Speaking at the event held by the Public Procurement Agency under the Ministry of Planning and Investment, Nguyen Thanh Tuan from the agency introduced the government procurement adjustments in the TPP, goods and services that need to be procured and the prices of bidding packages. He also analysed differences in selecting bidders before and after the deal takes effect.

Michael Trueblood, director of Usaid’s Economic Growth and Governance Office, said Usaid was assisting Vietnam in reforming its policies on government procurement.

USAID expert Mai Lam said the TPP was the first free trade agreement where Vietnam had made commitments on government procurement, noting the government procurement agency would face difficulty in selecting bidders for bidding packages that properly observe the TPP requirements. To improve effectiveness in government procurement, Lam said Vietnam needs to study and then provide its bidders with information on the government procurement market of other TPP countries.

It is necessary to conduct a survey on the capability of Vietnamese bidders and to build trade promotion programmes to boost Vietnam’s exports via the government procurement channels, he added.

Jean Heilman Grier, an international consultant, said when joining the TPP, Vietnam needs to recommend common requirements and principles as well as specific regulations and guidelines to be included in sub-law documents.

The country should also detail bidding requirements, including international commitments on bidding, he added.

Grier also recommended Vietnam revise Decree 63/2015/ND-CP on selecting bidders and focus on preferential programmes for small- and medium-enterprises, form independent arbitration agencies, disseminate the TPP government procurement commitments and issue tight regulations to avoid conflicts of interest and to prevent corruption.

A seminar on tax education at the Sky Star Hotel in Yangon was jointly organised by the Myanmar Rice Federation and the IRD. The LTO was inspecting the taxpayers included on its books, said Min Htut, director-general of the IRD.

“The LTO levies taxes based on a self-assessment system in accord with the law. This is a routine process for the LTO and taxpayers,” Mya Mya Oo added.

The government has released a list of the 1,000 top taxpayers for the 2014-15 fiscal year. Kanbawza bank and Denko Trading Co Ltd topped the lists by paying more than 20 billion kyat in income and commercial taxes.

For 2014-15, the other top 10 income taxpayers were Myawady Bank, Myawady Trading, Myanmar Economic Holdings Ltd, Global Treasure Bank, International Beverage Trading Co Ltd, Cooperative Bank, Ayeyarwady Bank and White Crane Trading.

Ten top commercial taxpayers were Myawady Trading, Myanmar Winery & Distillery Co Ltd, White Crane, Asia Energy Trading Co Ltd, International Beverage Trading Co Ltd, City Mart Holding Co Ltd, Six Winner Brothers Co Ltd, Benhur Trading Co Ltd and Shwe Mi Co Ltd.

Tax revenues earned in 2011-12 was 1.5 trillion kyat, 2.7 trillion kyat in 2012-13, 3.5 trillion kyat in 2013-14 and 4.4 trillion kyat in 2014-15.

The IRD has informed all taxpayers about the submission of the income declaration form for the last financial year. Now the IRD has earned 2.4 trillion kyat for the first six months.

The Eleven Media Group is the only print media group on the 500 taxpayer list. It is also on the top 100 taxpayers’ lists. The EMG and Eleven Trading Co have paid 2 billion kyat over the last five years.

Boustead Holdings Bhd is one case in point where its rights issuance was oversubscribed by only 0.28 per cent.

The close-to-even subscription rates makes a glaring statement especially for a big company with a market capitalisation of 3.88 billion ringgit (US$949.6 million).

Its share price had also taken a beating and is trading at a multi-year low of 2.68 ringgit while its new rights shares were priced at 2.55 ringgit.

Boustead, a plantation-based company had raised 1 billion ringgit in fresh capital to reduce debts including to fund its property development and other investment activities. The company, 58.4 per cent owned by the Armed Forces Fund Board, earlier said it wanted to reduce its gearing from 1.1 times presently to 0.9 times by the end of the year.

The difficult environment may be the new normal if sentiment on the equity market remained uncertain, analysts note.

This may also indicate that investors are less willing to cough up their own cash to plough into their investee companies due to various possible reasons including the soft market sentiment of late.

Another company to watch closely will be Malaysia Building Society Bhd (MBSB) that had recently announced that it wants to raise funds of up to 1.7 billion ringgit through rights issuance.

MBSB which last traded at a market capitalisation of 3.16 billion ringgit said it will soon send out its prospectus to its investors to allow them to decide if they want to take up their rights issuance.

Interpacific Research’s head of research Pong Teng Siew told StarBiz that the weak sentiment for fund raising was indicative of a soft market environment where investors believed there was not much upside to prices.

“People generally may have less money to put into stocks. We have seen worse situations than this actually, especially after the Asian crisis in 2001 to 2002. It was very bad then. There were waves of initial public offerings that were undersubscribed due to the poor liquidity,” Pong said.

“Today while the GDP is growing it is also not a very true indication of money supply. Recent statistics showed that M1 money supply have shrunk. M1 is the most liquid form of money that can be put into the equity market. Liquidity also comes from lending by the bank and margin financings have also shrunk,” he added.

Some other recent examples of companies which have seen their investors clearly undersubscribing to their rights issues are Mulpha International Bhd, PUC Founder (MSC) Bhd and TH Heavy Engineering Bhd (THHE).

Mulpha’s rights issue was undersubscribed by 13.76 per cent at the close of acceptance and payment on June 1 while the two other companies had even bigger undersubscription rates.

PUC’s 28-for-20 rights issue of up to 83.9 million ringgit nominal value of irredeemable convertible unsecured loan stocks (Iculs) with warrants was undersubscribed by 42.8 per cent while THHE’s rights issue of Islamic irredeemable convertible preference (ICPS-i) issuance exercise had been heavily undersubscribed at 69.96 per cent.

Notably, LTH was the sole subscriber of THHE’s rights issue exercise.

However, this does not really come as a surprise given the weak sentiment surrounding the oil and gas industry.

THHE is also in a financially difficult position with a recent reported first quarter ended March 31 that saw net losses almost doubling to 33.44 million ringgit while quarterly revenue shrunk three times to 14.5 million ringgit.

Other smaller capitalised and mostly Ace Market companies have, however, seen sound oversubscription rates to their fund raising plans.

These included Prolexus Bhd (oversubscribed by 37.75 per cent), Netx Holdings Bhd (100 per cent subscription), Connectcounty Holdings Bhd (oversubscribed by 14.71 per cent) and Spring Gallery Bhd (oversubscribed by 21.7 per cent).

This trend indicate that there was not much appetite among shareholders of bigger companies – who are mostly institutional – to add to their holdings by buying into the rights shares.

On the other hand, smaller companies that have a few key shareholders and less occurrence of institutional funds as their long-term holders, have seen stronger subscription rates.

(US$1 = 4.09 ringgit as of 6/20/2016 via oanda.com)

The retail industry has contributed about 18 per cent of GDP in 2015 alone. PRA Vice Chairman Roberto Claudio cited OFW remittances, BPO earnings, increased consumer spending power, and tourism as key contributors to this development. Tourism, in particular, is projected to attract 12.5 million tourists by 2022. This means demand for shopping, leisure and entertainment will increase tremendously.

Claudio said that although the retail industry has been experiencing growth over the last three years, it still has to address the challenge to keep the consumers coming to the stores because of the growing popularity of e-commerce. “We need to go beyond the idea of selling. We have to provide excellent customer experience for them to keep coming back to our stores,” he said.

Claudio gave SM as an example on how to meet the demand because of the company’s continuous investments in shopping, hotel and conventions, events and entertainment. “SM never stopped innovating. It keeps reinventing itself. In retail, you can’t afford to be complacent once you meet your sales targets. Just look at how many times SM innovates, how they keep reinventing their product categories, how they continue training their people,” Claudio said.

PRA Chairman Emeritus Samie Lim believes that SM’s success is driven by SM founder Henry Sy, Sr.’s ability to see beyond selling and marketing. According to Lim, Henry Sy was instrumental in bringing the Asian Retailers Conference and Exhibit to the Philippines in 1993 at the then newly built SM Megamall. There, he remembers seeing Henry Sy, exchanging ideas with, and learning from, the delegates who were some of Asia’s best retailers.

“Henry Sy is a true visionary. He doesn’t see things for what they are, but for what they can become,” Lim said. “That’s how SM became a leader. The company’s tradition of learning from the best retailers around the world continues until today. That’s the spirit of entrepreneurship.”

Today, the tradition is carried on by Hans Sy as president of SM Prime Holdings. “This win is a tribute to the entire team whose hard work has helped build the SM brand in the way it is recognized today,” said Hans Sy about the various awards SM brought home from the PRA. “It is a win that will help keep us on track toward maintaining innovative products and services.”

SM Megamall went home with another Shopping Centre of the Year award, which automatically elevates it to PRA’s Hall of Fame. It was also given a special award for Best Retail Architecture awarded by the Southeast Asia Property Awards.

“A potent mix of external factors combined with the public deficit spending-induced surge in the country’s import bill is likely to push the Philippine peso to a more competitive level against the US dollar,” BPI said in a note to clients authored by lead economist Emilio S. Neri Jr., economist Nicholas Antonio T. Mapa and research officer Robbin Ivory P. Brillantes.

The peso’s depreciation to the 50-peso level “by year end until next year” meant the new administration needed to keep a dollar buffer to fund its aggressive infrastructure buildup, the economists said.

BPI also took note of a possible Fed policy shift of gradually increasing rates to support the US economy and the dollar.

Last week, a statement from the transition team of incoming Finance Secretary Carlos G. Dominguez said part of the proposed 10-point socioeconomic agenda of President-elect Rodrigo Duterte included “accelerating annual infrastructure spending to account for 5 percent of the gross domestic product (GDP), with public-private partnerships playing a key role.”

Incoming Budget Secretary Benjamin E. Diokno had said the annual budgets of the Duterte administration would prioritize higher public expenditures on vital infrastructure, equivalent to about 7 percent of GDP, noting that “the economy is deficient in all types of infrastructure—highways and bridges, ports and airports.”

“There will be increased demand for the US dollar by the next administration for infrastructure spending and will likely have preference for domestic borrowing to fund deficits (which means no US-dollar financing flows for government, less of US dollars),” the economists said.

“Our estimates are about $145 billion will be needed in the next six years to fund this [infra program], assuming that three-fourths of the spending are from imported equipment and materials for construction,” BPI added.

In a text message last week, National Treasurer Roberto B. Tan said he already briefed Dominguez on the country’s borrowing plan for the rest of the year as well as the reform initiatives being pursued by the Bureau of the Treasury. Tan had said domestic sources would likely still account for the bulk of borrowings in the near term.

This year, domestic borrowing had been programmed to hit 84.5 per cent of the total.

“Incoming President Duterte’s aggressive infrastructure spending plan will definitely invoke a sharp increase in importation of capital machinery, which would lead a bump up in dollar demand, also causing the peso to weaken. Traditional sources of dollar liquidity may remain, such as remittances flows and business process outsourcing receipts, but these may not be enough to compensate for the surge in importations,” the BPI economists said.

Dr Siti N Abdul Malek (pictured), director at the AFBA secretariat, said the Product Working Group of Prepared Foodstuffs (PFPWG) is working on the MRA and will be finalised by this year.

“In the food industry you need to demonstrate with evidence that the products you produce for the consumers are safe for consumption,” she said.

Food processors need to install a system that can eliminate or minimise microbiological or chemical contamination.

Mutual recognition will allow a food hygiene system that is in place in one Asean member state to be recognised in another Asean member state. Dr Siti said this will keep testing from being duplicated to prove that a particular product is safe for consumption.

According to the Asean website, PFPWG has been actively supporting the Asean Consultative Committee on Standards and Quality (ACSSQ) in its task to eliminate technical barriers to trade manufactured food.

AFBA represents national associations in Southeast Asia involved in the manufacture, distribution and sale of food and beverage products. The group is advocating for the harmonisation of the food industry standards and regulatory requirements in Asean.

Up to 95 per cent of Vietnamese enterprises were using the Internet last year, but up to 60 per cent of them faced difficulties with information technology (IT) applications, according to a report from the Vietnam Chamber of Commerce and Industry (VCCI).

The VCCI, in coordination with Google Asia Pacific, organised a seminar called “Tap the vast potential of the digital economy: Are Vietnamese small- and medium-sized enterprises (SMEs) ready?” in Hanoi recently.

The report from VCCI also showed that businesses which effectively applied IT were able to access information on laws and policies more easily, adopting administrative procedures more quickly and seeing better business results.

Vu Tien Loc, VCCI chairman, said the digital technology movement had developed rapidly and had made a significant impact on Vietnamese enterprises, especially SMEs.

Proper reception and effective application of technology will help SMEs in Vietnam improve their competitiveness, he said.

State agencies also need to strengthen their application of IT to build policies that create favourable conditions for developing enterprises, he emphasised.

“Nearly 98 per cent of Vietnamese enterprises are SMEs, but they generate up to 51 per cent of total employment and contribute 40 per cent to the national gross domestic product,” Loc said.

The Internet had opened up major opportunities for Vietnamese enterprises to reach past the Vietnamese border, he said.

Vietnamese SMEs have great motivation and know they need to grasp opportunities that will help them quickly grow into large enterprises, he said. According to Google, some 52 million people connect online in Vietnam, and the country ranks fifth among those with the largest number of people connecting online in the Asia-Pacific region, after China, India, Japan and Indonesia.

Up to 55 per cent of Vietnamese have smart phones, while only 46 per cent own a personal computer.

The Vietnamese use their phones for many different activities ranging from seeking information to watching videos, getting directions, checking traffic conditions and managing a shopping list.

However, according to a Google representative, the digitalisation of Vietnamese enterprises remains slow for various reasons.

There is a lack of awareness of the benefits of online connection, a lack of internal technical expertise and people are in the habit of using cash due to security issues.

Kevin O’Kane, managing director, SMB, Google Asia Pacific, spoke at the seminar, saying any Vietnamese enterprise could become an e-commerce enterprise as there were customers available online on the Internet and on mobile platforms.

Customers typically expect businesses to have an e-commerce presence.

However, the majority of SMEs in Vietnam, have not yet provided a mobile commerce experience and many have not adopted e-commerce practices at all.

This makes these businesses almost invisible to more than half of Vietnam’s online population as well as the rest of the world, he said.

Speaking to provincial journalists whom PLDT invited to Makati City for its annual stockholders meeting on Tuesday, Pangilinan said the company’s digital shift was likely to succeed if the government would not meddle too much.

Some people, including people from the government, do not understand the implementation of major infrastructure needed to transform PLDT and Smart’s services into digital, and they could block the huge project, expected to be operational by 2018, because of lack of understanding of it, Pangilinan said.

He said people from the government could help by not dipping their hands too much into the project.

“The government’s share is to get out of the way,” he said.

Joint venture with Globe

PLDT is linking up with Globe Telecom to buy Vega Telecom Inc., the telco business of San Miguel Corp. (SMC), for 69.1 billion pesos.

The joint venture will improve the internet services of PLDT and Globe, the two companies said in separate statements announcing the partnership last month.

On Friday, however, the new antitrust body Philippine Competition Commission (PCC) said the PLDT-Globe deal would not be approved until after a comprehensive review.

“A comprehensive review includes a determination of the relevant market, whether there will be substantial changes to the market structure, and the potential impact of the transaction on public welfare,” the PCC said in a statement.

‘Transitory’ guidelines

The regulator’s decision could spur PLDT and Globe into taking legal action, as the two telcos consider the transaction approved under the PCC’s own “transitory” guidelines.

Under those guidelines, deals closed after the new competition law took effect but before its implementation rules take effect are deemed approved.

The PLDT-Globe deal with SMC was sealed on May 30, four days before the publication of the competition law’s implementation rules.

PLDT and Globe said they filed the required transaction notices under the PCC guidelines so the regulator could no longer challenge the deal.

But the PCC said the transitory guidelines did not dilute its authority to review transactions, especially if required by national interest and public policy.

“The review is intended to ensure that the transaction will, in the end, result in sustained gains for the public by not restricting competition,” the PCC said.

New competition

The announcement of the PLDT-Globe deal came after President-elect Rodrigo Duterte warned the two companies in May that he would open the Philippines to foreign telcos if they failed to improve their internet services.

With an average household download speed of 3.64 Mbps, the Philippines ranks 176th among 202 countries surveyed last year by internet metrics provider Ookla.

The local download speed is eight times slower than the global average broadband download speed of 23.3 Mbps.

In Asia, the Philippines has the second-slowest internet speed. Among 22 Asian countries studied by Ookla, the Philippines has a download speed just a tad faster than bottom-dweller Afghanistan.

Despite its slowness, internet service in the Philippines is expensive, $18.19 per Mbps compared with the global average of $5.21.

No public funds involved

To improve its services, PLDT is pouring billions of pesos for the shift to digital, and Pangilinan, in his speech to provincial journalists on Tuesday, stressed that no government funds were involved in the company’s investment.

“Whose money is being spent? It’s the private sector’s. There is no guarantee from the government, no government fund is involved, so get out of the way, period,” Pangilinan said.

“If ever the huge undertaking comes out lousy, it’s the company that will suffer the impact, to the delight of its competitors, and not the government,” he said.

If private projects fail, he added, “the government will not rescue us.”

Given the stiff competition in the digital industry, Pangilinan said, “we are mindful of other guys watching us.”

“We have to be on our toes. Somebody is watching us, like a wife, to police [our] ethical standards,” he said.

Improving the digital industry’s services will take time and lots of money, he said.

Higher capex

“The journey to the digital future will be long and the climb is steep,” he said.

“There will be false starts, there will be speed bumps, and there will be mistakes,” he said.

For PLDT to achieve its metrics, he said, the company has increased its capital expenditure (capex) to 43 billion pesos this year and beyond. This is before the PLDT-Globe deal to acquire the SMC telco, which added some $100 million to PLDT’s capital expenditures, he said.

Pangilinan said the considerable increase in capital expenditure showed the seriousness of the massive effort being taken to transform the PLDT-Smart network into the Philippines’ most extensive and data-capable infrastructure.

The undertaking, he said, has also forced PLDT to adjust its financial track for the next three years, like resetting its core income guidance to 30 billion pesos following the partial sale of its shares in power distributor Manila Electric Co.

Pangilinan said he was optimistic that PLDT’s 30-billion pesos core income is “(the) new base from which the company will rise.”

(US$1= 46.44 peso)

Malaysia recorded 37.3 billion ringgit (US$9 billion or Bt320 billion) of approved investments in the services, manufacturing and primary sectors in the first quarter and, if fully implemented, they will create 39,990 jobs.

Mustapa said the investments involved 1,271 projects, but he expected 2016 to be another challenging year for the country.

“As a diversified economy, we believe we can withstand these challenges and overcome them, especially with the continued inflow of foreign investments into the country. We are definitely doubling our efforts in achieving the country’s investment target,” he said.

Elaborating on the first-quarter investments, he said that despite a weaker global environment, Malaysia remained as a competitive location for foreign direct investment, with an increase of 28 per cent in this quarter.

“Year on year, FDI increased to 12.8 billion ringgit in the first quarter this year from 10 billion ringgit in the corresponding period of 2015. Domestic investments led with 24.5 billion ringgit or 65.7 per cent of total approved investments in the quarter,” Mustapa said.

He said taking into account the two lumpy projects approved in the first quarter of 2015 – China’s in Johor and LNG9’s project in Sarawak – the first quarter of this year showed a decrease from 69.8 billion ringgit. The two projects amounted to 35.3 billion ringgit.

“I would like to highlight that without the two big projects, Q1 2016 actually shows an overall increase of 8.1 per cent from 34.5 billion ringgit last year,” he added.

Mustapa said the services sector attracted 27.6 billion ringgit of approved investments in the first quarter. A total of 1,088 services projects were approved, creating 20,200 employment opportunities, the largest potential employer in the economy.

“Foreign investment in the services sector surged by 112.1 per cent from 3.3 billion ringgit in Q1 2015 to 7 billion ringgit in the same period this year. We are seeing more foreign participation in distributive trade, education services, global establishments, financial services and real estate sub-sectors,” he said.

Distributive trade saw an increase of 992 per cent of foreign participation from 101.5 million ringgit in first quarter of 2015 to 1,108.7 million ringgit in the first three months of 2016.

The increased investments from regional and international retailers have boosted Malaysia’s ranking to third position in the 2016 Global Retail Development Index (GRDI) by AT Kearney.

For the education sub-sector, the increase of 672.7 per cent of foreign investments from 19.3 million ringgit in first quarter 2015 to 149.2 million ringgit in the same period this year reflects Malaysia’s success in accelerating the process in making the country a regional education hub of excellence, the government says.

The private education sector will complement the government’s efforts in providing access to quality education to the people.

Sagawa Express Philippines, the local subsidiary of SG Holdings Global Pte, handles mainly inbound and outbound international freight forwarding and deliveries within Luzon.

“With the mutual cooperation with LBC, we’ll be able to deliver to other regions in the country,” said Lawrence Mendoza, CEO of Sagawa Express Philippines. “Our customers will now be able to send their packages and cargo to more areas in the Philippines using our joint service,” he continued.

Through the agreement, Sagawa now has access to the extensive network of LBC, consisting of more than 1,200 domestic branches in strategic locations across the Philippines.

LBC president and COO Miguel Camahort and SG Holdings Global president and regional head Tomoki Sano signed the agreement between the two companies recently.

“We wish to ‘open doors’ and opportunities in this cooperation with Sagawa,” said Camahort. “For now, under the agreement, LBC will provide last-mile fulfillment for Philippine-bound Sagawa packages and cargo. We hope that this as a first step in working better together with (Sagawa) to serve both the Japanese and Filipino markets.”