CARI Captures 337
China, Indonesia wealth gap widens
(4 December 2017) According to a World Bank report, Riding the Wave: An East Asian Miracle for the 21st Century, income inequality has risen across the region mainly due to an increasing rich-poor divide in Indonesia and China. In China, the International Monetary Fund said the Gini-coefficient rose the most from 33 in 1990 to 53 in 2013. While for Indonesia, Sri Mulyani Indrawati, Indonesian Finance Minister, said that the country’s current Gini coefficient will be a struggle for the next few years. Both the World Bank and the IMF stress that improved access to education, health and financial services could reduce inequality.
Vietnam plans to raise more than $570 million through IPOs in energy firms
(10 December 2017) In order to fund a budget deficit, Vietnam has accelerated its privatisation programme in recent weeks. Vietnam hopes to raise more than US$570 million by selling stakes in a public oil refinery, an oil distribution firm and a power company. The country aims to raise at least US$452 million by selling stakes in Petrovietnam, Binh Son Refining and Petrochemical company. The government also approved an earlier planned IPO in oil distribution firm PetroVietnam Oil Corp. Last month, Vietnam unveiled its plans to sell 54 percent of brewing company Sabecco worth US$5 billion which is set to be the country’s largest privatisation.
Philippines Government to sell US$1 billion bonds in 2018
(11 December 2017) The government of Philippines is planning to sell US$1 billion in dollar denominated global bonds in early 2018. Early this year, the government raised US$1.97 billion through the sale of global bonds and generated US$500 million from the issuance of fresh 25-year global bonds at a rate of 3.7 percent. Deputy Treasurer of the Philippines Erwin Sta. Ana, said that the Treasury is studying the structure for the possible issuance of Samurai-bonds next year. Despite the possible issuances of global and Samurai bonds, the Bureau of the Treasury and the Department of Finance (DOF) assured that the government would maintain its 80:20 borrowing mix.
MALAYSIA, THAILAND, INDONESIA
Three ASEAN countries launch framework to promote local currencies
(11 December 2017) To reduce reliance on U.S. dollars for bilateral trade and direct investment transactions Malaysia, Thailand, and Indonesia launched a framework and appointed top banks as partners in a coordinated effort to promote the countries’ local currencies. Malaysia’s bilateral trade volume totalled US$13.8 billion and US$13 billion with Indonesia and Thailand respectively. However, only 5.8 percent and 11.4 percent of the trade was settled in local currencies. Michelle Chia, Economist at CIMB Investment Bank commented that “Using more of our own currencies is a matter of getting liquidity and this cross-country cooperation is the first step”. Last year, trade within Southeast Asia contributed 23.5 percent of total trade while intra-ASEAN investment accounted for 25 percent of total foreign investment into the region.
Singapore launches electric car-sharing program
(12 December 2017) Singapore launched its first large-scale electric car-sharing program, as part of reducing the number of vehicles on its roads and encouraging the use of public transport. BlueSG, part of France’s Bollore Group, said that there are about 80 cars and 32 charging stations that already available for public use. BlueSG aims to roll 1000 electric vehicles and 2000 charging points by 2020. Singapore tightly controls its vehicle population by setting an annual growth rate, implementing a right to own bidding system and limiting the number of years a vehicle can be used for.
IMF: Malaysian economy has shown resilience
(12 December 2017) The International Monetary Fund (IMF) has projected Malaysia’s real gross domestic product (GDP) growth to be between 5.5 to 6 percent for 2017. Headline inflation is expected to decline to the 3.0 to 3.5 percent range due to a more muted impact from global oil prices. The IMF team led by Nada Choueiri said that the Malaysian economy has shown resilience in recent years and continues to perform well. She said that the government’s planned pace of fiscal consolidation for 2017-18 was appropriate and that would help to build a buffer and maintain financial market confidence. She added that priority should be given to policies to encourage female labour force participation, improve education and skills, vocational and technical, encourage research and development and upgrade public infrastructure.
Investor confidence remains strong despite drug war
(12 December 2017) Macroeconomic fundamentals remain strong prompting international debt watcher Fitch Ratings to upgrade the Philippines’ credit rating. The one-notch upgrade places the Philippines at par with Italy and higher than Indonesia. Fitch Ratings mentioned that the investor sentiment remained strong despite peace and order concerns with the ongoing war on drugs. Expected to maintain its place among the fastest-growing global economies, Fitch forecast the Philippines real gross domestic product growth of 6.8 percent for 2018 and 2019. Since 2013, the country’s credit rating has improved from the minimum investment grade of “BBB-” to “BBB”. It was the first such upgrade for the Philippines by Fitch.
Talent shortage affects expansion of Southeast Asian startups
(13 December 2017) A shortage of homegrown technology talent is the most pressing issue for the growth of Southeast Asian internet startups. Despite the challenges faced by the region’s internet startups, venture capital investments in Southeast Asian companies made up 0.18 percent of the region’s GDP in 2016 up from 0.04 percent in 2014. A joint research report by Google and Temasek notes that there is not a deep reservoir of executive experience in Southeast Asia unlike in Silicon Valley. This has forced companies players to seek experienced workers by opening technology hubs in China, India and the U.S.
2018 Asia growth outlook to keeps at 5.8 percent by ADB
(13 December 2017) The Asian Development Bank (ADB) expects economic growth in the region to slow in 2018. For Southeast Asia, the ADB boosted its growth projections to 5.2% in 2017 and 2018. “The subregion is benefiting from robust investments and exports,” the regional lender said. Its Asian Development Outlook Supplement report states that the unexpected strong expansion in Central, East, and Southeast Asia are more than enough to offset a downward adjustment to growth for South Asia.The ADB’s outlook for the region covers 45 of its 67 member economies, which also include countries in Europe and North America.
Malaysia’s investment outlook remains positive
(8 December 2017) The outlook for foreign and domestic direct investment in Malaysia remains positive with trends indicating that local companies are expanding. Malaysia Investment Development Authority (MIDA) has been promoting investment in research and developing the sector across all industries. Datuk Azman Mahmud, MIDA Chief Executive Officer urges companies to innovate and collaborate with research entities to be relevant to market needs adding that the fourth industrial revolution has seen the emergence of new and disruptive technologies reshaping the way business is being conducted around the world.