Teong Teck Lean, the company’s main shareholder, just walked away with a cool 93 millionlion ringgit from selling a block of his shares to a Japanese concern, Yamato Holdings Co Ltd.

Together with him, another major shareholder, Singapore Post Ltd (SingPost), also made a killing of S$64 million (RM190.05 million) from the sale of another block to Yamato.

Yamato, Japan’s largest door-to-door delivery service company, now owns 23 per cent of GDex via its wholly owned unit Yamato Asia Pte Ltd.

Yamato bought into GDex to use the latter as its springboard into the Asean region. A major announcement will be made in the following week of the two parties’ collaboration agreement, with Japanese media present.

The Tokyo-based holdings company has a 45.4 per cent market share in Japan and competes closely with Sagawa Express and Nippon Express.

It founded Yamato Asia in January 2014 as part of its global strategy to become the top distribution and lifestyle support provider in Asia.

The Yamato-GDex collaboration could well be poised to tap into one of the most lucrative markets – Asean, where barriers of entry are supposed to be reducing.

Malaysia’s population of 30 millionlion pales in comparison with the Asean region’s population of more than 600 millionlion people.

The partnership is banking on exponentially higher demand in intra-regional trade in Asean following both the Trans-Pacific Partnership Agreement as well as the formation of the Asean Economic Community.

That said, tapping into the Asean market will not be an easy feat. For example, in Indonesia, the single largest of the Asean countries by population, there are hundreds of courier companies plying their trade.

In the past, GDex had expressed plans to expand into Indonesia and Thailand to strengthen its regional foothold. Apart from SingPost, GDex is also in a working relationship with Pos Indonesia, and had established a representative office in Jakarta in 2014.

It also has strong partnerships with major international express courier service providers such as UPS and Fedex. “These partnerships indicate the recognition of GDex’s service levels by these players, as GDex is able to integrate into their delivery system and provides last millione delivery services for them. At the same time, GDex also leverages on these partnerships to provide international services as part of a total solution package,” says HLIB Research.

GDex needs to have a clear strategy on increasing its Asean reach, which will most likely be revealed at a briefing to be held sometime next week.

On Jan 21, the company announced in filings with Bursa Malaysia that it had placed out 124.89 millionlion new shares at RM1.74 each to Yamato Asia, representing a 9.08 per cent stake. The Tokyo Stock Exchange-listed Yamato at the same time announced its intention to up its stake in GDex to 23 per cent by buying more shares from other shareholders.

Then, a mere three weeks later on Feb 12, Yamato Asia increased its stake to 22.8 per cent by buying 191.09 millionlion shares from Teong and GDex’s second-largest shareholder SingPost.

All in all, Yamato Asia has spent a total of RM549 million for its 23 per cent stake. Although at a slight premium to GDex’s current share price of RM1.68, market observers feel this validates Yamato’s conviction in the former’s growth potential, despite it trading at high valuations.

Its purchase has now left Teong and SingPost’s shareholdings standing at 35.39 per cent and 11.2 per cent, respectively.

SingPost said the sale proceeds of S$64 million would reinforce its e-commerce logistics solutions and networks.

“This deal gave us a good return on our investment and also boosted our available resources to drive SingPost’s eCommerce logistics growth as it pivots into the United States with the recent investments in TradeGlobal and Jagged Peak,” said SingPost deputy group chief executive officer (corporate services) and group chief financial officer Mervyn Lim.

SingPost, an associate company of Singapore Telecommunications, which in turn is 50 per cent-owned by Singapore’s national investment fund Temasek, first bought into GDex in 2011, in a deal that valued GDex at a price-earnings multiple of 35 times.

In March 2011, SingPost increased its stake in GDex to 27.08 per cent from an initial 4.98 per cent. This made GDex an associate company of SingPost. Woo Keng Leong, SingPost’s senior executive vice-president/head of postal services was appointed to GDex’s board of directors as a non-independent non-executive director on Feb 12, 2015. At SingPost, he is fully responsible for the operations of the domestic mail, international mail and post office network businesses.

SingPost’s interest in GDex has set the latter apart from its local competitors Pos Malaysia, Nationwide Express and City-Link Express. Insiders say that SingPost’s stake in GDex has been a strategic one, and will continue to be, despite the reduction following the sale of a block to Yamato.

GDex’s Asean focus

GDex has an extensive network in Malaysia and Singapore, with express delivery as its core business, in which the conventional business-to-business segment contributed 80 per cent of its revenue.

The e-commerce business contributed the remaining 20 per cent.

As for its plans with Yamato, it has been revealed that Yamato would leverage on GDex’s extensive network to offer wider coverage for Yamato Malaysia’s customers, as well as implement cross-border logistics between Malaysia and Singapore.

The two parties will also cooperate on the line haul business between major centres to further improve efficiencies. The line haul business involves transport of heavy loads of freight cargo over long distances or between cities, usually by trucks.

GDex has already been actively investing on increasing its efficiency and expanding capacity to meet the growing demands for its service. Since 2009 to 2015, GDex’s daily sorting capacity (referring to the number of parcels that go through its system) has tripled to over 100,000 a day. During this time, its staff count and fleet size doubled to 2,676 and 578, respectively.

GDex shares are currently trading at about 68 times PE, one of the highest compared with other courier companies both within the region and internationally.

The company has been trading at relatively high valuations likely owed to its growth potential, especially in the e-commerce segment.

To be sure, GDex shareholders have enjoyed phenomenal returns as its share price has performed spectacularly well since its listing back in 2005 on the Ace Market. An initial public offering shareholder would have enjoyed total returns of close to 2,000 per cent until today.

While SingPost’s stake in GDex has been beneficial for both companies, things really started heating up when giant online retailer Alibaba group took a 10.35 per cent stake in SingPost in 2014.

In a recent report, HLIB Research said the emergence of Yamato and SingPost as major shareholders further validates GDex’s service levels.

“SingPost (proxy to Alibaba) and Yamato (proxy to Rakuten) are expected to boost GDex’s business volumes, given the feed-in business from these partners and expanded connectivity and solutions for local clients,” it said.

Rakuten is a Japanese e-commerce and Internet company based in Tokyo. Its e-commerce platform Rakuten Ichiba is the largest e-commerce site in Japan.

GDex has leveraged on the growing e-commerce business in Malaysia, having secured business relationships with renowned online portal Groupon, Lazada, Zalora and Astro Home Shopping, by providing total solutions – warehousing, logistics and last- millione deliveries.

HLIB Research believes e-commerce is an emerging catalyst for GDex, with expectations of double-digit growth over the next five years, given the increasing Internet and mobile penetration rate in Malaysia. This is no doubt supported by improving payment gateways and product delivery platforms.

“Henceforth, GDex is expected to continue to enjoy strong business volume growth, by leveraging on the emerging trend of online purchases – business to business, business to consumer, and likely going forward consumer to consumer,” it said.

HLIB Research now projects earnings growth for the financial year ending June 30, 2016 till 2018 to be between 21 per cent and 30 per cent, in view of the strong volume growth and expanding margins. A point to note is that it has not factored in any upside from GDex’s recent strategic alliances and potential regional expansions.

All eyes will be on GDex’s announcement this week, as it explains details of its collaboration with Yamato. The market will then be in a better position to gauge if GDex and its partners will be able to conquer the attractive but yet challenging market of Asean.

Michael Zink has been with the firm for more than 28 years, and was appointed Citi country officer for Singapore in April 2010. He became head of Asean in February 2012.

At the age of 57, he is one of the longest-serving country heads in Singapore. Citigroup Asia chief executive officer Francisco Aristeguieta told staff in a memo yesterday that “Michael has decided that now is the right time for him to return to the United States”.

He said that Zink “will ensure a smooth transition” as the bank starts the process to fill the “two vital roles” of Asean head and Singapore country officer.

Citi said a successor will be announced in due course. Zink, who joined Citi in 1988 in New York as a corporate relationship manager, will be with the firm until around May.

Aristeguieta said Zink has contributed significantly to the success of the franchise, and “his career epitomises the opportunities our global network provides for those who truly live our leadership values”.

Over the course of his Citi career, Zink worked in 10 countries, including Russia, Australia, South Korea, China and Indonesia. Aristeguieta said: “He has never shied away from challenging roles, and has always championed productive and innovative change.”

Zink was also lauded for his focus on promoting talent, having “recruited and developed a generation of leaders at Citi”.

Apart from his role at Citi, he is also co-chair of the Financial Services Committee and sits on the board of the US-Asean Business Council. He is a member of AmCham Singapore’s board of governors, and serves as a council member of the Association of Banks in Singapore.

Appearing relaxed in a long-sleeve batik shirt with first-lady Iriana in a simple pink hijab and red traditional Indonesian garb, Jokowi visited the headquarters of US technology giants Google, Facebook, Twitter and Plug and Play in Silicon Valley and downtown San Francisco on Wednesday to spread the message that Indonesia is serious about expanding into the digital economy.

From playing zero-gravity table tennis in virtual reality with Facebook chief executive officer and founder Mark Zuckerberg to writing on the office walls of Facebook and Plug and Play, Jokowi appeared to be having fun on his visit as well as showing his strong interest in the technology, innovation and digital sector.

“Start it up together, prosper together,” Jokowi wrote on Plug and Play’s office wall, in a clear sign of support for start-up companies to take on a larger role in the economy.

“I hope Plug and Play can take part in Indonesia’s vision to be Southeast Asia’s biggest digital economy, one that will reach US$130 billion by 2020,” he said during a meeting with Plug and Play CEO and founder Saeed Amidi at its Silicon Valley headquarters.

Plug and Play connects start-ups with corporations and invests in 100 companies every year, including Dropbox, with $3.5 billion (Bt125 billion) in funds raised by its start-ups since 2006.

Along with the $130-billion target, Jokowi envisages the birth of 1,000 “technopreneurs” in Southeast Asia’s largest economy with more than 250 million people sprawled across the archipelago.

His administration has allowed foreign e-commerce players valued at more than 100 billion rupiah (Bt263 million) to open businesses fully in Indonesia and teamed up with financial authorities to support funding for information-technology companies and small and medium-sized enterprises, which are the heart of the president’s “digital economy” vision.

At Googleplex in Mountain View, California – where Jokowi had Indonesian food for lunch with more than a dozen Indonesian workers – the president was greeted by CEO Sundar Pichai, whose company agreed to train 100,000 Indonesian mobile developers before 2020 through universities, online and in working groups across the country.

Google has also recently lowered the minimum price for applications, games and products on Google Play, from 12,000 rupiah to 3,000 rupiah so developers can reach more users.

Jokowi’s fresh and vibrant outlook on Indonesia’s economy, which is still somewhat reliant on commodity exports, was reflected in his message inscribed at Facebook’s headquarters.

“Peaceful together in harmony,” Jokowi wrote with pink chalk on the chalkboard wall at one of the world’s largest companies, with much laughter and light moments with Zuckerberg – who toured Tanah Abang market in Jakarta with the president in late 2014 – as well as a dozen or so Indonesian workers.

At Twitter’s headquarters in downtown San Francisco, where Jokowi met CEO and co-founder Jack Dorsey, the president was quick to record a live video of his activities there through the Periscope app that directly uploads to his Twitter account @jokowi.

There he also live-tweeted: “We invite @twitter to spread the word of tolerance and world peace.”

Wahyu Dinata Setiawan, 34, and Karl Karnadi, 33, both Indonesian workers at Facebook, said they appreciated the government’s support of start-ups, adding that they were thinking of opening their own business in Indonesia in the future.

Jokowi’s visit to the tech giants’ headquarters was part of his official agenda after attending the two-day US-Asean Summit that ended on Tuesday.

The ministry recently began the investigation following a demand from many domestic companies who themselves make billets and are affected by the cheap imports.

Since 2012 imports have more than tripled to 1.5 million tones, hitting domestic producers, whose inventories soared by 70 per cent last year from a year earlier.

Those currently opposing the ad hoc tax hike had also opposed the decision to investigate, saying imports had been much higher in 2008 -10 without sparking a similar probe.

They blamed the troubles of the billet manufacturers on excess capacity – two to three times higher than demand, is their claim – rather than on cheap imports.

The proponents of the investigation and higher tax dismissed these claims.

Nguyen Van Sua, deputy chairman of the Vietnam Steel Association (VSA), was quoted as saying by Tuoi Tre newspaper: “It is no surprise they are objecting because most of them are processing steel, not manufacturing, and are benefitting from cheap imported billets.

“We should think about long-term domestic production and stability of the industry.”

Nguyen Minh Thao, deputy head of the Central Economic Management Research Institute’s Business Environment and Competitive Ability Department, warned that in future import taxes would decline due to international integration, and many companies would stop production and switch to trading.

“With this, domestic production will disappear, jobs will also be gone, steel has to be imported and the economy will rely on imports.”

According to the VSA, last year Vietnam imported 1.9 million tonnes of vario kinds of billets for USVND14,235,995 million, with Chinese products accounting for 63 per cent, more than two-thirds up from 2014.

At an average of VND7,151,520 per tonne, Chinese billets were VND2 million (nearly VND2,234,850) cheaper than local products.

“If the [imports] continue, the local steel industry will face bankruptcy,” Nguyen Van Ton, deputy general director of major steel producer VinaSteel, said.

Billet producers would take down many supporting industries too with them, he warned.

Ho Nghia Dung, chairman of the VSA, said, “The use of protective measures is in line with international laws and are meant to protect the entire industry not individual companies.

“The VSA has sent a reply to six steel makers who oppose the import tax hike on billets.”

The six had earlier communicated their objections to the VSA.

Dung too said that if import taxes are not increased soon, local steel makers would go bust.

Deputy Minister of Industry and Trade Do Thang Hai, said: “Any investigation with respect to trade protection anywhere in the world will lead to conflicts between domestic producers and importers.

“In this case, domestic producers have proved their loss and the Ministry of Industry and Trade has opened an investigation.

“We pledge that the investigation processes and procedures will be transparent.”

Industry Minister Saleh Husin said the ministry was mulling Bintan island in the Riau archipelago to establish the SEZ, considering the existing MRO facilities already established there.

“There are requests from the companies to focus on one place to develop the MRO services, so it can be integrated,” he said on the sidelines of the Singapore Airshow recently.

Saleh added that Bintan had a strategic position, as many airlines went to nearby Singapore for MRO.

“We know that Singapore has limited space and it can be expensive to have MRO services there. Why don’t we develop it in a nearby location like Bintan, so people can switch to having the services there?” he said.

The government is said to be in discussions with GMF AeroAsia, national flag carrier Garuda Indonesia’s MRO service subsidiary, on its facilities in Bintan, as well as other companies. Currently, GMF is developing a hangar in Bintan, which is being built in a joint venture with Bintan Aviation Investments, a subsidiary of Singapore-based Gallant Venture, dating back to 2014.

Gallant Venture has the concession to build an airport in the area, which is slated to operate by 2017, with the company providing land for the hangar development for GMF. The hangar is slated to have the capacity to contain wide-body aircraft such as the Boeing 747 and Airbus 330.

Meanwhile, the country’s biggest low-cost carrier, Lion Air Group, has also established an MRO service at nearby Hang Nadim Airport in Batam, which is close to Bintan.

Saleh said companies establishing MRO facilities in Bintan would get incentives that were applicable to SEZs, as stipulated in the economic package. The incentives would include a tax holiday or tax allowance, adding to the scrapping of taxes on aircraft components for the industry.

The aircraft MRO business is estimated to be worth US$1 billion (Bt35.7 billion) per year, with Indonesian businesses currently taking up only 30 per cent. There are an estimated 60-70 aviation MRO companies in Indonesia, with GMF AeroAsia the only one certified by the European Aviation Safety Agency and the US Federal Aviation Administration.

GMF AeroAsia president director Richard Budihadianto said in an official statement that the expected total spending for MRO over the next five years would reach $32 million, with engine maintenance hitting $28 million worldwide, giving the opportunity for local MRO services to access international markets.

Commenting on the plan, State-Owned Enterprises Minister Rini Soemarno said she had also pushed Garuda Indonesia to negotiate with aircraft manufacturers such as Boeing and Airbus to hand over the servicing of their aircraft to Garuda, as it had purchased plenty of their products.

GMF signed a deal with Dutch airline KLM worth $3.5 million on aircraft components and engine maintenance on Wednesday. It was estimated to have signed deals worth more than $100 million during the Singapore Airshow.

Significant investments in air traffic management systems are needed to ensure the safety of the millions of people who fly every year .

This is a key area of focus for Singapore, said Senior Minister of State for Transport Josephine Teo.

By the end of the next decade, Singapore could handle 700,000 flights a year, twice as many as it is handling now, she told reporters on the sidelines of the Singapore Airshow yesterday.

On top of about 350,000 flights that Changi handled last year, there were another 300,000 flights that cut across Singapore skies.

Said Teo: “It is not going to be enough just to build airport capacity and have lots of room for airlines to move in and out, because if you don’t have the air traffic management capabilities, you won’t be able to deal with the capacity.”

By the time T4 opens in the second half of next year and the first phase of T5 is ready by the end of the next decade, Changi would have more than doubled its current annual passenger-handling capacity of 66 million travellers.

Singapore has launched several initiatives to boost air traffic management capabilities and capacity.

For example, the time separation or intervals between planes, especially during the peak periods, has been reduced to allow more flights to land and take off.

The Civil Aviation Authority of Singapore (CAAS) also works closely with the Changi Airport Group to minimise runway closure times for maintenance and other works.

In 2012, the CAAS set up a $200 million fund to conduct research into air traffic management.

So far, about $120 million has been earmarked for various projects, Teo said.

Apart from Singapore beefing up its capabilities, it is also vital for countries in the region to cooperate to ensure that flights can be managed efficiently and safely, she said, adding that air traffic controllers cannot work in silos.

“You are only as efficient as whoever it is around you that you take over flights from and you hand over flights to. The ability to do that in a smooth and efficient manner is also very important,” Teo said.

European Commissioner for Transport Violeta Bulc told The Straits Times earlier this week that the European Union (EU) is happy to share its experience with Asean’s 10 member states.

Both blocs have started working to seal the world’s first bloc-to-bloc open skies deal.

This will allow Asean carriers and airlines based in the EU’s 28 member countries to fly freely between the two regions.

Industry experts said the need to beef up air traffic capabilities will become more urgent as Aseanmoves towards open skies within the region.

While much progress has been made in the push for liberalisation, work remains.

Indonesia, for example, has yet to ratify a deal, which was to have been sealed at the end of last year, to allow Asean airlines free access to all Indonesian points.

Teo said, however, that she is encouraged by the tone and stance that Indonesian President Joko Widodo has adopted.

“He has indicated that Indonesia very much welcomes foreign investments and he wants to strengthen this aspect of his administration…

“Air connectivity and the Asean open skies feed directly into what he hopes to achieve for Indonesia.”

She added: “When they are able to ratify Asean open skies, it will provide a major impetus for theAsean economic community to come together in a stronger way.”

In a keynote address at the Business Session of Delhi Dialogue VIII here today, external affairs secretary (East), Anil Wadhwa said that under an MoU signed in 2012, nine border haats in the states of Arunachal Pradesh, Nagaland, Manipur and Mizoram will be set up. India has now two Land Customs Stations (LCS) at Tamu-Moreh in Manipur and Rhi-Zowkhathar in Mizoram, and the LCS at Moreh is being upgraded into an Integrated Check Post, he said.

Wadhwa said efforts at promoting cross border trade at the micro level requires support at the macro level through physical connectivity.

“We have announced a line of credit of US$1 billion to promote projects that support physical and digital connectivity between India and Asean. Along with the construction of the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multimodal Project, we are also at the final stages of a Motor Vehicles Agreement between India, Myanmar and Thailand which will address soft connectivity issues,” he said.

Recognising the importance of science and technology, India had enhanced the Asean-India Science and Technology Fund from $1 million to $5 million from this year, which will go towards setting up of an Asean-India Innovation Platform to facilitate commercialisation of low cost technologies and collaborative R&D projects.

Wadhwa said there was need to collaborate in development of infrastructure and sustainable energy by promoting private sector cooperation in the development and utilisation of renewable and alternative energy sources along with liberalisation of power trade among Asean members and India. “I hope the session will come up with the broad contours of an Asean-India ecosystem to facilitate the convergence of technology, integration across diverse fields, distributed architecture and people willing to back an idea,” he said, adding that India is currently undergoing economic and social transformation on a scale and a speed that is unmatched in history.

The Indian economy is the fastest growing major economy with a growth rate of 7.3 per cent in 2014-15, Wadhwa noted. “We have undertaken a number of steps to improve the business climate which have resulted in FDI inflows going up by 40 per cent,” he said. He added that Asean is forging ahead as a community by deepening its economic integration.

At the last Asean-India Summit in November 2015, Prime Minister Narendra Modi called India andAsean “two bright spots of optimism” amidst ongoing global economic uncertainties.

In the past year, a significant achievement has been the completion of the Asean-India Free Trade Area with the implementation of the Asean-India Agreements on Trade in Services and Investment on July 1, 2015.