Executives of the banks predict that the fall in exports caused by the global economic slowdown especially in China, one of Indonesia’s main trading partners, would not severely hurt their international trade financing business.

Bank Negara Indonesia (BNI) president director Achmad Baiquni said the lender, which was one of the country’s major players in trade finance, had reviewed the possible impact of China’s lower growth on its overall loans.

“We are still optimistic about our trade finance business growing,” Baiquni said in Jakarta recently.

China’s economic growth is expected to remain relatively low, with the country’s gross domestic product (GDP) seen to increase by only 6.5 percent this year compared to 6.9 percent in 2015.

Due to the global economic slowdown, Indonesia’s total exports fell by 14.62 percent last year to US$150.2 billion. Non-oil and gas exports dropped by 9.77 percent to $131.70 billion year on year.

Non-oil and gas exports to China dropped by 19.44 percent to $13.25 billion in 2015 from $16.45 billion in 2014.

Rahmad Hidayat, BNI’s head of financial institutions and overseas network, said previously the bank was expecting to double its trade finance business this year in order to increase revenues in the international banking division.

Revenues from international banking, such as fees from trade finance and bank guarantees, contributed almost 5 percent to BNI’s total revenues as of last year.

By the end of 2015, loans from BNI’s overseas branches also contributed Rp 19.5 trillion (US$1.43 billion), or equal to 6 percent, to the bank’s total lending, with a jump of 93.8 percent year-on-year despite the weak global economy.

Rahmad said BNI held a market share of about 10 percent in Indonesia’s trade finance business and China would remain the main export destination for the bank’s customers.

“Lower national export growth only affected our trade finance volume, but revenues grew by 28.6 percent from trade finance in third quarter last year,” he said.

Another state-owned lender, Bank Rakyat Indonesia (BRI), also maintained a positive outlook for its international banking business, as China’s economic growth was expected to be buttressed by monetary and government measures.

BRI finance director Haru Koesmahargyo said the international banking business contributed less than 5 percent to the bank’s total revenues but was expected to help boost overall fee-based income.

“Our fee-based income still contributes 7 percent to our total income, but we expect that the growth can be higher than interest income,” he said.

Haru said BRI’s international banking business had seen positive growth in revenues, especially from remittance and money-changing services in Malaysia, Saudi Arabia, Taiwan and South Korea.

Voicing a similar view, CIMB Niaga strategy and finance director Wan Razly Abdullah said the bank expected to maintain its annual growth rate at 20 percent in the trade finance business, despite seeing flat growth in volumes due to falling global commodity prices.

Wan Razly said the bank was expecting to enlarge its market share in trade finance this year, as it would offer competitive rates on foreign exchange loans.

“Our remittance operation also continues to grow positively as we have a service called CIMB SpeedSend that helps increase fee-based income from that business,” he said.

Gloomy outlook at home

Meanwile, Financial Services Authority (OJK) deputy commissioner for banking supervision Irwan Lubis said in Jakarta on Tuesday that layoffs in the banking industry may continue this year, but the number will not be as high as in 2015 when thousands of workers lost their jobs. There had been massive layoffs in the banking industry last year after some banks took consolidation measures to improve the efficiency of their businesses.

For this year, Irwan predicted that some banks would still have to reduce their workforce, but if they were to do so, the numbers would be far lower than last year.

Last year, several banks decided to offer early retirement programs to their employees as they struggled with rising expenses and falling revenues caused by the country’s economic slowdown.

Among the banks that decided to cut back employees were the private lenders Bank Danamon and CIMB Niaga.

The applicants are from Taiwan, South Korea, Vietnam, Cambodia, India and Mauritius.

The official, who asked for anonymity, said Taiwan led with seven applicants including CTBC Bank, Mega International Commercial Bank, Taiwan Business Bank, Taiwan Cooperative Bank and Taiwan Shin Kong Commercial Bank.

The rest are from South Korea with two and one each from the remaining countries.

Failing in the first round in 2014, the Bank for Investment and Development of Vietnam (BIDV), Cambodia’s Cathay United Bank, the State Bank of India, the State Bank of Mauritius, and Taiwan’s E.SUN Commercial Bank and First Commercial Bank made the second attempt.

The CBM closed applications on Monday and the winners will be announced next month. All will have to open local branches within a year. “Eight banks from the previous round applied for the licence in this round,” the official said.

Than Lwin, senior consultant to KBZ Bank and former deputy governor of the CBM, welcomed the applications, expecting more foreign banks’ entry to lead to technology and knowledge-sharing.

Pe Myint, former managing director of CB Bank, doubted what the foreign banks would gain in entering the small market.

“We have not seen many active activities by the first nine foreign banks [awarded licences in 2014], as they are allowed to open only one branch and serve only foreign companies.

“As many foreign companies are still in the wait-and-see mood, we have not yet received many foreign direct investments as expected. “So it will result in more foreign branch offices here with a few activities because there are only a few corporate customers,” he said.

All nine winners in the first round have opened branches in Yangon – Thailand’s Bangkok Bank, Australia’s ANZ, Industrial and Commercial Bank of China, Malaysia’s Maybank, Singapore’s Oversea-Chinese Banking Corporation and United Overseas Bank, and Japan’s Bank of Tokyo-Mitsubishi UFJ, Mizuho Bank and Sumitomo Mitsui Banking Corporation.

The furniture industry saw a 7.4 per cent growth from 2012 to 2015, recording $6.25 billion in sales last year. But there will be challenges ahead.

A key plank of a new three-year blueprint is the development of talent with the right skills sets, the SFIC said.

To this end, it will put in place a “new training ecosystem”, that provides training on emerging trends in the industry, and the enhancement of skills.

The proposed training framework, which comprises a basic and specialised tier, will cater to industry practitioners, fresh graduates and also those making a mid-career switch.

SFIC said all course fees will be fully borne by employers, with funding support from the National Trades Union Congress’ e2i and the Singapore Workforce Development Agency.

“These initiatives are essential for the industry to remain competitive and sustainable. While the furniture industry continues to enjoy positive growth, it also faces significant challenges from pricing pressures, external competition and the lack of skilled talents, ” said SFIC president Ernie Koh.

He added that the industry has moved beyond just carpentry, to encompass design, manufacturing, and sales and retail.

Apart from the structured training programmes, the council said the furniture industry will set up its own accreditation scheme that will cover capability certification at the individual level and a quality-mark accreditation at the company level.

It also unveiled a programme to train and place local mature workers, aged over 40, in the furniture industry. The training course will start from the second quarter of this year.

The SFIC also appointed Mr Lee Yi Shyan, MP for East Coast GRC, as an advisor on Friday.

Mr Lee will advise the council on strategic directions and issues relating to further development of the furniture industry here.

“Looking ahead, it would be opportune to enhance targeted assistance for local companies, especially SMEs, to strengthen their capabilities and explore overseas markets to reap benefits from the AseanEconomic Community and the various multilateral treaties and tax agreements signed between Singapore and its global trading partners, ” Mr Lee said.

Mr Lee added that the transformation of the industry is timely as “we can take advantage of the current softer market conditions to review and revitalise for future growth”.

Coordinating Economic Minister Darmin Nasution said the policy was aimed at boosting investment, both domestic and foreign direct investment (FDI), while providing protection to small and medium enterprises (SMEs).

“It means that 100 per cent foreign ownership is allowed in the 35 sectors that have fully opened up to FDI,” said Darmin during a press conference at the State Palace in Jakarta on Thursday.

The 35 sectors include cold storage, sports centers, film processing labs, crumb rubber industry, warehousing, tourism, e-commerce with a marketplace value above 100 billion rupiah, toll road operators, telcom device certification, non-hazardous waste management and raw medicine materials.

Plantation firms with more than 25 hectares of land integrated with a processing plant will also be allowed foreign ownership of up to 95 per cent. Seven types of businesses, including leasing companies, will be allowed 85 per cent ownership.

Businesses allowed up to 67 per cent ownership include job training, travel bureaus, golf course developers, flight logistics supporting businesses, health care, private museums, catering, convention center and exhibition, consulting and construction businesses with contract values above 10 billion rupiah, as well as telcom network providers with integrated telcom services.

The seven sectors allowed 51 per cent foreign ownership include natural tourism management. Meanwhile, 32 sectors were still pegged with 49 per cent maximum foreign ownership such as acupuncture, land transportation and high voltage electric installation.

“This policy is not liberalization but an effort to modernize our economy by encouraging SMEs and national companies to improve creativity, innovation and technology,” Cabinet Secretary Pramono Anung said.

On the new list, 20 industrial sectors were closed or restricted sectors for FDI, added by four new sectors from previously 16 restricted sectors under the preceding 2014 DNI regulation.

“In the revised DNI, we have added utilization of natural coral for aquariums, souvenirs and accessories. It is closed to any kind of investment for environmental protection,” Darmin added.

The remaining 19 industrial sectors, he continued, were reserved for SMEs, including pre-design and consulting services, architectural design services and architectural services. In addition, no SMEs were open to foreigners, along with businesses with investment value of less than 10 billion rupiah.

Singapore scored 25.63 out of 30 measurable criteria critical to innovation, which include patent, copyright and trademark protection, enforcement, and engagement in international treaties, among other things, the USCC said in a release yesterday.

The score was a notch better than last year’s 25.38, although the percentage remains the same at 85 per cent of total score.

Half of the 38 economies, which together account for nearly 85 per cent of global gross domestic product, also improved their total score from last year’s index, indicating increased recognition of the benefits of intellectual property and a strong IP system, the chamber said in the release.

For Singapore, the key areas of strength included an adequate patent- enforcement legal framework, a strengthened copyright framework, and a legal framework for protection of unregistered marks, while high (although dropping) rates of software piracy were a key area of weakness.

’A number of indicators suggest that online piracy in Singapore has fallen in the past year. Industry reports on music sales show that

after four consecutive years of falls, the music market in Singapore grew by close to 5 per cent in 2015,’’ the study noted. ’’Increased sales of digital music and streaming services were drivers of this growth.

’’ Singapore Customs successfully seized a number of trademark-infringing goods and illegal tobacco last year, the study said, but lamented that the authorities’ right to action against suspected goods is limited to those bound for Singapore.

The United States, Britain, Germany, France and Sweden occupied top spots in the index, while Malaysia’s IP environment has improved gradually over the last four years, resulting in a cumulative increase in its score to 14.78.

As Malaysia is a negotiating partner in the recently signed Trans-Pacific Partnership, the IP standards within the agreement – once ratified and implemented – will further strengthen its IP environment, the study said.

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.