Asia News Update

India/Singapore: How India can keep startups from leaving to Singapore

Source: Quartz, 17 June 2014

Burgeoning Automotive Industry Lends Momentum to the Engineering Plastics Market in Southeast Asia



One can name several technology startups who upped sticks in India and moved to Singapore all in the name of ease of business, among them include Mobikon and AdNear. In order for the Indian government to retain these entrepreneurial companies they must support equity investment and help access capital. The social crowdfunding site, Milaap, is headquartered in Singapore, even though all its operations are based in India. Explaining why, founder Sourabh Sharma says, the fund-raising environment is much more encouraging for startups in Singapore. There is a lot more equity capital available in that country. Also, schemes by the government allow investors to take a lot more risks there.

They would also do well to cut the red tape, the new Modi government has promised much to help fledgling businesses cut down the time it takes to do business, including improving ways in which companies interact with government agencies. The government also has schemes to help SMEs, however the lack of information and long drawn-out procedures still dampen the process. India has laws to protect intellectual property. Enforcement is another story. There is a general lack of respect for IP and delays in court proceedings to enforce laws that help IP owners. Enter Singapore yet again. According to the World Economic Forumís Global Competitiveness Report 2013-2014, Singapore has the best IP protection in Asia and second best in the world. India on the other hand ranks 71st on that list behind countries like Bhutan, China, and Sri Lanka.

Automotive

Thailand to serve as R&D hub in growing ASEAN auto industry

Source: Pattaya Mail, 14 July 2014

The chairwoman of the ASEAN Automotive Federation, Piengjai Kaewsuwan, has said the ASEAN auto industry will see further growth over the next few years following the regionís overall economic growth. And though all the countries of ASEAN are attracting auto-related investment, Kaewsuwan, who is also president of the Thai Automobile Industry Association, sees Thailand as the regionís R&D and manufacturing hub.

Kaewsuwan has supported this claim by pointing out that Thailand is already home to large R&D investment by such major firms like Nissan and Honda. In terms of manufacturing, the country currently can put out 2.4-2.5 million vehicles per year, with capacity set to increase further. Lastly, Kaewsuwan notes that while Indonesia has recently received significant investments and possesses a growing capacity of 1.2 million vehicles per year, most of the countryís auto industry growth has been spurred by domestic demand, and therefore does not indicate the countryís potential as an auto export leader.

Indonesia: June boost in auto sales may indicate market recovery

Source: The Jakarta Post, 15 July 2014

June saw Indonesiaís auto sales rise 6% y/y, which was a welcomed rebound from May's contraction of 2.6%. This means that the country will mark the first half of 2014 with 6.7% growth over the same period 2013. Astra International dominated the market by contributing to over half these sales with its Japanese-heavy catalogue. The company has said that 15% of its sales were from low-cost green cars (LCGCs), while low multipurpose vehicles comprised 45% of sales. The Association of Indonesian Automotive Manufacturers (Gaikindo) has said that all car segments sold in the country showed increased growth in June.

Whether or not the Indonesian car industry is back on track is a matter of debate. Gaikindo secretary-general Eddy Sumedi believes the June sales indicate that their 2014 goal of selling 1.2 million vehicles will be met. Echoing these sentiments, Astra spokesperson, Tira Ardianti, believes the company may be able to sell even more vehicles in the second half of the year. However, PT Hyundai Mobil Indonesia president director Mukiat Sutikno is skeptical, stating that the first half of 2014 is growth was propped up by big sales in LCGCs, while other segments did not fair as well.  

India: 2014-15 domestic car sales to grow 4%, double-digit growth coming in 2017

Source: Business Standard, 21 July 2014

A report by the French international advisory firm, Mazars, forecasts Indiaís domestic car sales to grow by 4% this year after two consecutive years of negative growth. Specifically, the four-wheel segment is expected to grow 4%, while two-wheeler sales will expand by 7% this year. The report used data from a survey of over 300 companies in Indiaís automotive industry, such as manufacturers, component suppliers, and dealerships.

Looking toward the future, the report also noted that this yearís turnaround will be part of a larger trend. As growth is slowly being seen in various verticals within the auto industry, the Mazars report also sees domestic growth reaching the double-digits starting in fiscal year 2017-18. India, after all, has very low car-ownership when compared to other nations. While there are 100 cars per 1000 people in China, that number is 20 in India. Beyond domestic growth, there are also opportunities for Indian carmakers to export, as the Mazars report also revealed that an increasing number of companies in India are considering entering the African market.

Chemicals

China: Evonik and Jiangsu Zhongneng to build silica and silicon tetrachloride plants


Source: Chemicals Technology, 15 July 2014


Evonik Industries have signed a letter of intent with Jiangsu Zhongneng Polysilicon Technology Development, a subsidiary of GCL-Poly Energy, in order to set up a fund for fumed silica and silicon tetrachloride plants in Jiangsu province, China. According to the deal, Evonik will attain a 60% stake in the joint-venture (JV). Aiming to start operations in 2016, the facilities will have an annual capacity of more than 20,000t. Evonik CEO Klaus Engel said: "By making the planned investment, we are aiming to further strengthen our market position for fumed silica and ultra-pure silicon tetrachloride, and to promote growth, particularly in the attractive Chinese market."

GCL-Poly chairman Zhu Gongshan stated: "This cooperation can combine Evonik's advanced technologies of producing silica and ultra-pure silicon tetrachloride with Jiangsu Zhongneng's leading technologies of silicon material production. The partnership will enhance GCL-Poly's overall competitiveness by diversifying the silicon products, better serving its main business and meeting market demand." Jiangsu Zhongneng stands as one of the leading producers of polycrystalline silicon (PCS), for which Silicon tetrachloride is used as a by-product. The JV will purchase PCS to produce AEROSIL fumed silica and Siridion STC HP silicon tetrachloride.


Thailand: Port chemical leak leads to nearly 100 people sick


Source: Al Jazeera, 17 July 2014


Over 90 people, comprising of primary school pupils, have been sickened by a chemical leak from a Hong Kong ship in eastern Thailand, authorities have said. Hazardous flammable liquids escaped from containers on 12 July 2014 as the ship was docked in Laem Chabang port in Chonburi province, said Surinrat Suksap, a Thai disaster office chief.

According to Suksap, 94 villagers in nearby areas were exposed to the chemicals. Many were treated in hospital for skin irritations and breathing diffculties. Surinrat said the leak on the ship was sealed within a few hours. The chemicals, identified as butyl acrylates, are used for polymer manufacturing and in industrial production. The ship was was traveling from Jakarta, Indonesia. Laem Chabang is Thailand's main deep seaport and is located 116km southeast of Bangkok.

Malaysia: Elevance and Genting Plantations to set up biorefinery


Source: Chemicals Technology, 15 July 2014


Speciality chemicals firm Elevance Renewable Sciences has partnered with Genting Plantations to establish a metathesis biorefinery in Lahad Datu, Sabah, Malaysia. It will be located in the Palm Oil Industrial Cluster (POIC), the facility will produce renewable olefins and speciality chemicals for use in various products, including lubricants, surfactants and detergents. The refinery will have a production capacity of 240,000t. Under the deal, the Genting Integrated Biorefinery (GIB) will provide Elevance license and design fees.

Elevance will contribute its expertise in property rights, knowledge transfer and technical and consulting services, and will engage in the sale of speciality chemicals produced at the biorefinery. Elevance CEO K'Lynne Johnson said: "This collaboration extends our ability to deliver novel products with improved performance, helping to achieve a paradigm shift in the way companies are addressing industry and consumer demand, making better products while leaving a smaller environmental footprint, in personal care products, detergents and cleaners, engineered polymers, lubricants and additives, and other speciality chemicals markets."

Construction & Property Development

China/Hong Kong: China sees strong property gains, while HK pares losses

Source: Reuters, 18 July 2014

China shares rose on Friday morning, reversing early losses as property counters surged after soft home price data triggered expectations of more mini-stimulus by local governments. Hong Kong's benchmark index opened down almost 1%, following weaker U.S. bourses after news of a downed Malaysian airliner at the Ukraine-Russia border rattled investors. Some of Hong Kong's losses were erased after China markets regained momentum. China's average new home prices fell in June from May for a second straight month. Prices are expected to continue declining in coming months, and if they fall sharply, that could be a challenge to Beijing. Expectations for more housing policy loosening by local governments were increased by a report in the 21st Century Business Herald. It said the new housing minister told a meeting that clearing inventories is a main second-half goal.

At midday, the Hang Seng Index was off 0.5% at 23,415.99 points. The China Enterprises Index of the top Chinese listings in Hong Kong slipped 0.6%. On the week, the two indexes were up 0.8 and 0.3%, respectively. The CSI300 of the leading Shanghai and Shenzhen A-share listings rose 0.7%, while the Shanghai Composite Index was up 0.4% at 2,063.76 points. They are now up 1.1 and 0.8% this week. "It's mainly sentiment-driven today because of the airliner attack," said Steven Leung, sales director at brokerage UOB Kay Hian in Hong Kong. "But after the Chinese property prices (data) was released, investors tended to be more optimistic because they expect further policy-easing in China," Leung added.

Singapore: Condominium sales in H2/2014 set to be cautious

Source: Business Times, 16 July 2014

With a drastic fall in developers' sales of private condos last month, the market is increasingly tilted in favour of homebuyers in the second half of this year. URA data shows developer sales of private condos plunging 68 per cent to 482 in June from a month earlier. Though fewer launches (418 units) in the traditional lull season of school holidays and the World Cup are to be blamed, consultants do not expect sales to jump when developers ramp up condo launches. PropNex CEO Mohd Ismail warned that the "air of caution" is expected to linger, with monthly sales in the second half expected to be around 600-800 units.

This would mean that the estimated 2014 sales of 9,000-10,000 units are 35% shy of the units sold in 2013, he projected. There are fewer "affordably priced mass-market projects" in the pipeline, said Chia Siew Chuin, director of research and advisory at Colliers International. "Furthermore, the slowdown in buying momentum - even for popular projects - indicates that buyers continue to face inertia to commit." Developers were more focused on moving units at existing projects rather than launching new projects in the traditionally slow month. Favourable pricing perceptions enabled certain projects to still garner interest after the initial launch.

Australia/Indonesia: Melbourne property group looks to Indonesia

Source: Mortgage Business, 18 July 2014

Indonesia has been flagged as a potential source of foreign investment into the Australian housing market. Addressing the House of Representativesí Standing Committee on Economics inquiry into foreign investment in residential property, Nyko Property director Bill Nikolouzakis said such investment was positive for the Australian economy, and that the current policy framework was fundamentally correct to ensure there were no abuses of the system. Mr Nikolouzakis said ìIn our opinion, this misunderstanding, and, in some instances, the misreporting of what is and isnít permissible in terms of foreign investment in residential property, has the potential to damage a valuable source of investment in what is a USD 4.75 trillion industry.

Mr Nikolouzakis said that although much of the focus on overseas investment into Australia had been on China, Indonesia was an emerging market that not only offered immediate economic benefits but had the potential to help nurture one of Australiaís most important foreign relationships. Melbourne-based Nyko Property licensed its business name in Indonesia in March this year and had given a local agent the right to distribute the groupís properties in Indonesia. Nyko's principals have since held a property seminar in Jakarta where they witnessed first-hand the interest in the Australian market and have now committed to opening offices in Jakarta and Surabaya.

Consumer & Retail

Thailand: Consumer sentiment skyrockets since coup

Source: Financial Times, 17 July 2014

Thailand consumer confidence is up nationwide and in Bangkok the streets are safer and traffic is no longer disrupted by protests. Many Thais approve both of the coup itself and the job the generals have done managing the country since. However, given the immediate alternative of seeing Thailand spiral further out of control, what else could be expected? The fact that many Thais report approval for the coup and greater levels of happiness does not indicate that democracy has been discarded. Thais still want elections. Surveys conducted by Asean Confidential, a Financial Times research service, reflect a complete turnaround in Thai consumer sentiment following the coup. The percentage of respondents who believed political stability would improve in the next six months jumped to 71% in June from 27.7% in February; in June 56% expected the economy to improve in the next six months vs 18.9 per cent in February.

We observed only a small difference between respondents in Bangkok and those elsewhere in Thailand, despite the fact that Bangkok residents tend to view the coup more favourably (and the previous Thaksin Shinawatra-linked governments much less so) than the majority of the country. The economy has also begun to stabilise. The putsch removed the remnant of the Puea Thai government two weeks after the top court booted Prime Minister Yingluck Shinawatra for illegal promotion of an official. In addition, the National Anti-Corruption Commission found her guilty of dereliction of duty over a corrupt rice pledging scheme, which Asean Confidential estimated had lost the government some USD 20 billion in two years.

Japan: Economy picks up on consumer spending

Source: Gulf Times, 17 July 2014

Japan upgraded its overall assessment of the economy in July for the first time in six months as consumers reopened their wallets following an initial pullback in spending in the wake of a sales tax increase. In its monthly economic report released, the government said the economy was recovering moderately and that a drop in consumption in response to the tax increase in April's easing. That is good news for Prime Minister Shinzo Abe as his administration tries to power through the speed bump of the higher tax and keep a hard-won recovery on track. Evidence that the tax increase is not having such a detrimental effect on the economy as feared will also help Abe as he looks to make a decision later this year on raising the tax again to help improve the nationís battered finances.

The latest assessment wasnít entirely positive, though, as the government lowered its view on capital expenditure amid lingering resistance among firms to spend money before the future path of the economy becomes clearer. The government had stood pat on its overall assessment of the economy since its April report, when it downgraded its view on the economy for the first time since November 2012, as consumers cut back sharply on spending after the tax was raised to 8% from 5%.

South Korea: Consumer confidence jumps in June 2014

Source: RTT News, 24 July 2014

The Bank of Korea said that its index measuring consumer sentiment climbed to 107 in June from 105 in May. Consumer sentiment on current living standards was one point higher than in the previous month at 92, while the outlook was two points higher at 101. This reflects the ongoing recovery of the consumer market which has been improving since early 2014.

Consumer sentiment regarding current domestic economic conditions was up by three points compared to May, at 79, and that for their future outlook by four points, at 98. Consumer sentiment on prospective changes in household income had risen by one point to 102, and that on expected spending was two points higher at 110. The expectation for inflation over the following year was 2.8%.

Energy, Resources & Environment

Thailand: Country refocuses on clean energy goals as political climate stabilizes

Source: PV Magazine, 17 July 2014

Before Thailand's year of political turmoil, the country had made plans to develop its renewable energy sector. That initiative suffered setbacks in the last year, as the Thai economy contracted as a whole and foreign investors stayed away from the troubled country. As a result, a plan to have 200 MW of rooftop solar capacity in place by now has fallen short by 100 MW. Moreover, a report from the Thai Ministry of Energy has stated the country is behind in its goal to produce 14 GW of clean energy by 2021.

Now that the country has experienced at least a few months of political stability under Gen. Prayuth Chan-ocha, the economy is getting back on track and serious clean energy development can begin again. In fact, the military government has singled out solar energy projects to reignite foreign investment in the country. The country's Alternative Energy Development and Efficiency Department has said it will restructure its feed-in tariffs and tax-breaks for foreign investors. Additionally, the Thai energy service companies (Esco) association has lobbied the government to make the state solar contract bidding process more friendly to foreign firms.

South Korea will invest USD 1.94 billion in six new clean energy businesses

Source: P-V Magazine, 18 July 2014

The announcement, made by President Park Geun-hye at a meeting of the Presidential Advisory Council on Science & Technology, represents a new approach towards achieving the country's clean energy goals. In comments released by Korea's Ministry of Trade, Industry and Energy, the country has decided to depart from the strategy of using regulation to control emissions, and ìinstead create new business models that can help fight climate change in a new and creative way through voluntary participation of the private sector. The countryís current goal is to reduce greenhouse gas emissions by 30% by 2030.

The six businesses include an electric car hire service provider, an energy management service provider, and a solar panel leasing company which is expected to be buoyed by Korea's upcoming carbon trading scheme. A large emphasis is being placed on the solar panel leasing company, as solar energy is to factor significantly into Koreaís long term clean energy plans. Meanwhile, the energy management service provider will deal mainly with the storage of companies' unused energy, which the companiesí can sell back to the grid when demand is high. On the whole, the six new companies are expected to add 10,000 green jobs to South Korea's economy by 2017.

Japan: In absence of nuclear power, 'smart town' energy-saving concept emerges

Source: DW, 16 July 2014

In the wake of 2011's Fukushima Daiichi nuclear disaster, Japan's moratorium on nuclear energy is still in effect. While, the government has permitted Kyushu Electric Power Co. to conduct the exacting process for the start of two reactors, the Japanese public still opposes nuclear power. To fill the energy gap left by the absence of nuclear sources, alternative energy producing and saving methods have taken wing, including 'smart towns'. 

Panasonic has already begun one such town. Fujisawa Sustainable Smart Town in Fujisawa is a 19-hectare town 50km southwest of Tokyo. According to Panasonic, the projectís main goal is to design a town that efficiently provides such services as energy, security, mobility and healthcare. Panasonic is already planning a second town, with more ambitious goals of cutting C02 emissions by 70% and water consumption by 30%. Additionally, property developer Mitsui Fudosan Co. is also working on a similar town called Kashiwanoha Smart City. The 300-hectare town will make use of interconnected storage batteries and solar panels, which can channel energy anywhere within the town, to reduce energy consumption by 26%.

Financial Services

Vietnam: The World Bank to map out development plan with Vietnam

Source: The World Bank, 17 July 2014

Vietnam and the World Bank Group announced on 17 July that they have agreed to conduct a joint study that will recommend policy actions to greatly increase economic growth in Vietnam in the coming years, putting it on a path to become a modern, industrialized country in a generation. The study will identify the changes Vietnam needs to make to build sustainable and inclusive growth and join the ranks of high-income countries. Moreover, it will look at changes Vietnam needs to boost trade and competitiveness and improve the business and investment climate to attract more foreign and domestic private investment. It will also examine the policies and actions Vietnam will need to build economic sustainability, reform its institutions and create more equality and opportunities for all people. Prime Minister Nguyen Tan Dung and World Bank President Jim Yong Kim agreed to complete the study within one year.

Dung and Kim announced the study in Hanoi, where they also signed credit agreements for five new projects totaling USD 876 million. In addition, Kim announced the World Bank Group will provide Vietnam with over USD 3.8 billion in concessional financing through IDA, the World Bankís fund for the poorest countries, in the next 3 years. A key objective will be to help Vietnam use World Bank resources to attract additional private financing.

Singapore/India: Opportunities for Singaporean investors in Indian real estate market after tax sops introduced

Source: The Economic Times, 18 July 2014

Abhijit Ghosh, of PricewaterhouseCoopers, believes India's new real estate tax sops will greatly benefit Singaporean investors, who already have strong ties to the country. Ghosh narrowed in on housing, urban and town planning, development of ports, and water as areas where Singapore could lend its expertise. Investment opportunities in these areas are expected to grow as India follows its plan to build 100 smart cities.

The real-estate sops will only strengthen an already close investment relationship as Singapore currently contributes 25% of India's foreign direct investment. The existing India-Singapore avoidance of double-taxation agreement is already a boon to Singaporean and Indian investors alike, whereas Singapore's comprehensive economic cooperation agreement (CECA) has made the city a launching pad for Indians looking to do business in Asia. Government officials and businessman from both countries are expected to engage in several trade-related talks over the next months.

China: Banking sector has glaring USD 3.2 billion exposure to companies under investigation

Source: International Business Times, 16 July 2014

The Chinese banking sector has now become entangled in the fraud probe into Qingdao's Deching Mining company. Deching is currently under investigation for misrepresenting its assets to obtain RMB 2.7 billion in loans as the company allegedly counted the same metals stockpiles multiple times. Commodity warehouses, such as the ones Deching maintains, are said to be less regulated than those of other goods.

As a result of the entanglement, Deching is currently facing a lawsuit from Chinaís Bank of Communications. The mining companyís owner, Chen Jihong, is also facing a USD 35.6 million lawsuit from Standard Chartered Bank, launched to ìprotect its positionî on USD 170 million worth of aluminum.

Logistics & Transportation

Vietnam: Fishermen want more government help for development of industry


Source: Vietnam.net, 18 July 2014


The Vietnamese government has already made several efforts to develop the countryís fishing industry. They have supported the use of steel ships through low interest loans, set up cooperatives, and set forth development plans, including Vietnam marine strategy until 2020. However, Nguyen Huu Dung, vice chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP), believes that these measures have largely been ineffective in their goal of nurturing the countryís fishing industry.


Nguyen believes many of the policies are a good start but donít address important challenges that come with industry development. For example, the government has given fisherman low interest loans to build steel ships, but these types of ships are more expensive to maintain. Nguyen also questions using ships of such a large size, as Vietnam has not yet developed marine resources capable of handling large-scale fishing. Additionally, Nguyen commented that cooperatives set up by the government failed to foster any real synergy. The Vice Chairman instead proposes that the government get involved in a more significant way. Specifically, he would like to see the government help set up a middleman-type industry to transport fish directly from fisherman to the shore and stronger policing of fishing waters. To do this, Nguyen recommends setting up a dedicated marine economy ministry.


Singapore/Malaysia: Singapore moves to clarify fees as Malaysia imposes foreign vehicles taxes of its own

Source: Channel News Asia, 18 July 2014

Singapore's Ministry of Transport has expressed concern over the intentions behind Malaysiaís new vehicle tax. As the tax will only be levied in Johor Baru, the Malaysian city adjacent to Singapore, it may interpreted that the tax is targeting Singaporean vehicles. Earlier this year, Singapore raised the fees for their Vehicle Entry Permit (VEP) and Goods Vehicle Permit (GVP), which significantly impacts Malaysian vehicles that enter the city on a daily basis. The new Malaysian measure is thus most likely retaliatory.

In light of this, Singapore Ministry of Transport released a statement clarifying the VEP and GVPís fee increase. The ministry stressed that the goal of the measure was no to target Malaysian vehicles, but simply to make the cost of owning and operating all foreign vehicles the same as Singapore-licensed ones, which are subject to higher costs stemming from taxes and certifications. The ministry also pointed out that the last time the VEP and GVP were changed was 2004, where the fees were actually lowered following lower costs of operating a vehicle in Singapore.

Thailand: Growth of e-commerce boosting logistics industry

Source: Bangkok Post, 17 July 2014

Last month, Thailand logistics firm aCommerce attracted the most Series A venture capital of any Thai firm ever, with USD 10.7 million. ACommerce is an 'end-to-end ecommerce logistics and service' company which offers website development, online marketing, customer service, packaging, warehousing and delivery to all of Southeast Asia. Similarly, Thailand Post has said it expects its express mail service (EMS) to see 15% growth this year, also in the wake of the rise of ecommerce in the country. Thailand Post has even established a new subsidiary, Thailand Post Distribution Co, meant to exploit ecommerce.

The future of these companies looks bright as ecommerce in Thailand and Southeast Asia still has much room for growth. A UBS Bank report estimated that Thailand's total retail market is worth USD 94.4 billion, but its ecommerce still only figures at USD 4.7 billion, or 0.5%. Moreover, less than half of Thailand's population even possesses Internet access currently, as the same report calculated that Internet penetration in the country stands at 46%.

Manufacturing & Industrial

India: Korea and Japan seeking industrial zone in Rajasthan's Neemrana

Source: Times of India, 21 July 2014

South Korea has approached the Rajasthan government for an industrial zone in Neemrana while Japan has asked for a second unit in the same area, developments that are expected to trigger a fresh round of investment in the area and bolster the government's efforts to build mega industrial clusters. The two countries have approached the BJP government at a time when the Narendra Modi government has assumed office at the Centre and is aiming to initiate measures to revive the manufacturing sector and create jobs. Sources said South Korea is keen to develop a zone in the Neemrana segment which is emerging as a vital industrial hub as it is part of the Delhi-Mumbai industrial corridor. Japan, already has an industrial zone in Neemrana where several top notch Japanese groups have set up base, also triggering a real estate boom in the once sleepy town on the way to Jaipur.

The Rajashtan government is set to give 500 acres for the second Japanese zone in Ghilot, which is around 10-12km from the highway, said a top-ranking government officer. Even the Koreans are expected to get land for the zone in the same area, where 2,000 hectares have been identified for the zones. The detailed plan for a Greenfield township has already been submitted to the Rajashtan government and environmental clearance for the investment region has also been sought. While building the town will take a few years, work on a solar project in Neemrana has begun for which RIICO is expected to provide land.  

China: Industrial production recovers in H1/2014

Source: CNTV, 16 July 2014

China's industrial production growth quickened in the first half of 2014, showing signs that the world's largest "workshop" is warming up. The National Bureau of Statistics (NBS) said on Wednesday that value-added industrial output in the country expanded 8.8% year on year in the January-June period, accelerating from an 8.7% increase in the first quarter. In June, output rose 9.2%, marking the fastest growth in the year. Value-added industrial output in the manufacturing sector rose 9.9% in the first half following continuous improvement in the PMI reading in the last four months.

NBS data also showed that the value-added industrial output of state-owned and state-controlled enterprises saw a 5.5% growth year on year in the six-month period, while that of joint stock companies expanded by 10.2%. The bureau said output grew by 8.4, 8.8 and 10.8% in east, central and west China respectively. China uses value-added industrial output to measure business activities of designated large enterprises each with an annual turnover of at least RMB 20 million (USD 3.26 million). From January to May, total profits of such enterprises grew 9.8% year on year to RMB 2.28 trillion, speeding up from a 9.4% increase in the January-February period.

Singapore suffers weak Q2 as GDP shrinks for first time since 2012

Source: Channel NewsAsia, 14 July 2014

Singapore's Ministry of Trade and Industry (MTI) has estimated that the country's economy will contract 0.8% from last quarter, as the economy suffers its first sequential contraction since Q3 2012. The economic figures for Q2 still represent 2.1% y/y growth, but that figure is down from this year's Q1 4.7% y/y growth. In fact the relatively impressive numbers from this year's Q1 are a contributing factor in the contraction combined with Q2's weak manufacturing results, especially in electronics.

Quarter-on-quarter, manufacturing fell a whopping 19.4% in the city. Contributing to this contraction was the departure of an electronics factory, which moved production offshore. In other areas, services and construction grew 2.8% and 5% quarter-on-quarter, respectively. As services are Singapore's largest contributor to growth, 2.8% actually represented a deceleration on a y/y basis, hurting growth in that regard. While several economists have lowered their aggregate GDP growth expectations for the country as a result of the news, the general consensus is that Q2's contraction was a one-off event and that the country will experience an uptick in growth for the second half of the year. Current GDP growth estimates for the country still range from 2-4%.

Pharmaceuticals & Healthcare

Singapore: Healthcare system lauded by World Bank President

Source: Channel News Asia, 18 July 2014


Singapore's healthcare system has been lauded by World Bank President Jim Yong Kim. Dr Kim was in Singapore on Friday (July 18), following visits to Vietnam and the Philippines. He extended his trip to Singapore, so that he can see for himself what makes it tick. "I don't think there's a single system in the world that spends as little as Singapore does in terms of percentage of GDP and gets the outcomes that it gets. That's why I'm here. I know that there're always challenges, and one of the challenges that has been talked about is getting more people to use the primary healthcare system first.”

"This is a problem that's common to many developed countries, and so it's one of the things that's been done very, very well - healthcare - but also we may even be able to bring some lessons here," said Dr Kim." While in Vietnam and the Philippines, Dr Kim announced billions of dollars in loans for the two countries. Besides healthcare, he said he was interested to learn about Singapore's approach to urban planning and water management. The visit is Dr Kim's first trip to Singapore, since he took office as the World Bank chief in 2012. "The bottom line here is what we see in Singapore is we see a government that is extremely focused on execution, and actually delivering results for their population, which at the same time is completely open so that market forces and good government execution come together in the success story of Singapore.”

Japan: Whiz Partners plans new Japan health-care fund on aging society

Source: Bloomberg, 16 July 2014

Whiz Partners Inc., a Japanese investment-management firm, plans to start its second health-care fund that will invest in companies with potential to benefit from aging societies. The fund will start as early as October and invest in convertible bonds and warrants of about 10 health-care companies, with market capitalizations of as much as JPY 50 billion (USD 491 million), said Managing Director Tomoyuki Fujisawa. Tokyo-based Whiz plans to raise as much as 15 billion yen by the year-end and up to JPY 30 billion by June 2015, targeting an annual internal rate of return of 35% for seven years, he said.

Whiz plans to capture rising demand for capital among health-care related companies in Japan as they seek to expand their businesses abroad. Its first fund, which has a similar strategy and was set up in April 2011, raised JPY 5.3 billion and had an internal-rate of return of 371% as of March 2014, Fujisawa said. "Mid-to-small companies are struggling with their global expansion strategy so they welcome the kind of investment style we have," Fujisawa said in an interview. "There are still lots of undervalued companies. The new fund will invest in listed and non-listed health-care-related companies such as a makers of testing equipment, tissue engineering companies and preventive health-care providers, in addition to biotechnology ventures, which the predecessor fund invested in," Fujisawa said. It also plans to invest in health-care units of major publicly traded companies that the parent companies are seeking to spin off.

India: Healthcare requires urgent improvements

Source: Niti Central, 21 July 2014

India's 70% population lives in villages but only 33% Government appointed doctors are working there. Hospitals in rural India are poorly equipped and peopleís medical needs have been somewhat left to their destiny. The total number of doctors working in both private and Government sectors is only 9,18,303 to address the health care needs of 121 crore people, of which majority are not ready to work in rural areas. The 1:1700 doctors-population ratio outline the very need for more number of medical professionals. Assessing failure and success of the Mission, the report states that that the total numbers of primary health facilities in India (excluding both sub-centres and district hospitals) is about 30,431. Of these, only 2,243 facilities or about 7% could qualify as 24/7 facilities when measured at the baseline. Over the last seven years, this number has grown to 14,676, but is still a net achievement of only 48% of the target and only a 35% achievement in the high-focus States.

Generally, it is found that most medical students after passing their degrees are reluctant to serve in the rural areas. Apart from bad road connectivity and electricity supply, the poorly equipped hospitals could be cited as a primary reason for lack of interest among medical professionals to work in the rural areas. With new Government at Centre under the leadership of Prime Minister Narendra Modi, it is hoped that a viable plan focused on improving health care in rural areas will be prepared and implemented soon. During election campaign, Narendra Modi had promised to improve social sector especially education and health care. Now, it is time his Government comes up with policies to fulfill the needs of health care sector of the country.

Private Equity

China: Investors wary of the impartiality of Jack Ma's private equity firm

Source: Reuters, 17 July 2014


Jack Ma founded the private equity firm, Yunfeng, with business associate David Yu in 2010. In an interview with Yu earlier this month, the businessman has said that the main concern for potential institutional investors was the role of Ma in the company. As Jack Ma's main role is the head of giant China e-retailer, Alibaba, investors are wary that Maís role in Yunfeng would present a conflict of interest with his desire to satisfy Alibaba shareholders. Yu in turn has sought to assure investors that Ma has no direct role in the fundís investment decisions, stressing that he does not sit on Yunfeng's investment committee. Despite this, there have been several potential investors who have declined to work with the fund specifically because of the concern over Jack Ma's role.

Though Mr. Ma may have no direct role in Yunfengís investments, the fundís business activities has inevitably overlapped with Alibaba multiple times. Filings from the US's SEC reveal that Yunfeng and Alibaba have invested money in each other. The two companies have also been part of at least three deals, such as in 2010 when they bought a combined 16% share of Chinese company Sogou Inc. Additionally, Jack Ma has his own personal money invested in Yunfeng, though SEC filings also show that any profits on those investments have gone to charity.

India: Clarification of Real Estate Investment Trusts' tax code to boost development

Source: The Economic Times, 12 July 2014

The Indian government's new budget has clarified how taxes will be levied on Real Estate Investment Trusts (REITs), which is set to boost development in the country. REITs involve spreading out ownership of real estate assets among shareholders, who then share the income generated by renting out the property. The government has clarified that shareholders will only pay a tax on the income generated by the fund, not on the amount of assets they possess in the REIT.

With potential shareholders now assured of how their investments will be taxed, it should be easier for developers to attract investment and therefore generate capital for projects. Moreover, many private equity firms have been amassing real estate assets over the past few years in hopes that the government would issue a favorable tax for REITs. Now that that day has come, these funds will be able to acquire even more property as they distribute assets to investors. For example, Embassy Office Parks has said it may double its office real estate in the new six months alone, and gross commercial office property in the country is set to rise. Furthermore, REITs will lower the country's banking system exposure to real estate.

Southeast Asia: Region's growth potential attracts the attention of private equity firms

Source: Channel NewsAsia, 17 July 2014

Private equity companies are increasingly drawn to the region because of several factors. Southeast Asia as a whole boasts favorable macroeconomic conditions, which features rising incomes and a growing middle class. Furthermore businesses within the region can easily cross borders, creating a dynamic business environment with strong growth potential.

Following increased attention from private equity firms, the Southeast Asian market has become more competitive. If firms want to stand out in the region, they need to go above and beyond merely providing capital and address their customers' unique needs. In Southeast Asia, that means facilitating the handing over of family businesses from one generation to the next. At the same time, those wishing to enter the market should be careful not to generalize too much ñ the region is after all composed of distinct countries. This is especially true for Singapore, which is more mature than other Southeast Asian countries and should be approached differently. For example, families there may be less interested in maintaining control of a company from one generation to the next and more interested in simply sustaining and growing the family's wealth.

Technology, Media & Telecommunications

Singapore/South Korea: Singapore makes deal to aid South Korea’s technology companies

Source: Channel News Asia, 14 July 2014


The Infocomm Development Authority of Singapore (IDA) has signed a Memorandum of Understanding (MoU) with the National IT Industry Promotion Agency of the Republic of Korea (NIPA) to support the expansion of Korean tech startups and small- and medium-sized enterprises (SMEs) into the South-East Asian market. In a statement on Monday (July 14), IDA said the MoU was signed last Friday, after South Korea picked Singapore as its South-east Asian hub to site IT Cooperation Centre. The collaboration will open up more opportunities for partnerships between Singapore and South Korea's ICT industries, and give tech startups from both countries direct access to each other's markets, it added.

The MoU also covers cooperation in the areas of ICT policies, manpower development and training, and exchange of thought leadership through seminars and workshops, the statement said. The MoU was signed between IDA Managing Director Ms Jacqueline Poh and NIPA President Park Soo-yong, in conjunction with the launch of the Korea IT Cooperation Centre in Singapore by the Republic of Korea's Ministry of Science, ICT and Future Planning. "Singapore and the Republic of Korea share a vision of developing knowledge-based creative economies, and using technology to enhance the quality of citizens' lives. We are encouraged that they see Singapore as a good launchpad for Korean tech startups to make inroads into the large and growing South-East Asian markets," Ms Poh said.

Malaysia: Samsung believe there is still room for growth in the smartphone market

Source: The Sun Daily, 16 July 2014

Despite concerns over a potential slowdown in the smartphone market due to increasing saturation, Samsung Malaysia Electronics Sdn Bhd feels there is still room for growth and plans to continue providing products that will meet consumer needs. "As smartphone saturation increases, the market has expressed concern that demand for high-end smartphones will slow down. We still think there is room for growth, as well as continued demand for replacement devices. Samsung will continue to increase the attractiveness of its products by making its higher-end devices stronger and filled with differentiated user experiences," Samsung Malaysia Electronics president Lee Dong Yong told SunBiz in an email interview recently."In fact, our recently launched Galaxy S5 smartphone was conceptualised based on 'people-first' belief, so that we give consumers what they truly want in a smartphone. We will also leverage our design and marketing capabilities to drive continued strong sales of high-end smartphones. In addition, we will also be expanding to meet low-end smartphone demand," he added.

Lee said the group observed a shift in trends this year among Malaysian consumers, whereby consumers are using more digital technology to improve productivity and enhance quality of life." This year, Samsung will continue to increase the attractiveness of its products by making its higher-end devices stronger and filled with differentiated user experiences. We will also leverage our design and marketing capabilities to drive continued strong sales of high-end smartphones. In addition, we will also be expanding to meet low-end smartphone demand because ultimately, Samsung's goal is not to create a product, but to give people the power to discover new experiences that open doors to new ideas and communications."

China: World’s largest 3D printer can build a two-person boat

Source: Daily Star, 18 July 2014

A Chinese company has created a 3D printed boat capable of seating two adults in the race to build ever larger 3D printers. China looks to be at the forefront of this technology, with firms claiming that everything from 3D printed cars to houses are on the horizon once the machines to make them are large enough. Only last month it was reported that after three-and-a-half years of research the Chinese company Sanya Industrial Innovation Design Center in Sanya, China, had developed the largest 3D printer to date.

It also has the ability to print in multiple types of material at affordable costs, at high speeds and in full colour. The printer, which weighs 15 tons, can print objects up to four metres in length with a height and breadth of around two metre. The developers are particularly proud about the fact that it was made with elements of materials in the form of pellets and ground up thermoplastics. However, with the cost for the 3D printers at hundreds of thousands of pounds the boat, which apparently works perfectly well even when put through its paces, is unlikely to be something the average household will be able to get their hands on.