“Maritime Silk Road” Tourism for Future Tourists Oct 28 2014, Macao – China Daily is hosting a Special Panel Session at Global Tourism Economy Forum to explore the likely far-reaching impact of the new “Maritime Silk Road” on the future of the tourism industry in the region. Distinguished leaders in the region’s tourism industry have agreed to share their rich and varied experiences and give their opinions at the panel, to be held between 12 noon and 1.15 p.m. on 28 October, 2014 at Ballroom G-H-J-K in Venetian Hotel, Macao. Panelists include Mr. David Baxby, President and CEO, Global Blue from Switzerland; Mr. Abid Butt, CEO, Banyan Tree Hotels and Resorts from Singapore; Mr. Edmond Ip, Vice-Chairman, Artyzen Hospitality Group from Hong Kong SAR, China; Ms. Wang Ping, Chairman of China Chamber of Tourism and Ms. Zhao Yilu, Chief Strategy Officer, Qunar.com from China. With Asia in general, and China in particular, leading the way, the global tourism industry is expected to grow at unprecedented rates in the foreseeable future as increased international cooperation and understanding are helping to break down travel barriers. Taking center-stage in the dawn of the golden era in regional travel and tourism is the grand economic design, "Maritime Silk Road", as envisioned by Chinese President Xi Jinping in October 2013. The scheme, which is both bold in design and practical to implement, can greatly facilitate not only the development of the tourism industry but also trade and investment. To take full advantage of the expected growth, it is important – particularly so for tourism professionals in Asia Pacific - to be better equipped to meet the needs and demands of the tourists of tomorrow. Tourism industry leaders recognize that they operate in an increasingly diverse and complicated market, and hence are much more willing than before to share knowledge. China Daily is pleased to contribute to this exchange for the benefit of all in the tourism industry. #### About China Daily Asia Leadership Roundtable The China Daily Asia Leadership Roundtable is a by-invitation network of movers and shakers in Asia, providing platforms for focused dialogue, issue investigation, and possible collective action on strategic issues relating to economic, business and social development in Asia. Our aim is to enhance communication and increase mutual understanding between China, Asian and Western countries. Roundtable events are held in major cities across Asia. (http://www.cdroundtable.com)
2014-10-28As economies in South and East Asia rely on domestic consumers for a greater proportion of their GDP, they are increasingly aware of the importance of strong infrastructure. Hard infrastructure like roads, ports, railways and telecommunication networks facilitate trade and commerce and make goods more easily accessible to consumers. Soft infrastructure like good finance and stable legal environments attract investment and make it possible to turn the hard infrastructure into visible economic gains. Achieving a high level of both is a key focus for economies in the region, particularly in China, India and the rapidly growing economies of the Association of Southeast Asian Nations (ASEAN). Massive investments are underway in infrastructure, education and telecommunications, said Zhou Li, publisher and editor-in-chief of China Daily Asia Pacific during a China Daily Special Forum co-hosted with the Asia Society Hong Kong Center on Sept 22. The roundtable event was titled Unleashing Asian Dragons: Infrastructure Investments for the Asia Century. “Asia is going through a momentous period of economic development,” said Zhou. “The 21st century has been dubbed Asia’s century and will see Asia, and ASEAN in particular, experience unprecedented economic growth with massive investments in infrastructure projects and other sectors such as energy, telecommunications and education.” A key example of how infrastructure can facilitate economic growth and trade is a proposal by Chinese President Xi Jinping to develop a maritime Silk Road, which could lead to “enormous investment opportunities for Asia, especially (the Chinese mainland) and ASEAN in such areas as trade, infrastructure and cultural exchanges”. But building infrastructure is expensive and the need for domestic and foreign investment is great, along with the need for private and public participation. Over the next few years, South Asia will require $250 billion per year in infrastructure investment to keep its rate of growth. East Asia, including ASEAN, will need another $600 billion. By 2025, worldwide capital spending on infrastructure could rise by $5 trillion to $9 trillion, at current rates of growth. The biggest hurdle to developing efficient and cost-effective infrastructure skeletons is finding the capital. Governments want to attract more private capital to cut down on their costs but private capital wants some guarantees that their investments will generate returns. So the focus of infrastructure financing is, increasingly, on public-private partnerships (PPPs). “Without infrastructure, no country can achieve sustainable growth,” said Li Yao, CEO of the China-ASEAN Investment Cooperation Fund. “Infrastructure is the key for an economy to achieve efficiency.” The benefits of a strong infrastructure backbone go well beyond smooth roads and fast ports. Connectivity that good infrastructure provides can make societies more fair and equitable by giving everyone access to the means of production, said Li. Another important area is the Internet. Digital connectivity, currently lacking in countries in the region like Myanmar, Laos and Cambodia, can “help people offset the gap between the poor people and the rich countries”, said Li. His fund is already supporting the construction of a fiber optic network in Southeast Asia that would help connect more people. One key proposal put forward by China is to create an Asian Infrastructure Investment Bank. Those who have shown interest are the 10 ASEAN members, South Korea, Pakistan, Kazakhstan, Mongolia, along with Canada, Australia and New Zealand. But more public funding is only part of the puzzle. Private participation is also important. And over the last year, private sector participation in infrastructure PPPs has dropped. In India, where the drop is particularly pronounced, the number of PPP projects fell from 119 in 2012 to 31 last year. A big challenge is a lack of trust in regulatory environments. Both governments and investors want to see more PPPs, however. On the one hand, private investment helps lower the financial risks for governments. On the other, government involvement can help overcome challenges brought about by the developing nature of most markets in Asia. “That is the name of the game, consistency in terms of the rules of engagement,” said Cledan Mandri-Perrott, lead finance officer and PPP specialist for the Singapore Infrastructure Hub at the World Bank Group. “The reality, whether we like it or not, is that in the ASEAN region regulatory risk faces uncertainty.” Thailand is a case in point. The country is solid from a financial perspective. It is strong enough, for example, to issue bonds for infrastructure investment. And yet, there is a lack of political certainty. And uncertainty is a turnoff for investors. Through 2013, regulatory uncertainty rose visibly and the number of PPP projects under way dropped, not only in India but also in other countries around the region. At the moment, China may have the most PPP projects underway with around 60 in the pipeline. To attract more projects, governments need to make the returns attractive to private investors. “That is one of the biggest challenges that we have in the region, to be able to push the pipeline (for PPP projects),” said Mandri-Perrott. New entities like a BRICS (Brazil, Russia, India, China, and South Africa) bank or the proposed infrastructure investment bank can work with more established players like the Asian Development Bank (ADB) or the World Bank to backstop government obligations and, in turn, offset liquidity concerns. “(We) need the right mechanism to develop and manage contingent liabilities,” said Mandri-Perrott. Achieving the “right network effect” is essential, he added. “If we can use the capital markets to look at projects on their merits, I think that would be a big driver,” said Mandri-Perrott. “The challenge in PPPs, particularly in greenfield projects, is involving the capital markets early on. Today (PPPs) don’t, because if you have a bond issuance, you want to have solid capital returns to pay off the bondholders.” As things stand, it is not always easy to attract private players. Banks are reluctant to participate because there are concerns in terms of the cash flow and size of the investment, said Jason Yeung Chi Wai, deputy chief executive at Bank of China (Hong Kong), which is involved in one PPP project in China. “When we talk about infrastructure, most people (think) about the bricks and mortar projects,” said Yeung. “For us, as an investment bank, we look at the financial infrastructure.” “We need to work on a framework that can give confidence for banks,” he added. Even with banks reticent in their involvement, infrastructure investment has gone up by about a quarter in China in the first seven months of this year. Infrastructure investment is responsible for about 10 percent of China’s economic output. Traffic congestion, flooding, sewage and water treatment needs, air quality, food safety and high-speed railway development are all areas that must be addressed. Ultimately, more and better infrastructure does create significant opportunities for the private sector, said Geert Peeters, group director and chief financial officer at China Light and Power (CLP) Holdings, a Hong Kong energy provider with long experience in PPPs. “These days, project financing goes around the world in different formats,” said Peeters. “But with PPPs it is important to look not just at individual projects but also at how they fit with the socioeconomic priorities in each economy,” he added. For CLP, its ultimate goal when taking on projects is to balance sustainability, a reliable and safe supply of energy and reasonable tariffs. “These three objectives very often compete and you need to look for a global optimum,” said Peeters. “This balancing act is our mission and … it needs to be sustainably profitable as well.” Emerging markets have competing priorities and try to balance the environment and their need for growth. “China and India are markets that have created opportunities for us and are moving in the area of PPPs,” said Peeters. There are challenges in both. In China, for example, there is a pollution issue and concerns over the reliability of electric grids, so more focus is needed on environmental concerns and network connectivity. In India and China, it is important to consider connectivity to power networks. For many cities, Hong Kong may offer a useful model, thanks to its combination of government involvement in developing its good infrastructure and the role of private investors in providing working capital. The model, said Peeters, could be used elsewhere just as easily. “As other megacities around the world emerge, more and more are looking at this model,” said Peeters. http://www.chinadailyasia.com/2014-09/26/content_15171144.html
2014-09-26China’s first commercial nuclear power plant at Daya Bay in southern Guangdong Province is best known as one of the earliest and largest joint venture projects undertaken by public and private sectors ever since the country opened up to international trade in the late 1970s. Decades later, China has witnessed propelling growth and has emerged as the world’s second largest economy. But while private investors are eager to share a slice of China’s recent infrastructure boom, many soon realize that the country is still struggling to enhance private capital participation in predominantly State-funded infrastructure initiatives. “We still have a long way to go. More than 90 percent of power assets are State-owned in China,” said Geert Peeters, group director and chief financial officer at China Light and Power (CLP) Group, at a roundtable session co-presented by China Daily Asia Pacific and Asia Society Hong Kong Center on Sept 22. The event was titled Unleashing Asian Dragons: Infrastructure Investments for the Asia Century. The CLP Group financed the Daya Bay nuclear station and holds a 25 percent stake in the power plant. The State-owned China Guangdong Nuclear Power Group owns the remaining shares. There is no denying that infrastructure remains a key engine of growth. “Look at the long list of problems China needs to tackle in infrastructure — traffic congestion, power shortages, urban flooding, ecological and environmental challenges, sewage treatment, air (pollution) and food safety,” said Jason Yeung Chi Wai, deputy chief executive of Bank of China (BOC) Hong Kong. “Infrastructure is a convenient option for governments to control fiscal policies when countries need to boost their economy,” he added. In April, the Chinese leadership pledged to accelerate the construction of railways and housing for the poor by unveiling 80 major infrastructure projects to arrest economic slowdown and create job opportunities. These projects span from railway to harbor construction, and from IT to clean energy projects such as wind and solar power. Given these massive projects in the pipeline, it is not surprising that infrastructure investment in China has risen by 25 percent from January to July this year. Its contribution to GDP has reached 10.9 percent in the same time period this year, from last year’s 5.5 percent, BOC’s Yeung pointed out. Despite the rosy prospect for infrastructure development in China, Yeung remains cautious. “Infrastructure is also about financial infrastructure,” he said. BOC Hong Kong has co-financed a gas project in the Chinese mainland with the Asian Development Bank and other financial institutions. What concerns the commercial banker is a lack of diversity in funding resources. Currently, infrastructure financing is either from direct public funding by the central government or indirect funding from local governments. For instance, the Chinese government provides more than 90 percent of funding for airports and 80 percent of power and utilities projects. The private sector only comes in as the third source. Official data shows private-sector investment accounted for about 60 percent of China’s total capital investment. “Significant infrastructure demand in China will require diversification of funding resources,” Peeters said, adding that the model for financing China’s infrastructure needs to change. Echoing Peeters is BOC’s Yeung. “Right now, money is predominantly from (State-owned) banks. Financing by capital markets in China is very much underdeveloped,” said Yeung, adding that public-private partnerships (PPPs) can provide further financing in infrastructure development. Last year, China led the way with 60 infrastructure projects with private participation. This was followed by 51 in Brazil and 31 in India, said Cledan Mandri-Perrott, lead finance officer and PPP specialist for the Singapore Infrastructure Hub at the World Bank Group. Chinese investors including those from Hong Kong sponsored the 60 projects, either alone or in joint ventures, although 93 percent of these deals were inside China, World Bank data showed. Creating an environment conducive to PPPs is equally important. This particularly holds true for developing countries where political instability remains one of the biggest deterrents for banks and private investors. “We are talking about projects lasting for decades and those with thresholds influenced by political situations. That is why some banks are reluctant to participate,” Yeung said. “What we believe is most needed is public sector oversight in a regulatory framework that can give confidence to private investors.” Experts agree that grievances from the private sector are not disregarded as reforms are gradually underway. According to the communique of the Third Plenum, the first policy blueprint unveiled by the new leadership under President Xi Jinping and Premier Li Keqiang in November last year, “We must ensure the decisive role of the market in allocating resources and further eliminate different forms of monopoly.” Earlier this year, the State Council decided to encourage private investment to enter fields that used to be dominated by State-owned enterprises (SOEs). Public utilities, airport construction, oil and gas projects will be next on the agenda to open up to private investment. “We note and welcome China’s reforms,” said CLP’s Peeters “and the quest of SOEs to access the international capital market,” he added. jennifer@chinadailyhk.com http://www.chinadailyasia.com/2014-09/26/content_15171145.html
2014-09-26As the Association of Southeast Asian Nations (ASEAN) is becoming a large community without boundaries, the cost of infrastructure projects will be lower, said Cledan Mandri-Perrott, lead finance officer and public-private partnership (PPP) specialist, Singapore Infrastructure Hub with the World Bank Group. “(While) we wouldn’t have a perfect price at the beginning, but, we will have a benchmark in other countries for reference,” said Mandri-Perrott. “If you look at OECD (Organisation for Economic Cooperation and Development) countries, there has been a decrease in cost. When the risks are fully understood, the premium will gradually decrease accordingly. So does the cost,” he told China Daily. Based in Singapore, Mandri-Perrott has been involved over the past 20 years in infrastructure projects and has experience in developing and implementing project finance transactions particularly. He recommended greater use of the PPP — arrangements of services and responsibilities shared by both the public and private sectors — for infrastructure projects in the ASEAN region, as the region aims to achieve a sustainable economic development. “The question is what should be the ratio between public money and private money, and how to achieve the balance of relevant risks between these two sectors and benefit the community at the same time.” The forthcoming ASEAN Economic Community by the end of 2015 will remove trade barriers among its 600 million population region. ASEAN infrastructure investment grew by 8.5 percent over the previous year to $19.4 billion and comprised 12.9 percent of global investment. The whole region implemented 85 new projects, data from the World Bank show. He said there are massive opportunities, as there are many trans-boundary infrastructure projects, including those in energy and railway sectors. “What I am worried about projects in ASEAN is that people are talking about very big projects, while actually small projects, which will improve efficiency, such as sewage or waste water treatment, should be done in a much systemic way,” he commented. There are many other challenges, such as lack of quality in project preparation, week contractual environment and currency devaluation. He suggested local government should manage those projects by better prioritization, profitability and feasibility, and encourage the participation of small companies. Data from the World Bank show that China led the way in 2013 (60 projects), followed by Brazil (51) and India (31). Mandri-Perrott also named many fields that require further investment in the coming years for China, such as telecom and urban transportation, which will directly impact people daily life. Geert Peeters, group director and chief financial officer with CLP Holdings Ltd, said that there are three perspectives to balance when conducting infrastructure projects, namely, caring for the environment, reliable and safe supply, and reasonable tariff. “There are (also) opportunities for China’s utility sectors, due to its highly efficiency thermal generation, large scale renewable energy in wind and solar, and ambitious nuclear expansion plan,” said Peeters. Mandri-Perrott added that the biggest issue with China’s infrastructure is that PPP has not been properly used as a tool. “We are seeing that the local government is showing more interest in using PPP for project financing, instead of relying on normal commercial banking.” He suggested local governments should diversify their sources by using financing from the local capital market and institutional investors. linjingcd@chinadaily.com.cn http://www.chinadailyasia.com/2014-09/25/content_15170771.html
2014-09-25Hong Kong’s approach to building infrastructure by using a combination of private sector incentives and government support could be a useful model for cities globally. Speaking on Sept 21 at a China Daily Special Forum on how to fund infrastructure building in Asia, Geert Peeters, group director and chief financial officer at CLP Holdings, said popular as they are, however, there are a number of challenges in creating an environment conducive to absorbing more and larger public-private partnerships (PPPs) infrastructure projects. “As other megacities around the world emerge, more and more are looking at this model,” said Peeters. CLP is a Hong Kong energy provider listed on the Hong Kong stock exchange that has long experience in PPPs. The China Daily Special Forum was co-hosted by the newspaper and the Asia Society. Emerging Asian dragons Massive investments in infrastructure, telecommunications and education are keys to the rapid regional economic growth, said Zhou Li, publisher and editor-in-chief of China Daily Asia Pacific. These investments, combined with proposals for a new Maritime Silk Road put forward by Chinese President Xi Jinping and plans for a new infrastructure investment bank, could drive infrastructure construction in the region. “All these augur well for the future of emerging Asian dragons,” said Zhou. “This forum may be able to shed some light on how these strategic initiatives can stimulate Asian economic growth, the role that Asian investors play in turning these projects into reality and how Asian countries can cooperate in meeting the challenges and seizing the opportunities that lie ahead.” A concern in Asia is regulatory uncertainty. Stable regulatory environments help attract investors but the opposite is also true. Hong Kong, with its mixture of strong financial markets and stable regulations, is an ideal venue for partnerships between government and the private sector, said Peeters. “These days, project financing goes around the world in different formats,” said Peeters, but with PPPs it is important to look not just at individual projects but also about “how they fit with the socio-economic priorities in each economy”. Investments in infrastructure can be profitable. CLP has seized opportunities in both India and the Chinese mainland. The number of PPP projects generally dropped in 2013 across the region but the pendulum appears to be moving the other way. On the mainland, for example, infrastructure investment has gone up 25 percent in the first six months of this year. All told, these investments are responsible for around 10 percent of the country’s economic output. RMB financing access And the Chinese mainland is a big player in infrastructure investment both at home and abroad. This role is helping popularize the use of the renminbi (RMB) to fund projects. More access to RMB-based financing could help the region tackle its growing infrastructure needs. Economic growth in Asia is increasingly tied to more efficient and more interconnected infrastructure. South Asia and East Asia, including the Association of Southeast Asian Nations (ASEAN) need more than $800 billion per year in infrastructure investment to meet their needs. Around the world, capital spending on infrastructure could rise by $5 trillion to $9 trillion by 2025, at current rates of growth. The importance of infrastructure to achieve sustainable economic growth is not in doubt, said Li Yao, chief executive officer at the China-ASEAN Investment Cooperation Fund. The benefits of a strong infrastructure backbone go well beyond smooth roads and fast ports. Connectivity, the links between people that good infrastructure provides, can make societies more fair and equitable by giving everyone access to the means of production, said Li. “Infrastructure is so important to Asia,” said Li. “Infrastructure is not (just) luxury goods (and hard infrastructure) only for the rich but also covers soft (infrastructure).” Hard infrastructure refers to roads, ports, railways and telecommunication networks for facilitating trade and commerce and to make goods more easily accessible to consumers. Soft infrastructure refers to good finance and the stable legal environment for attracting investment and making it possible to turn the hard infrastructure into visible economic gains. While pointing out that infrastructure is important for economic growth, efficiency and values, Li said one important area that cannot be ignored is the Internet. Connectivity, currently lacking in countries in the region like Myanmar, Laos and Cambodia, can “help people offset the gap between the poor people and the rich countries”, he said. His fund is already supporting the construction of a fiber optic network in Southeast Asia that would help connect more people. Yet the question of funding remains. And regulatory stability is key to attracting more funding. As they rely on domestic consumers for a greater portion of the gross domestic products, economies in South and East Asia are increasingly aware of the importance of strong infrastructure. However, the biggest hurdle to developing efficient and cost-effective infrastructure skeletons is finding the capital. Governments want to attract more private capital to cut down on their costs, but private capital wants some guarantees that their investments will generate returns. So the focus of infrastructure financing is, increasingly, on PPPs. Demand for PPPs Both governments and investors want to see more PPPs. On the one hand, the private investment helps to lower governments’ financial risks, but on the other, government involvement can help overcome challenges brought about by the developing — and changing — nature of most markets in Asia. “The reality is that the need is there, the pipeline is there but the project implementation, that is where the need is,” said Cledan Mandri-Perrott, lead finance officer and PPP specialist at the Singapore Infrastructure Hub of the World Bank. “That is one of the biggest challenges that we have in the region, (that is) to be able to push the pipeline … If we want to do PPPs we need to have the right balance.” Thailand is a case in point. The country is solid from a financial perspective. It is strong enough, for example, to issue bonds for infrastructure investment. And yet, there is a lack of political certainty. And uncertainty is scary to investors. To attract more projects, governments need to make the returns attractive to private investors. BRICS banks New entities like a BRICS bank or the proposed infrastructure investment bank can work with more established players like the Asian Development Bank (ADB) or the World Bank to backstop government obligations and, in turn, offset liquidity concerns. “(We) need the right mechanism to develop and manage contingent liabilities,” said Mandri-Perrott. “The alternative is to keep doing what we at the World Bank or the ADB have been doing for 50 years, which is to fund public spending.” “It is not just about building things. It is about making sure that you are building the right things, about achieving the right network effect.” “If we can use the capital markets to look at projects on their merits, I think that would be a big drive,” said Mandri-Perrott. “The challenge in PPPs, particularly in greenfield projects, is involving the capital markets early on … today they don’t because if you have a bond issuance you want to have a solid capital returns to pay off the bondholders.” As things stand today, it is not always easy to attract private players. Banks are reluctant to participate because there are concerns in terms of the cash flow and the size of the investment, said Jason Yeung Chi-wai, deputy chief executive at Bank of China (Hong Kong), which is involved in just one PPP project on the mainland. “When we talk about infrastructure, most people (think) about the bricks and mortar projects,” said Yeung. “For us, as an investment bank, we look at the financial infrastructure. We need to work on a framework that can give confidence for banks.” The Hong Kong model could prove to be an effective one as it is the clear and effective use of PPPs. For many cities, Hong Kong may offer a useful model thanks to its combination of government involved in the development of the city’s famously good infrastructure and the role of private investors in providing working capital. The model, said Peeters, could be used elsewhere just as easily. Around the region, even in the face of uncertainty, PPPs have been used well at times, said Peeters. “China and India are markets that have created opportunities for us and are moving in the area of PPPs,” said Peeters. http://www.chinadailyasia.com/2014-09/25/content_15170773.html
2014-09-232014年9月22日,香港 - 「中國日報亞洲領袖圓桌論壇」與「亞洲協會香港中心」聯手舉辦題為「龍騰亞洲:基建投資新世代」的論壇。今日九時至十一時,亞洲金融、基建投資界翹楚匯聚亞洲協會香港中心,共同探討亞洲基礎建設及戰略發展與合作等重要議題。 千禧年以來,亞太地區的經濟發展舉世矚目,東西方不約而同稱此為「亞洲之龍」的騰飛,並預示二十一世紀將是「亞洲世紀」。然而,亞洲地區,尤其是東盟各成員國之間需要在如交通、能源、電信、環境、教育和自然資源等基礎設施建設方面加強投資,才可以更好地應對未來的機遇與挑戰。 2012年,亞洲基礎設施建設的年度開支佔世界總額的49%;到2050年,亞洲基建投資金額預計將增加一倍。同時,基礎設施項目中傳統的「公私合作」(PPP)模式已經不能滿足於亞洲不斷增加的投資需求。因此,許多亞洲國家及地區正在共同策劃和實施一系列戰略舉措,如擬設立亞洲基礎設施投資銀行,共建二十一世紀「海上絲綢之路」,以惠及亞洲廣大地區。 中國日報亞洲領袖圓桌論壇構建了一個核心的精英對話平臺,邀請了多位亞洲金融、基建投資業界領袖到場,共同探討以上戰略性舉措將如何促進亞洲的經濟增長,中國與東盟於亞洲基礎設施投資藍圖的發展戰略、趨勢、機遇以及重大基礎設施項目如何長遠造福亞洲。 中國日報亞太分社社長兼總編輯周立先生在開場致辭中表示,亞洲在這個經濟騰飛的重要時期需要改善貿易及基礎設施,亦需促進文化交流。他代表論壇歡迎本次演講嘉賓:中國銀行(香港)有限公司副總裁楊志威先生;中國——東盟投資合作基金總裁李耀博士;中電控股有限公司集團總監及財務總裁彭達思先生以及世界銀行集團新加坡基礎建設中心主任財務總監及公私合作專家Cledan MANDRI-PERROTT先生。 -完- 關於中國日報亞洲領袖圓桌論壇 中國日報亞洲領袖圓桌論壇是一個由亞洲國家和地區的政、商、學界領袖和社會精英參與的高端對話和交流平臺,圍繞亞洲地區經濟、商業、產業和社會發展等具有戰略影響的重要議題展開討論,至今已經舉辦了30屆,逾萬名決策精英參與。(http://www.cdroundtable.com)
2014-09-22SINGAPORE: Businesses can look forward to more seamless customs procedures as part of deeper economic integration between Association of Southeast Asian Nations (ASEAN) member countries, said Minister for Trade and Industry Lim Hng Kiang on Monday (Sep 8). Speaking at the ASEAN Business Club Forum 2014, Mr Lim highlighted that almost all goods already move across borders in the region without tariffs. With such internal processes in place, ASEAN is now ready to take the next step and look to eliminate non-tariff trade barriers between its member countries. Some of the initiatives include a self-certification system, which will allow exporters to certify export documents on their own, and an initiative called the ASEAN Single Window. The ASEAN Single Window seeks to link the 10 ASEAN countries electronically, which would help businesses reduce cost and enjoy simpler and faster custom clearance of goods in ASEAN. ROLE OF PRIVATE SECTOR As governments work to remove trade barriers within the region, the private sector can play its part by identifying key areas to improve on, said Mr Lim. "ASEAN is not only about inter-government discussions. Businesses play a critical role, in telling us where the barriers to trade lie and where the bottlenecks in our regional and global value chains are. To that end, ASEAN countries are now working to develop its post-2015 economic agenda," he noted. However, businesses may not be that forthcoming, particularly in the finance, telecoms and aviation industries. According to AirAsia, if companies can overcome their differences, it would be a big step forward. AirAsia's Group CEO, Tony Fernandes, said: "You can clearly see there is a lack of trust. So if the private industry agreed on some metrics and then went to the regulators, you would make the regulators' life a lot easier. "So if AirAsia, Thai Airlines, Malaysia Airlines, Singapore Airlines, Jetstar, Tiger all agreed on something and said, 'Hey, the industry agrees on this', that is going to make it a lot easier for the regulators." Together, ASEAN member states have a consumption and production market of 600 million people, and an average annual GDP growth of 6 per cent. By 2050, the grouping is forecast to be the fourth-largest economy in the world. There is still plenty to do as the 2015 deadline for economic integration approaches. Even if ASEAN falls short of the target, industry players said they remain optimistic that post-2015, the regional grouping will be able to build on what it has achieved so far. http://www.channelnewsasia.com/news/business/singapore/more-seamless-customs/1351066.html
2014-09-14ASEAN businesses boost joint AEC formation efforts Over 300 business executives from the Association of Southeast Asian Nations (ASEAN) gathered at the ASEAN Business Club (ABC) Forum 2014 in Singapore on September 8-9 to tackle trade and industry issues and support the formation of the ASEAN Economic Community (AEC) in late 2015. In his opening speech, Singaporean Minister of Trade and Technology Lim Hng Kiang stated that the integration is a turning point for ASEAN, and the bloc’s member states are continuously working towards the fast-approaching establishment of AEC, which will create a single market and production base by 2015. Tariffs were lifted on almost all the region’s goods, Kiang said, adding that ASEAN was ready to take action to remove the region’s non-tariff barriers. The minister also underlined the important role ASEAN businessesplayed in shaping the AEC thanks to their deep understanding of global value chains and the region’s trade barriers. Talking to Vietnam News Agency correspondents, former ASEAN Deputy Secretary General Pushmanathan Sundram said the AEC would make ASEAN a more open community, requiring regional governments to increase their support for national enterprises, particularly small and medium-sized firms, to help them improve their competitiveness. ABC, a public initiative, aims to provide a forum for the region’s business leaders to establish links and build partnerships. It also seeks to improve the ASEAN business community’s preparations for AEC. Participants focussed their discussions on six key topics during the two-day forum, including laws and tariffs, the automobile industry and manufacturing, financial services and capital market, oil and gas exploitation, food and agriculture, and the retail market. ASEAN comprises ten member states, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam.-VNA http://en.vietnamplus.vn/Home/ASEAN-businesses-boost-joint-AEC-formation-efforts/20149/55096.vnplus
2014-09-14WITH 2015 just around the corner, few expect the initial vision of an Asean Economic Community (AEC) to be fully realised by the end of next year as targeted. But Singapore's businesses - particularly small and medium enterprises (SMEs) - cannot afford to put off considering the impact of a common market on their future. By most accounts, the region has fallen behind AEC targets to lower and abolish non-tariff and regulatory barriers to the free flow of goods, services and investment. Yet, the progress made so far is not to be sniffed at - at least 70 per cent of integration work is already done. Earlier this week, addressing the Asean Business Club Forum, Singapore Trade and Industry Minister Lim Hng Kiang noted that virtually all goods already move throughout the 10 Asean countries tariff-free. Companies can also look forward to cost savings from simpler and faster customs clearance of goods with new electronic links. Anyone doing business in this region should be aware of the unprecedented opportunity opened up by a common Asean market. It is already a consumption and production market of 600 million people and the seventh-largest economy globally, with a gross domestic product (GDP) of US$2.3 trillion - the third-largest in Asia. Asean is also projected to grow at an average pace of 6.4 per cent a year over the two decades until 2030, the Asian Development Bank Institute says. Nominal GDP could reach US$6.6 trillion by then. Amid the optimism over Asean's growth prospects though, there has been a tacit acknowledgement by political leaders that AEC 2015 is now less a target to be met and more a milestone in a far longer journey. "The AEC 2015 journey will not be the end of the road for Asean," Mr Lim said this week. The longer full economic integration takes, the more important it will be that businesses get involved in shaping the post-2015 economic agenda for the region. After all, as Mr Lim said, they know best where the barriers to trade, and labour and capital flows lie. But businesses would do well to consider the challenges the AEC presents too - heightened competition could hit SMEs hardest. One Boston Consulting Group survey of over 230 business leaders and government officials found that more than 80 per cent expect SMEs to lose out amid more intense competition after the AEC comes into force. When Singapore assumed the chairmanship of the Asean SME Working Group in June, one clear goal was to equip SMEs to take on the opportunities and challenges that will come with the AEC. This meant raising awareness of ongoing initiatives to improve access to financing and technology, strengthen export capacity, promote innovation and develop human resources for SMEs. Asean's SMEs, and Singapore's, need to make sure they are positioning themselves to gain, rather than lose, from the AEC.
2014-09-14[SINGAPORE] The chief executive of one of Indonesia's biggest conglomerates, Lippo Group's James Riady admitted that the Indonesian government made a "big mistake" when it stonewalled Singapore bank DBS Group Holdings' S$7.3 billion takeover of Bank Danamon last year. "Do I agree with what happened? I absolutely do not. I think it sends a wrong message. Once in a while, governments make mistakes and I think this was one big mistake they made," said Mr Riady at a panel discussion at the Asean Business Council (ABC) forum on Tuesday themed "Leadership and transformation in Asean". Mr Riady was responding to a question on whether protectionistic policies in some Asean member countries, such as the Indonesian government's move to tweak foreign ownership limits in local banks which led DBS to pull the plug on the deal last year, were standing in the way of Asean aspirations to build a single, unified market. He, however, added that to gain a proper perspective on Indonesia's policy in the banking sector, it should not be viewed through the narrow lens of just a single point of time but over the past decades.
2014-09-14While China may have been catching up with some of the world’s rich countries when it comes to creating billionaires, one paradox remains: It has made limited progress in developing global behemoths like IBM, Samsung and Apple. China’s billionaire population is now the world’s second largest at 152, trailing only the United States, which has 492 billionaires this year, according to Forbes, and outnumbering those of most developed countries such as Japan. “The ecosystem of Chinese enterprises in China is not very healthy,” Xiang Bing, founding dean and professor at Beijing-based Cheung Kong Graduate School of Business, which includes prominent businessmen, like e-commerce giant Alibaba’s Jack Ma and Fu Chengyu, chairman of State-owned China Petroleum and Chemical Corp (Sinopec), among its illustrious alumni. “China has State-owned enterprises (SOEs), but it doesn’t have modern corporates, which are so essential for the success of the United States and Japan. They are so crucial for creating middle class in society,” Xiang told the audience at a forum organized by the ASEAN Business Club, which kicked off in Singapore on Sept 8. The two-day event was a private sector collaboration that aimed to promote economic integration among the member states of the Association of Southeast Asian Nations (ASEAN). The forum, which revolved around the theme ASEAN Game Changer, was attended by 300 delegates including scholars, business leaders and government officials from 12 countries across the region. Like China, ASEAN is also struggling to unlock the potential of the private sector. Private businesses in the region have been frustrated by extensive red tape, lack of progress in standards harmonization, and non-trade barriers, which include quotas, licensing and customs clearance. As the world’s seventh largest economy, ASEAN has a consumer market of 600 million people and an average GDP growth rate of 6 percent annually, higher than the global average of 4 percent. The 10-nation regional group had a combined GDP of $2.3 trillion last year, making it the third largest economy in Asia after China and Japan. By the end of 2015, ASEAN plans to launch the ASEAN economic community (AEC) to create a single market and production base with free flow of goods, services and investments. But the private sector across the region is not too optimistic about progress toward economic integration. “The biggest challenge is to implement the (remaining) 20 percent measures, which can be hard to agree on,” said Pushpanathan Sundram, managing director of consulting firm EAS Strategic Advice. ASEAN states have implemented nearly 80 percent of all measures required for realizing the AEC. Tariffs are basically zero for the six older ASEAN members — Brunei, Indonesia, Malaysia, Singapore, Thailand and the Philippines. For newer members including Cambodia, Laos, Myanmar and Vietnam, tariffs are between 0 and 5 percent, said Sundram, also a former deputy secretary-general of ASEAN for AEC. “The reality is that we are a long, long way from where we need to be. There is too much government involvement,” said Piyush Gupta, CEO of the Development Bank of Singapore (DBS), Southeast Asia’s largest bank by assets. “More than 50 percent of the issues faced in ASEAN are inertia, not (only) protectionism,” he said. Last year, DBS scotched a deal valued at around $7 billion to acquire Indonesia’s Bank Danamon after the country’s central bank blocked foreign ownership of local banks exceeding a 40 percent stake. “That (disapproval) was one mistake that (Indonesia) made,” said James Riady, CEO of Lippo Group, an Indonesian conglomerate with businesses spanning from retail and real estate to healthcare. “It’s easy for businesspeople to criticize governments … but businessmen tend to be more transactional; when we look at ASEAN, we need to be transformational,” he said. Nazir Razak, chairman of the Kuala Lumpur-based CIMB Group, warned that regional economic integration will make little progress if member states are still hesitant about ASEAN. “ASEAN is nothing without Indonesia unless the new leadership steps up and tones down on economic nationalism; ASEAN integration efforts could stall,” he said. Similarly, CIMB group, the second largest financial services provider in Malaysia with a market capitalization of 61.5 billion ringgit ($19.39 billion), has only been allowed to open two branches in Singapore due to banking regulations on foreign banks. “Non-tariff (barriers) lead to far greater hindrance than tariffs,” said Razak. According to some analysts, one thing that complicates ASEAN is that governments often play a significant role in businesses such as stock exchange and protectionist policies. Echoing Razak, Tony Fernandes, founder and CEO of AirAsia, the largest no-frills carrier in the region, said: “For ASEAN to be relevant, it has to be inclusive and engage with the private sector and young generation. “Governments have to distinguish if they are regulators, facilitators of business — or if they are in business,” he added. In China some see privatization as a neat solution to problems involving State-owned enterprises (SOEs) in China. “Sometimes it’s far (too) utopian when it comes down to privatization,” said Xiang from the Cheung Kong Graduate School of Business, adding that reform efforts would be futile if leadership succession in conglomerates still lay in the hands of a few wealthy families. Speaking at a China Daily co-branded session on Chinese transformation at the recent ASEAN forum, Xiang said: “The private sector is far more prominent in China than you see in any major economy.” Last year, the sector generated nearly 80 percent of jobs and 50 percent of China’s GDP — surpassing those of Singapore and the US, Xiang said. Within ASEAN, some government officials agree that deepening economic integration has to be done in a manner that is relevant to today’s business realities. “As the engine of growth, businesses are well-positioned to provide feedback on government intervention,” said Kan Zaw, Union Minister for National Economic Planning and Economic Development of Myanmar. Adopting a similar view, Lim Hng Kiang, minister of trade and industry of Singapore, said: “ASEAN is not only about inter-government discussions. Businesses play a critical role in telling us where the barriers to trade lie and where the bottlenecks in our regional and global value chains are. “The key forward for ASEAN is integration and businesses can play a key part in it,” he said. jennifer@chinadailyhk.com
2014-09-12China’s two-way investment with the Association of Southeast Asian Nations (ASEAN) has been on the rise, although its full potential is yet to be realized, experts say. Part of it has to do with “the natural complementary aspect of the Chinese and ASEAN economies”, said Xiang Bing, dean of the Cheung Kong Graduate School of Business in Beijing. At a China Daily co-branded session on the sidelines of the ASEAN Business Club Forum on Sept 8, Xiang spoke on China’s forthcoming transformation and its global implications. Three decades after China opened up its economy in the late 1970s, it became a magnet for foreign direct investment (FDI), second only to the United States. But those were the days. The reality is that China’s outbound investment has surpassed its inbound investment since July. In short, Chinese enterprises are eager to leverage resources regionally and globally. China’s FDI, excluding financial investment, has been growing at its weakest pace in two years. In July, it plummeted 16.95 percent from a year earlier to $7.81 billion. Meanwhile, China’s outbound direct investment (ODI) by non-financial companies surged nearly 85 percent from last year to $9.21 billion in July. So now the question is, where are Chinese enterprises headed? The 10-nation ASEAN bloc is a natural choice for China, Xiang theorizes, due to the geographic and cultural proximity of the two. Not surprisingly, Chinese investment in ASEAN has soared. It reached $5.9 billion in 2011, up from just $120 million in 2003, official data show. China is already the largest trading partner of ASEAN. And ASEAN has overtaken Japan to become the third largest trading partner of China since several years ago. With a population of 600 million people, ASEAN has a combined GDP of 2.3 trillion, making it the largest economy in Asia after China and Japan. Annual growth, above 6 percent, makes it an attractive market compared to the global average of 4 percent. “ASEAN is a fantastic place when you look at the 4.2 percent growth rate in the United States,” said Rodney Ward, chairman of global corporate and investment banking at Bank of America Merrill Lynch in Asia Pacific, adding that a strong euro has dampened exports. “(ASEAN) has come a long way to become the most attractive investment destination,” Ward added. ASEAN’s attractiveness to foreign investment could heighten with the launch of the ASEAN economic community (AEC) to create a single market with free flow of goods and services by the end of 2015. “The world is inevitably coming together as one because of globalization. ASEAN only makes a better place to deal with China and India,” said Tony Fernandes, founder and chief executive officer of AirAsia, the region’s largest low-cost carrier. “The pie is much bigger with ASEAN. I am a living proof of it. If you embrace economic integration, you may have a smaller slice but the pie will be much bigger,” he said. Numerous opportunities exist in infrastructure investment, such as in power plants, roads, railways and sanitation facilities. According to the Asian Development Bank, ASEAN requires infrastructure spending of $600 billion by 2020. In contrast, ASEAN investment in the Chinese mainland only shares a small piece of a big pie. Hong Kong, Japan, Singapore, South Korea, Taiwan and the US are top investors, dominating 94 percent of overseas direct investments in the Chinese mainland. However, in the absence of mega projects, investment flow from ASEAN to the Chinese mainland fell nearly 13 percent from last year to $4.18 billion in first seven months. Part of this has to do with intense local competition facing ASEAN investors while robust local players already enjoy handy access to capital and technology. With a changing landscape and China being the second largest economy, “(ASEAN members) have to be among the very best from around the globe to play in the China market,” Xiang said. The silver lining for ASEAN-China synergy however lies in agriculture. For instance, rice-exporting economies such as Thailand and Vietnam enjoy a comparative advantage. “China needs to feed itself — a 1.3 billion population,” said Xiang. Rapid urbanization in China also means an unprecedented opportunity for foreign players, including ASEAN investors. The official urbanization rate in China was about 53 percent last year, compared to about 80 percent in the US. Xiang believes a bigger game changer for investors lies in China’s gradual deregulation in sectors such as finance, telecommunications, education, culture, sports and healthcare. For instance, the healthcare sector only contributes 5.3 percent of China’s GDP, compared to 18 percent in the US. “Chinese economic openness is often understated,” Xiang said, assuring investors. “China is far more open than you think.” For example, Cisco Systems, a Silicon Valley-based network provider, is said to have built a 70 percent share of China’s leading Internet infrastructure projects, said Xiang. Other global companies have also done well. Yum Brands, parent company of fast-food chain Kentucky Fried Chicken, had half of its revenue generated in China last year, while electronics giant Samsung made a record $13 billion sales in China. “Given that the Chinese economy continues to open, there will be great opportunities for ASEAN,” Xiang concluded.
2014-09-12“Maritime Silk Road” Tourism for Future Tourists Oct 28 2014, Macao – China Daily is hosting a Special Panel Session at Global Tourism Economy Forum to explore the likely far-reaching impact of the new “Maritime Silk Road” on the future of the tourism industry in the region. Distinguished leaders in the region’s tourism industry have agreed to share their rich and varied experiences and give their opinions at the panel, to be held between 12 noon and 1.15 p.m. on 28 October, 2014 at Ballroom G-H-J-K in Venetian Hotel, Macao. Panelists include Mr. David Baxby, President and CEO, Global Blue from Switzerland; Mr. Abid Butt, CEO, Banyan Tree Hotels and Resorts from Singapore; Mr. Edmond Ip, Vice-Chairman, Artyzen Hospitality Group from Hong Kong SAR, China; Ms. Wang Ping, Chairman of China Chamber of Tourism and Ms. Zhao Yilu, Chief Strategy Officer, Qunar.com from China. With Asia in general, and China in particular, leading the way, the global tourism industry is expected to grow at unprecedented rates in the foreseeable future as increased international cooperation and understanding are helping to break down travel barriers. Taking center-stage in the dawn of the golden era in regional travel and tourism is the grand economic design, "Maritime Silk Road", as envisioned by Chinese President Xi Jinping in October 2013. The scheme, which is both bold in design and practical to implement, can greatly facilitate not only the development of the tourism industry but also trade and investment. To take full advantage of the expected growth, it is important – particularly so for tourism professionals in Asia Pacific - to be better equipped to meet the needs and demands of the tourists of tomorrow. Tourism industry leaders recognize that they operate in an increasingly diverse and complicated market, and hence are much more willing than before to share knowledge. China Daily is pleased to contribute to this exchange for the benefit of all in the tourism industry. #### About China Daily Asia Leadership Roundtable The China Daily Asia Leadership Roundtable is a by-invitation network of movers and shakers in Asia, providing platforms for focused dialogue, issue investigation, and possible collective action on strategic issues relating to economic, business and social development in Asia. Our aim is to enhance communication and increase mutual understanding between China, Asian and Western countries. Roundtable events are held in major cities across Asia. (http://www.cdroundtable.com)
2014-10-28As economies in South and East Asia rely on domestic consumers for a greater proportion of their GDP, they are increasingly aware of the importance of strong infrastructure. Hard infrastructure like roads, ports, railways and telecommunication networks facilitate trade and commerce and make goods more easily accessible to consumers. Soft infrastructure like good finance and stable legal environments attract investment and make it possible to turn the hard infrastructure into visible economic gains. Achieving a high level of both is a key focus for economies in the region, particularly in China, India and the rapidly growing economies of the Association of Southeast Asian Nations (ASEAN). Massive investments are underway in infrastructure, education and telecommunications, said Zhou Li, publisher and editor-in-chief of China Daily Asia Pacific during a China Daily Special Forum co-hosted with the Asia Society Hong Kong Center on Sept 22. The roundtable event was titled Unleashing Asian Dragons: Infrastructure Investments for the Asia Century. “Asia is going through a momentous period of economic development,” said Zhou. “The 21st century has been dubbed Asia’s century and will see Asia, and ASEAN in particular, experience unprecedented economic growth with massive investments in infrastructure projects and other sectors such as energy, telecommunications and education.” A key example of how infrastructure can facilitate economic growth and trade is a proposal by Chinese President Xi Jinping to develop a maritime Silk Road, which could lead to “enormous investment opportunities for Asia, especially (the Chinese mainland) and ASEAN in such areas as trade, infrastructure and cultural exchanges”. But building infrastructure is expensive and the need for domestic and foreign investment is great, along with the need for private and public participation. Over the next few years, South Asia will require $250 billion per year in infrastructure investment to keep its rate of growth. East Asia, including ASEAN, will need another $600 billion. By 2025, worldwide capital spending on infrastructure could rise by $5 trillion to $9 trillion, at current rates of growth. The biggest hurdle to developing efficient and cost-effective infrastructure skeletons is finding the capital. Governments want to attract more private capital to cut down on their costs but private capital wants some guarantees that their investments will generate returns. So the focus of infrastructure financing is, increasingly, on public-private partnerships (PPPs). “Without infrastructure, no country can achieve sustainable growth,” said Li Yao, CEO of the China-ASEAN Investment Cooperation Fund. “Infrastructure is the key for an economy to achieve efficiency.” The benefits of a strong infrastructure backbone go well beyond smooth roads and fast ports. Connectivity that good infrastructure provides can make societies more fair and equitable by giving everyone access to the means of production, said Li. Another important area is the Internet. Digital connectivity, currently lacking in countries in the region like Myanmar, Laos and Cambodia, can “help people offset the gap between the poor people and the rich countries”, said Li. His fund is already supporting the construction of a fiber optic network in Southeast Asia that would help connect more people. One key proposal put forward by China is to create an Asian Infrastructure Investment Bank. Those who have shown interest are the 10 ASEAN members, South Korea, Pakistan, Kazakhstan, Mongolia, along with Canada, Australia and New Zealand. But more public funding is only part of the puzzle. Private participation is also important. And over the last year, private sector participation in infrastructure PPPs has dropped. In India, where the drop is particularly pronounced, the number of PPP projects fell from 119 in 2012 to 31 last year. A big challenge is a lack of trust in regulatory environments. Both governments and investors want to see more PPPs, however. On the one hand, private investment helps lower the financial risks for governments. On the other, government involvement can help overcome challenges brought about by the developing nature of most markets in Asia. “That is the name of the game, consistency in terms of the rules of engagement,” said Cledan Mandri-Perrott, lead finance officer and PPP specialist for the Singapore Infrastructure Hub at the World Bank Group. “The reality, whether we like it or not, is that in the ASEAN region regulatory risk faces uncertainty.” Thailand is a case in point. The country is solid from a financial perspective. It is strong enough, for example, to issue bonds for infrastructure investment. And yet, there is a lack of political certainty. And uncertainty is a turnoff for investors. Through 2013, regulatory uncertainty rose visibly and the number of PPP projects under way dropped, not only in India but also in other countries around the region. At the moment, China may have the most PPP projects underway with around 60 in the pipeline. To attract more projects, governments need to make the returns attractive to private investors. “That is one of the biggest challenges that we have in the region, to be able to push the pipeline (for PPP projects),” said Mandri-Perrott. New entities like a BRICS (Brazil, Russia, India, China, and South Africa) bank or the proposed infrastructure investment bank can work with more established players like the Asian Development Bank (ADB) or the World Bank to backstop government obligations and, in turn, offset liquidity concerns. “(We) need the right mechanism to develop and manage contingent liabilities,” said Mandri-Perrott. Achieving the “right network effect” is essential, he added. “If we can use the capital markets to look at projects on their merits, I think that would be a big driver,” said Mandri-Perrott. “The challenge in PPPs, particularly in greenfield projects, is involving the capital markets early on. Today (PPPs) don’t, because if you have a bond issuance, you want to have solid capital returns to pay off the bondholders.” As things stand, it is not always easy to attract private players. Banks are reluctant to participate because there are concerns in terms of the cash flow and size of the investment, said Jason Yeung Chi Wai, deputy chief executive at Bank of China (Hong Kong), which is involved in one PPP project in China. “When we talk about infrastructure, most people (think) about the bricks and mortar projects,” said Yeung. “For us, as an investment bank, we look at the financial infrastructure.” “We need to work on a framework that can give confidence for banks,” he added. Even with banks reticent in their involvement, infrastructure investment has gone up by about a quarter in China in the first seven months of this year. Infrastructure investment is responsible for about 10 percent of China’s economic output. Traffic congestion, flooding, sewage and water treatment needs, air quality, food safety and high-speed railway development are all areas that must be addressed. Ultimately, more and better infrastructure does create significant opportunities for the private sector, said Geert Peeters, group director and chief financial officer at China Light and Power (CLP) Holdings, a Hong Kong energy provider with long experience in PPPs. “These days, project financing goes around the world in different formats,” said Peeters. “But with PPPs it is important to look not just at individual projects but also at how they fit with the socioeconomic priorities in each economy,” he added. For CLP, its ultimate goal when taking on projects is to balance sustainability, a reliable and safe supply of energy and reasonable tariffs. “These three objectives very often compete and you need to look for a global optimum,” said Peeters. “This balancing act is our mission and … it needs to be sustainably profitable as well.” Emerging markets have competing priorities and try to balance the environment and their need for growth. “China and India are markets that have created opportunities for us and are moving in the area of PPPs,” said Peeters. There are challenges in both. In China, for example, there is a pollution issue and concerns over the reliability of electric grids, so more focus is needed on environmental concerns and network connectivity. In India and China, it is important to consider connectivity to power networks. For many cities, Hong Kong may offer a useful model, thanks to its combination of government involvement in developing its good infrastructure and the role of private investors in providing working capital. The model, said Peeters, could be used elsewhere just as easily. “As other megacities around the world emerge, more and more are looking at this model,” said Peeters. http://www.chinadailyasia.com/2014-09/26/content_15171144.html
2014-09-26China’s first commercial nuclear power plant at Daya Bay in southern Guangdong Province is best known as one of the earliest and largest joint venture projects undertaken by public and private sectors ever since the country opened up to international trade in the late 1970s. Decades later, China has witnessed propelling growth and has emerged as the world’s second largest economy. But while private investors are eager to share a slice of China’s recent infrastructure boom, many soon realize that the country is still struggling to enhance private capital participation in predominantly State-funded infrastructure initiatives. “We still have a long way to go. More than 90 percent of power assets are State-owned in China,” said Geert Peeters, group director and chief financial officer at China Light and Power (CLP) Group, at a roundtable session co-presented by China Daily Asia Pacific and Asia Society Hong Kong Center on Sept 22. The event was titled Unleashing Asian Dragons: Infrastructure Investments for the Asia Century. The CLP Group financed the Daya Bay nuclear station and holds a 25 percent stake in the power plant. The State-owned China Guangdong Nuclear Power Group owns the remaining shares. There is no denying that infrastructure remains a key engine of growth. “Look at the long list of problems China needs to tackle in infrastructure — traffic congestion, power shortages, urban flooding, ecological and environmental challenges, sewage treatment, air (pollution) and food safety,” said Jason Yeung Chi Wai, deputy chief executive of Bank of China (BOC) Hong Kong. “Infrastructure is a convenient option for governments to control fiscal policies when countries need to boost their economy,” he added. In April, the Chinese leadership pledged to accelerate the construction of railways and housing for the poor by unveiling 80 major infrastructure projects to arrest economic slowdown and create job opportunities. These projects span from railway to harbor construction, and from IT to clean energy projects such as wind and solar power. Given these massive projects in the pipeline, it is not surprising that infrastructure investment in China has risen by 25 percent from January to July this year. Its contribution to GDP has reached 10.9 percent in the same time period this year, from last year’s 5.5 percent, BOC’s Yeung pointed out. Despite the rosy prospect for infrastructure development in China, Yeung remains cautious. “Infrastructure is also about financial infrastructure,” he said. BOC Hong Kong has co-financed a gas project in the Chinese mainland with the Asian Development Bank and other financial institutions. What concerns the commercial banker is a lack of diversity in funding resources. Currently, infrastructure financing is either from direct public funding by the central government or indirect funding from local governments. For instance, the Chinese government provides more than 90 percent of funding for airports and 80 percent of power and utilities projects. The private sector only comes in as the third source. Official data shows private-sector investment accounted for about 60 percent of China’s total capital investment. “Significant infrastructure demand in China will require diversification of funding resources,” Peeters said, adding that the model for financing China’s infrastructure needs to change. Echoing Peeters is BOC’s Yeung. “Right now, money is predominantly from (State-owned) banks. Financing by capital markets in China is very much underdeveloped,” said Yeung, adding that public-private partnerships (PPPs) can provide further financing in infrastructure development. Last year, China led the way with 60 infrastructure projects with private participation. This was followed by 51 in Brazil and 31 in India, said Cledan Mandri-Perrott, lead finance officer and PPP specialist for the Singapore Infrastructure Hub at the World Bank Group. Chinese investors including those from Hong Kong sponsored the 60 projects, either alone or in joint ventures, although 93 percent of these deals were inside China, World Bank data showed. Creating an environment conducive to PPPs is equally important. This particularly holds true for developing countries where political instability remains one of the biggest deterrents for banks and private investors. “We are talking about projects lasting for decades and those with thresholds influenced by political situations. That is why some banks are reluctant to participate,” Yeung said. “What we believe is most needed is public sector oversight in a regulatory framework that can give confidence to private investors.” Experts agree that grievances from the private sector are not disregarded as reforms are gradually underway. According to the communique of the Third Plenum, the first policy blueprint unveiled by the new leadership under President Xi Jinping and Premier Li Keqiang in November last year, “We must ensure the decisive role of the market in allocating resources and further eliminate different forms of monopoly.” Earlier this year, the State Council decided to encourage private investment to enter fields that used to be dominated by State-owned enterprises (SOEs). Public utilities, airport construction, oil and gas projects will be next on the agenda to open up to private investment. “We note and welcome China’s reforms,” said CLP’s Peeters “and the quest of SOEs to access the international capital market,” he added. jennifer@chinadailyhk.com http://www.chinadailyasia.com/2014-09/26/content_15171145.html
2014-09-26As the Association of Southeast Asian Nations (ASEAN) is becoming a large community without boundaries, the cost of infrastructure projects will be lower, said Cledan Mandri-Perrott, lead finance officer and public-private partnership (PPP) specialist, Singapore Infrastructure Hub with the World Bank Group. “(While) we wouldn’t have a perfect price at the beginning, but, we will have a benchmark in other countries for reference,” said Mandri-Perrott. “If you look at OECD (Organisation for Economic Cooperation and Development) countries, there has been a decrease in cost. When the risks are fully understood, the premium will gradually decrease accordingly. So does the cost,” he told China Daily. Based in Singapore, Mandri-Perrott has been involved over the past 20 years in infrastructure projects and has experience in developing and implementing project finance transactions particularly. He recommended greater use of the PPP — arrangements of services and responsibilities shared by both the public and private sectors — for infrastructure projects in the ASEAN region, as the region aims to achieve a sustainable economic development. “The question is what should be the ratio between public money and private money, and how to achieve the balance of relevant risks between these two sectors and benefit the community at the same time.” The forthcoming ASEAN Economic Community by the end of 2015 will remove trade barriers among its 600 million population region. ASEAN infrastructure investment grew by 8.5 percent over the previous year to $19.4 billion and comprised 12.9 percent of global investment. The whole region implemented 85 new projects, data from the World Bank show. He said there are massive opportunities, as there are many trans-boundary infrastructure projects, including those in energy and railway sectors. “What I am worried about projects in ASEAN is that people are talking about very big projects, while actually small projects, which will improve efficiency, such as sewage or waste water treatment, should be done in a much systemic way,” he commented. There are many other challenges, such as lack of quality in project preparation, week contractual environment and currency devaluation. He suggested local government should manage those projects by better prioritization, profitability and feasibility, and encourage the participation of small companies. Data from the World Bank show that China led the way in 2013 (60 projects), followed by Brazil (51) and India (31). Mandri-Perrott also named many fields that require further investment in the coming years for China, such as telecom and urban transportation, which will directly impact people daily life. Geert Peeters, group director and chief financial officer with CLP Holdings Ltd, said that there are three perspectives to balance when conducting infrastructure projects, namely, caring for the environment, reliable and safe supply, and reasonable tariff. “There are (also) opportunities for China’s utility sectors, due to its highly efficiency thermal generation, large scale renewable energy in wind and solar, and ambitious nuclear expansion plan,” said Peeters. Mandri-Perrott added that the biggest issue with China’s infrastructure is that PPP has not been properly used as a tool. “We are seeing that the local government is showing more interest in using PPP for project financing, instead of relying on normal commercial banking.” He suggested local governments should diversify their sources by using financing from the local capital market and institutional investors. linjingcd@chinadaily.com.cn http://www.chinadailyasia.com/2014-09/25/content_15170771.html
2014-09-25Hong Kong’s approach to building infrastructure by using a combination of private sector incentives and government support could be a useful model for cities globally. Speaking on Sept 21 at a China Daily Special Forum on how to fund infrastructure building in Asia, Geert Peeters, group director and chief financial officer at CLP Holdings, said popular as they are, however, there are a number of challenges in creating an environment conducive to absorbing more and larger public-private partnerships (PPPs) infrastructure projects. “As other megacities around the world emerge, more and more are looking at this model,” said Peeters. CLP is a Hong Kong energy provider listed on the Hong Kong stock exchange that has long experience in PPPs. The China Daily Special Forum was co-hosted by the newspaper and the Asia Society. Emerging Asian dragons Massive investments in infrastructure, telecommunications and education are keys to the rapid regional economic growth, said Zhou Li, publisher and editor-in-chief of China Daily Asia Pacific. These investments, combined with proposals for a new Maritime Silk Road put forward by Chinese President Xi Jinping and plans for a new infrastructure investment bank, could drive infrastructure construction in the region. “All these augur well for the future of emerging Asian dragons,” said Zhou. “This forum may be able to shed some light on how these strategic initiatives can stimulate Asian economic growth, the role that Asian investors play in turning these projects into reality and how Asian countries can cooperate in meeting the challenges and seizing the opportunities that lie ahead.” A concern in Asia is regulatory uncertainty. Stable regulatory environments help attract investors but the opposite is also true. Hong Kong, with its mixture of strong financial markets and stable regulations, is an ideal venue for partnerships between government and the private sector, said Peeters. “These days, project financing goes around the world in different formats,” said Peeters, but with PPPs it is important to look not just at individual projects but also about “how they fit with the socio-economic priorities in each economy”. Investments in infrastructure can be profitable. CLP has seized opportunities in both India and the Chinese mainland. The number of PPP projects generally dropped in 2013 across the region but the pendulum appears to be moving the other way. On the mainland, for example, infrastructure investment has gone up 25 percent in the first six months of this year. All told, these investments are responsible for around 10 percent of the country’s economic output. RMB financing access And the Chinese mainland is a big player in infrastructure investment both at home and abroad. This role is helping popularize the use of the renminbi (RMB) to fund projects. More access to RMB-based financing could help the region tackle its growing infrastructure needs. Economic growth in Asia is increasingly tied to more efficient and more interconnected infrastructure. South Asia and East Asia, including the Association of Southeast Asian Nations (ASEAN) need more than $800 billion per year in infrastructure investment to meet their needs. Around the world, capital spending on infrastructure could rise by $5 trillion to $9 trillion by 2025, at current rates of growth. The importance of infrastructure to achieve sustainable economic growth is not in doubt, said Li Yao, chief executive officer at the China-ASEAN Investment Cooperation Fund. The benefits of a strong infrastructure backbone go well beyond smooth roads and fast ports. Connectivity, the links between people that good infrastructure provides, can make societies more fair and equitable by giving everyone access to the means of production, said Li. “Infrastructure is so important to Asia,” said Li. “Infrastructure is not (just) luxury goods (and hard infrastructure) only for the rich but also covers soft (infrastructure).” Hard infrastructure refers to roads, ports, railways and telecommunication networks for facilitating trade and commerce and to make goods more easily accessible to consumers. Soft infrastructure refers to good finance and the stable legal environment for attracting investment and making it possible to turn the hard infrastructure into visible economic gains. While pointing out that infrastructure is important for economic growth, efficiency and values, Li said one important area that cannot be ignored is the Internet. Connectivity, currently lacking in countries in the region like Myanmar, Laos and Cambodia, can “help people offset the gap between the poor people and the rich countries”, he said. His fund is already supporting the construction of a fiber optic network in Southeast Asia that would help connect more people. Yet the question of funding remains. And regulatory stability is key to attracting more funding. As they rely on domestic consumers for a greater portion of the gross domestic products, economies in South and East Asia are increasingly aware of the importance of strong infrastructure. However, the biggest hurdle to developing efficient and cost-effective infrastructure skeletons is finding the capital. Governments want to attract more private capital to cut down on their costs, but private capital wants some guarantees that their investments will generate returns. So the focus of infrastructure financing is, increasingly, on PPPs. Demand for PPPs Both governments and investors want to see more PPPs. On the one hand, the private investment helps to lower governments’ financial risks, but on the other, government involvement can help overcome challenges brought about by the developing — and changing — nature of most markets in Asia. “The reality is that the need is there, the pipeline is there but the project implementation, that is where the need is,” said Cledan Mandri-Perrott, lead finance officer and PPP specialist at the Singapore Infrastructure Hub of the World Bank. “That is one of the biggest challenges that we have in the region, (that is) to be able to push the pipeline … If we want to do PPPs we need to have the right balance.” Thailand is a case in point. The country is solid from a financial perspective. It is strong enough, for example, to issue bonds for infrastructure investment. And yet, there is a lack of political certainty. And uncertainty is scary to investors. To attract more projects, governments need to make the returns attractive to private investors. BRICS banks New entities like a BRICS bank or the proposed infrastructure investment bank can work with more established players like the Asian Development Bank (ADB) or the World Bank to backstop government obligations and, in turn, offset liquidity concerns. “(We) need the right mechanism to develop and manage contingent liabilities,” said Mandri-Perrott. “The alternative is to keep doing what we at the World Bank or the ADB have been doing for 50 years, which is to fund public spending.” “It is not just about building things. It is about making sure that you are building the right things, about achieving the right network effect.” “If we can use the capital markets to look at projects on their merits, I think that would be a big drive,” said Mandri-Perrott. “The challenge in PPPs, particularly in greenfield projects, is involving the capital markets early on … today they don’t because if you have a bond issuance you want to have a solid capital returns to pay off the bondholders.” As things stand today, it is not always easy to attract private players. Banks are reluctant to participate because there are concerns in terms of the cash flow and the size of the investment, said Jason Yeung Chi-wai, deputy chief executive at Bank of China (Hong Kong), which is involved in just one PPP project on the mainland. “When we talk about infrastructure, most people (think) about the bricks and mortar projects,” said Yeung. “For us, as an investment bank, we look at the financial infrastructure. We need to work on a framework that can give confidence for banks.” The Hong Kong model could prove to be an effective one as it is the clear and effective use of PPPs. For many cities, Hong Kong may offer a useful model thanks to its combination of government involved in the development of the city’s famously good infrastructure and the role of private investors in providing working capital. The model, said Peeters, could be used elsewhere just as easily. Around the region, even in the face of uncertainty, PPPs have been used well at times, said Peeters. “China and India are markets that have created opportunities for us and are moving in the area of PPPs,” said Peeters. http://www.chinadailyasia.com/2014-09/25/content_15170773.html
2014-09-232014年9月22日,香港 - 「中國日報亞洲領袖圓桌論壇」與「亞洲協會香港中心」聯手舉辦題為「龍騰亞洲:基建投資新世代」的論壇。今日九時至十一時,亞洲金融、基建投資界翹楚匯聚亞洲協會香港中心,共同探討亞洲基礎建設及戰略發展與合作等重要議題。 千禧年以來,亞太地區的經濟發展舉世矚目,東西方不約而同稱此為「亞洲之龍」的騰飛,並預示二十一世紀將是「亞洲世紀」。然而,亞洲地區,尤其是東盟各成員國之間需要在如交通、能源、電信、環境、教育和自然資源等基礎設施建設方面加強投資,才可以更好地應對未來的機遇與挑戰。 2012年,亞洲基礎設施建設的年度開支佔世界總額的49%;到2050年,亞洲基建投資金額預計將增加一倍。同時,基礎設施項目中傳統的「公私合作」(PPP)模式已經不能滿足於亞洲不斷增加的投資需求。因此,許多亞洲國家及地區正在共同策劃和實施一系列戰略舉措,如擬設立亞洲基礎設施投資銀行,共建二十一世紀「海上絲綢之路」,以惠及亞洲廣大地區。 中國日報亞洲領袖圓桌論壇構建了一個核心的精英對話平臺,邀請了多位亞洲金融、基建投資業界領袖到場,共同探討以上戰略性舉措將如何促進亞洲的經濟增長,中國與東盟於亞洲基礎設施投資藍圖的發展戰略、趨勢、機遇以及重大基礎設施項目如何長遠造福亞洲。 中國日報亞太分社社長兼總編輯周立先生在開場致辭中表示,亞洲在這個經濟騰飛的重要時期需要改善貿易及基礎設施,亦需促進文化交流。他代表論壇歡迎本次演講嘉賓:中國銀行(香港)有限公司副總裁楊志威先生;中國——東盟投資合作基金總裁李耀博士;中電控股有限公司集團總監及財務總裁彭達思先生以及世界銀行集團新加坡基礎建設中心主任財務總監及公私合作專家Cledan MANDRI-PERROTT先生。 -完- 關於中國日報亞洲領袖圓桌論壇 中國日報亞洲領袖圓桌論壇是一個由亞洲國家和地區的政、商、學界領袖和社會精英參與的高端對話和交流平臺,圍繞亞洲地區經濟、商業、產業和社會發展等具有戰略影響的重要議題展開討論,至今已經舉辦了30屆,逾萬名決策精英參與。(http://www.cdroundtable.com)
2014-09-22SINGAPORE: Businesses can look forward to more seamless customs procedures as part of deeper economic integration between Association of Southeast Asian Nations (ASEAN) member countries, said Minister for Trade and Industry Lim Hng Kiang on Monday (Sep 8). Speaking at the ASEAN Business Club Forum 2014, Mr Lim highlighted that almost all goods already move across borders in the region without tariffs. With such internal processes in place, ASEAN is now ready to take the next step and look to eliminate non-tariff trade barriers between its member countries. Some of the initiatives include a self-certification system, which will allow exporters to certify export documents on their own, and an initiative called the ASEAN Single Window. The ASEAN Single Window seeks to link the 10 ASEAN countries electronically, which would help businesses reduce cost and enjoy simpler and faster custom clearance of goods in ASEAN. ROLE OF PRIVATE SECTOR As governments work to remove trade barriers within the region, the private sector can play its part by identifying key areas to improve on, said Mr Lim. "ASEAN is not only about inter-government discussions. Businesses play a critical role, in telling us where the barriers to trade lie and where the bottlenecks in our regional and global value chains are. To that end, ASEAN countries are now working to develop its post-2015 economic agenda," he noted. However, businesses may not be that forthcoming, particularly in the finance, telecoms and aviation industries. According to AirAsia, if companies can overcome their differences, it would be a big step forward. AirAsia's Group CEO, Tony Fernandes, said: "You can clearly see there is a lack of trust. So if the private industry agreed on some metrics and then went to the regulators, you would make the regulators' life a lot easier. "So if AirAsia, Thai Airlines, Malaysia Airlines, Singapore Airlines, Jetstar, Tiger all agreed on something and said, 'Hey, the industry agrees on this', that is going to make it a lot easier for the regulators." Together, ASEAN member states have a consumption and production market of 600 million people, and an average annual GDP growth of 6 per cent. By 2050, the grouping is forecast to be the fourth-largest economy in the world. There is still plenty to do as the 2015 deadline for economic integration approaches. Even if ASEAN falls short of the target, industry players said they remain optimistic that post-2015, the regional grouping will be able to build on what it has achieved so far. http://www.channelnewsasia.com/news/business/singapore/more-seamless-customs/1351066.html
2014-09-14ASEAN businesses boost joint AEC formation efforts Over 300 business executives from the Association of Southeast Asian Nations (ASEAN) gathered at the ASEAN Business Club (ABC) Forum 2014 in Singapore on September 8-9 to tackle trade and industry issues and support the formation of the ASEAN Economic Community (AEC) in late 2015. In his opening speech, Singaporean Minister of Trade and Technology Lim Hng Kiang stated that the integration is a turning point for ASEAN, and the bloc’s member states are continuously working towards the fast-approaching establishment of AEC, which will create a single market and production base by 2015. Tariffs were lifted on almost all the region’s goods, Kiang said, adding that ASEAN was ready to take action to remove the region’s non-tariff barriers. The minister also underlined the important role ASEAN businessesplayed in shaping the AEC thanks to their deep understanding of global value chains and the region’s trade barriers. Talking to Vietnam News Agency correspondents, former ASEAN Deputy Secretary General Pushmanathan Sundram said the AEC would make ASEAN a more open community, requiring regional governments to increase their support for national enterprises, particularly small and medium-sized firms, to help them improve their competitiveness. ABC, a public initiative, aims to provide a forum for the region’s business leaders to establish links and build partnerships. It also seeks to improve the ASEAN business community’s preparations for AEC. Participants focussed their discussions on six key topics during the two-day forum, including laws and tariffs, the automobile industry and manufacturing, financial services and capital market, oil and gas exploitation, food and agriculture, and the retail market. ASEAN comprises ten member states, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam.-VNA http://en.vietnamplus.vn/Home/ASEAN-businesses-boost-joint-AEC-formation-efforts/20149/55096.vnplus
2014-09-14WITH 2015 just around the corner, few expect the initial vision of an Asean Economic Community (AEC) to be fully realised by the end of next year as targeted. But Singapore's businesses - particularly small and medium enterprises (SMEs) - cannot afford to put off considering the impact of a common market on their future. By most accounts, the region has fallen behind AEC targets to lower and abolish non-tariff and regulatory barriers to the free flow of goods, services and investment. Yet, the progress made so far is not to be sniffed at - at least 70 per cent of integration work is already done. Earlier this week, addressing the Asean Business Club Forum, Singapore Trade and Industry Minister Lim Hng Kiang noted that virtually all goods already move throughout the 10 Asean countries tariff-free. Companies can also look forward to cost savings from simpler and faster customs clearance of goods with new electronic links. Anyone doing business in this region should be aware of the unprecedented opportunity opened up by a common Asean market. It is already a consumption and production market of 600 million people and the seventh-largest economy globally, with a gross domestic product (GDP) of US$2.3 trillion - the third-largest in Asia. Asean is also projected to grow at an average pace of 6.4 per cent a year over the two decades until 2030, the Asian Development Bank Institute says. Nominal GDP could reach US$6.6 trillion by then. Amid the optimism over Asean's growth prospects though, there has been a tacit acknowledgement by political leaders that AEC 2015 is now less a target to be met and more a milestone in a far longer journey. "The AEC 2015 journey will not be the end of the road for Asean," Mr Lim said this week. The longer full economic integration takes, the more important it will be that businesses get involved in shaping the post-2015 economic agenda for the region. After all, as Mr Lim said, they know best where the barriers to trade, and labour and capital flows lie. But businesses would do well to consider the challenges the AEC presents too - heightened competition could hit SMEs hardest. One Boston Consulting Group survey of over 230 business leaders and government officials found that more than 80 per cent expect SMEs to lose out amid more intense competition after the AEC comes into force. When Singapore assumed the chairmanship of the Asean SME Working Group in June, one clear goal was to equip SMEs to take on the opportunities and challenges that will come with the AEC. This meant raising awareness of ongoing initiatives to improve access to financing and technology, strengthen export capacity, promote innovation and develop human resources for SMEs. Asean's SMEs, and Singapore's, need to make sure they are positioning themselves to gain, rather than lose, from the AEC.
2014-09-14[SINGAPORE] The chief executive of one of Indonesia's biggest conglomerates, Lippo Group's James Riady admitted that the Indonesian government made a "big mistake" when it stonewalled Singapore bank DBS Group Holdings' S$7.3 billion takeover of Bank Danamon last year. "Do I agree with what happened? I absolutely do not. I think it sends a wrong message. Once in a while, governments make mistakes and I think this was one big mistake they made," said Mr Riady at a panel discussion at the Asean Business Council (ABC) forum on Tuesday themed "Leadership and transformation in Asean". Mr Riady was responding to a question on whether protectionistic policies in some Asean member countries, such as the Indonesian government's move to tweak foreign ownership limits in local banks which led DBS to pull the plug on the deal last year, were standing in the way of Asean aspirations to build a single, unified market. He, however, added that to gain a proper perspective on Indonesia's policy in the banking sector, it should not be viewed through the narrow lens of just a single point of time but over the past decades.
2014-09-14While China may have been catching up with some of the world’s rich countries when it comes to creating billionaires, one paradox remains: It has made limited progress in developing global behemoths like IBM, Samsung and Apple. China’s billionaire population is now the world’s second largest at 152, trailing only the United States, which has 492 billionaires this year, according to Forbes, and outnumbering those of most developed countries such as Japan. “The ecosystem of Chinese enterprises in China is not very healthy,” Xiang Bing, founding dean and professor at Beijing-based Cheung Kong Graduate School of Business, which includes prominent businessmen, like e-commerce giant Alibaba’s Jack Ma and Fu Chengyu, chairman of State-owned China Petroleum and Chemical Corp (Sinopec), among its illustrious alumni. “China has State-owned enterprises (SOEs), but it doesn’t have modern corporates, which are so essential for the success of the United States and Japan. They are so crucial for creating middle class in society,” Xiang told the audience at a forum organized by the ASEAN Business Club, which kicked off in Singapore on Sept 8. The two-day event was a private sector collaboration that aimed to promote economic integration among the member states of the Association of Southeast Asian Nations (ASEAN). The forum, which revolved around the theme ASEAN Game Changer, was attended by 300 delegates including scholars, business leaders and government officials from 12 countries across the region. Like China, ASEAN is also struggling to unlock the potential of the private sector. Private businesses in the region have been frustrated by extensive red tape, lack of progress in standards harmonization, and non-trade barriers, which include quotas, licensing and customs clearance. As the world’s seventh largest economy, ASEAN has a consumer market of 600 million people and an average GDP growth rate of 6 percent annually, higher than the global average of 4 percent. The 10-nation regional group had a combined GDP of $2.3 trillion last year, making it the third largest economy in Asia after China and Japan. By the end of 2015, ASEAN plans to launch the ASEAN economic community (AEC) to create a single market and production base with free flow of goods, services and investments. But the private sector across the region is not too optimistic about progress toward economic integration. “The biggest challenge is to implement the (remaining) 20 percent measures, which can be hard to agree on,” said Pushpanathan Sundram, managing director of consulting firm EAS Strategic Advice. ASEAN states have implemented nearly 80 percent of all measures required for realizing the AEC. Tariffs are basically zero for the six older ASEAN members — Brunei, Indonesia, Malaysia, Singapore, Thailand and the Philippines. For newer members including Cambodia, Laos, Myanmar and Vietnam, tariffs are between 0 and 5 percent, said Sundram, also a former deputy secretary-general of ASEAN for AEC. “The reality is that we are a long, long way from where we need to be. There is too much government involvement,” said Piyush Gupta, CEO of the Development Bank of Singapore (DBS), Southeast Asia’s largest bank by assets. “More than 50 percent of the issues faced in ASEAN are inertia, not (only) protectionism,” he said. Last year, DBS scotched a deal valued at around $7 billion to acquire Indonesia’s Bank Danamon after the country’s central bank blocked foreign ownership of local banks exceeding a 40 percent stake. “That (disapproval) was one mistake that (Indonesia) made,” said James Riady, CEO of Lippo Group, an Indonesian conglomerate with businesses spanning from retail and real estate to healthcare. “It’s easy for businesspeople to criticize governments … but businessmen tend to be more transactional; when we look at ASEAN, we need to be transformational,” he said. Nazir Razak, chairman of the Kuala Lumpur-based CIMB Group, warned that regional economic integration will make little progress if member states are still hesitant about ASEAN. “ASEAN is nothing without Indonesia unless the new leadership steps up and tones down on economic nationalism; ASEAN integration efforts could stall,” he said. Similarly, CIMB group, the second largest financial services provider in Malaysia with a market capitalization of 61.5 billion ringgit ($19.39 billion), has only been allowed to open two branches in Singapore due to banking regulations on foreign banks. “Non-tariff (barriers) lead to far greater hindrance than tariffs,” said Razak. According to some analysts, one thing that complicates ASEAN is that governments often play a significant role in businesses such as stock exchange and protectionist policies. Echoing Razak, Tony Fernandes, founder and CEO of AirAsia, the largest no-frills carrier in the region, said: “For ASEAN to be relevant, it has to be inclusive and engage with the private sector and young generation. “Governments have to distinguish if they are regulators, facilitators of business — or if they are in business,” he added. In China some see privatization as a neat solution to problems involving State-owned enterprises (SOEs) in China. “Sometimes it’s far (too) utopian when it comes down to privatization,” said Xiang from the Cheung Kong Graduate School of Business, adding that reform efforts would be futile if leadership succession in conglomerates still lay in the hands of a few wealthy families. Speaking at a China Daily co-branded session on Chinese transformation at the recent ASEAN forum, Xiang said: “The private sector is far more prominent in China than you see in any major economy.” Last year, the sector generated nearly 80 percent of jobs and 50 percent of China’s GDP — surpassing those of Singapore and the US, Xiang said. Within ASEAN, some government officials agree that deepening economic integration has to be done in a manner that is relevant to today’s business realities. “As the engine of growth, businesses are well-positioned to provide feedback on government intervention,” said Kan Zaw, Union Minister for National Economic Planning and Economic Development of Myanmar. Adopting a similar view, Lim Hng Kiang, minister of trade and industry of Singapore, said: “ASEAN is not only about inter-government discussions. Businesses play a critical role in telling us where the barriers to trade lie and where the bottlenecks in our regional and global value chains are. “The key forward for ASEAN is integration and businesses can play a key part in it,” he said. jennifer@chinadailyhk.com
2014-09-12China’s two-way investment with the Association of Southeast Asian Nations (ASEAN) has been on the rise, although its full potential is yet to be realized, experts say. Part of it has to do with “the natural complementary aspect of the Chinese and ASEAN economies”, said Xiang Bing, dean of the Cheung Kong Graduate School of Business in Beijing. At a China Daily co-branded session on the sidelines of the ASEAN Business Club Forum on Sept 8, Xiang spoke on China’s forthcoming transformation and its global implications. Three decades after China opened up its economy in the late 1970s, it became a magnet for foreign direct investment (FDI), second only to the United States. But those were the days. The reality is that China’s outbound investment has surpassed its inbound investment since July. In short, Chinese enterprises are eager to leverage resources regionally and globally. China’s FDI, excluding financial investment, has been growing at its weakest pace in two years. In July, it plummeted 16.95 percent from a year earlier to $7.81 billion. Meanwhile, China’s outbound direct investment (ODI) by non-financial companies surged nearly 85 percent from last year to $9.21 billion in July. So now the question is, where are Chinese enterprises headed? The 10-nation ASEAN bloc is a natural choice for China, Xiang theorizes, due to the geographic and cultural proximity of the two. Not surprisingly, Chinese investment in ASEAN has soared. It reached $5.9 billion in 2011, up from just $120 million in 2003, official data show. China is already the largest trading partner of ASEAN. And ASEAN has overtaken Japan to become the third largest trading partner of China since several years ago. With a population of 600 million people, ASEAN has a combined GDP of 2.3 trillion, making it the largest economy in Asia after China and Japan. Annual growth, above 6 percent, makes it an attractive market compared to the global average of 4 percent. “ASEAN is a fantastic place when you look at the 4.2 percent growth rate in the United States,” said Rodney Ward, chairman of global corporate and investment banking at Bank of America Merrill Lynch in Asia Pacific, adding that a strong euro has dampened exports. “(ASEAN) has come a long way to become the most attractive investment destination,” Ward added. ASEAN’s attractiveness to foreign investment could heighten with the launch of the ASEAN economic community (AEC) to create a single market with free flow of goods and services by the end of 2015. “The world is inevitably coming together as one because of globalization. ASEAN only makes a better place to deal with China and India,” said Tony Fernandes, founder and chief executive officer of AirAsia, the region’s largest low-cost carrier. “The pie is much bigger with ASEAN. I am a living proof of it. If you embrace economic integration, you may have a smaller slice but the pie will be much bigger,” he said. Numerous opportunities exist in infrastructure investment, such as in power plants, roads, railways and sanitation facilities. According to the Asian Development Bank, ASEAN requires infrastructure spending of $600 billion by 2020. In contrast, ASEAN investment in the Chinese mainland only shares a small piece of a big pie. Hong Kong, Japan, Singapore, South Korea, Taiwan and the US are top investors, dominating 94 percent of overseas direct investments in the Chinese mainland. However, in the absence of mega projects, investment flow from ASEAN to the Chinese mainland fell nearly 13 percent from last year to $4.18 billion in first seven months. Part of this has to do with intense local competition facing ASEAN investors while robust local players already enjoy handy access to capital and technology. With a changing landscape and China being the second largest economy, “(ASEAN members) have to be among the very best from around the globe to play in the China market,” Xiang said. The silver lining for ASEAN-China synergy however lies in agriculture. For instance, rice-exporting economies such as Thailand and Vietnam enjoy a comparative advantage. “China needs to feed itself — a 1.3 billion population,” said Xiang. Rapid urbanization in China also means an unprecedented opportunity for foreign players, including ASEAN investors. The official urbanization rate in China was about 53 percent last year, compared to about 80 percent in the US. Xiang believes a bigger game changer for investors lies in China’s gradual deregulation in sectors such as finance, telecommunications, education, culture, sports and healthcare. For instance, the healthcare sector only contributes 5.3 percent of China’s GDP, compared to 18 percent in the US. “Chinese economic openness is often understated,” Xiang said, assuring investors. “China is far more open than you think.” For example, Cisco Systems, a Silicon Valley-based network provider, is said to have built a 70 percent share of China’s leading Internet infrastructure projects, said Xiang. Other global companies have also done well. Yum Brands, parent company of fast-food chain Kentucky Fried Chicken, had half of its revenue generated in China last year, while electronics giant Samsung made a record $13 billion sales in China. “Given that the Chinese economy continues to open, there will be great opportunities for ASEAN,” Xiang concluded.
2014-09-12