Economy

Additional Asian Alliance

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Turkey and Vietnam Need to Join Forces

It seems that if there was greater cooperation between Vietnam and Turkey, the economy climates of both countries would greatly benefit. According to an article in the Vietnam News, they need to get on to this though and start making real efforts so that they will thrive. This is the case for many areas such as: “economics, education and training, [and] science and technology.” It was just two days ago that Nguyen Tan Dung, the Prime Minister of Vietnam, spoke about this in a statement in which he “received outgoing Turkish Ambassador Ates Oktem in Ha Noi.” He had been impressed with the Ambassador’s efforts in his time in office which helped “develop the Vietnam-Turkish friendship and co-operation.”

Better Buddies

Although there is still a way to go, things have for sure improved between Turkey and Vietnam in the last few years. For example, just last year, trading between the two countries reached US$850m. At the moment, Turkey and Vietnam are in the process of signing an “investment encouragement and double taxation avoidance agreements.” It is anticipated that these will really give a jumpstart to economic cooperation and partnerships between the two countries.

Put Differences Aside

It is true that there has been tension between the two countries over the years. But imagine what would happen if these were totally put to one side? As it is business between Turkey and Vietnam is booming and got to almost $1bn last year, even with the current political instability. There has been a steady increase of trade between the two countries over the last few years “from almost nothing to $857m in 2010.” In 2002, this figure was just a little more than $100m.

It is Turkey that is vehement in trying to improve relations with Vietnam and working hard towards this goal. It intends to “appoint a trade counselor” to its Hanoi embassy. Vietnam is home to around 86 million people and is the world’s 13th biggest population. So it’s worth everyone working closely with Vietnam, but especially Turkey.

Asia Investment Banks (IBs): Overcrowding?

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It seems like Asia may be encountering a few too many IBs around at the moment, (15 altogether – nine bank-backed and six non-bank backed). But which ones are doing really well? Apparently the CIMB group has a lot to say for itself, having been described as “ambitious” in its attempts at becoming a “leading universal bank in South- East Asia, providing a full array of banking services ranging from savings accounts to large corporate transactions for fund-raising.”

Going Global

What initially prompted CIMB to become global occurred in 2005 when it acquired RM500mil of GK Goh Holdings Ltd, which apparently gave the bank access to markets in the region, as well as London. Further to that, the bank purchased the Bumiptura Commerce Bank, Southern Bank, PT Bank Niaga and Bank Thai. Acquiring a “strong balance sheet” led CIMB to greater places.

IB Growth

There has been other regional growth for some of the non-bank IBs too. For example, OSK Investment Bank has established various advancement strategies while working hard on putting itself into the “smaller and mid-cap market as well as research capabilities.” Much of its profit hails from Asia, with 30 percent of its “overseas pre-tax profit” hailing from Singapore. Currently the bank is looking to establish its presence in Thailand and Cambodia. In the former country it is doing this with the purchase of BFIT Securities public Co. and in the latter it now boasts “a full-fledged commercial bank with nine branches as well as license for stockbroking and corporate finance.” OSK IB sees the necessity now to pump up its “institutional equity capability.” If it does this successfully in Hong Kong, it will be well on its way to establishing a very solid presence throughout the Asian region since it sees this country as “one of the largest financial gateways.”

There has been significant restructuring in OSK as well as new employees in an attempt to go further in its markets and develop a presence in Europe while “exposing the Asian markets to the Europeans.” As well the company is looking into what they can do in South Korea, Taiwan and China.

It’s Always Sunny in Singapore?

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Stable Singapore Stakes

Is it true that things (financially-speaking) are that good in Singapore these days? Is that what is making the area so attractive for hedge funds, financiers and investors? Indeed the answer should be a resounding yes. The country is for sure facilitating things for these financiers as “setting up shop” is now deemed as much easier in Singapore than in any other Asian city.

If you just take a look at Hong Kong you will see just how much harder it is for such financiers to work. Indeed, managers of hedge funds alone are doing it tough, being forced to engage in the “same licensing requirements as mutual-fund managers.” Small funds in Singapore will be able to continue operating without having a license at all. Since it is today Singapore and Hong Kong which are the countries that have the most operation of hedge funds, of course these financiers would choose the former over the latter.

Seductive Singapore Taxes

The taxes haven’t always been so attractive in Singapore. But today they are, given what is going on in the UK. Currently the highest taxes for individuals reaches 20 percent in Singapore but the UK recently put their top rate up to a staggering 50 percent. In addition, the whole of Europe – as well as America – in general works on “tougher rules.”

So it makes sense that hedge funds in Singapore saw a significant development, reaching $48bn at the end of 2009 which was a jump of $10bn from just four years earlier. In 2001 there were only 20 hedge funds; two years ago that figure had escalated to 320 hedge fund managers. All predictors are pointing to a continued hedge fund interest looking to “tap Asia as a source of funds as well as a source of excess returns,” over the next year.

Singapore Squeeze?

While this is great for the country, is it so good for the people and the businesses already in existence there? Apparently there is the fear that “the increasing number of global hedge funds is unlikely to crowd out smaller Singapore-based managers.” There will however, be space for “large and niche players” as long as they keep adding “value to investors.” There is now more focus on “transparency and risk management by investors post-crisis,” also, which will lead to hedge fund managers around the world developing their “mid-bank office infrastructure.”

It’s great that Singapore is providing such an attractive environment for financiers around the world and that for sure will help the country’s economy. But at the same time, it has to ensure it looks after its own.

Germany Goes to Chinatown?

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Well, not exactly. But there will be some mega-German investments in China. BMW is currently planning to advance development of its work in China with “investments to increase manufacturing capacity.” According to the company’s board of management chair, Norbert Reithofer, the Chinese really like the BMW vehicles and “anticipate” more growth for the company for the future.

Mega Monies Investments

Hence the company in Germany is combining its efforts with their “joint venture partner Brilliance” in an effort to further develop the investment monies it announced before which was already significant at EU 560m. This will be taking place in Shenyang which is where their Chinese facility is. Now, the figure will be increased to EU 1bn.

This extra money will be split between BMW and Brilliance and be utilized for the construction of paint shop, press shop and to advance the Tiexi plant’s infrastructure in anticipation of greater production capacities hoped for the future.

German-Chinese Manufacturing Relations

Germany has had a good relationship with China vis-a-vis investments for a while now. For the last six years, there has been production in China of both the BMW 3 and 5 Series. Around a year and a half ago, BMW Germany said it was planning on constructing a second production plant in China “with the BMW X1 slated to begin production there in 2012.” Further, this renders China as BMW’s “third-largest market worldwide, with 167,116 vehicles sold in China during the last financial year.” The plan is that there will be an expansion of over 100,000 vehicles per annum at the first facility (Da Dong) and then at the second one, 200,000.

Indonesian Investments

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Indonesia and Malaysia Join Forces

There have been substantial efforts made to encourage companies from Indonesia to make investments in Malaysia which, has also resulted in a re-balance of “bilateral investment between the two friendly neighbors.” According to Datuk Seri Mustapa Mohamed (International Trade and Industry Minister for Malaysia), various companies from Indonesia have been discussion four memorandums of understanding (MoUs) with four companies in Malaysia for possible investment opportunities there. He pointed out that once negotiations are completed, there will be a signing ceremony in Malaysia.

Business Summit

The Asean-EU Business Summit takes place today along with the Asean Economic Ministers’ Meeting, which Mustapa is attending. He is using these meetings to meet up with various figures in the Indonesian corporate world who are involved in these possible investments.

Origins of Success

The way it all started was when Tan Sri Muhyiddin Yassin, Deputy PM of Malaysia, came to Indonesia and met with industry “captains” in the industry a year ago. This was what led to such an optimistic response from investors in Indonesia. This led to Malaysian companies inviting “Indonesian Chinese corporate figures from the Indonesian Chinese Chambers of Commerce and Industry to Malaysia in February to explore investment prospects in Malaysia particularly in projects slated under the Economic Transformation Program.”

The good news for Indonesia is that the economy has grown so fast. But this has resulted in the country’s businessmen looking for investment possibilities outside of the republic. Now Malaysia has invited Indonesians to use its country “as the platform to set a basin foreign investment.” These days Malaysia is definitely doing better vis-à-vis investments between the two countries as trade is up to over $2bn and Indonesia’s is $600m in Malaysia.

Awesome Asian Achievements? Coming Soon

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Asian Job Creation Scheme

The economic climate and job potential in Asia is about to get a kick-start. A group of economic development officials led by Gov. Bob McDonnell just set out on an “11-day job creation and economic development marketing mission,” to China, Japan and South Korea at an estimated cost of $278,000. This scheme will be financed by taxpayers. He is being joined by Jim Cheng, Secretary of Commerce and Trade, Todd Haymore, Secretary of Agriculture and those connected with Virginia.

The group is Virginia Economic Development Partnership which will – through the efforts – be able to try and develop relations with various companies and potentially acquiesce new clients for their projects as their will be a promotion of various investment/business opportunities hopefully also resulting in “job creation initiatives throughout the Commonwealth.”

Project Gets First Lady Backing

Not only is First Lady Maureen McDonnell supportive of this great project, she is showing it by being part of the mission. McDonnell will be traveling to China and South Korea “focusing her efforts on promoting tourism and the Virginia wine industry.” Her husband believes they have much to offer, offering “a great tax, regulatory and litigation environment,” amongst other incentives.

There will be meetings with CEO’s and business executives from around the world who will be told about the benefits of investing in Virginia. It is essential that jobs are created for “our citizens” who need them he said and thus the company “will not sit by and watch as the jobs….are awarded to other states and countries that choose to be more proactive and visible.”

Worldwide Job Creation Competition

It seems that right now there is a lot of competition to try and get more jobs in the private sector area that is set to “power and define the 21st century economy.” McDonnell wants Virginia to “win that competition,” which will lead to extra “jobs and opportunities” for the citizens to ensure a “better and stronger Commonwealth in the years ahead.”

Escalating Chinese Exports

In terms of the export markets, things are going well for China now. In 2000, china ranked number 14 but now it holds the number 2 position. This is why it is now a great environment to receive McDonnell and his mission in an attempt to “promote Virginia’s location advantages to approximately key 100 business executives.”

There is a great chance that this mission will be successful since McDonnell has done it before when he went to Europe last year. At the time he “helped close a lucrative economic development deal that led to the company investing $28.3 million to expand its O’Sullivan Films operation in Winchester.” Over 150 new jobs were created there following this.

So let’s hope McDonnell does it again and Asia’s job market will really benefit too.

Peachy Pakistani Possibilities

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Great Investment Opportunities in Pakistan

Despite the somewhat trying environment in Pakistan, according to Syed Yousouf Raza Gilani, the country’s Prime Minister believes that the country offers amazing investment opportunities for outside investors. Indeed, if you look at the stats, Gilani is probably not wrong. As he claims, the fact that over seven hundred companies have been making such investments in the country proves that it presents “lucrative opportunities.” Otherwise these companies wouldn’t be advancing. In addition, the PM claimed it was merely “propaganda” vis-à-vis his country’s security situation and that foreign businessmen should ignore this and instead choose to “invest in diverse sectors for securing tremendous dividends.”

Gilani Goes Gabbing

So Gilani went to France. Arriving two days ago, he is there to discuss defense and economic matters. There was also a signature on a Memorandum of Understanding between the two countries in an effort to develop a Joint Business Council that is meant to encourage “mutually advantageous trade.”

Despite what Gilani is saying however, there has been concern over rather pricey taxation for those investing in Pakistan. This was also discussed with Hina Rabbani Khar (Pakistan’s Minister of State for Economic Affairs) asking the French entrepreneurs who were voicing this complaint to “provide detailed proposals either directly to the government or through their embassy so that these might be looked into and considered in the next budget.”

Pakistani Perception Problematic

According to Gilani, there are huge misconceptions vis-à-vis what is really going on in Pakistan. He is not happy with how the media has been portraying things and urges them to refocus on what is actually going on with the country and the real issues it is encountering while at the same time battling the country’s problems of terror. As well, French potential investors should come see for themselves; visit the country and check out how investors succeed in Pakistan and have been doing so for years.

So there is a lot of good news in Pakistan. Despite what the media portrays and what we thus see on our TVs, when it comes to investment opportunities, rather than believe what we see/hear, if we are serious about making a rupee or two then we need to take a plane to Pakistan ourselves.

Thailand Cambodian Trade News

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Border Clashes Negatively Impact Trade

There’s going to be trouble with the Asian economy, and a lot of it. That’s if the situation between Thailand and Cambodia continues. Currently the border clashes there are so detrimental to good sentiments between the two countries, that even though trade is developing, without an end to these clashes, the market share of Thailand goods in Cambodia will be reduced.

According to Kasikorn Research Center (KRC), what will happen is that Thai exporters and potential business investors will lose confidence in placing their businesses in Cambodia. In addition, other countries will start putting pressure on them to take business elsewhere, especially Vietnam.

Good Trading Between Thailand and Cambodia

But it would be a real shame if things went sour. Investment between Thailand and Cambodia has been increasing continuously over the last few years from $1.4bn in 2007 to $2.5bn in 2010. Thailand has been benefitting from this vis-à-vis trade. In addition, trade between the two countries accounts for at least 70 percent of overall trade – that is a huge amount that would be devastating for both places if it things stopped going well.

It’s not all been great news though. In March 2011 there was only a slight increase in export volume. Also, due to border clashes, there was a drop from 34.9 percent in 2008 to 29.9 percent in 2009. There was a large plummet of Thai investment in Cambodia from the 2008 figure of $30.7m to the 2010 figure of $1m.

Vietnam-Cambodia Trade Figures

Consequently there was additional merchandise from Vietnam to the Cambodian market with an increase of 19.5 percent in 2008 to 23.7 percent in 2009. But Vietnamese exports to Cambodia also increased in 2010 by a significant 35.3 percent, culminating in $1.5bn. But anyway Vietnam ranks as Cambodia’s largest investor with “an accumulated investment value of around $49.5m. Thailand comes in second at $47.2m, and Singapore in third place at $24.9m.

So there is work to be done. It would clearly be a huge economic shame if the political situation between Thailand and Cambodia wasn’t resolved – and fast.

Foxy Financial Females?

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Are Asian Women Financially Savvy Today?

Years ago the answer for sure would have been a resounding “no.” But today things are somewhat different. It seems that women in Asia (especially those married, 30+, in the workforce) know their won from their yen and their level of competence is likely to increase further “especially among the younger generation.”

For example, women from Thailand topped financial planning (87) and investment (69.3) scores for financial literacy but Vietnamese women also did pretty well, scoring 70.1 overall, placing them in fourth place. There wasn’t much to sniff at with women from the Philippines either (who did extremely well in Financial Planning), but those from Korea and Japan could probably learn a lesson or two on how to get more financially in-the-know.

Survey Assesses Savvyness

It was the MasterCard Index of Financial Literacy that took a survey of these countries. The questions were posed to 24 markets around APMEA (Asia/Pacific Middle East Africa). It looked at three main areas: Basic Money Management (budgeting, savings and credit responsibility); Financial Planning (their understanding of financial products and services as well as ability to make long-term financial plans); Investment (understanding of risks and products associated with investments). In general, Asian women as a whole did best in Financial Planning.

In developed markets it was women from Australia and New Zealand who were most successful in their financial knowledge. Females from Singapore are pretty good at basic money management but were pretty clueless vis-à-vis anything to do with investments. But when looking at financial literacy, India and China don’t seem to be all that with it.

According to VP of Communications for Asia/Pacific, Middle East and Africa, MasterCard Worldwide, Georgette Tan, “this new MasterCard Index has certainly provided us with fresh insights to women’s aptitude for and knowledge of managing their finances. While it is encouraging to see that women across Asia/Pacific have some degree of financial literacy, it is also apparent that there is still work to be done to improve levels across the board.” This is important as complexities increase in the financial world resulting in a necessity for women to become “more financially confident and competent.” MasterCard also seeks to give more power to these women.

Japan Causes Toshiba Tension

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Japan’s crisis has led to a downturn in Toshiba investment.  According to one of the corporation’s American partners (NRG Energy), there will be no additional investment in a Texas nuclear power project, due to the “Japanese nuclear plant” crisis.  There was the intention of developing a further two reactors near Houston but now David Crane, the company’s president has said that the recent crisis created “multiple uncertainties around new nuclear development in the United States which have had the effect of dramatically reducing the probability [of constructing reactors in the South Texas Project] in a timely fashion.”

US Impacted by Japan’s Crisis

This announcement came in reaction to the Japanese crisis.  NRG – as a result of what happened in the Asian region – “will not [be] invest[ing] additional capital in the STP development effort.”  It has been said that this indicates that the Japanese crisis “has directly affected the US nuclear power industry.”  It remains unclear as to whether Toshiba will move forward with its project with other partners.

New Toshiba Projects

But despite its reservations vis-à-vis the Japanese crisis, Toshiba is still forging ahead with other new and exciting projects.  It is due to “launch its first tablet computer” in a couple of months and, according to company’s digital products and services unit president Masaaki Oosumi, “attempt to gain a 10 percent share of the global tablet market by 2013.”  It is an impressive PC tablet, based on Android’s 3.0 operating system, priced at approximately ¥60,000 (US$730) in Japan.