Asean round-up

Bangkok SkyTrain Fund Raises $2.1 Billion in I.P.O. The offering, by an infrastructure fund controlled by the rail operator BTS Group, priced at the top of its marketed range, and ranks as the biggest ever new listing by a Thai company.

DEALBOOK

Burma has shortlisted 12 international consortia, including one led by Singapore Telecommunications, for the final stage in its telecommunications licence tender, the Wires report.

Other shortlisted applicants are a consortium comprising China Mobile and Vodafone Group, India’s Bharti Airtel, MTN Dubai, Jamaica’s Digicel Group, Japan’s KDDI Corp and Sumitomo Corp, Malaysia’s Axiata Group, Norway’s Telenor, Millicom International Cellular, Qatar Telecom and Vietnam’s Viettel Group.

Seems Temasel’s teco didn’t make it.

The shortlisted applicants can now formally bid for the two licences, each with initial terms of 15 years. Bids must be submitted by June 3, and the winners will be announced by June 27.

SMEs like Iskandar http://www.todayonline.com/business/ocbc-expects-sme-loans-iskandar-triple

What happens in PK wins GE but Johor remains UMNO heartland.

Asean round-up

Indon IPOs: Private-equity firm PT Saratoga Investama Sedaya, and Indonesia’s biggest taxi operator Blue Bird Group, have picked underwriters to prepare their initial public offerings (IPOs) as they seek to raise money ahead of a 2014 general election.

Burmese telco update: Telecoms will be among the first industries to be liberalised under Burma’s reformist government, which hopes to place mobiles into the hands of between 75% and 80% of its 60 million citizens by 2016, up from an estimated 6% today.

If take-up is high, the entire mobile market in Burma – renamed Myanmar by the ruling military junta – could be worth $10bn (£6bn) a year, with networks generating $7.3bn of those revenues, research by Ericsson found.

Foreign companies are eager to partake in what has been described as a mouthwatering opportunity, and by Thursday’s deadline 22 bids had been submitted.

http://www.guardian.co.uk/business/2013/apr/04/vodafone-china-mobile-burma-telecoms

SingTel and Temasek are also trying their luck. but LKY’s remarks about “stupid” generals (a few yrs ago) can’t be helpful.

Iskandar: Some issues are beginning to surface as highlighted in a recent Business Times article which said that investors are not getting assurances in black and white on issues like land zoning, mortgage loan quantums and Bumiputra employment quotas, among others.

Foreigners investing in Iskandar might do better if they can understand that most policies in Malaysia are instituted by politicians of the day. When the politician leaves, a new policy replacing the old one is to be expected. When doing business in Johor, one has to factor in such risks.

Remember that Putrajaya, the state administrative capital of Malaysia, is still struggling after more than 20 years in the making. When Iskandar was mooted in 2006, authorities were confident about getting funds from Middle Eastern investors. Obviously, that plan didn’t work out and the focus is now back to Singaporean investors.

http://www.tremeritus.com/2013/04/01/perils-of-investing-in-iskandar-malaysia/

Thailand is the “Detroit of the East”. And it is Japanese carmakers in particular that use the country as a manufacturing hub. In 2012 production reached 2.45m vehicles of which 1m were exported. This made Thailand the 7th largest car exporter globally.

http://www.economist.com/blogs/schumpeter/2013/04/thailands-booming-car-industry

Eat yr hear out Dr M. Remember, he started Project Proton because he wanted to kick-start M’sia into becoming a leading vehicle manufacturer.

Pinoys ahoy: Over 10m Filipinos, equivalent to about a quarter of the country’s labour force, live or work abroad, permanently or temporarily, legally or illegally, in over 200 countries. Their remittances are equivalent to 8.5% of GDP, helping the country to plug its trade deficit and amass over $80 billion of currency reserves. As a result, the Philippines has become a net creditor to the rest of the world … , not just a net supplier of labour.

These impregnable external finances are one reason why Fitch, a ratings agency, awarded the Philippines its first ever investment-grade credit rating on March 28th.

http://www.economist.com/news/finance-and-economics/21575812-archipelago-has-never-been-more-creditworthy-ratings-heaven

The April Fools joke is on the govt

Private daily newspapers are being sold in Burma for the first time in almost 50 years, as a state monopoly ends.

Sixteen papers have so far been granted licences, although only four were ready to publish on Monday.

This is another important milestone on Burma’s journey away from authoritarian rule, the BBC’s Jonathan Head reports from the commercial capital, Rangoon (BBC report on 1 April).

Yet our president has the cheek on 1 April to say. “We want to see Myanmar succeed, and are prepared to do whatever is within our means to support this transition towards democracy and steady development.”

“Where Myanmar goes, S’pore doesn’t dare follow” is what he should be saying.

Update at 10.20 — Forgot to mention that people don’t need a licence to protest: peaceful demonstrations are not an issue.

Asean round-up: The dark side

Strikes  for higher wages a regular occurrence in Indonesia: workers and businesses unhappy http://www.bbc.co.uk/news/business-21840416

Muslims attacked in central Burma: Mosques and other Muslim buildings have been attacked by crowds of Buddhists in towns on the road from Rangoon to Pyay, about 200km (125 miles) to the north … A state of emergency is in force in the central town of Meiktila, where some 40 deaths have been reported … At least 12,000 Muslims are thought to have fled their homes in the unrest …

The conflict is the worst since violence in Rakhine state last year, where nearly 200 people were killed and tens of thousands forced from their homes.

The conflict that erupted in Rakhine involved Buddhists and Rohingya Muslims, who are not recognised as Burmese citizens. Scores of Rohingyas have fled what they say is persecution in Burma in recent months.

The Burmese government will use force if necessary to stop “political opportunists and religious extremists” from fomenting hatred between faiths, President Thein Sein has warned. BBC reports

Asean round-up

Carlsberg has signed a joint venture to brew and market its beers in Burma. Carlsberg will own 51% of the joint venture with local firm Myanmar Golden Star (MGS) Breweries.

Foreign banks could enter Burma with majority-owned joint ventures with local banks as early as April, FT reports, followings news of a cabinet reshuffle and announcements on reforms to attract foreign investment.

The Indonesian economy, the biggest in Southeast Asia, slowed in the last three months of 2012, dragging down full year growth.The economy grew by 6.2% last year, down from 6.5% in 2011.http://www.bbc.co.uk/news/business-21333607

 

Asean round-up

In Vietnam, the government’s planned sale of a 20% in Sabeco, a brewery,  is expected this year, according to bankers.

Wilmar, one of Asia’s largest agribusinesses, and Cargill, the commodities’ trader are setting up in Burma.

18 companies, including Malaysia’s Axiata, Norway’s Telenor Group, parent of the Thai mobile operator DTAC, Digicel, the Caribbean based operator, and two Singaporean companies, Singapore Telecommunications, one of southeast Asia’s biggest telephone companies, and ST Telemedia, a unit of Temasek Holdings, have submitted proposals for the two telecoms licences

The Burma has abolished a 25-year-old ban on public gatherings of more than five people: more liberal than S’pore.

Malayan Banking Bhd (Maybank) has made a US$100 million capital injection into its Philippines operations.The banking group, the fourth largest in the region, on the previous Friday launched a new corporate head office in Manila and announced plans to double its number of branches in that country to 100 by 2014, and thereafter to 200 by 2018, Malaysia’s Business Times said.

It currently has 54 branches there, with another expected to open in the city of Davao by the end of this month.

Maybank Philippines Inc (MPI), which has been operating since 1997 and is now the 24th largest bank by assets, may eventually go for a listing there. The Philippine central bank had last year issued a directive, requiring banks controlled by their foreign counterparts to go for a listing on the Philippine Stock Exchange.

Asean round-up

Problems Chinese and British investors face.

Chinese investments in Burma

U/m extracted from BBC report:

– China has nearly $14bn of interests in Burma – one third of all foreign investment in the country

– About US$13bn of that has been invested since 2008

– Most investments are in hydro-electric power, oil and gas, mining, jade and teak

– Critics say a US$2.5bn project for twin oil and gas pipelines from the Bay of Bengal to western China will provide China with cheap energy while Rangoon continues to suffer power cuts

– In 2011 Burma halted a hydropower project, the Myitsone dam on the Irrawaddy river, which would have created a reservoir bigger than Singapore.

– There is a major row between villagers and a mining project that the Chinese have an investment in. The copper mine, is a joint venture between China’s Wanbao company – a subsidiary of the arms manufacturer, Norinco – and the business arm of the Burmese military,People have badly hurt protesting against the US$1bn expansion of thr copper mine.

Corporate governance row continues in Indonesia

Coal miner Bumi has said it is unable to substantiate claims of potential financial and other irregularities at its Indonesian operations.

Bumi is facing a battle for control after agreeing to a shareholder vote that will decide the future of the majority of its board members.The vote will take place in February, at a date to be named.

Nathaniel Rothschild, co-founder of Bumi, had demanded the vote in an attempt to return to the firm’s board. Mr Rothschild wants to oust 12 of the 14 board members and bring in new ones in an effort to turn the firm around.

He had quit the board last year amid a row with Indonesia’s Bakrie family.

Bumi owns a stake in key Bakrie assets and there have been tensions between the two over potential irregularities at one of the Bakrie firms.

The dispute revolves around Bakries’ Indonesian firm PT Bumi Resources, in which Bumi owns a 29% stake.

Mr Rothschild had called for a radical clean-up at the firm in 2011, leading to relations between the two being soured. Last year, Bumi began an inquiry into what it said were “potential financial and other irregularities” at the firm.

Then, the Bakrie family offered to buy back its assets from Bumi for an estimated $1.4bn (£870m) and split from the firm.

However, Mr Rothschild said the proposal was “not in the interests of minority shareholders” and resigned from the board.

The deteriorating relations between the two key shareholders have stoked fears about the future of the firm and hurt its share price. Its shares have plunged more than 65% in the past 12 months.

Bumi has also been hurt by a drop in coal prices, which has hurt its earnings and forced it to review its expansion plans.

Asean round-up

Almost about the telco market in Burma, but there’s more after this Burmese stuff.

Taiwanese smartphone company HTC has become the latest to enter the largely untapped Burmese market, as the country opens up to foreign firms. HTC launched its smartphones in Burma on Monday. The phones will come with a Burmese language on-screen keyboard, which the company says is the most advanced available. Burma has one of the lowest mobile phone ownership levels in the world: in 2011, only 3% of the population had a mobile phone.

HTC is not the first smartphone maker to try to tap into the Burmese market. Samsung and Huawei lead the market with their low-cost devices. However, HTC is hoping to attract consumers with what it calls one of the most advanced Burmese language keyboards in the country.

Burma is also planning licence four more telco operators: invitations have been made to tender for two. The existing is govt-owned.

The expected bidders are: Russia’s VimpelCom, among the world’s top 10 mobile network operators in terms of subscribers; Telenor of Norway, a major shareholder in VimpelCom; Vietnam’s VNPT-Fujitsu, a joint-venture between Vietnam and Japan’s Fujitsu; Malaysia’s Axiata; and Digicel, the largest mobile operator in the Caribbean.

Local listco and mobile phone distributor mDr Ltd has incorporated a subsidiary in Burma. Itholds a 51% stake in MDR Myanmar while its local partners, Be-Well (Myanmar), Be-Well Corp and Avitar Enterprises, will hold 20, 20 and 9% respectively.

The new company, with a paid-up and issued capital of US$50,000, will provide after-sales services of telecommunication devices to consumers. It will also be involved in the mobile devices and accessories distribution and retail businesses via its provision of exclusive consultancy and retail franchisee procurement services to Myanmar-based Golden Myanmar Sea Co Ltd (GMS).

Thailand: a cheong too far? http://blogs.reuters.com/breakingviews/2013/01/16/thailands-unsustainable-boom-is-piling-up-risks/

Indon private equity firm on a roll: http://www.bloomberg.com/news/2013-01-15/saratoga-seeks-consumer-deals-with-480-million-war-chest.html

Flooding caused by days of heavy rain has hit parts of the Indonesian capital, Jakarta, forcing businesses to close and blocking roads. Areas including the central business district (CBD) were inundated and traffic was grid-locked as residents struggled to move around the city.

Meanwhile there is a water shortage just south of KL.

ASEAN country of 2012 & 2013

Burma continued along its reform path in 2012, holding elections that returned Aung San Suu Kyi to parliament. The Lady was allowed to travel abroad for the first time in 24 years; Barack Obama became the first American president to visit Burma. But the good news was marred, however, by deadly ethnic rioting between local Buddhists and Rohingya Muslims in Rakhine state.

If the reforms continue, great for the country and investors and bizmen.

Privately owned newspapers are to be allowed in Burma from April 2013 for the first time in almost 50 years, the government announced late last week

SPH, MediaCorp newsrooms should be like this?

We saw the most surreal newsroom … There were no journalists there. “Why not?” we asked. “We don’t need them yet. The news hasn’t arrived.”

We learnt the news is literally delivered once a day by the state news agency. The job of the journalists was to read it out, word for word, unaltered.

BBC story

And the govt is wondering why productivity is so low? It’s not the SMEs with their poorly paid FTs. It’s the constructive, nation-building local media with highly paid copyists of govt media release.

 

Asean round-up

“President Thein Sein of Burma is The Straits Times’ inaugural Asian of the Year. Mr Thein Sein, 67, was chosen by top editors of this newspaper for his role in making his country oosening political and economic controls in Myanmar. This has led to democracy icon and Nobel Peace laureate Aung San Suu Kyi taking a seat in Parliament, the lifting of Western sanctions and a surge of investor interest in the once-reclusive nation.”

Constructive, nation-building ST at its best. LKY’s remarks about Burmese generals (they are stupid) and PM’s public row with the Burmese govt few yrs back means that TLCs, GLCs and ordinary S’porean cos are finding it difficult to get the goodies in Burma, unlike the Thai, US, Brit, EU companies. So ST trying to improve relations. BTW, the Lady’s team has no time for S’pore too. S’pore upset both sides. George Yeo’s fault.

The Teletubbies, 24-hour news and Doctor Who are being introduced to Burma as the BBC launches three pay-TV channels there next January.

KKR has achieved its goal of raising $6bn for its new Asia fund making it the largest such regional fund.

Asean round-up

The government in Burma has apologised to Buddhist monks for the injuries sustained during a police operation outside a copper mine two weeks ago.

Indons love their Blackberries (still): now they can transfer money to one another using their Blackberries. Maybe some rich Indon should save RIM, Blackberries’ manufacturer.

The BTS Group, a Thai elevated-railway operator, is looking to raise at least US$1.5 billion through an I.P.O. of its infrastructure fund, “which would make it the country’s largest-ever I.P.O.,” WALL STREET JOURNAL 

Iskandar getting desperate: want our SMEs. One time, see our SMEs no ak. Only wanted MNCs, TLCs and Arabs.

Malaysian billionaire Quek Leng Chan, who owns 75% of the HK-listed Guoco Group, offered to take the company private for about US$1.1 billion, WALL STREET JOURNAL 

 

Asean round-up

Indonesia’s  increased piousness has led to a demand for the services of Islamic or Sharia banks: growth is at 40% a year.

In the report*, called Emerging Trends in Real Estate Asia Pacific 2013, Singapore fell to third place in the rankings, losing the top place it held for the last two years to Jakarta. ”The main issue in Singapore is a glut of new supply that’s arrived just as financial sector firms have been shedding headcount,” said Mr Colin Galloway, ULI’s Research Consultant and the author of the report.

Jakarta is seen by the 400-over industry experts surveyed for the report as the best bet, especially in the retail and office segments. Its jump to the top from its previous mid-table position has been driven by strong investor interest tied to the country’s economic growth. ”It’s really boom times in Indonesia now,” said one of the surveyed developers. “The demographics look good, it’s a country as big as America in terms of headcount and corruption seems to have been at least partly reined in.”

Singapore may face further competition in attracting real estate investment as it may lose out to countries offering better yields across the region, such as emerging and frontier markets like Cambodia and Myanmar, the report said.

Thai coup coming? An analyst speculates.

S’pore minister endorses Iskandar.

So does Peter Lim. And why he likes it.

*According to a report co-published by PricewaterhouseCoopers (PwC) and the Urban Land Institute (ULI).

Good-bye Kra canal, Hello Thai-Burmese highway

Burma and Thailand want to build a highway linking a to-be built port in Burma to a port in Thailand. This will enable cargo to by-pass the congested Malacca Straits.

Will this remain a dream like the Kra canal, then the Kra oil pipeline? I suspect not as there are benefits for Thailand and Burma.

Might even attract TLCs: there will be a need for industrial and logistic parks.

As for the Straits of Malacca as a shipping lane? Well the development of the US inter-continental port, highway rail system to move containers from the West Coast to the East, hasn’t affected the traffic using the  Panama Canal. It is being enlarged to take bigger ships.

Asean round-up

The Philippines economy grew 31.5% more than forecast in the third quarter, boosted by increased consumer and government spending and a recovery in exports.

Following violent anti-govt protests at the weekend, Thai Prime Minister Yingluck Shinawatra, on Wednesday, easily survived a no-confidence vote. She was accused her of failing to crack down on corruption.

The actions against this protest shows that the changes in Burma are still a work-in-progress. The protest also highlights China’s growing image problems amid intensifying local opposition to its extensive natural resources and infrastructure projects. In fact, one of the reasons why the generals opened up was their fear of Chinese domination.

“Najib said the 13th general election would be the decisive point for the future of the country and the people should be able to judge for themselves the advantage of choosing BN over the opposition.” (CNA). Actually what he means is that it determines his wife’s position as FLOM: First Lady of M’sia. LOL. She gets heself called FLOM, even though she is not the queen. Non-parisan analysts don’t expect Bn to lose power, but neither do they expect BN to regain its two-thirds majority in parliament, UMNO’s holy grail. If Najib can’t deliver this, there will be a new PM.

EPL available in Burma

Burma’s SkyNet has bought TV rights for the English Premier league football games. It will show all the matches in the next two seasons.

Wow I didn’t realise that the Burmese too follow EPL teams.

 

Asean round-up

Last week, Indonesia’s constitutional court ruled that BPMigas, its upstream oil and gas regulator should be disbanded, adding to the growing legal uncertainty that has hampered investment in its natural resources sector. BPMigas is responsible for negotiating with oil and gas contractors such as BP, Chevron and ExxonMobil.

On Sunday, Thailand’s PM announced her country’s intention to join a US-led regional trade pact after meeting the US president on Sunday.  M’sia and Vietnam signed up a long time ago.  Surprising, S’pore has not signed up yet.

Not all roses from the US for the Burmese govt when POTUS visited Burma on Monday: US demands that the Burmese govt makes “unconditional release of remaining political prisoners, an end to ethnic conflicts, steps to establish the rule of law, ending the use of child soldiers and ensuring the safety and welfare of the people of Rakhine state”. The Burmese government is not the only group the US will work with. The US will also work directly with opposition groups, backing demands for the rule of law and human rights. This is like saying US will work with SDP in S’pore to ensure the rule of law and human rights.

In pictures: Obama in Burma

Great cartoon

PAS still wants to chop off limbs even if it gets into power with Anwar and DAP. And the Chinese and Indians still support DAP and Anwar? Juz look at the Muslim Brotherhood in the Middle East. Sharia law rules OK when the Brudders get into power. PAS is a Brudders branch.

Asean round-up

Shareholders of KFC Holdings in Malaysia voted in favor of a US$1.7 billion bid by a group that includes CVC Capital Partners, REUTERS 

Msian IPO boom set to continue, leaving our SGX in the dust. The top two jobs in SGX are held by FTs where the “T” seems to stand for “Trash”. KLSE is run by a local.

QE-lenient world gives Vietnam financial pardon.

Why POTUS is visiting Burma.

Asean round-up

Burma’s president signs into law a bill designed to attract foreign investment on 2 November.

The World Bank has approved an US$80m grant and pledged lending for Burma for the first time in 25 years. The money will go to rural communities to build roads, bridges, schools and health clinics.

The Yingluck Shinawatra administration’s new cabinet appointees were sworn in before the King on 31 October. FT earlier in the week reported that the changes strengthened the PM’s position vis-a-vis Thaksin, her brother.

Asean round-up

Vietnam’s prime minister admits ‘faults’ on economy

And its China-plus-one Asean country for MNC manufacturers: In contrast to 2005, the previous time anti-Japanese riots flared, China is not the only fast-growing, well-populated, low-cost market around. Back then, Japanese firms hedged their China risk with a “China-plus-one” strategy, implying that they would find an extra Asian supply hub, such as Thailand. Now, that has grown into a wider “China-plus” strategy, because their options these days have widened to include Indonesia, Myanmar, Vietnam, Cambodia, the Philippines and India. (From the Economist’s last but one issue).

Will Laos join the other Asean countries now that it’s in WTO? Unlikely, but its been growing fast (and under the radar) http://www.bbc.co.uk/news/business-20078312. Stag Yaw should pop across from Hanoi to check out the gals biz prospects?

M’sia’s Westport is planning a US$500bn IPO for the first quarter of 2013 reports Reuters.  Thirteen companies have raised US$6.4bn so far this year on KLSE making it the 4th biggest IPO mkt after US, China and Japan. And CEO and COO are locals, not FTs like those of SGX.

Asean round-up

Thailand’s central bank unexpectedly cut interest rates in an effort to boost domestic demand and sustain growth: key rate to 2.75% from 3%. Analysts mutter about govt pressure on the central bank which is supposed to make independent decisions. Some analysts criticised the move, saying that lower borrowing costs might spur a rise in consumer prices, forcing the bank to reverse its decision as early as the first half of next year.

Japan (one of Asean’s biggest trading partners and source of much FDI is looking to stimulate its economy.

Burma’s president re-appointed party chief but FT and others report tensions in the party. They say this guy is the one to watch: the speaker of parliament who now has been chosen as day-to-day leader of the party: another ex-general. Parly has been causing govt some problems regarding foreign investment laws.

Vietnam’s leaders are unhappy with their PM. Makes investment scene more unstable. And Stag Yaw (remember him?) is trying to do biz there.

Around Asean: recent financial news

Shares in the London-listed Indonesian coal miner Bumi rise sharply for a second day after a proposal from Indonesia’s powerful Bakrie family to split from the firm. The dynastic Indonesian Bakrie family has proposed a split from Bumi that they helped to create with the British financier Nathaniel Rothschild. Wonder what the guy who bot at 11 thinks?

A.I.A. to pay US$1.7bn for ING’s Malaysia business. A.I.A. said the acquisition will catapult it to the No. 1 position in Malaysia’s lucrative life insurance market. For the Dutch insurer ING, it is the first major deal in its plan to divest its Asian assets.

The founders of Malaysia’s AirAsia, Tony Fernandes and Kamarudin Meranun, are set to launch three IPOs in 2013 worth more than US$500 million (S$614 million).

Tune Group, a financial services-to-discount hotel conglomerate owned by Fernandes and Kamarudin, is expected to launch US$65 million IPO of its insurance arm, Tune Insurance, not later than the first quarter of 2013, according to two sources with direct knowledge of the deal.

Meanwhile, AirAsia’s long-haul arm, AirAsia X, recently hired CIMB, Malayan Banking Bhd and Credit Suisse Group for a US$250 million IPO expected early next year.

The group is looking to list its Indonesia operations, Indonesia AirAsia, by the first quarter of next year in a deal that could raise up to US$200 million.

The listing plans also come at a time when Fernandes is stepping down as the chief executive officer of the Malaysian-listed airline to focus on regional growth through Indonesia. The group’s plan to buy up to 100 Airbus jets, potentially worth about US$9 billion, is designed to fuel the growth of what is becoming a cluster of related airlines under Fernandes, who placed a record order for Airbus jets last year.

With an operating fleet of more than 116 aircraft, AirAsia has ordered a total of 375 Airbus jets as part of dramatic expansion plans that include the acquisition of Indonesia’s Batavia Air.

DBS Group, South-east Asia’s largest lender, is selling more than half of its 20.3% stake in The Bank of Philippine Islands (BPI) to conglomerate Ayala Corp for 25.6 billion pesos (S$757.3 million). “With the divestment of a 10.4 per cent interest in BPI, DBS will hold an aggregate 9.9 per cent investment in the bank. DBS will continue to have representation on the BPI board.”.

DBS, which has been a strategic investor in BPI since 1999, would realise a gain of about S$450m against the carrying value of the investment.

Ayala is the biggest shareholder in BPI, the Philippines’ largest bank by market capitalisation.

DBS is selling the stake at a time when the Philippines stock market is among the best performing markets in South-east Asia. The Philippines main index has gained some 23% this year, with BPI 42%.

Nice little profit in a rising market. Can’t blame DBS for not trusting the bullishness that the Philippines has got its act together finally.  It’s cyclical, juz like another peace treaty signed with Muslim rebels in the South.

Japan intends to start lending Burma money aiming to help transform Burma into a production and investment hub to rival Vietnam.  ”Japan’s big trading companies are at the forefront of the investment effort. Mitsubishi, Marubeni and Sumitomo have signed an agreement with the Myanmar government to develop the initial phase of Thilawa, a 2,400-hectare site close to the southern port of Yangon, which will feature housing, commercial space and an industrial park,” reports FT

Burma: Developments this week

Earlier this week, FT reported Burma is to delay the implementation of controversial foreign investment legislation passed this month, but will step up reforms in areas like financial services, land use and government structures.

Seems the president will ask parly to make changes to the foreign investment law. So this compromise did not work.

This is what the ISEAS Monitor (Sept issue) wrote juz before the compromise and its analysis is spot-on.

Myanmar is being confronted with a serious challenge to the rule of law and the integrity of the constitutional arrangement by a controversy over the ruling by the Constitutional Tribunal (CT) regarding the status of parliamentary bodies. It began when parliamentarians insisted that committees, commissions and bodies formed by parliament be accorded the status of “Union” (central) level organisations in order to fulfill their ‘check and balance’ function.

A request to clarify the issue was sent to the President early this year. The Attorney-General, on behalf of the President, submitted the issue to the CT for a ruling. The CT ruled, in February, that the interpretation of committees, commissions and bodies “formed by each Hluttaw [parliament] as Union Level Organisations” was unconstitutional. Many parliamentarians did not accept the verdict and 191 MPs from the Pyithu Hluttaw (PH; lower house) informed its Speaker in April theirintention to table a motion calling for the impeachment of the CT chair and members.

When negotiations to resolve the dispute failed, 301 MPs from the PH again prompted the Speaker, on 8 August, for the impeachment citing breach of constitutional provisions and failure to fulfill their duties. The Speaker sent amessage to the President on 14 August suggesting that the Attorney-General’ssubmission to the CT be withdrawn and the CT chair and members should resign voluntarily before 21 August. The President replied in a message, dated 20 August,to the Speaker that the submission could not be withdrawn because the verdict hadalready been reached and he could not act to make the CT chair and members, who had independently made a decision in accordance with the Constitution, resign as that would be unfair and against the law.

The CT also held a press conference on 20 August to explain its position and reaffirmits commitment to stand by the decision and to carry on its tasks and duties.

Subsequently, it was announced that the impeachment process would be initiatedby the Amyotha Hluttaw (upper house) in the current parliamentary session. The spectre of political division looms.

Key points: The CT and MPs are on a collision course. This could arrest the momentum of much-needed political and economic reforms, and erode the legitimacy of the democratic institution. In the worst case, it could be an excuse for the return of authoritarianism.

Meanwhile, Burmese opposition leader Aung San Suu Kyi, who is visiting the US, has said she supports further easing of sanctions against Burma’s government.

And M’sian retailer, Parkson, plans to expand into Burma, despite its not so happy experiences in Vietnam.

Burma: Think small, think basic

“What Myanmar needs now are more 7-11s, not more Walmarts,” said Lex Rieffel, a senior fellow at the Brookings Institution. He was quoted by FT.

Garments, footwear, frozen seafood and other food products were among Burma’s main exports to the west until sanctions 10 to 15 years ago. Expect foreigners (think Chinese) to invest in these labour intensive businesses for a start.

 

A Chinese bizlady told the BBC: “In my factory in China, the salary of workers has been increasing steadily over the last few years,” she told me during her recent visit to Bangladesh to look for opportunities here.”It has reached around $400 to $500 (£250 – £315) a month per worker. If I continue to produce there, our business will disappear.”In Bangladesh the average monthly salary for garments workers is only around $70 to $100. If I produce here, price is much more competitive.”

She can now scout out Burma, next door.

Finally for this week, Myanmar launched its first debit cards on Friday, giving customers the chance to use plastic for shopping, dining and travel for the first time in the latest leap forward for its cash-dominated economy.

Burma: Even ltd democracy can be bothersome

(Or “Why LKY did things “My way or the highway”)

Burma has finally passed a new investment law acceptable to the govt and parliament (govt supporters and opposition had problems with govt’s original proposal) http://www.bangkokpost.com/news/asia/311492/myanmar-passes-investment-law

There was a constitutional row http://www.google.com/hostednews/afp/article/ALeqM5h_v4zNhgcL9PAWMqwLA2uUJwSYzQ?docId=CNG.6e407b6a8ce05880ef03e016b2221a0e.201

Govt backed down: judges resigned, and opponents of the above law passed it in a form acceptable to govt. Even ltd democracy can be bothersome. The army represenratives kept neutral. They were meant to give government an in-built majority.

Best to do it the LKY way? “I ignore polling as a method of government. I think that shows a certain weakness of mind – an inability to chart a course whichever way the wind blows, whichever way the media encourages the people to go, you follow. You are not a leader.”

Another classy Burmese lady

Something in the air that develops such ladies? Juz like something in the air that develops feisty wimmin in M’sia.

http://www.bbc.co.uk/news/world-asia-17812348

Burma: Work on Tues, Wed, Thurs, Sat and Sunday

Never sign a contract on Friday; Saturdays and Sundays are fortuitous for doing deals; starting just about anything on a Monday and you’ll be starting with a bad omen.

http://www.economist.com/blogs/banyan/2012/07/investing-myanmar

Korean and Jap exchanges are eating SGX’s lunch in ASEAN

Korea Exchange, which runs the world’s 13th-largest stock market, is helping ASEAN countries set up exchanges in return for stakes in the bourses. It helped Laos (last year) and Cambodia (recently) open their stock market trading platforms.

The Cambodian government has a 55%ish stake in the Cambodia Securities Exchange, while the Korea Exchange which provided information-technology systems, owns the rest. It holds 49% in Lao Securities Exchange, while the Laotian government owns 51%.

It is hoping to do the same for Myanmar even though the Tokyo Stock Exchange and Daiwa Securities had negotiated a “memorandum of understanding” to establish a stock exchange and develop the country’s capital markets.

Korea Exchange said that it would do its best to win the Myanmar government’s confidence until Myanmar makes a final decision and enters into a binding agreement for the establishment of its exchange.

True, these are “peanut” deals, but they are the kind of deals one would expect SGX to do given that these nations are ASEAN members. And anyway, while SGX may think it is a global player, it hasn’t done anything globally. It made a dumb bid for ASX (dumb because no-one except SGX and ASX mgts tot the Oz authorities would allow the bid*); and had to close its dark pool joint venture Chi-East in May as business volumes were weak and unlikely to improve.

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*The bid would have benefitted ASX’s shareholders, in the main brokers using ASX’s trading platform. Brokers are damned gd at getting non-brokers particularly foreigners to buy into them or their investments. British brokers made their fortunes in the 1980s (including one David Cameron’s father) by selling out to, in the main, US banks.

Happened in India recently.   Private equity firms (think Americans again), which had invested in Indian stock brokers between 2005 and 2008, are in the main, struggling to exit these investments as current valuations of broking firms are less than half of what they were during the stake purchases due to a drop in profits on account of declining trading volumes and shift in the business model to a capital-driven one. http://articles.economictimes.indiatimes.com/2012-06-15/news/32254600_1_pe-firms-broking-equity-firms

Northern ASEAN: Dark clouds threaten the sunny weather

Thailand’s recovering from late last yr’s floods. GDP up 11% Q on Q. http://www.bbc.co.uk/news/business-18141171.

But inflation is a problem that the govmin is trying hard to solve, not make sick jokes* like our finance and trade ministers (also governor and deputy governor of central bank). But then if Thais get angry, they riot, not juz bitch anonymous online abt it.

(BTW, the int’l manufacturing hub hard disk drive industry is now in Thailand http://www.bbc.com/news/technology-17299249. It was once here.)

Money will pour into Burma but the country is ill-prepared to cope with the resulting floods http://blogs.reuters.com/breakingviews/2012/05/18/myanmar-must-brace-for-post-sanctions-cash-deluge/

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*Because more than half of the headline inflation rate of 5.2% came from higher COEs for cars and the effect of higher market rent on houses, most S’poreans would not be affected by inflation. The vast majority of Singaporeans who already own their homes and are not buying new cars would not feel the effects of these sharp increases. And the increase in prices of daily necessities and essential services such as food and clothing have actually been much more moderate at 3% or lower.

Burma: Wake up S’pore

Japan has agreed to write off more than US$3.7bn of debt owed by Burma and to resume development aid.  The leaders of both countries  also agreed to plan a special economic zone near Rangoon.  This could give Japanese firms a head start in winning business in what is seen as one of Asia’s last frontier markets.

Hey could have been S’pore planing a SEZ with Burma! We are “old friends” of Burma. And GLCs and TLCs got experience of building biz parks in Vietnam and China. Come on Georgie Boy. Go broke deals between S’porean cos and Burmese ones and the government. Too comfortable, what with big fat pension? Or planning to reform PAP? Or planning to be president?

(Ya aware that three postings in row abt Northern ASEAN countries. But taz where the biz and investment opportunities are coming from in this region.)

Burma: Stock exchange coming/ Cambodia: Starting soon

Burma is to get a new stock exchange, after the Tokyo Stock Exchange and Daiwa Securities received preliminary approval to help set one up.

http://www.bbc.co.uk/news/business-17673773

Meanwhile, Cambodian brokers and wannabe investors, and foreign investors are preparing for the country’s first ever IPO.

http://www.bloomberg.com/news/2012-03-18/cambodia-embracing-capitalism-with-first-ipo-since-khmer-rouge.html

Templeton on Burma, Cambodia, Indonesia and Thailand

Investors should be cautious when pursuing the opportunities for growth present in Myanmar and Cambodia, Southeast Asia’s frontier markets, Templeton Asset Management Ltd says, according to a Bloomberg report.

While Myanmar’s natural resources of oil, gas and minerals are positive factors, there are “areas of concern”, Templeton portfolio manager Dennis Lim wrote in a note last week on chairman Mark Mobius’s blog.

Although Cambodia is “ideally located” to benefit from trade with Thailand, Vietnam and Laos, investors need to study corporate governance standards, he said.

“Weaknesses we’re especially mindful of in Myanmar are lack of a proper legal structure, the lack of a well developed banking system, and the lack of solid foreign exchange operations. In Cambodia, I would caution potential investors to monitor corporate governance standards to ensure investors are treated fairly.”

In Cambodia, state- owned Phnom Penh Water Supply Authority will have its IPO next month, making it the first to be traded on the stock exchange that opened last July without a single listed company.

The Cambodian government has said it wants to spur economic development by selling off state- owned companies and encouraging private enterprises to expand with new funding.

Mr Mobius, who oversees more than US$50 billion in emerging-market assets as executive chairman of Templeton Emerging Markets Group, has said he’s watching the Cambodian railroad industry “with particular interest’”

Indonesia, whose natural resources include timber and coal, can benefit from increasing global demand for commodities as emerging markets invest in infrastructure, Mr Lim said. Thailand, which suffered its worst floods in almost 70 years in 2011, will have a sound economic recovery and has “positive’” long-term fundamentals, he said.

“For value investors like us, current valuations in Thailand generally remain attractive, though the potential growth obstacles do bear ongoing scrutiny”. He cited agriculture, tourism and offshore gas as drivers of growth.

Interesting, no mention of Vietnam which is now in the dog house because of high inflation and other problems.

Singapore’s stock exchange is a conduit through which Templeton can access new markets because of listings by some companies from the frontier economies, he notes.

Rushing to do biz, invest in Burma?

Better read this first.  [W]hat has been achieved so far in reforming the country in such a short period of time rests on the trust established between the slight, bespectacled former general and the charismatic daughter of Aung San, the country’s liberation hero.

Banyan goes on to point out that both of them are not in best of health and that the Burmese president has many enemies who want to push the clock back.