Led by Singapore Finance Minister Heng Swee Keat at the World Bank Singapore Infrastructure Finance Summit, they called for a collective effort, which would be more efficient in meeting international investors’ concerns.

While Asean countries have been successful in tapping the private capital market for infrastructure financing, it is also time to step up, said Heng, the keynote speaker.

Last year Indonesia’s second-biggest power producer PT Paiton Energy’s US$2 billion (S$2.6 billion) project finance bond attracted some US$9 billion in orders. “The opportunity set is large but much work is needed to mainstream Asean infrastructure financing as an asset class,” he said.

The Asian Development Bank estimates Asean’s infrastructure investment needs from 2016 to 2030 will total US$2.8 trillion.

Asean needs to raise the visibility of its investment opportunities and projects, Mr Heng said, and promote itself as an investment bloc.

In the energy sector, there are about 77 renewable energy projects in hydro, solar, wind, geothermal and biomass. There are tremendous opportunities as demand for electricity in Asean is expected to grow at a compound annual growth rate of 4 per cent from 2014 to 2025.

In transport, rapid urbanisation and increased mobility have raised demand for transport infrastructure and more efficient networks. There are 219 road and bridge projects alone in the pipeline.

Heng said Asean has to improve the bankability of its infrastructure projects. “The goal is to draw in private-sector participation on projects that provide reasonable returns with reduced project volatility,” he said.

Where the expected revenue may not cover costs fully, governments can step in to increase a project’s bankability, by providing co-funding, raising user charges, or extracting additional funding from value created from the project.

Where there are sufficient revenues to cover the cost but exposure to certain risks remain high, risk-mitigating measures such as government guarantees and credit enhancements can come into play.

Multilateral development banks can play a role too, he said, citing the Co-Lending Portfolio Programme managed by the World Bank’s International Finance Corporation (IFC). It facilitates the participation of institutional investors in infrastructure by allowing them to invest in infrastructure loans originated by the IFC.

Singapore’s Infrastructure Asia office, to open this month, will harness the collective capabilities of public-sector agencies and private-sector firms, partnering key stakeholders in the region to catalyse more project opportunities that meet Asia’s infrastructure needs. One of its key initiatives will be to develop a multi-year capacity-building scheme for regional government officials.

Standard Chartered Bank’s global head of project and export finance Surya Bagchi said there is an increasing trend of private-sector investors keen on funding infrastructure projects.

“This ranges from commercial banks who are skilled in assessing projects during their construction phase to infrastructure and pension funds, insurance companies who prefer the long-term stable yields and good credit ratings of completed projects.”

According to Agriculture Ministry data released this week, Cambodia exported 161,115 tonnes of rice in the first quarter of this year, down from 166,678 tonnes last year.

That’s despite a bumper year for the rice crop, as an improved harvest and strong international market have drawn higher prices from brokers and middlemen coming to buy rice and transport it illegally into Thailand and Vietnam.

“The international rice market is good … so the demand for paddy rice increased,” said Hun Lak, vice president of the rice industry body Cambodia Rice Federation.

“Rice exporters could not buy the rice before brokers from the border bought it from the farmers,” he said, adding that the entire year’s export numbers could be harmed if authorities did not intervene to block rice smugglers.

Large strain on farmers

Hean Vanhan, director-general at the Agriculture Ministry’s General Directorate of Agriculture, could not be reached. Last week, he said the government could not crack down on rice smuggling because it would place a large strain on local rice farmers.

“Even we [rice exporters] have the orders from abroad, but we do not have the stock on hand,” Lak said yesterday. “How can we supply? That’s why the export figure went down.”

Smuggled rice is a regular problem for Cambodia’s rice sector. The UN Food and Agriculture Organisation forecast that 44 per cent of Cambodia’s total rice exports this year would be smuggled out of the country, which, while problematic for the industry, would be an improvement over previous years.

Song Saran, CEO of rice exporter Amru Rice, said that fluctuations in the rice market were normal, and said that farmers would benefit from the higher paddy rice prices.

Negotiations of the EVFTA is in the final stages and, with the goodwill of the two sides, the agreement is expected to be finalised this year, according to Deputy Prime Minister Vuong Dinh Hue

When the EVFTA is signed, the export tariff to the EU will reduce to zero from the current high rates of 7-17 per cent, said Vu Duc Giang, chairman of the Textile and Apparel Association. Therefore, the growth rate of garment exports from Vietnam to the EU market is predicted to reach 7-8 per cent per year. In 2017, Vietnam’s textile and garment export turnover reached US$31.16 billion, a year-on-year increase of 10.23 per cent, Giang said, including $3.79 billion from the EU, a year-on-year surge of 6.3 per cent.

$35-bn target

The target of $35 billion for 2018’s exports is feasible as a result of the major role played by the free trade agreements in the development of garment exports.

In addition, an optimistic EU economic outlook is also a positive signal for the development of the local textile and apparel industry.

Therefore, the EU – the second largest import market of the textile and garment sector, after the United States – is expected to help the local textile and garment industry grow strongly this year, he said.

Viet Dragon Securities Joint Stock Company (VDSC) commented that in the case of stability in the global economy, especially in the EU, the difficulty associated with having orders similar to 2016 would not be repeated, reported ndh.vn online newspaper.

VDSC said companies that will likely have high turnover in garment exports to the EU market are Saigon Garment Manufacturing Joint Stock Company, TNG Investment and Trading Joint Stock Company, Garment 10 Corporation and Viet Tian Garment Joint Stock Company, with high growth in export orders compared with other firms.Vo Van KiMeanwhile, Nguy?n Th? Thu Trang, director of the WTO Integration Centre under the Vi?t Nam Chamber of Commerce and Industry, said it is not easy to make use of opportunities offered by the EVFTA because the local garment industry must deal with many technical barriers for its products exported to the EU, including standards of production, packaging and labeling.

Local businesses can overcome tariff barriers, but it is unlikely to overcome technical barriers without extensive preparations because the EU is well known for being a fastidious market, Trang said.

In particular, local exporters will face difficulties in meeting the requirements of the rules of origin. At present, most textile materials from Vietnam’s textile and garment industry do not originate from EU member countries, so they cannot take advantage of the preferential tariffs.

She said the greatest challenge for the domestic textile and garment industry in the coming period is the development of domestic materials. This is also an opportunity to attract foreign investors to take full advantage of the EVFTA.

In its research note issued yesterday, it said that based on that estimate for the 350 km line, it would cost 15 billion.

The research house said that civil infrastructure could range from 35 billion to 40 billion ringgit while the 60 trains could cost 5 billion ringgit.

On Thursday, MyHSR Corporation Sdn Bhd (MyHSR Corp) completed its Project Delivery Partner (PDP) tender and has selected two consortia to assist with the project’s civil works.

The Gamuda-Malaysian Resources Corporation consortium (Gamuda-MRCB) was picked for the northern portion of the alignment.

The Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd-TH Properties Sdn Bhd consortium (YTL-THP) was been selected for the southern portion of the alignment. The terms of the PDP package agreement shall be agreed upon within three weeks.

UOB Kay Hian Research said the Gamuda-MRCB was awarded the northern portion from Kuala Lumpur to the state border between Melaka and Johor.

The contract will be awarded when MyHSR concludes negotiations with the consortia. Gamuda-MRCB would have a 50:50 interest in the PDP JV.

Construction of the HSR is expected to take five to six years. Assuming the 2026 timeline is intact, contracts for civil construction works should be awarded the latest by 2019.

The respective governments would be financing the project that is within their borders.

“In Malaysia’s case, we think the financing structure would be similar to that for the MRT Line 1 and Line 2, where bonds were raised via DanaInfra Nasional,” it said.

The research house said the official project cost has yet to be formally announced, given the sheer size and long timeframe.

However, media reports suggest that the project could cost around RM60b, which comprises civil infrastructure works of 35 billion ringgit and the rest from train sets, operating systems and other associated costs.

Assuming the civil construction works are worth close to 40 billion ringgit (with the northern stretch accounting for slightly over half of the value), and PDP fees capped at 6 per cent of construction cost (similar to that for the MRT1, MRT2 and LRT3), the entire project would yield a net profit (at an estimated 5 per cent margin) of 2.1 billion to 2.4 billion ringgit.

Assuming a 6.5-year construction period (early-19 to 2025), net profit from project management fees for the entire project would be about 300 million ringgit yearly on a straight line recognition basis.

“The HSR PDP contract could contribute about 8 per cent of Gamuda’s FY20F EPS and 37 per cent of MRCB’s 2020F EPS (we assume civil works package of 20 billion ringgit for the 50:50 consortium).

“We would review our forecasts once details of the HSR contract are revealed. Our current forecasts assume 5 billion ringgit annual contract wins for Gamuda, and only 1.5 billion ringgit contract wins for MRCB.

Oil and gas director general Djoko Siswanto said in Jakarta on Thursday the government had clearly instructed the company to distribute certain amounts of subsidized fuels.

Under Downstream Oil and Gas Regulatory Agency (BPH Migas) Decree No. 41/P3JBKP/BPH Migas/KOM/ 2017, Pertamina is required to distribute 7.5 million kilolitres of Premium and 14.37 million kl of Solar in 2018, as well as prepare 1 million kl of each Premium and Solar.

“Soon after the stocks at gas stations run out, Pertamina has to add to the supply,” said Djoko as quoted by kontan.co.id.

Many gas stations in Greater Jakarta frequently run out of the subsidized fuels, forcing customers, including drivers of angkot (public minivans) to turn to non-subsidised fuel Pertalite. Certain Pertamina stations do not even sell Premium anymore.

A similar call was made by BPH Migas commissioner Hendry Achmad, saying the decree that was issued by the agency referred to Presidential Regulation No 191/2014 on supply, distribution and retail prices of fuels.

Premium and Solar fuels are sold at 6,550 rupiah (48 US cents) and 5,150 rupiah respectively, while Pertalite, the cheaper non-subsidised fuel, is sold at 7,800 rupiah.

The Lao government and private sector have discussed the three main issues hindering improvement to business operations in the country and complete integration with the region and world.

The issues are business taxation, the cost of domestic and international freight and barriers to tourism development.

While some issues have reported good headway following discussions others have not made any progress, the Lao Business Forum heard.

Good progress was made in the cost of domestic and international transport of goods, export of finished wood products and wood product export procedures, access to import-export data, business registration and licensing, access to finance for SMEs and access to information on public procurement.

However, no progress was reported on value-added tax for the services sector, value-added tax refunds on export production, taxes on online sales, competition from informal practices and businesses without licences, barriers to tourism development, fees related to product trademarks, registration fees related to food and drug certificate registration, and government policy in supporting startups. – The Vientiane Times

HCM City set to host tourism fair

More than 30 travel firms in Vietnam’s Ho Chi Minh city will sell nearly 60,000 domestic and outbound tours at 15-50 per cent discount at the HCM City Tourism Fair to be held from April 12 to 15.

The annual fair, which has the theme “Exploring Summer” this year, seeks to stimulate travel demand during the upcoming summer season, said deputy director of the city Department of Tourism, said.

It is a forum for localities and travel firms to interact with potential customers and offers locals a chance to buy quality tours at reasonable prices, he said.

Tour operators, hotels, restaurants, airlines, and transport providers will showcase their products and services at 150 booths and offer discount vouchers, gifts, lucky draws, buy-one-get-one tours and others. Vietnam Airlines will offer 2,400 tickets on international and domestic flights at 30 per cent discount.

The event, to be held at September 23 Park in the city’s downtown, is expected to attract 400,000 visitors. |– Viet Nam News

Indonesia AirAsia records loss due to tax burden

Publicly listed firm AirAsia Indonesia, parent company of low-cost carrier Indonesia AirAsia (IAA), has announced that it recorded 512.96 billion rupiah (US$35.9 million) in losses in 2017 due to the tax burden.

The company noted that it had actually reaped 300.29 billion rupiah in profit in 2017 before taxes, a considerable jump from 92.49 billion rupiah in the previous year. The jump in profit, before taxes, was due to operational efficiency. – The Jakarta Post

Reacting to the latest inflation report, the Bangko Sentral ng Pilipinas – the country’s central bank – finally hinted at acting against the accelerating pace of price increases.

BSP governor Nestor Espenilla, in a mobile phone message to reporters, said the Monetary Board—whose seven members meet every six weeks to determine the level of domestic interest rates, and consequently help manage the inflation rate—was tasked to “carefully evaluate the appropriateness of a measured policy response.”

This response, he said, was meant to “firmly anchor” inflation expectations to the central bank’s insistence that its targets for the rate of increases in the prices of basic goods and services ” would continue to be met in 2018 and 2019”.

“There’s a pick-up in inflation that we recognise,” Espenilla said, adding that financial markets were already factoring this in their assumptions.

In the meantime, UK-based Oxford Economics said the headline inflation rate could hit seven-year high levels this year, such that the BSP would likely raise rates twice.

A report of the PSA on Thursday showed that the rate of increase in the prices of basic goods last month was faster than the 3.1 per cent posted in March last year and the revised 3.8 per cent in February.

As such, nationwide inflation averaged 3.8 per cent in the first quarter, near the upper end of the 2-4 per cent target range for the year.

Based on data reflecting 2012 prices as base, inflation in March was the highest since 2013, as data before that year were not yet available.

The PSA’s price statistics division said that historical data up to 1957 would be released in September.

Using the old base of 2006 prices, last month’s inflation was 4.8 per cent, the highest since the 4.9 per cent in both July and August 2014.

In the National Capital Region, headline inflation rose 5.2 per cent year-on-year in March, up from 3.9 per cent a year ago and 4.7 per cent a month ago, bringing the first quarter average to 4.8 per cent, PSA data showed.

Commodities

The PSA report showed that among major commodity groups, prices of alcoholic beverages and tobacco rose the fastest in March, jumping 18.6 percent year-on-year.

Prices of food and non-alcoholic beverages rose 5.9 per cent; restaurant and miscellaneous goods and services, up 3 per cent; housing, water, electricity, gas and other fuels, up 2.9 per cent; furnishing, household equipment and routine maintenance of the house, up 2.7 per cent; health, up 2.4 per cent, and communication, up 0.3 per cent.

Earlier, the Department of Finance blamed “tax issues” for the steep climb in prices of so-called sin products such as cigarettes and tobacco, last month in view of the the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act and the Sin Tax Reform Act of 2012.

Signed by President Rodrigo Duterte in December, Republic Act No. 10963 or the TRAIN law jacked up or slapped new excise taxes on cigarettes, oil, sugary drinks and vehicles to compensate for the restructured personal income tax regime that raised the tax-exempt cap to an annual salary of 250,000 pesos.

Also, the excise taxes on alcoholic drinks increased at the start of the year as mandated under the Sin Tax Reform Law.

In an April 3 research note, Oxford Economics said that “inflationary pressures are already more evident in India and the Philippines”.

“Consequently, we expect the Reserve Bank of India and BSP to raise rates twice this year,” Oxford Economics said.

Speaking at the 22nd Asean Finance Ministers’ Meeting, he said that the Asean finance ministers are meeting at a time of optimism for the regional economies. Asean grew by 5.1 per cent by 2017, according to IMF’s (International Monetary Fund) estimates.

“However, we should not take this positive outlook for granted. We are only too aware of the headwinds that lie ahead – including rising protectionism and trade tensions, technological disruptions, and demographic trends,” Heng said.

“If not managed well, these profound forces can dramatically affect our growth trajectories. But, working together, we can rise to meet these challenges.”

This year’s area of focus will include sustaining growth, which is centred on infrastructure financing. At the World Bank-Singapore Infrastructure Finance Summit on Thursday, the finance ministers discussed with investors ways to unlock greater private capital in regional infrastructure projects, Heng said.

The two other areas of focus are in boosting resilience by looking at disaster financing and cyber resilience in the region, as well as fostering innovation through the use of new technology to quicken payments and boost financial inclusion.