atans1

Archive for the ‘Indonesia’ Category

BT: Comparing apples to oranges again?

In Emerging markets, Indonesia, Malaysia, Vietnam on 28/12/2013 at 7:27 am

(Or “Anti-PAP bloggers share LKY’s Hardest Truth)

Schroders plc and Baring Asset Management Ltd are avoiding Singapore stocks, the cheapest in South-east Asia, as slower economic growth in the region and cuts to Federal Reserve stimulus drive capital outflows.

The fund managers expect property to lead declines in Singapore amid a real-estate slump and the prospect of higher interest rates. The Straits Times Index was the worst-performing developed market in 2013, dropping 9.5 per cent since Fed chairman Ben Bernanke said in May that bond purchases may be reduced on signs of sustainable US recovery.

Surprised constructive nation-building (but mathematically challenged) BT reported things this way.

In US$ terms, among the bigger Asean stock mkts, only the M’sian stk mkt was better than us. Taz not saying much as only M’sia index ended in positive territory (juz) juz before hols

M’sia:          +3.2%

S’pore:          -6.0

Thailand:     -8.5

Indonesia:   -23.0

Got subversives in BT meh?

In the minnow Asean mkts Vietnam  was +24%, while Manila was +3.4% according to the MSCI indices.

Next yr is not going to be a gd yr for Asean countries, so the fact that Schroders and Barings are “avoiding” S’pore is no big deal for anti-PAP bloggers to brag about. Don’t know about you, but I get the sense that some of them hate the PAP so much that they end up cheering and being cheerful when S’pore tanks, for whatever reason. Looks like they agree with one LKY that S’pore and the PAP are one. They may hate him but they accept his premise?

Asean round-up returns next yr, god willing.

Advertisements

Asean’s prospects in 2014

In Indonesia, Malaysia on 07/12/2013 at 6:25 am

(Asean round-up)

The Centre for Economics and Business Research (Cebr) says Asean is looking gd: Asean as a whole to grow 5.0 per cent this year, still weighed down by Thailand’s recession. And although the country is tipped to recover in the second half of this year, it may be affected by China’s soft landing, which is projected to extend into next year and dampen its demand for Asean’s goods and services.

As for individual countries (I’ve excluded S’pore as I will analyse it next week with reference to politics):

Not only is economic growth in the Philippines expected to take a hit, the report says intra-regional trade will suffer, hampering growth in other Asean countries.

Strong government spending and higher exports to China in the second half of the year were tipped to boost the Philippine GDP to 6.9 per cent this year, but Typhoon Haiyan is expected to make growth “noticeably weaker” in the final quarter of the year.

Slower government spending and a tighter US monetary policy will cap growth at 5.8 per cent next year, said the report.

Stubbornly high unemployment and extreme poverty, along with the need to lift interest rates to attract capital, will trim the country’s GDP growth to 4.8 per cent in 2015, it added.

The Cebr report’s prediction for Thailand is that its economy will grow 3.4 per cent this year. Thanks to healthier consumption and export growth, it will jump by 4.4 per cent next year; stronger exports to Western markets will nudge the Thai economy up 4.5 per cent in 2015. [Note thar report was written before the recent bout of trouble]

In Malaysia, growth will be at 4.6 per cent courtesy of a lift from China’s economy. But weakened Chinese growth will depress Malaysia’s growth to 4.2 per cent next year.

A revamped general sales tax in 2015 could further hinder growth, but a stronger global economy should ease this somewhat. Cebr forecasts that Malaysia’s GDP growth will be 4.1 per cent in 2015.

Indonesia, Asean’s biggest economy, is likely to grow 5.7 per cent this year, as a slight uptick in the Chinese economy in the second half of the year is expected to soften the effect of China’s cooling economy on Indonesian exports.

But the report said the US’ tighter monetary policy and higher interest rates will lower Indonesia’s growth to 5.6 per cent next year and the year after.

(http://www.businesstimes.com.sg/premium/top-stories/spore-economy-stay-pink-next-2-years-20131205)

2014: Last chance for govt to increase prices?

In Economy, Indonesia, Political governance on 30/11/2013 at 5:51 am

(Asean round-up)

Ministers no longer joke about COE prices not affecting core inflation, (related post) ’cause increase in food prices is affecting core inflation.

In addition to Thai meat, maybe Burmese rice (see below) will help curb food inflation prior to next GE. Remember that public tpt fares are going up soon despite lack of much improvement. This is ’cause SMRT needs $ (scholar, ex-SAF chief says biz model broken, but nothing that higher fares can’t fix) and 2014 is last possible time that fares can rise. GE must be held in 2016, and increasing fares in 2015 may be too risky for PAP. As an election may be held in 2015, January to June 2014 is the last window of opportunity for us to kanna pay and pay.

Burma plans to more than double rice shipments as the country that used to be the largest exporter embraces trade and opens its economy, challenging Thailand, Vietnam and Cambodia for sales amid a global glut.

Shipments may increase to 2.5 million tonnes in 2014-2015 from an estimated 1.8 million tonnes in the year that started on April 1, according to Toe Aung Myint, director-general of the Department of Trade Promotion at the Ministry of Commerce. Exports are targeted to increase to 4.8 million tonnes in 2019-2020, he said when Hong Kong.

Indonesian coal and property firms could find obtaining loans increasingly difficult next year as banks tighten their lending due to higher interest rates, slowing economic growth and a weakening rupiah, industry officials said. The rupiah has fallen nearly 20 per cent so far this year, hitting 12,000 per US dollar yesterday for the first time in almost five years.

The central bank this month issued guidance to banks to slow loan growth to 15-17 per cent next year, from 18-20 per cent this year, in an effort to protect the financial system from potential turbulence amid heightened global uncertainties. In response, Bank Mandiri, Bank Central Asia (BCA), Bank Tabungan Negara, and other top financial institutions are becoming more particular about companies they lend to.

“We haven’t turned cautious for any sector, but we see challenges in infrastructure, construction, coal, cement, and real estate because of several policies. We are expecting a slowdown,” said Eugene Gailbraith, a BCA director, at an investment conference. He said that the country’s biggest bank by market value plans to “take a breather” and will lend less than its expected 45 trillion rupiah (S$4.79 billion) target this year.

Loan growth at Bank Mandiri is seen slowing to 17-18 per cent in 2014 from 19-20 per cent this year, while Bank Jabar Banten eases to 22 per cent from 33 per cent, company officials said. “We will be more cautious on sectors that are sensitive to interest rates,” said Pahala Mansury, Bank Mandiri chief financial officer. Indonesia’s increased hesitation to lend to coal companies comes as no surprise with banks around the world curbing their exposure to the industry due to a sharp fall in demand and prices. For the property sector, Bank Indonesia has made the industry less attractive to banks by implementing several policy measures to curb the purchases of second homes. Financial institutions are expected to favour consumer driven industries, such as retail and food companies, as domestic consumption continues to remain strong. – Reuters. (BT report)

Indonesia’s most aggressive rate tightening in eight years has barely dented a current account deficit, prompting calls for more increases and other measures before the Federal Reserve cuts stimulus.

Bank Indonesia has raised borrowing costs by 1.75 percentage points to 7.5% since early June, the quickest since 2005.

Following data which recently showed the country recorded its second-highest current account shortfall on record in the three months through September, JPMorgan Chase & Co and Standard Chartered now see a further 50 basis points of increases in the first half of next year.

Foreign funds pulled US$3.8bn from Indonesian stocks and local currency bonds in June after the Fed said it could cut stimulus, and a lack of progress on improving the current account before the US does eventually taper leaves the country vulnerable to another sudden outflow.

In addition to ongoing political unrest in Thailand:

Thai factory output shrank more than expected in October, adding to a string of weak data that prompted the central bank to unexpectedly cut interest rates to support the economy as mounting political tension dents confidence.

The Industry Ministry now expects output to fall 2.8 per cent this year, rather than growth of 0.5-1.0 per cent projected earlier, but predicts a rise of 2 per cent next year.

October was the seventh straight month in which output has declined, falling 4.02 per cent from a year earlier. The median forecast of a Reuters poll was for a decline of 3.3 per cent.

In September, output dropped 2.9 per cent. (BT report)

— Thailand’s central bank unexpectedly lowered the cost of credit Wednesday as escalating protests to topple the government add to pressure on the economy.

The central bank lowered its policy interest rate by a quarter percentage point to 2.25 %, hoping to stimulate lending and investment, saying  in a statement that the “ongoing political situation” could compound existing weaknesses in Southeast Asia’s second-largest economy. Business confidence is fragile and government plans for $69.5 billion of spending on high speed rail and other transport infrastructure have been delayed by legal challenges.

Thailand’s third quarter economic growth was weaker than expected and a recovery in exports has not gained traction, the bank said. Earlier this month, Thailand’s economic planning agency cut its growth forecast for this year to 3% from 3.8-4.3% predicted in August.

Where S’porean traits produce world-class TLCs

In Energy, Indonesia, Temasek, Vietnam on 28/11/2013 at 6:25 am

More to irritate Temaeek and S’pore (self) haters, especially TRE readers*. There are advantages to S’poreans’ reputation as the Prussians of the East: hardworking, careful, conscientious and mindlessly efficient. These are very qualities that make Keppel and SembCorp world beaters in rig-building.

Singapore’s two main yards, Keppel and SembCorp Marine, have also invested heavily in quality and efficiency. They specialise more in deep-sea rigs than in drill-ships and carriers. Keppel, the bigger of the two, is building a record 20 such monsters this year; next year it will deliver the first of three giant, $600m “jack-up” rigs (ones that are floated into place then jacked up on their legs).

Time is money

The Singaporeans are also good at building things on time, which is vital in an industry where late delivery can cost the operators of rigs and drill-ships over $500,000 a day. Over the past five years, rigs ordered from Keppel and SembCorp were, on average, delivered ahead of schedule, whereas Chinese yards delivered 50-250 days late, says IHS Petrodata, a research firm.

http://www.economist.com/news/business/21590496-korean-and-singaporean-yards-have-adapted-well-chinas-challenge-deeper-better

As to China’s cost advantage, having facilities in Indonesia helps provide cheap labour for SembCorp’s rig building biz. Keppel too has an Indonesian operation, though its tiny compared to SembCorp’s.

And with Vietnam having problems with China over maritime boundaries, one wonders if Chinese built-rigs are allowed in its waters. Remember, energy cos are exploring for oil off Vietnam. Still, the waters do not require the sophisticated rigs built by these TLCs.

Related post: https://atans1.wordpress.com/?s=Temasek+Fab+5

*Though TRE readers will be pleased that these TLCs are not led by ex-generals or ex-Temasek MDs. The CEO of Keppel is a scholar, but I’m not sure of the background of CEO’s SembCorp. But both have worked that these TLs for many yrs. They were not parachuted in like in NOL to teach executives to suck eggs.

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/

Indon origins of our Batman Suparman

In Indonesia, Malaysia, Vietnam on 16/11/2013 at 4:59 am

(Asean round-up)

Batman bin Suparman’s family appear to be originally from the Indonesia island of Java – where the name Suparman is very common, explains Ben Zimmer, a language columnist for the Wall Street Journal, who has worked in Indonesia and who has written about Suparman.

“Su” has Sanskrit origins and is a common prefix in Indonesia, featuring in a whole rung of Indonesian presidents’ names – including the current one Susilo Bambang Yudhoyono. “Bin” means “son of” in Arabic, making it very likely that Batman’s father was also called Suparman.

The Batman part is a bit harder to explain, however says Zimmer, as it’s not a traditional name in the region. The most likely explanation is that his parents chose it as a joke – Batman the superhero is popular there, and Indonesians are often playful in the names they choose, says Zimmer. “I see the name as this interesting juxtaposition of local naming with Western pop culture.”

http://www.bbc.co.uk/news/magazine-24911186

Illegal logging and mismanagement of Indonesia‘s forestry industry may have prevented more than US$7 billion flowing to state coffers from 2007 to 2011, costing the government more than its health budget, Human Rights Watch said.

In contrast, the Indonesian government’s 2011 revenue from timber royalties and reforestation fees was US$300 million, said Emily Harwell, the lead author of a report released by Human Rights Watch.

“This is a very conservative estimate,” Dr Harwell, a partner at Natural Capital Advisors LLC, said at a briefing in Jakarta on Nov 8 of lost revenue. “The calculation doesn’t include any wood that’s smuggled.”

The report indicates that weak governance is chipping away at revenues in the world’s fourth-most populous nation, as budget and current-account deficits this year hurt the rupiah. BT report.

Malaysia has the highest English language proficiency level in the entire Asian region, according to a latest research by Swiss-based international education company EF Education First (EF).

The nation also climbed two notches higher to 11th place from 13th position last year in the EF English Proficiency Index which saw over 60 countries being surveyed.

The results revealed that Malaysia, which was placed in the ‘High Proficiency’ category, had overtaken Singapore who fell behind to 12th position in the world ranking. Malaysia scored 58.99 points in the survey while neighbouring Singapore received a 58.92 score.

Money for Vietnamese start-ups and buy-outs

— Ministry of Science and Tech in Vietnam pours $110 million into startups

http://www.techinasia.com/ministry-science-tech-vietnam-pours-110-million-startupsministry-science-tech-vietnam-pours-110-million-startupsministry-science-tech-vietnam-pours-110-million-startupsministry-science-tech-vietnam-po/

— Franklin Templeton Investments (BEN)’ venture in Vietnam said the time is right for buyout firms to invest in the country as it expects monetary and fiscal reforms to take effect over the next three to five years.

Low valuations, constrained bank lending and an improved corporate landscape mean private-equity investors have an opportunity to buy companies in the Southeast Asian country before the economy picks up again, said Avinash Satwalekar, chief executive officer of Vietcombank Fund Management, Templeton’s venture with Joint-Stock Commercial Bank for Foreign Trade of Vietnam.

“The best time to make investments is when the water is murky,” Satwalekar, 39, said in an interview in Singapore yesterday. “When its gets clear, that’s when everybody can make investments.”

http://www.bloomberg.com/news/2013-11-06/buyout-opportunities-seen-in-vietnam-imbalances-southeast-asia.html

Philippine Finance Minister Cesar Purisma has told the BBC that the devastation caused by the Typhoon Haiyan Mr Purisma says that the worst affected region accounts for 12.5% of the Philippines economy and a steep slowdown there could slow the overall economy by one percentage point next year. IMF has earlier this yr said GDP growth would be 6% next yr.

Mr Purisma also said it would take “many years” to rebuild the infrastructure damaged by the storm.

S’pore, Asia, West hsehold debt levels compared

In Energy, Indonesia, Malaysia on 09/11/2013 at 7:00 am

Asean round-up

S’pore (at 61% of debt to GDP) is third in Asean, M’sia tops the list (81%), followed by Thailand (68%) , according to a World Bank report. (http://www.economist.com/news/economic-and-financial-indicators/21588882-household-debt-asia)

A recent World Bank study identified Malaysia and Thailand as having the largest household debts, as a share of GDP, among eastern Asia’s developing economies. In Malaysia, where household debt now exceeds 80% of GDP, the government has been seeking to curb credit growth. Thailand’s government boosted access to credit following the country’s big floods in 2011. The recent slowing of growth in many Asian economies raises concerns about the sustainability of all this personal debt.

Note two weeks ago, I reported Currently, M’sia‘s household debt stood at about 83% of gross domestic product. Household debt in S’pore now accounts for 75% of gross domestic product, having doubled in the last 13 years. According to Standard Chartered, a private bank, household borrowing as a share of national income now stands at 68% of Thailand’s GDP, much higher than in bigger Asian countries, such as China (20%), India (18%) and Indonesia (17%).

(Related post: https://atans1.wordpress.com/2013/07/28/the-maths-of-salaries-when-mortgage-rates-rise-50/)

In other Asean news

Indonesia‘s economy expanded at its weakest rate in four years in the third quarter as a result of slowing exports and subdued domestic demand.

Its economy grew 5.6% in the July-to-September period from a year earlier, down from 5.8% in the previous quarter.

Indonesia’s exports have been hurt by slowing demand from key markets and a drop in commodity prices.

Meanwhile, domestic demand has been impacted by rising fuel prices and rising interest rates.

Fuel prices in the country surged earlier this year after the government removed its subsidy programme.

Petrol prices went up by 44% while diesel prices rose by 22%, leading to higher transportation costs and electricity bills.

http://www.bbc.co.uk/news/business-24831172

And as usual Indonesia is repenting the nationalistic policies it always implements when the economy is doing well. It is again, as usual, lifting restriction on foreign investments, to attract foreign capital.

Thais are in the streets, protesting a controversial amnesty bill. http://www.economist.com/blogs/banyan/2013/11/unrest-thailand

And an energy boom in the region. http://www.thefinancialist.com/an-oil-and-gas-boom-for-southeast-asia/

Govt’s reaction to rising food prices?

In Indonesia on 02/11/2013 at 5:27 am

On 24 October, it was reported that

Singapore has lifted a ban on the import of Thai frozen chicken and is also considering allowing the sale of frozen pork from Thailand.
After banning Thai poultry from its market for nine years, Singapore has finally allowed frozen chicken from Thailand back in, reports The Nation of Thailand.

http://www.thepoultrysite.com/poultrynews/30426/singapore-lifts-ban-on-thai-chicken-imports October 24th via http://singaporenewsalternative.blogspot

Timing of ban lighting, not coincidental, methinks

On 29th October, it was reported: Inflation in Singapore will pick up over the next few quarters before tapering towards the end of 2014.

This is according to the Monetary Authority of Singapore’s (MAS) Macroeconomic Review.

The central bank said domestic food inflation is expected to rise from around 2 per cent in 2013 to close to 3 per cent in 2014, although this is still lower than the 3.4 per cent average over the last five years.

In particular, cooked food vendors are likely to pass on the increases in labour and rental costs to consumers, as these account for a significant share of their operating expenses compared to non-cooked food establishments.

The MAS said cooked food is estimated to make up 14 per cent of average household expenditure.

http://www.channelnewsasia.com/news/singapore/inflation-in-s-pore-to/865788.html

Today reported: The MAS expects the core inflation rate, which strips out the cost of accommodation and private road transport, to increase from between 1.5 and 2 per cent this year to between 2 and 3 per cent next year.

Better than these non-actions:

https://atans1.wordpress.com/2012/09/03/err-lee-what-did-you-say-abt-food-inflation/

https://atans1.wordpress.com/2012/08/13/inflation-why-the-misleading-picture-minister-media/

https://atans1.wordpress.com/2012/05/25/will-hougang-make-the-pap-moan-the-inflation-blues-not-joke-abt-it/

In other Asean round-up news:

Burma is getting its first online music store, which aims to stamp out the problem of illegal downloads, according to the Eleven Myanmar news site. “The traditional distribution system has been plagued by piracy,” the man behind the website, Ko Ko Lwin, is quoted as saying. His Myanmar Music Store apparently trialled operations for a week ahead of an official launch, with home-grown star Lay Phyu’s record, Diary, selling 4,000 copies.

http://www.bbc.co.uk/news/blogs-news-from-elsewhere-24743082

SingTel may still get into Burma. While it failed to get one of the two licences granted this yr, the govt has asked leading telecos (including SingTel) to offer help to the govt-owned operator as it upgrades.

Workers across Indonesia begun a two-day strike on 31 October demanding higher salaries, the latest industrial action to hit the South East Asian economy.

The workers say their cost of living has gone up amid rising inflation and a hike in fuel prices.

http://www.bbc.co.uk/news/business-24753469

Thailand‘s lower house of parliament has passed a political amnesty bill that critics say could allow the return of former PM Thaksin Shinawatra.

The amnesty applies to offences committed during the political turmoil after Mr Thaksin was ousted in a coup.

The lower house passed the controversial bill in the early hours of Friday. It now goes to the Senate.

The opposition Democrat Party has warned that the passage of the bill will trigger street protests.

http://www.bbc.co.uk/news/world-asia-24768110

M’sia, S’pore tops Asean in household debt

In Indonesia, Infrastructure, Malaysia on 26/10/2013 at 7:31 am

Currently, M’sia‘s household debt stood at about 83% of gross domestic product. Household debt in S’pore now accounts for 75% of gross domestic product, having doubled in the last 13 years. According to Standard Chartered, a private bank, household borrowing as a share of national income now stands at 68% of Thailand’s GDP, much higher than in bigger Asian countries, such as China (20%), India (18%) and Indonesia (17%).

In other Asean round-up news:

Burma‘s Yangon had passed Singapore’s office rental rates of US$74 a square metre by the first quarter of this year according to estate agents Colliers. To give some context to this piece of info, something from yesterday’s BT: AT S$11 per square foot (psf) per month, or US$103 psf per year, the extended central business district comprising Raffles Place and Marina Bay is the eighth most expensive office area in the world, according to a Jones Lang LaSalle study.

Taking into account quoted rents from only premium office space in top sub-markets, Singapore was inched out by other Asian locations such as Hong Kong’s Central which commanded rents of HK$105 psf per month (US$162 psf per year) and Beijing’s Finance Street where corporates paid rents of 750 yuan per square metre per month (US$137 psf per year).

S’pore is sharing with Indonesia with its best practices in public-private partnership (PPP) in water and waste-water infrastructure projects.

Led by Singapore Cooperation Enterprise (SCE), an integrated arm of International Enterprise Singapore, and Temasek Foundation, the partnership programme will be delivered over a two-year period by a team of Singapore experts from both private and public sectors to 200 Indonesian government officials from various provinces and cities as well as ministries including the Ministry of Finance and Ministry of Public Works (Bappenas).

Singapore will provide knowledge in planning and procurement of water and waste-water infrastructure projects; and help cultivate a core group of officers from PT Sarana Multi Infrastruktur (Persero), a government partner promoting infrastructure development in Indonesia, who will develop public-private partnership training materials.

Blame Apple, Google for declining exports, growth

In Economy, Indonesia, Malaysia on 19/10/2013 at 6:26 am

The following pieces of bad news came as no surprise even though I’m no economist

— Singapore’s non-oil domestic exports (NODX) fell year-on-year for an eighth straight month in September.

Overall, exports declined by 1.2 per cent on-year in September.

Still, economists say the contraction was smaller than what the market was expecting.

Better-than-expected export performance in September was driven by non-electronic exports like ships and petrochemicals.

This helped to offset lower electronics exports such as PC parts and disk media products.

Electronic export has been declining year-on-year for 14 consecutive months due to weak external demand.

Vishnu Varathan, a senior economist at Mizuho Bank, explained: “The higher value-add items such as the part for the integrated circuits — they did better; whereas PC parts, the lower-end items, disk drives — these did much worse. So this underlies the fact that Singapore’s competitiveness must be at the higher end of the range given our cost base, and that’s where we’re losing out. So in terms of restructuring, it’s going to be a difficult period for electronics despite coming from a low base.”

The top three contributors to the export contraction were the European Union, South Korea and Japan.

On a month-on-month basis, exports rose 5.7 per cent in September, versus the previous month’s 6.6 per cent decline.

http://www.channelnewsasia.com/news/business/singapore/singapore-s-nodx-down-1-2/850428.html

— [A]n advance estimate showing the city-state’s economy shrank 1.0 percent on quarter in the July-September period, better than expectations for a 3.6 percent contraction, but a significant deceleration from 16.9 percent growth in the previous three months.http://www.cnbc.com/id/101109030

This is because on 10 October I read a BBC report:

Global PC shipments drop to a five-year low

Global shipments of personal computers (PCs) have hit a five-year low, according to new figures from the research firm Gartner.

Shipments totalled 80.3m units in the three months to September, down 8.6% from a year ago.

PC sales have now fallen for six quarters in a row, hurt by the growing popularity of tablets and smartphones.

Gartner said falling prices of tablets had further hurt sales of PCs in emerging markets.

“Consumers’ shift from PCs to tablets for daily content consumption continued to decrease the installed base of PCs both in mature as well as in emerging markets,” Mikako Kitagawa, principal analyst at Gartner, said in a statement.

“A greater availability of inexpensive Android tablets attracted first-time consumers in emerging markets, and as supplementary devices in mature markets.”

Decline

Research firm IDC, also released figures on Thursday, which showed global shipments of PCs fell by 7.6% to 81.6m units over the period.

As I explained before (example), S’pore and M’sia belong to the Microsoft ecosystem, not those of Android or Apple.

Not gd news for Msia either.

In other Asean-round-up news,

In M’sia, Umno V-Ps favoured to hold on to posts. They are up against three challengers, including Mahathir’s youngest son, Mukhriz

And maybe we can learn something from Indonesia‘s

— youth growing interest in politics and civil society matters (http://www.bbc.co.uk/news/world-asia-24549654); and

— how to grow old gracefully by going against tradition (http://www.bbc.co.uk/news/business-24530350).

M’sia mkt outperforms Asean

In Gold, Indonesia, Malaysia, Vietnam on 05/10/2013 at 6:10 am

Lex

Not saying much as above chart from FT shows that its flattish unlike the other Asean mkts. Seems the big local funds are buying.

Other Asean round-up news:

According to OSK-DMG while Indonesia will be increasing its oil production over the next few years but only a few offshore marine players here can benefit from this because of an Indonesian rule that protects jobs in the industry for Indonesians.

While rig builders here could stand to gain in the near term, it appears that the cabotage law in Indonesia is being expanded to include Indonesian shipyards as well, boding well for rig builders with Indonesian-based yards. Indonesia has cabotage rules requiring all work in the oil & gas sector to be done only by Indonesian-flagged vessels.

Thailand is the third biggest buyer of gold in Asia, after China and India having overtaken Vietnam.

Phew, Asean can relax a little, but not too much

In Indonesia, Malaysia, Vietnam on 28/09/2013 at 6:59 am

The Fed’s decision to delay unwinding its $85-billion-a-month money-printing programme eases the pressure on the two Asian countries with the biggest dollar addiction – India and Indonesia – to cure their habit by squeezing domestic demand. Investors reacted accordingly: the Indonesian Rupiah jumped 1.9 percent against the dollar on the morning of Sept. 19, while Jakarta stocks rose 5 percent.

… Asian countries cannot afford to relax. From just before the onset of the global financial crisis, private sector debt has swelled by 73 percentage points of GDP in Hong Kong and 45 percentage points in Singapore. While these small, open economies can arguably live with large swings in capital flows, the credit surge in Malaysia and Thailand is more worrying. The longer the global liquidity glut lasts, the more painful the hangover will be.

http://blogs.reuters.com/breakingviews/2013/09/19/fed-brings-asia-short-term-relief-long-term-risks/

Burma: Lady’s still sceptical

how sceptical she was about the reform process in Myanmar …

Yet, she pointed out, Myanmar is still not a democracy, and neither at peace, nor under the “rule of law”. She and her party are campaigning to change a constitution which, besides debarring her from the presidency she hopes to assume in 2015, guarantees the army a blocking minority in parliament. She said many members of the government are betting that economic success will enable them to hold back democracy. “How quickly and reliably can mindsets change?” she asked, recalling that Myanmar has had half a century of military dictatorship and just three of tentative reform.

And although ceasefires have been signed in most of the score of ethnic conflicts that have simmered since independence in 1948, a comprehensive peace deal remains a distant dream. She identified this—“national reconciliation”—as the biggest task facing Myanmar.

http://www.economist.com/blogs/banyan/2013/09/aung-san-suu-kyi-singapore

UOB Vietnam has launched a unit to advise Vietnamese businesses expanding into Asia.

“Vietnam has prospered from steady economic growth over the last decade and we have seen many of our customers develop from small businesses to companies that are ready to spread their wings to the rest of Asia,” said Thng Tien Tat, executive director of UOB Vietnam.

From the first half of last year to the same period this year, UOB’s business flows between Vietnam and Asia increased 20 per cent. Trade between Vietnam and Asia grew 46.7 per cent to US$150.4 billion from 2010 to 2012, according to the International Monetary Fund.

The new FDI Advisory Unit will give UOB customers expanding in and out of Vietnam access to the bank’s full suite of corporate and personal banking products. BT

Floodwater encircled an industrial estate to the north-east of Bangkok yesterday, adding to fears that Thailand could see a repeat of the devastation caused by floods in 2011, but the estate’s director said the water will not enter the complex.

The 2011 floods killed more than 800 people around the country and caused major disruption to industry, cutting economic growth that year to just 0.1 per cent.

Since Thailand is a big supplier of electronic parts, hard disk drives and car parts, international supply lines were disrupted, too.

The government has insisted there will be no repetition, partly because rain has been less heavy this time but also because dams are nowhere near as full as they were then. BT

A Thai transgender student who protested against having to wear a male uniform could end up in court, it’s reported. BBC report

Why the rupiah can’t recover

In Indonesia on 26/09/2013 at 5:32 am

Other Asian countries’ currencies are recovering.

The rupiah touched levels around 11,580 against the U.S. dollar Tuesday, its weakest level since April 2009, shedding around 20 percent of its value this year. The declines continued even after the country’s central bank raised rates by 150 basis points since June, including surprise rate hikes in August and September that brought rates to 7.25 percent.

One reason: “Without the depth of liquidity, it’s difficult to know the true price at the moment. I’m really looking for when we do have that liquidity coming back,” he said. “Once that happens, the currency will be better placed to stabilize, though there are still some structural issues that need to be tackled to see an improvement in the medium term outlook.”

http://www.cnbc.com/id/101057430?__source=ft&par=ft

Might want to monitor First Reit or Lippo Malls if bullish on Indonesia. Might have buying opportunities. Same with Ascendas India.

M’sians, Pinoys & Indons love F1 S’pore

In Indonesia, Malaysia on 21/09/2013 at 5:02 am

F1 in Singapore … as in the past five races, the proportion of foreign fans hovers around the 40 per cent mark. It was highest at the inaugural race in 2008, with visitors buying 41.7 per cent of the 100,000 tickets, but dipped to 39.2 per cent in 2010 on 81,350 tickets.

 Last year, it was 40.9 per cent of the total 84,317 tickets sold … according to race promoter Singapore GP, the top 10 countries are (in no particular order): Australia, India, Indonesia, Japan, Germany, Malaysia, the Philippines, the United Kingdom, the United States and Taiwan. (BT report on Wednesday)

Other Asean round-up news

Gambling revenues round Asia compared

Way of presentation is v.v gd.

http://www.economist.com/blogs/graphicdetail/2013/09/daily-chart-5

Thank us ethnic slitt-eyes, who gamble on anything

In January 2011 the Chinese city of Tianjin opened an “art exchange” in which artworks’ ownership is divided into tradable shares. Demand was enormous: Chinese households have limited investment options for their savings. Within a year more than 50,000 investors had bought shares in less than two dozen artworks. At least 34 similar art exchanges cropped up elsewhere in China, says Zhao Li, a professor at the Central Academy of Fine Arts, a state school in Beijing.

But frenzied trading on the new exchanges soon turned the market frothy. Tianjin’s exchange halted trading on two paintings after their values multiplied seventeenfold in less than three months; other exchanges have also limited trading. To protect investors, the central government has drawn up regulations that have stifled activity. “We have to be careful not to cause trouble,” says Chen Zongsheng, a city official behind the Tiajin exchange.

Meanwhile an ang moh exchange folds.

http://www.economist.com/blogs/schumpeter/2013/06/investing-art

PM wrong on haze, hope he correct on “no repeat of 1997 crisis’

In Economy, Indonesia on 15/09/2013 at 5:47 am

(Or “1997/ 1998 revisited”)

Earlier this week, PM said: “On balance, I would take a sanguine view. I think the Asian economies are in a stronger position than they were in 1997 when the crisis came. I think we’ve got more safeguards instituted now, over the last decades since the Asian crisis to deal with the likely consequences of big capital flows. CNA

Well, Indonesia’s central bank has raised interest rates for the second time in two weeks as it looks to stem the sharp decline in its currency, the rupiah.

It raised its key rate to 7.25%, the highest level in more than four years.

Indonesia’s currency has dipped nearly 18% against the US dollar since May this year as investors pull out of emerging markets, stoking concerns about the economic impact.

The central bank also cut its growth forecast for the current year.

On Thursday, it said that it now expects the economy to grow between 5.5% to 5.9% compared with its earlier projection of a growth between 5.8% to 6.2%.

That will be the lowest pace of growth since the global financial crisis in 2009.
http://www.bbc.co.uk/news/business-24075745

But he got the haze issue wrong: he said would return “for weeks”. Hasn’t has it? And haze season is almost over. I’m glad he was wrong on this.

Here’s hoping he’s right on the Asian economies because if not

vivid memories of the 1997 crisis in Indonesia … watching in disbelief as a once stable currency slid, gently at first, from 2,400 rupiah to the US dollar in July, to 4,000 by early December, and then, dramatically to more than 16,000 in January.

The economy seized up, and within months Indonesia was in chaos.

… something else too.

The foreign fund managers, who had been cheerleaders for the investment boom before the crisis, privately admitting that the corporate data they were given by Indonesian companies was suspect.

But they continued buying into the country’s broader economic growth story, despite nagging fears about corruption and the persistent current account deficit.

“Start Quote

Today the Thai economy is very different. Because we learned things like risk management, corporate governance, the ability to be flexible”

Jada Wattanasiritham SCB

I remember the World Bank and other respected international experts telling us, after Thailand’s economic collapse in July 1997, that Indonesia was different, its fundamentals were sound. It would not be infected by the disease, they said.

For anyone who experienced those bewildering months, and especially those who were victims of the crisis, they left a lingering mistrust of official reassurances, and an anxiety that they could be caught out again.

She seems to have forgotten:

— Fresh from leveraging up to buy a stake in insurer Ping An (he borrowed US$5.5bn), Dhanin Chearavanont is borrowing US$6 billion to finance a takeover of Siam Makro. Combining the Thai cash-and-carry group with his 7-Eleven convenience store chain makes sense. He co-founded Siam Makro with Dutch group SHV in the late 1980s, but was forced to sell out in 1998 when the Asian crisis left his empire overextended (soon to be repeated?). Sentimentality aside, the combined business should also be in a stronger position to expand into neighbouring Southeast Asian countries such as Laos and Myanmar.

The reunion is expensive. The offer price of 787 baht per share is 75% above where Siam Makro was trading at the beginning of January, and values the business at 53 times last year’s earnings. The advantage is that both Siam Makro and CP All, Mr Dhanin’s partially listed Thai retail company, currently have no debt.

— And in January another Thai tycoon, Charoen Sirivadhanabhakdi, won the battle for control of Fraser and Neave with a debt-heavy $11.2 billion offer based largely on breaking up the Singaporean conglomerate.

1997/1998 again? Both had problems then, esp the former.

Related post: https://atans1.wordpress.com/2013/08/22/why-regional-mkts-are-tanking-why-its-a-risky-moment/

Govt doesn’t highlight subsidy problems in M’sia, Thailand & Indonesia; wonder why?

In Indonesia, Infrastructure, Internet, Malaysia, Vietnam on 07/09/2013 at 5:58 am

The govt likes to warn about the dangers of subsidies, forever quoting the deficits in the West. Well what about telling us about problems nearer home? And how come it’s ok to “subsidise” HDB flats at home? ‘Cause it not really a subsidy is what the usual suspects would argue.

Malaysia has cut fuel subsidies for the first time in more than two years as it tries to reduce its budget deficit.

The subsidy on petrol has been cut by 20 sen (6 cents; 4 pence) a litre and on diesel by 20 to 80 sen a litre.

Prime Minister Najib Razak said the cuts would result in savings of about 3.3bn ringgit ($1bn; £650m) a year.

The government spent 24bn ringgit on fuel subsidies last year, which contributed to a widening budget deficit.

Malaysia’s budget deficit was 4.5% of its gross domestic product (GDP) last year.

http://www.bbc.co.uk/news/business-23926411

Some analysts said that the cut in fuel subsidies was an attempt by the government to increase investor confidence and persuade them to leave their money in the country.

Malaysia’s ratio of public debt to gross domestic product (GDP) “is approaching worrying leve according to a Bank of  America Merrill Lynch (BOAML) report. It said that the country’s debt-to-GDP ratio had risen to 54.6%  at the end of the second quarter, from 53.8% in the first quarter.

The figure is just short of the country’s mandated debt ceiling of 55% of GDP. In the 1960s, the limit was made law by then-finance minister Tan Siew Sin to ensure fiscal prudence.

BOAML said that it could worsen. “Rising longer-term bond yields (and hence higher debt-servicing costs) may accelerate the climb.”

Meanwhile, total debt including guarantees is piling up.

“Government guaranteed debt came in at RM147.3 billion (S$56.4 billion) in the second quarter, slightly lower than RM147.8 billion in the first quarter. Adding this to public debt brings the quasi-public debt to about 70.2 per cent of GDP at the end of the second quarter, up from 69.4 per cent during the first quarter.” [BOA report added after first publication)]

Other Asean round-up news

Thailand‘s Thaksinonmics runs into trouble

Thaksinomics has always been about two things. First, it was about establishing a secure hold over the voters, and in that it has unquestionably been successful.

But it is also supposed to be about driving the domestic economy.

The original schemes for micro-credit, affordable healthcare and local product promotion have lifted the living standards of millions of poorer Thais, as has this government’s decision to raise the minimum wage.

But the benefits of the car and rice purchase schemes are more doubtful, especially given their cost.

Thailand still remains heavily dependent on exports and on foreign direct investment for its growth.

http://www.bbc.co.uk/news/business-23903476V

What Viki’s US$ 200m exit says about S’pore’s, M’sia’s and Indonesia’s startup environment

And one of the reasons for the flight of money from Indonesia, is it’s failure to tackle the rising cost of its fuel subsidy. http://www.bbc.co.uk/news/world-asia-23015511

http://sgentrepreneurs.com/2013/09/02/what-vikis-usd-200m-exit-says-about-singapores-startup-ecosystem/?utm_source=rss&utm_medium=rss&utm_campaign=

CNA Group’s Vietnam-based subsidiary, CNA-HTE Vietnam Co, has landed a $10.6 million contract to renovate, upgrade and expand the domestic terminals in Ho Chi Minh’s Tan Son Nhat International Airport.

Under this project, CNA will provide mechanical, engineering and plumbing services such as the air-conditioning, ventilation and electrical systems at the airport’s new two-storey domestic terminal. CNA will also upgrade the airport’s existing domestic terminal, which will be equipped with a new bus terminal building and a VIP lounge. Its roof will be upgraded.

The project is slated for completion in October next year and will contribute to the group’s financial performance for the fiscal year ending Dec 31, 2013. It boosted CNA’s order book to $74.2 million, from $63.6 million as at June 30.

This is CNA’s second airport-related project in South-east Asia this year; it won a contract for Laos’ Luang Prabang Airport in April for common-use terminal equipment, typically used to facilitate passenger check-ins. BT

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”.

Wheels coming off Thailand, Indonesia, M’sia & Vietnam

In Indonesia, Malaysia, Vietnam on 24/08/2013 at 5:04 am

Asean round-up: Bad news abounds

(Update: Related post https://atans1.wordpress.com/2013/08/22/why-regional-mkts-are-tanking-why-its-a-risky-moment/)

Indonesia’s benchmark Jakarta Composite Index – the biggest loser among emerging markets – has plunged over 20% in the past three months, putting it in bear market territory. Neighboring Thailand and the Philippines are not far behind, with losses amounting to over 17 and 11%

Thailand has fallen into recession after the economy shrank unexpectedly in the second quarter of the year.

The 0.3% contraction in gross domestic product between April and June followed a previous fall of 1.7% during the first quarter of 2013.

Previously, Thailand had been recording strong economic growth, outpacing other economies in the region, with expansion of more than 6% during 2012.

Many analysts had expected this performance to continue.

Sanjay Mathur, head of economics research at RBS, told the BBC that weak exports and domestic demand, plus fading business confidence, were to blame for the downturn.

http://www.bbc.co.uk/news/business-23751846

I’m not only guy critical of Indon’s way of fighting inflation

http://blogs.reuters.com/breakingviews/2013/08/16/indonesia-imitates-indias-costly-growth-obsession/

— And on 19th August: Indonesia’s rupiah fell to 10,500 per US dollar for the first time since 2009, stocks dropped by the most in 22 months and government bonds plunged after the current-account deficit widened to a record last quarter.

The Jakarta Composite Index of shares has fallen 8 per cent in two days, and is now the world’s worst performer this quarter.

The yield on 10-year notes surged to the highest since March 2011 after Bank Indonesia (BI) said late on Aug 16 the current-account shortfall was US$9.8 billion, the largest in data compiled by Bloomberg going back to 1989. Inflation quickened to a four-year high and economic growth slowed to the least since 2010, figures showed last week.

As at Wednesday, the Indon market entered its bear phase after falling 20% since May http://www.bbc.co.uk/news/business-23763829

A fund manager with local investment bank Lautandhana Securindo. “The measures taken by the government and the central bank [to fix the current-account deficit] haven’t brought about the desired results.”

Indonesia’s July consumer confidence index fell to the lowest level since May last year, and follows a sharp rise in fuel prices in late June, a Bank Indonesia survey showed on Monday.

The July index was 108.4, down from 117.1 the previous month and compared to 109.0 in May last year.

A reading above 100 indicates that consumers in general are optimistic

The survey of 4,600 households in 18 major cities in the archipelago showed that consumers were pessimistic over the current economic environment, particularly related to jobs and wages.

Concern over fewer jobs and lower wages is expected to be a feature of coming months.

However, the survey said price pressure is expected to decrease in January 2014, as demand ease after Christmas and New Year.

The central bank according to a recent report has lost 13.6% of its central bank reserves from the end of April until the end of July defending the currency. Well August would have added to the losses. And as the chart shows, it hasn’t that much money in the first place.

Malaysia’s growth was below expectations and the central bank, lowered its forecast for the year to 4.5-5%, from 5-6%. A sharp fall in the current account surplus highlighted fears that the country could be vulnerable to market turmoil.

Gross domestic product grew 4.3% in the second quarter of 2013 from the same period a year earlier, data showed yesterday, well below economists’ expectations of 4.9 per cent in a Reuters poll.

Forecasts had ranged from 4.2 to 5.2%, following growth of 4.1% in the first three months of the year.

Still, while the Thai, Indon and S’pore equity markets were in local currency terms below their 31Dec 2012 levels, M’sia is juz ahead by about 3%. All are down in US$ terms.

Vietnam was the country that was viewed as the “next China” due to its stable transition has started to generate concerns about a looming debt crisis.

http://www.bbc.co.uk/news/business-23755593

Update: Related post https://atans1.wordpress.com/2013/08/22/why-regional-mkts-are-tanking-why-its-a-risky-moment/

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.

Triple confirm, SE Asia is slowing down

In Indonesia, Malaysia on 10/08/2013 at 4:55 am

First HSBC’s results and now StanChart’s result show that regional economies are slowing down

http://blogs.reuters.com/breakingviews/2013/08/06/stanchart-shows-not-all-emerging-markets-are-equal/

Example Singapore, where first half income fell 3% and profits dropped 12% (not reported by our constructive, nation-building media).

Other Asean round-up news

And here’s the third confirmation. Indonesia’s exports are dropping, GDP growth is slowing and inflation is rising.

Forget about India, China, Thai or Indon markets

Think frontier markets: like Vietnam, Cambodia. Laos and Burma are coming too

http://www.economist.com/blogs/graphicdetail/2013/07/daily-chart-22

And here’s a plug for M’sia

http://www.bloomberg.com/news/2013-08-06/formula-one-joins-legoland-in-plan-to-remake-malaysia-s-south.html

Another Lion Air air crash since May (then into sea)  this year: now into into a cow

And UOB recently set up a unit offering loans to Chinese companies looking to move into the region, including in renminbi

DBS, Temasek, Indonesia all lose

In Indonesia, Temasek on 06/08/2013 at 5:02 am

Maybe DBS should blame VivianB (and the PM) for taking a hard stand on the haze issue, even though this blog supports their stance because the Indon govt is naturally devious on this and other issues.

Seriously, DBS, Temasek and Indonesia all lose following DBS’ decision to allow its agreement to buy Temasek’s stake in Bank Danamon to lapse after the Indons only allowed it to buy up to 40% of Bank Danamon. It wanted DBS’s entire 67% stake and more: see Backgrounder at end of article for details.

Why DBS loses

Piyush Gupta, pulling his [US]$6.5 billion bid for PT Bank Danamon Indonesia, said his ambitions in Southeast Asia’s largest economy may be set back by about five years.

The lender had sought a controlling stake in Danamon as part of a strategy to expand in markets outside Singapore and Hong Kong, which jointly accounted for 83 percent of its profit in 2012. Average net interest margins for banks in its home market are 1.82 percent, according to data compiled by Bloomberg based on the latest company filings, lagging behind lenders in the rest of Southeast Asia. In Hong Kong, the measure is even lower at 1.66 percent, the data show. [Note that DBS gets 80% of its profits from S’pore and HK.]

In contrast, Indonesian lenders are the most profitable in the world’s 20 biggest economies, data compiled by Bloomberg show. Banks with a market value of at least $5 billion boast an average net interest margin of 6.6 percent, the data show.

DBS’s net interest margin shrank to 1.62 percent last quarter from 1.72 percent a year earlier, today’s earnings report showed. That’s the 15th straight year-on-year decline.

http://www.bloomberg.com/news/2013-07-31/dbs-drops-6-5-billion-danamon-bid-after-failing-to-win-control.html

Note too that DBS doesn’t have much of an Asean presence outside S’pore. It has no retail network in peninsula Malaysia, unlike UOB and OCBC: a failure of its botched attempt to takeover OUB in the early noughties. And unlike Maybank and CIMB, its M’sian rivals, it has only “peanuts” in Indonesia. They, Maybank, in particular, have thriving and biggish S’pore operations.

“DBS missed out on a value-creation opportunity,” Kevin Kwek, an analyst at Sanford C. Bernstein & Co. … The bank “will have to build up a presence in Indonesia the longer and harder way.”

“Indonesia was supposed to give them a leg up in terms of growth,” said Julian Chua … at Nomura … “There may not be that many willing sellers of such a sizable bank.”

If you are wondering why the shares are up then, investors think DBS may use the $ to return some capital. Besides, the issue of shares to Temasek would have been dilutive. And Indonesia’s economy is slowing.

FTs can be blamed for these historical failings, though Gupta and his deputy are exceptions to the rule that in DBS the “T” stands for “Trash”, not “Talent”. They have stabilised DBS’ operationally. And are trying to repair the damage done by DBS’ earlier FT inspired strategy of buying non-controlling stakes in regional banks.

Why Temasek loses

Its involvement as a shareholder in both banks helped spark an anti-Singapore political backlash in Indonesia. The value of its investment has also been reduced by new Indonesian restrictions which limit single bank shareholders to a 40 percent stake. That makes Danamon a less attractive target because Basel capital rules make it expensive for banks to hold minority stakes in other lenders.

However, Temasek can also take comfort. It is under no immediate pressure to sell. And though Danamon shares fell by more than 13 percent on Aug. 1, Temasek’s 67 percent shareholding is still a highly successful investment.

The Japanese banks are seen as interested in the 40% stake that it can sell. They have been buying minority stakes in Indonesia and the region https://atans1.wordpress.com/2013/07/06/asean-round-up-30/, https://atans1.wordpress.com/2012/12/29/jappo-banks-step-up-presence-in-asean-region/

Why Indonesia loses

lost http://blogs.reuters.com/breakingviews/2013/08/01/indonesia-biggest-loser-from-bank-merger-flop/

Here’s an alternate view that DBS and S’pore lost more than Indonesia: http://www.themalaymailonline.com/what-you-think/article/singapore-loses-much-more-than-indonesia-in-dbs-decision-vincent-lingga. I’m sure TRE posters and Balding would agree with this view.

Backgrounder from Bloomberg

DBS had proposed acquiring the 67.4 percent stake in Danamon held by Fullerton Financial by allowing it to swap its Danamon holdings into DBS shares. The exchange was to be at a price of 7,000 rupiah for each Danamon share and called for DBS to issue 439 million new shares to the Temasek unit at S$14.07 apiece, increasing the stake held in DBS by Singapore’s state-owned investment company to 40.4 percent from 29.5 percent.

Following that transaction, DBS would have made a tender offer for any remaining Danamon stock at 7,000 rupiah a share, taking its holding in the Indonesian bank to 99 percent.

Cambodian elections harbinger of S’porean GE?

In Indonesia on 03/08/2013 at 5:07 am

Cambodia’s opposition party says it narrowly won Sunday’s general election, challenging the ruling party’s earlier declaration of victory.

Hours after the poll, PM Hun Sen’s ruling party said it won 68 seats in parliament to the opposition’s 55. Previously, the ruling party dominated had two-thirds majority.

What should interest S’poreans is

Hun Sen, one of the world’s longest-serving prime ministers, has been in power in Cambodia for 28 years.

Many here credit him with having steered the nation out of a civil war and raising living standards for the population of 14 million.

Under him, Cambodia has seen strong economic growth, thanks to a combination of foreign aid, development, tourism and garment exports.

All very PAP-like achievements.

–the Opposition there finally united by combining forces;

“I think Mr Rainsy and his party have a very simple message,” said Mr Cox. “It is striking a chord with people. Do you like the way things are or do you want change?

— ‘Many Cambodians are screaming for change.” … that certainly appears to be the sentiment among many of the urban youth in Phnom Penh.

I sat down with a group of young men and women in a cafe in the city, and many expressed a desire for greater political participation in their country.

“I acknowledge that the current government has made huge improvements and strides in this country since the days of the war,” says 32-year-old Chulsa Heng.

“But we want more. I still think Cambodia has a long way to go, and it’s still not enough.”

First-time voter Ngoun Somaly said that regardless of who she ended up choosing on polling day, there were many issues that the current government was not paying enough attention to.

“Human rights violations, land grabbing from rural peasants and a lack of job opportunities for Cambodia’s graduates – we need to see more firm action on that,” she said.

“Whoever wins the election must work hard to fix these problems. I really want to see these human rights issues solved.”

— And “There is also no longer that cloak of fear, the way it used to be in the past. People aren’t afraid to be out on the streets and true to themselves.”

http://www.bbc.co.uk/news/world-asia-23461127

BTW, the media there is tightly controlled. And the govt regularly sues opponents, winning damages.

So no wonder PM is working hard on his National Day Rally speech. All to play for in next GE.

Lest I be accused of being anti-PAP https://atans1.wordpress.com/2013/07/13/why-young-sporeans-should-be-sent-to-yangon/

Asean round-up con’td

China imports gas from Burma

The gas pipeline that connects China, Myanmar and the Indian Ocean has officially begun operating, and China has begun importing gas from Burma.

Related post https://atans1.wordpress.com/2013/06/13/implications-for-spores-port-as-burma-opens-up/

Indons learning Japanese

Indonesia has more high school pupils studying Japanese than any other country (872,000) other than China

Japan keeps Asean’s economies motoring along

In Indonesia, Japan, Private Equity, Vietnam on 27/07/2013 at 5:26 pm

Asean round-up

Gd summary from FT on Japan’s reemergence in region

China’s slowdown and the prospect of less easy US money have sent a chill through southeast Asia. Benchmark indices in Jakarta, Bangkok and Manila have lost almost half of the one-fifth gains they had made this year to mid-May. The real economy is weakening, too. Last week the Bank of Thailand cut its growth forecast below 5 per cent and recent comments from Bank Indonesia suggest it accepts growth will slip below 6 per cent. Hardly a disaster then, but nor is it what these countries or their followers are used to. Enter Japan and, crucially, its direct investment. In terms of trading with the region, Japan’s significance has slipped over the past decade as its economy stagnated, but at a shade over $200bn it commands the same share as China. Its FDI of $60bn into the region over that period, however, is 10-times greater than its giant neighbour, according to HSBC. Japan is either the largest or second-largest investor in each country.

 During the past two months, Japanese banks and insurers have spent almost $6bn buying stakes in their southeast Asian counterparts. More deals are expected as they try to escape a weak and ageing home market.

Background

Meiji Yasuda Life Insurance Co is expected to acquire a 15% stake in Thai Life Insurance Co. in what would be one of the biggest investments ever in Asia by a Japanese life insurer With the planned investment worth about ¥70 bn (US%700bn), Meiji Yasuda wants to make the major Thai insurer into an equity-method affiliate and dispatch executives, the sources said.

Like other Japanese insurers, Meiji Yasuda is looking to expand overseas earnings, especially in Asia, amid sluggish business at home due to the aging of society.

Sumitomo Life Insurance Co. has made a ¥28 bn investment in Vietnam’s top insurance group, while Dai-ichi Life Insurance Co. in June announced a ¥34.3 bn investment in Indonesia. Sumitimo which lost out to Yasuda is now looking to Indonesia where Bank Negara is looking to sell up to 40% of its life business for up to $800m, according to the FT.

Japanese banks have been active too. https://atans1.wordpress.com/?s=Mitsubishi

Cambodia’s growing

Low labour costs and Cambodia’s proximity to key markets such as China and other emerging economies in South East Asia are attractive to foreign investors.

And with wages in countries such as Thailand and China on the rise, Cambodia is likely to become even more attractive.

http://www.bbc.co.uk/news/business-23429693

Vietnam R private equity

http://blogs.reuters.com/breakingviews/2013/07/18/vietnam-is-back-in-the-game-for-buyout-firms/

Haze over, Indons start two-timing again

In Indonesia, Insurance on 20/07/2013 at 5:15 am

Asean round-up

Indonesia

This two-timing was predicted:

Despite Indonesia committing to ratify the regional pact on transboundary haze pollution by early next year, at the latest, and agreeing to share digitised concession maps with other governments, Singapore’s Minister for the Environment and Water Resources Vivian Balakrishnan left yesterday’s regional meeting on the haze problem “disappointed (but) not surprised”, in his own words …

Only two of the four outcomes that Singapore had sought were fully met after the four-hour meeting: Getting the participating countries — Singapore, Malaysia, Indonesia, Brunei and Thailand — to involve high-level officials from all relevant ministries and agencies from each country in the MSC process, and getting a commitment from Indonesia to ratify the ASEAN Transboundary Haze Pollution Agreement “expeditiously”.

Singapore was unable to get an agreement from Indonesia to renew their collaboration to reduce forest fires at Jambi and other provinces if possible, with Indonesia issuing a noncommittal response to offers of bilateral collaborations from Malaysia and Singapore.

While it welcomed the offers, Indonesia is “currently identifying the areas of cooperation which will maximise and bring mutual benefits for all parties concerned”, a press released issued after the meeting said.

Singapore had also hoped to get the participating countries to submit their concession maps and agree a date for the public launch of the ASEAN Sub-Regional Haze Monitoring System (HMS) platform to enable identification errant companies engaging in slash-and-burn practices.

Maps from the Indonesian govt are the only way S’pore can establish whether S’pore-based companies are telling the truth about where the fires are burning. If the accounts of the S’porean (mostly controlled by Indonesians) are taken at their face value, the fires are almost always anywhere except on their land. Note that despite the allegations by Indon officials that S’pore companies started fires , only one co, a M’sian co,has been charged.

Related post: https://atans1.wordpress.com/2013/06/26/why-plan-suffocate-sporeans-failed/

Thailand/ Insurance

Meiji Yasuda Life Insurance Co is expected to acquire a 15% stake in Thai Life Insurance Co. in what would be one of the biggest investments ever in Asia by a Japanese life insurer With the planned investment worth about ¥70 bn (US%700bn), Meiji Yasuda wants to make the major Thai insurer into an equity-method affiliate and dispatch executives, the sources said.

Like other Japanese insurers, Meiji Yasuda is looking to expand overseas earnings, especially in Asia, amid sluggish business at home due to the aging of society.

Sumitomo Life Insurance Co. has made a ¥28 bn investment in Vietnam’s top insurance group, while Dai-ichi Life Insurance Co. in June announced a ¥34.3 bn investment in Indonesia.

Sumitimo which lost out to Yasuda is now looking to Indonesia where Bank Negara is looking to sell up to 40% of its life business for up to $800m, according to the FT.

Japanese banks have been active too. https://atans1.wordpress.com/?s=Mitsubishi

Haze: PM, silence is NOT a solution!

In Indonesia, Political governance on 05/07/2013 at 6:20 am

The PM was wrong about the haze returning (conditions are getting better) and S’pore, Indonesia and M’sia have kissed and made up. Sort of. “ASEAN’s foreign ministers have agreed on a process to task officials from Singapore, Malaysia and Indonesia to examine what is happening on the ground and to report to the leaders in managing it … Mr Shanmugam, together with his counterparts from Malaysia and Indonesia, met to discuss the haze issue and to recommend to the grouping ways to tackle the problem.Mr Shanmugam felt it was a very positive development as it gave ASEAN a framework to move ahead on the matter.” (CNA)

So back to the days of the Asean way: keeping quiet, and working behind closed doors (like how WP MPs, according to Auntie, deal with the PAP govt? To be fair WP MPs are starting to get vocal; sadly its PritamS, the loose canoon )

The situation is more like making up until the offending partner in a relationship cheats again. And going by Indonesia’s track record on fighting haze, it’s reasonable conclude that it will try to “smoke” M’sia and S’pore, once we sit down and keep quiet. Remember VivianB shouted, “Rape!”*, while M’sia took tougher but quieter action: it sent a diplomatic note of protest, but made it public that it had sent a protest note.In olden days, this was often a prelude to war.

And countries also said publicly that they would raise the issue at an Asean meeting, thereby making it publicly an Asean issue. (They did, hence the “agreement”.)

Only after this public display of anger, did Indonesia got to work https://atans1.wordpress.com/2013/06/24/haze-what-raffles-would-have-done/.

Still not convinced Indons officials are dishonest? There is this ST story (http://www.straitstimes.com/the-big-story/asia-report/indonesia/story/spore-funded-efforts-fight-haze-face-challenges-ground-201) on how aid is wasted or offers of help ignored. (Of course, the usual suspects would discount this story, but it ties in with what their ang moh HR and environmental friends are saying.)

Given this track record of mendacity, it is important not to forget what Indonesian Energy and Mineral Resources Minister, Jero Wacik said juz before his boss apologised**.

At the opening of a meeting of senior energy officials from Asean countries in Nusa Dua, Bali  on 24 June, Indonesian Energy and Mineral Resources Minister, Jero Wacik said that both Singapore and Malaysia had made much profit from Indonesia all this while. He said Malaysia had benefited from bilateral cooperation with Indonesia, including electricity imports from Indonesia. Likewise, Singapore had benefited from Indonesia’s gas supply as well as the large number of Indonesian tourists visiting Singapore.

But he seems to have forgotten S’pore and M’sia didn’t get electricity and gas these things for free. Their companies or govts paid cash, much of which found its way into official’ bank accounts (albeit according to the Indon govt in S’pore). As for tourism, Indonesia benefits from our wealthier tourists visiting Indonesia.

He then went on to say Singapore and Malaysia were trying to discredit Indonesia globally when they should help, he added. said, “Let me remind our friends from Malaysia, Singapore, don’t just because of the haze, tell stories to the world.” He said Singapore and Malaysia should “know themselves” (tahu diri) over the haze, accusing both of trying to discredit Indonesia over the haze issue. “It’s called sharing, you go through good times together, don’t make noise to the world when things go bad. It’s just like husband and wife, don’t take your quarrel outside.”

Err didn’t M’sia and S’pore offer to help fight the fires but were told to bugger off? And haven’t both countries been telling Indonesia for years to do something about the yearly haze, and Indonesia promises to do so, anually, despite refusing to ratify a 2002 Asean treaty*** on the issue? And as related above, our offers of help are ignored or our aid wasted.

And despite him saying,“Both countries should sit together to resolve the problem without making a big deal of it to the world.”, one senior official publicly said  that Malaysia and Singapore linked companies were involved in the burning. But two other senior Indonesian officials publicly contradicted him and said that there was no basis for saying this. Indonesia has acknowledged that its officials have been contradicting each other on this point, and that what is needed is a proper investigation. all the companies have also denied publicly the allegations.

He also said that the Indonesian government is doing its utmost to put out the fires. So how come it comes around around as regularly as the monsoons? And what about ratifying the 2002 Asean treaty on fighting haze?

Finally, Indonesian politicians criticised their president for apologising, showing their belief that Indonesia had a right  to smoke its neighbours, juz as it has the right to invade and rule West Papua and East Timor.

So until Indonesia shows it is serious about solving the annual problem that hurts millions of its people, S’pore and M’sia have to be willing to name and shame Indonesia publicly and in int’l forums like Asean meetings, or worse come to the worse at the UN This, it seems, is the modern equivalent of Raffles sending in the army to burn down palaces to teach recalcitrant sultans  to respect the British https://atans1.wordpress.com/2013/06/24/haze-what-raffles-would-have-done/.

Let’s hope Pinky has found his balls to stand up for S’pore! Silence is not an option!

Related post: https://atans1.wordpress.com/2013/06/20/the-haze-and-regime-change/

* In a strongly-worded statement on Facebook he bitched that “no country or corporation has the right to pollute the air at the expense of Singaporeans’ health and wellbeing”, Starting to like him despite his sneering at the poor when a pAP MP asked him to spend more on them. while throwing our money at the Kiddie Games.

**My take on the apology

***Only now is the govt taking steps to get it ratified.

China sneezes, effects on Asean vary

In Economy, Indonesia, Malaysia, Vietnam on 29/06/2013 at 8:50 am

https://i2.wp.com/pdf.reuters.com/pdfnews/pdfnews.asp

As these charts show, S’pore’s economy is more exposed to China than Indonesia, Philippines, Thailand, Vietnam and M’sia. (BTW, no Asean round-up this week)

https://i2.wp.com/pdf.reuters.com/pdfnews/pdfnews.asp

https://i2.wp.com/pdf.reuters.com/pdfnews/pdfnews.asp

Why Plan “Suffocate S’poreans” failed?

In Humour, Indonesia, Malaysia on 26/06/2013 at 4:55 am

(Or “Why Indonesia apologised?”)

So the Indonesian presisent has apologised to M’sia and S’pore for the haze, despite an official earlier saying that Indonesia would not apologise to S’pore. And the president also admitted that his ministers were talking cock, while doing bugger-all.

So this has worked: https://atans1.wordpress.com/2013/06/24/haze-what-raffles-would-have-done/?

Seriously, why has Indonesia apologised to this  “little red dot” inhabited by “children”?

My friend in M’sia’s Special Branch told me the following story based on bugs placed in the cabinet room: nothing to do with us “children” it seems.

On Monday, the Indonesia cabinet was briefed on “Operation Smoke Out the Money”. The president and his ministers were told that S’pore was choking in the smoke from Riau and would be soon be very receptive to this call by a fair-minded S’porean-Canadian* to surrender all of its ill-gotten gains from Indonesia, especially as the article was republished in the widely read, influential patriotic and nationalistic TRE, and the very respected, influential SGDaily carried a link to the original article**. My source said that many ministers were heard groaning presumably because they had illicit money in S’pore.

Then an aide came in and said, “Mr President, the dad of S’pore’s PM wants to speak to you.” The ministers clapped.

Then another aide called, “Sir, Najib, Anwar and Tun M are calling, together”. The president said, “How do they know so fast Suharto’s buddy is repenting? And why a joint call?”.One minister said,”Sir, they came together to honour you, the MAN who brought S’pore to its knees!”

The aide said, “Sir, I doubt it. M’sia has declared an emergency in South Johor and schools in KL are closing; all because of the haze. Apparently, Superman*** is blowing the smoke away from S’pore, diverting the smoke into Malaya. S’pore is smoke free! The Malay media is asking, “Why are our Muslim brudders behaving like this? Screwing, smoking us and not the infidels in S’pore? S’pore took their money, not us!”

A third aide came in saying, “Sir, the plantation companies and APRIL are calling. They want to know how much more money yr ministers want them to deposit in the ministers’ S’pore bank accounts?”

The president went, “Oh Riau!”. My SB source says presumably because Riau is now hotter than hell.

And one Christian minister was heard sniggering, “Where are the Islamic superheroes when Muslims need them?”. Ash trays and wine glasses were thrown at him.

*Contrary to TRE posters, Special Branch does not believe he is an Indonesian Quisling, doing it for the money. He is an honest S’porean- Canadian. He sincerely believes that S’pore is screwing Indonesia.

**Only TOC didn’t carry the article.

***I reminded my SB contact of Superman’s Jewish origins: Kal-El (his Krypton name) sounds like the Jewish term for “Voice of God”. My contact laughingly said that LKY chose his friends better than M’sia’s rulers did. He chose Israel and the US to suck up to, M’sia chose Muslim countries and the US as friends.

Haze: What Raffles would have done

In Indonesia on 24/06/2013 at 4:40 am

“Mr Shanmugam reiterated Prime Minister Lee Hsien Loong’s position that it is not productive to trade accusations”, CNA reported. He was being asked about

— the recent comments of Indonesian Minister Agung Laksono chiding Singapore for behaving “like a child”; and

— Indonesian Foreign Affairs Minister Marty Natalegawa remarks that the Indonesian government would not issue an apology to Singapore for the haze crisis.

Bit rich this, given that it was our very own VivianB who, rightly, started the public naming and shaming of the Indonesian govt: in a strongly-worded statement on Facebook that “no country or corporation has the right to pollute the air at the expense of Singaporeans’ health and wellbeing”, in the early hours of 20th June.

The Indonesian govt lost face, as his remarks were reported in the West where the govt has been trying to show its green face with various announced policies (like reserving land as jungle), and where the govt is trying to investors to think of Indonesia as a BRICS nation (“I” for India and Indonesia, not juz India).

The govt started bitching against S’pore, but has done something (witness the clear skies on Saturday evening, Sunday, and so far today*) following VivianB’s, Shan’s and PM’s comments about Indon non-actions:

— At a late-night emergency meeting on 20th June , President Susilo Bambang Yudhoyono ordered disaster officials to “immediately mobilise all the country’s resources” to extinguish the fires on Sumatra island that have created vast palls of smoke. Why so late? Firefighters on the ground have struggled to put out the blazes, which are burning under the surface of the peat, for at least two weeks..

— Indonesia announced it has earmarked around 200 billion rupiah (US$20 million) to handle the disaster. No budget, before S’pore shamed Indonesia?

— Indonesia’s national disaster agency said that two helicopters with cloud-seeding equipment were sent early Friday from Jakarta and Borneo island to Riau province, where hundreds of hectares (acres) of carbon-rich peatland are ablaze. Again why so late?

— It  said water-bombing helicopters could be dispatched, although gave no timeframe. [Update

Sutopo Purwo Nugroho, a spokesman for Indonesia’s national disaster agency, said they had “carried out 14 water-bombings, dropping a total of 7,000 litres (1,820 gallons) of water onto the fires”.

He added that altogether, four helicopters had been deployed for water-bombing operations while two planes were conducting cloud-seeding, AFP news agency reported.

However, Indonesian disaster agency official Agus Wibowo told AFP that two cloud-seeding attempts tried in Riau province over the weekend were not successful.— BBC report]

— Two S’pore based companies controlled by Indonesians were named by the Indonesian authorities as partly responsible for the fires. They denied the name calling. Anyway, these are own goals because the owners are Indonesian, and the burning is in Indonesia. So why no action leh?

All in all, has VivianB’s screams of “Rape!”, got the Indonesian govt embarrassed enough to do something?

And the pressure continues:

— S’pore, by getting M’sia*** to agree to get the haze issue on the agenda at the coming Asean meeting in Brunei, has forced the Indons to talk about the issue in front of other Asean countries.

— S’pore is also rightly threatening to raise the cry of “Rape!” in other int’l public forums.

Gd for VivianB and gd for PM? No more “behind closed doors meetings” like what Auntie says WP MPs do with the S’pore govt to get things done? To be fair, even WP has now learnt that “closed doors” is for sex only.

Raffles must be laughing in his mansion in heaven. When he was ruling Java (see Raffles and the British Invasion of Java and here), he sent in the army to teach the sultans of Palembang (in Sumatra) and Yogyakarta (in Java) a lesson. The former had killed a few Europeans, while the latter was two-timing the British. The British stormed and looted the sultans’ palaces, and appointed new sultans. The new sultans and all the other sultans realised that the British were unruly, irrational and brutal, like children, and decided to behave. When the Dutch returned, they behaved like the British, seeing that the sultans were cowed by such thuggish behaviour. Being nice, didn’t pay, it seemed.

So the only way to get anything done by the Indonesian govt is to threaten disproportionate “punishment” if ministers are caught two-timing? Today, sending in the army is not acceptable behaviour (except for the hegemon and the wannabe hegemon). But maybe naming and shaming ministers, who value face (especially from ang mohs), is acceptable, and, more importantly, effective: juz as force* was in the 19th century, as Raffles showed.

The Indonesia govt and ruling elite want Indonesia to be perceived as a major player on the int’l stage. Showing that ministers are incompetent and dishonest affects the perception. Here’s how Shan showed up the incompetency or mendacity of an Indon minister http://www.channelnewsasia.com/news/singapore/singapore-getting/721306.html. More pls, Shan.

Raffles (and then the Dutch) “children” physically lashed the sultans until they cried “Uncle”***, and “behaved”; so shouldn’t S’pore lash the ministers verbally, until they stop “smoking” us?

—-

*And it’s peace and quiet on Facebook as the anti-govt activists (esp those belonging to minor opposition parties) think of new reasons to bitch against the govt. Don’t worry guys. Yr silence only only shows yr lack of imagination.

**And  during Confrontation, a lot more Indon soldiers were killed than the Commonwealth, M’sian and S’porean (if any) soldiers defending M’sia and S’pore. Many were killed in Kalimantan by the SAS and Gurkhas. While the Indonesian elite forces were playing at being warriors, the SAS and Gurkhas attacked them when they tot they were safe in Indonesian territory. The Indonesian soldiers and ministers tot that only they were entitled to trespass. The SAS and Gurkhas tot otherwise.

*** TOC reported yesterday on FB, “What is seen from above for the region. Singapore is spared from much of the haze as more of it diverts towards north of Malaysia.”

Haze: Economy will slow

In Economy, Indonesia on 22/06/2013 at 10:35 am

Businesses and analysts have warned that the longer the problem persists, the higher the cost will be for the overall economy.

“Tourism-related sectors such as retails sales, hotels, food and beverage, and gaming, these will take a hit,” Joey Wong of Barclays told the BBC.

Tourism is a big revenue earner for Singapore and according to some estimates industries related to the sector account for between 5% and 6% of Singapore’s total economic output.

The last time the city-state was hit by such bad haze in 1997, tourist arrivals dropped by nearly 15% in a month.

According to a report by Barclays, there are indications that some tourists have already started to cut short their stay in Singapore and some have even cancelled their bookings.

Ms Wong said while it was too early to estimate the overall impact of the haze on the industry, the cost for the sector could be between $200m – $400m (£130m – £260m) if there was an 8% to 10% drop in arrivals.

However, she added that any drop would be temporary and the arrivals will pick up once the conditions improved.

Bad timing?

While a situation like the current one is never good for businesses, it is even worse if it happens during the peak annual period.

That is position that Singapore’s retailers find themselves in. The haze has hit during the annual “Great Singapore Sale”, one of the busiest shopping periods of the year … Singapore Retail Association, says that retailers are already experiencing a marked decline in traffic and sales are down by between 8% to 12%.

“If this continues, the industry – which is already faced with very high cost of operations – would certainly be badly hit and retailers, who are already struggling to hold on to their very slim margins, will see this being eroded further,” said Ms Wei.

http://www.bbc.co.uk/news/business-22999205

Indons’ got problems

In Indonesia on 22/06/2013 at 7:16 am

A bigger problem than haze. Haze doesn’t affect the Javanese, the dominant group in Indonesia. This does.This problem (like the haze) also shows that the Indonesian elites try to avoid doing anything, unless they benefit personally.

http://www.bbc.co.uk/news/business-22947410

http://blogs.reuters.com/breakingviews/2013/06/18/indonesia-subsidy-cut-is-right-plan-for-wrong-time/

 

 

No Asean round-up this week.

The haze and regime change

In Indonesia on 20/06/2013 at 8:09 am

The haze illustrates one gd reason why S’poreans should be careful of regime change. It has unintended consequences.

Since the fall of S’pore’s very gd friend, Suharto, Indonesia has become a very decentralised country and decentralisation is at the root of the haze problem.

The local leaders are responsible for implementing the rules against burning. But they rely on the plantation cos and other businesses to fund their election campaigns. Jakarta and S’pore are faraway places. So burn baby burn.

And the attitude of the Javanese-centric national govt doesn’t help.

Hadi Daryanto attempted to shift some of the blame onto Malaysia and Singapore, saying their palm oil companies that had invested in Indonesia were also responsible.

“We hope the governments of Malaysia and Singapore will tell their investors to adopt proper measures so we can solve this problem together,” he said.

Yet when our ministers, Mr Shanmugam and Dr Balakrishnan, on Tuesday, asked Indonesia to share the names of errant companies involved in illegal burning, the response was a deafening silence.

And in the name of national sovereignty, Indonesia refuses all offers of help from M’sia and S’pore to fight the fires. It even refuses to ratify the 2002 Asean treaty on the matter.

And I’m a bull on Indonesia! There is a disconnect somewhere!

Coming back to regime change. Think carefully before voting for the co-driver (PritamS will be a minister) or Mad Dog (Free medical care). Actually free medical care is a great reason for the elderly to vote for the SDP!

Asean round-up

In Banks, Indonesia, Temasek on 25/05/2013 at 6:20 am

Growing faster than Greater China

South East Asia is expected to drive growth in the luxury market in Asia this year. Analysts at Bain and Co predict that luxury goods sales will grow by 20% in 2013: Greater China only 6% http://www.bbc.co.uk/news/business-22564297

How Myanmar will connect up Asia

http://www.economist.com/blogs/graphicdetail/2013/05/daily-chart-9

Great graphics: explains how the opening up of Burma will allow ships to by-pass the Malacca Straits.

DBS’ woes

DBS Group Holdings is hoping it will have to settle for the minority stake (40%) it has been offered in Indonesia’s Bank Danamon. It hopes that talks between the central banks of Indonesia and Singapore will clear the way for a majority takeover. Pending these, it may ask for an extension from seller Temasek Holdings.

Note that because UOB and OCBC have a bigger regional presence (thks to legacy branches in M’sia), they trade at a 25% to DBS in terms of book value.

Asean round-up

In Indonesia, Malaysia on 18/05/2013 at 6:06 am

Global loan growth for HSBC: gd indication of relative economic growth rates. Asean and China is the place to be.

M’sias economic output for the first quarter grew a lower-than-expected 4.1%, dragged down by weak exports.Economists surveyed by Bloomberg had projected a median growth of 5.5%. More headaches for Najib. Well he can tell himself that the problems will not be his to resolve. Badawi must be chuckling to himself. This appeared before the elections http://www.channelnewsasia.com/news/specialreports/malaysiadecides/news/najib-should-not-be-forced-to-resign-bad/661854.html

Indonesia’s IPO market is enjoying its busiest fiscal second quarter ever. Indonesian electronics retailer PT Electronic City became the 10th company to commit to selling shares to the public. Electronic City is reportedly planning to sell the equivalent of 25% of the company raising US$150 million in part to help open new stores.

Indonesia: Export woes slow economy

In Indonesia on 11/05/2013 at 7:11 am

Indonesia’s economy grew at 6% in the first three months of the year, its slowest pace in more than two years, as exports slowed.The expansion was slower than the 6.1% reported in the previous quarter, compared to the same period the year before.Last week, the statistics bureau said exports had fallen the most in seven months in March.Analysts said the declining expectation of the global recovery led to a further weakening of global commodity prices.

Its government has set a 2013 growth target of 6.8%.

A few weeks ago, the CEO of Astra (the dominant vehicle distributor) said he expected slower sales, in a FT interview.

BTW, no Asean round-up this week.

Asean round-up

In Indonesia, Malaysia on 27/04/2013 at 7:04 am

Thai banks are warily watching for signs of a credit bubble, even as they make record profits on robust loan growth on the back of a strong economy.

Bangkok Bank, Thailand’s largest lender by assets hasraised its loan-loss reserve coverage to 203.3% of non performing loans (NPLs) in the first quarter, more than double the central bank’s minimum requirement.

The Bank of Thailand has cautioned banks on rising household debt in South-east Asia’s second biggest economy, and expressed concern that cheap home loans could cause a steep rise in prices similar to that seen in Singapore and Hong Kong.Thai banks say there are not worried about a property bubble, but concede there is a possible excess supply of condominiums along Bangkok’s mass transit routes.

Fresh from leveraging up to buy a stake in insurer Ping An (he borrowed US$5.5bn), Dhanin Chearavanont is borrowing US$6 billion to finance a takeover of Siam Makro. Combining the Thai cash-and-carry group with his 7-Eleven convenience store chain makes sense. He co-founded Siam Makro with Dutch group SHV in the late 1980s, but was forced to sell out in 1998 when the Asian crisis left his empire overextended (soon to be repeated?). Sentimentality aside, the combined business should also be in a stronger position to expand into neighbouring Southeast Asian countries such as Laos and Myanmar.

The reunion is expensive. The offer price of 787 baht per share is 75% above where Siam Makro was trading at the beginning of January, and values the business at 53 times last year’s earnings. The advantage is that both Siam Makro and CP All, Mr Dhanin’s partially listed Thai retail company, currently have no debt.

“No business as usual if opposition wins Johor: Anwar”. So too said Lim Kit Siang. This means Iskandar will be affected.

“Leaders of Indonesia & Singapore discuss ways to boost close ties” Err what about the forest fires that come round this time every yr for decades? I’m bullish on Indonesia but taz despite its dysfunctional govt.

Asean round-up

In Indonesia, Malaysia, Vietnam on 20/04/2013 at 1:57 pm

M’sia too will suffer because of drop in PC sales juz like S’pore https://atans1.wordpress.com/2013/04/11/when-economy-slows-not-nec-its-cause-ft-supply-ltd/ because Penang too is part of the Mircosoft ecosystem. And it too is not part of the Apple or Google ecosystems.

Asean round-up

In Indonesia, Malaysia on 06/04/2013 at 7:32 am

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

Asean round-up: The dark side

In Indonesia on 30/03/2013 at 6:52 am

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

Numbers show GCT & Lee Jnr messed up?

In Economy, Indonesia, Malaysia on 27/03/2013 at 6:45 am

This chart shows all the economies that maintained 6% growth or faster over 30 years. S’pore’s run of 7ish% growthended in 1994, when GCT was PM and Lee Jnr was Deputy PM and in charge of the economy. Going by the things our PM is doing now, maybe GCT held him back? Or LHL has repented? And the changes he is initiating, is his way of saying, “Sorry”?. How about a claw-back of ministerial salaries? Esp of PM’sand DPM’s? If it happens to bankers, it can happen to ministers: after all ministers’ salaries pegged to bankers among others.

Why Indonesia is still a cheong

In Indonesia on 24/03/2013 at 5:20 am

http://www.businessweek.com/news/2013-03-21/cvc-led-group-said-to-raise-1-dot-3-billion-in-matahari-sale

 

Asean round-up

In Airlines, Casinos, Indonesia on 23/03/2013 at 6:33 am

Airbus has won a record order for 234 A320 planes worth 18.4bn euros (US$24bn) from Indonesia’s Lion Air.The order trumps last year’s record order for 230 Boeing planes – also from Lion Air.

Last Saturday, Bloomberry Resorts Corp’s was opened by Philippine President Benigno Aquino.

Big casino operators will be scrutinising the Philippines’ debut as Asia’s newest top-end gambling destination this weekend to see if Manila can deliver on promises of better profit margins and lower costs than global betting capital Macau, says Reuters.

They also want to know whether Bloomberry Resorts Corp , whose shares have climbed 40% in the last six months on hopes of quick returns, can overcome national security concerns and flawed infrastructure to bring in VIPs from China to place bets at its US$1.2 billion Solaire casino resort.

Its rivals are Melco Crown Entertainment Ltd and Genting Hong Kong Ltd, with their respective local partners Belle Corp and Alliance Global Group Inc.

“There are high rollers coming in to play … I am expecting at least 1-1.5 billion pesos (US$25 million to US$37 million) to be wagered tomorrow night,” Cristino Naguiat, head of local regulator the Philippine Gaming Corp (Pagcor) told reporters.

The advantage that the Philippines has is that junket operators are welcomed, unlike in S’pore. Junket operators have a reputation for laundering money, and ties with organised crime.

Bangkok skytrain operator BTS Group Holdings Pcl has received commitments worth $850 million from 20 cornerstone investors for Thailand’s biggest initial public offering, a source with direct knowledge of the plans told Reuters on Friday.

The investors in the infrastructure fund IPO include insurer AIA Group Ltd, hedge fund Azentus Capital Management and global asset managers Fidelity and Capital Research and Management, added the source, who was not authorized to speak publicly on the matter.

BTS on Friday week filed a prospectus for the up to $2.1 billion IPO, but the document did not include the names of the cornerstones.

The fund will likely yield between 6-6.2%, Reuters reported.

PT Matahari Department Store (LPPF)’s owners raised 12.7 trillion rupiah (US$1.3 billion) selling stock in the Indonesian retailer, Bloomberg reported.

CVC and Lippo Group sold 1.167 billion shares at 10,850 rupiah. The shares were initially offered at 10,000 rupiah to 11,250 rupiiah

The sellers, seeking to capitalize on investor optimism about consumer spending in Indonesia, asked for as much as double the median valuation among department stores in emerging Asia, price-to-earnings data compiled by Bloomberg show T(he shares were offered for as much as 28 times Matahari’s forecast 2013 earnings). Jakarta’s stock benchmark is up 11.3 percent this year and hit a record high earlier this month.

Temasek GIC is a cornerstone investor despite selling some shares too.GIC also committed to buy a 1.8% stake in the share sale as a cornerstone investor at the same time as its private equity arm was one of the main selling shareholders. Temasek too was a cornerstone investor. There were 15 cornerstone investors each with less than 5%.

(Update: Last para amended and expanded on 24 March 2013.

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

Asean round-up

In Casinos, Corporate governance, Indonesia on 23/02/2013 at 6:49 am

The Philippine unit of Macau casino company Melco Crown Entertainment Ltd  said on Tuesday it plans to sell up to 1 billion shares as it prepares to develop a $1 billion casino-resort project with local partner Belle Corp.

Melco, run by Australian billionaire James Packer and the son of Macau gambling tycoon Stanley Ho, bought a 93% in Manchester, a formerly illiquid stock with investments in pharmaceutical and real estate businesses. Melco paid Manchester shareholders 1.3 billion pesos for the backdoor listing.

Melco and Belle, controlled by the Philippines’ richest man, Henry Sy, formalized their partnership in October.

Belle plans to build an integrated entertainment resort complex called Belle Grande Manila Bay, which features a 30,000-square-metre casino in a sprawling gaming complex being developed near Manila Bay. Melco will operate the casino.

There are three other groups with casino licences in the Philippines.

Financier Nathaniel Rothschild has lost his bid to oust the current board of coal mining giant Bumi, the company he helped to found.

Chairman Samin Tan survived a vote to remove him but informed the board he was stepping down.

Mr Rothschild had wanted to rejoin the company and expel 12 of the 14 board members, including the chief executive and chairman.Allegations of financial irregularities at Bumi’s key Indonesian operating subsidiary, PT Bumi Resources – in which it owns 29% alongside the Bakrie family – first emerged in September 2012 , after Mr Rothschild received information from a whistleblower.

Thailand’s economic growth exceeded expectations in the last three months of 2012 as it continued to recover from the previous year’s devastating floods.

Gross domestic product surged 18.9% in the October-December period, from a year earlier. Most analysts had forecast a figure close to 15%.

Compared with the previous quarter, the economy grew by 3.6%. But inflation is a concern.

Indonesia: Opportunities always there in infrastructure

In Indonesia on 19/02/2013 at 5:55 am

Indonesia is the single most preferred destination for Singapore-based companies planning to venture overseas in the next six months, according to the BT-UniSIM Business Climate Survey. Indonesia overtook China – the destination of choice for the past two years – which slipped to second place while Malaysia rounded off the top three.

As flooding in Jakarta highlighted the dismal state of Indonesia’s infrastructure, a potential US$200 billion pipeline of power plants, water systems and toll roads presents “huge opportunities” for the region’s banks, engineering companies and law firms, says the country’s agencies charged with reaching out to private investors that can help deliver projects.

“The opportunity is very big,” said Emma Sri Martini, president director of state-owned PT Sarana Multi Infrastruktur (SMI), which was set up in 2009 to plan and help finance projects with public money and find private sector backers.

Private investment will play an important role in building the transport, electricity and other services the country will need to maintain economic growth, expected to accelerate to 6.3 per cent in 2013, the World Bank said in December. Spending on fuel subsidies – a popular vote winner that cost about US$20 billion in 2011 – rivals amounts earmarked for infrastructure this year.

DBS: Why it needs to buy Temasek’s stake in Danamon

In Banks, Indonesia, Uncategorized on 14/02/2013 at 9:30 am

Indonesian lenders the most profitable among the 20 biggest economies in the world, according to data compiled by Bloomberg. The average return on equity, a measure of how well shareholder money is reinvested, is 23 percent for the country’s five banks with a market value more than $5 billion … Returns in Indonesia, Southeast Asia’s largest economy, are driven by net interest margins, the difference between what banks charge for loans — an average of 12 percent, according to the central bank — and what they pay for deposits. The average margin for the country’s big banks is 7 percentage points, the highest of the 20 economies … Indonesia’s high net interest margins have prompted banks such as DBS Group Holdings Ltd. in Singapore, where the figure averages 2 percent, to look at acquisitions. DBS, Southeast Asia’s biggest lender, made a $6.8 billion bid in April for 99 percent of Bank Danamon and is awaiting regulatory clearance.

http://www.bloomberg.com/news/2013-02-04/world-s-most-profitable-banks-in-indonesia-double-u-s-returns.html

UOB and OCBC have an easier time because of their relatively large M’sian contributions to earnings. Malaysia is generous to its banks.

DBS’s core markets of S’pore and HK are very competitive and mature markets.

Asean round-up

In Indonesia on 07/02/2013 at 3:06 pm

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 mkts leading the world

In Indonesia, Malaysia on 06/02/2013 at 5:11 am

In January, Thailand and Indonesia are the world’s best equity markets. M’sia is 4th and S’pore is 7th.

http://www.economist.com/blogs/graphicdetail/2013/02/daily-chart-0

And the voters of Punggol East still vote against the PAP? Are voters deft?

Asean round-up

In Corporate governance, Indonesia on 26/01/2013 at 5:52 pm

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.

HSBC on Asean in 2013

In Indonesia, Malaysia, Vietnam on 24/01/2013 at 1:26 pm

“India, Indonesia and Vietnam stand to benefit most as they have large labour forces and strong domestic markets,” says HSBC on MNCs moving on from China because of rising wages and an appreciating yuan.

It also highlighted in a report last month political jockeying ahead of a presidential election in Indonesia in 2014; uncertainty over the outcome of a general election expected in Malaysia soon (the Opposition alliance is tot to have a chance of winning despite the strange combi of Islamists, connected to the Muslim Brudders in Egypt, who want to chop off heads and limbs, and a moderate Malay party, and a secular Chinese, Indian party)) ; and simmering political tensions in Thailand.
This puts netizens preoccupation with Punggol East in perspective: doesn’t matter in ASEAN context. And, dare I say it, in the local context too. Either PAP wins, or PAP Lite wins.

Asean round-up

In Indonesia, Malaysia, Private Equity on 19/01/2013 at 1:21 pm

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 round-up

In China, Indonesia, Vietnam on 12/01/2013 at 5:08 pm

Gd news for SE Asia. China has reported better-than-expected trade data, adding to optimism that growth in the world’s second-largest economy may be rebounding.Exports, a key driver of expansion, rose 14.1% in December from a year earlier. Most analysts had forecast a figure closer to 4%.Imports also rose, climbing 6% and indicating stronger domestic demand.

The US has filed a complaint with the World Trade Organization (WTO) against Indonesia’s restrictions on imports of horticultural and animal products. BBC report. Other agricultural exporters like Australia and Thailand have been unhappy about Indonesia’s restrictions too.

Thailand is considering measures to help companies cope with the country’s rise in the minimum wage (35% up from level of last year), but has rejected business warnings of job losses, factory closures and a shift by some manufacturers to neighbouring countries

Thailand’s central bank left its benchmark interest rate unchanged at 2.75% on Wednesday, as expected, saying the global economy continued to recover while growth this year could be higher than thought and inflation was stable.

The International Monetary Fund has warned that a credit boom in Cambodia poses a threat to economic growth. Banks have been cutting interest rates to win customers and private sector credit has increased by almost a third in the past 12 months, the fund said.

A $US200m deal with Masan Group by KKR is the largest by a private equity firm so far in Vietnam. It comes in addition to an earlier $159 million investment by KKR. Masan is Vietnam’s leading fish, soya and chilli sauce producer. As well as sauces Masan makes instant foods such as noodles, cereals and coffees. The firm estimates that 90% of local households use its products.http://www.bbc.co.uk/news/business-20954875

Japan was in talks with the Philippines on Thursday to enhance maritime co-operation amid their separate territorial rows with China.

“We talked about the challenges that we appear to be facing in view of the assertions being made by China,” Philippine Foreign Secretary Albert del Rosario told reporters after meeting with his Japanese counterpart, Fumio Kishida, in Manila.

Part of the co-operation may include 10 new patrol vessels from Japan to boost the Philippine coast guard, as well as communication equipment, Mr Del Rosario said.

Indons no “hue” UK governance rules

In Corporate governance, Indonesia on 28/12/2012 at 5:58 am

UK Takeover Panel is asking questions of Bakries and another Indon investor in Bumi for time being can only vote 29.9% of their shares.

http://www.guardian.co.uk/business/2012/dec/19/nat-rothschild-bumi-resume-conflict

 

Asean round-up

In Indonesia, Malaysia on 15/12/2012 at 6:14 am

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 

 

Corporate governance Indon style cont’d

In Corporate governance, Energy, Indonesia, Uncategorized on 14/12/2012 at 6:00 am

The  Bakrie Group said this week some documents used to justify an investigation at Bumi Resources PLC were stolen or accessed by hacking.

“Some of these documents appear then to have been ‘doctored’ to give a purposely misleading impression of a number of business transactions at Bumi Resources,” a Bakrie Group spokesman, said on Dec. 10. The Bakries plan to submit a report to U.K. police and regulatory authorities, while Indonesian police are probing the hacking complaints, Fong said.

Nathaniel Rothschild described the allegations as a “desperate attempt to divert the inquiry” by the Bakries and Chairman Samin Tan. He said e may seek to remove the board of the coal venture he founded with Indonesia’s Bakrie family in the coming weeks because it has failed shareholders.

http://www.bloomberg.com/news/2012-12-12/bumi-seeks-to-end-ties-with-bakries-as-von-schirnding-named-ceo.html

Asean round-up

In Indonesia, Malaysia on 08/12/2012 at 9:12 am

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).

Indons buys S’pore telco biz

In Indonesia, Private Equity, Telecoms on 22/11/2012 at 5:14 am

Indonesian private equity firm Northstar Group is expanding into take-private deals, agreeing to buy a majority stake in Singapore-listed Nera Telecommunications and offering to buy the entire company for around US$146m

Norway’s Eltek ASA said it has agreed to sell its 50.1% in Nera to Northstar, part-owned by TPG Capital, a major US private equity firm for S$88.8 m  (US$72.6 mn) or S$0.49 a share. Northstar will extend the same offer for the remaining shares in a mandatory unconditional cash offer.

 

 

Asean round-up

In Energy, Indonesia, Malaysia on 20/11/2012 at 6:17 am

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.

Indonesia: Fight connections with connections

In Corporate governance, Indonesia on 08/11/2012 at 6:48 am

Private equity increases focus on SE Asia

In Indonesia, Malaysia, Private Equity, Vietnam on 30/10/2012 at 5:58 am

Buyout Firms Increase Focus on Southeast Asia Moves by the Carlyle Group and K.K.R. show their “increasing interest in one of the world’s most promising, but complicated, emerging markets: Indonesia.”

Indonesia attracted a record US$5.9 bn in foreign direct investment in the third quarter. It is a hot despite a bleak global outlook and worries about corruption and corporate governance http://www.reuters.com/article/2012/10/22/us-indonesia-economy-fdi-idUSBRE89L04220121022.

Note KKR has juz opened an office in S’pore.

FT says the economies of Indonesia, Malaysia and the Philippines are being driven by relatively strong corporate balance sheets, commodity exports and robust consumption amid the emergence of a rapidly urbanising middle class with purchasing power, hence the PE interest.

If Vietnam gets its act together, it could join these countries. Thailand has the corporates and the middle class but not commodities. It manufactures. So it too will be on PE radar.

And taz why the PEs have set up shop here. Convenient hub.

Indonesia: Governance is an issue

In Corporate governance, Indonesia on 18/10/2012 at 6:39 am

I’m bullish on Indonesia, but governance issues give me regular heart tremors.

Nathaniel Rothschild, co-founder of coal mining giant Bumi, has quit the firm’s board amid a row with Indonesia’s influential Bakrie family.

MFA refutes Indonesia news report on extradition.

Around Asean: recent financial news

In Indonesia, Malaysia on 14/10/2012 at 6:51 am

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

Stock ideas for M’sia and Indonesia

In Indonesia, Malaysia, Property on 13/10/2012 at 9:24 am

Playing the property game

http://blogs.barrons.com/emergingmarketsdaily/2012/10/08/fund-managers-finding-opportunities-in-emerging-market-real-estate-plays-including-cement/?mod=BOLBlog?mod=BOL_article_full_blog_em

Indonesia: An interesting statistic

In Corporate governance, Indonesia on 07/10/2012 at 10:01 am

Less than US$1bn of the US$26bn in net equity inflows into Asia outside of Japan have gone to Indonesia this year, HSBC estimates. Seems that there isn’t enough quality investments there. Well we know corporate governance is an issue even among friends  https://atans1.wordpress.com/2012/09/25/indonesia-even-friends-get-screwed/.

StanChart: Troubles never come singly

In Banks, Indonesia, Temasek on 02/10/2012 at 6:44 am

The British bank where Temasek has a controlling stake of 19%, which agreed in August to pay the New York state’s top banking regulator US$340 million to settle money-laundering allegations (and in the process making a PAP apologist look even more stupid: he attacked the NY regulator as a “rogue prosecutor”), may be at risk of losing money on a US$1 billion loan to an Indonesian tycoon to buy shares in an Indon mining company*controlled by the family of an indon presidential candidate. He bought the shares at abt 11 sterling last yr. Now under 150 pence.

http://dealbook.nytimes.com/2012/09/27/standard-chartered-next-worry-a-1-billion-indonesian-loan/?nl=business&emc=edit_dlbkam_20120928

In the 70s and 80s, StanChart was the go-to bank for goofs but in the 1990s and noughties (aside from employing one TJS) it gained a reputation as a bank that didn’t do silly things: not anymore.

So far in the scheme of things, the losses are “peanuts”. Let’s hope there is no mega encore.

—–

*Related post: https://atans1.wordpress.com/2012/09/25/indonesia-even-friends-get-screwed/

Creative Indonesia: The gd and the ugly

In Indonesia on 28/09/2012 at 6:32 am

Batik entrepreneur and designer

http://www.bbc.co.uk/news/world-asia-19567545

Comic book writers

http://www.bbc.co.uk/news/world-asia-19725706

The ugly side of creativity

Talk big, do nothing. Nothing heard since 2010.

http://www.swfinstitute.org/fund/pip.php

http://oxfordswfproject.com/2010/08/31/indonesia%E2%80%99s-fifteen-minutes-of-swf-fame/

And this

https://atans1.wordpress.com/2012/09/25/indonesia-even-friends-get-screwed/

What a country of contrasts. Taz why I’m cowardly bullish.

Indonesia: Even friends get screwed

In Corporate governance, Indonesia on 25/09/2012 at 6:21 pm

Samin Tan, an Indonesian entrepreneur who bought 23.8% of Bumi Plc at almost £11 pound a share from the Bakries last year after the family was unable to top up a loan guaranteed by Bumi Plc shares. He now has 29% and is executive chairman but yesterday the shares fell a further 25% and closed eventually at 148p. But the Bakries still control PT Bumi where the alleged irregularities occur.

 
A Bakrie is the chairman of the Golkar party (part of the ruling coalition) and is a presidential candidate in next year’s Indon election.
 
God what a country and what a family.
 
More on the family . Updated on 26 Sept at 8.16am.
 
 

Bearish news for First Reit?

In Indonesia, Property, Reits on 31/08/2012 at 9:59 am

Background info

Lippo Karawacial is First Reit’s financial sponsor: “On 11 December 2006, Lippo Karawaci became the first company in South East Asia to list a Healthcare REIT on the Singapore Stock Exchange with Indonesian assets. Assets in the First REIT includes the Siloam Hospitals Lippo Village, Siloam Hospitals Kebon Jeruk, Siloam Hospitals Surabaya, Siloam Hospital Cikarang, Mochtar Riady Comperhensive Center and The Aryaduta Hotel and Country Club Karawaci, and four Singapore based properties.”

https://atans1.wordpress.com/2012/07/20/first-reit-nav-revision-bonus/

Now the bearish news

One of the sources told Reuters that first-round bids were below expectations, but the sale process will continue to give the buyers an opportunity to bid higher. It wasn’t clear how much the bidders had offered for the stake in the first round.

 Blackstone, Bain Capital, KKR & Co and Dubai’s Abraaj Capital have been shortlisted for the second phase of an auction of a fifth of private Indonesian healthcare operator Siloam in a deal that could fetch as much as $300 million, sources said.

Seller PT Lippo Karawaci is seeking a valuation of more than 20 times Siloam’s forward core earnings for the stake, they said, declining to be named as the discussions were private. Siloam is the country’s biggest private hospital firm.

“Lippo may be back in the market next year if the valuation disparity is too big,” said one of the sources.

Lippo plans to sell a minimum 20 percent of unit Siloam Hospitals for between $200 million and $300 million, but could increase the stake to 49 percent if the price is right. It hired Bank of America Merrill Lynch to run the auction, sources have told Reuters earlier.

http://www.nytimes.com/reuters/2012/08/27/business/27reuters-lippo-privateequity.html?_r=1&src=busln&nl=business&emc=edit_dlbkam_20120827

So there may be no revision of First Reit’s NAV https://atans1.wordpress.com/2012/07/20/first-reit-nav-revision-bonus/

Might even be revised downwards. But Global buyout firms are keen on Indonesia’s consumer and healthcare sectors despite steep valuations, as they are betting on the country’s fast-growing economy.

Indonesia has one of the world’s lowest healthcare spending-to-GDP ratios, but its rising middle class – which represents more than half of its population of 240 million – is expected to sharply increase its medical spending and drive growth in the sector over the coming years.

“The healthcare sector still continues to remain the darling of private equity. Even with rich valuations it is easy to find bidders for this sector,” said Krishna Ramachandra, head of corporate finance and investment funds at law firm Duane Morris & Selvam LLP.

But a growing number of investment banks are advising clients that south-east Asian rivals such as Malaysia and Thailand now look more enticing than Indonesia. Morgan Stanley and Credit Suisse say the Indon economy is overheating. Barclays is relaxed abt the “problems”.

Interesting Indon play

In Indonesia, Telecoms on 25/08/2012 at 6:48 am

Ward Ferry Asia Fund returned almost 16% in the first seven months, according to the July newsletter that Hong Kong-based Ward Ferry Management estimates that PT Tower can double its profits in the next three years partly because Indonesia has half of the number of towers per capita as the U.S. and has been increasing them at 26 percent a year since 2006, according to the letter. The stock is up 18% since June 1 to Aug 15.http://www.bloomberg.com/news/2012-08-16/ward-ferry-asia-hedge-fund-returns-16-this-year-beating-peers.html

Indon growth exceeds expectations

In Indonesia on 10/08/2012 at 5:33 am

Indonesia’s economy expanded more than expected in the second quarter as domestic consumption helped offset a decline in demand for exports.

http://www.bbc.co.uk/news/business-19144786

Trumplets pls. Few days I wrote

But Indonesia has a few things going for it:

— two major exports are recession-proof

    — lower cost producer of thermal coal and closer to China (tpt costs lower) than Oz means there will still be demand for its coal; and

    — palm oil cooking oil is the cheapest cooking oil;

— cheap labour attracting the likes of Foxcomm;

— last yr’s floods in Thailand are prompting MNC manufacturers to a “Thailand + one” strategy; and

— consumption now accounts for two-thirds of gross domestic product in Indonesia.

https://atans1.wordpress.com/2012/08/02/thailand-philippines-hip-indonesia-is-history/

Thailand & Philippines hip: Indonesia is history

In Indonesia, Malaysia, Vietnam on 02/08/2012 at 5:53 am

http://blogs.wsj.com/searealtime/2012/07/19/investors-look-to-thailand-philippines-as-indonesia-love-affair-fades/

http://blogs.wsj.com/searealtime/2012/07/11/indonesian-rules-dousing-u-s-investor-enthusiasm/

But Indonesia has a few things going for it:

— two major exports are recession-proof

    — lower cost producer of thermal coal and closer to China (tpt costs lower) than Oz means there will still be demand for its coal; and

    — palm oil cooking oil is the cheapest cooking oil;

— cheap labour attracting the likes of Foxcomm;

— last yr’s floods in Thailand are prompting MNC manufacturers to a “Thailand + one” strategy; and

— consumption now accounts for two-thirds of gross domestic product in Indonesia.

Malaysia is one of the most vulnerable Asian economies should a “perfect storm” of a disorderly debt default in Europe, a slowdown in China and the United States and rising tensions in the Middle East materialise, Roubini Global Economics said in a recent report.

The research firm, which predicted the 2008 global financial crisis, said Malaysia had the highest exposure to a pullout of capital as its euro zone and US bank claims amount to more than 25% of GDP.

The report said Malaysia was among the lowest ranked in terms of monetary and fiscal capacity to respond to a crisis, coming in ahead of only Thailand, Japan and Indonesia.

“Malaysia, Taiwan, South Korea and Vietnam appear to be the most exposed to a perfect storm through their trade and financial linkages, while South Korea, Australia, Vietnam and the Philippines … have the most policy space to offset such an external shock.”

First Reit: NAV revision bonus?

In Indonesia, Reits on 20/07/2012 at 6:25 am

Indonesia’s PT Lippo Karawaci may sell as much as 49 percent of its unit Siloam Hospitals in a deal that would value the firm at more than $1 billion, drawing a slew of private equity firms to the sale as they bet on growth in healthcare spending in Southeast Asia’s biggest economy, sources said. Reuters

There is plenty of US private equity market sloshing around the region as article explains. And the IHH IPO and the coming one by Fortis (Religare Heath Trust) will ensure that the animal spirits of these investors remain bullish.

The Indon co is First Reit’s financial sponsor: “On 11 December 2006, Lippo Karawaci became the first company in South East Asia to list a Healthcare REIT on the Singapore Stock Exchange with Indonesian assets. Assets in the First REIT includes the Siloam Hospitals Lippo Village, Siloam Hospitals Kebon Jeruk, Siloam Hospitals Surabaya, Siloam Hospital Cikarang, Mochtar Riady Comperhensive Center and The Aryaduta Hotel and Country Club Karawaci, and four Singapore based properties.”

Kinda painful for me as I didn’t buy this Reit. Really dumb as I kept waiting price to correct. I aim to buy a Reit that is trading at a big discount to published NAV. The discount was smallish and now has disappeared. Big premium in fact.

If China slows down, ASEAN beneficiaries

In China, Commodities, Indonesia, Malaysia, Vietnam on 26/06/2012 at 6:22 am

(Or “What stocks, ETFs to buy”)

A  China slowdown need not be bad for everyone. Mr Frederic Neumann, Regional Economist at HSBC, distinguishes between hard and soft commodities. A Chinese rebalancing could actually be good for soft commodities*, such as wheat and soybeans*, if household spending were to rise.

Brazil’s loss, in other words, could be Argentina’s gain. Other commodities, such as palm oil**, used in processed foods, may also do better.

That could benefit countries such as Malaysia, which has ramped up palm oil*** production in recent years, and Indonesia**** – although the latter also produces hard commodities including coal.

On the other side of the ledger, some big oil importers***** could benefit from the weaker prices that a Chinese slowdown might produce.

http://www.todayonline.com/CommentaryandAnalysis/Commentary/EDC120622-0000021/Should-we-fret-about-Chindown?

*Think Olam, Wilmar, Golden Agri, Bumitama Agri, Kencana Agri and First Resources

**Think Wilmar and the other SGX plantation stocks.

***Think Felda, Sime Darby, United Plantations, IOI, Genting Plt, KL Kepong, TSH, Oriental.

****Think Astra Agro and London Sumatra Indonesia. Any other Indon listed plantations cos to think about? Do remember that the SGX-listed planters are mainly Indonesian planters and many of them are relatively new, giving them an advantage over the older Malaysian plantation players. Malaysian planters have also bought land in Indonesia partly because land in Malaysia is getting too expensive even in East Malaysia.

*****Think ETFs on Singapore, Thailand and Vietnam.

Indonesia: Talking cock is not helpful, helpful

In Indonesia, Infrastructure on 13/06/2012 at 7:32 am

Work on a new deepwater port for container ships on an island between Batam and Bintan is set to begin next year, creating a potential rival to Singapore’s port. The port, on Tanjung Sauh, aims to be a major transshipment center for Indonesia, and is part of the country’s overhaul of its transport infrastructure to cope with growing domestic demand.

http://www.thejakartapost.com/news/2012/05/21/deepwater-port-near-batam-set-rival-singapore.html

Well in 2005, Indonesia annced a major expansion of the port on Batam. It even awarded a contract to a French company. Err nothing ever happened. Wonder if this time, it will be anything different. And remember that Batam has one unused int’l airport. It was built to rival S’pore’s airport in the late 1970s.

Readers will know I’m bullish on Indonesia. But that is despite, not because, of its officials or the government planning agencies.

But here’s one talking cock project that works: using social media to help farmers get info they need http://www.bbc.co.uk/news/business-18193993

Indon stocks could Jump 15% in 2012: Citi

In Indonesia on 07/06/2012 at 3:31 pm

http://www.cnbc.com/id/47716652?__source=ft&par=ft

The Indonesian stock market has been the worst performer in Southeast Asia this year, owing to recent declines, but Citigroup says it’s time to take advantage of the low valuations, forecasting over 15 percent upside for the country’s equities over the rest of 2012.

Indonesia does DBS shareholders a favour

In Banks, Indonesia, Temasek on 01/06/2012 at 2:38 pm

By planning to allow financial institutions a maximum of 40% in an Indon bank (applicable only to new investors), the Indon central bank has blocked Temasek’s plan to sell its 67% stake in Bank Danamon to DBS Bank where it has a controlling stake.

On a day when banks (and other blue chips) are weak in local trading (UOB -1.5% and OCBC -0.5%) fact that DBS is only -o.6% shows that investors are not upset over the failure of the deal.

One reason is that institutional investors don’t like big “strategic” deals by their investments because they usually overpay and are prone to destroy shareholder value. Here while the price is decent, the issue of lots of new shares to Temasek is dilutive to earnings.

Ah well back to the drawing board DBS mgt to find a new driver for growth. Same too for Temasek’s financial enginners. The deal would have reduced Temasek’s direct exposure to Indonesia while increasing its exposure to DBS.

Lippo Reit: OCBC is bullish, but Indon economy is slowing

In Indonesia, Property, Reits on 07/05/2012 at 6:25 pm

http://sreit.reitdata.com/2012/05/02/lmir-ocbc-14/

So am I. But Indonesia’s economy grew at its slowest pace in 18 months amid a slowdown in exports as demand from key markets such as the US, Europe, China and India weakened.

Worse, the Indonesian rupiah has fallen 8% against the US dollar in the last twelve months: a weak currency may hurt the purchasing power of domestic consumers and dent demand. Remember domestic consumption accounts for nearly 60% of its economy. http://www.bbc.co.uk/news/business-17980123

Other analysis, info on LMIRT:

http://s-reitinvestmentblog.blogspot.com/2012/05/analysis-of-lmir.html

http://diyvalueinvesting.blogspot.com/2012/04/lmir-q1fy2012.html

Property: Rich Indons buying in London

In Indonesia, Property on 30/04/2012 at 7:17 pm

More wealthy Indonesians are looking to buy a second home in London, while interest in Singapore has waned, according to Property Report, a real estate magazine, citing a study by global property consultancy Knight Frank, earlier this month.

“Interest from Indonesian-based purchasers in London property increased by over 100 per cent last year … Indonesia moved up two places last year in Knight Frank’s rankings of Asian buyers in London, from 11th in 2010 to ninth position… weakening of the British pound against the rupiah has made the idea of buying property in London more attractive to wealthy Indonesians”.

Even though Singapore remains the No 1 destination for Indonesian property investors, the Republic’s recently-introduced additional buyer’s stamp duty was having a “cooling effect”, the report said.

BTW, lots more Muslims and rich people there. The Arabs love London, so do the Russian rich.

Knight Frank also said Singapore remains the favourite for the Indonesians, “Indonesians are among the top-three property buyers in Singapore after China and Malaysia. Last year, Indonesians bought 1,714 properties in Singapore. In the first quarter of this year, the number was 137”.

“We estimate that Indonesians spent 1.5 trillion rupiah (S$204.5 million) on property in Singapore (last year)”.

Indonesia: Showing its strength globally

In Indonesia on 14/04/2012 at 10:36 am

Indonesia is the world’s 11th biggest grocery market by revenue, ahead of Spain but behind Italy. BRICs occupy all but the second position and third that is held by US and Japan in the top six.  By 2015, the BRICs (Brazil, Russia, India and China) will have pushed Japan out of the top five slots, leaving America as the only remaining rich country in the top five.

http://www.economist.com/blogs/graphicdetail/2012/04/daily-chart-3

David Cameron, the UK’s PM, announced a £326m deal to sell 11 Airbus A330 aircraft to airline Garuda Indonesia when he was in Indonesia in Indonesia on his trade tour of East and South East Asia.

In February, Lion Air confirmed a deal, announced last year, to buy 230 Boeing planes worth US$22.4bn.The order is the biggest in Boeing’s history

The Indonesian airline in February also placed an order for 27 ATR aircraft for its regional subsidiary Wings Air, in a plan to service the country’s smaller airports.The deal, valued at US$610m, would make Wings Air one of the largest operators of such aircraft. One of the big contributors to Indonesian air travel growth is likely to be travel between smaller cities and airports in the country’s various islands. And increased spending by authorities in infrastructure development would also help boost demand.

Err Temasek can do savvy deals too

In Indonesia, Temasek on 08/04/2012 at 7:36 am

TRE’s and TOC’s readers, and other S’porean netizens may not realise it, but Temasek doesn’t always lose money on its overseas investments.

In 2008, just before the financial crisis, Temasek sold its majority stake in BII for a price that put a value of the Indonesia bank of 4.6 times book value. The  sucker buyer was MayBank of M’sia. It paid Temasek US$1.13bn. NYT article. MayBank later justified its cock-up by pointing out that around the same time, HSBC paid around the same price (book value wise) for another Indon bank. Critics pointed out that in the context of MayBank’s financials, the amount was a big a sum while HSBC’s purchase was “peanuts” relative to HSBC’s financials.

Analysts now say that MayBank’s plans to sell a stake in BII for the same price as it paid Temasek is unrealistic.

Well the price that DBS is paying Temasek for its majority stake in Bank Danamon works out to be 2.6 times book value, and is considered reasonable but pricey. The premium over book has dropped substantially. But it is a gd deal.

And going back in history, Temasek got a great deal when it sold its PosBank stake to DBS. Foreign broker analysts (though not local broker analysts and our constructive, nation-building media) were grumbling that Temasek was getting DBS shares at a big discount to DBS’s fair value. FTR, no foreign analyst is arguing that Temasek is getting DBS shares at a big discount to its fair value in the Bank Danamon deal.

Moral of these examples: Temasek can do savvy deals with M’sians and DBS. Nothing to do with fact that DBS is controlled by Temasek. It’s that DBS likes to do “strategic” deals and, there are studies (dispued) which show that because strategic deals involve paying over the odds, shareholder value is destroyed in the process.

And consider this too.  RRJ and Temasek have been big backers of the trend to use natural gas. Last year they put US$250m into Nasdaq-listed Clean Energy Fuels, a US-based group that provides natural gas fuel for transportation at gas stations in the US at a saving of US$2 a gallon.

That transaction, which closed in January or February this year, has already more than doubled in value.  

And this looks pretty savvy too. Singapore state investor Temasek Holdings and private equity firm RRJ Capital bought nearly half of the shares in the $1.34 billion offering by PetroChina Co’s unit Kunlun Energy Co Ltd, two sources with direct knowledge of the deal said on Tuesday. $=US$

Kunlun Energy and Clean Energy Fuels have a similar mandate and RRJ hopes to bring the two together, according to one report. BTW RRJ is founded by a Malaysian Chinese.

Bang yr balls in frustration Ho Ching detractors, and all haters of the S’pore government and its agencies. Temasek can do savvy deals if M’sians are involved. Either as suckers buyers or as co-investors.

Jokes aside, remember the lines from “If”

If you can meet with Triumph and Disaster
And treat those two impostors just the same;

Well in investing, as in other aspects of life, the line between success and failure is very, very narrow.

Examples:

 KKR and TPG, giant US private equity investors invested billions of their investors’ funds in TXU. One of the things they were betting on was that natutal gas prices would be priced-off oil prices for the foreeable future. Err now even Buffett has lost money buying TXU bonds. The problem is that recent  technological developments mean that natural gas can be extracted from shale, decoupling its price from that of oil. Natural gas is no longer a scarce commodity.

Now all three have extremely gd track records as savvy investors. BTW Temasek’s Merrill Lynch deals would be like this deal. The conventional wisdom was that the deals were risky but that the prices paid reflected the risk and that in all probability the deals would work out for the investors.

Now the conventional wisdom was that the investors got things wrong* . But as FT’s Lex reports:

They paid too much. That was the consensus when 3G Capital took Burger King private in 2010 for a total enterprise value of $4bn, or nine times trailing earning before interest, taxes, depreciation and amortisation. How did things go? Well, Justice Holdings has just paid $1.4bn and will get 26 per cent of Burger King’s common shares in return. This now puts the enterprise value of Burger King at $8bn – an ev/ebitda multiple of 16 times (14 times if you follow Burger King’s practice of excluding restructuring and other costs). By comparison, the multiples for global powerhouses McDonald’s and Yum Brands are 11 and 14 times. Arcos Dorados, the largest Latin American McDonald’s franchisee, trades at 12 times.

3G’s partners put $1.2bn of cash into the original deal and borrowed the remainder of the price. They also paid themselves a near $400m dividend last year, thank you very much. If they had sold the whole company at the price Justice has paid, 3G would have more than doubled its money in a year and a half. Over the same period, McDonald’s and Yum shares have returned 38 per cent and 64 per cent, respectively. Consensus now: would you like fries with that, gentlemen.

*Bit like Temasek’s Shin deal. Brokers were telling their clients with shares in Shin to tender the shares. They would never see such a price again. But our nation-building, constructive media failed to report these views here.

Templeton on Burma, Cambodia, Indonesia and Thailand

In Emerging markets, Indonesia, Vietnam on 05/04/2012 at 7:14 am
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.

DBS: Investors don’t like the Indon deal

In Banks, Corporate governance, Indonesia, Temasek on 03/04/2012 at 11:34 am

Well DBS is down 0.44 to 13.74 some 3% from Friday’s close.

Despite all the propoganda from our constructive, nation-building mainstream media, aided and abetted by the wires and most brokers, investors don’t like the Bank Danamon deal. To be fair, investors nowadays don’t like their investee companies doing mega strategic deals (like Pru’s attempted purchase of AIA last year) because the historical numbers (still disputed) seem to show that strategic deals destroy shareholder value.

Well the non-Temasek shareholders of DBS will have an opportunity to reject the deal, if they think that Temasek benefits far more than DBS? BTW, did you know that when DBS bot PosBank from Temasek all that many years ago, it was a great deal for Temasek, not so gd for DBS .

Indonesia: Perennial Bearish Issue

In Indonesia, Mining on 11/03/2012 at 5:03 am

As regular readers will know, I’m a bull on Indonesia. But one problem that occurs regularly there is the inability of the Indonesian government to refrain from changing or trying to change the rules of the game. Very unsettling.

We see it in the regular calls by the government to re-negotiate the commercial gas contracts that S’pore has with Indonesia*. We also see it in the plan mooted last year by the central bank to limit bank ownership to 49%. This would mean Temasek, all three local banks, and M’sian banks having to cut back their holdings. So far nothing concrete has emerged.

Now Indonesia will force foreign firms to sell down stakes in mines by the 10th year of production, with domestic ownership to be at least 51%, in a move likely to hurt existing miners and scare off potential investors. The new rule is the latest government attempt to extract greater domestic profit from the vast mineral wealth in the world’s top exporter of thermal coal and tin. Indonesia contains some of the world’s richest mineral deposits, such as the Freeport-run Grasberg, the world’s largest gold mine, and its fast-growing mining sector accounts for about 11% of GDP.

The requirement, stated in a regulation on the mining ministry’s website, comes as the government is renegotiating contracts with the leading foreign metals miners in the country, Freeport McMoRan Copper & Gold Inc and Newmont Corp.

To be fair, the rule isn’t a brand new outbreak of resource nationalism. It is ad hoc legislation to fill in holes in a 2009 mining law, which followed 2003 revisions to royalties and 2001 rules on distributing mining revenue. The 2009 law required foreign owners to start divesting after five years of production, but didn’t say by how much. A number has now been provided, but it’s still not clear which existing mines the new terms will affect, if any.

—————-

*S’pore’s new liquefied terminal will be able to handle sufficient imports of the fuel to cover all of the country’s power needs, even if piped gas supply contracts with Malaysia and Indonesia are not renewed, a senior civil servant said a few days ago. It depends on natural gas for around 80% of its power generation needs, with the bulk sourced from Indonesia and Malaysia under long-term contracts.

Indonesia: More private equity funds are a’coming

In Emerging markets, Indonesia, Private Equity on 05/03/2012 at 5:19 am

http://www.bloomberg.com/news/2012-01-25/tpg-partner-paves-way-for-newcomers-to-indonesian-private-equity.html.

Also, buyers from Singapore completed the largest number of transactions as Indonesia witnessed a record year for M&A activity.The 12-month M&A activity for Indonesia ended 31 Jan, 2012, saw 78 transactions worth a total of US$9 billion being recorded, with Singapore-based companies completing nine transactions worth US$372 million, according to global risk management company Kroll and M&A intelligence service mergermarket.

The nine transactions completed by Singapore-based buyers were in a diverse range of industries, highlighting the investment potential in Indonesia. Two transactions were in the energy sector, the rest of the deals were in transportation, consumer food, real estate, construction, financial services, internet and e-commerce, and in other services.

Japan was the most prominent country in the South-east Asian nation’s M&A activity in terms of value and volume, with US$1.1 billion across six deals. The largest Japanese transaction of the year was Mitsui Sumitomo Insurance’s US$827 million, 50% stake acquisition in life insurance provider PT Asuransi Jiwa Sinarmas (Sinarmas Life Insurance), according to the report.

Deals by Asia-Pacific buyers accounted for 72% \of Indonesia’s M&A deal count while 28% of bidders were from outside Asia, with US bidders completing the most transactions,

 Indonesia is expected to see continued strong M&A activity, particularly in the technology, media and telecommunications, financial services, energy and mining & utilities sectors.

But there are problems as highlighted by a corporate governance spat: Indonesian tycoons versus Nat Rothschild.

“Investing in emerging markets is always challenging for investors. Indonesia in particular requires deep local insight into the market and potential target companies, as various reforms continue to raise both opportunities and challenges for potential bidders,” said Kroll.

“Many investors interested in Indonesia tend to seek help from local third-party advisers or partners to assist with administrative functions during a transaction. However these intermediaries may not necessarily have sufficient understanding of global anti-corruption legislation. Overlooking such legislation can lead to costly violations for investors in their home markets … investors also need to be aware of other operational pitfalls that may impact their business such as the state of local infrastructure and the integrity of business partners. These risks often vary according to sector.”

Strikes could also be a problem http://www.bbc.co.uk/news/business-17175833 despite the consumer boom.

Its booming economy also masks its problems with politcal governance and corruption. This is what ISEAS* says about the country in its inaugral ASEAN Monitor dated February 2012

Indonesia

Indonesia is in a period defined simultaneously by stasis and stability. It has yet to move into the next phase of its democratic consolidation, and it is unlikely to do so in 2012.

In fact, several indicators suggest an overall deterioration in earlier democratic achievements. First, the country’s judiciary and police are — and most likely will remain — notoriouslyunpredictable in upholding the rule oflaw. Second, large sections of the bureaucracy are in disarray; they will continue to perform poorly for theforeseeable future. Third, Indonesia’s main political parties have fallen increasingly into internal turmoil over positions of influence and finances.

Those problems and frictions are boundto persist in several important parties in the coming months.

Externally, Indonesia is expected continue playing a fairly minor role despite being the dominant power inSoutheast Asia. This is largely because of the strong emphasis on purely domestic political issues. As the next generalelection and the presidential electionapproach in 2014, all of Indonesia’s political parties will become increasinglypreoccupied with preparations for the polls and the selection of candidates. It must be remembered that an anti-porn bill was introduced in 2008, just before the general election the following year.

The coming months will tell if there is to be a similar populist legislative measure to win conservative votes this time. Overall, it is unlikely that Indonesia’s status as a stable yet static democracy will change substantially during 2012.

Key points: The current consumer boom in Indonesia will continue to mask its problems with corruption. And though Indonesia is less likely to be adversely affected by a global economic slowdownthan other regional countries, will global risk aversion stem the investment inflows it has enjoyed in recent years? Read the rest of this entry »

Why investors are bullish on Indonesia

In Indonesia on 15/12/2011 at 5:35 am

The Indonesian stock market was the best performer in emerging Asia in 2009 and 2010 when it was up 87% and 46% respectively. So far this year, it is Asia’s second best performer behind the Philippines’ 2.05% rise. It has risen 1.26%. According to Thomson Reuters StarMine, the market is trading at 13.4 times this year’s projected earnings. Thailand is trading at 11 times, Singapore is at 12 times, the Philippines 12.2, Malaysia at 13.3 and the whole of Asia at 10.9.

Indonesia has one of the fastest growing middle classes in the region – up from 80 million five years ago to 130 million now. That’s more than half of this country’s 240 million strong population. That number is expected to grow. By 2020, many think that Indonesia’s middle class will be wealthier than many in Asia.

Largely insulated from the troubles overseas (but remember that China is a big importer of Indonesian exports like themal coal and palm oil) because of strong domestic demand, economists say Indonesia will see growth rates stay stable or possibly even rise next year, at a time when many in the region are cutting their growth forecasts.

So it is not surprising that Indonesian consumers are feeling far more confident about their prospects than ever before, and they consistently rank as some of the most optimistic in Asia about their economic future.

Even a Rothschild can get screwed in Indonesia

In Corporate governance, Indonesia on 14/12/2011 at 6:46 am

I’m a bull on Indonesia* for all my sins and it hasn’t done me much gd. It is a treacherous place, navigating through opaque regulations, erratic business relationships, changing policies and deeply entrenched corruption.

Nat Rothschild, son of Jacob Rothschild (a semi- retired leading London- based financier), a good dealer-maker and savvy investor has found that out the hard way. He is chairman and a major shareholder of London- listed Bumi plc which  owns a 29% stake in Jakarta- listed Bumi Resources, and 75% of Berau. He wrote in early November a very nasty letter to the CEO of both Bumi compaines (same man), complaining that

—  despite being heavily in debt, Bumi Resources had US$867m of assets that had nothing to do with its core coal business;  and

— these assets were held by “connected parties”.

It seems he has yet to receive an official response.

RElated post:

https://atans1.wordpress.com/2010/12/15/nomura-bullish-on-indonesia/#more-5517

——————————

*Long on Lippo Malls Trust and hoping First Reit’s share price falls so I can buy.

Indonesia: Retail Reit paradise?

In Indonesia, Reits on 30/05/2011 at 5:48 am

There are some interesting Indonesian consumption patterns according to a recent report by Indonesia’s Kresna Securities.

It cited a survey by research firm MARS Indonesia saying that discounts and promotions are able to change 67% and 52% of window shoppers into buyers respectively even though they may not have been interested in buying at first.

‘Indonesian consumers are dominated by shop lovers and lifestyle shoppers, who accounted for 54.5% of total consumption in 20.

In my view, a locally-listed Reit that will benefit from these trends is Lippo-Mapletree Indonesia Retail Trust. It is a Singapore-based real estate investment trust with a diversified portfolio of income producing retail and retail-related properties in Indonesia.

Check it out yrself as I can’t say more. I bot some shares earlier this year.

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.

Citi: Owe it money?

In Banks, Indonesia on 09/04/2011 at 8:52 am

A customer, a politician, who owed 68 million rupiah on his Citigold card, died on March 29 while meeting with bank staff, Gatot Eddy Pramono, head of the South Jakarta Police District. said. Four people are suspected of being involved in the death, he said, Bloomberg reports.

FT reports that three external debt collectors  working for Citi have been detained, and face possible murder charges.

An internal investigation into the death didn’t reveal any physical violence, Citigroup’s Mukhtar said April 5. The bank had been working with the client and had offered to waive as much as 40 percent of the principal amount, he said, Bloomberg reported.

Oil at US$120: Buy M’sia

In Energy, Indonesia, Malaysia on 26/02/2011 at 5:45 am

As Asia’s largest net energy exporter, only Malaysia will benefit significantly from higher energy prices. With crude oil, natural gas and palm oil making up almost 30% of total exports, the country is experiencing a significant positive terms-of-trade shock, says Barclays Capital.

It says US$120 oil would add 3.1 percentage points to  Malaysia’s current account balance as a percentage of GDP, and 0.9 percentage points to Indonesia’s.

In(do)(ia)n bulls: noticed?

In Indonesia, Uncategorized on 14/01/2011 at 5:36 am

Indon mkt is down 8% this yr after doing 46% last yr, one of world’s best.

Reason: investors are worried that authorities are too complacent abt inflation. The Reuters article also tells us that the mkt collapsed in previous bouts of inflation, though the analysts say this time is different (“They would say that, wouldn’t they?)

So might want to curb yr bullishness on all things Indon* on SGX here.

The Indian stock market has fallen more than 7%  from a record high set in November, as investors have grown increasingly concerned about inflation and corruption scandals that have paralyzed the country’s Parliament. The Nifty 50 stock index did close up 1.9 percent on Wednesday, but that came after a six-day losing streak.

I’m still a bull on these countries owning Lippo-Mapletree and Ascendas I (despite it trading above last reported RNAV).

—-

*I missed buying First Reit. I tot it would trade at 0.71 (theoretical price taking into account massive rights issue) for a while. No hurry to buy. In New Yr it moved to juz above its last reported RNAV of 0.76. Sigh. Penny wise, pound foolish.

HSBC doesn’t think M’sians, Indons and PAP are daft

In Economy, Indonesia, Malaysia on 08/01/2011 at 5:30 am

Malaysia and Indonesia will move into the top 20 list of economies by 2050.

S’pore is doomed unless more FTs are let in.

Daily Telegraph article.

Invest in the neighbourhood in 2011?

In Indonesia, Vietnam on 04/01/2011 at 5:23 am

Seems sophisticated investors are looking beyond the ‘BRIC’ countries (Brazil, Russia, India and China). I’ve seen predictions that by 2020, the “Future 7” (F7) countries (Argentina, Egypt, Indonesia, Mexico, South Africa, Turkey and Vietnam) will account for 1-in-10 global consumers, and per capita disposable income will rise by 52% in real terms. The F7 are characterised by youth and urbanised populations, combined with rising incomes and the expansion of the middle class.

Well two of them are neighbours: Indonesia and Vietnam.

Lippo-Mapletree Reit, First Reit,  Berlian Laju and Samudera are Indon plays listed on SGX.

There is one Vietnam play, Latitude.

On you can invest via an EFT listed here.

Go do yr homework. You might make money without investing on a foreign exchange.

BTW I got some Lippo-Mapletree.

Keep calm, carry on — No need to rant against Temasek

In Indonesia, Temasek, Uncategorized on 23/12/2010 at 5:27 am

Or write stories defending it.

This story, abt the possibility of the Indon authorities seizing Temasek’s assets there, is nothing to get excited about. Someone wants some money. Remember its Money time!

This blogger is bullish on Indonesian. But he has been around long enough to know that Indonesia’s ideas of good governance (public or private) is not benchmarked to global standards. It is uniquely Javanese.

A few years back, a foreign investor was involved in a dispute with the management of a listco. An EGM was called, and the investor’s resolution won the support of the majority of shareholders in a poll vetted by a major international accounting firm.

The next day, the investor read in the papers that he had lost, and management had won, the vote. When he sought an explanation, he was told, “The counters made a mistake”.

A senior US foreign service officer who was based in Indonesia once told me that Indonesian officials had demanded a bribe from him to process an application even though they knew he was a member of the US embassy there. The embassy raised the issue and were told, “Err misunderstanding brudder”. Still, by the time he left for another posting a few years later, his application was being processed.

So now that Temasek has asked the court if a judgement has been issued, sumeone will say, “You mean you never got it? We posted it months ago. We have sent another copy in the mail.”

BTW, S$13m is “peanuts” as Mrs SM could have put it, but didn’t.

Nomura: Bullish on Indonesia

In Commodities, Energy, Indonesia on 15/12/2010 at 5:11 am

Nomura says Indonesia’s fundamentals are solid. Growth is strong, inflation is muted, and the central bank aims to keep the rupiah stable. And the government aims to kick-start infrastructure projects by making land acquisition easier.

So GDP growth is expected to grow from an estimated 5.9% this year to 7% next year. Nomura sees a 15 times PE for the equity market next year, with a possible re-rating to as much as 16.5 times PE.

The firm’s top stock picks in Indonesia are infrastructure providers. Commodity companies are also expected to do well. Coal prices are rising even as production volumes improve. A return to normal weather conditions will also boost Read the rest of this entry »

The case for Indonesia: incompetency notwithstanding

In Indonesia on 22/10/2010 at 5:39 am

I’m sure we are all upset that the #$%^ Indons are at it again: promising yr after yr to control forest fires while doing nothing. And there are riots

But as FT’s Lex reports today To say that Indonesia has outperformed would be an understatement. A thousand dollars invested in the MSCI Asia ex-Japan index 10 years ago would be worth about $3,600 now, with dividends reinvested. The same sum invested in the Jakarta Composite would have grown to almost $13,000. $=US$

Indonesia’s core investment case remains compelling. Bigger than Brazil in population, and with a fractionally younger median age, Indonesia resembles India in the composition of its growth: powered not by net exports – just 1 per cent of gross domestic product in the first half – but by consumption and fixed capital formation. As it had no demand shock from which to recover, Indonesia may be one of a handful of regional economies to see gross domestic product growth accelerate next year.

True Foreigners sold a net $148m of Indonesian stocks on Tuesday, the biggest net sale in eight months, as police prepared the razor wire.

But even at near-record high valuations – Jakarta’s price/book ratio of 3.5 times is not far from the 3.8 it hit almost three years ago – this remains a tough market to underweight. Oligopolies in the consumer, financial, utility and resources sectors mean that aggregate returns on equity are Asia’s highest.  They will almost certainly be back.

Our neighbour Indonesia

In Indonesia on 30/09/2010 at 5:51 am

Jakarta Composite Index had another record day yesterday, rising 0.7%, close to the  3,500 level and breaking fresh records for a fourth successive day.

On Monday, the index was up 2.1% , on volume of 7bn shares worthUS$699m changing hands. Indonesia’s buoyant economy and a rise in consumer spending are attracting investors, particularly foreigners.

Related post: trumpets pls.

https://atans1.wordpress.com/2010/03/20/our-neighbour-the-new-brazil/

Indonesia: Value investor bullish

In Emerging markets, Indonesia on 07/06/2010 at 5:17 am

Obama did it again. The  “Canceller-in-chief”,  has again postponed  his trip to Indonesia.  If I were an Ondonesian, I’d be upset. Waz so difficult abt vistiing the Gulf, do a tv special, explain that you have already postponed one trip to Indonesia,  https://atans1.wordpress.com/2010/03/20/our-neighbour-the-new-brazil/, and that a second postponement is an insult to the the new Brazil?

And Indonesia is impt — Mark Mobius says so.

Indonesia has a “good” outlook due to its resources and large population, putting the nation in a favorable position to attract investment, Templeton Asset Management Ltd.’s Mark Mobius said.

“Overall we have a positive take on investment opportunities there,” Mobius, who oversees about $34 billion in emerging markets as Templeton Asset Management’s Singapore-based executive chairman, wrote in his blog dated yesterday. “Indonesia has a young, growing population and Jakarta, the capital of Indonesia, is expected to be the largest city in the world within two decades.”

Full article from Bloomberg.

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?

Oil: Neither too hot nor too cold

In Economy, Indonesia, Temasek on 01/04/2010 at 7:22 am

Juz like Goldilock’s porridge.

Since August last year, oil prices have stabilised in the US$70 to US$83 range and according to this NYT articleEconomists and government officials say that if prices remain in that band, it could benefit the world economy, the future security of energy supplies and even the environment. The price is high enough to drive investment in future oil production and in supplies of alternative energy, they note, but low enough that consumers can bear it.

“It’s a sweet spot,” said Kenneth S. Rogoff, a Harvard professor of international finance. “It’s not too low that it’s crushing demand for renewable energy sources or causing debt and fiscal crises in oil-exporting countries. And it’s not so high that it’s driving African countries deeper into poverty and threatening the recovery in the U.S. and Europe.”

So for us value investors, the issue is avoiding being complacent because, For all the good that stable prices can do, however, no one is willing to predict they will last forever.

“Demand will change; supply will change,” said Christof Rühl, chief economist of BP, the oil company. “The world changes all the time.”

BTW looks like Temasek goofed in selling Orchard Energy

https://atans1.wordpress.com/2009/12/09/time-to-load-up-on-oil-connected-stocks/

But the buyer, RH Petrogas, is having difficulties completing the deal because the Indonesian authorities are insisting a transfer of an oil interest needs their approval.