Despite being cleared by the commission investigating the source of the hundreds of millions of dollars in his accounts (alleged to have come from the ailing investment fund 1MDB), Prime Minister Najib remains under pressure to resign. Peaceful anti-government protests and demonstrations took place in August;
the organisers put attendance at 300,000 people, the authorities at 50,000. Moreover, the opposition is in disarray after the imprisonment of Anwar Ibrahim, as well as several other issues on which the opposition parties have failed to take a unified stand. Our view is that political risk has increased, but our baseline scenario is that Najib will complete his mandate.
The main risks are that the embattled prime minister will push forward the kind of deeply nationalistic, protectionist policies that help him shore up support among his rural base, and increase racial tensions.
In mid-September, another Indonesian forest fire caused widespread haze across Malaysia (and other parts of Southeast Asia). A few dozen flights had to be diverted or cancelled and 2,000 schools closed; the air quality in Kuala Lumpur and other states reached ‘unhealthy’ levels.
This is a recurrent problem that strains relations between Indonesia and its neighbours. From an economic point of view, aside from increasing the risk of accidents for road, air and maritime transport, the haze risks affecting the palm oil crop by stunting fruit growth; estimates put the impact at as high as 10%-20% lower output. Palm oil prices are already pushed upwards due to the possible effects of El Nino, and the haze will add to those pressures.
In addition, given the pressure that the ringgit has been under, the current level of reserves (and the rate at which
they are declining) is a concern. This year to date, foreign funds have sold more the USD3.8bn of Malaysian equity, and the ringgit is Asia’s worst-performing major currency.
However, we maintain our view that Malaysia will avoid a full blown currency crisis. Indeed, echoing our view that Malaysia’s fundamentals are sound, several major global funds (including Morgan Stanley) have flagged the currency as one of the most undervalued in the world.
For more details on Country Risk, please visit Dun &
Bradstreet Singapore / Dun & Bradstreet Malaysia.
Country Headlines
–
Cambodia - China’s slowdown has limiteddownside effects
–
Indonesia - World’s most renowned marketsfor resource extraction
–
Myanmar - Tensions rise ahead of theNovember general election
–
Philippines - A weak global environmentweighs on exports
–
Singapore - Challenging economic climatepersists
–
Thailand - Large middle class makes anattractive market
–
Vietnam - The currency stabilises after itsdevaluation in August
Click here to check out more analysis on these countries or any of the 130 countries covered worldwide.
Every Haze Has a Silver Lining?
ASIA NEWSFLASH
November 2015
COUNTRY SPOTLIGHT MALAYSIA
Unlocking the Puzzle of China’s Oil Imports
China’s crude oil imports are up 10% in 2015, despite dire headlines claiming the country’s demand for raw materials has peaked. China imported more crude oil than the US in April — for the first time ever — to reach an average of 6.6 million barrels per day (b/d) for the year to date.
At a time in which global commodities markets are swooning, how has China’s oil demand bucked the trend?
First, China’s refined fuel exports are growing — they were up 11.6% year-over-year by volume in January- August 2015. Refinery capacity has grown faster than product demand, forcing Chinese refiners to put product out on the world market.
A new factor in the Chinese market is the smaller,
“teapot” private-sector refiner. Several received quotas for the first time in 2015 to import and refine crude oil — totaling 660,000 b/d — as part of a rare market reform in an upstream sector that enables refiners to use more capacity. In any case, higher fuel exports are accounting for up to 100,000 b/d of increased crude imports.
Second, China is storing as much oil as it can, at these prices. Data remain sparse and often fail to distinguish
between state and oil company inventories. However, China’s reported strategic petroleum reserve is still likely to be substantially smaller than the International Energy Agency member countries’ mandatory 90 days of prior-year net oil imports.
By November 2014, in China’s most recent phase of building strategic reserves, stockpiled oil topped 91 million barrels or barely two weeks of import demand.
In 2015 a second strategic-reserve-building phase has begun, with a target of 168 million barrels, including a facility in the eastern city of Qingdao. The pace of strategic purchasing will vary as China scrambles to secure storage space, but more storage was being contracted from the private sector as of late 2015.
Indeed, given the situation of Middle Eastern oil producers Iraq, Libya, Syria, and Yemen, building strategic reserves from their current low base seems advisable to China’s leadership and energy sector, especially given excess supply conditions. Problems in the region include an undeclared proxy war between a thermonuclear power and a major oil producer (Russia and Iran) on one side, and a NATO member and the world’s largest oil producer (Turkey and Saudi Arabia) on the other.
By Isaac Leung | Dun & Bradstreet Editor
FOLLOW THE PHILIPPINES SINGAPORE THAILAND
ASIA NEWSFLASH
MARKET INSIGHT
November 2015
Sources: China’s General Administration of Customs, National Bureau of Statistics, Platts
MONTHLY TRADE DATA IN ‘000 BARREL PER DAY (B/D)
Aug'15 Aug '14 % Chg Jul '15 Jun '15 May ‘15 Apr ‘15
Net Crude Imports 6,236 5,931 29.3 7,182 7,195 5,465 7,292
Crude Production 4,296 4,148 4.2 4,280 4,426 4,297 4,276
Apparent Demand 11,185 10,148 10.2 11,211 11,250 11,102 11,367
ASIA NEWSFLASH
MARKET INSIGHT
November 2015
CONSUMER TRENDS
Though increasing demand for automobiles may seem strange given China’s slowing growth, driving is becoming more popular among Chinese consumers.
Gas is more heavily taxed than in the US but is over 20% cheaper now than it was a year ago in 2014.
Despite the lull in car purchases (which fell almost 7%
year over year in July and will likely be down for the entire year compared to 2014) and the tough economic situation in parts of the country, the Chinese are getting into their cars and driving more.
Apparent demand for gasoline, as estimated by Platts China Oil Analytics, was up almost 22% January- August 2015, compared to the same period the year before. The trend is in contrast to muted demand growth for diesel fuel used in commercial transportation, construction, agriculture, and fisheries.
Demand for aviation fuel also was still growing in second half 2015, in line with increased domestic and international travel. Whether this trend can hold up as employment sputters and the yuan weakens is unclear.
But the IEA expects Chinese gasoline demand for oil to be up almost 5% by the end of 2015.
DOMESTIC SUPPLY
Though domestic oil production rose by 3.8% in August, onshore production is sagging, and stabilizing it has only been achieved after massive expense and effort to eke out the most from China’s aging mainstay onshore fields. Most of the domestic growth has come from offshore production.
In late 2014 leading state-owned oil major CNPC made it clear that it would allow the giant Daqing oil field (accounting for one in five barrels produced domestically) to enter a process of decline. New fields in China face complex geology and high expense.
Domestic supply is unlikely to reach much past 4 million b/d in coming years. This trend is already informing Chinese sourcing decisions and supporting imports.
THE MYSTERY EXPLAINED
In all, it should be no surprise that Chinese oil demand has been increasing lately. Its refineries are exporting more, the government is stockpiling, drivers are driving more, and domestic supply is about to enter a phase of decline. Ultimately, though, one factor is the puppet master behind all these shifts: the price of oil.
Isaac Leung is a Senior Economist for Dun & Bradstreet.
Based in the UK, he covers China, India and other parts of the Asia Pacific region. His areas of interest include maritime economics.
ANALYTICS IN ACTION:
ENERGY SECTOR
A mid sized Energy company was looking to expand its US footprint.
CHALLENGE: Within their service footprint they wanted to find and prioritize best prospects with the greatest energy need and highest propensity to respond.
ACTION: They wanted to advance beyond the use of basic, firmographic data in their modeling. Custom Modeling was used to drive marketing response and consumption estimation for business growth.
RESULTS: Click on image to see how they used two Custom Analytics Models to identify qualified businesses with larger energy needs (3:00).
CUSTOMER STORY
100
80
60
40
0
0 10 20 30 40 50 60 70 80 90 100
20
TARGET %
P O P U L A T I O N %
PREDICTED MODEL GAINS
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ASIA NEWSFLASH
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ASIAN PERSPECTIVES
The global economy has yet to fully recover from the recession that began in the late 2000s with the US subprime crisis. Andy Haldane, chief economist at the Bank of England, argues that we are now facing part three of the crisis.
Part one was the 2008-09 recession in “Anglo-Saxon”
countries; part two is the ongoing debt crisis in Europe;
and part three, an emerging-market crisis, is developing.
Many emerging-market (EM) currencies have deteriorated sharply (the Brazilian real is at its lowest-ever level against the US dollar), and EM sovereign bond ratings are falling.
Some media accounts are going so far as to predict EM weakness could result in another global recession.
Such reports note the slowdown in China and a weakening of the country’s official currency, the renminbi, will further curtail Chinese import demand.
Additional apprehensions linked to EM turmoil include weak commodity prices, the strength of the US dollar, and continuing problems in the eurozone.
Because the emerging economies are not a monolithic group, the impact of several economic factors on various EMs will differ widely. A number of dynamics will determine the depth and length of the downturn in each economy.
EM growth will be determined by the dependence of the economy on commodity exports, the vulnerability of the economy to the downturn in China, and the openness of the economy to capital outflows.
DEPENDENCE ON COMMODITY EXPORTS
Hydrocarbon exports can account for over 80% of total exports. In Algeria the figure is nearer 100%.
Some countries, such as Qatar and the United Arab Emirates, have built huge reserves to reduce the risk associated with high dependency.
In contrast, traditional oil exporters in some African countries have not been exporting for many years and consequently have fewer reserves to combat falling revenues. Exporters of other commodities have a lower but still high dependency on their primary exports.
VULNERABILITY TO CHINA’S DOWNTURN
A number of countries have seen their economies grow strongly as Chinese demand for their products increases. Many Asian countries have built up their export dependency on China over the past 15 years.
OPENNESS TO CAPITAL OUTFLOWS
Paradoxically, the more open the economy, the more vulnerable it is to changes in investor sentiment and therefore outward flows of capital. If the country is running an account deficit and is exposed to high levels of foreign borrowing, this will add pressure on the local currency, raising risks even further.
During the 1997-98 Asian financial crisis, the Malaysian economy was arguably able to contain the downturn better than South Korea or Thailand by introducing capital controls.
Will there be a Part 4 or even a Part 5 to this “economic trilogy,” and if so, what will they be? The IMF is already worried that low interest rates will negatively impact the ability of life insurers in Europe to meet their commitments, which could create yet another liquidity crisis.
Emerging Market Turmoil Could
Spark Third Global Economic Crisis
By Warwick Knowles | Dun & Bradstreet Editor
November 2015
Dr. Warwick Knowles is the Deputy Chief Economist on D&B’s Global Data, Insight & Analytics team. Based in Marlow, UK, he covers global issues and the Middle East and North Africa for D&B Macro Market/Country Insight Products. He has great expertise in political economy and Middle East politics.
FIRST PARTY COLLECTIONS
First party collections services are traditionally carried out either externally in the name of the creditor by debt collection agencies or internally by the creditors themselves. When outsourced to an external agency, the work starts earlier in the process, typically from the invoice due date.
Contrary to the European countries and more aligned to the tendency observed in the Americas, companies in the Asia Pacific region have displayed a noticeable interest in using first party collections services in the near future (Figure 7).
Almost 60% of the interviewed companies in the region have claimed to be (highly) likely to adopt this service during the next two years; while the percentage of companies fully against the use of this particular offer is quite limited to a 20% of respondents (compared to over 40% recorded among European companies).
It has been already observed that companies in Asia Pacific have displayed a completely different approach to debt collections and the services available in this market, especially when compared to the general trend in Europe. With the exception of the micro companies, all companies irrespective of size have shown an interest in first party collections higher than the average of the region, with a peak among the small and medium companies where 65% of the total interviewed companies have affirmed to be willing to outsource the first party collections service in the next two years.
Price-wise, almost half companies in the Asia Pacific have claimed to be willing to pay a price around 8 € per invoice for outsourcing the first party collections service; a relevant quarter of respondents claimed instead to be willing to pay between 8 and 12 € for each outsourced invoice.
Micro companies appear to be very price-averse: 64% of the respondents would not commit to paying more than 8 € with a remarkable high presence (compared to the average of the region) of companies that claimed not to be willing to pay more than 5 €. Large companies are instead
Future Development of The Debt Collection Market
This article is provided courtesy of Atradius and reproduced with permission. Copyright by Atradius Collections B.V. – October 2014.
CREDIT PRACTICES
ASIA NEWSFLASH
November 2015
FIGURE 7 – THE LIKELIHOOD TO OUTSOURCE THE FIRST PARTY COLLECTIONS
22
23
11
37
37
21
22
20
24 19
11
11
25 9
8
ASIA PACIFIC
AMERICAS
EUROPE
Highly likely Unlikely
Likely
Highly unlikely
Neither likely or unlikely
%
%
% Basis: All interviewed companies
Source: Global Collections Review, October 2014
more inclined to pay a higher price compared to the other business sizes: over 70% of the interviewed companies have claimed to be willing to pay a price higher than 8 €, with a peak of 30% of respondents willing to pay over 15€ per invoice to outsource the service.
Also, medium companies appear to be more prone to pay a higher price per invoice to outsource the first party collections service: over half of respondents of the companies of this size would pay a price between 8€ and 15€.
From a price perspective, companies in the Asia Pacific region have displayed an attitude towards the use of this additional debt collections service more similar to companies in the Americas, but with an opposite tendency observed among their counterparts in Europe.
There are some dissimilarities at country level: Japanese companies are the least inclined to use the first party collections service and this attitude is perfectly mirrored in the way they price the value of the service: the majority (over 50%) of all respondents in Japan have claimed to be willing to pay only the lowest price per outsourced invoice (less than 5 €). On the contrary, companies in India and Hong Kong and to a greater extent companies in China have affirmed to be willing to pay a price between 5€ and 12€ with a peak of companies in China where the expected price is between 8€ and 12€.
FINAL DEMAND LETTER
The final demand letter is a letter sent out by the creditor, normally using a debt collection agency’s headed notepaper, which informs the debtor that if they don’t pay, the debt will be handed over to the debt collection agency. The interest for this additional service is very high among the companies in the APAC region, where more than 60% of respondents have claimed their intention to use the service in the next 2 years (Figure 8).
The likelihood of companies making use of this service is higher among those operating in China, Taiwan, Indonesia and India; while Japanese companies appear to be absolutely opposed to the use of any services related with debt recovery, irrespective of the way it is offered.
Companies of all sizes, except micro enterprises, have declared a high interest in the final demand letter that is significantly above the average of the region. The most prone to make use of this collections solution are the small and the mid-sized companies where 70% of the respondents affirmed to be likely to use this tool within the next two years.
Compared to Europe and the Americas, where the acceptance of the final demand letter is (quite) high, Asia Pacific companies have shown a positive openness to the adoption of additional solutions for putting pressure on their debtors before starting the traditional debt collections process.
Price expectations for the use of the final demand letter are less popular than the price intentions claimed for the first party collections service. In fact, the majority of the respondents (61%) claimed to be willing to pay up to 10€ ; with a peak of price sensitivity among Japanese companies where almost 60% of the respondents in the country declared to commit to paying less than 7€
per letter. Chinese companies are those who are more inclined to make use of the service and consequently their price expectations are perfectly mirrored in the price level they would commit to paying: 40% of the respondents claimed to be willing to pay between 10 to 15€ per letter.
The attitude towards the price varies remarkably when it comes to the size of the companies: micro businesses are on average inclined to pay no more than 7€ while among the mid-sized and the large companies there is a large percentage of respondents (around 32%) that seem to be willing to pay a price between 10 and 15€ per final demand letter.
This article is provided courtesy of Atradius and reproduced with permission. Copyright by Atradius Collections B.V. – October 2014.
ASIA NEWSFLASH
CREDIT PRACTICES
November 2015
GREAT INTEREST IN BOTH FIRST PARTY COLLECTIONS AND FINAL DEMAND LETTER WITH POSITIVE
EXPECTATION IN TERMS OF PRICE
FIGURE 8 – THE LIKELIHOOD TO USE THE FINAL DEMAND LETTER
24
29
21
40
40
28
20
16
21 14
9
8
16 7
7
ASIA PACIFIC
AMERICAS
EUROPE
Highly likely Unlikely
Likely
Highly unlikely
Neither likely or unlikely
Basis: All interviewed companies
Source: Global Collections Review, October 2014
%
%
%
Looking at the price expectations by regions (APAC, Americas and Europe) there is not a big difference in terms of pricing: in all regions the majority of the respondents would be likely to pay a price not exceeding 10€.
DEBT COLLECTION PRACTICE ACROSS INDUSTRIES
In this section, the Global Collections Review offers an overview of the collection practices across the industries represented in the 8 countries involved in the survey.
The scope of this section is to highlight how the collection practices differ from industry to industry mainly due to the way business is conducted in the B2B environment.
DEALING WITH OVERDUE RECEIVABLES
Overall, companies working in the industries considered in this report have developed their business mainly trading in the domestic markets with the exception of companies operating in the Chemicals, Machines and Textiles industries where the share of their international business is on average around 40% of the total value of their B2B transactions.
Enterprises in Transport, Food, Business service and Chemicals, have been more oriented in selling their products and services on credit (around 50% or above); while the remaining industries are more credit averse.
With reference to the overdue receivables, the share of the unpaid invoices is higher among domestic buyers than export customers. In particular companies in Chemicals, Consumer durables and Financial services are the ones that suffered more than the other industries with the delays in payments showing a percentage of overdue invoices remarkably higher than the average of the region.
In this respect, observing the way the companies have dealt with overdue receivables displays some peculiarities (Figure 9). It is generally true that across industries, own management is usually the most chosen method for recovering unpaid debts, which is common among industries, countries and regions. However in some industries, like Construction materials, Food and Consumer durables, the choice of using internal procedures to handle delayed payments is almost comparable to the frequency of use of the external solutions for collecting the overdue invoices.
Working in cooperation with debt collection agencies has been an alternative option frequently chosen by companies operating in the Chemicals, Construction materials, Financial service and Food industries, which have used professional debt collections services more intensively than the average of the region.
It is generally true that across industries, own management is usually the most chosen method for recovering unpaid debts, which is common among industries, countries and regions. However in some industries, like Construction materials, Food and Consumer durables, the choice of using internal
This article is provided courtesy of Atradius and reproduced with permission. Copyright by Atradius Collections B.V. – October 2014.
ASIA NEWSFLASH
CREDIT PRACTICES
November 2015
FIGURE 9 - HOW COMPANIES HAVE DEALT WITH OVERDUE INVOICES IN THE PAST 12 MONTHS
24% 50%
47% 63%
ASIA PACIFIC
18% 46%
51% 56%
FOOD
29% 66%
55%59%
CONSTRUCTION MATERIALS
26% 51%
42% 65%
TEXTILES
24% 52%
48% 63%
ELECTRONICS
26% 44%
56% 68%
CHEMICALS
32% 52%
48% 65%
TRANSPORT
27% 51%
52% 61%
FINANCIAL SERVICES
28% 45%
36% 66%
CONSTRUCTION
16% 54%
48% 67%
MACHINES
24% 45%
48% 60%
CONSUMER DURABLES
15% 49%
40% 67%
BUSINESS SERVICES
Sold debts Used law office / attorney Used external debt collection agency Used internal resources for collecting
Basis: All interviewed companies Multiple reponse
Source: Global Collections Review, October 2014
ASIA NEWSFLASH
November 2015
CREDIT PRACTICES
procedures to handle delayed payments is almost comparable to the frequency of use of the external solutions for collecting the overdue invoices.
Working in cooperation with debt collection agencies has been an alternative option frequently chosen by companies operating in the Chemicals, Construction materials, Financial service and Food industries, which have used professional debt collections services more intensively than the average of the region.
Choosing legal procedures to collect overdue debts has proven to be noticeably more common among companies working in the Constructions materials industry, even though those industries are also very active in seeking the assistance of debt collection agencies, when they outsource the management of their overdue receivables.
Similar to the average in the Asia Pacific, selling debts is always the least chosen way to manage overdue receivables but it is more common among companies working in Transport and to a lesser extent, Construction and Construction materials industries; while the least inclined to use this method are companies in Business services, Machines and Food.
USE OF A DEBT COLLECTION AGENCY
With reference to the type of cooperation with debt collection agencies, the results of the survey at industry level do not bring any surprises and confirms that, due to the predominance of overdue receivables from domestic buyers, companies that have cooperated with debt collection agencies have outsourced the recovery service specifically for dealing with domestic debts, especially in the Construction materials industry (Figure 10).
Companies operating in the Financial service and Construction industries have sought the assistance or an external party to manage overdue receivables from their international buyers.
Companies in Textiles chose to work closely with debt collections agencies for recovering a combination of both domestic and international unpaid invoices.
This concludes our 3-part series on Credit Practices in Asia Pacific. For more information on this article, please visit www.atradiuscollections.com.
Next month we will begin a 2-part Special Report on the perception of Asian businesses towards the coming ASEAN Economic Community in Dec 2015 and Trans-Pacific Partnership (TPP), courtesy of AmCham Singapore and US. Chamber of Commerce.
This article is provided courtesy of Atradius and reproduced with permission. Copyright by Atradius Collections B.V. – October 2014.
FIGURE 10 – USE OF DEBT COLLECTION AGENCY I use an external agency to collect overdue domestic receivables I use an external agency to collect overdue international receivables I use an external agency to collect both overdue domestic and international receivables
40% 29% 31%
ASIA PACIFIC
38% 32% 30%
53% 25% 23%
18% 24% 58%
41% 30% 29%
33% 29% 38%
43% 27% 30%
TRANSPORT
36% 36% 27%
45% 34% 21%
41% 28% 31%
36% 30% 34%
45% 19% 36%
Basis: Interviewed companies which used debt collection agencies Source: Global Collections Review, October 2014
FOOD
CONSTRUCTION MATERIALS TEXTILES
ELECTRONICS
CHEMICALS
FINANCIAL SERVICES
CONSTRUCTION MACHINES
CONSUMER DURABLES
BUSINESS SERVICES
D&B’s U.S. Economic Health Tracker Reveals Continued Challenges for Small Businesses Balanced by Positive Job Growth
– Dun & Bradstreet’s Small Business Health Index continued on its sluggish course.
Retail Trade, Construction and Personal Services Sectors show slight increases, while other major sectors declined. Payment delinquencies are major drivers of the movement in both directions.
– Dun & Bradstreet estimates 194,000 new non-farm jobs were added to U.S. payrolls in September 2015. The labor market is expected to continue the relatively softer trend of the past month, with the slack Manufacturing sector seeing some losses. Business Services continues to lead the employment gains.
– September 2015 recorded an all-time high for Dun & Bradstreet’s U.S. Business Health Index since the inception of the index in December 2010. The index also climbed 0.3 points on a month-on-month basis. This is the fourth straight month in which the BHI has ticked up, signalling diminishing financial risks and strengthening balance sheets for U.S. businesses.
Click here to read the report.
WALL ST
FOLLOW THE PHILIPPINES SINGAPORE THAILAND
ASIA NEWSFLASH
November 2015
Q4 2015 BUSINESS OPTIMISM INDEX The quarterly Dun & Bradstreet ASEAN BOI is the first business optimism metric for Southeast Asia, one of the world’s largest trade regions which will establish the ASEAN Economic Community (AEC) in Dec 2015. To view the reports, please contact your local D&B office.
SUMMARY
Overall sentiment remains relatively upbeat in Vietnam and Philippines for the fourth quarter but deteriorated sharply in Malaysia and Thailand. Most indicators have similarly underperformed in Indonesia, the region’s largest economy, and Singapore. Prevailing global uncertainty continues to weigh on expectations of the business community. The blunted growth trajectory of China, the third largest trading partner for ASEAN, has also cast shadows on this region.
ASEAN-6
INDO-
NESIA MALAYSIA PHILIPPINES SINGAPORE THAILAND VIETNAM
SALES VOLUME NET PROFIT SELLING PRICE NEW ORDERS INVENTORY EMPLOYMENT
ADDRESS
TELEPHONE
CONTACT PERSON
FINANCIAL STATEMENT
LINKAGE
REGISTERED CAPITAL
LEGAL STRUCTURE
2014 DEC
CATEGORY 2015 AUG 2015 DEC
HANOI
130,224 RECORDS
(34% DATABASE AS OF AUG 2015)
HO CHI MINH CITY
141,870 RECORDS
(37% DATABASE AS OF AUG 2015)
The Business Information You Need That We Have ASIA NEWSFLASH
CATEGORIES DATA AVAILABLE IN TOTAL
135,000
123,000
122,000
6,000
7,000 -
20,000
386,000
240,000
355,000
6,000
8,000
350,000
376,000
904,000
486,000
897,000
500,000
20,000
680,000
750,000
INDUSTRY DATA AVAILABLE IN %
CONSTRUCTION
WHOLESALE
TRANSPORT, COMMUNICATIONS,
UTILITIES FINANCE,
INSURANCE & REAL ESTATE
AGRICULTURE, FORESTRY AND
FISHING
3% OTHERS
1% RUBBER AND MISCELLANEOUS PLASTIC PRODUCTS 1% CHEMICALS AND ALLIED PRODUCTS
1% TEXTILE MILL PRODUCTS
1% APPAREL AND OTHER TEXTILE PRODUCTS 1% LUMBER AND WOOD PRODUCTS 1% PRINTING AND PUBLISHING 1% FABRICATED METAL PRODUCTS 2% FOOD AND KINDRED PRODUCTS MINING
SERVICES
RETAIL TRADE
10
%17
%12
%4
%2
%1
%1
%5
%MANUFACTURING
10
%DATA SHOWCASE VIETNAM
1 Million Records
(TOTAL DATABASE AS OF DEC 2015 - ESTIMATED)
POSITIONING PREMIUM BRANDS IN CHINA
It’s key to remember that commodities can be turned into Chinese luxury products with the right brand positioning. Many companies are relying on clever advertisements and packaging designs to appeal to consumers. Yili Dairy, for example, uses red and gold — colors traditionally associated with wealth and good fortune in China — to bring a grand feel to its products on the shelves and on subway billboards.
HOW TO HIRE PART TIME EMPLOYEES IN CHINA
Part time work is not as common in China as it is in the West. From a legal perspective, regulations are not very comprehensive or detailed. However, the labor market in China is dynamic, changing, and influential. Foreign companies may thus find themselves in situations where employing part- time workers is advantageous. It is important that foreign companies are aware of the different laws and options relating to hiring workers.
TPP USHERS IN VIETNAM AS NEW FDI HAVEN
Amid the onset of the TPP is a reduction of trade barriers for Vietnam and other countries, and Taiwan and Hong Kong investors have immediately responded by buying up Vietnam equities. Along with the removal these trade barriers will be a closer look at the country, and particularly how additional capital into the country is going to bring additional interest in alternative spots of investment into the country.
MAKE IN INDIA – A YEAR IN REVIEW
Make in India is now one year old. Designed to kick-start India’s lagging manufacturing sector, the national program has affirmed the business-friendly nature of the Bharatiya Janta Party (BJP)-led government. This was BJP’s key campaign promise in the last elections – regain foreign investor confidence after years of high-profile corruption scandals and some adversarial economic policies.
Prime Minister Modi has fronted the Make in India program during his official visits to 28 countries.
INDIA TRAINS ITS GUNS ON CHINA AUTO INDUSTRY
KPMG’s 2015 Global Automotive Report notes that India is expected to become the fourth largest automobile producer in the world by 2020. In order to sustain growth in the sector, the Indian government has created incentives, including: tax reductions, customs exceptions, investment allowances, 100 percent FDI investment allowance, automatic approvals for foreign companies, manufacturing/
import exemptions from licensing and approvals and technology modernization funds for Small and Medium Sized Enterprises (SMEs).
THE NEW BPO CAPITOL OF THE WORLD?
Earlier this year, Tholons Inc. a leading US-based services globalization and investment advisory firm published a report that placed Manila ahead of Mumbai as the second largest outsourcing destination in the world. Cebu, also figured among the top ten preferred destinations. In fact, over the years Philippines has seen a fast growth in the BPO industry. Though the BPO industry has not always been a fast growing market.
REGIONAL BRIEFING
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ASIA NEWSFLASH
These articles first appeared in Asia Briefing, a subsidiary of Dezan Shira Group Ltd, and are licensed to post in Asia Newsflash.
November 2015
UNDERSTANDING LAOS’
SPECIAL ECONOMIC ZONES
Laos became part of the World Trade Organization in 2013. For the past decade, Laos, one of the smaller economies in Southeast Asia, has seen economic growth at a rapid rate of 7-8 percent annually. The country has been able to do this by taking advantage of its abundant natural resources and low cost raw materials.
Laos has also sought to attract investors through the implementation of special economic zones.
ASEAN FOREIGN INVESTMENT RESTRICTIONS: PART 1
In this first instalment of a multi-part series, we take a closer look on the restrictions in place on FDI throughout ASEAN, with a focus on Indonesia, the Phillipines, and Cambodia. In this diverse region, the foreign investment climate inevitably differs from state to state. Many have rolled out beneficial policies to attract more foreign investors, hoping that increased capital inflows and business activity will stimulate the economy.
HOW TO LEGALLY TERMINATE AN EMPLOYEE IN ASEAN
Though ASEAN presents investors with an important growth market, navigating the regulatory hurdles to firing employees can present a significant challenge. Therefore consulting with a professional services firm prior to entering into a new ASEAN market is imperative. This will help address these issues, and anticipate common regulatory trends in specific countries. It will also help companies avoid making mistakes that may put their businesses in jeopardy.
ASEAN’S WINNERS AND LOSERS UNDER TPP
Earlier this month, 12 countries in the Asia Pacific region signed the Trans-Pacific Partnership (TPP) which ranks as the biggest trade agreement in history – signatory countries account for 40% of total global output. While the treaty still must be ratified by each and every party to it, its initial passage represents a monumental moment in the integration of economies on each side of the Pacific.
SINGAPORE
Businesses in Singapore have welcomed the agreement, as they see it creating new opportunities for investment and boosting trade.
Singapore already has FTA with almost every other TTP signatory, with the notable exceptions of Mexico and Canada. However, the TPP will extend tariff reductions to areas previously not to cover areas that had not been previously covered by the TPP covered by bilateral arrangements.
VIETNAM
Vietnam is being touted by many as the overall
“winner” of the TPP agreement. The opening of US and Japanese markets presents enormous opportunities for the country’s booming garment and apparel industry, which has the potential to act as a major magnet for FDI into the economy. Most of this investment would likely be diverted from other countries, such as China and Cambodia.
MALAYSIA
Authorities in Malaysia have cautiously welcomed the TPP – it is believed that the agreement will provide some gains and some losses. Moreover, not all of the details of the agreement have been made public yet. Among the industries that stand to benefit from the TPP are electronics, chemical products, palm oil, and rubber exporters. On the other hand, the TPP may hurt state-owned enterprises which benefit from weak competition for government contracts.
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ASIA NEWSFLASH
These articles first appeared in Asia Briefing, a subsidiary of Dezan Shira Group Ltd, and are licensed to post in Asia Newsflash.
REGIONAL BRIEFING
November 2015
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