Extreme climate conditions do harm develop west and devloping Asia as well. The diffrence is that devolop world is better prepared to face them with better resources and technology.
Thursday, December 6, 2012
Sunday, November 11, 2012
New trade partners
India and Japan to sign deal on rare earth trade http://t.co/MeZgxeZt -- China Business Watch (@ChinaBizWatch)
Tuesday, October 9, 2012
India too slow
India’s GDP Growth to Weaken to Slowest Pace in Decade: IMF | Economy Watch http://t.co/miFUFaOr -- EconomyWatch (@EconomyWatch)
Monday, October 8, 2012
Lesson
Facing an alarming economic slowdown, much of Asia needs to learn the lesson: service industries are the future http://t.co/MZUH79fh -- The Economist (@TheEconomist)
Sunday, October 7, 2012
Friday, October 5, 2012
Thursday, October 4, 2012
Wednesday, October 3, 2012
Thursday, September 27, 2012
Monday, September 24, 2012
Sunday, September 23, 2012
Indian reform-Finally
AFTER years of drift and sleaze, the Congress-led government of Manmohan Singh has found some pizzazz. The initiatives that the prime minister announced on September 13th and 14th are nothing compared with the “big bang” reforms of 1991 that set India growing and for which Mr Singh, then finance minister, was chiefly responsible. They do not even match the incremental reforms of Mr Singh’s first term as prime minister from 2004-09. Still, from an ageing man whose second-term performance has been feeble, they mark a welcome change. Businesspeople are suddenly less despondent.
Mr Singh began with a small but bold cut in diesel subsidies, which mainly benefit the better-off. As the oil price has risen and the rupee fallen, the subsidy bill has exploded—one reason why budget-deficit targets will be missed by a mile. He has also revived a push to allow foreign supermarkets to operate in India’s spectacularly inefficient retail sector, dominated by small shops. A fragmented wholesale-distribution network spoils a high proportion of fruit and vegetables before they reach the consumer. That hurts both farmers and the hungry.
Read more
Japanese Airlines-From bloated to floated
EVERY three months or so, employees of Japan Airlines (JAL), from the boss to pilots and ground staff, spend a day studying a little white book that is JAL’s turnaround manual. Some discuss it in department meetings every day. It sounds Maoist, but the prescriptions are cheerily Zen-like, reflecting the thinking of the man JAL credits as its saviour, Kazuo Inamori, an aged business guru. One of its mantras is: “Be thankful.” Indeed, JAL has a lot to be thankful for.
On September 10th JAL—lavishly supported by the government—at last emerged from its spectacular nose-dive into bankruptcy, pricing an initial public offering (IPO) at ¥663 billion ($8.5 billion), at the top of a range offered to investors. The price will make it more valuable than its national stablemate, All Nippon Airways (ANA), when it is relisted on September 19th, even though analysts say ANA has long been the better-managed airline. ANA has grumbled about the unfair advantages handed to its better-known rival.
It has shed all its jumbos since then, slashed its number of routes, reduced staff by a third, persuaded its unionised pilots and staff to take big pay cuts, and slashed its pension payouts by up to half. As a consequence, the latest results show its operating profit margin has surged to 17%, from negative territory in 2008. That is higher than some of the most profit-hungry low-cost carriers, such as Ryanair (see chart). It has made JAL, for a while at least, one of the world’s most profitable airlines.In many ways, the turnaround highlights the pros and cons of government intervention. On the positive side, the airline’s return to profitability has been stunning. JAL was one of those blue-blooded Japanese firms that put prestige far above profit: before its bankruptcy in 2010 the company once owned the world’s biggest fleet of jumbo jets, many of which flew half-empty.
More at
Japan’s energy security-Foot on the gas
WITH doubts running high about how long the Japanese government can survive, its decision last week to phase out nuclear power by the end of the 2030s looked half-baked. Sure enough on September 19th it dropped any pretence of a deadline, leaving open the possibility that at least two reactors under construction could operate until the 2050s.
The ambiguity has much to do with the general election which the prime minister, Yoshihiko Noda, has promised to call soon. Polling indicates that since the Fukushima nuclear disaster in March 2011 public opinion has turned firmly against nuclear energy. Yet big business argues that Japan’s economy will suffer if the phase-out occurs too quickly. Local governors whose prefectures host nuclear power plants also complain about the strategy.
For the time being, the government’s policy appears to be to pay lip service to a phase-out that it is too timid to implement, while also scrambling for alternative sources of energy. Even before the nuclear disaster, Japan was the world’s biggest importer of liquefied natural gas (LNG), and now consumes nearly a third of global output. But ensuring reliable supplies, as well as securing a good price, is becoming a foreign-policy headache.
read more
China nixes events to mark 40 years of Japan ties
TOKYO (AP) — Japan says China has canceled events planned to commemorate 40 years of diplomatic relations between the two countries, further signaling its anger over a simmering territorial dispute.
Japanese Foreign Ministry official Hiroaki Sakamoto confirmed Sunday that China has canceled the events, planned for Thursday. He did not provide further details.
China’s Xinhua News Agency, citing officials with the China-Japan Friendship Association and another government-affiliated group, reported Sunday that the events would not take place as planned. It said they would be held ‘‘at a proper time.’’
Calls to China’s Foreign Ministry were not answered Sunday.
Relations have sunk to their worst level in years as the two sides spar over islands claimed by both countries.
Malaysian jobseekers to face tough times in Q3
Employers predict that jobseekers in Malaysia will face a harder time in the third quarter of 2012, according to the latest survey by JobStreet.com.
Despite assurances from the government that the Malaysian economy is set to grow by up to six per cent, one third of employers (33%) feel that the general outlook will be slightly worse or much worse. This is a marked increased from Q2’s 22%.
The number of respondents who answered that the job outlook will be slightly better or much better has dropped from 47% to 31% for Q3 2012. The number of employers who felt that employment prospects would worsen increased by 10%, compared to the same period last year.
Almost half of respondents (46%) said that they will be hiring less people, replacing or filling essential positions only in the next 12 months. Another 11% said that they will not be conducting any hiring exercises in the near future.
The survey said that jobseekers with skills in sales and marketing, or marketing and business development, are the most sought after, followed by those with expertise in computer and information technology, accounting and administration.
Major industries such as manufacturing, information and communication technology, retail and wholesale trade, and finance were likely to have the lowest job growth in the next year.
Investment protection agreement marks new milestone in cross-strait relations
Two years of negotiations have finally resulted in the signing of the Cross-Strait Investment Protection and Promotion Agreement between Taiwan and mainland China on August 9, formally establishing an institutionalized cross-strait mechanism that strengthens protection of the lives and property of investors. The agreement encompasses Taiwanese businesses that invest through third areas, and marks a new milestone in cross-strait economic and trade relations.
Statistics compiled by the Investment Commission of the Ministry of Economic Affairs (MOEA) show that applications by Taiwanese businesses to invest in China amounted to a total of 39,891 cases with a total investment value of approximately US$117.4 billion between 1991 and the end of June this year. This accounted for about 63% of Taiwan’s total outward investment during the period, making China the biggest recipient of overseas investment by Taiwanese businesses.
Many Taiwanese companies have been struggling to develop their business in mainland China for years, and some have even moved the center of their operations there, but their investments have never enjoyed legal protections. Minister Shin-Yuan Lai of the Mainland Affairs Council (MAC) notes that the Cross-Strait Investment Protection and Promotion Agreement is a vital foundation for the protection of Taiwanese investors, “the first step in the establishment of safety,” and that it will help make the protection of Taiwanese businesses more complete and more institutionalized, and the investment environment healthier.
Statistics compiled by the Investment Commission of the Ministry of Economic Affairs (MOEA) show that applications by Taiwanese businesses to invest in China amounted to a total of 39,891 cases with a total investment value of approximately US$117.4 billion between 1991 and the end of June this year. This accounted for about 63% of Taiwan’s total outward investment during the period, making China the biggest recipient of overseas investment by Taiwanese businesses.
Many Taiwanese companies have been struggling to develop their business in mainland China for years, and some have even moved the center of their operations there, but their investments have never enjoyed legal protections. Minister Shin-Yuan Lai of the Mainland Affairs Council (MAC) notes that the Cross-Strait Investment Protection and Promotion Agreement is a vital foundation for the protection of Taiwanese investors, “the first step in the establishment of safety,” and that it will help make the protection of Taiwanese businesses more complete and more institutionalized, and the investment environment healthier.
Read more
Saturday, September 22, 2012
New war footing on Thai-Cambodian border
Since early January, Royal Thai Army (RTA) planners have prepared new plans to defend Thailand against potential attacks from Cambodia, a move that threatens to rekindle tensions along the two countries' contested border. The plan, drawn up by the RTA's 2nd Army Region and formally approved in April, represents a significant departure from previous Thai strategic footings vis-a-vis Cambodia and involves the immediate commitment of large regular army combat units along the border.
The new plan is highly unusual for the RTA and could be perceived as provocative given the lack of any immediate and realistic military threat from Cambodia. It would also seem to contradict the policy of the Yingluck Shinawatra administration, which has worked to ease tensions with Cambodia over a disputed land claim at the Preah Vihear temple that spiked during the previous Abhisit Vejjajiva-led government.
The last time that Thailand faced a threat of conventional invasion was in early 1979, when units of the Vietnamese army arrived on the Thai border after overthrowing Cambodia's Khmer Rouge government. There was an initial brief period of panic that the battle-hardened Vietnamese might continue into Thailand. Those concerns faded, however, when it became apparent that Vietnam was bogged down in Cambodia and China offered support in the event that the Vietnamese crossed into Thai territory.
The new plan is highly unusual for the RTA and could be perceived as provocative given the lack of any immediate and realistic military threat from Cambodia. It would also seem to contradict the policy of the Yingluck Shinawatra administration, which has worked to ease tensions with Cambodia over a disputed land claim at the Preah Vihear temple that spiked during the previous Abhisit Vejjajiva-led government.
The last time that Thailand faced a threat of conventional invasion was in early 1979, when units of the Vietnamese army arrived on the Thai border after overthrowing Cambodia's Khmer Rouge government. There was an initial brief period of panic that the battle-hardened Vietnamese might continue into Thailand. Those concerns faded, however, when it became apparent that Vietnam was bogged down in Cambodia and China offered support in the event that the Vietnamese crossed into Thai territory.
Read more at
Suu Kyi backs end of US sanctions
Myanmar opposition leader Aung San Suu Kyi was upbeat over the country's reforms in her first public address in the United States, urging the US to drop its last sanctions. Her optimism was tempered with warnings that democracy demanded the release of all political prisoners and the call for a clear reform timetable beyond the whims of the military and government.
Friday, September 21, 2012
Wednesday, September 19, 2012
Share those magical moments
Dear readers,
I have created a place in facebook for you to share your positive service encounters with the world.
Please record your positive experiences.
http://www.facebook.com/pages/WHO-WOW-US/219182861432518?ref=hl
Thank you
Amithe
I have created a place in facebook for you to share your positive service encounters with the world.
Please record your positive experiences.
http://www.facebook.com/pages/WHO-WOW-US/219182861432518?ref=hl
Thank you
Amithe
Tuesday, September 18, 2012
Saturday, September 15, 2012
Friday, September 14, 2012
Monday, September 10, 2012
BRIC ?
Have the BRIC Nations lived up to the Hype? | Economy Watch http://t.co/J3cUBIlm -- EconomyWatch (@EconomyWatch)
Saturday, September 8, 2012
China has approved plans for Rmb1tn ($158bn) in infrastructure spending
(Financial Times) -- China has approved plans for Rmb1tn ($158bn) in infrastructure spending, an investment push that analysts say will help support growth in the stuttering economy.
The money will be rolled out over several years and the government has not described the investments as a stimulus package, but the announcements nevertheless fuelled renewed optimism about China's prospects.
The domestic stock market surged more than 4 per cent in early trading on Friday, reflecting the hope of investors that China could be on the verge of turning the corner after two years of consistently slower growth.
"With clear signs of a worsening slowdown of economic growth, China's central government finally took real actions," said Lu Ting, an economist with Bank of America Merrill Lynch.
?
China's growth fell to 7.6 per cent in the second quarter, its lowest in three years, and data in recent months has pointed to an even steeper slowdown this quarter. Economic indicators for August, to be published over the weekend, are expected to show sluggish industrial output.
Analysts had long predicted that the government would intervene with more fiscal spending and monetary easing to cushion the slowdown, but the nation's top leaders have been very cautious and have only made mild moves so far.
Fear of overstimulating the economy, as happened in 2009, has been one major constraint. Officials also appear to have been preoccupied with politics as a once-in-a-decade leadership transition is set to take place later this year.
In the announcements over the past two days, the National Development and Reform Commission, a top central planning agency, has approved 25 urban rail projects, 13 highway construction projects, seven waterway projects and nine waste water treatment plants. The total cost of the projects is estimated to be about Rmb1tn, or 2 per cent of gross domestic product.
"We believe implementation of these projects will begin in the coming months, which will cause fixed asset investment growth to rise. The impact should start to be reflected in GDP numbers in the fourth quarter of 2012," said Zhang Zhiwei, an economist with Nomura Securities.
Projects spearheaded by the NDRC are seen by analysts as much more credible spending commitments than those announced by a series of local governments in recent months.
Local officials are keen to prop up growth, but they are struggling to find the means to do so, because their tax and land-sale revenues are flagging and they are effectively barred from borrowing money. By contrast, once projects have received the NDRC's stamp of approval, funding is usually a formality, with either banks providing the financing or the government arranging for bond issuances.
http://edition.cnn.com/2012/09/07/business/china-stimulus-infrastructure/index.html?hpt=ias_c2
Friday, September 7, 2012
SK Telecom
SK Telecom hit 5m LTE subscribers, adding 1m users in 46 days with an average of 33k new subs a day http://t.co/EY5l8Hc4 #SKtelecom #LTE -- Telecom Asia (@TelecomAsia)
Huawei India ?
How #Huawei, the global telecom giant, is Indianising its business model, culture and consumer products!! http://t.co/xoC736JY -- Bhavya Siddappa (@bhavis)
Tuesday, September 4, 2012
Lending in China
China Development Bank Steps Up Lending To Private Firms | Economy Watch http://t.co/ArDaFaqu -- EconomyWatch (@EconomyWatch)
NZ
New Zealand augments online government services http://t.co/Q0Qwl7Vk -- Telecom Asia (@TelecomAsia)
Child labour
Samsung To Review All Chinese Suppliers After Child Labour Accusations | Economy Watch http://t.co/O0cEacQb -- EconomyWatch (@EconomyWatch)
Saturday, September 1, 2012
A court in Tokyo has ruled that Samsung Electronics did not infringe on patents held by Apple,
A court in Tokyo has ruled that Samsung Electronics did not infringe on patents held by Apple, a victory for the South Korean company.
The patent was related to transferring media content between devices.
It comes after Samsung lost a key patent case in the US last week and was ordered to pay more than $1bn (£664m) in damages.
This is one of many cases brought to courts around the world by the two smartphone market leaders.
"We welcome the court's decision, which confirmed our long-held position that our products do not infringe Apple's intellectual property," said Samsung in a statement to the BBC.
Tokyo District Judge Tamotsu Shoji dismissed the case filed by Apple in August, finding that Samsung was not in violation of Apple patents related to synchronising music and video data between devices and servers.Sales ban
On 24 August, a US court ruled Samsung had infringed Apple patents for mobile devices, including the iPhone and iPad.
The company has vowed to continue to fight against Apple saying it will appeal against the US ruling.
Apple is now seeking a ban on sales of eight Samsung phones in the US market.
On 6 December, US District Judge Lucy Koh, who presided over the initial trial, will hear Apple's plea for an injunction against the Samsung phones, although it does not include the most recent Samsung phone to hit the market, the Galaxy S3.
Product designer Geoff McCormick strips down an iPhone to explain patents
Could Burma be the next emerging market miracle?
Not just green shoots, Burma's economy is set to bloom
In Rangoon's hotel lobbies anticipation is high. Brash Australian miners rub shoulders with hard-nosed American private equity investors. Indonesian infrastructure specialists and Japanese salesmen scout out the terrain.
Everyone here is eager to be first out of the starting blocks as the economy of Burma, a previously isolated country, opens up for business.
The opportunities abound, in raw materials such as gems, timber, rubber and gas, but also in catering for a population of 55 million in need of everything from healthcare to smartphones.
"I think this is the last virgin market left in the world, the last untapped market," says Vinod Chugani, an American-educated Singaporean.
"Twelve years ago, when I was in China, I felt the same rush."
In Rangoon's hotel lobbies anticipation is high. Brash Australian miners rub shoulders with hard-nosed American private equity investors. Indonesian infrastructure specialists and Japanese salesmen scout out the terrain.
Everyone here is eager to be first out of the starting blocks as the economy of Burma, a previously isolated country, opens up for business.
The opportunities abound, in raw materials such as gems, timber, rubber and gas, but also in catering for a population of 55 million in need of everything from healthcare to smartphones.
"I think this is the last virgin market left in the world, the last untapped market," says Vinod Chugani, an American-educated Singaporean.
"Twelve years ago, when I was in China, I felt the same rush."
Hands up who's ready to do business in Burma
Vinod Chugani is here to sell Panasonic's range of multi-line phones, rice cookers and projectors.
"There is a massive race going on. It's intense," he says.
"This is one of last frontiers, along with North Korea and to some extent Iran," says Romain Caillaud, who heads the Rangoon office of Vriens and Partners, advising multinationals entering Burma.
Burma also sits at a key geographic junction.
"Just look at the map and you'll see the location is strategic, at the crossroad between India, China, Thailand, in the middle of one of the fastest growing regions in the world," he says.Piles of cash
After 50 years the generals who governed Burma have stepped back and handed power to a nominally civilian government.
They have also begun the first tentative steps in reforming the economy.
And they have been rewarded with the suspension of sanctions by the West.
But 50 years of isolation from the global economy has taken its toll, above all on the financial system.
Vinod Chugani is here to sell Panasonic's range of multi-line phones, rice cookers and projectors.
"There is a massive race going on. It's intense," he says.
"This is one of last frontiers, along with North Korea and to some extent Iran," says Romain Caillaud, who heads the Rangoon office of Vriens and Partners, advising multinationals entering Burma.
Burma also sits at a key geographic junction.
"Just look at the map and you'll see the location is strategic, at the crossroad between India, China, Thailand, in the middle of one of the fastest growing regions in the world," he says.Piles of cash
After 50 years the generals who governed Burma have stepped back and handed power to a nominally civilian government.
They have also begun the first tentative steps in reforming the economy.
And they have been rewarded with the suspension of sanctions by the West.
But 50 years of isolation from the global economy has taken its toll, above all on the financial system.
Banking cash in Rangoon is a big job
At the main Rangoon branch of Yoma bank, customers wander in with plastic bags full of bank notes.
Their voices are barely audible above the whirring and clicking of mechanical counting machines, lined up like washing machines in a launderette.
A dozen staff work their way through the stacks piled high on the tables.
American financial sanctions and a home-grown banking crisis have undermined Burma's banking system, so that now most people simply keep their money in cash.
If you want to buy a car you go to the showroom with a box full of notes. If you want to buy a house you drive over a car full of money.
There are a handful of cash machines now in Rangoon, but none that work for foreigners. Credit cards can be used, for a stiff fee, only at a few top-range hotels.
All this may soon change, with the lifting of American financial sanctions.
But the rudimentary banking system is not the only obstacle to doing business.
At the main Rangoon branch of Yoma bank, customers wander in with plastic bags full of bank notes.
Their voices are barely audible above the whirring and clicking of mechanical counting machines, lined up like washing machines in a launderette.
A dozen staff work their way through the stacks piled high on the tables.
American financial sanctions and a home-grown banking crisis have undermined Burma's banking system, so that now most people simply keep their money in cash.
If you want to buy a car you go to the showroom with a box full of notes. If you want to buy a house you drive over a car full of money.
There are a handful of cash machines now in Rangoon, but none that work for foreigners. Credit cards can be used, for a stiff fee, only at a few top-range hotels.
All this may soon change, with the lifting of American financial sanctions.
But the rudimentary banking system is not the only obstacle to doing business.
A Youthful Populace Helps Make the Philippines an Economic Bright Spot in Asia
MANILA — In the upscale business district of Manila, a midweek crowd spills out into the street. The New York-themed Borough restaurant is pulsating to the beat of a Bon Jovi song, while young, hip Filipinos take shots of tequila from a passing tray and sing in unison.
Enlarge This Image
Jes Aznar for The New York Times
A company support center in Makati City, Philippines. Last year, the Philippines surpassed India as the world’s leading provider of voice-based outsourcing services.
“Whoa-oh, we’re halfway there!” the crowd sings. “Whoa-oh, livin’ on a prayer!”
The revelers have reason to celebrate. Times are pretty good in thePhilippines if you are young, skilled and live in the city. Young urban workers are helping to give the country its brightest prospects in decades, economists say.
With $70 billion in reserves and lower interest payments on its debt after recent credit rating upgrades, the Philippinespledged $1 billion to the International Monetary Fund to help shore up the struggling economies of Europe.
“This is the same rescue fund that saved the Philippines when our country was in deep financial trouble in the early ’80s,” said Representative Mel Senen Sarmiento, a congressman from Western Samar.
The Philippines has certainly had a steady flow of positive economic news recently. On July 4, Standard & Poor’s raised the country’s debt rating to just below investment grade, the highest rating for the country since 2003 and equivalent to that of Indonesia.
The Philippines is the 44th-largest economy in the world today, according to HSBC estimates. But if current trends hold, it can leap to the No. 16 spot by 2050. The Philippine stock market, one of the best performers in the region, closed at a record high after the recent S.& P. rating upgrade, and the country’s currency, the peso, reached a four-year high against the dollarat about the same time.
The gross domestic product of the Philippines grew 6.4 percent in the first quarter, according to the country’s central bank, outperforming all other growth rates in the region except China’s. Economists expect similarly strong growth in the second quarter.
“We have made a very bold forecast for the Philippines, but I think justifiably so,” said Frederic Neumann, a senior economist at HSBC in Hong Kong.
A high population growth rate, long considered a hindrance to prosperity, is now often seen as a driving force for economic growth. About 61 percent of the population in the Philippines is of working age, between 15 and 64. That figure is expected to continue increasing, which is not the case for many of its Asian neighbors, whose populations are aging.
“There are a number of countries in Asia that will see their working-age populations decline in the coming years,” Mr. Neumann said. “The Philippines stands out as the youngest population. As other countries see their labor costs go up, the Philippines will remain competitive due to the sheer abundance of workers joining the labor force.”
Many of those workers are feeding the country’s robust outsourcing industry. The Philippines, where English is widely spoken, surpassed India last year as the world’s leading provider of voice-based outsourcing services like customer service call centers.
According to the country’s Board of Investments, offshore call centers employed 683,000 Filipinos in 2011 and generated about $11 billion in revenue, a 24 percent increase from the previous year. The government is seeking to expand the industry and has said it hopes it will generate $25 billion in revenue by 2016.
The Philippines’ growing prosperity has also been driven by the 9.5 million Filipinos — almost 10 percent of the population — who work outside the country and who sent home about $20 billion in 2011. That is up from $7.5 billion in 2003.
Trinh D. Nguyen, an economist with HSBC in Hong Kong, said the Philippines had benefited from an increase in government efficiency and revenue collection, as well as aggressive actions to address corruption, like the impeachment of the chief justice of the Supreme Court and the arrest of former President Gloria Macapagal Arroyo on suspicion of accepting kickbacks and of misusing government lottery money.
“It is not only short-term growth that draws investors to the Philippines,” Ms. Nguyen said. “The fundamentals are there.”
But there are also real weaknesses in the country. Recent flooding, which by some estimates submerged 50 percent of Manila, illustrates a shortage of modern infrastructure that makes the Philippines highly vulnerable to disasters.
“The Philippines is hit with several deadly and devastating natural disasters every year,” Ms. Nguyen said.
But government officials have said that the recent flooding might actually help economic growth, because reconstruction will require an increase in public spending and the country will have to put into place programs to make it more resistant to the effects of natural disasters.
Another hurdle is the fact that the Philippines has traditionally underexploited its natural resources. The government estimates that there are 21.5 billion tons of metal deposits in the country, including large deposits of nickel, iron, copper and gold. But they have never been a significant driver of economic growth because extraction has been mismanaged, Mr. Neumann said.
In the shorter term, there are concerns that the country’s newfound prosperity has not sufficiently eradicated poverty.
Other countries in the region, most notably China and Japan, but also Thailand and Vietnam, have successfully developed export-driven manufacturing, bringing millions of people out of poverty and increasing the size of their middle classes. Manufacturing typically draws workers away from agriculture, which pays less. But many of the large foreign companies that financed such transitions to manufacturing in Asia have avoided the Philippines because of periods of political instability.
The service sector — including the young call center workers who were recently reveling in Manila — are helping drive an economic boom in the cities.
But that type of outsourcing still provides only about 1 percent of jobs in the country, according to data from the Asian Development Bank. And the strong sector does not create jobs accessible to farmers or to millions of other Filipinos in rural areas who seek a way out of poverty.
“While the Philippines’ business process outsourcing industry has grown impressively, it still employs a very small portion of the country’s work force,” noted Rajat M. Nag, a managing director of the Asian Development Bank. “It needs to aggressively develop its manufacturing sector to create more jobs.”
On Emerald Avenue in the Ortigas business district of Manila, where hundreds of call center workers pour out of skyscrapers to gossip and smoke, Mika Santos, 18, does not have much to say about the national economy. But she is very happy with her own situation.
After completing a two-year information technology course and passing an exam in English proficiency, she started handling customer service calls for a United States mobile phone company. She earns a comparatively high salary for an entry-level job, and her employer offers incentive bonuses, free meals and shuttle service.
Had she been born a generation earlier, she would most likely have worked as a low-income farmer or gone overseas to find work. “My parents didn’t have any opportunity like this,” she said.
This article has been revised to reflect the following correction:
Correction: August 27, 2012
An earlier version of this article misstated the Philippines’ rank among world economies as 112, rather than 44.
“The worst is probably over for India – we may be at, or close to the bottom,”
Gross domestic product (GDP) growth in India picked up pace in the April-June quarter helped by a rise in construction output, prompting economists to say the worst might just be over for Asia’s third largest economy struggling to return to the days of 8-9 percent growth rates.
Felix Hug | Photolibrary RM | Getty Images
The economy expanded 5.5 percent in the second quarter, beating consensus estimates and marking an improvement from the previous three months when growth came in at 5.3 percent - the slowest pace in nine years.
Economists expect India to better that in the coming months as commodity prices decline and a weak, but stable rupee makes its exports more competitive.
“The worst is probably over for India – we may be at, or close to the bottom,” Robert Prior-Wandesforde, Director of Asian Economics at Credit Suisse in Singapore told CNBC.
“The economy is losing some of the negatives that were hampering it before – oil prices are at a more manageable level, the lagged effects of the interest rate rises in 2010-2011 are fading,” he said, adding that he expects growth to move towards the trend rate of 7 percent in coming quarters.
The Reserve Bank of India forecasts growth will come in at 6.5 percent for the current fiscal year, while the government’s target is 6.7 percent.
Weaker oil prices – which have declined more than 10 percent over the last six months - help to contain India’s current account deficit as the country imports 70 percent of its crude requirements. Higher imports of oil and gold led the country’s current account deficit to widen to a record high of 4.5 percent of GDP in the January-March period.
Thursday, August 30, 2012
Foreign investors see huge healthcare potential in Vietnam
HANOI: Vietnam’s hospital sector is on the rise as wealthier Vietnamese are willing to pay more for better patient cares, which will help drive increased foreign investment in the sector in the years ahead.
A Vietnamese trainee looks on during an operation.
The fast-growing country of 86 million is the 13th most populous in the world. Along with a growing number of wealthy and middle-class citizens, Vietnam is one of the fastest-growing markets in the global healthcare industry.
The Economist Intelligence Unit recently predicted that total healthcare spending in Vietnam would rise from nearly US$7 billion in 2010 to $11.3 billion in 2015, an annual average growth rate of 10.3%.
However, the country’s healthcare system remains largely underdeveloped in terms of both the number and quality of hospitals, clinics and doctors. Vietnamese hospitals, with two or three patients per bed in some cases, are the area in most urgent need of upgrading.
The situation looks set to change now as a lot of foreign companies have arrived in Vietnam to explore opportunities in this untapped market.
Already there are a growing number of international hospitals and clinics in the major urban centres, with French and US companies the dominant foreign players in the market. More investors are expected to enter in the next coming years, including those from Germany, India, Singapore and Malaysia.
Last year, India’s Fortis Healthcare agreed to pay $64 million for a 65% stake in Hoan My Medical Corporation, one of Vietnam’s biggest private healthcare groups with six hospitals and many other clinics and facilities nationwide.
This year, executives of a number of hospitals and pharmaceutical companies from Germany and France have come to Vietnam. They are showing the most interest in high-end healthcare market, which mainly serves wealthy people and foreigners working in the country.
“We’re targeting the Hanoi and Ho Chi Minh City markets, where there’s a concentration of many high-income people,” said Michael Sprotte, director of Germany’s TSB Technology Systems Business.
A lot of Vietnamese people travel every year to the United States, Singapore, Thailand, South Korea and China for medical care. According to the Ministry of Health, up to 40,000 Vietnamese went abroad last years and spent $1 billion for medical services overseas.
While many diseases can be treated well in Vietnam, some wealthy Vietnamese prefer the luxurious and hotel-like private hospitals of Singapore and Bangkok, which have been drawing in affluent patients from around the developing world.
In January this year, VinMec, Vietnam’s largest private, hotel-like hospital, built by the leading property developer VinGroup, was inaugurated in Hanoi. It introduced a five-star hotel standard and incorporated 25 VIP rooms and two presidential suites.
VinGroup deputy chairman Le Khac Hiep said the group aimed to make VinMec the top-quality international hospital in Vietnam and Southeast Asia.
Besides helping reduce overloading at public hospitals, he expected high-quality healthcare service providers in Vietnam could help prevent the “foreign currency drain” that results when so many Vietnamese people go abroad for health treatment.
More upscale facilities are in the pipeline. Singapore-based Parkway Group is building an $80-million, 319-bed hospital in Ho Chi Minh City, expected to open in the first quarter of next year.
Other domestic companies will also invest $95 million to build an international-standard hospital with 500 beds in Hanoi, with Phase I to be completed by the end of next year.
http://www.bangkokpost.com/business/economics/301632/foreign-investors-see-huge-healthcare-potential-in-vietnam
Asia’s carbon challenge
Asia Pacific is expected to produce roughly 45% of the world’s carbon dioxide (CO2) emissions by 2030 and up to 60% by the end of the century if current trends continue, according to the United Nations Environment Programme (UNEP).
The figures underscore the challenges the region’s policymakers face as they deal with rapid population growth, urbanisation and increasing consumption demand.
A store in Bang Phra Chonburi, uses a locally developed turbine that can generate power from wind speeds. Kaikorakosh
Emissions from transport worldwide are also expected to jump by 57% between 2005 and 2030. China and India alone will account for more than half that figure, according to the fifth edition of the Global Environmental Outlook (GEO-5), which was launched on the eve of the recent Rio+20 Summit.
With rapid growth in Asia Pacific countries leading to increasing emissions and degradation of natural resources, progress in addressing climate change has been limited compared with some other parts of the world.
Of the 10 countries in the world that are most at risk from climate change impacts, six are in Asia Pacific, according to GEO-5. Notable among them are the islands of the Maldives, 85% of which could be under water by 2100, according to some international projections.
Elsewhere in the region, South Korea and China are promoting low-carbon and green-growth policies aimed at reducing greenhouse-gas emissions. India, Indonesia and China have reduced or removed fossil fuel subsidies in an attempt to encourage their citizens to consume less energy.
“If the region would like to overcome these environmental problems, it has to have strong governance structures, sustainability approaches to integrate in all policy levels,” the report said.
Marine pollution, which is largely caused by land-based activities, is one area that has attracted far less attention than it deserves. The number of coastal “dead zones” has increased significantly.
Thirteen coastal dead zones out of 169 globally are recovering, while 415 coastal areas suffer from eutrophication, meaning that excess nutrients in the water stimulate excessive plant growth. In Asia Pacific, the dead zones are mostly found in the East Asian, Southeast Asian, Yellow, Bohai and South China seas. Marine litter has also been found in the Southeast and North Pacific, East Asian and Caribbean seas.
However, the report does identify four areas in which many countries have made significant progress: eliminating substances that deplete the ozone layer; removing lead from fuel; providing access to improved water supplies; and doing more research to reduce pollution of the marine environment.
Among major developing economies, India managed to phase out the production and consumption of chlorofluorocarbons (CFCs), carbon tetrachloride (CTC) and halons at the start of 2010.
Sri Lanka, the Maldives, China, Indonesia and Fiji eliminated CFCs nearly two years ahead of the 2010 deadline. Five of the six remaining CFC plants in China were shut down in 2007, and Indonesia banned CFC imports in 2008.
Air pollution is another concern and has been linked to premature deaths and numerous health problems, as well as reduced agricultural yields. The report estimates that global economic losses of $14-26 billion annually can be attributed to the impact of air pollution.
Water-related problems are also proving difficult to solve. Of 30 environmental goals identified by the UNEP, progress has been made on just one — access to clean drinking water. However, ensuring clean drinking water remains a challenge in many rural areas of Africa and the Pacific.
The elimination of lead in fuel, meanwhile, is one success story that nearly all countries can point to. The resulting health risk reduction, according to the report, can be expressed in monetary terms as $2.45 trillion a year or 4% of global gross domestic product.
In the bigger picture, though, governments will face more serious damage and degradation if current trends continue and they do nothing to cope with them, warned Achim Steiner, a UN undersecretary-general and UNEP executive director.
However, if governments carry out policies or promote technological innovations, it is still possible for them to accomplish their targets by the middle of the century.
The report makes a number of recommendations including specific long-term environmental targets, reliable data for decision-making, changes for both the short and long terms, investments, and governance measures to eliminate emissions sustainably.
Linking accurate environmental data with national economic statistics is one effective way to put environmental issues at the heart of government policymaking, the report suggests.
Some problems in the past were a consequence of a lack of statistics, or if the statistics were available, they were not considered integral to overall economic analysis. The result was slow progress in areas such as chemical pollution and waste reduction.
Similarly, electronic waste is currently the fastest-growing waste category in the world; however, the data in this area are insufficient in Asia Pacific and it receives less attention than it should.
http://www.bangkokpost.com/news/asia/303888/asia-s-carbon-challenge
Asian M&A: Riding the wave
It will be quite evident to even the most casual observers that Asia has become the focus of the world, due in no small part to the current challenges in the developed Western hemisphere. As a result, growth in and through Asia is now on the top of the agenda for most global and Asian companies.
We see mergers and acquisitions (M&A) as a critical driver of industry structure and future competitiveness in this region. However, M&A activity on a meaningful scale has been slow to come to Asia, even as the region’s growth rate significantly outpaces that of the rest of the world. Though deal activity is heating up in Asia (Asia’s share of global M&A has doubled in the last decade), the industry endgames are still far away and dealmaking is still in its infancy.
We expect the coming decade to be critical for Asian M&A and therefore for the competitiveness of Asian industry. The Asian M&A story is expected to unfold rather differently and perhaps more unpredictably compared with the patterns established in the developed markets of the West.
We see three different themes about Asian M&A:
First, there will be room for multiple local deals in the Asian consolidation, due to the extensive fragmentation of customers and markets. This is unlike the West where there is a single optimum model with a handful of companies dominating each industry. For example, while Coca-Cola and PepsiCo might be the national beverage leader in China, local beverages that cost less and come in flavours that appeal to local tastes (for example, ready-to-drink herbal tea) dominate specific segments and geographic regions.
Second, there is a tendency for cross-border M&A to happen in Asia even before local consolidation takes place, unlike in the West. Asia’s share of outbound M&A, excluding Australia and Japan, grew from 4% to 22% of global outbound M&A from 2001 to 2010. The expansion strategy via M&A is driven by five key reasons:
The quest for new markets: Asian players in different industries such as SingTel in telecommunications, CIMB in banking and Infosys in IT have all used acquisitions to expand beyond their domestic markets.
Filling gaps: These can be in market access, distribution network, brand names, or new technologies, as exemplified by Lenovo’s acquisition of IBM to gain access to the latter’s global distribution and brand, and Tata’s acquisition of Jaguar Land Rover to get access to its top-end design and engineering operation.
Expanded balance sheets: Asia’s surging stock market, easier access to global bond markets as well as cash hoards that companies have built over the years have given Asian companies the means to acquire. In addition, some countries such as China are using its huge foreign reserves to support their national corporations’ bids to buy offshore assets.
Surging Asian currencies: Gains relative to the US dollar and euro have made acquisitions of Western companies more compelling from a value perspective. Thai Union Frozen’s acquisition of MWBrands and NTT’s acquisition of Dimension Data came during periods when the euro and dollar had depreciated at least 10% relative to the local currency over a 12-month period, following a long-term trend of Asian currency appreciation.
Domestic resistance to local consolidation: Sometimes it might be too difficult to consolidate locally compared to expanding internationally due to resistance by shareholders of family-owned companies, or complex cross-holding company structures as is common in many Asian countries.
Third, most Asian economies are dominated by government-owned or government-linked companies, which are typically lethargic, ponderous and bureaucratic compared to private companies. M&A could bring about a real and transformative benefit, allowing for a mindset shift to improve their competitiveness.
This is especially true in sectors traditionally dominated by government-linked entities, such as energy, telecoms, airlines, exploration and production, refining and downstream oil and gas, mining, metals and complex manufacturing. In some cases, government-to-government links may facilitate joint ventures, partnerships and even M&A between two government companies, thus favouring government-led M&A.
Asia is clearly rewriting the rules of global engagement. We are already seeing the emergence of Asian champions, and before the decade is out, there will be many global champions originating from Asia. We have one message for Asian companies: This is your time. If you want to track Asia’s trajectory and be a future Asian or global champion, you need to think about M&A.
http://www.bangkokpost.com/business/economics/305033/asian-m-a-riding-the-wave
A sleeping e-commerce giant
Vietnam is one of Asia’s sleeping giants in terms of e-commerce with a young population eager to buy more online. But low trust in online shopping and e-payment remains the main challenge e-commerce can really take off in the country.
Other payment systems besides credit cards are important in developing economies. Thai Smart Card offers a Smart Purse Online for transactions with many local business allies.
The Vietnamese government’s efforts to promote internet use and e-commerce over the last decade have helped popularise the business. Buying and selling through e-commerce websites has become popular for goods and services such as airline tickets, tours, hotel rooms, electronics, mobile phones, computers, books, perfume and flowers.
Payment and shipping methods are also flexible to meet the requirements of buyers, many of whom still do not have credit cards, from online payments to bank transfers or cash-on-delivery.
In Vietnam, one-third of population now uses the internet, and some 60% go online to research information on products before making a purchase. Internet penetration in the country has recorded the most rapid growth in Asia, with an average annual rate of 20% from 2000 to 2010.
According to a survey of 3,400 businesses operating in different fields nationwide by the Ministry of Industry and Trade, 60% of companies have applied B2B (business-to-business)
e-commerce, 95% of which received orders online. One-third of the companies said e-commerce accounted for 15% or more of their total revenues.
E-commerce transactions in Vietnam now account for 2.5% of it's GDP, or nearly US$2 billion. It's predicted to reach $6 billion by 2015.
Despite its huge potential, e-commerce growth in Vietnam is held back by a low-trust environment.
The other factors that constrained e-commerce a few years ago, including ICT infrastructure and the legal framework, have almost all been tackled, according to Nguyen Thanh Hung, deputy chairman of the Vietnam E-commerce Association.
“Current barriers now are buyers’ low trust in online shopping, customer protection and information security, and dispute settlement in online transactions,” Hung said.
Though payments can now be made easily online through cooperation between e-commerce websites and banks, they still account for a very small proportion of payments in Vietnam.
Though improvements are needed in some areas, many foreign companies are looking at business opportunities in the emerging industry, given Vietnam’s population of nearly 90 million and growing middle class. Big global players including Google, Alibaba, Rakuten, eBay and Amazon are rapidly building their presence.
In June 2012, Google became a member of Vietnam E-commerce Association, expecting to build online business with other members. Google has expressed its desire to earn $30 million a year from the Vietnamese market, targeting small and medium-sized companies.
Alibaba and eBay have also chosen official representatives in the country. While eBay bought 20% of Peacesoft Solution, the owner of the local site chodientu.com, Alibaba chose Investment and Technology JSC as its agent in Vietnam. Amazon and Rakuten have also approached local e-commerce providers for potential stake purchases or partnerships.
Foreign investors are free to form their own companies or they can buy into domestic firms to enter the market, said Tran Huu Linh, director of the Department of E-commerce and Information Technology at the Ministry of Industry and Trade.
Most Vietnamese e-commerce providers have been leaning on foreign investment, including the country’s two leading e-commerce sites, vatgia.com and chodientu.com. Heavy demand for venture capital also has led to the active participation of international financial players including IDG Ventures, DFJ Vina Capital, Softbank China and India, and CyberAgent.
Nguyen Hong Truong, director of business and technology development with IDG Venture Vietnam, said the country was an attractive target, having been ranked among the five most attractive online retail markets in the world in recent years.
“Therefore, even though the infrastructure, conditions of payment, delivery, quality of goods and transaction security are still underdeveloped, investment in this untapped market is a bold step for ambitious organisations,” Truong said.
Nguyen Ngoc Diep, director of Vat Gia Vietnam JSC, said that at the entry-level stage, development of an e-commerce website must attract foreign backers for financial support.
“Each site would need around $2-3 million to successfully pass the startup stage. Without funding from a foreign partner, Vatgia would not have been able to weather that stage,” Mr Diep admitted.
Vat Gia invested around $3 million from 2007-10, with most of this funding from IDG Ventures. Now the site is the top player in Vietnam with more than 1 million hits per day and transactions valued at $15 million a month, making up 40% of the market share.
Mr Diep said that if his companies could not raise more capital from domestic market, they might think about cooperation with foreign partners to keep the business strong and growing.
http://www.bangkokpost.com/business/telecom/306226/a-sleeping-e-commerce-giant
Indian e-commerce seeks winning formula
India has a booming retail market worth about $500 billion, but the market size of its e-commerce industry is only $10.3 billion with 81% of that total coming from travel transactions and 6% from product purchases.
However, e-commerce is likely to enter a high-growth phase in the coming years and travel will continue to lead as new business models emerge, according to B.N. Satpathy, economic adviser at the Department of Information Technology.
The federal government is working on a new information and communication technology (ICT) policy to propel the growth of low-cost, internet-enabled and handheld devices.
“India is poised to be one of the top e-commerce hubs as number of internet users increases. This will bring in a new revolution in retail industry,” he said, adding that e-commerce globally was now estimated to be worth at least $700 billion.
Accelerated innovations have expanded the online retail market to $241 billion in Europe, $176 billion in the United States, $76.4 billion in China and $10.3 billion in India. The Indian retail industry is currently estimated at $520 billion and e-commerce is a sub-set of it.
With high GDP growth, a young population with a median age of 25 years, large and relatively insulated rural tracts, coupled with people’s hunger for achievement, the country is projected to witness maximum growth coming from small towns and cities.
At present, small towns contribute 40% of all e-commerce transactions due to increasing broadband penetration.
India also has the second fastest growing travel market globally, estimated at $42 billion. Of this, the online travel market is expected to grow from $2.9 billion in 2008 to $7 billion by next year.
E-payment systems are also expanding for products such as mutual funds and insurance, and government bodies also are increasingly adopting this route for both accepting and making payments, according to Amrish Rau, vice-president and country manager of the data aggregator First Data Corporation.
Other promising segments include digital downloads and paid content subscriptions.
However, Indian e-commerce companies have been incurring huge losses by selling products at heavily discounted rates as a way to build up the market base.
The industry has suddenly become crowded with all players chasing the volume game and leaving no money on the table. With the cost of acquiring a new customer ranging between $15 and $20, many have shut up shop and the rest are trying hard to keep afloat.
The business model is slowly finding acceptance with people ordering even groceries, vegetables and meat online. But even after 12 years, none of the e-commerce companies makes money and no one has any idea when they will break even.
The business model is slowly finding acceptance with people ordering even groceries, vegetables and meat online. But even after 12 years, none of the e-commerce companies makes money and no one has any idea when they will break even.
Industry watchers are optimistic that online shopping may reach $40 billion by 2025.
Indiaplaza was among the first to go online and began operations in 1999 with warehouses in five cities, trying to cater fast services to new customers. By 2002, founder and CEO K. Vaitheeswaran realised that the only way to make his new business profitable was to start sourcing products from vendors and do away with the warehouses. So he closed all of them.
Most e-commerce players agree is that the high operational efficiency and a strong back-end are the most pressing needs for the industry to gain more credibility.
Myntra.com, a retailer of branded garments, shoes and accessories, whose CEO Mukesh Bansal is optimistic that like global e-commerce, the Indian counterpart will also be profitable in the next two to three years. But huge discounts are a risk that needs to be managed properly or else it will spell doom for the industry.
Indonesia looks to unclog bottlenecks
Indonesia is preparing to make major investments to improve its infrastructure, which has been blamed for holding back growth and reducing the investment attractiveness of Asean’s largest economy.
President Susilo Bambang Yudhoyono recently told parliament that the country would increase spending on the country’s overburdened roads, airports and power plants and pare restrictions on businesses in order to encourage investments.
Indonesia’s infrastructure is strained on all fronts. It faces a lack of power and its ports and airports are sadly outdated, hardly in line with the country’s status as a G20 economy.
Mr Yudhoyono’s budget proposed lifting infrastructure spending to 194 trillion rupiah (640 billion baht) in 2013 from a target of 169 trillion rupiah this year. The funds will be used to improve 4,431 kilometres of road, add 380km of new rail lines, build 15 new airports and expand another 120.
Indonesia has massive economic potential but is struggling to position itself to take advantage of Asean integration in 2015. Reforms related to distribution and logistics networks are the most pressing needs.
Indonesia has the highest logistics cost in Asean, estimated at 25-30% of gross domestic product (GDP), according to Lukman Hakim, chairman of the Indonesia Institute of Sciences.
Even in Thailand, which is also considered to have unacceptably high logistics costs, the comparable figure is 17% of GDP.
In a country with Indonesia’s geographical conditions, said Mr Lukman, the logistics cost should not exceed 15% of GDP.
“Indonesia’s logistics system is not efficient as there is a price gap in logistics between eastern and western regions,” he said. “Thus, some imported commodities are more affordable than local commodities.”
Distribution of goods between regions and islands is a major challenge and this means the prices of many goods outside Java are too high.
“For example, the price of rice in one province can be 64% higher than in other provinces. Also, the price of a bag of cement in the territory of Papua can be about 20-fold higher than in Java,” he said.
National logistics costs in 2010 were 1,402 trillion rupiah (about 4.6 trillion baht), or 26% of GDP. The figure is made up of inventory carrying costs of 421 trillion rupiah, transport 841 trillion, and administrative costs totalling 140 trillion.
Armida Salsiah Alisjahbana, the minister for National Development Planning, said proper funding for infrastructure development would gradually encourage better connectivity.
The ratio of infrastructure spending to GDP in 2013 is expected to reach 4% and grow to 5% in the following year. “In terms of macro funding, we have set the infrastructure spending target at as much as 5% of GDP in 2014, and it will increase to 7% or 8% afterward,” she said.
With progressive infrastructure funding and an investment ratio of 5% of GDP, the country could achieve economic growth above 7% annually on an ongoing basis, the minister said.
In terms of soft infrastructure improvement, Ms Armida is pushing continuous reform of the bureaucracy with involvement from local governments, private companies and state enterprises.
She said she had already noted more responsive management and productivity from state enterprises in charge of ports, airports, and other means of connectivity.
The World Bank recently increased the performance index of logistics in Indonesia, from 75 in 2010 to 59, reflecting improved contributions of both the private sector and the government.
It recommends two steps to improve efficiency: reducing dwell times in port and developing “dry ports” or inland container depots.
Henry Sandee, senior trade economist with the World Bank, said the average dwell time of import containers in the Jakarta International Container Terminal was still increasing, which was not a good sign.
Over the past year, the port of Tanjung Priok handled one million containers with an average dwell time of 6.7 days, up from 4.8 days a year earlier. Port officials have been working with experts at the Technology Institute of Bandung to monitor dwell time changes every three months.
“The main issue is to improve logistics efficiency to reduce dwell time and develop a dry port. Surely this must be supported with the good coordination,” said Mr Sandee.
The dry port is urgently needed to handle extra demand until work is completed on the higher-capacity Kalibaru container terminal or Tanjung Priok New Port.
“We have Cikarang Dry Port. Let’s compare it with Lat Krabang in Bangkok, which has been optimised. Indonesia has to do the same thing. We estimate 62% of containers will be directed to Cikarang,” he said.
Mr Sandee said Indonesia could learn from its neighbor. He noted the logistics cost (transport, handling, customs and excise tariffs) between Tanjung Priok and Cikarang, a distance of 55.4km, is US$750 per container. In Malaysia between Pasir Gudang and Tanjung Pelepas, a distance of 56.4km, the cost is only $450.
The Indonesia Chamber of Commerce and Industry (Kadin) has set an ambitious target to reduce logistics costs by 10% in 2014 as part of preparations for the Asean Economic Community in 2015.
Flexibility the key to e-commerce success in Indonesia
E-commerce in Indonesia is experiencing substantial growth, from sale and purchase transactions via Facebook to the growing presence of Indonesian versions of international online shops.
A wide variety of payment methods also serves to reassure consumers, ranging from bank account transfers to credit cards, mobile credit, and the traditional cash on delivery. The potential in the country of 240 million has encouraged international online merchants to set up shop, among them Zalora, one of the many brands of the German company Rocket Internet.
The boom in e-commerce in Indonesia is being fuelled by rapid growth in internet penetration — up 32% last year alone, according to research by MarkPlus Insight. Currently, there are about 55 million internet users, both mobile and fixed-line.
According to research by Frost & Sullivan, the total transaction value of e-commerce in Indonesia in 2011 was estimated at US$1 billion.
The biggest challenge for e-commerce in Indonesia, as in many developing countries, is to gain the trust of consumers. Unfamiliarity with English is also a barrier, although
almost all leading sites, such as Tokobagus.com and Bukalapak.com, offer Indonesian language services. Even international sites have Indonesian versions, such as Groupon (with Disdus.com) and eBay, through Plaza.com
Ichwan Sitorus, manager of public relations with Tokobagus.com, said education is needed to increase the number of visitors and turn them into buyers.
“The goal is to increase page view traffic, which will have an impact on ads,” he said. “It is important that we create more revenues which usually come from advertisements placed by third parties.” Most online shops do not charge fees to sellers or buyers, so they rely heavily on ad revenue.
“The tip is an intensive educational activity such as offline activity without forgetting the online activity,” he said.
Online shopping has become a regular habit for the most Indonesian people, especially in big cities such as Greater Jakarta, Bandung, Yogyakarta, Bali, to Makassar.
The two main online shops, with hundreds of millions of page views per month, are Tokobagus.com and the online shopping forum Kaskus. Local sites also average thousands of page views per month.
“Online shopping is common. What is new in Indonesia is the online transaction in which payment is made through a payment gateway,” said Edward K. Suwignyo, assistant vice-president for marketing communications with Multiply, one of the world’s largest online malls.
Multiply is so bullish on Asia that it even moved its headquarters to Indonesia from the United States.
E-commerce sites are not just serving as providers but also are involved in regulating the system, including ensuring the security of transactions, as operators are aware that trust is the key to their success.
One of the local sites that accommodates online transactions is Multiply Indonesia. A buyer can pay using mobile banking such as Klik BCA, a system provided by PT Bank Central Asia Tbk, one of the largest banks in Indonesia. There is also a direct payment using ATMs of large banks such as BCA and Bank Mandiri.
Also significant is that fact that the future of e-commerce in many developing countries doesn’t involve computers. Infonetics Research noted that mobile broadband users worldwide grew nearly 50% to 846 million last year, which will have a huge impact on the way people buy, sell and pay.
In Indonesia alone there are an estimated 100 million internet users who connect via mobile devices including phones and tablets. The rapid growth of mobile channels has put the country ahead of schedule for internet connectivity. Policymakers earlier had set 2015 as the deadline for having half the population, or 120 million people, online.
Asean spells out tourism priorities ahead of 2015
Asean countries are now working on a clear road map to achieve the tourism objectives of the Asean Economic Community in 2015. There will be a new ‘Asean for Asean’ campaign and special promotions, along with enhanced strategic cooperation with the growth markets of China, Korea, Japan, India and Australia.
A new website and digital promotional campaigns targeting the mass markets of China and India are part of the programme endorsed by the 10-country bloc’s tourism ministers and Asean Secretary-General Dr Surin Pitsuwan
Asean will also work to attract niche markets such as experiential, creative, adventure, business, senior, and long-stay visitors. There will be special promotions for the cruise market as well to take advantage of the region’s many island and port attractions.
“Our strategy is designed to help build global recognition of Southeast Asia as a competitive, world-class tourism destination,” said Dr Surin.
“Our focus is on drawing visitors to the region and encouraging them to visit more than one country. As each has its own unique attractions, we will capitalise on the sophisticated marketing capacity and resources of our individual national tourism organisations to spread the word.”
The Asean Tourism Strategic Plan 2011-15 is the foundation of the Asean Tourism Marketing Strategy (ATMS) 2012-15, adopted by tourism ministers in January 2012.
Asean destinations attracted 81.2 million visitors in 2011, an average increase of a million visitors each year for the last two decades. Three out of four visitors to Asean come from Asia; 46.5% from within Asean and 27.6% from other Asian markets.
Niche and mass-market promotions will go hand in hand, Sansern Ngaorungsi, who chairs the Asean Tourism Marketing Working Group and is also a deputy governor of the Tourism Authority of Thailand.
“While Asean’s niche, tactical campaigns will target sectors such as adventure, experiential, business and long stay, and show the diversity of Asean, mass tourism demand for mainstream attractions is expected to keep growing and bring important economic benefits to Asean destinations,” said Mr Sansern.
One niche sector, cruises, is being favoured because river and sea-cruise vessels usually visit more than one destination. To promote cruise ship activity in Asean, Singapore will stage the Cruise Shipping Asia Pacific 2012 forum on Sept 17.
Southeast Asian NTOs will also be emphasising the group’s marketing plan at the Asean Tourism Forum in Vientiane from Jan 17-24 next year. More than 1,600 delegates will include some 150 Asean tourism ministers and officials, 800 Asean exhibitors, 400 international buyers, 150 international and local media members and 100 tourism trade visitors.
Myanmar micro-lenders could help reshape rural economy
The first of an expected wave of new micro-lenders plans to begin operating in Myanmar in the next quarter as the country lifts restrictions on a sector that could bring in hundreds of millions of dollars to help kick-start the rural economy.
Germany’s Savings Bank Foundation for International Development (SBFIC) has teamed up with two local non-government organisations, Myanmar Egress and Mingalar Myanmar, with plans to start taking deposits by the end of the year to fund a pilot lending operation.
“We are strengthening the local microfinance institutions there,” said Nicole Brand, SBFIC’s project manager for Southeast Asia, adding the project expected a government licence within a month.
Over decades of military rule and amid Western sanctions, micro-lenders were effectively barred from Myanmar, meaning the rural economy has missed out on millions of dollars in small loans poured into other developing economies such as Cambodia and Laos.
The vacuum has been filled in part by a handful of humanitarian organisations including the United Nations, whose portfolio of just US$50 million accounts for 90% of all micro-lending in the country.
But a microfinance law passed by the new civilian government late last year has prompted a “stream of foreigners” to look into micro-lending, said Akbar Usmani, senior deputy resident representative of the UN Development Program’s Yangon office.
“In terms of the potential market, we are just tiny,” he said of the UN’s microfinance operation in Myanmar.
The country’s appetite for micro-loans is thought to be about $650 million, according to the latest UN estimates, a figure that balloons to $2 billion when small loans are taken into account.
“The domestic banks haven’t really gone out into rural areas in a very big way,” said Usmani.
The UN has dispersed $440 million in Myanmar since it started lending in 1997, offering loans of $100 to $150 to groups of people – mostly women – in the centre of the country, the Irrawaddy Delta and Shan State.
“At the grassroots level people are saying: ‘Look, we have repaid our loans, can we borrow a larger amount?’” said Usmani. “But we are not a microfinance institution.”
Although the new framework affords a legal status to micro-lenders while also permitting non-collateralised loans and deposit-taking for the first time, the central bank has taken the “unusual step” of fixing micro-borrowing and lending rates, said SBFIC’s Brand.
New microfinance lenders cannot charge more than 2.5% per month, a move analysts warn could put off some organisations, given the costs associated with Myanmar’s underdeveloped financial sector.
“This is not enough to allow genuine financial self-sustainability,” said Sean Turnell, an economist at Burma Economic Watch at Macquarie University in Sydney.
In other countries such as Cambodia, microfinance institutions have blossomed, offering savings rates of about 10% per year to lure investors, which in turn has allowed rapid accumulation of funds to lend at high rates of interest, but considerably lower than what informal lenders charge.
In Myanmar, these lenders typically offer cash at about 10% interest per month, while the low level of banking makes transferring money equally expensive.
“Far and away the majority of people in Myanmar have no relationship with a formal bank, or an ability to borrow from them,” said Turnell. “So they are forced into the hands of informal money lenders charging exorbitant rates of interest.”
It also remains to be seen whether micro-lenders will be willing and able to reach some of the areas with the greatest need for loans – the outer-lying ethnic areas which have in many cases have seen fighting between insurgency armies and government forces for decades
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