Asia News Update
Vietnam: Property market doors open to foreigners, but locked to locals
Source: Vietnam Net, 28 November 2013
The draft of the amended Housing Law is believed to ‘keep the doors open widely’ to facilitate foreigners to buy houses in Vietnam. Policy makers needed many years to consider pros and cons before taking this step, because this is a delicate ground to tread. Professor Dang Hung Vo, former Deputy Minister of Natural Resources and the Environment, the best-known land expert in Vietnam, said that once Vietnam opens its doors to welcome foreigners’ entries, it should also open the doors for Vietnamese to go to the world market. Vo has suggested that the government should allow Vietnamese enterprises to mortgage real estate products at foreign banks for loans, which, together with the new provision of the housing law, would help rescue the real estate market.
Experts suggest it is now the right time for Vietnam to apply a more open policy. Once Vietnamese can mortgage real estate at foreign banks for loans, they would be able to get the capital they need to develop projects. If so, this would be the most effective capital flow to rescue the frozen real estate market. In mid-2012, the State Bank of Vietnam once organized a big workshop on the mortgaging of the land use right and the assets on land at foreign banks. However, policy makers and experts still could not come to a final conclusion. The amended 2003 Land Law, which is expecting the National Assembly’s ratification, stipulates that overseas Vietnamese, foreign institutions and individuals and joint ventures can mortgage properties at foreign banks. However, the Prime Minister will make decisions in every case.
China: Smart becomes first European company to import electric cars to ChinaSource: The Green Car Website, 21 November 2013
Capitalizing on China’s expanding market
for electric vehicles, Smart has become the first European importer to the
Chinese market. China is the 14th market for the company’s fully-electric smart
fortwo that is already available in Europe, North America and Japan. Following
the electric drive smart fortwo’s launch at the Guangzhou Motor Show, the car
has become available for sale across China. According to company head, Dr Annette Winkler:
"Our smart electric drive was one of the first all-electric cars and is
the clear market leader in Germany. We are now bringing this successful vehicle
to China, and are the first European manufacturer to launch an all-electric car
on this market. Offering powerful driving pleasure with zero local emissions,
the smart electric drive is perfectly suited to China's big cities."
China is already becoming a major market for Smart, alongside Germany and Italy. In 2012, the company’s China sales increased 43.8 % year-over-year. China is now the world's largest automotive market, and it is expected to be a crucial market for the growing demand for alternative fuel vehicles. This is in large part thanks to the Chinese government’s supportive environmental legislation. One example is the government’s most recent renewal of a grant programme that provides buyers of fully electric cars a subsidy worth up to USD 10,000 towards their purchase.
India: Car sales decline in October,
industry body cuts forecast for full year to negative growth
Source: International Business Times, 12 November 2013Passenger car sales in India fell about 4 % annually in October, while cumulative sales for the April-October period fell by 4.5 %, as high interest rates and a slowdown in the economy continue to hurt the market. Auto manufacturers sold 163,199 cars in October in the country, while exports marked a 0.09 % increase -- with 42,536 vehicles shipped out -- from the same period last year. Sales in the domestic market are expected to decline further in the current financial year ending March 2014, SIAM said, cutting its previous forecast that the sector would grow by 3.9 % this year.
“Now the decline is moderating, so if it keeps on moderating at this pace maybe we'll see zero growth in January-February," said Vishnu Mathur, director general at SIAM. "Definitely the year will be negative," The Indian automobile Industry has suffered from a slowing economy, high interest rates and rising fuel prices, all of which have put a crimp on an industry that was booming only two years ago. The country's automobile sales took a hit after a surprise move by the Reserve Bank of India in July to help the rupee tightened liquidity in the system and made auto loans dearer. And, the fall in sales in October, which typically sees heavy demand fueled by the start of a two-month festival season, took automakers by surprise.
Vietnam: New vehicle sales up 20% in October
Source: Just Auto, 13 November 2013
Vietnam’s new vehicle market continued to show improvement in October, with sales rising by 20.2% to 8,465 units, from 7,041 units in the same month of last year, according to data released by the Vietnam Automotive Manufacturers Association. Light passenger vehicles continued to drive the market forward, with sales rising by close to 29% year on year to 5,232 units, from 4,066 units, with consumers benefiting from much lower interest rate compared with last year.
Commercial vehicles have also begun to trend higher, with volumes rising by 6.6% to 3,053 units, from 2,864 units a year earlier. A further 205 sales were reported separately by Mercedes-Benz in October, bringing its year to date total to 1,363 sales - mostly passenger vehicles. In the first 10 months of 2013, total vehicle sales increased by just over 20% to 67,045 units, from 55,807 units in the same period of 2012. Light passenger vehicle sales were up by 38.5% at 39,761 units, while commercial vehicle sales were just slightly lower at 26,126 units.
Thailand: Vencorex to construct Tolonate HDI plant
Source: Chemicals Technology, 21 November
France's Vencorex - a joint venture between
Perstorp and PTT Global Chemical - has unveiled plans to expand its global
capacity for Tolonate hexamethylene diisocyanate (HDI) derivatives by
constructing a production plant in Thailand The new plant is scheduled to be
completed by 2015 and cater to demands for HDI in the Asian market. Vencorex
CEO Magnus Lanner said Thailand is a strategic location and will provide the
company with a competitive advantage in the region. He said "We want to
strengthen our global position, and our presence in Asia will be a significant
stepping stone, among others. This new asset in Asia, with an annual capacity
of 12,000tpy and our own state-of-the-art technology, will serve this
expansion, helping the industry in Asia to provide very high quality offerings
The company will have facilities on three continents after this investment in Aliphatic Isocyanates derivatives production in Asia. Vencorex marketing and sales vice president Sutin Chamulitrat said Asia's market is fast growing and the plant will allow the company to effectively participate within it. "The new plant in Thailand will provide us with an industrial footprint for HDI and derivatives: in addition the markets served by Pont-de-Claix in France and Freeport in the US," Chamulitrat added. Vencorex JV was established in June 2012 to sell isocyanates products to the polyurethane industry. PTT Global Chemical holds a 51% stake in the JV, while Perstorp owns the remaining share.
Korea: Chemical companies increasing diaper chemicals in response to one-child policy relaxation
Source: Global Post, 25 November 2013
Chemical companies in South Korea are
preparing to increase the production of chemicals used for diapers after the
Chinese government announced a relaxation in the one-child policy, according to
industry sources. LG Chem Ltd., a key player in South Korea’s chemical industry
is among those gearing up for the push to China. It is aiming to boost its
annual capacity at its plant for superabsorbent polymers (SAP), a major
material used in diaper production, to 260,000 tonnes by 2014, up from its
current level of 180,000.
Likewise, SK Global Chemicals Co., is considering construction of a new joint-venture plant with Mitsubishi Chemical Company in Ulsan to produce 160,000 tonnes of acrylic acid – a key ingredient of SAP - by 2016. Management consulting firm Price Hanna Consultants, who specializes in nonwoven and hygiene absorbent products, forecasted last February an average annual market growth of 6 % until 2017; it is expected that this policy change will fuel further growth of the SAP market.
China: Wacker Chemie to expand polymer powder plant
Source: Chemicals Technology, 22 November 2013
German chemical company Wacker Chemie is planning to expand its production capacity for dispersible polymer powders at its Nanjing site, in China, in 2014. The planned expansion is aiming to double the company's current Chinese capacity of 30,000 metric tonnes per year and help it meet increasing demand from Chinese customers. Subject to necessary permission by the local authorities, debottlenecking work is scheduled to start immediately. The capacity expansion is also expected to help Nanjing site's dispersible polymer powder production output to reach up to 60,000 metric tonnes per year.Wacker Polymers president Arno von der Eltz said after the successful capacity expansion for vinyl acetate-ethylene (VAE) copolymer dispersions in Nanjing earlier this year, the group is ready to increase its dispersible polymer powder capacity as well. He said "The market demand in China is continually growing, in particular for residential construction. The increasing trend towards construction of pre-decorated housing is also driving demand for ceramic tile adhesives, which require high-quality dispersible polymer powders. This capacity expansion will support market growth and strengthen our position as the leading manufacturer of dispersible polymer powders in China." The facility, which is located in the Nanjing Chemical Industrial Park, produces VAE dispersions and dispersible polymer powders for construction, coatings and adhesives sectors.
Construction & Property Development
Indonesia: Central bank measures cool Indonesia’s property sector
Source: Indonesia Investments, 22 November 2013
After high housing demand and low interest rates fueled Indonesia’s property market’s spectacular growth in 2012 and early 2013, the growth prospects have become increasingly negative. In addition to political factors and the country’s overall slowed economic growth, Indonesia’s central bank (Bank Indonesia) introduced a series of measures aimed at cooling the market. After detecting speculative buying in the property sector, the bank introduced new policies that have boosted the minimum down payment required and stymied second home purchases.
The central bank also increased benchmark interests rates over the year from 5.75 % to 7.50 % in November, making the cost of borrowing substantially more expensive. Real Estat Indonesia, a real estate association group, claimed that between USD 434.7 - 521.7 million worth of mortgages were not distributed this month after Bank Indonesia introduced these policy adjustments, and has caused property developers to delay projects. The REI also stressed that the growth of Indonesia's property sector in 2014 will be difficult if the central bank will not lower its BI rate and if it does not ease its tighter policy regarding credit for house purchases.
Thailand: Property market may expand 10% in 2013
Source: Pattaya Mail, 16 November 2013
Thailand's property market may enjoy a 10 per cent growth this year, an expansion by 120,000 housing units, according to the Government Housing Bank (GHB). Samma Kitsin, director of the GHB Real Estate Information Centre, said there were 32,000 newly-built housing units in the first three quarters of the year and the figure will rise to 40,000 units by year-end. There were 60,000 units of new condominiums in the first three quarters with a forecast of 80,000 units this year, representing a 20% growth with an emphasis on projects along mass transit train routes. Higher land prices have led more consumers to buy condominiums instead of homes in housing estates.
Loan extensions by commercial banks have significantly slowed down in the second half of the year after 20-25% of loan applications were rejected – much higher than the normal 10-20% rejection rate. Commercial banks have achieved their loan extension targets while many financial institutes were concerned with the continued economic slump. Among positive factors contributing to the real estate business are reduced personal income taxes which consequently boost consumers’ purchasing power and higher housing demand among foreign investors who choose Thailand as their regional manufacturing base in preparation for the ASEAN Economic Community in 2015.
Cambodia: Construction industry looks ahead
Source: The Phnom Penh Post, 13 November
Cambodia’s construction industry took a major step forward in its development on Tuesday with the second summit of the Cambodia Constructors Association at DARA Airport Hotel. The summit occurred alongside an exhibition of construction products, materials and services. Association chairman Pung Kheav Se said that he was proud of the summit’s success. The association reached a total of 50 members recently, but many companies have still yet to join.. Promoting sustainable development is one of the association’s key objectives for the construction industry, he said. Cambodia’s construction sector employs more than 150,000 people and is currently in a state of rapid expansion.
Im Chhun Lim, Senior Minister of the Ministry of Land Management, Urban Planning and Construction, said the summit highlighted the substantial progress and achievements of the domestic construction industry over the past two years. It also served to improve relationships with partners in the government as well as domestic and international institutions. Im said the association will serve as “an important stage for members and the construction sector as whole” and would raise domestic construction standards. Member companies are involved in a wide variety of construction activities, including constructing buildings, roads, bridges, railways and airports as well as manufacturing electric, water and air conditioning systems.
Consumer & Retail
China: Consumer confidence in China stable in Q3
Source: Global Times, 19 November 2013
According to a Nielsen Holding’s report, China’s consumer confidence index (CCI) remained unchanged in the third-quarter, compared to the previous quarter, but remains 4 points up on the previous year. There was strong performance from consumers in China’s fourth-tier cities, as the index rose by 2 points to 109 from the second quarter, and 5 points from the fourth-quarter last year. Third-quarter performance from China’s first- and third-tier cities was down, while second-tier cities improved by 1 point in their CCI from last quarter.
Explaining why, Patrick Dodd, managing director of Nielsen China, said: "The fourth-tier cities, many of which are located at the crossroads of rural and urban China, are always regarded as regional centers for rural consumers to shop around or to have a tryout of city life. The expansion by both multinational and local Chinese companies and retailers into lower-tier cities will further unlock the consumers' purchase power in these emerging markets.” This reflects China’s central government’s efforts to shift its GDP growth pattern to promote domestic consumption.
Japan: Economy growth forecast weak survey indicates
Source: Arab Times, 26 November 2013
Japan’s economy will grow slower than previously forecasted for the current fiscal year ending in March, thanks to a decline in consumer spending and weak export performance, according to a Reuters poll. Consumer spending is likely to pick up again before a planned sales tax increase in April, to 8 % from 5 %. However, there are increasing concerns that an expected fall immediately afterward will do more damage to the economy than previously anticipated.
Economists were divided on whether the Bank of Japan has done enough to influence expectations to guide inflation up to its 2 % target. Of the five economists polled who said the BOJ has not done enough, only two said the central bank should ease policy in April to coincide with the sales tax hike. Next month, the government will announce a USD 50 billion stimulus package. According to Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute, “the government’s stimulus spending will be supportive, but there is a big chance that the tax hike will limit improvements in the economy.”
Southeast Asia: Consumer confidence slowly increasing
Source: VietnamNet Bridge, 24 November 2013
According to the latest Consumer Confidence Index released by Nielsen, the index was the highest since the beginning of the year. Southeast Asia's index in the Q3 continued to rank among the world highest, in spite of the fact that it leveled out over the last quarter, as consumers said they were saving for the future and re-prioritising their discretionary spending to save on household expenses. Indonesia had the highest index score globally in Q3, followed by the Philippines. Thailand and Malaysia both recorded two point declines, while Singapore increased by three points.
Matt Krepsik, executive director of Nielsen's Marketing Effectiveness business in Southeast Asia, North Asia and Pacific pointed out that, "although four Southeast Asian markets recorded a fall in consumer confidence compared to the previous quarter, it is important to keep these modest declines in perspective. These latest Nielsen findings suggest a level of cautious optimism throughout Southeast Asia as consumers balance their expansion of wealth between spending and channeling their spare cash into savings to ensure their future financial security."
Energy, Resources & Environment
Myanmar's energy sector poised for boom
Source: International Business Times, 14 November 2013
Myanmar could be sitting on as much as 100 trillion cubic feet of untapped natural gas reserves offshore, in addition to its onshore energy wealth. What the Southeast Asian nation doesn't have is experience and expertise, both of which it will have to get from international energy companies. Of that figure, 20 trillion cubic feet of reserves have already been proven, and the rest are considered “probable and possible” before proper exploration of the deepwater areas have even begun, according to the North Petro-Chem Corporation (Myanmar) Ltd. The company gave a presentation at a recent conference attended by the 61 local and international firms prequalified to bid for blocks in Myanmar, along with other energy players, the Irrawaddy reported on Thursday.
The 18 onshore blocks will be awarded to the highest bidders before the end of the year, while bidding for the 30 offshore blocks will end on Friday, and licenses are set to be awarded early next year. “The offshore blocks are good incentive for the investors,” said U Aung Kyaw Htoo, deputy director of the Ministry of Energy’s production planning section. “Especially the deepwater blocks — they are untapped, they have never been touched before.” What has been explored thus far looks promising. The Shwe gas field, which went into operation some weeks ago, has reserves of up to 9.1 trillion cubic feet of natural gas – enough for China to build a USD 3.7 billion gas pipeline that is now sending gas from Myanmar to China.
Thailand: Government will vow to UN that gas emission will be reduces by up to 20%
Source: Bangkok Post, 18 November 2013
Thailand will inform a United Nations climate change conference this week it remains committed to reducing greenhouse gas emissions by 7-20% by the end of 2020. The conference will continue until Friday in Warsaw, Poland. Thailand’s delegate to the 19th conference of parties, along with various Thai agencies have devised an action plan to reach the 2020 target. The plan will be ready for submission to the United Nations Framework Convention on Climate Change (UNFCCC), in 2014. The plan will focus on greenhouse gas emission in the energy and transport sectors, both of which are responsible for discharging the majority of global warming gases into the environment.
Thailand are currently waiting for the cabinet to approve the plan before submitting it to UNFCCC, they are likely to be the last ASEAN country to have done it, with even Cambodia having submitted. Funding would also be needed to reach these objectives, from the Green Climate Fund. It is estimated that Thailand will emit 500 million tonnes of greenhouse gas in 2020, 700 million tonnes in 2030 and 12 billion tonnes in 2050, compared with 345 million tonnes in 2010, failing measures to curb greenhouse gas emissions.
Australia: Environmental laws increasingly threatened, conservationists say
Source: The Guardian, 15 November 2013
Australia’s environmental laws are increasingly under threat, according to the country’s conservationists. This warning follows the government’s announcement that it would be amending its legislation that protects Australia’s endangered species. The change in question adds a clause to the country’s Environment Protection and Biodiversity Conservation Act that allows the minister to allow projects even if they have not received “relevant approved conservation advice.” The government has attributed the review to a court challenge against a proposed mine in Tasmania, after the court ruled the project could not continue until the government considered advise on the potential harm to the Tasmanian devil.
Jess Abrahams, the healthy ecosystems campaigner at the Australian Conservation Foundation, suggested that the changes would reduce government accountability in protecting endangered species. “These are weasel words, in many ways, because the minister can ignore advice with no recourse at all. Review and recourse from third parties to government decisions is an essential part of democracy, so it’s very worrying this is being removed.” This change is expected to affect both future and on-going court challenges, for example, in the Maules Creek mine in NSW.
Malaysia: Malaysia’s now has dynamic financial services industry
Source: Bernama, 23 November 2013
Malaysia’s banking industry has modernized along with the rest of the country, and produced a dynamic financial services industry that is now critical to the nation’s economy, according to Malaysia’s Prime Minister Datuk Seri Najib Tun Razak at RHB Bank's Centennial Dinner Saturday night. He said the country has great expectations for the sector to continue to play an important role in the nation’s future development. However, he pointed out that it is important to ensure that risk is well managed to mitigate potential problems. "We must therefore continue to strive for long-term sustainability in the management of our economy and our businesses," said the prime minister.
On Malaysian’s current fiscal situation, the PM said the budget for 2014 is based on three fundamental considerations: boosting the economy, commitment to transformation, and the strengthening of economic resilience. The budget has strengthen global expectations as, Moody’s raised its outlook on Malaysia to positive, and the World Bank, placed it as the sixth easiest place in the world to do business, up from twelfth. These signs reflect the government’s “political will on fiscal consolidation to strengthen national revenue.”
China: China’s banking liberalization positive for Australia
Source: The Conversation, 26 November 2013
The Third Plenum once again signaled the China’s intention to open up its financial markets to global competition. The move would bring with it substantial risks both for China and Australia. Two key elements up for reform are: 1) the removal of many of the regulated prices in the financial system and 2) the floating of China’s currency, the Reminbi, and the allowance of freer flows of international capital. Deregulating lending and deposit rates are crucial to this. However, the deregulation of lending rates has been problematic and encouraged China’s shadow banking sector. And the next big step, opening up deposit rates, has prompted concerns that banks will have issues competing for deposits.
Floating of the currency will provide a number of opportunities. While Australian banks, wealth managers and insurers have had issues establishing market position, thanks to current regulations, this should change in the next phase of reforms.
But the strongest opportunity for Australia will come from the liberalization of the Chinese capital market to allow freer flows of money in and out of the country. The IMF has suggested that, while it’s difficult to see whether China will finish up importing or exporting capital, the size of the flows both in and out will significantly rise.
Korea: International banks scaling down operations
Source: The Korea Times, 23 November 2013
After apprehensiveness in the past about Korea’s domestic banks ability to compete when major international banks began to enter the Korean market place some years ago, these fears have been largely placated. They have been proven unfounded amidst the current climate that is seeing major foreign banks trim their Korean operations, including branches and staff. Standard Chartered Bank Korea, Citibank Korea, and HSBC are all among the institutions undergoing restructuring. Korea’s economic slump and the low interest environment have made times difficult in the banking sector.
According to researcher Kim Woojin at the Korea Institute of Finance the foreign banks in the country will likely focus on cost reduction rather than on asset growth, as profitability is much lower in Korea than in other Asian countries. “To yield more profits, they had to choose between more investment and closure. But they may have thought future profit is unforeseeable, so they chose the latter,” Kim said. Standard Chartered Bank, for example, has already reduced its branches by one fifth, and additional shutdowns may drop the number to 250 from the current 350.
Logistics & Transportation
Cambodia: Construction of port terminal set
for early 2014
Source: Hellenic Shipping News, 27 November 2013
Construction on a new multi-purpose terminal at Sihanoukville Autonomous Port is expected to begin in early 2014 to support Cambodia’s rising exports. The new terminal, linking sea to shore, will occupy three hectares and is expected to be finished by late 2016. It will cost close to $80 million and will be funded with a loan from the Japanese government. Var Sonath, deputy director of Sihanoukville Autonomous Port, said that the port is needed to support Cambodia’s growing agricultural and garment exports.
He said “As Cambodia’s economy keeps growing, we see an increasing number of agricultural products being exported. The new terminal will be built to keep up with the growth.” The terminal was originally slated for completion in 2014, according to Sonath, but was delayed as designs were changed to include more space for warehousing. With the government targeting the export of one million tonnes of rice in 2015, the president of the Federation of Cambodian Rice Exporters, Kim Savuth, said he welcomed the new construction.
Indonesia: Pelindo III will spend USD 68 million on new cranes
Source: The Jakarta Post, 26 November 2013
State-owned port operator PT Pelabuhan Indonesia III (Pelindo III) plans to spend USUSD68.2 million on container cranes and grab ship unloaders to help improve efficiency at its four main ports in Java and Kalimantan. Pelindo III spokesman Edi Priyanto said the new cranes and unloaders were expected to arrive in 2015. Edi said “According to the agreement, we will receive the container cranes in the next 21 months and the grab ship unloaders in the next 15 months,”
The eight container cranes and two grab ship unloaders had been ordered from China’s Dalian Huarui Heavy International Co. Ltd. and would be used at Tanjung Perak Port in Surabaya (East Java), Tanjung Emas Port in Semarang (Central Java) and Trisakti Port in Banjarmasin (South Kalimantan). Meanwhile, two unloaders for dry bulk purposes will be used at the USD297.5 million Teluk Lamong multipurpose terminal in East Java, which will start initial operations in the first half of 2014. Container traffic at all ports that we manage increases every year. Thus, investment in cranes and other facilities to help accelerate loading and unloading activities has become important, plus it will improve our services.
China: Shenzhen taking no chances on Hong Kong lead
Source: Hellenic Shipping News, 25 November 2013
Shenzhen overtook Hong Kong's port business this year in a move that was widely expected, and anyone who thought it was a temporary phenomenon, induced by a labour strike, had better think again. Da Chan Bay Terminal One, the fastest-growing port in Shenzhen last year, says it wants to triple its throughput over the next three years. The port, controlled by Wharf's Modern Terminals, expects to see its annual throughput reach 1 million 20-foot equivalent units this year.
It says it has already started talk with the Shenzhen government and Yantian Port on a phase-two terminal that would add four berths of at least 3.5 million teu capacity to the Shenzhen west port cluster before 2020. "The Shenzhen government said it's time to plan for phase two because it takes five years from the beginning of real discussion to the commissioning of the first berth," said Benjamin Lai, chief executive of Da Chan Bay Terminal One. "You can't wait until your existing capacity is fully utilised." Terminal One's 5.5 million teu capacity is operating at just one-fifth of capacity so far, but throughput has more than doubled to 742,000 boxes during the first three quarters.
Manufacturing & Industrial
India: Manufacturing growth reviving, needs
Source: Times of India, 22 November 2013
With the current depression behind it and India’s economic revival well underway, the manufacturing sector will quickly return to the 14-16 % growth rates that were last seen a decade ago, according to Ajay Shankar, Member Secretary of the National Manufacturing Competitiveness Council. He delivered the comments at the CII 12th Manufacturing Summit, and called on industry leaders to make the case to the government to assist the construction of a larger manufacturing sector. India’s government recently issues a plan to boost national manufacturing by 100 million jobs.
Shankar also called on the industry to increase its creativity in taking on problems related to economic growth. For example, rather than bemoaning labour laws, he suggested companies formulate mutually beneficial strategies to set up new factories. He stressed that the Indian manufacturing sector is strong in all sectors and is receiving global recognition as an excellent manufacturing location. The views of the NMCC Member Secretary were echoed by a number of India’s leaders in manufacturing, as they expanded on other industry problems and opportunities at the Summit.
Singapore: 2013 GDP growth forecast boosted on manufacturing strength
Thanh Nien, 21November 2013
After an unexpected increase in Singapore’s economic performance last quarter, the central bank has opted against a stimulus package. GDP growth in 2013 is expected to be between 3.5 and 4 %, with around 4 % expected for 2014. This growth is thanks to expected export demand rebounds in global markets. According to the trade ministry, “externally-oriented sectors such as manufacturing, wholesale trade and transportation and storage are likely to support growth, in line with a slight pickup in the global economy.” While “domestically-oriented sectors such as construction and business services are also expected to remain resilient in the fourth quarter.”
The 1.3 % quarter-on-quarter expansion exceeded all 15 estimates in a Bloomberg survey, where the median was for a 0.3 % drop. As for short-term monetary policy, the central bank said that it will maintain a modest and gradual appreciation of the currency, forgoing stimulus as labor shortages and record home prices fuel inflation. The USD 85 billion monthly bond purchases may be reduced as the economy improves.
China: Manufacturing shows growth slowdown in November
Source: Wall Street Journal, 21 November 2013
A preliminary analysis of China's manufacturing activity showed a mild weakening of growth in November. The sector was weighed down by diminished new export orders, and suggested the Q3 rebound in the world's second-largest economy may be losing steam. HSBC’s preliminary Purchasing Managers' Index dropped to 50.4 in November from 50.9 in the previous month. That leaves it in positive territory, holding above the key 50-mark that separates expansion from contraction. Despite the weaker expansion, the result was still the second-best reading in the past seven months.
China's economy showed an overall increase in the Q3, posting year-over-year growth of 7.8 %, following two quarters of slower growth. The economy is widely expected to breach the government target of 7.5 % for the full year, but many economists are expecting a slower pace of expansion next year. Weaker new export-order data showed a decline though the measure of new orders overall showed an upturn. November also saw the Third Plenum of the Communist Party, where the country’s leaders mapped out a development plan that envisioned ambitious economic and social changes that could maintain growth over the longer term but could mean less of an expansion in the near term.
Pharmaceuticals & Healthcare
Bangladesh: Healthcare shows great
improvement despite poverty
Source: The Guardian, 21 November 2013
A Lancet study has shown Bangladesh has had remarkable success in improving healthcare, with much of it attributed to the empowerment of women and the reach of NGOs. Despite low spending on health, a weak healthcare system and endemic poverty, Bangladesh's life expectancy is superior to most of the region’s other countries, its infant mortality, under-fives mortality and maternal mortality rates are also better than other countries in the region, and Bangladesh is ahead of Pakistan in all education and health indicators. Although survival rates have improved, nearly half of children in the country have chronic malnutrition, a problem shared with India. Dramatic successes in tuberculosis treatments rates have also been achieved.
Much of these achievements, according to the Lancet, are due to Bangladesh's pluralistic health system that pulls in government and NGOs and emphasizes the role of women in delivering action on family planning, immunization, oral rehydration therapy, tuberculosis and vitamin A supplementation. The report highlighted the importance of NGOs such as Brac, Grameen and Bangladesh Diabetic Samity in contributing to the improved health of poor people in rural areas. Though, opinion on the role of foreign aid is mixed. For future outlook, the report said that despite annual economic growth of 6 %, persistent poverty would continue to limit health progress.
Singapore: ICT solutions for healthcare challenges
Source: Future Gov Asia, 21 November 2013
Singapore is facing a fast ageing population with increasing life expectancy, and a growing burden of chronic diseases with a shrinking proportion of working citizens. To deal with these challenges, Singapore’s healthcare system is increasingly integrating care delivery with the growing participation of the community – general practitioners, polyclinics, step-down care facilities such as community hospitals and nursing homes, non-governmental and voluntary welfare organisations. The system has been transformed into Regional Health Systems that focus on better teamwork and communication across different health settings. IT solutions are being used to manage this reformulation of delivery.
To ensure patient care is fully coordinated and seamless within healthcare clusters, Singapore’s IT systems have moved beyond the episode-centric model, to link various stages of care – from inpatient to outpatient to home care. This is a partnership where technology, clinicians, medical personnel, caregivers and healthcare administrators work together to provide patient-friendly healthcare services. Previously, care was delivered only at a physical facility, and often as a ‘one size fits all’ solution. Using mobile devices and wireless broadband, healthcare can now be personalized and integrated into people’s lifestyles, accessible wherever, whenever. The technology can analyze and interpret population data to plan and deliver services in a more efficient and effective way.
Australia: Aging population to impact healthcare costs, action needed
Source: The Pharma Letter, 22 November 2013
A report by the Productivity Commission, the Australian government's independent research and advisory body, titled An Aging Australia: Preparing for the Future, has said the country is facing a major slowdown in its per capita national income and productivity outlook while the population is aging. It projected that, without proper policy interventions, net national income per capita, the best single measure of national prosperity, may grow by only 1.1 % per annum over the next five decades. This population will consume 6 % of the GDP by 2060, compounding the problem.
The report also noted that older people consume more healthcare resources than others in value terms, reflecting the higher incidence of disease among this segment and the complexities associated with comorbidities. It also cited figures that showed people aged 65 years or more used about 55 % of Pharmaceutical Benefit Scheme scripts and received 51 % of total government expenditure on the PBS, but represented only 14 % of the population. One of its conclusions was that by shifting more people into higher cost groups, population ageing will increase healthcare costs.
China: PE should manage enthusiasm in China
Source: Private Equity International, 21 November 2013
Private equity companies should manage its enthusiasm for China due to its corruption levels, Roberto Paganoni, head of Swiss private equity firm Capital Partners, said in a speech to the Association of the Luxembourg Fund Industry. He pointed out that anti-corruption laws are largely ineffective because bribery is benefiting the very people meant to enforce them, and that it reach all the way to the country’s leaders. Paganoni’s concerns are supported by research. Kroll, for example, detailed in a 2013 report that procurement fraud has substantially increased.
Respondent companies covered in the report that were affected by “vendor, supplier or procurement fraud,” at 18 %, were significantly higher than in 2012. Moreover, twenty % of companies said they had been affected by management conflict of interest in China, compared to only 12.5 % the previous year, and companies citing intellectual property theft doubled to 15 % from the previous year. In any event, the rise in corruption shouldn't necessarily put off GPs from marketing in the country, according to Paganoni, who concluded that Chinese insurance companies could be attractive private equity investors.
India: PE investment in India continues to fall
Source: Business Standard, 25 November 2013
Private equity investment into India’s small and medium enterprises is continuing to fall, as it declined from USD 1.3 billion in 2012 to USD 970 million in 2013, marking a decrease of 25 %. PE investors said they are waiting and watching owing to the slowdown, and that this trend would continue for the next couple of years. When the economy improves, however, SMEs offer a good bet for funds that are already in the process of raising money from their investors to launch new funds focusing on SMEs. A partner in a PE fund pointed out that funds that had invested earlier are yet to report any profitable exits, though many SMEs can still attract investors, provided they showcase the unique advantages they can bring to the table. For instance, some branded ready-to-cook products are attracting interest, thanks to their uniqueness backed by innovation, he added.
A senior official from an advisory firm that helps SMEs raise money from PEs said that funds with a focus on deals of up to US 30 million were major contributors to the slowdown in investments. PE funds have been unable to raise second-round funding from their investors, who have negative perceptions about India," he maintained. The partner added that fewer than 20 per cent of the funds that had invested in deals of up to USD 30 million four or five years ago had made money. In spite of this, some investors - including International Finance Corporation, the investment arm of World Bank - are bullish and continuing their support for the SME sector. Recently, IFC's director, South Asia, Serge Devieux said that IFC may invest USD 400 million in equity deals in India in the current financial year. It also recently decided to support some lenders and investors who will focus only or mainly on SMEs.
Hong Kong: HK should allow limited partnerships to attract PE
Source: South China Morning Post, 27 November 2013
The Hong Kong government should consider introducing a change in the law to allow private equity funds to be set up as limited partnerships to further enhance the city’s fund industry, said Florence Yip Chiu Kwai-fong, a member of Financial Services Development Council. The FSDC, a government advisory body, released its first set of reports last week on what can be done to enhance the city’s competitiveness. Yip also said that “if the Hong Kong government would consider introducing a change in the law to allow private equity funds or certain non-retail fund products to be set up as limited partnerships, it would attract more international fund houses to set up such funds here and hence promote the fund industry in Hong Kong.”
She pointed out that many overseas PE funds are set up as these kinds of partnerships. As they allow investors to enter a limited partnership as passive limited partners with limited liability, disallowing them from controlling the management and investment of the funds, which are the duties of a general partner. The FSDC has submitted this suggestion to the government of Hong Kong, with consultation aiming to be completed in a year.
Technology, Media & Telecommunications
Vietnam: Untapped market potential in telecom
Source: Vietnam Bridge, 27 November 2013
Vietnam’s telecom market is one of the most competitive in Asia. According to an expert ICT in the country, its “internet and mobile-phone coverage has increased, and quality has improved. Prices have fallen, too, which allows rural and remote areas to have more access.” Average costs for fixed and mobile phone users have also continued to fall. Prepaid mobile phone users now account for 90 % of the mobile phone market, which means low turnover and low profit. Fixed phones have declined in the number of users and turnover.
The internet market includes three large companies, including Viet Nam Post and Telecommunication Corporation, Viettel Group and Financing and Promoting Technology. For information technology, the Government has issued many incentive policies for enterprises that have helped improve electronics and hardware as well as software and digital content growth. Despite the average growth of these three sectors, added value has been limited, and work productivity remains low in comparison with other countries in the region. Nguyen Manh Hung, deputy general director of Viettel Group, said that a new definition should be created for the national data network. As for the future direction, he said that “telecommunication service providers will give up their current major services because telecommunications combined with information technology has entered every area of our lives, and created four to five times higher income than telecoms.”
Korean technology offers strong business potential
Source: Gulf Times, 27 November 2013
Nine Korean companies in the consumer goods industry met with 50 local companies in Qatar as part of a two-day trade mission. The Korean companies, made up of primarily small and medium enterprises, were promoting their advanced technologies to Qatar, especially in biotechnology, health and medical care, in an effort to show their business potential. The delegation was supported both by the Korean government and the Qatari state. The Korean ambassador to the country has put his weight behind the group by attesting to the credibility of each manufacturer, saying they are bringing the right technology, expertise and technical knowhow, which can be deployed in Qatar.
The range of Korean companies spans manufacturers of baby skincare products, hand dryers, pet care products, automotive service equipment, to spinal fixation system and golf simulators. Abhishek Pant, marketing consultant of the Korea Trade-Investment Promotion Agency (Kotra), stated that they “customized research” for the delegation to meet the right companies. Kotra, known as Korea Business Centre in Qatar, is the Korean government’s arm that promotes and facilitates international trading relations. It was established in May 2012, and has 121 branches in 80 countries around the world.
China: Skype announces new partnership
Source: China Daily, 26 November 2013
Microsoft Corp’s online chatting arm, Skype, announced a new joint venture in China after ending its six-year partnership with Li Kashing-controlled media conglomerate Tom Group. Skype’s new partner will be GMF, an Internet communications company co-created by Founder Group and State-owned newspaper Guangming Daily. Details of the partnership deal were not disclosed. The lesser-known GMF will help Skype build a good relationship with the Chinese government because of its parent companies’ backgrounds, said Judd Harcombe, head of Skype’s global market development.
He added that Skype, which specializes in online instant messaging and video call services, will launch more localized services for Chinese users in order to boost its user base. Chen Jiandong, vice-president of Guangming Daily’s flagship website, said the joint venture will help GMF to better engage the mobile Internet market and develop new-media business. Established in 2003, Skype has more than 300 million active users globally. It entered the China market in 2004 and achieved a sizeable user population among high-end customers. Microsoft acquired Skype in 2010 for USD 8.5 billion to replace its Windows Live Messenger instant-messaging service. Local services such as WeChat and QQ have been mounting a strong threat to the United States company since 2010. QQ is said to be the most-used online chatting service in China based on customer count. The company declined to provide a figure.