TrendLines

December 13, 2017

FOLLOWING up a  GST with its new Insolvency and Bankruptcy Code, an amended Arbitration Act requiring faster settlement of commercial disputes, and recapitalisation of the banks  has allowed the Modi Government to present a more enticing offering to international investors. The rules of the game have changed . . .

INDIA’S Modi Government has introduced game-changing corporate and taxation reform that could trigger far-reaching implications for its economy.It now has a goods and services tax (GST), an up-to-date Insolvency and Bankruptcy Code (IBC) and an amended Arbitration Act which requires the hearing and settlement of commercial disputes to be completed within a maximum of 18 months.According to key executives of one of India’s top legal firms, compared with three years ago, the investment climate is “100 per cent” better.
Pallavi Shroff, a Managing Partner of the Delhi-based Shardul Amarchand Mangaldas & Co (SAM), says the States are actually competing with each other for investment.
“They are trying to facilitate investment,” she says. “Approvals still take a bit of time, but the whole process is much simpler today.”
The impact of the changes is freeing up distressed assets, including manufacturing plants, for ownership transfer to new investors.
Until now, banks have been hamstrung by archaic legislation which protected the sponsors of companies. As a result, banks, particularly public sector entities, were weighed down by non-performing loans.
The changes have rekindled investor interest in India, a destination that was once difficult and unpredictable ­— in large part because of unhelpful Government policies.
The Modi Government, it seems, has done what its predecessors were unable to deliver — a single simplified taxation system — and has taken over the powers of the States to collect taxes. It has also reduced bureaucratic red tape.
It is early days yet with these reforms, but the first signs are promising. Investors are reassessing India. In just one sector alone – real estate – an estimated US$10 billion in new investment has flowed in.
Shardul Shroff, Executive Chairman of SAM, regards the GST legislation as India’s most far-reaching change yet.
“The Government has made Constitutional amendments giving it power to take over taxation from the States,” he told ATI. “In doing so it has reduced State authority and vested the Centre with the right to collect and distribute taxes between manufacturing States and consuming States.”




December 13, 2017

CHINA is one of four major factors that will reshape the global energy market over the next two decades, says the International Energy Agency. The others are the U.S., which is set to become the undisputed global oil and gas leader, development of renewables, and a growing share of electricity in the energy mix . . .

CHINA and its new industrial policy will play a key role in helping the world transit to a cleaner energy environment over the next two decades, according to the Paris-based International Energy Agency (IEA).
In 2017 World Energy Outlook, its flagship publication, the IEA says China is increasingly switching from coal to solar, other forms of renewable energy and natural gas.
It says China is entering a new phase in its development.
China’s President, Xi Jinping, has called for an ”energy revolution” in the “fight against pollution” as he aims to guide the Chinese economy to one based on services, leaving behind low-end manufacturing.
The publication notes that Xi’s policies are moving China’s – and, in turn, the world’s — energy sector in a new direction, with the emphasis in energy policy now firmly on electricity, natural gas and cleaner, high-efficiency and digital technologies.
It says China’s previous orientation towards heavy industry, infrastructure development and the export of manufactured goods has left it with an energy system dominated by coal, and a legacy of serious environmental problems. Almost two million premature deaths occur each year because of poor air quality.
Under Xi’s new industrial policy, the agency says China’s energy usage is moving in a new direction.
Demand growth has slowed markedly from an average of 8.0 per cent per year from 2000 to 2012 to less than 2.0 per cent per year since 2012. The IEA expects this to slow further to 1.0 per cent a year to 2040.
“Energy efficiency regulation explains a large part of this slowdown,” the report says. “Without new efficiency measures, end-use consumption in 2040 would be 40 per cent higher. Nonetheless, by 2040, per-capita energy consumption in China will exceed that of the EU.”




December 13, 2017

Liem Sioe Liong and Suharto had a classic patron-client relationship – the payback was funds channelled the President’s way . . .

IN Julius Caesar, Shakespeare wrote: “There is a tide in the affairs of men, which, taken at the flood, leads on to fortune.”
Such was the luck of Chinese business entrepreneur Liem Sioe Liong, who landed in Java in 1938 as a dirt-poor migrant from Fujian province, in China.
He not only caught the tide, he became the chief financier and cukong (crony) of President Suharto.
In post-Sukarno Indonesia, Liem surfed on a tsunami of wealth and political power, and soon became recognised as Southeast Asia’s wealthiest tycoon.
Suharto hungered for power, Liem for money. Together, “they made a potent team that kept them on top in Indonesian politics and business respectively for three decades”.
Liem’s gutter-to-glitter journey is splendidly captured in Liem Sioe Liong’s Salim Group  by Richard Borsuk and Nancy Ching [ISEAS Publishing], a frank and revealing business biography which explores Liem’s life and times with painstaking care and in exhaustive detail (573 pages).
It also doubles as a primer on how to do – or not to do – business in Indonesia.




ANALISYS - Khoon Goh
December 12, 2017

Bank of Korea and Bank Negara Malaysia have turned hawkish in recent statements, laying the groundwork for interest rate increases . . .

AFTER FOUR YEARS of depreciation, Asian currencies put in a much stronger performance in 2017. Our Asian currency index shows a gain of 4.6% year-to-date against the U.S. dollar. 

How Asian currencies fare in 2018 will depend on which of two contrasting forces dominates: (i) the effect of policy normalisation in the major advanced economies on capital flows to emerging markets; or (ii) a strengthening and broadening of Asian economic growth with export recovery spilling over into domestic demand.




November 24, 2017

HSBC has taken digital trade a step further with the introduction of its Trade Transaction Tracker - an app providing instant access to trade transactions 24/7.

Trade Tracker is available to HSBC trade customers through the HSBCnet Mobile app facility for either Apple or android phones. The solution has been built to provide the customers with easy self-onboarding processes using their details registered with HSBC.

It also provides –

  • An overview of documentary credits, collections and payments;
  • Access to export and import documentary credits and collection transactions status; and
  • Real-time trade transaction status detail.




October 25, 2017

AGRICULTURE, aviation, marine, defence, e-commerce, cybersecurity, fintech, vocational education and training, future cities and health are among emerging growth sectors in Indonesia . . .

INDONESIA’s economy, currently the world’s 16th largest, is forecast to be the world’s fourth largest individual economy by 2050 – a compelling reason why Australian businesses should enhance engagement, says by Sally-Ann Watts, Austrade’s Jakarta-based Senior Trade Commissioner for Indonesia.

Addressing a series of seminars in Australia, she said three main changes have occurred in the Indonesian market - digital transformation of the economy; the emerging middle class; and opportunity for Australia to help improve living standards and close the skills gap.

The seminars outlined opportunities for Australia in key areas of agriculture (including goods, technology and services), aviation, marine, defence, e-commerce, cybersecurity and fintech, education (transnational vocational education and training), future cities and health.

Watts said Indonesia is now Australia’s 13th largest trading partner, and that, economically, it represents almost 40 per cent of the ASEAN region’s output. It is home to 255 million people.

Along with her team of in-market Trade Commissioners, Watts presented the following summary of industry sectors in Indonesia -  

Agrifood and agtech

Indonesia is an important market for Australia, taking agricultural exports valued at AUD3.2 billion in 2016.

Indonesia’s agricultural sector is undergoing a transformation as the next generation of farmers look to new technologies to increase productivity. Farm and processing enterprises are seeking new technologies to maximise acreage usage and reduce waste.




October 4, 2017

ONE of Germany’s largest real estate asset managers is making a bid to attract Asian investors into the real estate market of Germany’s regional cities . . .
German manufacturers of trusted brands, whether cars or sophisticated machinery and equipment, need little or no introduction to their products.
 Asian consumers know them well.
 But when it comes to real estate investment, Germany is off the radar - because Asians are not familiar with, or often even aware of the opportunities that exist there.
 The Asian predilection for luxury brands is second only to a partiality for real estate, and when it comes to investing in offshore real estate, London traditionally has been the city of choice.
 Stefan Kalmund, managing director of Accom, one of Germany’s largest real estate asset managers, says Asian investment in the UK obviously comes from familiarity with that country.
 Now launching Accom’s first real estate fund targetting Asian capital, Kalmund has made several trips to Asia, hoping to raise the awareness of institutional investors to opportunities outside the three German entry cities of Berlin, Munich and Frankfurt.
 These cities offer trophy assets, he says, but it is the regional cities that are the hidden champions of German real estate.




October 18, 2017

Governments led by those in Singapore and Hong Kong are helping drive widespread support for a global move towards digital trade . . . 

In May this year, Singapore-based fintech company CCRManager Pte Ltd, launched an innovative new electronic platform developed for the distribution of trade finance, supply chain finance and working capital assets.

Bank of China, DBS Bank, ICICI Bank, Swiss Re Corporate Solutions, and UniCredit have signed up as pioneer members of the platform to support their trade risk distribution business globally.
In addition, ANZ Bank, Bank of America Merrill Lynch, BBVA, Bank of East Asia, BNP Paribas, HSBC, Industrial and Commercial Bank of China, Mitsubishi UFJ Financial Group, Mizuho Bank, Standard Chartered Bank and Sumitomo Mitsui Banking Corporation have signed a Letter of Intent to become members of CCRManager within the next few months.
The platform has been developed with the support of the Monetary Authority of Singapore (MAS) and major global financial institutions.
CCRManager will provide the global financial sector with infrastructure designed to enhance capital, credit, and liquidity management.
In launching the platform, Tan Kah Chye, Chairman of CCRManager, described it as “truly a collaborative effort” which had taken more than 1,000 man hours to help design and refine the platform. “This is our contribution to development of the global financial ecosystem as a group,” Tan said.
The platform is web-based, and will enable banks to manage the entire process of distributing trade finance internationally to other banks, credit insurers, and fund managers.
Users of CCRManager will be able to list assets for distribution, negotiate deals, and manage supporting documentation in a secure environment. They will also have access to tools for data analytics, market benchmarking, and pricing indices.
Man Ka Kit, CEO of CCRManager, said: “We estimate the secondary market for trade finance assets, at approximately US$1.7 trillion, is roughly 10% of global cross-border trade. As an infrastructure platform, we believe CCRManager will address this entire market, help unlock more capital and increase the supply of trade finance globally.”




October 13, 2017

SUCCESSFUL Chinese investors in Australia retain Australian management – and strive for meaningful engagement with their local community, says a new report on the angst that can be caused by wrong decisions  . . .

SOCIAL LICENCE, or the lack of, is the reason that Chinese investments in Australia, especially in agriculture, a sector keenly sought-after by Chinese investors, fail.
 Quite apart from needing official approvals, says a report jointly produced jointly by Powell Tate’s Sydney office and Weber Shandwick’s Beijing office, Chinese investors must have social licence — meaning engagement with the Australian community — from the grassroots level upwards, together with respect for the rules and regulations in Australia, including local industrial laws.
 To have a social licence is therefore to have acceptance of the local community, including local businesses, says the report, The Licence That Matters: Beyond Foreign Investment Review Board Approval.
 The report points to successful Chinese investments in Australia, all of which retain Australian management, engage Australian employees and contract local suppliers.
 The biggest mistake made by the Chinese investor is a belief that FIRB approval translates to having a licence to do as they wish with their investment.
 The report cites the celebrated failure of Ningbo Dairy in Gippsland, Victoria, a tale of naivety, ignorance, or, at worse, arrogance on the part of the Chinese investor.
 Ningbo Dairy acquired five farms in Gippsland, and planned major expansion —without first doing its homework.




October 5, 2017

GOVERNMENTS led by those in Singapore and Hong Kong are helping drive widespread support for a global move towards digital trade. And that will help, because it is not technology that has been slowing progress, says Michael Lim, ANZ’s Head of Trade and Supply Chain. Agreements on the commercial issues of digital trade need to be forged across all participants in the supply chain process.
In future trade, Lim sees distributed ledger technology (DLT), a key component of Blockchain, helping reduce fraud and creating  new efficiencies, with artificial intelligence playing an increasing role in the process . . .




September 22, 2017

HONG KONG — S&P Global Ratings has affirmed its ‘AAA’ long-term and ‘A-1+’ short-term issuer credit ratings on Hong Kong, but said the rating outlook remains negative, mirroring S&P’s long-term rating on China (AA-/Negative/A-1+; cnAAA/cnA-1+).




September 22, 2017

THE REAL BENEFITS of Artificial Intelligence will come when as much of the trade environment as possible is digitised, says HSBC’s Andrew Speers...




August 31, 2017

Donald Trump may be an advocate of the “madman school of diplomacy”, but might Kim Jong-eun be using the same strategy . . .  

SEOUL – With Kim Jong-eun threatening to launch missiles in the direction of - if not directly at - the U.S. island of Guam in response to Trump’s “Fire and Fury” speech aimed at rattling the DPRK into getting “its act together,” is the world about to witness its first actual bilateral nuclear war (assuming China and India hold off just long enough)?

Is your correspondent finally going to get the message and bail out before this corner of the world blows up along with an uncertain chunk of U.S. real estate? 

As both Kim Jong-eun and Donald Trump seemingly careen headlong into a potential no-nuclear-punches-barred confrontation that would undo both of them -- the former physically and the latter politically -- there is some basis for remaining sanguine in the expectation that neither will actually go over the brink and take the other with him.

An assessment of the objectives of each and the risks to both underlies such sangfroid.




July 28, 2017

IT IS the privatisation of Australia’s critical infrastructure that has led to consideration of national security implications when foreign investors seek to acquire such assets, says David Irvine, Chair of the Foreign Investment Review Board . . .
 
SYDNEY — David Irvine, the former Head of Australia’s spy agencies, acceded to the Chair of the Federal Government’s Foreign Investment Review Board In the wake of a number of controversial rulings against foreign investors.
 Not unexpectedly, the commentariat in the media looked at his appointment as the Government shifting its emphasis to national security.
 But this could not be further from the truth, Irvine told an audience attending a CEDA (Committee for Economic Development of Australia) event in Sydney.
 Irvine said a lot was said at the time of his appointment suggesting that, given his background, FIRB was shifting its focus to national security to the exclusion of all other considerations.
  “Frankly, national security issues only impinge on a very, very small number of advisory notes provided by FIRB to the Treasurer (Scott Morrison),” he said.
 Indeed, the composition of the FIRB decision-making process includes people with experience on taxation issues, resource investment, agriculture investment and so on, he added.
 In recent times, national security has become an issue in a number of proposed acquisitions – more so than in the past because of privatisation and sale of public assets.




July 21, 2017

TRADE GROWTH is more promising, but it could be derailed by policy shocks and geopolitical uncertainly, warns the WTO . . .

GENEVA — With the outlook for the world economy likely to be better in coming months, international trade is also expected to rebound, with growth of 2.4 per cent for 2017, according to the World Trade Organisation’s latest forecast.

Leading indicators of real trade growth are up in the early months of 2017.

Container throughput at major ports has recovered from its 2015-16 slump to reach a record high level, with on-year growth of 5.2 per cent in January and February this year, says the Geneva-based global trade club.

A key index of world export orders also climbed to its highest level in several years in February.

Trade growth will reflect high global GDP growth, which is expected to be 2.7 per cent in 2017, inching up to  2.8 per cent next year.

There is increasingly a chorus among leading economists calling for synchronised global growth — something that has been absent for the past decade.

However, trade growth can be derailed by policy shocks and geopolitical uncertainty.

The WTO speaks of a prevailing sense of uncertainty because of unpredictable Government policies on monetary, fiscal and trade. These Government actions could stifle the promising expansion in trade, it says.




July 20, 2017

THE LAO Government has sold a majority stake in its State forest to the Australia-based New Forests, a leading global institutional investor  specialising in timberland, for an undisclosed amount.
New Forests manages committed capital of more than AUD3.6 billion globally from pension and superannuation funds and other institutional investors invested in sustainable forests across Asia Pacific.
In its latest joint venture in Laos, New Forests holds a stake of 85% in what is known as Mekong Timber Plantations, the Government retaining a residual stake of 15% in the plantation estate.
Mekong Timber Plantations will manage 22,000 hectares of leased area, mainly in Bolikhamxay and Khammouane provinces.




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