ASEAN Affairs Forum

[nufix]

Foreign Investors’ Appetite Rises


Ana Noviani, Reviana Rahmania Surya, Aprianto Cahyo Nugroho

JAKARTA—Foreign investment grew two-fold bigger than domestic, data show. According to Investment Coordinating board (BKPM) records, foreign investment in 2012 grew by 26% to IDR221.0 trillion while domestic rose by 21% to IDR92 trillion.

“Investors eye emerging market following financial crisis in Europe and US,” said agency’s Head Chatib Basri, Tuesday (1/22).

Regarding domestic capital, he said, though not as high as the growth of foreign capital, domestic capital has reached its target at 120%. “Overall, investment in 2012 skyrocket by 110% from our initial target to IDR313.2 trillion. It’s the highest in our investment history.”

Investment in 2012 reached IDR313.2 trillion, exceeding BKPM initial target at IDR283.5 trillion by 110.5%. Investments in the quarter IV/2012 reached IDR83.3 trillion, which consists of foreign investment by as much as IDR56.8 trillion and domestic investment by IDR26.5 billion. During January-December 2012, investment arrived at IDR313.2 trillion.

Foreign investment in 2012 was still dominated by capital injection to mining sector. Significant foreign investment growth also occurred on metal, machinery, and electronics sectors.

In the fourth quarter, foreign investment largely channeled to metal, machinery, and electronics sectors amounted to US$1.2 billion or approximately 18.5% of total overseas capital injection in the period at US$6.31 billion. As for mining sector, foreign investment in the business reached US$1.1 billion in QIV/2012.

The increased investment in metal, machinery, and electronic indicated the acceleration in supporting industry in Indonesia. It is expected to suport national industry in order to reduce the downstream industry dependence on raw or intermediate goods.

Some 19.8% or US$4.9 billion from US$24.5 billion of foreign investment were from Singapore. Moreover, the largest foreign investment were also from Japan (US$2.5 billion), tailed by South Korea (US$1.9 billion), United States (US$1.2 billion), and Mauritius (US$1.1 billion). “Singapore ranks first since they can become the hub for foreign companies, while Mauritius becomes quarter hub due to tax issue,” Basri said.

Meanwhile, the South Korea investors’ aggressiveness made the country becomes the country’s three biggest foreign investors within the last two years. In fact, in 2010 South Korea investment was only ranked eighth.

Coordinating Minister for the Economy Hatta Rajasa reminded that the government for not satisfied with the actual investment in 2012 which exceeded the target.

He said the high direct investment might balance the current account deficit (CAD). Thus, the pressure on Indonesia’s balance of payment can be reduced. “The high investment in Indonesia also needs the import management in order to improve Indonesia’s balance of payments.”

Chairman of the Institute of Research and Community Service for Unika Atmajaya, A. Prasetyantoko previously reminded that the direct investment performance might experience a slowdown in the second half of 2013 as the global economy is predicted to decrease.

According to him, the global economy slowdown could lead to the decline in the company’s ability in financing direct investment. "In terms of financing, the [foreign] company ability that invests in Indonesia will be limited in line with the uncertain external condition," he said.

Moreover, he continued, the direct investment composition in the country is still dominated by foreign investment. (aph)

Foreign Investors

 

[Viet]

Singapore and Germany, both have similar problem and solution regarding population growth, but the problem is caused by different background. Germany is not lacking spaces for living and its citizens still dominate the percentage of population compared to migrant workers like you, its main issue is the lack of available labor forces, not the closing gap between German citizens and foreign workers in numbers.

While in the other hands, Singapore's main issue, is the gap between foreign workers and its own citizen, out of 5.3 million people settling in Singapore, only 3.3 million of them are Singapore citizens and 20% of them have reached 65 years. Making immigration rule for Vietnamese or any foreign countries with huge labor workforce become easier will only making the gap between Singapore citizens and migrant workers in number become much much closer and it will eventually defeat the main purpose of Singapore's parenting bonuses program.

The main purpose is to reduce the number of foreign workers in Singapore, and replace the gap with their own citizens.

I predict this parenting bonus program is not going to work. Look at many developed nations like Germany, Japan and many others, money does not really encourage for getting more babys. Singapore comes close to Japan in terms of low birthrate.

One can see that the richer the nation, the lesser the birthrate. For a developed nation to increase births, one must change mentality: baby is a blessing, not liability. France is a good example how to overcome low birthrate.

 

[Nusantara]

Indonesia Zeroes in on Currency

Indonesian rupiah banknotes of various denominations.

Indonesia Zeroes In on Currency - Southeast Asia Real Time - WSJ

BI akan gelontorkan Rp 200 miliar untuk redenominasi | merdeka.com

 

[nufix]

I predict this parenting bonus program is not going to work. Look at many developed nations like Germany, Japan and many others, money does not really encourage for getting more babys. Singapore comes close to Japan in terms of low birthrate.

One can see that the richer the nation, the lesser the birthrate. For a developed nation to increase births, one must change mentality: baby is a blessing, not liability. France is a good example how to overcome low birthrate.

I agree with that fact, but then again we should see each's background. Most developed nations that eased their immigration rules do not have Citizens-Immigrant domination percentage issue, and they still have huge living spaces available for both migrant workers and their own citizens, social problems caused by culture shock between indigenous people and immigrant still can be maintained as their own citizens still dominate the number of population, and housing cost in those countries will not jump high as they still have many living spaces.

Singapore is in the other ways around. Out of 5.3 million people living in Singapore, 2 million are foreigners with their own culture and background, if the immigration rules are simplified the 2 million could be 3 million and 4 million, considering most people will go to developed countries for better jobs, Singapore is a magnet for international Arbeitsbewerbers. 3.3 million of real singapore citizen will automatically become minorities in their own homeland.

 

[Viet]

Vietnam bank presents computers to Laos Ministry
1/24/2013 5:56:00 PM Voice of Vietnam

(VOV) - The Bank for Investment and Development of Vietnam (BIDV) handed over 50 computers to the Laos Ministry of Science and Technology in Vientiane on January 24.

Tran Bac Ha, BIDV Chairman said his bank has been the largest Vietnamese business to invest in Laos over the past few years and its investment efficiency has been acknowledged by both the Vietnamese and Lao Governments.

The bank has joined social welfare programmes by encouraging more Vietnamese investment in remote areas, assisting Laos’ learning promotion fund, and building education facilities, as well as supporting schools for Vietnamese children in Laos. Since 2005, BIDV has contributed over US$1.1 million to Laos’ social security programmes.

 

[nufix]

Pertamina Says ConocoPhillips Algeria Unit Deal Still Set to Roll


Tito Summa Siahaan

State energy firm Pertamina has been aggressively expanding its operations. (Bloomberg Photo/Dimas Ardian)

State energy firm Pertamina will proceed with its plans to acquire three Algerian oil and gas blocks from ConocoPhillips, a company spokesman says.

Bloomberg News quoted Ali Mundakir as saying that Pertamina aims to complete the deal to acquire ConocoPhillips’s Algerian units in mid-2013. He added that completion of the deal is subject to approval by the Algerian government, and that ConocoPhillips’s partners must waive their rights to buy the stake.

Pertamina announced the deal with ConocoPhillips, which owns participating interests in several oil and gas units in the North African nation, last month.

The agreement, which is valued at around $1.75 billion, will boost Pertamina’s reserves by 100 million barrels of oil and will boost annual production by about 23,000 barrels per day.

Pertamina has been steadily expanding its presence by purchasing strategic assets at home and abroad. Under Karen Agustiawan, the current president director, the company has laid out an ambitious plan to become a global energy giant by 2025.

Aside from the ConocoPhillips deal, Pertamina has at least two other acquisitions in the pipeline: one for US-based Anadarko’s Indonesian units and another $725 million deal for assets in oil-rich Venezuela from US-based Harvest Natural Resources.

On the domestic front, Pertamina is in the process of acquiring state-owned engineering firm Rekayasa Industri.

Pertamina is preparing to invest heavily in processing facilities to improve the country’s oil refining capacities, and the company has laid out plans to build two refineries in cooperation with the Kuwait Petroleum Corporation and Saudi Aramco. Each will have a processing capacity of 300,000 barrels of crude per day, with operations slated to commence in 2018.

Pertamina currently has six refineries with a total capacity to process 1.031 million barrels of crude per day.

Additionally, three foreign firms — South Korea’s SK Global Chemical, Japan’s Mitsubishi and Thailand’s PTT Global Chemical — are vying to partner-up with Pertamina to build a $5 billion petrochemical plant in Indonesia.

Pertamina has set aside $6.7 billion for capital expenditure this year.


Pertamina Says ConocoPhillips Algeria Unit Deal Still Set to Roll | The Jakarta Globe

 

[Malaya]

Philippines ‘Top Destination’ in China

Manila, Philippines – The Philippines won one of the “Best Tourist Destinations” Awards at the 2012 Oriental Morning Post’s Annual World Travel – Special Trips Awards, based on a consumer survey. The “Oriental Morning Post” is one of the top news dailies in Shanghai, focusing on business and financial stories.

Officials from the Department of Foreign Affairs received the Award for the Philippines in Shanghai, People’s Republic of China, on January 9, 2013, with personalities from the Shanghai travel trade and media gracing the event. Other winning countries in the survey were Ireland, Korea, Singapore, Finland, and Dubai.

China is the fourth largest tourism market for the Philippines, next is South Korea, United States of America, and Japan. It posted growth of 5.36 percent to 233,174 tourist arrivals from January to November, 2012, based on Department of Tourism (***) data. They go to Boracay Island and Bohol, the most popular Philippine destinations for Chinese tourists, and are interested in seeing historical and cultural places such as Vigan in Ilocos Sur, Intramuros in Manila, and the Underground River in Palawan. The *** is attracting more Chinese tourists in 2013 by participating in major travel fairs in China and offering familiarization tours for travel agents and the media.

To cater to the growing number of Chinese tourists traveling to the Philippines, an airline launched direct flights from Shanghai to Kalibo, Aklan, on January 10, 2013. Other chartered flights will be opened in time for the Chinese New Year holidays covering several routes: Beijing-Kalibo (January 15, 2013), Hangzhou-Kalibo (January 17, 2013), Guangzhou-Cebu (January 17, 2013), Chengdu-Kalibo (February 5, 2013), and Shanghai-Cebu (February 8, 2013). By the second and third quarters of 2013, chartered flights out of China’s major cities will also be opened.

We congratulate the Department of Tourism headed by Secretary Ramon R. Jimenez Jr., Department of Foreign Affairs led by Secretary Albert F. del Rosario, and the Philippine Consulate General in Shanghai, led by Consul General Charles C. Jose, Tourism Attaché Gerard O. Panga, and Attaché Niel P. Ballesteros, all the best and success in their cooperative efforts to invite more Chinese tourists to visit the Philippines. CONGRATULATIONS AND MABUHAY!

Philippines ‘Top Destination’ in China | Tempo - News in a Flash

 

[nufix]

Indofood buys stake in Brazilian sugar maker

The Jakarta Post, Jakarta | Business | Tue, January 29 2013, 5:55 AM


Publicly listed PT Indofood Sukses Makmur announced on Monday that its subsidiary Indofood Agri Resources Ltd. had entered an agreement to purchase a 50 percent stake in Brazil-based Companhia Mineira de Acucar e Alcool Participacoes (CMAA).

Indofood Agri, whose shares are listed on the Singapore Stock Exchange, said that the acquisition would be made through IndoAgri Brazil Participacoes Ltda., which was established recently by its Singapore-based subsidiary IFAR Brazil Pte. Ltd.

IndoAgri Brazil will pay US$71.7 million for the stake.

“Closing is expected to occur during the second quarter of 2013,” Indofood said in an announcement submitted to the Indonesia Stock Exchange.

CMAA, established in 2006, engages in the cultivation and processing of sugarcane for the production and marketing of ethanol and sugar, as well as the generation of electricity from sugarcane bagasse.

Currently, CMAA operates one mill in Vale de Tijuco with a total crushing capacity of 3 million tons per year.

Indofood buys stake in Brazilian sugar maker | The Jakarta Post

 

[Malaya]

Asean to lead growth

The global research department of banking giant Standard Chartered on Monday said that the ASEAN region, which includes the Philippines, will likely grow anew this year, possibly outpacing global growth.

Edward Lee of StanChart said that the growth will be supported by strong domestic economic activity and support from intra-regional trade.

“ASEAN is set to be the region to be situated in again in 2013. After an estimated growth of 5.2 percent, we project the region to grow by 5.3 percent in 2013, outpacing IMF’s global growth estimate of 3.6 percent,” Lee said.

He stressed that the region is expected to see economies such as Indonesia, the Philippines, and Malaysia matching or exceeding their 10-year average rates.

The Philippines has been one of the better-performing economies in the region last year. It beat expectations in the third quarter with 7.1 percent GDP growth, ahead of other economies within the ASEAN. Indonesia was the second-best performer in the ASEAN with 6.2 percent growth, followed by Malaysia (5.2 percent), Vietnam (4.7 percent), Thailand (3 percent), and Singapore (0.3 percent).

Year-to-date growth is already at 6.5 percent with services and industry still driving growth.

The International Monetary Fund (IMF) last week revised upward it’s 2012 and 2013 economic growth forecasts for the country, as it expects private and public consumption to remain strong.

IMF said that it now sees the country growing 6.5 percent in 2012, higher than its forecast last year of 4.8 percent. For 2013, the IMF sees growth “slowing down” to 6 percent. But this is also higher than the lending institution’s earlier forecast of 4.8 percent.

Lee said that confidence in the ASEAN region is high, not just domestically but also among foreign investors, from whom the region attracted 7.6 percent of global foreign direct investment in 2011 versus 4.3 percent in 2006.

“Indeed, since 2000, following the crippling financial crisis, the ASEAN region has outgrown the world by an average of 1.5 percent,” Lee said.

Lee also stressed that despite beating global growth since the Asian financial crisis, the region still has plenty of room to expand as it catches up with the rest of the world.

“Despite the world-beating growth rates registered over the last decade or so, the region can still achieve more. The region is hardly at the stage where the factors for growth have become complicated,” Lee said.

StanChart said that at the most basic level, the continued process of urbanization will help to drive ‘easy’ growth.

“This is the economics of agglomeration. Urbanization helps to improve the overall well-being of an individual by improving access to services and housing. This can boost productivity and consumption,” Lee said.

Lee explained that the bank conducted a simple study on the positive impact of urbanization on economic growth.

“Urbanization and economic growth tend to go hand-in-hand, although there have been cases where urbanization is not accompanied by economic growth. Here, we assume that urbanization efforts are successful in raising economic well-being,” Lee said.

They categorized the 10 economies within the ASEAN bloc into three tiers of urbanization. Tier 3 (20-25 percent urbanized) includes Cambodia, Vietnam, Myanmar, Thailand and Laos; Tier 2 (50 percent) includes the Philippines and Indonesia; and Tier 1 (75 percent) includes Malaysia, Brunei and Singapore.

“Our study yielded two main results. First, Asean’s GDP per capita could almost triple to $10,290 from $3,509 in 2011, assuming successful urbanization. Second, assuming no GDP growth in the Tier 1 countries, the region’s GDP growth could average 6 percent for the eight years from 2012-19, higher than the 5.3 percent average from 2000-11,” Lee said.

StanChart stressed that urbanization is likely to grow at a slower pace than the overall economy, but per-capita GDP typically rises at an exponential rate as urbanization increases.

He added that urbanization helps to increase efficiency as distances are shortened. This lowers the costs of businesses, or the government’s costs to provide infrastructure and necessities. Jobs and supply of labor are concentrated rather than dispersed.

According to the World Bank, the world passed the 50 percent mark for urbanization in 2007. As of 2012, there are still 6 countries in ASEAN that have not passed the 50 percent point – Cambodia, Laos, Myanmar, Philippines, Thailand and Vietnam.

“Indonesia just crossed the midpoint at 51.4 percent. Singapore, Malaysia and Brunei are largely urbanized. As a region on the whole, we still have some low hurdles that we can cross to keep growth sustained,” Lee said adding that urbanization is typically associated with growing wealth.

Measuring this by GDP per capita and using the World’s experience with urbanization as an example, every percentage point increase in urbanization raises GDP per capita by about $500. The low hurdles to growth can also be seen in the GDP per capita of countries in ASEAN, Lee said.

Compared with the World’s GDP per capita of $10,000 in 2011, only 2 countries (Singapore and Brunei) exceed this level.

Malaysia is nearly on par but the next nearest country, Thailand, is only about half of the World’s GDP per capita.

Lee said Brunei and the Philippines are in the transition stage to efficiency-driven and Thailand and Indonesia are at the efficiency-driven stage.

The country’s per capita GDP is estimated at $2,500.

Malaya Business News Online - Philippine Business News | Online News Philippines - Asean to lead growth

 

[Malaya]

Despite our own woes, Spain won’t abandon you, ex-minister assures PH

Despite being in a recession, Spain will continue to turn a “fraternal eye” on its former colony, the Philippines.

No less than former Spanish Defense Minister Jose Bono made the assurance at a press conference in a Makati City hotel on Monday that was convened by Spanish and Filipino diplomatic and civil society groups to launch the sixth Tribuna España-Filipinas this week.

The Tribuna—established in 2005 by the Barcelona-based Casa Asia and the Spanish Ministry for Foreign Affairs and Cooperation and the Philippines’ Fundacion Santiago—provides a regular venue for dialogue among business, academic, civil society and government representatives from both countries in order to strengthen bilateral ties. At the press conference, Bono, a member of the 30-person Spanish delegation this year, said Filipino-Hispano ties would be maintained and strengthened despite Spain’s “struggling to overcome a very serious economic situation.”

“Even when the going gets rough, we turn our eye to the Philippines always in a very fraternal manner,” said Bono in his message in Spanish that was translated by Tribuna spokesperson Chaco Molina.

Molina, in a press statement, said “the Philippines and Spain share a very special and unique relationship, so much so that Spain has pledged to continue providing grants to the country to support health and education programs despite budget cuts brought on by austerity measures in Europe.”

Continued support

“Despite reductions in the budget for development aid, Spain has assured that the Philippines will be the only country in Asia to continue to receive such support in the coming years,” Molina said. Spanish Agency for International Development Cooperation (Aecid)-Asia Pacific Director Jose Luis Martin Yague said Spanish aid to the Philippines in the last five years totaled about 180 million euros.

“We hope that in the next years, the level of disbursement will be 50 million euros,” he said at the press conference.

A June 2012 publication of the AECID showed that Spain was the top bilateral donor to the United Nations system in the Philippines, with a 22-million euro contribution.

Bono acknowledged, however, that while Spain’s ties to the Philippines may have deep historical roots, it “has not blossomed to the level of benefits that a country of such significance should maintain.”

“Our bilateral contributions have not surpassed the 300-million euro mark. We are aware that geography has a mandate which is as persistent as that of politics. We’re here to defy those challenges of distance,” Bono said.

In an interview after the press conference, Casa Asia Director General Ramon Moreno said the sixth Tribuna España-Filipinas was supposed to be held last year but was postponed due to the economic crisis and lack of delegates.

Long way to go

He also admitted that while culturally the two countries may be very close, from an economic point of view “we have a long way to go.”

He said the Spanish Ministry of Foreign Affairs only started drafting Asia Pacific-oriented programs in 2000.

“We hope this tribunal can help… to present the good economic potential of the Philippines and the opportunity for Spanish companies to come here. In turn, we would like to receive as well investments from the Philippines,” Moreno said.

He was quick to point out, however, that the forum was more a “brainstorming session” than an economic summit.

Bono, for his part, stressed that the two countries’ affinity for each other “is far stronger than economic interest.”

Very selfless interest

“Spain has a very selfless interest in the Philippines,” he said.
Bono described Spain-Philippine relations as being similar to “a tree that has more roots than fruits.”

“Roots in history throughout centuries. Your names, surnames, your very own history is also our history,” he said.

The sixth Tribuna Espana-Filipinas will be held on Jan. 29-30 at the AIM Conference Center in Makati.

The Spanish delegation will include prominent personages such as Bono, Moreno, Deputy House Speaker Dolors Montserrat, Instituto Cervantes Secretary General Rafael Rodriguez-Ponga and other multisectoral leaders from Spain.

The Philippine delegation will include Budget Secretary Butch Abad, Cabinet Secretary Jose Rene Almendras, NAPC Secretary Joel Rocamora, Education Secretary Armin Luistro and presidential political adviser Ronald Llamas, among others.

Despite our own woes, Spain won

 

[Reashot Xigwin]

Indonesia to import 2,500 ships from China.
Mon, 28 Jan 2013

Jakarta, Jan 28 (IANS) Indonesia will import 2,500 ships from China to improve the logistics and distribution among ports scattered throughout the archipelago.

The Indonesia Chamber of Commerce and Industry or Kadin will import the ships, Xinhua reported.

Kadin has signed an agreement with China worth $5 billion, said Natsir Mansyur, vice chairman of Kadin's trade, distribution and logistics division.

The ships will be delivered within five years starting 2013.

"Indonesia's logistics costs are quite high due to limited infrastructure and armada, we need to boost the logistics operations," Natsir said.

Indonesia is the world's largest archipelago with 17,000 islands.

A report by the World Bank in 2012 showed Indonesia's position in logistics performance index was at 2.94 in the scale of 5, lagging behind its regional peers such as the Philippines and Vietnam.

Indonesia to import 2,500 ships from China to boost logistics performance - Globaltimes.cn

 

[Viet]

Indonesia to import 2,500 ships from China.
Mon, 28 Jan 2013

Wow, that´s a huge order! I wonder why Indonesia just picked China, and not Vietnam?

 

[nufix]

Wow, that´s a huge order! I wonder why Indonesia just picked China, and not Vietnam?

Maybe because China has more shipyards and steel industries, more shipyards means larger production capacity and more steel industries means lesser time to make key materials for the hull. Both results to lesser time needed to build the ships which Indonesia need fast, as stated in the news, the costs for logistic are quite high in here and the solution (adding new ships massively) should be implemented before the logistic costs affect commodity costs and skyrocketing the prices.

 

[Viet]

...

That makes sense. Maybe China offers a loan, too.

 

[nufix]

That makes sense. Maybe China offers a loan, too.

that's possible, 2,500 ships in one order is huge, loan and installment are still needed.