Regional News

Tamil Nadul: Industrial Hub

by

Making it Big for the Japanese

It seems that Tamil Nadu (located on the Coromandel Coast of the Bay of Bengal in India), might be getting industrial hub status for Japan.  According to an article in IBN Live, various Asian companies have been “growing four-fold in the state during the last five years and plans are underway to set up an industrial township in Mahabalipuram.”

Omega Project

Right now, around 70 percent of the land has been acquired.  According to an official, the Omega project agreement should be finalized “soon.”  All in all though, it will take around a decade to complete, with the first phase due for completion in around half that time.  There has been a quadrupling of the firms from 2006/7 where it stood at around 65 companies to today’s figure of 245.  Anticipation by the state is that this will increase to 300 by the end of 2011.

Attraction of Japanese Investments

Apparently these days, Japanese investments are very attractive in China.  This is because the state may view it as “top government officials from power, Metro Water, non-renewable energy and ports provided insights into where the investments are possible in the infrastructure sector between the two countries at a seminar.”

Japan’s Interest in Chennai

What makes Chennai (Tamil Nadu’s capital city) so attractive to Japan?  Possibly it is due to the fact that around 30 percent of Japanese firms are working in India.  According to Chennai’s Consul-General, Consulate General, Masanori Nakano, “we see the state as being close to the South East Asian countries and as a gateway to the West Asia, Africa and Europe. Availability of highly skilled manpower and investment-friendly policies were the other advantages.” Further, an economic co-operation has been signed between JETRO (Japan External Trade Organization) and the State Guidance Bureau.

India Investment Drop

by

Last month saw an all-time foreign institutional investment (FII) drop in India through participatory notes (P-Notes).  As a recent report detailed in Business Standard noted, the figures dropped to less than 10 percent for “the first time since 2003.”  According to director of institutional equities and chief strategist of Padmakshi Financial Services, Sailav Kaji, “many P-Note investors had built up short positions in the earlier months. These shorts would have got squared off in the rally and internally adjusted,”

There was an increase of P-Note exposure from January to May from Rs 1.34 lakh crore to Rs 1.61 lakh crore “without corresponding inflows into the Indian markets.”  But then the following month things took a nosedive.  Between January and May, although Indian markets were extremely popular, receiving “net inflows of around Rs 700 crore, suggesting most positions built up through P-Notes could have been short positions.”

June Jaunts

So what happened in June?  What happened from the high of the previous five months?  It wasn’t great when the country encountered deregulated diesel prices.  That was probably what led to the Sensex rally that according to brokers, “consumed many of these shorts.”  Then there were worries that there would be another P-Notes crackdown which caused P-Note investors to move their monies to the standard FII route.

Further, P-Note issuers were required to give details of the notes’ end beneficiaries on “an upfront basis regularly” At the start, investors who wanted to remain anonymous, or those who didn’t make an official registration, would veer towards P-Notes.  There has now been a request that P-Notes will only be given to those individuals “regulated by an appropriate foreign regulatory authority and should be issued after compliance with ‘know your client’ norms.”  Once these rules were put in place, there was an average of 15-16 percent drop of P-Notes’ share during the bulk of 2009/10, “down from 35-38 percent in 2007/8.

PTT Pcl Investment Plans

by

The PTT Pcl has big plans. The firm – Thailand’s largest energy firm and third largest oil and gas company according to market value – has plans for investments of $100bn in the next decade.  According to the company’s Chief Executive Prasert Bunsumpun, at the end of this, it is anticipated that annual group revenue will reach $200bn.  The company controls over “30 petroleum, gas exploration, petrochemical and refinery businesses.”

Spending Plans

So, the next question is, how would the money be allocated?  Around 50 percent of it would go towards foreign investment; the remaining half to petroleum exploration and production.  First though, the plans need to get through the board.  So by the end of this month the five-year plan is being put to the board.

According to an article in BusinessWeek, with the plan, the expectation is that the PTT will invest approximately 300bn baht. Over 400bn baht is due to go to PTT Exploration and Production Pcl (PTTEP) and over 200bn baht to the refinery and petrochemical areas in which it works.

Coal Boosts

In addition, as Bansumpun pointed out, the PTT plans to “boost its coal output to 30-40 million tons in 2015 and to 70 million tonnes in 2020 from 10 million tons now.”  It plans to do this once it has acquired Straits Resources Ltd., (Australian coal miner).

Vietnamese Investment Interests

by

Laos, Land of Opportunity?

Just yesterday, a seminar took place on investment possibilities and cooperation at the Laos Vietnamese embassy.  Over two hundred Vietnamese business representatives were in attendance.  Ta Minh Chau, Vietnamese Ambassador, addressed the seminar and pointed out that Laos is a “peaceful country” with huge potential in many areas, especially financial.  Vietnam and Laos have a “special relationship,” with significant support from the Lao Government that has worked hard to establish optimistic and facilitative conditions for the thriving of Vietnamese business investments there.

Indeed, such good relations can be witnessed in the success various Vietnamese businesses are enjoying in Laos, most notably, the Hoang anh-Gia Lai Group, Lao-Viet Bank, Long Thanh Golf, and Song Da Corporation.

In addition, there are many areas in Laos that Vietnamese businesses could be interested in, such as: coffee, rubber, cotton, banking, agriculture and more.  According to a news report the embassy was asked to give Vietnamese  businesses, “information on the legal requirements of both countries to facilitate their investment in Laos.”

It seems that Laos is quite a popular place for foreign investments these days.  According to the Investment Promotion Department of the Ministry Planning and Investment, India is now ranking in the top 10 foreign investors there with more than $359m.  Other countries on the list are: Australia, China, France, Japan, India, Malaysia, Republic of Korea, Singapore, Thailand and Vietnam.  Thailand is definitely the number one investor, ranking in at over $2bn.  The most popular area for investment is the field of electricity.

Big Burmese Bucks

by

In the last year, Burma was the recipient of $20bn in foreign investments.  Not only is this figure alone  impressive, but it is a huge development when looking at last year’s figure which was $302m.

So where did all of this money come from? Well, according to a recent BBC News article, it seems the Chinese are pretty big fans of Burma, making the largest investment of foreign countries, mainly in power-based projects.  Indeed, according to another Chinese-investment-based news report, Chinese companies have been the financier of a great deal of Burma’s major hydropower projects, despite political unrest in the region.

It has not been an easy ride all the way for China making these investments though.  Nonetheless, according to the Ministry of National Planning Development, its staggering $8.27bn investment from March 2010-11 was substantially larger than the next country in line being Hong Kong at $5.3bn and then Thailand at $2.94bn.

In addition, it was reported that “China is looking only for minerals, they are looking for economic benefit. That is all. That is damaging the country. They are not even making peace.”  So the fact that China has been desperate to make such efforts at pursuing investment returns, no matter what the cost, hasn’t been great for the country.  For sure it on some level makes sense for China to invest in places the West avoids as it doesn’t have to deal with such a high level of competition but still, various events including the work conducted “on the China-backed Tasang Dam in Burma proves that China is not immune from the same geopolitical concerns that keep others from parking their capital in ‘rogue states.’”

Political Impacts

Of course, the political scene is bound to have an impact on all of this too.  When polls were taken in Burma last November, it was the military based parties that won the most amount of seats.  Indeed, just looking at the 2008 constitution, a staggering quarter of seats were anyway reserved for this group.  It might have been just this fact that led to the criticism of polls by western nations and opposition groups; it seems that there is no choice pretty much, but to back a military-based party.

Big Bahrain Banknotes

by

Good times in Bahrain vis-à-vis its business sector. Recent news from the region is that according to a Yahoo news article, its “business firm sector saw strong first quarter growth with an increase of more than 40 percent in managed assets compared to last year.”  Principle investments also jumped the equivalent of $325.22m.  According to Rahman Al Baker (CBB Executive Director of Financial Supervision), “this sector has shown substantial growth since its inception and still is promising further growth in the coming few years.”  Now that has to leave Bahrainians smiling, or at least its business people.

IB Breakthrough

It seems that one of the reasons for this is the development of the IB license.  Before that was in the place there was an “antiquated and cumbersome licensing process for firms wishing to provide investment products and services like asset management and brokering and advisory services.”  The introduction in 2006 of this new one by the Central Bank of Bahrain (CBB) has led to the escalation of IB’s from 22 to 51 in five years.  As Baker pointed out, “the creation of this license has attracted a number of prominent regional and international financial institutions to establish investment business firms in Bahrain.”

Great Potential for Bahrain

All of this spells great news for Bahrain irrespective of the “economic uncertainty” plaguing major parts of the world.  This led Ayman Al Tajer (CBB Director of Financial Institutions Supervision Directorate Mohammed) to feel “optimistic” about the country’s “ultimate recovery and growth.”  He said that “the global economic crisis had put pressure on the region’s capital markets and investors.  However, it is an established fact that any crisis or slowdown is a time phase of a given economic cycle and problems would always bring about opportunities.”

Bulgarian-Turkish Investment

by

According to a recent report from Bulgarian News Agency BTA, Trakia Glass Bulgaria which is owned by Sisecam (a Turkish-owned glass-maker) – is due to make a $60m investment “in capacity expansion in 2012.”

As reported in a news article on the web, these funds will be put towards “increasing the capacity of an existing tableware furnace and opening a second furnace at its plant near Bulgaria’s northeastern town of Turgovishte.”  This upgrade will do a lot.  Indeed, the current furnace’s daily glass output will be expanded by a staggering 18 tons.  As well, at the new facility, there will be an increase in production of up to 200 tons of tableware glass each day.

As well, at some point, this will lead to a job-creation scheme and provide a further 200 jobs.  Right now anyway the employee count at Sisecam’s tableware glass unit stands at 1,000.  Just a few months ago, earlier this year, the fifth production facility was opened at the plant which is set to “manufacture motor vehicles.”

To date, the invetment in the Bulgarian unit made by Sisecam has reached $405m.

Good News for Indian Economy

by

When a country gets a big investment, not only is it good for the company bringing the capital, it’s also great for the recipient country.  Thus, both India and Tata Consultancy Services (TCS)  should be smiling right now, according to a recent report in Money Control.  The AMR contract (automation of metering and billing) has just been awarded to TCS “of high tension industrial consumers in Haryana.”

According to “an official spokesman of power distribution company Uttar Haryana Bijli Vitran Nigam (UHBVN), the contract will involve 3,200 consumers in 11 districts.  These include: Panchkula, Ambala, Yamuna Nagar, Kurukshetra, Kaithal, Karnal, Panipat, Sonepat, Rohtak, Jhajjar and Jind.”

In addition, the project is meant to be finished in the next half a year.  Much of the work will be based on the most up-to-date GPRS technology and is the first time this has been used in Northern India (with the exception of Delhi).

GPRS Use

All the HT Industrial consumer premises will receive GPRS modems and meter data “will be transferred to server installed in Head office at Panchkula through these modems.”  Through the project, the consumers’ meter reading will be “transferred online to the headquarter.”  What’s great about the project is that it will require no human intervention because of the use of “automatic meter reading, billing and regular data analysis.”  As well, there will be the opportunity for close observation of the consumption of electricity that will “help the UHBVN in preventing the losses due to pilferage of power.”

Improved Accounting

In addition, this project is set to improve the accuracy of billing and make savings in manpower.  In addition, the transfer of power factor will be covered, as well as “time of day consumption, tamper events and half load survey data etc.”

India Gets Mega Software Investment

by

When you have money, you can use it to make more money.  That’s how the rich get richer.  And it seems that the largest software services provider in India – Tata Consultancy Services (TCS) – is doing just that.  For the 2011-12 financial year, TCS will be making an investment of Rs 2,300 crore.  Nonetheless, in a report in Money Control, it seems that the company was questioned as to why it hadn’t given out a special dividend.  To which Ratan Tata responded, “it’s true that I could have paid you more this time. But we would also like to have some more liquidity in case we see opportunities to acquire companies. But eventually, you will get more dividend once we do that.”

TCS Attacks

The company has also been attacked as of late too.  But Tata insisted that the investigation of his company for “tax benefits on onshore services,” was unwarranted.  He pointed out that “we have not received any such notice. I am not too sure of the veracity of that report. Unfortunately, people read these reports and assume that they are gospel truth. But that is simply not true.”  Indeed, he also noted how TCS’s attrition rate was on a higher scale than “the industry average.”  He pointed out how well the company motivates its employees, by giving them an opportunity to “bag an overseas assignment, which gives them experience of working abroad. We are the largest when it comes to giving employees overseas assignments. So we do keep them motivated enough.”

Expanding Markets Globally

While it’s true that much of the TCS markets are in North America, the company is now also “in the process of doing more business in Europe and other markets. About revenue from large clients, we need big anchor clients.”

 

The Changing Face of the Chinese Economy

by

Many investment partners today have their eyes on China.  And for good reason.  Consumer spending in China is predicted to come close to doubling by 2015 in the retail sector alone, according to a new report by the Chinese Academy of Social Science (CASS).  And this comes on the back of spending that has already been increasing a great deal, as companies like ARC Investment Partners have noted.

From 2006 to 2010, retail spending saw an average growth rate of 18.1% each year, according to the National Bureau of Statistics.  It is Chinese women who are leading this wave of consumer spending and that are helping to secure the future economic growth in China.

As reported in a recent financial newsletter by Adam Roseman of ARC Investment Partners, 3000 women were recently surveyed in 12 Chinese cities by China Market Research Group to see what their spending habits are like.  85% of those surveyed said that they planned to spend more in the coming six months than they did in the previous six.

This key sector of the economic market in China has yet to be taped into by western brand managers – but women are not only influencing the household budgets in China.  They are influencing the overall decision-making in the home and even in the homes of their parents.  Forbes has actually reported, in a report last year, that half of the world’s 14 self-made billionaire women are Chinese.  Raised in one-child families in China, millions of girls have been told that their parents’ futures’ rely on them; and they are fulfilling those expectations to ensure proper care for their retiring parents.