The president’s proposal, which will ease rules in the e-commerce, retail, healthcare, movie and several other industries, could pit a relative newcomer on the political stage against an establishment resistant to change.

It would be the most far-reaching yet in a string of stimulus packages rolled out over the past six months to drive industry and employment beyond the economy’s traditional mainstays of agriculture and mineral extraction.

Southeast Asia’s largest economy has been growing at its slowest pace in six years because of falling commodity prices and cooling growth in major trading partner China.

But Widodo told Reuters in an interview at the presidential palace he was very optimistic that growth would rebound to 5.3 percent this year after a slide to 4.8 percent in 2015.

His trade minister, Tom Lembong, told Reuters separately that the planned overhaul of the so-called ’Negative Investment List” signalled a greater openness to foreign investment and would partly prepare the country for free trade agreements, including eventually the Trans-Pacific Partnership (TPP).

“We are seriously considering deregulation across the board, but focusing on e-commerce, healthcare, and creative industry,” Widodo said ahead of a cabinet discussion of the proposals.

“There are 49 sub-sectors (affected) so in my opinion this is the big bang.”

Lembong said retail was also among the sectors that would be opened up, and there would be some degree of deregulation in each of the 16 main sectors on the negative list, which include agriculture, forestry, energy, communication and transport.

In some cases this would raise the limit on foreign stakes in companies from a minority to a majority, helping Indonesia comply with limits on “equity caps” stipulated under the TPP and other trade pacts, like one under negotiation with the European Union.

The healthcare push, which would open up investment in hospitals, clinics and laboratory services, could bring a sea-change in a country where at present foreign medical professionals are not allowed to practice.

Although foreign direct investment into Indonesia has risen in recent years, it remains among the lowest in Southeast Asia in relation to total investment and gross domestic product.

Foreign investors have pushed for years for a greater access to opportunities in Indonesia’s vast domestic market, valued at some $840 billions at market exchange rates.

Singapore was Indonesia’s largest foreign investor last year, with a 20.2 percent share of the $29.28 billion total realised investment, followed by Malaysia and Japan, the Investment Coordinating Board said last month.

HISTORY OF PROTECTIONISM

Indonesia has a long history of protectionism, and vested interests have often stood in the way of trade and investment from abroad. The last revision to the negative list was done in2014 and was seen by many as less investor-friendly.

Widodo said that, so far, he has not faced any political backlash or resistance to the steps he has taken towards liberalisation.

“For me competition is very important,” he said. “If we have already launched our deregulation, the bureaucracy and the system must follow the new rules.”

Widodo’s meteoric rise from furniture businessman to president of the world’s third-largest democracy – and the first to come from outside the political or military establishment -was widely seen in 2014 as a watershed moment for Indonesia.

Supporters had predicted that the former governor of Jakarta would root out corruption, promote people based on merit rather than connections and create a vibrant economy.

Instead, as economic growth sagged last year, critics said he seemed out of his depth at times and battling to get around politicians determined to preserve the status quo.

A cabinet reshuffle last August, which brought experienced technocrats into his team, set a new tone. Since then Widodo’s administration has rolled out nine stimulus packages cutting red tape, offering tax breaks and loosening regulations.

Widodo said there were two prongs to his growth strategy: deregulation to create competition, efficiency and better services, and infrastructure development.

His government has struggled to disburse funds for roads, ports and power stations, and many critical infrastructure projects were hamstrung by bickering ministers and red tape.

However, data released last week showed that investment growth picked up in the last quarter of the year thanks to rising public spending.

The final quarter also saw a jump in foreign direct investment, taking its rise for the year to 2.8 percent in dollar terms.

Despite the collapse in commodity prices, the mining sector saw the most inward investment, followed by transport, warehouses and telecommunications.

Bank Indonesia spurred growth prospects further in January by cutting interest rates for the first time in 11 months. Widodo said in the interview he wanted to see rates even lower but could not force the hand of an independent central bank.

– Reuters

The summary of the first quarter’s report highlighted the significant achievements and outlines its plan for the second quarter and the whole year’s plan.

In the first quarter, two domestic investment projects have been approved by the province’s Planning and Investment Department, worth a total of 57 billion kip.

In addition to that, a total of six foreign investment projects valued at more than US$557 million (over 4,457 billion kip) have also been given the go ahead.

Over the last 10 years, Vietnam’s GDP has grown from US$66 billion in 2006 to $186 billion in 2014, at an average growth rate of 13 per cent annually, according to a report on logistics in Vietnam written by CBRE Vietnam, a foreign property service provider.

At the same time, inbound and outbound trade has expanded positively in value. The positive growth in economic performance has spurred the development of logistics infrastructures and the establishment of major logistics hubs supporting international trade.

The Vietnam logistics system is in its early stage, as compared to global logistics networks. Since Vietnam joined the WTO in 2007, total trade volume has surged by 168 per cent from 2007 to 2014. This has supported the growth in the development and improvement of the logistics sector. Further, annual throughput nationwide has doubled, from 4.9 million TEUs in 2008 to 10 million TEUs in 2014.

HCM City and Hai Phong have the two most important seaports in Vietnam, according to CBRE Vietnam. The annual throughput for these ports is growing, but throughput capacity at HCM City port is currently only equivalent to one-quarter of Hong Kong’s, and one-sixth of Singapore’s in 2014, while Hai Phong’s capacity is about 50 per cent of that of HCM City.

From 2008 to 2014, annual throughput in the south of Vietnam, increased by 105 per cent, with HCM City taking the lead. Over the same period, total throughput in the north of Vietnam, with Hai Phong leading the way, increased 88 per cent.

Notably, for northern Vietnam, Hai Phong contributed 98 per cent of the nation’s total throughput in 2014. Hai Phong has advantages in location, with over 100 kilometres of coastal line, and has the potential of a rising logistics hub able to offer national and regional standards in the future. However, Hai Phong’s logistics sector has not performed at its full capacity, primarily due to a lack of fully-integrated infrastructure.

With the completion of major infrastructures in the future, Hai Phong hopes to attract more foreign investors and become a logistics hub in the region, contributing to the growth of the country.

Meanwhile, under the Provincial Competitiveness Index (PCI) report 2014, Hai Phong only ranks 34th among 63 cities and provinces. Of those issues noted in the PCI report, transparency, infrastructures and labour quality are highlighted.

Therefore, in order to become a local hub in the near future, and regional hub in the long run, it is critical that Hai Phong addresses issues of administrative procedures, transparency, as well as pays attention to improving labour conditions.

At present, the Hai Phong local authority has worked to improve the city’s infrastructure system and network, in connection with other cities and provinces, especially those key cities connecting regional logistics hubs, such as Ha Noi and Quang Ninh, according to CBRE Vietnam.

KEIN deputy chairman Arif Budimanta said the roadmap would highlight five main things, namely job creation, poverty reduction, narrowing the gap between the rich and the poor, inflation control and maintaining high economic growth.

“This is why the roadmap is very important as an aggregation, the result of the entire existing roadmaps in all ministries. It is like a second opinion,” Arif said in a press conference after the committee’s first meeting with President Joko “Jokowi” Widodo at the State Palace in Jakarta on Wednesday.

The Indonesian Democratic Party of Struggle (PDI-P) further said that the roadmap was scheduled to be completed in the first quarter of 2016. It would regulate the future of all levels of Indonesian industry.

Arif said the re-industrialisation plan was aimed at minimising imports, including the import of staple foods that could trigger inflation. In the agricultural sector, industrialisation would be used as a tool of price control and as a substitution for the import of goods. “So, we hope that the volatility of our exchange rate can be decreased,” he said.

KEIN secretary Putri K.Wardhani said the committee’s work would not overlap with the work of the Cabinet. “Although each ministry has its own roadmap, the President has urged us to give input to support the growth of national industry,” she said.

Putri said the committee would create a crisis centre where the businesspeople could receive advice. Meanwhile, industry players could discuss the obstacles faced by national industry.

Pramono said the main function of the committee, established last month, was to give the government creative advice on infrastructure development and deregulation.

Chaired by businessman and National Mandate Party (PAN) advisory council chairman Soetrisno Bachir, KEIN comprises 20 businesspeople and economists assigned to provide feedback to Jokowi on matters relating to the economy.

The committee includes Arif, a former member of Jokowi’s economic team during his 2014 presidential campaign, Hariyadi Sukamdani, chairman of the Indonesian Employers Association (Apindo), businessman Sudhamek AWS and economist Hendri Saparini. The committee replaces the National Economic Committee.

The Bangko Sentral ng Pilipinas (BSP) said on Wednesday that its policy-making Monetary Board approved a two-phased lifting of the moratorium put in place in 1999.

The first phase, which takes effect until end-2017, allows existing thrift banks to apply for a license to convert into a universal or commercial bank.

The second phase, which will start on Jan. 1, 2018, will fully remove all restrictions on the grant of all new bank licenses, according to the BSP.

“The two-year transition period gives interested parties ample time to strategically position themselves in line with evolving policy reforms and regional integration efforts,” BSP Governor Amando M. Tetangco Jr. said.

As a whole, the lifting of the moratorium “provides local businesses the avenue to explore opportunities in the banking sector amid the opening of the industry to foreign capital infusion,” said Tetangco, who also chairs the Monetary Board.

In 2014, President Aquino signed into law Republic Act 10641, which allows the full entry of foreign banks. Under the new law, foreign lenders can account for a maximum of 40 percent of the banking industry’s assets.

To date, the BSP has allowed six foreign banks to operate in the country: Japan’s Sumitomo Mitsui Banking Corp., Singapore’s United Overseas Bank Ltd., South Korea’s Shinhan Bank and Industrial Bank of Korea, and Taiwan’s Cathay United Bank and Yuanta Commercial Bank Co. Ltd.

Last month, Mitsubishi UFJ Financial Group—Japan’s biggest bank—acquired a 20-percent stake in Security Bank in a deal valued at P37 billion, making it one of the biggest foreign acquisitions of a local bank in recent years.

Deputy Governor Nestor A. Espenilla Jr. told reporters last month that the application of another Asian bank to establish operations here was pending with the BSP.

The BSP noted that the previous moratorium served as “a policy initiative to encourage mergers and consolidations to facilitate the establishment of larger and stronger financial institutions.”

The moratorium nonetheless exempted the grant of licenses for new banks in unbanked areas as well as for microfinance-oriented thrift and rural banks, it added.

“Under [the new] regulation approved by the Monetary Board, all of these restrictions and exemptions will be fully lifted in Phase 2,” the BSP said.

They note that the longer-term prospects remain favourable, especially with a new stream of supply set to come online in the coming years.

Singapore has been gearing up to become a regional LNG hub in recent years, in terms of both financial trading and physical handling capabilities. The first LNG import terminal opened here in 2013.

It will have a throughput capacity of 11 million tonnes by next year, when its fourth LNG storage tank is up and running.

And last month, the Singapore Exchange (SGX) launched futures and swaps on Singapore’s new price index for LNG, the SGX LNG Index Group (Sling).

But headwinds in the industry remain, with LNG prices having fallen in tandem with crude oil since June 2014. This is as natural gas traded in Asia has traditionally been pegged to crude prices, given that the region lacks a benchmark similar to the Henry Hub in the United States.

Cheap oil, as a result, has put a lid on demand for LNG globally, said Kerry-Anne Shanks, vice-president of gas and LNG at Wood Mackenzie.

“The case for switching from oil to gas has gone away, with crude prices now at US$30 a barrel. And that’s on top of the weaker economic outlook globally,” she told The Straits Times in an interview last month.

Adding to that, spot prices for LNG are being capped by the oversupply in the Asian LNG market, with a further 130 million tonnes of supply to be made available by 2020, noted Shanks. But she also believed that this upcoming supply “should support liquidity”.

Platts Asia editorial director Vandana Hari said it is “natural” to see trading slow down “in an environment of low prices and lacklustre demand”.

“And for any trading hub to operate successfully, it does need a fair amount of liquidity,” she noted. “But Singapore is no stranger to the characteristic ups and downs that all commodity markets undergo. It’s just a question of staying the course.”

Singapore’s role in LNG price discovery, said Hari, is “all the more important” amid today’s volatile conditions. “The more transparent and robust the price discovery system, the better for the market.”

A spokesman for Pavilion Energy said that the longer-term view for global LNG “remains positive”, with Asia set to continue to be a significant LNG buyer globally.

“An Asian LNG hub based on a gas-linked index will provide a more transparent and fair price for both LNG sellers and buyers,” he said, referring to the Sling. “With the current oil price volatility and uncertainty, there is no better time to index the price of LNG in Asia to regional gas fundamentals.”

In a report on Tuesday last week, the SGX said that the next one to two years will present “a clear window” for the Sling to be accepted as the Asian benchmark. It said that the liquid LNG spot market in Asia would “take time” to evolve, but many of the crucial elements were already emerging. These include the shift towards shorter term contracts, the move away from oil indexation and the removal of destination restrictions on cargoes.

At the same time, Singapore LNG Corporation (SLNG), which operates the LNG receiving terminal, said there are opportunities in the small-scale LNG segment, which includes LNG bunkering and the substitution of liquefied petroleum gas, diesel or fuel oil for LNG in industrial use and small-scale power generation. “With the infrastructure that we have built in Singapore, SLNG will be able to play a role in serving the small-scale LNG segment and facilitating its growth,” said a spokesman for the firm, although he also acknowledged that such changes will require time, given the high capital cost involved in different segments of the LNG value chain.

For a hub to be effective and an index to emerge, both buyers and sellers have to commit to use it, said industry veteran Martin Houston, who is also chairman of United States-based LNG firm Parallax Energy. “Buyers will like the flexibility, and once a trading pattern emerges and pricing starts to reflect the true spot price of the commodity, it is more likely to grow quickly, at least to the capacity of the LNG storage available.”

Although only half the 120ha of available land has been taken up by about 60 local and foreign firms, plans are on for the next phase of Singapore’s aerospace industry development, JTC’s assistant chief executive for the aerospace cluster, Alvin Tan, told The Straits Times.

Tan did not say where the next cluster will be located but industry players said Changi East, where the future Changi Airport Terminal 5 will be built, is being considered.

Works spearheaded by JTC to transform the sleepy area around Seletar Airport into a vibrant aerospace hub started in 2008.

The development of the 300ha site, including the airport, was done in three stages.

More than eight years later, Seletar Aerospace Park is home to global names such as engine makers Rolls-Royce and Pratt & Whitney, as well as home-grown firms including ST Aerospace.

Together, they employ about 5,000 people and operate either out of their own facilities or shared premises built by JTC.

The JTC developments include three high-rise buildings and 14 factories.

The second and third buildings will open this month, Tan said.

Apart from the big boys, small and medium-sized local companies such as Wah Son Engineering and WingsOverAsia have thrived at Seletar, adding to the diversity of the area, Tan said.

Wah Son, which moved to Seletar last July, operates out of an 8,000 sq m purpose-built facility.

The firm serves both international and local companies such as UTC Aerospace Systems, Bombardier and Vector Aerospace.

The clustering of aerospace-related operations and businesses at Seletar helps companies to derive benefits from economies of scale and the synergies from being in an integrated environment, said Wah Son executive director Lim Hee Joo.

Singapore’s aerospace industry, which is made up mainly of the maintenance, repair and overhaul of aircraft engines and parts, accounts for more than 2 per cent of the economy.

Even as Singapore aspires to be the premier Asian hub for aerospace services, there is growing competition from neighbouring countries such as Malaysia, Indonesia and Vietnam.

Subhranshu Sekhar Das, Asia-Pacific vice-president for aerospace and defence at Frost & Sullivan, said: “Despite the competition, Singapore is the clear leader with a comprehensive range of services and products as well as superior logistics and other support services.”

The development of Boom Marina will reportedly be integrated with upgrades to Benoa Port in Bali and Labuan Bajo Port in East Nusa Tenggara–all slated to be completed by 2017. The project may also be expanded to include locations such as Karimunjawa Island in Central Java, Lombok in West Nusa Tenggara and Kupang in East Nusa Tenggara.

“We are confident the project will attract more tourists to Indonesia,” said PT Pelindo Properti Indonesia (PPI) president director Prasetyo in a press release circulated on Tuesday.

PPI is a subsidiary of state-run port operator PT Pelabuhan Indonesia III (Pelindo III).

The development of marine tourism at Benoa Port is considered particularly vital, as the port is an entry point for holidaymakers arriving in Bali aboard cruise ships.

In addition to being a destination port, where cruise ships drop off and later pick up the same passengers, Benoa also serves as a turn-around port, where cruise ships can drop off passengers who then go on to holiday in Bali. These passengers leave the island via other modes of transportation, and the cruise ships pick up new passengers before leaving for the next destination.

As reported by kompas.com, Pelindo III also announced other development plans including for Gili Mas and Mandalika Resort in Lombok and Alor in East Nusa Tenggara, as well as future cooperation with Raffles Marina in Singapore and Fremantle Sailing Club in Australia.

Prasetyo said the cooperation would involve support in planning and development, as well as operational and business training such as overseas internship programs for PPI staff.

Said Chung-Sim Siew Moon, the head of tax services at Ernst & Young Solutions: “We propose that Singapore’s income tax system be simplified and made more competitive to promote Singapore as Asia’s business and financial hub, while tweaking certain policies to ease business costs and promote business growth.

As an open economy, Singapore also has to continue to improve the international competitiveness of its tax treaties, she added.

This could mean refreshing them, providing for tax arbitration clauses and greater clarity on the interpretation of tax treaties or adding new treaties.

To support government spending, EY suggested ways to capture new streams of tax revenue through lowering the GST registration threshold and imposing GST on the digital economy.

Currently the GST registration threshold in Singapore is S$1 million per annum – significantly higher than most other countries, EY noted.

Mr Kor Bing Keong, a GST Services partner at Ernst & Young Solutions, said: “The government could consider lowering the GST registration threshold to S$500,000 per annum. A high GST registration threshold was important at the start of GST implementation as it relieves small businesses from GST registration and compliance.

“GST has now become an integral part of businesses and GST-compliant accounting and point-of-sale software is readily available. With the expected increase in social spending by the government, a decrease in GST registration threshold could bring more businesses into the GST net and increase revenue collection.”

Other recommendations that EY made in its wish list included providing incentives for Singapore-based family offices, maintaining the corporate tax rate and increasing the cap for tax deduction for medical expenses.

Currently, companies can claim a tax deduction for their employees’ medical expenses of up to 1 per cent of the employees’ total remuneration for the year. Increasing the cap will help companies to defray part of the business cost of providing this important benefit to their employees, EY said.

Land Bank of the Philippines (LBP) will be the surviving entity when it merges with Development Bank of the Philippines (DBP), pending Bangko Sentral ng Pilipinas (BSP) approval as well as written consent of the state-run Philippine Deposit Insurance Corp.

The merger will result in a bank with combined assets of about P1.6 trillion, just behind Henry Sy-owned BDO Unibank Inc’s 1.88 trillion peso and surpassing George Tan-led Metropolitan Bank and Trust Co’s 1.37 trillion, based on end-September 2015 BSP data.

Ayala-led Bank of the Philippine Islands had 1.16 trillion in assets as of end-September last year while Lucio Tan’s Philippine National Bank had 607.4 billion.

LBP is the country’s fourth-largest bank in terms of assets with 1.14 trillion, while DBP has 465 billion and ranked seventh.

BSP Governor Amando M. Tetangco Jr. said the merger of LBP and DBP “is actually in line with the BSP’s advocacy for bigger and better banks, and would potentially allow the national government to benefit from economies of scale in the banks’ operations.”

Tetangco said in a text message to reporters that the BSP would await the formal application from the parties involved, which should include the national government’s plans as well as the business case for the merger.

Executive Order (EO) No. 198 issued on Feb. 4 and published on Tuesday noted that the Governance Commission for GOCCs (GCG) earlier determined that “it is in the best interest of the State to merge DBP and LBP,” noting the two banks’ overlapping functions.

The EO said the merger “will build a stronger and more competitive universal development bank able to fulfill its mandate of providing banking services to propel countryside development and to contribute to sustainable and inclusive growth.”

DBP’s assets and liabilities will be transferred to LBP under the operational merger. In a text message to reporters, BSP Deputy Governor Nestor A. Espenilla Jr. said the parties involved would have to file a merger application with the policy-making Monetary Board of the BSP. “A law or EO is just their legal basis to merge being government banks. Like all banks, they still have to get Monetary Board approval,” he explained.

“No request for merger has so far been submitted to the BSP. We’ll wait for their application,” Espenilla said.

Following the recommendation of the Department of Finance, LBP’s authorised capital stock will be increased to 200 billion from 25 billion at present. This significant increase would make the merged entity the biggest in the country in terms of capital, the GCG said in a report submitted to Malacañang last year.

In Southeast Asia, the merger would make LBP one of the region’s top 20 lenders, according to the GCG.

The EO also directed the DOF as well as the Department of Budget and Management to infuse 30 billion in capital to LBP.

The GCG will implement the merger, including undertaking a reorganization plan under which personnel of the two banks who will be separated from service will receive a merger incentive pay on top of separation or retirement benefits. About 220 Landbank employees will become redundant while 170 DBP workers would lose their jobs, the GCG had said.