Asia News Update
Japan: Country unable to step away from nuclear power
Source: Bangkok Post, 3 March 2014
Since the March 2011 tsunami and the ensuing meltdown of the Fukushima Daiichi reactor, the government has begun a USD 30 billion clean up and shut down almost all of its nuclear plants. 17 of these reactors are currently undergoing inspection for possible reopening whilst for others, the closure is permanent. The government of Shinzo Abe may take a bold step in attempting to restart some of the nuclear reactors. A survey suggested that over 50% of the Japanese population were not in favor of the reopening of the reactors. The Abe government’s proposal is meant to provide a plan for Japan’s energy future in the next 20 years.
Energy demand, after all, will continue to rise in the years ahead as Abe’s policies have helped revive the economy after two decades of stagnation. Nuclear energy met about 30% of Japan’s energy needs before 2011 and the government had hoped to raise the figure to 50% but all this went out of the window after the Fukushima disaster. However some analysts believe that the newer generation is power-hungry and that electricity has to come from some kind of fuel, be it fossil fuel or renewable sources Renewable energy has yet to make a big mark on the globe and in Japan it accounts for a mere 2-3% of the energy supply, while hydropower accounts for 7.5%. The remaining 90% or so will have to come from other sources and fossil fuels are certain to take a big share.
Japan: Auto output up 14.5%
Source: Japan Times, 28 February 2014
2014 is off to a great start for Car manufactories. Japan has seen a rise in the production of cars in January, up 14.5% to 860,803 units, from January 2013. This is the 5th straight month increase to hit Japan. The productions of cars, trucks and buses have increased by 15.3%, 9.8%, and 14.7% respectively. The dramatic increase in domestic market car sales is due to strong demand ahead of a 3% rise in Sales tax in April of 2014.
Exports fell by 4.9% to 326,696 units. This is due to the increasing number of manufactures shifting production overseas. The dramatic increase in the domestic market car sales is due to strong demand ahead of a 3% rise in Sales tax in April of 2014. This increase in tax brings the total amount to 8%, which is still a lot lower than other countries (UK 20% VAT). Exports to Asia were weak in January. Political unrest in Southern Asia can be to blame. Thailand’s first time car buyers government incentive program ended in 2012. 2014 exports to Thailand fell by 1/3.
South Korea: Car sales rise due to solid demand
Source: National News Agency of Malaysia, 3 March 2014
Japan is not the only country to see a dramatic rise in car sales on the domestic front in 2014. Five carmakers, including Hyundai, Kia, GM Korea, Renault Samsung and Ssangyong, in total sold 689,100 units in February. An increase of 5.8% compared with February 2013. Domestic sales rose by 8.3% from 2013. These figures may be as a result of the increase in the number of business days as the Lunar New Year moved to January from February 2013. Due to the change of the lunar calendar, results are hard to assess. At this stage it may be unrealistic to compare February 2013 with February 2014.
Overseas sales are up 5.3% year on year to 582,096 units due to shipments made by Hyundai and Kia. The five carmakers saw their domestic market rise last month. Sangyong’s sales have seen the biggest increase in the domestic market, up 26.9%, followed by Renault Samsung and Hyundai with increases of 16.7% and 8.2% respectively. Due to these results, car manufacturers seem to be confident that 2014 will be a promising year for them both domestically and overseas.
India: High fuel costs and tighter lending norms keep car sales down despite excise duty cut
Source: Business Standard, 2 March 2014
While excise duty was cut last month the car sector is still feeling the pain of high fuel costs and tighter lending practices. Eight of the top seventeen automobile companies reported a 2.3% growth in sales compared to 2013. These results are sluggish. The excise duty was cut on compact hatchbacks, large sedans and utility vehicles. But manufacturers are not seeing the results they expected.
India’s largest passenger vehicle company, Maruti Suzuki, reported a 1.8% rise in domestic sales. Hyundai sold just 3 units more than 2013. Utility specialist M&M hoped to see the biggest rise in sales due to the cut in excise duty. In fact, they saw the biggest drop in sales, down 17.5% since 2013. Honda’s City Sedan overtook Hyundai’s Verna as the segment leader.
China: BASF to construct specialty amines plant in Nanjing
Source: Chemicals Technology, 4 March 2014
BASF has unveiled plans to construct a new plant to produce specialty amines at its existing wholly-owned site in the Nanjing Chemical Industry Park in China. The plant will mainly produce dimethylaminopropylamine (DMAPA) and polyetheramines (PEA) after coming on-stream in 2015. With the new facility, BASF plans to further strengthen the company's global production network, and also complement its existing DMAPA and PEA facilities in Germany and the US. BASF Intermediates division president Sanjeev Gandhi said: "BASF is a leading supplier of DMAPA and PEA globally, and this investment reflects our continued commitment to meeting the growing market demand in Asia Pacific. Our ability to produce these products within the region will strengthen our supply reliability and better serve our customers with shorter lead times."
BASF Intermediates Asia Pacific senior vice-president Dr Guido Voit said: "The investment is driven by the increasing consumption of personal care products by the growing middle class in China and in Asia. Additionally, the development in the construction, wind energy and coatings industries in China and other emerging countries in Asia will continue to drive demand for PEA." Primarily consumed in the production of betaines, DMAPA is also used in various other applications including dye-stuff intermediates, lubricant additives, electroplating and coupling agents for rubber.
Australia: Shell to sell downstream businesses to Vitol for USD 2.6 billion
Source: Business Standard, 22 February 2014
Shell has entered into a binding agreement to sell its Australia downstream businesses (excluding Aviation) to the Dutch firm Vitol for a total transaction value of approximately USD 2.6 billion. The sale covers Shell’s Geelong Refinery and 870-site retail business - along with its bulk fuels, bitumen, chemicals and part of its lubricants businesses in Australia. It also includes a brand license arrangement and an exclusive distributor arrangement in Australia for Shell Lubricants.
It does not include the Aviation business, which will remain with Shell Group, or the lube oil blending and grease plants in Brisbane, which will be converted to bulk storage and distribution facilities. The majority of Shell’s downstream staff in Australia will continue to operate the business under its new owner. Shell’s upstream operations in Australia, in which it will continue to invest, are not impacted by this announcement. Ben van Beurden, Shell’s Chief Executive Officer, said: “Australia remains important to Shell, but we are making tough portfolio choices to improve the company’s overall competitiveness. Our customers will continue to benefit from the quality associated with the Shell brand and we are confident Vitol will invest in and grow the business.”
South Korea: Showa Denko to increase N2O production capacity
Source: Chemicals Technology, 27 February 2014
Showa Denko (SDK) has signed a work commissioning agreement with Dooam Industrial to increase its capacity of high-purity nitrous oxide (N2O) in South Korea. Both firms have also agreed to jointly build a purification facility within the premises of Dooam's plant near Seoul. After completion, the purification facility will have the capacity to produce 600t per annum (tpa). The facility is expected to be completed by the end of 2014, and commercial shipments are planned to commence in 2015. SDK's total high-purity N2O supply capacity will increase to 1,800tpa upon completion of the new facility.
The company is currently operating a 1,200tpa plant at Kawasaki, Japan. SDK said high-purity N2O is used for deposition of an insulating oxide film in the process of chemical vapor deposition (CVD) for producing semiconductors. The company noted that demand for high-purity N2O is increasing at a rate of 10%-15% a year in Asia, and demand is also growing as it is used as a source of oxygen for oxide film in the process of producing displays. SDK has decided to meet the increasing demand for high-purity N2O in East Asia by developing an additional production site in South Korea and intends to further expand the business globally.
Construction & Property Development
Singapore: Investors are optimistic about 2014
Source: Singapore Business Review, 28 February 2014
Singaporean investors seem to be confident that 2014 will bring them a high return on their investment. 36% of investors believe that their most likely investment will be in property while 34% of investors think equities will be the best investment of 2014. Singaporean investors think that stocks will perform best 2014 although they do believe it will be the riskiest asset class of 2014, ahead of property and the US Dollar. Investors also plan to add precious metals, emerging and developed market equities to their portfolios.
Optimism is high in Singapore but investors do think that returns on investments in property and metals will not be as high as they were in 2013. 79% of Singaporean investors believe that they will reach their 2014 financial targets. Although this level of optimism seems to be high, it is slightly lower than the US, Malaysia and Hong Kong where over 80% of respondents indicated that they were optimistic. Diversifying your portfolio looks to be a good option across the board for 2014.
Thailand: Chiang Mai sees property boom thanks to tourism
Source: Bangkok Post, 3 March 2014
On expansion of Chiang Mai’s airport combined with the Asean economic integration the future looks bright. Chiang Mai is an attractive destination due to future projects that can help the province’s economy and growth. They are upgrading road networks which will connect with the R3A highway that’s connects southern China, Laos, Myanmar and Thailand. Also improving the rail routes, cutting travel times in half and increasing international arrival and domestic departures at the airport.
Interest from Big Brand developers from Bangkok has increased the quality of the local developers, which in turn increases competition in the market. Although all this sounds good, there is a negative factor. The new town planning regulations do not support the city’s growth structure. The current political situation is unsteady which had a negative impact on the market sales for January. Tourism is the key driver to Chiang Mai’s economic growth. Chinese tourists have increased. They are hoping that there will be a future demand of foreign buyers as tourism increases.
India: Construction slump hits home
Source: Wall Street Journal, 3 March 2014
A fall in construction activity has reduced the creation of new jobs in the last two years in India. The construction sector, India’s second largest employer, has projected growth at a low of 1.4% average between 2012-2014. Between 2009-2012 the sector added 6.2 million jobs, growing at 7.7%. Third quarter results for 2013 show that the sector grew only 0.6%. Agriculture is still the No 1 employment sector in India.
Lower job creation will play a role in the up and coming national elections due in May. Road construction has not picked up and no projects are taking off. High interest rates have hurt the residential sector. Clients are having trouble raising funds, which hinders the payment of contractors. DLF, India’s largest developers have shifted targets by at least 2/4 quarters. Inflation is rising, cost is rising, and demand is still weak. India still has future hope. They have healthier forecasts for the second half of 2014 hoping that after the elections a stable government will be introduced.
Consumer & Retail
China: Services sector improves in February due to the new lunar year
Source: Reuters, 3 March 2014
February 2014’s data on the manufacturing and services sector are hard to assess at the moment. The recent results show that the services industry has risen but the manufacturing sector has struggled. These results are not definite which makes it difficult to assess the strength of the Chinese economy early 2014. If results are believed, the services sector is doing well but the manufacturing sector is not doing so well.
Non-manufacturing PMI increased to a 3 month high to 55.0 while the manufacturing PMI has had a third straight decline to 48.5. The “50” mark separates contraction from expansion. Investors are concerned, China and US factory sectors are dragging while the EU manufacturing sector had a solid start to 2014. Don’t be alarmed. Manufacturing sectors close during the holidays as the service industry explodes. This could be the reason that the manufacturing sector may look to be in the contraction stage at the early stages of 2014. China’s economy in 2013 rose 7.7% exceeding forecasts of 7.5%. China also feels that 2014 forecasts will be exceeded.
Japans: Consumer spending strengthens
Source: Daily Forex, 28 February 2014
Japans economy has been plagued with deflation over the past 20 years. The population have been delaying major purchases knowing that the price of goods always drop over time. While this sounds like a dream to the low budget consumer this causes major economic problems for the country. It causes weak domestic demand and puts pressure on the job front, which in turn starves the economy of investment.
Politicians have blamed deflation for their dept. to GDP ratio of 226% ( $9 trillion) which is the world’s largest dept. Adding to this problem, Japan has an aging population and rising social security costs. Sales tax will increase in April by 3% (8% total), which is still extremely low compared with the UK’s VAT of 20%. This increase in tax has led to an increase in consumer spending and a greater domestic production to meet demand. Retail sales were up 4.4% in January compared to 2013. This increase was seen mainly in the high cost products such as vehicles, durable goods and property.
Indonesia: Consumers less optimistic on business conditions
Source: Business Times, 5 March 2014
Indonesia's consumers were less optimistic in February 2014 when compared to the previous few months, with many expecting a slowdown in business conditions over the next six months, a central bank survey revealed. The consumer confidence index eased to 116.2 from 116.7 in the previous reading. A reading above 100 indicates that consumers in general are optimistic.
However, the Bank Indonesia survey did show that there was a feeling of optimism over the economy, compared with the last six months, mainly due to manageable price expectations which had helped keep consumer confidence relatively strong. Prices pressures are expected to ease off in the next three months, despite a general election in April, then see an upturn during the Muslim fasting month in July 2014, after which they will ease once again.
Energy, Resources & Environment
China: Government to press on with new nuclear reactors
Source: Oil Price, 2 March 2014
China’s Ministry of Environmental Protection given the green light for the construction of two new nuclear reactors in the eastern coastal province of Shandong. The plan calls for the construction of two Westinghouse AP1000 reactors, at an estimated cost of USD 5.1 billion. The purchaser will be the state-owned utility China Power Investment. China hopes to be the first country to install Westinghouse’s third generation design, although there are two reactors under construction in the U.S. using the AP1000 design. China has a sense of urgency that is not felt elsewhere, and for good reason. Its cities are choked in smog, and aside from needing more electricity capacity to power its growing economy, it also needs to find cleaner sources of power and shut down some coal plants. Thus, China has ambitious plans for nuclear power.
While China only has 14.6 gigawatts of nuclear capacity as of 2013, it plans to scale up nuclear reactors to a combined installed capacity of 58 GW by 2020. It then hopes to nearly triple that figure to 150 GW by 2030. It has 31 reactors under construction and about 8.6 GW are expected to come online in 2014. China’s plans for nuclear are impressive, but the torrent pace at which they are installing new reactors is starting from a small base. Nuclear power only accounted for around 1% of China’s electricity in 2012, compared to two-thirds coming from coal. And even if China meets its 2020 goal of 58 GW of installed nuclear capacity, it will account for only half of what the U.S. has installed currently.
Vietnam: Government ponders barriers to prevent waste imports
Source: Vietnam Net, 25 February 2014
The National Assembly is considering installing barriers and putting strict control over the imports before Vietnam turns into the waste ground for developed countries. Law compilers have been criticized heavily for their decision to allow importing some kinds of scrap which could be used as the input materials for the domestic industrial production. Understanding the serious consequences to be brought by the waste imports, the compilers drafting the amended law on environment protection still decided to allow importing some scrap metals and alloys, paper, glass and plastics for domestic production. The import scrap cannot recycle themselves. Therefore, Hien has strongly proposed to prohibit the scrap imports in order to rescue Vietnam from becoming a waste ground for developed countries.
According to the Chair of the National Assembly’s Economics Committee, Vietnam cannot prohibit the scrap import, or it would violate the international commitments. However, it is necessary to set up technical barriers to restrict the import of scrap. There are 160 enterprises in Vietnam that import scrap, of which, 75 % of enterprises import scrap to serve their production and recycling, while the other 18 % import scrap for the domestic distribution and the remaining import under the authorization by others. According to the Ministry of Natural Resources and the Environment (MONRE), Vietnam imported 2.9 million tons of scrap which could be used as a material for production, including scrap iron, plastics, paper.
Indonesia: Construction of more hydropower plants to boost alternative energy
Source: The Jakarta Globe, 27 February 2014
Indonesia’s government plans to build hydroelectric plants at 239 dams owned by the Public Works Ministry, as part of its renewable energy initiative. The rental fee will be determined by the Finance Ministry. The government has yet to set a feed-in-tariff — the rate set by the government at which state utility Perusahaan Listrik Negara buys electricity from private power producers — under the plan. The government is yet to determine whether such projects will be assigned to state enterprises or given to private investors.
In 2014, as part of the project, the government plans to kick-start the construction of four hydropower plants in East Java. The combined capacity of these four new plants is forecast to reach as much as 146.52 megawatts. Private investors have also expressed interest in building similar facilities in five locations, which would have total power capacity at around 16.94 megawatts. As of 2013, hydroelectricity accounted for 8.78 % of the country’s installed capacity of 46,428 megawatts.
Vietnam: Government pushes banks to lower lending rates
Source: Vietnam Briefing, 3 March 2014
Inflation begins to ease throughout the country. Vietnamese banks are trying to reduce their high level of excess capital. In order to get more money to flow through the economy, banks are lowering their lending rates, which in turn will lower business-borrowing costs. The Central Bank believes that by following these strategies the economic environment will improve. Commercial banks are also being encouraged to lower the lending rates to fewer than 15%. This is great news for investors.
At the moment banks have lowered their rates, but the problem still remains. The rates tend to change to floating interest rates, resulting in an overall higher rate than what the government is looking for. Lowering the lending rates is a positive for the country but the Vietnamese banks are still shadowed by a 15% level of bad debt. In order to spur credit increase and lower costs of borrowing, banks have also made cuts to rediscounts, refinancing and overnight rates. These plans will allow investors more access to loans at a lower cost, increasing the rate at which projects can be completed and contractors paid. With more projects on the pipeline, employment will increase equaling a healthier economic environment all round.
Malaysia: Strong growth in the year ahead
Source: The Malay Mail, 27 February 2014
Malaysia’s two biggest banks recorded record annual profits and they are confident that a number of government curve balls on the property sector will not impact on future loan demand. Maybanks 4th quarter profits rose 19% in 2013. The banks second straight year of record earnings due to loan growth and the strength in Islamic Banking. CIMB Group Holdings Bhd logged a 5th consecutive year of record profits. The banks are benefiting from a domestic property boom and have plans to move to diversify into a fast-growing Southeast Asia.
While domestic house loans are the bank bone of Maybank and CIMB, both banks do expect overall loan growth will slow to 9/10% in 2014 from the industry average of 10.6% in 2013. Due to easy credit and robust demand the country might be in the midst of a future property bubble. Malaysia has the highest household debt in Southeast Asia, equaling 86% of GDP. Household lending accounts for 57% of outstanding bank loans. In order to burst the bubble before it starts, government has proposed a ban on buying property in bulk while the central bank has cut the maximum length of mortgages. On the up side, rising inflation may allow the central bank to keep interest rates unchanged, at 3%, for the 3rd straight year.
Singapore: Banks' loan growth seen to moderate to 10-11% in 2014
Source: Singapore Business, 4 March 2014
In Singapore, January's 18.2% hike could just well have been a fluke. Business loans may have expanded in January, helping lift system loans growth to an 18.2% year on year increase, but expect more subdued activity for the rest of 2014. "Notwithstanding the healthy increase seen in January, we expect banks’ loans growth to moderate to 10%-11% in 2014, with demand for credit dampened mainly by softness in the property market," said an industry expert based on their f business loans growth data in January 2014.
However, banks are not overly concerned about the high loan-to-deposit ratio as they have been tapping USD deposits and commercial papers as alternative sources of funding. Investors looking at Singapore banks are advised to pick DBS. "We expect the group to deliver stronger earnings growth 2014F: +8.6% vs the sector’s average +7.2%, helped by sustained corporate lending, intra-Asia trade flows and healthy momentum in its fee income businesses," The industry expert concluded.
Logistics & Transportation
Vietnam: First tramway construction in Hanoi marred by delay
Source: Thanh Nien News, 3 March 2014
Hanoi mayor Nguyen The Thao became furious about the slow and delayed construction of the capital city’s first tramway. The 12.5 kilometers (7.8 miles) tramway project, which broke ground in 2010, was originally scheduled for completion in 2015 before it was delayed to 2017 and recently to 2018. Thao instructed Tu Liem District authorities to complete site clearance by late April and the investor to reach an agreement with the project consultant on compensation in March. “If there is no improvement, the city will launch an inspection into individuals and entities involved,” he said. But he said there would be no clear deadline for the project without pointing out the culpability of individuals involved.
Right now, the 2018 deadline is still a challenge, at the February 24 meeting, the town mayor stated that the tramway is the city’s first such project - a kind of “trial” - thus relevant agencies have no experience to build upon in implementing it. He also said the plans were unclear and related agencies were not coordinating well with each other. Due to delays, the project’s consultant, France’s Systra-International Consulting Engineers for Rail and Urban Transport, has demanded USD 4.12 million) in compensation. The company also proposed upping the contract value from EUR 22 million to EUR 43 million for extended consultation.
China: COSCO and China Shipping agree to cooperate
Source: Container Magazine, 5 March 2014
The COSCO group and China Shipping Group have signed a Strategic Cooperation Framework Agreement, designed to have the state-owned companies work closer amid a global economy slow to recover and intense shipping market competition. The pair will work together on business development and investments, based on “long-term perspective, mutual benefit and win-win cooperation and common development.” As partners, priority will be given to each other. The two sides will establish a comprehensive strategic partnership and a resource-sharing mechanism in areas of shipping, terminal operation, logistics, shipbuilding and ship repair, among others.
The agreement “will help the two companies achieve advantage complementation and coordinated growth, and be better prepared for industrial changes, so as to improve the influence of Chinese shipping companies in the world shipping industry,” according to a statement from COSCO. Container shipping is prominent among the numerous shipping activities of the two groups, through COSCON and CSCL respectively, although the statement provided no clues on a possible merger between the two leading Chinese carriers. Also not mentioned is the status of existing third-party cooperation agreements. Both parties presently operate in competing alliances: COSCO as part of the CKYH agreement and CSCL in various loose partnerships on the East-West trades with CMA CGM, UASC, Zim and Evergreen.
India: Adani to build on the east coast
Source: Port Strategy, 5 March 2014
Adani Ports and Special Economic Zone Ltd (APSEZ), India’s largest private port operator, is working to strengthen its position on the country's East coast with a new container terminal at Ennore Port. Adani already holds a strong position on India’s West coast, where it owns and operates the ports of Mundra, Dahej and Hazira. Winning the bid for the new terminal on a design, build, finance, operate and transfer (DBFOT) basis for a concession period of 30 years will mean it can boost its presence on the East coast.
The Group’s original bid of 5% revenue share was rejected in 2013, but local media suggests the Group won the tender after offering a revenue share of 37% for building the new terminal with an investment of USD 205.6 million. The container terminal will have a quay length of 730 m and an estimated capacity of 1.4 million teu. Adani will have 36 months to begin operations at the port.
Manufacturing & Industrial
Thailand: Manufacturing activity falls 6.4% in January
Source: Nasdaq, 28 February 2014
Thailand's Manufacturing Production Index contracted 6.4% year-over-year in January, the Office of Industrial Economics said, in the latest sign that the domestic political crisis is taking a toll on the economy. Political uncertainty and months-long demonstrations to topple Prime Minister Yingluck Shinawatra from office were the causes of production declines in various sectors, including motor-vehicle, textile and garment, and steel, office Director General Somchai Harnhirun said in a statement. Anti-government protests started in October against a bill that would have cleared former leader Thaksin Shinawatra from corruption charges and allowed him to return to Thailand after a self-imposed exile without facing trial.
This is the 10th straight month of declines in manufacturing. Motor-vehicle production slumped 54.44% in January due to a high base effect, while domestic sales fell 46% from a year earlier, data showed. In January 2013, the government's first-car tax rebate program boosted demand and production. Textile and garment production declined 3.71% on year owing to lower domestic and international orders. Buyers were worried that manufacturers wouldn't be able to deliver goods on time due to Thailand's political troubles. Political uncertainty also prompted buyers to delay making purchase orders in the steel sector, resulting in a 10.2% decline in production.
Japan: February manufacturing PMI growth slows before tax hike
Source: Reuters, 27 February 2014
Japanese manufacturing activity in February pulled back from an eight-year high set the previous month, a survey showed on, suggesting a slight slowdown in factory output before a sales tax increase in April. The Purchasing Managers Index (PMI) fell to a seasonally adjusted 55.5 in February from 56.6 in January. The index remained above the 50 threshold that separates expansion from contraction for 12 straight months but declined for the first time in seven months. "April's forthcoming sales tax hike looks set to test the current sequence of expansion, particularly given the recent slowdown evident in new export order growth, indicating that the current expansion is primarily driven by domestic demand," said an industry analyst.
The index for new export orders fell to 51.5 from 52.8 in January for the third consecutive month of declines. The output component of the PMI index fell for the first time in two months to 58.4 from 61.1 in January. Prime Minister Shinzo Abe's government will raise the 5 % sales tax to 8 % in April to pay for rising welfare costs. Since the middle of 2013, sales of apartments, houses, cars and durable goods have been rising as consumers look to buy big-ticket items before the tax increase. Some economists worry the tax hike may hit consumption harder than expected later 2014, and speculate the Bank of Japan may need to ease monetary policy. There are already signs momentum is stalling, with the economy growing at a much slower pace than expected at the end of 2013.
China: Manufacturing showed more weakness in February, while service PMI rises
Source: Finfacts, 3 March 2014
China's manufacturing showed more weakness in February but because the week-long Lunar Year holidays fell in the first week of the month, it wasn't a typical one. Services rose according to a new official PMI measure. The government's official manufacturing purchasing managers index, fell to 50.2 in February from 50.5 in January - - 50 is the no change point. After adjusting for seasonal factors, such as the recent Chinese New Year festival, the HSBC PMI posted at 48.5 in February, up fractionally from the earlier flash reading of 48.3, and down from 49.5 in January.
This signaled a moderate deterioration in the health of the Chinese manufacturing sector. February data signaled the first contractions of both output and new orders at Chinese manufacturers since July 2013. The rates of decline were moderate in both cases, and were linked by panelists to weaker-than-expected client demand. New business from abroad also declined over the month, and at a modest pace that was little-changed from January. Lower output requirements and fewer new orders led to a fourth successive monthly fall in staffing levels at Chinese goods producers in February. Furthermore, the rate of job shedding was the quickest since March 2009.
Pharmaceuticals & Healthcare
Singapore: Healthcare spending to hit SGD 12 billion by 2020
Source: Channel News Asia, 5 March 2014
Healthcare financing will be a key fiscal challenge for Singapore, said Finance Minister Tharman Shanmugaratnam. The government's projected healthcare spending is expected to triple to SGD 12 billion a year by 2020, up from SGD 4 billion in 2011. Healthcare spending, he said, will reach SGD 8 billion in 2015 -- a year earlier than what had initially been projected. Mr Tharman said the government has been making significant shifts as the population ages. To put things in perspective, he pointed out that the Pioneer Generation Package is for 450,000 Singaporeans. In contrast, there are a million Singaporeans between the ages of 45 and 64, who will reach retirement age in 10 to 20 years.
Mr Tharman, who is also Deputy Prime Minister, said the challenge is in how to provide quality healthcare in an affordable way. He said there is no such thing as free and cheap healthcare system anywhere in the world, because the public ends up paying for it, either through taxes or hefty insurance premiums. He added: "We will have to spend more on healthcare in future as our society goes up, as medical treatments that improve the quality of life become available, we'll have to spend more. But we have to do it in a cost-effective way and prevent the total healthcare bill from spiraling upwards, because everyone will have to pay for that."
India: Urban healthcare requires holistic, disruptive and collaborative solutions
Source: Economic Times, 5 March 2014
India's healthcare outlook is troubling. A tsunami of non-communicable diseases (NCDs), such as cancer, cardiac ailments, and diabetes is hitting our shores. That means economic loss, besides being the leading cause of death: Responsible for more than six — and up to eight — in 10 deaths in urban India. A recent study by the Harvard School of Public Health assessed the financial burden of NCDs in India at nearly USD 6.2 trillion from 2012 through 2030. Meeting this challenge also presents an opportunity. As India's urban healthcare system is nascent, the potential exists to develop India-centric, cost-effective models more sustainable than those in developed markets.
Focusing beyond the urban affluent and poor to the expanding urban mass market will be key, as this segment will account for over 450 million people by 2020. The people in this urban market have per capita incomes ranging from USD 1,500 to 5,000 and USD 5,000 to 10,000. By 2020, their healthcare spending will be much higher. For private healthcare companies, this represents a huge commercial opportunity and also a chance to contribute to a national need. As they work to address India's healthcare challenges, private companies should focus on four As: Awareness: Both private and government stakeholders need to raise awareness by focusing on prevention.
China: Government to increase spending on healthcare
Source: Straits Times, 5 March 2014
Although the spotlight of China's budget 2014 was on the 12.2 % boost in defence spending - its fastest pace since 2011 - there were other parts of the government's spending plan such as its boost in healthcare and social security that were as significant. National defence took up the biggest chunk of the projected CNY 15 trillion of national expenditure 2014, which was revealed recently at the opening session of the national parliament, however the increase in healthcare and social security in terms of budget allowance, also took many by surprise.
Still, Beijing's 9.8 % jump in social security and employment spending to CNY 715 billion also reflected its domestic priorities, amid growing public pressure to secure jobs for China's record 7 million college graduates every year and provide adequate safety nets for its fast-ageing population. This compared with CNY 657 billion in actual spending 2013, which exceeded 2013's budget and represented a 14 % increase.
South Korea: Government to invest in fields of science and technology
Source: Arirang, 5 March 2014
To give Korea's research and development sector a much needed boost, the government will be pouring more money into related institutes over the coming months. The Ministry of Science, ICT and Future Planning laid out its plan to provide USD 64 million in 2014. The money will mainly go toward establishing an R&D base station for small- and medium-sized enterprises in four different Korean cities. The science districts will foster business research laboratories, improve exclusive research zones and promote networking among researchers. More than USD 54 million will be funneled into businesses that commercialize research outcomes and the rest will go toward establishing a better environment for start-ups.
The Ministry of Trade, Industry and Energy also laid out its own plan, promising to invest over USD 140 million in the nation's smart sensor industry over the next six years. The government will use a major chunk of that investment in generic technology development. Along with wearable smart devices and autonomous vehicles, which represent just two of 13 industrial projects, the government is looking to create more sensor related products for the international market. The global smart sensor industry is booming, but here in Korea, the market is led by smaller companies, and they haven't been able to compete effectively on the world stage.
China: Country speeds past Europe on 4G mobile rollout
Source: Journal Focus, 2 March 2014
China Telecom and China Unicom are also building smaller 4G networks. Up to 1 million 4G masts could be built in China by a finish of 2014, according to apparatus makers. At final month’s annual Mobile World Congress in Barcelona, executives from European mobile operators feared that a multiple of regulatory constraints and indolent mercantile expansion would diminish construction of 4G networks in a continent. Wei Zaisheng, financial executive for ZTE, a Chinese state-owned apparatus maker, stated there could be as many as 1 million 4G bottom stations in China by a year’s end, from tighten to 300,000 today, as companies “speeded adult construction”.
China represented about 60 % of a marketplace for new 4G masts, he said. “China is heading 4G compared to Europe.” Three attention executives pronounced they were awaiting a second proposal from China Mobile for about 500,000 bottom stations 2014. Equipment-maker executives foresee that China Telecom would sequence adult to 250,000 masts in 2014.
Vietnam: Cheap labor costs just one of many reasons why country is tech haven
Source: Vietnam Briefing, 24 February 2014
Thanks to cheap labor costs, preferential tax and investment policies, and its geographically strategic location, Vietnam is fast becoming the go-to destination for multinational technology companies’ manufacturing and assembly needs. Many high technology MNCs have already set up bases in Vietnam, or have announced plans to do so. Some notable examples include Intel, which entered the country back in 2010, set up a USD 1 billion chipset testing and assembly facility in Ho Chi Minh City, LG Electronics, which plans to invest USD 1.5 billion into a production complex in Hai Phong city, Nokia, which began operations at its USD 300 million manufacturing base in Bac Ninh 2013, and Samsung, which is opening a new USD 3.2 billion complex in Thai Nguyen and expanding its Bac Ninh facilities for a total investment of USD 2.5 billion.
Vietnam far exceeded its 2013 FDI target of USD13 billion, registering a total of USD21.6 billion FDI inflows, up 54 % from the previous year. Investment in the manufacturing sector alone reached US$16.6 billion, accounting for over 75 % of total FDI inflows. The rise in FDI has also had a substantial impact on the nation’s exports. The Ministry of Planning and Investment (MPI) reports that exports by foreign companies made up two-thirds of the nation’s total export turnover in 2013, which isn’t surprising when you consider the size of the companies in question.
Telecommunication, Technology & Media
China: 8.2% sequential decline in the Q3 shipments for China-based smartphone touch screen makers
Source: Digitimes, 28 October 2013
China-based manufacturers of smartphone touch panels saw an 8.2% sequential decline in third-quarter shipments this year. With 99.9 million panels used in phones in the third-quarter, the numbers denote a substantial decline. However, total shipments of 31 million units used in tablets below 11 inches and 851,000 units shipped in 11 inches and above tablets and notebooks recorded a 29.5% and 495.1% increase, respectively.
Film-based capacitive models represented 64% of the touch panel shipments, while glass based capacitive and resistive each accounted for 21% and 16%. Shenzhen O-film Tech accounted for the greatest proportion of shipments with 17.1%, while Truly Opto-electronics was second at 11%, followed by similar shipment figures of between 8% and 6% from the three other largest producers: Chung Hua EELY Enterprise, Mutto Optronics, and Top Touch Electronics. Glass-based capacitive models accounted for 60% of the shipments of touch panels used in below 11 inch tablets, while film-based capacitive was 38% and resistive was 2%.
Myanmar: Telenor expects telecoms licence before end of 2013
Source: Eleven Myanmar, 7 November 2013
Telenor Myanmar expects to secure a nationwide telecom licence before the end of this year, as the Myanmar government has recently passed the telecommunications by-law, according to the company’s CEO, Petter Furberg said “Myanmar has released both the telecoms law and the by-law. The by-law was posted on the website of Myanmar Post and Telecommunications on November 5. Now, the discussions to obtain the licence will start. The licence is expected to be granted in November or December. We can wait for it, as the licence for Telenor will be valid for 15 years. The government has done well to prepare the telecommunications law and the by-law in a short time.”
Myanmar’s Telecommunications Law faced a few months’ delay coming out, but the by-law followed it by just one month. Norway’s Telenor, along with Qatar’s Ooredoo, won a competitive tender for two mobile operating licences last June. Both companies said they would start selling SIM cards and offer their services eight months after they are granted the licenses. Telenor is currently in discussions with other telecommunications firms to set up mobile networks across Myanmar. They are inviting local retailers to distribute their SIM cards. Ooredoo is also starting some recruitment. Currently, only 11.1 % of Myanmar’s population have access to mobile phones and services. The government plans to increase Myanmar’s mobile density to between 75 and 80 % between 2015 and 2016.
Taiwan’s Q3 handset shipments increase, Digitimes Research
Source: Digitimes, 30 October 2013
According to Digitimes Research, Q3 shipments of handsets are up. Taiwan-based ODM, JDMs, and OBMs shipped 16.6 million handsets in total in the third quarter. This marks a 2.7% increase on quarter and a 10.6% increase on the year. Of these figures, 16.4 million or 99% of the total were smartphones, representing a 3.3% quarterly rise and 23.1% increase on the year.
WCDMA models accounted for 82% of the shipments, followed by CDMA 2000 models (16.7%) and GSM (1.4%). The largest producer, accounting for nearly a third of the shipments, was HTC, trailed by Arima Communications with nearly a quarter, Chi Mei Communication Systems with 20%, Compal Communications with 16% and Inventec Appliances with 5% of the share.