atans1

Archive for the ‘India’ Category

Govt faciliates spying and tax avoidance, but bans Ashley Madison: Uniquely PAP

In Economy, India, Indonesia, Malaysia, Political governance, Telecoms on 27/11/2013 at 5:05 am

In the space of a few days, the govt is facing or is likely to face uncomfortable questions from other govts about its activities: activities that the usual suspects, could reasonably argue, show the two-timing nature of the PAP govt that they (they the usual suspects) detest and wish it all the ill-will in the world.

Malaysia said it will summon Singapore’s high commissioner today to respond to allegations of spying which risk damaging improved political and business ties between the Southeast Asian neighbors.

Indonesia and Malaysia have been key targets for Australian and U.S. intelligence cooperation since the 1970s, facilitated in part by Singapore, the Sydney Morning Herald reported yesterday, citing documents leaked by former U.S. intelligence contractor Edward Snowden. Malaysia’s foreign ministry said it was “extremely concerned” and had already acted against earlier claims of espionage by the U.S. and Australia.

The reports could also spur friction between Singapore and Indonesia, Tan said. “The Indonesians would probably be concerned whether the information is also being shared with Singapore intelligence, besides the Australians*.”

(http://www.bloomberg.com/news/2013-11-26/malaysia-summons-singapore-commissioner-as-spying-claims-widen.html)

As SingTel was singled out for mention by the Oz newspaper**, and as it has extensive mobile operations in Indonesia and Thailand, and a major stake in a major Indian telco, it could face problems in these countries.

Then there is the issue of how European and US cos are using S’pore to avoid taxes, at a time when there is growing resentment among politicians and voters that these cos are not paying their fair share of taxes. The Indian, Japanese, Taiwanese and Korean govts will also not be too happy too with S’pore’s corporate tax-regime if they read the Economist.

“Taxing times for Singapore as corporate strategy faces scrutiny” was a Reuters headline on 24 November 2013 (BT and Today carried the report too). It gave details of how Apple used S’pore as a tax-saving centre and went on, “Companies justify booking significant amounts of revenue and profits in Singapore by the fact they often run key business functions such as finance and operations, hold intellectual property rights there or base regional executives in the city.”

The chart below (via the Economist) shows a hypothetical scenario where a company moves its headquarters from Singapore (a very low-tax economy) to another country. http://www.economist.com/blogs/schumpeter/2013/11/corporate-tax-rates

S’pore very cheap place (tax wise) esp compared to Japan. Minister Zorro must be happy: juz as happy as looking as his monthly CPF statement.

The Reuters article went on: Singapore has so far largely stayed out of the debate raging in Europe and the United States about the ways multinationals try to lower their tax bills.

But revenue-hungry governments are looking to impose tougher rules on so-called transfer pricing that could make it harder for firms to trade goods, services or assets between their Singapore and overseas entities.

As a result, accountants warn that the city-state will need to review the level of transparency in its tax incentive schemes and get stronger justifications from companies on their transfer pricing arrangements to fend off challenges from other jurisdictions.

“Singapore’s challenge is to ensure that it stands ready to adequately address any kind of unilateral tax action taken by other countries,” said Abhijit Ghosh, a partner at PricewaterhouseCoopers in Singapore.

“In this brave new world of fiscal competition for the tax dollar, dispute resolution will be on the increase and Singapore will need to focus more resources on enforcing and defending its principles of value creation in international forums.”

The city-state’s government says it is against artificially contrived arrangements constructed “solely for the purpose of flouting or exploiting loopholes in tax rules”, according to a spokeswoman from the Ministry of Finance.

However Singapore is also arguing that it should not be singled out because it has low tax rates.

“We must guard against new forms of protectionism masquerading as tax harmonisation,” the spokeswoman said. “We should avoid converging on high taxes globally as this would only hurt growth and jobs.”

Looks like the owl that visited PM was a harbinger of bad news for PM.

Seriously, the “usual suspects” could reasonably argue, if they tot about it, that the “chickens are coming to roost”.and that while moralising on adultery, the PAP govt helps the ang mohs spy on our neighbours, while helping ang moh and other Asian cos avoid tax. And PritamS wants the WP to be in coalition with the PAP?

*Remember that Indonesia suspended military co-operation with Australia, after allegations emerged of Australian spies bugging the phones of the president and his inner circle.

**Access to this major international telecommunications channel***, facilitated by Singapore’s government-owned operator SingTel, has been a key element in an expansion of Australian-Singaporean intelligence and defence ties over the past 15 years.Read more: http://www.smh.com.au/technology/technology-news/new-snowden-leaks-reveal-us-australias-asian-allies-20131124-2y3mh.html#ixzz2lkSC0P8c

***SEA-ME-WE-3 cable as well as the SEA-ME-WE-4 cable that runs from Singapore to the south of France.

Still want to buy M’sian properties?

In India, Indonesia, Malaysia, Uncategorized on 23/11/2013 at 6:00 am

(Asean round-up)

KL property owners, an estimated 10-16 per cent of whom are foreigners, are facing sharply higher assessment payments of up to 300 per cent following the latest move by City Hall (DBKL) to boost its coffers. http://www.businesstimes.com.sg/premium/top-stories/kl-homeowners-facing-sharp-assessment-hikes-20131119

But otherwise M’sia’s looking pretty gd

– ECONOMISTS have turned more bullish on the Malaysian economy as a result of its unexpectedly strong showing in the third quarter.

They have upgraded their forecasts, and one has even dismissed the second quarter’s sharply reduced current account surplus on the balance of payments as an “abnormal”, one-off glitch.

Malaysia’s growth accelerated to 5 per cent in the third quarter, above the street’s 4.7 per cent, and sharply higher than the 4.4 per cent posted in the second quarter. The expansion was largely driven by domestic demand and a turnaround in exports.

The figures suggest that, despite criticism from rating agencies such as Fitch and an uncertain global economy, the Malaysian economy remains resilient, and continues to maintain steady economic growth.

– THE ringgit is undervalued as it has underperformed its peers since Prime Minister Najib Razak’s Budget almost a month ago, a British bank said.

In a report yesterday, Barclays Bank said the currency’s underperformance stemmed from doubts over the country’s “fiscal credibility”. But it said any such doubt should now be “diminished” after international rating agency Moody’s raised Malaysia’s sovereign outlook to “positive” from “stable” in a report released on Wednesday.

The news should boost Mr Najib’s credibility as a finance minister; he has been flayed by critics who have accused him of going on a profligate spending spree to boost the Barisan Nasional coalition’s popularity. In the run-up to the May 5 general election, government debt had ballooned to more than 54 per cent of GDP, just a whisker away from the legally mandated debt ceiling. Although the BN won, it did so with a weaker mandate.

In July, global rating agency Fitch had affirmed Malaysia’s investment-grade sovereign rating but cut its outlook to “negative” from “stable”. That raised the level and intensity of the criticism against Mr Najib.

(Excerpts from BT)

But M’sia (like Thailand) is doing less than Indonesia to prepare for tapering: Indonesia has raised short-term interest rates and India has attracted deposits from its large diaspora. Both are now accumulating foreign-exchange reserves to help prepare them for the eventual end of quantitative easing. So are South Korea and Taiwan.

Malaysia and Thailand are not taking the same precautions. Neither country has managed to recoup the reserves it lost in August. That’s a worry, considering foreigners own 28 percent of Malaysia’s sovereign bond market. Pending the implementation of a goods and services tax from 2015, the country’s public finances remain shaky. At the peak of the summer turmoil, the cost of insuring against default on Malaysian government bonds was slightly higher than for Philippines debt, which carries a lower credit rating. The gap has widened since.

Finally, debt is soaring. In Thailand, bank loans to individuals have jumped 20 percent in the first nine months of the year, higher than last year’s 18 percent growth. Meanwhile, the Thai economy has lost momentum, the politics has become unstable, and the current account has tipped into a deficit. Instead of easing, Asia’s fear of the Fed is spreading wider.

http://blogs.reuters.com/breakingviews/2013/11/21/asias-fear-of-fed-is-now-infecting-more-economies/

Why more FT Indians here than local Indians?

In Economy, India on 15/10/2013 at 4:52 am

(I hope readers don’t mind my flow onto LionsXII at the end)

One of the bloggers, I was concerned about here that might get a stroke or a heart attack, last week blogged that there are more FT Indians, than local Indians here. He didn’t give his source but used the statistic as the basis of prophesying doom and gloom for our minorities and society. It would have been nice if he had given his reasons, rather than assuming that we all know why.

Assuming he is correct about the FT Indian population being bigger than the local Indian population, there is possibly a gd, sound economic reason for it:- Our local Indians are not the “right” kind of Indians S’pore needs?

He may not be aware that S’pore’s an offshore hub of India, along with Dubai and Mauritius.

The largest hub for Indian trade is probably Singapore. It is the centre for investment banking, which thrives offshore, owing to the tight regulation of India’s banks and debt markets. Reflecting this, the global exposure to India of Citigroup and Standard Chartered, the two foreign banks busiest in India, is 1.9 times the size of their regulated Indian bank subsidiaries.

Fund managers running money in India are often based in Singapore. India’s best financial newspaper, Mint, now has a Singapore edition. At least half of all rupee trading is offshore, says Ajay Shah of the National Institute of Public Finance and Policy in Delhi. Investors and firms do not like India’s fiddly rules and worry that the country may tighten capital controls if its currency falls too far, says one trader in Singapore. He denies, though, that the rupee’s fall is mainly the work of speculators abroad. “The onshore guys have as much of a role,” he says.

Indian e-commerce firms often get their data crunched in Singapore, using web-hosting and cloud-computing firms, such as Google and Amazon. Amitabh Misra, of Snapdeal, says bandwidth costs less, technology is better and you avoid India’s headaches—such as finding somewhere to work, coping with state-run telecoms firms and having to wait to import hardware.

Singapore is also a centre for legal services. International deals involving India often contain clauses which state that disputes be arbitrated outside India, with its clogged courts. Singapore, along with London and Paris, has become the preferred jurisdiction. “The level of comfort Indian companies get from Singapore is unmatched,” says Vivekananda N of the Singapore International Arbitration Centre.

When India’s economy thrived, in 2003-08, so did its offshore hubs. Singapore’s service exports to India tripled. Yet these centres may sometimes be a reverse barometer. If things improve in India, activity should shift to the mainland, and vice versa. By gradually improving its ports, for example, India has convinced more shipping lines to make direct stops.

The government wants to attract activity back to create jobs and boost foreign earnings. Pride plays a role, too—it is unbecoming for a potential superpower to have outsourced vital economic functions. India has far less control over Dubai and Singapore than China does over Hong Kong. Plenty of policy statements in recent years argue that India should become a global hub for aviation, legal arbitration, diamond trading and international finance.

http://www.economist.com/news/international/21583285-growth-slows-and-reforms-falter-economic-activity-shifting-out-india-made-outside?spc=scode&spv=xm&ah=9d7f7ab945510a56fa6d37c30b6f1709

So are TRE posters who regularly complain about Indian FTs are DRUMS saboing S’pore? Though two-timing new citizen Raj who has publicly boasted that his son will avoid NS, and get PR (here and here) is not exactly a poster boy for Indian FTs or the govt’s “We love FTs” policy: more for GG and friends who hate FTs.

Finally, those of us (self-included) who love to regularly grumble about or mock ESM “Peanuts” should remember that he initiated the “Look to India” to differentiate himself from one LKY who wanted S’pore to be plugged into China’s sphere. So three cheers for him, for initiating the move that resulted in S’pore becoming a major offshore hub of India? Or should it be only two cheers for then allowing the likes of new citizen Raj in?

BTW, Mindef should be trying to close the loop-holes that allow those bums like new citizen Raj to boast that their sons can avoid NS, and then get PR, rather than make it difficult for our young Lions http://www.goal.com/en-sg/news/3880/singapore/2013/10/13/4321556/zainudin-hints-at-restrictions-for-sundram-departure: In his two-year tenure with the LionsXII, one of Sundram’s biggest bugbear had been the unavailability of players. A slim squad that was frequently decimated by injury lay-offs was further shorn of players due to National Service (NS) call-ups.

Players in NS who had used up their annual leaves to play for the LionsXII were often unable to find release from their active duties. Shakir Hamzah was most infamously found guilty of going AWOL from duties in June, after linking up with the LionsXII for an away game, and was handed a four-day sentence in the detention barracks.

BTW2, Our media has been 200% behind Fandhi’s attempt to be the new LionsXII  coach (Of course, he would deny he is campaigning to be coach: he would wouldn’t he?); but would temperamental Fandhi have put up with Sundram’s frustrations. I doubt he would. Likely, he would have walked out. Don’t anyhow support Fandhi. He willingly collaborates with our MSM, wanted to sue SDP and failed as coach of a free-spending Johor team (think Sity, think Johor). He was a good, and honest footballer but he isn’t exactly god’s gift to LionsXII. He’s god’s gift to our constructive, nation-building media who use him to sell papers and try to make us forget that the media here in part of the Dark Side.

Where S’pore and other Asean countries most vulnerable to Fed tapering

In China, Hong Kong, India, Malaysia, Vietnam on 14/09/2013 at 5:36 am

This chart from Reuters shows the vulnerability of major Asian economies to Fed policy of tapering

http://graphics.thomsonreuters.com/RNGS/2013/AUG/ASIARANKINGS/ASIARANKINGS.html

S’pore is vulnerable

Slowing GDP: Most vulnerable

Growing Public Debt : Second most vulnerable

Uncompetitive Currency: Second most vulnerable

Growing Credit Intensity: Fourth most vulnerable. Another view: Banks with large property loan portfolios will face higher risks when interest rates start to rise — this as highly-leveraged households begin to have difficulty paying their mortgages.

Economists said this could lead to credit tightening by banks, and a hard landing for the property sector.

If that happens, DBS Bank said Singapore and Hong Kong will be hardest hit within Asia.

In other Asean round-up news

surpluses of Thailand, Hong Kong and Malaysia have narrowed even more since the second half of 2007. However, this is partly because Thailand and Malaysia have boosted domestic investment, which lifts imports.

Malaysian and Indonesian companies are grappling with a margin squeeze: The two commodity-producing economies have witnessed the biggest rise in their real cost of capital. The Philippines has the opposite problem: Falling inflation-adjusted returns for savers.

Rightly or wrongly, though, the sovereign debt issued by developed countries is perceived as safe. Malaysia is not in the same league, and it is pruning petrol and diesel subsidies to control its growing public debt problem.

Unlike in 1997, most Asian countries have relatively straightforward choices. Malaysia can introduce a goods and services tax to control the 14 percentage point increase in its sovereign-debt-to-GDP ratio since 2007. Indonesia can raise interest rates to tame 9 percent inflation. The main problem is India, with its cocktail of slumping growth, high inflation, a creaking banking system, reckless fiscal policies and political uncertainty. Other Asian nations can’t take rising U.S. interest rates lightly, but they are far from a crisis.

http://blogs.reuters.com/breakingviews/2013/09/05/not-all-asian-countries-need-to-fear-the-fed/

Indonesia’s central bank raised its benchmark interest rate 25 basis points Thursday afternoon in a move that defied market expectations and continued a swift phase of tightening efforts as the nation’s economic growth showed signs of stumbling.

The interest rate increased to 7.25 percent, the fourth hike in as many months, as Bank Indonesia moved to stabilize the increasingly volatile rupiah while controlling inflation and the widening trade deficit.

The danger of capital controls in Asean (Note this is new link and chart, not the one originally posted)

http://www.economist.com/news/finance-and-economics/21586569-error-apology-and-revision-spreadsheet-different

Asean trade with China (FT charts)

Ingratitude, uniquely S’porean? Blame the internet? Not really

In India, Internet, Political governance on 06/09/2013 at 5:15 am

The irony is the opposition made gains where there is almost full employment, the country peaceful and prosperous.

(http://www.pressrun.net/weblog/2013/08/singapore-prime-ministers-and-election-results.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rana+%28pressrun.net%29 I commend this blogger who usually has interesting, unpredectible perspectives. Not one of the usual suspects, whose rants can be surmised even without reading their articles: juz scan the titles.)

The govt in Norway is expected to lose an election on 9th September, even though eonomic growth was at 2.6% year-on-year in the second quarter and unemployment at just 3.4%, while the current-account surplus is huge: nearly 14% of GDP.

One could argue that because things are so gd, people are willing to take risks, experiment.

When times are bad, if the ones suffering badly are a smallish minority, and the majority, while unhappy, are fearful of what can happen, the majority of voters will opt for “Better the devil we know” We saw that in 2001 when an election was called after 9/11. If Islamic terrorists could successfully attack Metropolis, which place was safe? And if there was a resulting global recession, who better than the PAP to handle it for S’pore? Certainly better than JBJ’s lot, even though the WP had juz kicked JBJ out as leader.

But the classic example was UK during the early yrs of Thatcher’s tenure. Despite massive unemployment she won a second term (helped by winning a war). The unemployed voted against her, but those with jobs trusted her govt more than they did the opposition Labour party, which was seen as incompetent economically (strikes, IMF loan when it was governing).

Connected with the issue of experimentation when times are gd, is that people get tired of the same govt. The present Norwegian govt has been in power since 2005. As the PAP has been in power since 1959 (UMNO and allies in M’sia since 1957), it’s a testament to their tenacity and public goodwill that the PAP and UMNO are still in power. Even the LDP in Japan has lost power for two spells before regaining it.

The author of the above quote puts the unpopularity of the S’pore govt to the internet:

The internet seems to have been a game-changer. In the first post-Twitter general election, in 2011, the People’s Action Party (PAP) won only 60.1 per cent of the vote, its lowest share since independence, while the opposition secured six seats, more than ever before. (Twitter was launched only in 2006.)

He has a point because the internet

… proved a real pest,
Critics online all the time,
How do you make ‘em toe the line?

But let’s not forget. In the last GE 60% voted for the PAP. Taz a gd majority by any standard except that of the PAP itself and S’poreans. Remember, we used to give it 70-over % of the popular vote, and all the seats in parliament in the 70s.

True the PAP’s “preferred” candidate won the PE by a very short nose. But the man that nearly became president was someone that for many S’poreans (self included) exemplified what many S’poreans liked about the PAP Old Guard: principled, meritocratic, technocratic, smart (academically and street-wise), no wayang, no pretensions and compassionate: not sneering, complacent, privileged, incompetent and self-serving snob. Even the PAP’s preferred candidate belonged to the Old Guard, even if he had a privileged background: in fact many of the Old Guard had privileged backgrounds, they juz didn’t behave like a certain sneerer. Tony Tan juz didn’t get my vote because he was the “preferred” candidate. But if it had been between him, TJS and TKL (ex-PAP too), I’d voted for Tony Tan.

The next candidate, TJS, had only 25% of the vote. This is in line with the hard core opposition vote that emerges in any constituency an opposition candidate appears, even a looney one.

What the internet has allowed, is to give amplification to the voices of the hard core opposition supporters. They were never silent but the exclusion of their voices from the constructive, nation-building local media meant that they could only communicate in a less than effective way most of the time to other die-hards and ordinary S’poreans.

Ordinary S’poreans now realise that these voices are not demon voices because like the hard core opposition voters, they too have grievances, doubts etc. They now know, they are not alone.

The power of the internet and the govt’s concern that it is losing the commanding heights of public communications are best illustrated by P Ravi’s reposting on Facebook about the availability of the masks: that the public were not going to get it despite repeated govt assurances to the contrary, and the govt’s heavy-handed reaction. This reposting was enough to get him accused of spreading misinformation.

P Ravi’s defence when the govt accused him spreading misinformation about the distribution of masks, was that he sharing with his Facebook friends (1000 over if you must know), giving the govt feedback, and seeking clarification from the govt: rather contradictory assertions. Why the govt didn’t ridicule these contradictions is beyond me. Instead, Yaacob, a civil servant and the constructive, nation-building media beat the drums to the tune of RAVII*, making him a hero and martyr to the hostiles on the internet and, in particular on social media. My posts on this

http://atans1.wordpress.com/2013/07/24/p-ravis-reposting-what-the-govt-should-have-done/

http://atans1.wordpress.com/2013/07/19/reason-why-govt-fears-keyboard-warriors/

http://atans1.wordpress.com/2013/08/07/is-the-pap-leopard-baring-his-fangs-and-unsheathing-his-claws/

http://atans1.wordpress.com/2013/09/04/telling-gd-info-from-bad-the-secret-police-way/

So nope, the desire to experiment when things are gd, isn’t unique to S’pore. Nor is the internet the cause of the unpopularity. Even when the PAP had 70ish % of the popular vote, the balance voted for the opposition.

And 35% of the population like the values of the PAP Old Guard, they juz don’t like the way the PAP has developed in the 1990s and noughties. All this means that those who want change cannot afford to be complacent esp as there is going to be a party that’s going to be gd for the Party i.e. the PAP.

*Recriminations, Accusations, Vilifications, Insinuations & Insults. Minister Shan talks of criticising ministers n the “right” way (E-Jay’s take). Well, what Yaacob and a civil servant did to Ravi, and what VivianB did to various people including the elderly poor doesn’t set gd examples for the public, do they?

SingTel affected by rupiah, rupee collapse

In China, India, Indonesia, Malaysia, Telecoms, Vietnam on 31/08/2013 at 5:08 am

In its latest set of results announced a few weeks ago, the profit contribution from regional associates climbed 14% to S$552 million in the quarter on higher results from Indonesia, Thailand and India, the company said.

SingTel gets 12% of its profit before tax from India and 22% from Indonesia, with those earnings in future likely to take a hit when translated back into Singapore dollars. Remember too the weakish A$, Baht, and Filipino peso will affect its earnings.

Other Asean round-up news

At an emergency meeting on Aug. 29, the monetary authority raised its benchmark and overnight deposit rates. It’s a decision Bank Indonesia should have made at its last official gathering less than two weeks ago. An obsession with economic growth stayed its hand. http://blogs.reuters.com/breakingviews/2013/08/29/currency-markets-rude-wakeup-call-stirs-indonesia/

Politics is back on the streets in Thailand, after a relative lull of more than two years, with a protest over the weekend. It underlines the persistence of divisions in Thailand and raises the prospect of a return to the political turmoil that left more than 90 people dead in Bangkok in 2010.

Thousands of demonstrators gathered in a vacant lot in Bangkok on Saturday, as speakers threatened to “overthrow” the government.

But unlike in previous years, this time the protesters were members of Thailand’s oldest political party, the Democrat Party, which has long had a reputation as the staid, well-mannered and intellectual voice of the Bangkok establishment and has been firmly dedicated to resolving differences inside Parliament, where the Democrats lead the opposition.

The acrimony between the Democrats and the government of Prime Minister Yingluck Shinawatra centres on a number of legislative issues, chiefly an effort by the government to pass an amnesty law for those involved in the 2010 protests.

The Democrats oppose the Bill, saying it might also apply to those who insulted the monarchy or committed serious crimes.

But the broader conflict appears to stem from their feeling of powerlessness in the face of the resurgence of Thaksin Shinawatra, Ms Yingluck’s brother, who sets the broad policy lines for the government and the Pheu Thai Party despite living abroad since 2008 in self-imposed exile to escape corruption charges.

The weekend protests followed another peaceful one earlier this month involving some 2,500 supporters of the Democrat Party and royalist groups at Bangkok’s Lumpini Park, throwing fresh light on Thaksin’s divisive influence in Thailand.

(Extract from NYT)

Malaysia‘s government is exploring the possibility of hiking the real property gains tax to rein in rising housing prices and curb speculation in the market. Bernama quoted Housing Minister Abdul Rahman Dahlan as saying that current property tax levels had failed to stabilise house prices with the house price index continuing to rise.

Malaysia’s GST will take 14 months to implement if announced in the budget in October, a ministry official said

The Philippines posted better-than-forecast economic growth, fuelled by its services sector and higher consumer and government spending. Its economy grew 7.5% in the April to June quarter, from a year earlier. It is the fourth quarter in a row its economy has expanded by more than 7% – defying a regional trend which has seen growth slow down in many countries. The Philippines’ 7.5% second-quarter growth matched that of China but is higher than Indonesia, Vietnam or Malaysia,

However, the country has been hurt in recent weeks by investors pulling out of the region’s emerging economies. This despite under emerging mkts, given the follow of remittances from workers overseas, it will not have to worry about investors’ outflows unlike other mkts.

Japan’s All Nippon Airways has said it will acquire a 49% stake in Asian Wings Airways, an airline based in Burma..

The Japanese airline will pay 2.5bn yen (US$25m) for the stake.mIt is the first time a foreign carrier has invested in a Burmese-based commercial airline. It currently operates domestic flights to all major tourist destinations in Myanmar.It t plans to “extend its wings to regional destinations through scheduled flights as well as chartered ones”.

SCCCI SME Survey proves LKY’s point?

In China, India, Indonesia, Malaysia, Vietnam on 17/08/2013 at 1:41 pm

Indonesia has overtaken China as a preferred investment destination for small and medium-sized enterprises (SMEs), This was a key finding of the Singapore Chinese Chamber of Commerce and Industry (SCCCI) SME Survey 2013, which polled 516 companies in June and July.

Of the 63% SMEs which are venturing into markets abroad, 39.9% favour investing in Malaysia and 28.1% Indonesia, a hair’s breadth more than the 27.2% looking towards China.

One reason given is that as the Chinese economy develops and wages rise, Indonesia could stand to position itself as an undertapped source of low-cost labour. As I blogged here, a few days back, LKY said that SMEs would flee S’pore if FTs were not allowed in by the cattle-truck load: they want cheap labour. The survey indicates that securing cheap labour is all that SMEs care about?

Other Asean-round up news:

Express link to KL

M’sia should talk to billionaire inventor Elon Musk. He wants to build a Hyperloop that would cut travel time between SF and LA to 35 minute. 12 minutes to KL based on the 35 minutes time

http://www.bbc.co.uk/news/technology-23681266

Shrimps

THe US Commerce Department declined to set duties on shrimp imports from Thailand and Indonesia. It has imposed duties on shrimp imports from five nations.

The ruling applies to about US$2bn of shrimp imports, from India, Ecuador, China, Malaysia and Vietnam. The Commerce Department found that those nations had been subsidising their shrimp producers.

Malaysia faces the highest duties of up to 54.5%, the lowest were set for Vietnam which faces duties of up to 7.8%.

A final approval is needed by another government body, the International Trade Commission (ITC), before the duties can take effect, The ITC will consider whether US producers have been threatened by the imports and make its decision in September.

Fighting inflation the Indon way

Bit like the way they fight the haze: wayang all the way.

Indonesia’s central bank held its benchmark interest rate on Thursday and took steps to contain loan expansion to battle inflation without taking any more steam out of slowing economic growth.

Many economists do expect another rate hike later this year but the central bank faces a tricky combination of surging prices, a falling rupiah, a stubborn current account deficit and slowing economic growth.

Minister, you thinking of yr govt?

In India, Political governance on 16/07/2013 at 5:13 am

I laughed when I read the following:

Law and Foreign Affairs Minister K Shanmugam said one of the biggest risks for Singapore is a populist government that spends increasing amounts of money to succeed.

Already, he noted, there are other challenges facing the nation, such as an ageing population, a shrinking workforce and rising healthcare costs.

Mr Shanmugam said: “There’s always something else on which money can be spent. But every time the government agrees and puts down a programme, you must remember it’s hard-coded, very difficult to take it back.

“Whenever we put down a programme today to spend money, I think the biggest risk for Singapore is a populist government that decides that the way to succeed is to spend more and more money. Every programme that you put down money (for), today, would just mushroom in 10, 15 years.

“So the impact will not be seen in the next five years. Next 10 years will be okay, but after that, how are we going to afford it? How sustainable is it going to be?”

Mr Shanmugam was speaking at the National University of Singapore U@live forum on [12th June 2013]. (CNA)

Recently,

– the govt has junior civil servants more money (Singapore’s 80,000 civil servants will get a mid-year Annual Variable Component of 0.4-month. In addition, Division IV officers will receive a wage increase of $70 per month and Division III officers a pay rise of $40 per month.)

– NTUC is pushing for cleaning companies to give each of their workers $60 a month more.

National Development Minister Khaw Boon Wan said the government has taken steps to help low-income tenants of rental flats who see their pay rises eaten up by a rental increase.

Two million adult Singaporeans received letters from the government in the first week of July, informing them of the benefits they and their households will receive as part of Budget 2013.

And what about these?

– In 2011 or 2012, the govt funded a rise in the salaries of doctors, and I think, other health professions in public service. There were assurances that the fees we pay to use SingHealth services would not be raised.

– CPF interest rates are maintained despite the yields on 10-yr govt bonds collapsing.

– The injection of $1.1bn into the public transport system, a system which the former transport minister tot was perfect. Remember, he threatened a GST increase because he said commuters were asking for too much comfort.

– The accelerated HDB building programme despite constant govt grumbles that it loses money. A previous HDB minister even implied that by building more HDB flats, S’pore was raiding its reserves. Yes, yes he actually didn’t say this but I didn’t say he said this. I’m putting a reasonable spin on what he said.

So one could reasonably argue that this govt is doing the very thing it decries. It spends increasing amounts of money to succeed or to make sure it’s share of the popular vote doesn’t fall further in the next GE. A few years ago, when LKY was still in the cabinet, and believed to have a veto over cabinet decisions, I had lunch with some economists. One of them wondered if LKY would die if the govt spends one more cent of our money to make life a bit more comfortable for S’poreans. Wonder how LKY feels about all the above spending? Would he think it is “populism” at work?

The continuing good news for “P” (for “political”) netizens, and the opposition is that so long as VivianB is in the cabinet, the PAP will have very serious problems being perceived as a populist, compassionate party, no matter how much of our money the govt throws at us. It also undercuts the gd work that Kee Chui is doing. When social welfare workers praise him, he must be doing something gd. Or at least “populist’.

Asean round-up

In Airlines, Banks, India, Indonesia on 09/03/2013 at 7:09 am

The Mitsubishi UFJ Financial Group “is among banks considering a purchase of TPG Capital’s $1.6 billion stake in Indonesia’s PT Bank Tabungan Pensiunan Nasional, two people with knowledge of the matter said,” Bloomberg News reports.

A bid by Malaysian low-cost carrier, AirAsia, to set up an airline in India has won approval from the Indian government.

It would be the first foreign company to try to capture the rising demand in India’s aviation sector.

AirAsia India would be a joint venture with the well-known Tata Group, based in Chennai in South India.

India’s aviation industry, which has suffered major losses, was opened to foreign investment last year.

The government now allows foreign companies to own up to 49% of a local airline.

AirAsia, which is Asia’s largest low-cost carrier, will make an initial investment of 800m rupees ($15m; £10m) and will own 49% of the new airline, while Tata Sons will have a 30% stake. Part of BBC report

India following S’pore, rewarding failure

In India, Political governance on 12/08/2012 at 6:23 am

New finance minister in India. Previous one became president. What a country. Mismanaged the country’s finances (high inflation, falling foreign direct investment, retrospective taxes etc) but moved onto the highest post in the land.

Bit like S’pore? Tony Tan as executive director of GIC presided over purchase of “two 30-yr” investments (UBS and Citi) that tanked within months of purchase. He became president.

Seriously, the actions of new Indian finance minister is gd news for stale Indian bulls like self.

http://www.breakingviews.com/india-begins-the-post-mukherjee-clear-up/21034450.article

Err Tharman for president? We could do with a finance minister given our problems with inflation:

– Inflation has accelerated, fueled by rising housing and private transportation costs … The monetary authority last month estimated consumer-price gains will average 4 percent to 4.5 percent this year, compared with the 3.5 percent to 4.5 percent range it forecast previously.

http://www.bloomberg.com/news/2012-08-10/singapore-economy-contracts-as-pressure-gains-for-policy-easing.html

– DBS says S’pore facing stagflation with one of highest inflation rates in region

http://sbr.com.sg/economy/news/singapore-struggle-one-highest-inflation-rates-in-southeast-asia

Sporting losers celebrated

In Humour, India on 28/07/2012 at 2:32 pm

Good fun and graphics

http://www.bbc.co.uk/news/world-asia-india-18979959

Artist is from India, not noted for its Olmpic prowess even in hockey. Kinda appropriate. ))))

GIC: Buying while others selling

In GIC, India on 27/07/2012 at 6:44 am

Don’t worry, amounts only “peanuts”.

GIC increased its holding in Reliance Industries from 1.06% to 1.22% in the three-month period ended June 30, 2012 while other foreigners were selling.

http://zeenews.india.com/business/news/finance/foreign-investors-press-sell-button-on-reliance-stocks_56354.html

Temasek’s cautious in India while PM’s bullish

In India, Temasek on 16/07/2012 at 9:46 am

So “Prime Minister Lee Hsien Loong said Singapore is prepared to share its experience in building industrial parks with India … Mr Lee believes there is potential for building such parks in India, following Singapore’s experience with such parks in countries like Indonesia and Vietnam … Singapore has been talking to several states in India about such projects … acknowledged that it would take some time, as land has to be acquired and approval has to be obtained. Support from the state government is also needed … if these hurdles can be cleared, Singapore will be able to build the parks faster and contribute to India in a strategic direction [such parks can help to boost the manufacturing sector in India which he says India needs. India also needs a substantial amount of manufacturing investments he claims] … the Indian economy is at a stage where it needs a considerable amount of investments, especially in infrastructure. Singapore companies have capabilities to handle some of these projects.”

But despite his bullishness (see here for the CNA report), Rohit Sipahimalani, co-chief investment officer of Temasek, told The Economic Times: “There’s a lot of uncertainty, but times like these also create opportunities. We will take advantage of the uncertainty, but will remain cautious.”

Can’t blame Temasek, given things like this in India  http://www.reuters.com/article/2012/05/18/india-buyout-idUSL4E8G318Y20120518

IPO: Healthcare & Indian themes

In Emerging markets, India, Malaysia on 05/06/2012 at 6:51 am

(Or “The Achars are coming”)

First, there is IHH expected to list in July. Intetegrated Healthcare Holdings is the healthcare arm of Malaysia’s state investor. Its assets include Turkish hospital group, Singapore’s Parkway Holdings, India’s Apollo Hospitals Enterprise and Malaysia’s Pantai Hospitals and International Medical University. It presses all the right buttons: Turkey, India, M’sia and S’pore.

The listing of IHH in Singapore and Malaysia is expected to be the fourth-biggest initial public offering in S’pore’s history and Malaysia’s second-largest this year after the planned listing of Malaysian plantation group Felda Global Venture Holdings.

International Financial Corp, part of the World Bank Group, is planning to take part in the planned US$1.5 billion listing of IHH. Another cornerstone investor is the Pru’s Asian funds arm. UK’s Pru or the US Pru. I’m sure GIC or Temasek will be another cornerstone investor.

For those interested in Indian healthcare and yield there will be  Religare Health Trust. India’s Fortis Healthcare, which is seeking to expand its clinical operations and cut debt, plans to raise about 20bn rupees (S$459m) by listing its hospital business in Singapore. Its listing is expected to be later than that of IHH.

“We are looking at this listing to de-leverage the balance sheet,” its CEO said anning the IPO last week. Fortis, which has about 15 hospitals and clinics that are part of this business, has a consolidated net debt of 50bn rupees, the CEO said. The company is looking to add about 2,500 hospital beds in three to four years, he added. Fortis, India’s No 2 hospitals chain after Apollo Hospitals Enterprise, said consolidated net profit jumped 41.34%  to 415.4bn in its fiscal fourth quarter ended March.

Religare Health Trust has a mandate to invest in medical and healthcare assets and services in Asia, Australasia and emerging markets.

The IPO would be the second by an Indian company in Singapore after Indiabulls Properties Investment Trust raised US$165m (S$210.8m) in 2009. This has been a dog of a stock.

Reliance Communications is also planning to raise US$1 billion through a Singapore listing of its undersea cable business.

 

Ascendas India: DBS is bullish

In India, Property, Reits on 08/05/2012 at 6:06 pm

http://sreit.reitdata.com/2012/05/02/a-itrust-dbsv/ (Ya I know technically it’s not a Reit, but it looks like one.)

So am I. )))). BTW, the Indian rupee has strengthened after the government said on Monday that it would delay proposed laws targeting tax avoidance by one year.

But five things wrong with the Indian economy.

Why India is no longer flavour of the season

In India, Telecoms on 07/04/2012 at 7:31 am

Why MNCs and  int’l investors are giving India a miss while still liking the other “I”: Indonesia.

Seven international trade associations have written to Indian Prime Minister Manmohan Singh criticising a new tax proposal under which even 50-year-old corporate deals could be scrutinised.

The proposals were announced as part of India’s federal budget last month.

The associations warned that the firms they represent could reconsider their business ventures in India.

http://www.bbc.co.uk/news/world-asia-india-17581212

And the cancellation of telecoms’ licences doesn’t help.

http://www.bbc.co.uk/news/world-asia-india-17621257

Standard Chartered beats forecasts with 17% profit rise

In Banks, India, Temasek on 04/08/2011 at 7:51 am

London-based, Asia-focused Standard Chartered Bank (Temasek owns 19%) has reported that pre-tax profits for the first six months of the year were $3.6bn (£2.2bn), up 17% from last year.

Profits grew in all the regions where Standard Chartered operates, except for its biggest market, India, where profits fell by 5%.

Profits grew by 23% in Hong Kong, 34% in Singapore, 14%in South Korea and 19% in China.Income from the Middle East grew 4%, in Africa it grew 10% and in the Americas and Europe it grew 11%.

It blamed rising interest rates, growing competition and regulatory changes for falling profits in India.  It made a big bet in India financing takeover details. Will be interesting to see if these give the bank the same death-defying experiences as it gave some Wall Strret banks in the 1980s and 1990s. http://atans1.wordpress.com/2010/09/10/stanchart-getting-too-aggressive/

Head south young S’poreans

In India, Indonesia on 27/05/2011 at 9:25 am

Indonesia is the best place for entrepreneurs to start a business, a BBC survey suggested. The US, Canada, India and Australia are seen as among the next best countries at supporting new businesses.

So head south to Indonesia or Oz, young entrepreneurs.

No FTs, no Indian food

In Economy, India on 05/04/2011 at 10:29 am

The M’sian experience.

Over the last year the Abirami restaurant chain has closed down five of its seven locations because of a shortage of foreign workers.

The moral of the story: there are always consequences to any policy.

High Oil Prices: India in trouble

In Energy, India, Uncategorized on 23/03/2011 at 9:15 am

On all four counts* … India scores badly. New Delhi has already seen street rallies protesting rising food prices. And if India needs higher subsidies, its weak and cash-strapped coalition government – dented anew by last week’s WikiLeaks claims – seems powerless to deliver them. The sovereign most exposed to an oil shock could be the least well prepared to deal with it.

*a country’s oil intensity (how much oil it takes to produce a unit of output), its energy trade balance, its current level of price inflation, and the government’s fiscal position. The first two give an indication of a country’s exposure to higher prices; the latter two suggest how much scope it has to absorb and defray them through fuel, electricity and food subsidies.

FT’s Lex

US$120 oil: Losers in region

In India on 26/02/2011 at 8:23 am

According to BarCap, the big losers are South Korea, Thailand, Taiwan and India. US$120 oil would drag both Korea and Thailand into current account deficit (in Korea’s case, so would $110 crude). In Taiwan it would drag 4.3 ppts off the current account as percentage of GDP.

India doesn’t trust our SWFs

In GIC, India, Temasek on 11/10/2010 at 4:31 am

Once upon a time, India deemed GIC and Temasek to be one entity and there was a 10% on the joint holdings of both in Indian companies. The Comprehensive Economic Co-operation Agreement (CECA) which was signed in 2005 provided that Temasek and GIC were to be recognised as separate entities, i.e. each is entitled to each own up to a 10%  stake in a company.

There is a report in an Indian newspaper that the Securities and Exchange Board of India (SEBI) has ordered  that both Temasek and GIC could only own up to a combined 15% stake in a company, or takeover rules would be triggered.

Can you blame one MM for once being sceptical abt investing in India?

StanChart: Getting too aggressive?

In Banks, India, Temasek on 10/09/2010 at 5:11 am

Is Standard Charterd (which like HSBC) had a good crisis taking on too much risk? We shld care as Temasek owns 18% of StanChart, and StanChart  is one of its best performing investments.

Ranked 14th among merger advisers in India in 2009, StanChart is now number two (and could be soon Numo Uno) by financing takeovers in the world’s second-fastest growing major market for M&A deals, Bloomberg reports.

The problem is that in the 1980s and 1990s, major US investment banks  and European universal banks  got into serious trouble by financing takeovers in the US. The deals went sour when the economy collapsed. The banks had tot financing takeovers was a gd way (“no brainer”) of getting into the lucrative M&A game.  They forgot that these loans are margin financing by another name.

Is StanChart repeating the same mistake?  Maybe it thinks India’s economy may never collapse. But never take for granted anything about a country that needs “divine help” to get ready for the October Commonwealth Games.

GIC: a problem at Citi

In Banks, India, Temasek on 08/09/2010 at 5:49 am

Some analysts and accounting experts (among the latter Lynn Turner), a former chief accountant at the Securities and Exchange Commission,  say Citi must set aside funds to cover US$50bn of deferred taxes.

These assets  are important to Citi. At the end of the second quarter, deferred tax assets made up more than a third of Citi’s tangible equity. So if he had to set aside funds, this would reduce its capitalratios and weaken its balance sheet.

To avoid setting aside funds, Citi has to be confident it will earn US$99bn in taxable income during the next two decades. It says it can.

However as  its pre-tax losses in 2008 and 2009 topped US$60bn, these critics ask why it should be trusted.  They have a point, while between 2002-2006 period Citi had annual pre-tax profits of at least US$20bn, this got wiped out by the recent losses.

Err so will this “30-yr” investment be around in 30 yrs time, let alone make money for GIC, as MM predicted? Remember Temasek cut loss on its Merrill Lynch investment, after doubling down, and juz before market turned.

Just when you tot it was safe

In China, Economy, Emerging markets, India, Indonesia on 29/04/2010 at 5:18 am

Thinking of starting to  invest seriously in emerging markets? Standard Chartered warns of bubble in emerging markets. Extract from Guardian article:

Gerard Lyons, chief economist at Standard Chartered, said Asia was the main recipient of western capital, but there was also evidence of speculative activity in Latin America, Eastern Europe and Africa.

A combination of a prolonged period of low interest rates in the west and strong growth in emerging markets meant the money would continue to flow in. “The size of the flows could become more significant,” he added. “There is a significant risk, even though it is a consequence of economic success.”

The report noted that many countries did not have the capacity to absorb the capital inflows, with the result that the money boosted share and property prices, adding to inflationary pressures.

“The longer it takes to address this, the bigger the problem will be. Just as excess liquidity contributed to problems in the western developed economies ahead of the financial crisis, excess liquidity has the potential to cause fresh economic and financial problems across the emerging world.”

Massive flows of capital from emerging economies, especially those in Asia, helped to inflate the asset bubbles in the west that led to the financial crash of 2007. Standard Chartered said global liquidity flows had now reversed, with emerging economies now on the receiving end. Recipients included countries with current account surpluses such as China, and those running current account deficits such as Vietnam and India.

Lyons said China was the emerging economy investors were looking at for signs of trouble. “China is not a bubble economy but it is an economy with bubbles.” But he added that the problem was not confined to Asia, and that hedge funds were now looking at “frontier markets” in Africa.

While emerging markets needed foreign direct investment to help them grow, Standard Chartered said the influx of hot money was a big worry. “Although hot money is regarded as temporary, it persists until the incentive to speculate is eliminated.”

Oh and there is the Greek crisis. 2008, here we come again?

DBS: What the new chairman should be looking at II

In Banks, China, Corporate governance, India, Indonesia on 30/03/2010 at 6:04 am

He should ensure that any acquisition in Indonesia, India, Malaysia and Thailand,  the countries where DBS says it would look for acquisition opportunities is disciplined in terms of valuation, strategic fit and execution.  Investors still remember the Dao Heng fiasco, overpaying and having to take billion dollar impairement charge. And the purchase of POSB was not such a gd deal as anti-government subversives like to imply that it is.

Better still he shld relook at the rationale for these M&A activities.

DBS is  Singapore and Hong Kong centric. But, in February, it said it was aiming to have 30 per cent of its revenue from South and South-east Asia, excluding Singapore, 30 per cent from Greater China and 40 per cent from Singapore within five years.

Morgan Stanley estimates that DBS would have to grow at a compounded annual growth rate of 40 per cent a year in South and South-east Asia to achieve its stated target in that region i.e. it would have to grow via acquisitions.

BTW last Friday BT reported that DBS’s CEO had said DBS had identified unnamed acquisition targets in Indonesia which shld worry investors.

Previous post on topic

http://atans1.wordpress.com/2010/03/24/dbs-what-the-new-chairman-shld-be-looking-at/

He shld be relooking at FT policy — both in principle and execution.

Where shld Standard Chartered base its CEO?

In China, India, Temasek on 04/03/2010 at 5:28 am

Last sat ST reported that analysts were saying  that Standard Chartered will be forced to relocate its CEO into Asia in imitation of HSBC.

If it does, it will be a test of Temasek protestations that it does not interfere with the commercial decisions of its investee companies. Remember it is the single largest shareholder in SC (195 ), and all the other big shareholders are “peanuts” as Mrs SM might put it.

The logical place for the CEO is to base himself in HK, SC’s biggest market and which is part of China: it and HSBC are targeting China as the biggest driver for growth.

But could Temasek or its shareholder resist the temptation to have  SC’s CEO here. Singapore is way behind HK in IPOs, hedge fund HQs (Soros prefers HK as his Asia HQ), fund mgt,   and in wealth mgt where S’pore wants to be a global player, the head so HSBC and JP Morgan’s private bank are basing themselves in HK, or thaz what reports are saying.

Already the private bank’s  and PE’s global HQs of SC are here, giving SC  the perfect excuse for relocating its CEO here.And S’pore’s nearer India, another big driver for SC’s future growth. As  to HK and China, he can fly there on SIA, not Cathay, of course.

And relocating here will give our MSM the excuse they need to exult the merits of this government before the expected early general elections.  Hard for the MSM to laud the government given the growing inability of ministers to avoid contradicting one another.

Note the news that SC’s CEO will also donate his bonus to charity, came only after it was reported that HSBC’s CEO would donate his. SC is always playing catch up to HSBC. At one time they were the same size, but one is a global player, the other is 19% owned by Temasek. But then OCBC was once on par with HSBC.

I’m a shareholder of HSBC for over 25 yrs.

BTW the relative sizes of both and how both had a gd crisis:

“The ranking three years ago and for most of the preceding few years saw HSBC as the biggest bank, Barclays and Royal Bank of Scotland chasing its tail, Lloyds some way behind that and Standard Chartered as the enthusiastic, fast-growing puppy.

‘Today HSBC isn’t just the biggest British bank. Its market value of more than £120bn is more than that of all the other four added together. It’s in a league of its own.”

“Today the market value of Standard Chartered, at an almost unbelievable £32bn, is only £2bn less than Lloyds’ and £5bn less than Barclays. And it is £11bn more than RBS (although that’s to ignore all the “B” shares that RBS has flogged to taxpayers).”

Excerpt from http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/03/the_new_banking_hierarchy.html

and if you want to read why HSBC and SC did so well a gd read.

SingTel: African indirect approach is best

In India, Telecoms, Temasek on 23/02/2010 at 5:19 am

I read a media report that some analysts were querying when it didn’t invest in Africa direct, rather than allow Bharti to buy Zain’s African assets.  My tot,” what weed are these analysts on?”

Well for starters, the Indian govt would not be impressed with SingTel, Temasek and the S’pre govt if SingTel used its32% in Bharti to flow Bhart’s African ambitions which have the Indian govt’s blessing. Remember India thinks it has to counteract China’s grow influence in Africa.

And Bharti wants Africa. It made two attempts to merge with MTN,Africa’s largest telco.

If SingTel tried to use its 32% stake in Bharti to kill Bharti’s African ambitions,  SingTel, Temasek and the S’pore govmin would be the losers, just like us footie fans because the EPL bid has caused FIFA to raise the price of World Cup footie for us.

Then also SingTel’s mgt expertise is in developed couuntries — Little Red Speck and the Lucky Country.  Its ventures in India, Indonesia, Thailand, the Philippines, and Bangladesh: countries which once in trlco terms are like Africa today are thru associates where mgt are in the hands of experienced local mgrs who are not SingTel employees.   Zain is selling out partly because it can’t make serious $ in Africa. Africa generated about 45% of group revenues in the first nine months of last year but only 10% of net profits. Its managerial experience like that of SingTel is in developed telco mkts.

And would straight-laced, conservative SingTel be able (or want to or would we want it) to deal with cowboys in chaos. Example:   The privatisation of Nitel, Nigeria’s former state telecoms monopoly, is in a mess.  The Nigerian government found itself arguing with some of the preferred bidders over whether they had, in fact, bid at all. China Unicom – named as part of the winning consortium – said “it had not started any negotiations with respect to any substantive and legally binding agreements. It said its unlisted parent had not had any direct discussions with parties to the proposed privatisations. It said the European arm had been “in contact with potential bidders” for Nitel but did not name them,” according to the FT. At first, Unicom said it knew nothing of the bid.

Nope better for SingTel to let Bharti do the work. With all its experience, its share price is 11% down since the annc. of the Zain deal.  Clearly there is some concern.

If we don’t get to see the World Cup, SingTel will have a massive PR crisis on its hands in its home mkt. It doesn’t need Africa to add to its woes.

SingTel: During the hols

In India, Temasek on 17/02/2010 at 5:19 am

After twice failing to merge with MTN, Bharti (32% owned by SingTel) has finally found a way into Africa: by buying the African assets of Zain.

At US$10.7bn in cash, this is not cheap. Zain’s African businesses are expected to earn US$1.3bn this year before interest, tax, depreciation and amortisation; Bharti has offered about eight times that. Vodafone paid a similar multiple for South Africa’s Vodacom.  Eight times EBITA seems to be the norm where telco services are underdeveloped but with potential:  Vivendi paid this multiple for a stake in a Brazilian telco last year.

Why buy? Africa is undeveloped and poor: Bharti knows how to run a low-cost, high-growth business.  More importantly, India’s biggest mobile phone operator needs a new driver for earnings: in India,  it has 11 competitors and price wars.

So why is Zain a seller? The usual reasons that allow a deal to be made

Some of Zain’s shareholders need the money.

The Kuwaiti company cannot make serious wagga in Africa. Africa generated about 45% of group revenues in the first nine months of last year but only 10% of net profits.

Bharti’s shareholders are nervous, with prices falling 9% on Monday, afraid that despite its experience in India, Bharti will fail in Africa.

But for SingTel, it will have via Bharti a presence in Africa: a place with potential for explosive growth.

Global diversification via one blue chip

In China, India, Investments on 20/01/2010 at 6:14 am

Tony Tan, deputy chairman of GIC is optimistic about Asia’s prospects and expects it to enter a ‘Golden Age’ in the next decade.

So if you believe him (remember MM Lee, GIC’s chairman, talked of something similar just before the global credit crunch and subsequent global recession), what to buy leh?

Just as CapitaLand is a “no-brainer” China play, maybe  this is “no brainer” for dummies to get global exposure?

“[W]ill continue to outgrow America over the coming years. Already 60% of its sales are overseas, and its bridgehead into China and India looks more robust than most.”

Of course you could buy an ETF that invests in a global index.

Follow

Get every new post delivered to your Inbox.

Join 186 other followers