HO CHI MINH CITY – Vietnam’s Ministry of Finance has issued a new Circular expected to take effect from August 11 which in effect formalises a pilot programme introduced two years ago to speed up and simplify Customs procedures for ‘prioritised enterprises’, usually referred to as Authorised Economic Operators (AEOs). In a Client Alert, lawyers Baker & McKenzie say that while the new Circular will be useful for import and export businesses, these businesses must fully satisfy all the requirements listed in the new Circular to be considered an AEO.
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HONG KONG – In a new research report, HSBC says urban residency rights and land reform in China are high on Beijing's agenda – because this will help turn 260 million migrant workers into urban spenders, and lure another 10 million surplus rural workers to more productive sectors each year.
SINGAPORE - Standard & Poor's has affirmed its 'A-' long-term and 'A-2' short-term foreign currency sovereign credit rating on Malaysia, together with its 'A' long-term and 'A-1' short-term local currency sovereign credit ratings. The outlook on the long-term rating remains stable. S&P also affirmed its ASEAN regional scale rating on Malaysia at 'axAAA/axA-1+'. S&P said the sovereign credit rating reflects Malaysia’s strong external balance sheet, open and competitive middle-income economy, and considerable monetary flexibility.
SEOUL – Second quarter GDP growth in South Korea has increased for a third consecutive quarter, rising to 1.1% q/q, (2.3% y/y) from 0.8 q/q (1.5% y/y) in the first quarter, and beating market expectations. The better-than-expected performance was led by a pickup in private and Government consumption, most likely due to fiscal stimulus measures adopted in April, with support from May’s interest rate cut. Investment and exports also performed reasonably well, although moderating from the previous quarter.
HONG KONG - The Hong Kong Monetary Authority (HKMA) has announced two measures to facilitate RMB liquidity, including i) using its swap line with the People’s Bank of China (PBoC) to provide one-day (rather than only one-week) funds to banks, which will be available on the next day (T+1); and ii) using its own RMB funds to offer overnight RMB lending, available on the same day (T+0). Analysts see the measures as a response to tight RMB liquidity conditions that emerged in June during China’s interbank liquidity squeeze.
HONG KONG - To ensure that its economy expands by 7.5% this year, China’s State Council has announced temporarily exemption of business tax and VAT for some small and micro-sized enterprises and measures to stabilise exports – and to accelerate railway investment. HSBC says the measures will help buffer demand and the employment slowdown. “These targetted measures should boost confidence and reduce downside risks to growth,” says HSBC.
SYDNEY - Last month's credit crunch should be seen as part of Beijing’s effort to restrain runaway credit growth and investment, and encourage consumption spending, according to Australia’s export credit agency, the Export Finance and Insurance Corporation (EFIC). “The late-June jump in China's interbank lending rate, and the refusal of the People’s Bank of China to intervene took markets by surprise”, says EFIC’s Chief Economist, Roger Donnelly. “From targetting inflation at the end of 2011 to promoting growth in 2012, the central bank now appears to have switched again, on concerns about the build-up of bad loans in the shadow banking system. Authorities now seem more tolerant of slower economic growth, and are encouraging more discriminating lending. That worries many Australian businesses.”
NEW DELHI - The Reserve Bank of India (RBI) has taken additional steps to tighten liquidity and promote currency stability. The latest measures include an additional cap on banks’ access to overnight liquidity from RBI's repo facility (at 7.25%) at 0.5% of individual bank deposits. and tighter implementation of the daily cash reserve ratio on non-reporting days. The measures come on top of recent efforts to curb rupee volatility. After reaching a weak point of 60.7 per USD in late June, the rupee has strengthened to 59.1 at present.
TOKYO – Japanese exports rose for a fourth consecutive month in June, by 7.4% y/y, on rising demand from the US, EU and China which was boosted by competitive gains from the yen’s weakness. Imports rose by 11.8% y/y from 10.1% in May, resulting in a trade deficit of US$1.8 billion. Recent trade out-turns have been watched as an indicator of the effectiveness of Government steps to stimulate GDP growth ("Abenomics"). In this regard, BBVA Bank comments that this monthly economic assessment by the Government was upbeat, noting that "the economy is picking up steadily and shows some movements on the way to recovery".
HONG KONG – Operating conditions in China’s manufacturing sector are continuing to deteriorate, according to the HSBC Flash China Manufacturing PMI (Purchasing Managers’ Index) released today. It has come in at 47.7 (48.2 in June), an eleven-month low, while the Flash China Manufacturing Output Index came in at 48.2 (48.6 in June), a nine-month low. The HSBC Flash PMI is published monthly about one week before official final PMI data is released. In the breakdown, new orders decreased at a faster rate, while new export orders also decreased, but at a slower rate than in June. Both inut nd output prices decreased, but at a slower rate.
BEIJING – At its record high of 6.1721 against the US dollar, the RMB has been effectively revalued by 34% from eight years ago, when China first embarked on reform of its currency exchange regime, with the Chinese Government reported to be wanting to move towards a more market-determined exchange rate. This could be confirmed shortly if speculation is confirmed that the daily trading band for the RMB against the USD could be lifted from 1% to 2%.
BEIJING – China’s Environment Minister, Zhou Shengxian, says the Government will issue a series of tough measures by the end of July to curb air pollution. The measures follow record air pollution in China earlier this year, and will enhance controls over PM2.5 particles - airborne particles measuring less than 2.5 microns in diameter. The Government’s action plan to prevent and treat air pollution calls for strictly controls on sectors that produce large amounts of waste and pollution.
BEIJING – China’s Ministry of Commerce has imposed preliminary anti-dumping duties on imports of US and South Korean solar-grade polysilicon, but made no decision on tariffs on European Union exports of the raw material used to make solar panels. The move coincides with difficult talks between the EU and China to defuse a conflict over alleged dumping of Chinese solar panels in Europe. Both the US and the EU have imposed anti-dumping and anti-subsidy tariffs on Chinese solar panels, which could easily expand into a wider trade war involving European wine exports as well as steel.
TAIPEI - Taiwan’s export orders in June have dropped 3.4% y/y, driven mainly by poor demand from China, Europe and Japan. Notably, orders from China declined 1.9% y/y or 8.6% m/m, possibly mirroring the impact of recent tightening of cross-border trade in China. On the positive side, orders from the US stayed resilient, and orders from ASEAN held up. ANZ Bank says the second-half outlook will improve as the US market picks up and the global electronics sector remains upbeat.
GUANGZHOU – The Chinese Government is continuing its efforts to weed out food manufacturers producing foods that may harm consumers. In new investigations, toxic chemicals that could cause cancer have been found in a rice-based food for infants tested in Guangzhou. Two types of rice powder were found to contain aflatoxins, toxic elements that are carcinogenic. In addition seven other dairy products were found to contain aflatoxins, microorganisms or antiseptics during a city-wide investigation.
SINGAPORE – Sales of tablets and laptops have surged by 32 per cent in the year to June to nearly 14.2 million in the region’s key markets – Singapore, Malaysia, Thailand, Vietnam, Indonesia and the Philippines, according to a study by research company GfK. While laptops continued to make up 57% of combined sales, this segment’s growth rate was just 4%, while the tablet segment doubled in volume (101%). Indonesia was the largest mrket, accounting for more than one-third of total tablet sales volume, while in the Philippines, tablet take-up increased 322% over the year.