Posts tagged investment
The World Bank Group (WBG) has announced it will set up a new office in Singapore, its first outside Washington DC. It said the new branch will employ over 70 people within three years, including director Bert Hofman, the bank’s current Chief Economist for the East Asia region.
The WBG office’s main purpose is to advance private-sector investment for infrastructure projects in East Asia’s developing regions, with ready access to Singapore’s large commercial banks and established companies. Channel NewsAsia reports it will also provide services through its Multilateral Investment Guarantee Agency (MIGA), which has experience with complex infrastructure projects and supports investments into and from Asia “by issuing risk guarantees to equity sponsors, banks, funds, and other financial institutions.”
source & article: Channel NewsAsia
There has been a ‘wave’ of foreign direct investment (FDI) into Malaysia this year, totaling RM31.7 billion (US$10.6 billion) to the end of July 2011. More than half of this has flowed to the manufacturing sector and the top sources are Japan, Singapore, the Netherlands and Taiwan.
Malaysia’s Minister of International Trade and Industry, Mustapa Mohamed, announced the figures and said government initiatives such as the Economic Transformation Programme (ETP) had attracted international interest. Domestic investment had also improved, with RM4.3 billion ($1.44 billion) also going to manufacturing projects.
Business Times reports a breakdown of manufacturing investments shows RM6.5 billion ($2.2 billion) went to electronics and electrical products, RM2.4 billion ($804 million) to basic metal products, RM1.7 billion ($570 million) to chemicals and chemical products, and RM1.1 billion ($369 million) to food manufacturing.
Mustapa also said the figures reflect a shift towards high-value-added, more capital intensive (investment per employee) industries as Malaysia became less competitive at the lower-pay end against countries like China and Vietnam. He promised more new opportunities and growth areas as the ETP chases its 2020 goal of RM1.2 trillion ($40.23 billion), 92% of which the government wants to come from the private sector.
Total investment in Malaysian projects, including both foreign and domestic, was RM47.2 billion ($15.8 billion) in 2010.
source & article: Business Times
Indonesia is considering tax holidays for major foreign direct investors, targeting new and existing businesses in an attempt to bump the country’s FDI up to a total Rp240 trillion (US$28.2 billion) by the end of 2011.
Finance Minister Agus Martowardojo said details of the plan were still being discussed, but would probably feature 5-10 year tax breaks for investors in the base metals, telecommunications equipment, oil refinery, petrochemicals, machinery and renewable energy industries.
The new plan would also cover businesses which had been in operation less than a year. Projects such as a $6 billion joint venture by South Korea’s POSCO, a $4.5 billion petrochemical complex by Honam Petrochemical Corp (also of South Korea) and a $8-9 billion oil refinery from Kuwait Petroleum Corp were said to be waiting for an announcement on foreign investor tax breaks before going ahead.
Foreign direct investment (FDI) into Indonesia in Q2 is already up 21% on the same period last year, thanks mainly to the mining sector. The government is also mulling plans to give tax holidays to smaller investors employing 100-300 people, determined to take Indonesia’s economy into the global Top 10 by 2025 and making much-needed improvements to the country’s infrastructure.
More companies listed on the Bursa Malaysia (Malaysian stock market) are potential acquisition targets for Japanese companies as investment continues to flow in, thanks to a strong yen and a geographic diversification drive gathers pace in Japan.
The momentum was already underway before Japan’s 11 March 2011 disasters highlighted the need for more offshore activity. Between January 2009 and July 2011 Japan was involved in 513 M&A deals worth US$14.2 billion in emerging Asia, reports The Edge Malaysia. This figure includes Chinese and Indian deals as well as those in Malaysia and Indonesia.
Focusing on Malaysia alone, however, Japanese FDI rose 537% year on year in 2010 (compared to 109% in other Southeast Asia), accounting for 12% of all foreign direct investment inflow. Japan was involved in 34% of Malaysian M&A activity.
But this activity might not be what you’d expect from Japanese deals, and is certainly different to those of the previous two decades. UOB Kay Hian Malaysia Research said it’s not the electronics and electrical sector attracting Japanese interest this time. Instead, the Japanese are looking at logistics, financial, healthcare and consumer industries, as well as heavier industries where Malaysia offers a better deal on energy and logistics costs. The research house said Japanese companies were also prepared to pay more for greater control of their acquisitions, like Asahi Group’s purchase of Malaysian bottler Permanis, and Mitsui & Co’s 30% stake in Integrated Healthcare Holdings. Companies that already trade with Japanese firms are seen as more attractive.
source & article: The Edge Malaysia
Longer-term investment inflows into Indonesia are replacing riskier short-term investments, a condition showing more confidence and more favorable to economic growth.
According to The Jakarta Post, Bank of Indonesia (BI) data shows foreign direct investment (FDI) increased from US$2.48 to $2.9 billion in the first quarter of 2011, a 17% rise. At the same time, the trend was reversed in shorter-term foreign portfolio investment (FPI) went from $6.1 billion to $3.56 billion.
BI spokesman Difi A. Johansyah said investment loans rose 29% on a year-on-year basis as of May 2011, and would build Indonesia’s economic capacity for growth without negative impacts, like economic overheating. Increased production capacity would ensure ample supply to meet demand, mitigating inflation.
The trend will move even further towards FDI and longer-term investments should Indonesia achieve investment-grade rating from Moody’s, Fitch Ratings and Standard & Poor’s, enabling influxes from large foreign institutional investors. Indonesia’s central bank also recently revised the country’s growth forecast for 2011 from 6.4% to 6.8% on improved prospects for investment and exports.
source & article: The Jakarta Post
Malaysia has launched a raft of new corporate governance proposals designed to build its image as a secure, investor-friendly destination.
The five-year Corporate Governance Blueprint makes a total of 35 recommendations to improve transparency and disclosure, and ensure company directors remain accountable through continuing education. Chairman and CEO roles will be separated and an individual may act as an independent chairman for a maximum (and cumulative) nine years. Company directors will also be limited to a maximum five directorships.
Whistle-blowing obligations will be extended through existing legislation to corporate advisers and even secretaries. Poll voting will be mandated by shareholders for related-party transactions and proxies will not be allowed to vote by show of hands where a shareholder has nominated more than one.
The Malaysian Securities Commission (SC) will engage in a public consultation and feedback process on its proposed changes, particularly those relating to CEO/Chairman division and poll voting. It will also set up a working group and special task force to garner opinions on other proposals like: half-yearly reporting, electronic voting, a new code of conduct for institutional investors, director compensation, and third-party funding of litigation to empower shareholders.
According to Business Times, Malaysia’s capital market has grown at an annual 11% since 2000, outstripping the economy and going from RM718 million (US$240 million) in 2000 to RM2 trillion ($66.88 billion) today. The country’s investment management and Islamic finance industries have also reached significant sizes. Zarinah Anwar, the Securities Commission chairperson, said concerns over efficacy of the markets and ability to manage investment risks still needed to be addressed, while the new measures would elevate standards and “inculcate a good corporate governance culture.”
source & article: Business Times
With Indonesia on track to achieve investment-grade credit rating by the end of 2011, it’s time to look at another large Southeast Asian economy looking to follow suit. The Philippines Department of Finance is confident the country can achieve the same investment-class rating by 2013, after a budget surplus and government measures to reduce spending.
Fitch Ratings raised the Philippines long-term foreign currency bond rating from BB to BB+, one step below investment grade, while Moody’s Investors Service raised its rating on foreign and local currency bonds from Ba3 to Ba2. Philippines Finance Secretary Cesar V. Purisima said it was a historic fourth positive action on the country’s credit rating since the Aquino administration began 11 months ago.
Higher credit ratings lower the price of debt, allowing the government to borrow more efficiently to finance infrastructure and other projects. Investment grade also opens the doors to large institutional investors (such as pension funds) from wealthy countries, who are often blocked by law or internal rules from investing in anything below the grade.
The new administration has an agenda to improve the Philippines financial image abroad with initiatives to cut spending, combat corruption and promote fiscal sustainability. The central bank, Bangko Sentral ng Pilipinas, has also promised to play its part in keeping prices stable, maintaining growth and insuring against external shocks through sound monetary policy.
source & article: mb.com.ph
Japanese equities firm Nomura has released a glowing report on Indonesia through its local subsidiary there, saying “this country cannot be ignored.” Its abundant natural resources, young and large population, and decade of reforms are all factors contributing to Indonesia’s current and future prosperity.
It was Nomura Indonesia’s first research report, and the company is interested in setting up a Jakarta brokerage to capitalize on a country which “finds itself in the tail winds of some of the world’s most dynamics economies” and also expressed confidence Indonesia would attain investment-grade sovereign debt rating by the end of this year.
There were the oft-repeated calls for more spending on infrastructure and further reforms to attract investment. The report listed 10 points or ‘development signals’ which needed to happen for Indonesia to reach 8% economic growth, which included opening the service sector to foreigners, passing a land acquisition reform bill, further eradicating corruption and developing the financial sector.
source & article: the Jakarta Globe
The Jakarta Globe reports a growing interest in Indonesia from large multinationals, especially those from the Middle East and India. Not surprisingly, most investments have been in the resources and energy sectors, but companies are also moving into the manufacturing, supply chain and retail sectors.
Many of the region’s economic powerbrokers are meeting in Jakarta this week for the World Economic Forum on East Asia 2011. The report quotes a representative from Abraaj Capital, the largest private equity group in the Middle East, North Africa and South Asia with about US$6.3 million in funds. They were impressed by Indonesia’s steady growth (over 6% last year and this year so far), sound monetary policies and inflationary curbs, all of which made Indonesia a major investment destination after China and India.
Indian firms the Essar Group, Tata Power and Reliance Power are looking at Indonesia’s resources and energy sectors to meet their country’s growing energy demands. Essar last year agreed to buy the Aries coal mine in East Kalimantan province, and is also considering investments in oil and gas, power plants and coal bed methane projects. US-based Carlyle Group, another private equity firm, also beat Japanese food & beverage giant Suntory to make its first direct investment in Indonesia, spending US$200 million for a 25% stake in GarudaFood.
source & article: the Jakarta Globe
Malaysia’s stock market Bursa Malaysia has enjoyed a sharp rise in foreign investment lately. This week, foreign participation topped 50% from May’s average of 30%. Foreign funds snapped up RM10.3 billion (US$3.4 billion) of local stocks as the market dipped and other ‘established’ emerging markest lost their appeal. The trend seems to be continuing into June.
Local funds were net sellers of RM1.3 billion ($432 million) in Malaysian stocks in May, while foreign funds were net RM1.6 billion ($532 million) buyers of Malaysian equities. The FTSE Bursa Malaysia Kuala Lumpur Composite Index was up by 24 points at the end of the month.
The UK’s Financial Times suggested investors were tiring of the more popular ‘BRICs’ emerging markets after news of sluggish growth, inflation and poor corporate governance. Foreign funds were adjusting their portfolios with a perception that Malaysia could handle inflation, and there were growth opportunities in oil and gas, property, plantations and renewable energy.
source & article: Business Times