Malayan Banking Bhd (Maybank), the country’s largest banking group by assets, is looking at a loans growth of 8 per cent to 9 per cent, while CIMB Group Holdings Bhd is forecasting a loans growth of 10 per cent after having grown 12.8 per cent last year.

Maybank chalked up a loans growth of 12 per cent last year.

CIMB group chief executive Tengku Datuk Seri Zafrul Aziz said while the bank would continue to see challenges, it would nevertheless continue to grow and improve its performance, albeit at a slower pace.

“We are facing challenging times,” he said at a press conference held to announce the bank’s full-year results for the financial year ended December 2015.

Maybank’s president and chief executive Datuk Abdul Farid Alias said the group would see slower overall growth from the corporate segment because several sectors were recording lower profits and having fewer investment activities.

Abdul Farid said the group’s Singapore loans growth is expected to be between 3 per cent and 4 per cent from the 6 per cent growth in FY15 due to slower regional and domestic economic growth, and that asset quality may continue to rise if the credit cycle turns and the weakness in the oil and gas sector persists.

Maybank is, however, targeting a higher loans growth from its Malaysian operations at between 6 per cent and 7 per cent for this year from 5.3 per cent last year, driven by the consumer sector and public infrastructure projects such as the MRT and the LRT.

Maybank’s Malaysian operations made up about 56 per cent of the bank’s loan portfolio last year.

Abdul Farid said Maybank is targeting a deposits growth of between 10 per cent and 11 per cent this year, lower than the 12.8 per cent deposit growth reported in FY15.

“Asset quality remains a concern because of the volatility that we see in the market, whether from the foreign exchange or from the interest rate hike by the US Federal Reserve.

“We want to make sure that our balance sheet remains strong and we preserve asset quality,” Abdul Farid said.

Maybank’s net impaired loans (NIL) ratio climbed to 1.38 per cent as at Dec 31, 2015, the highest in at least two years.

Maybank chief financial officer Datuk Mohamed Rafique Merican said the increased impaired loans came from several overseas corporate clients in Indonesia and China and one Malaysian account.

“Asset quality from the consumer and SME segments are still good and improving, but the corporate side is more challenging,” Abdul Farid said.

When asked if the bank sees its NIM ratio moving higher, Abdul Farid said: “You are right to think that the current economic volatility would increase the stress on customers. But what we see is that the stress would be on certain individuals only.”

Meanwhile, CIMB Group also predicts further compression of net interest margins (NIM) in the current year amidst a soft economic environment.

Tengku Zafrul said the group is expecting NIM – which is the difference between interest income made by banks and the interest paid out to its lenders – to compress by some five to 10 basis points this year.

Last year, CIMB’s NIM stood at 2.66 per cent against 2.80 per cent in FY14.

Loan loss provisions remained elevated from its Indonesian operations, one of its largest overseas businesses last year.

However, Tengku Zafrul expects it to be “lower” this year, backed by improvements in the country’s overall economy.

He did not provide any indications of when such provisions would stop being made.

Last August, international credit agency Fitch Ratings said a combination of sustained weak coal prices and oversupply would continue to challenge the credit profiles of the mining sector, and consequently, have a major impact on the mining sector-related asset quality at Indonesia’s banks.

Although the direct exposure for every other large bank there is around 3 per cent or less, the banks also have indirect exposure to the mining sector through construction loans for mining projects, it pointed out.

While it was earlier anticipated that provisions for these would more or less be cleared by last year-end, some market observers had predicted that effects could well eat into this year and beyond.

The luxury resort developer posted a net loss of S$18.4 million for the three months to Dec 31, from a net profit of S$4.1 million for the year-ago quarter.

Revenue rose 34 per cent to S$123.2 million from S$91.8 million previously but this was more than offset by provision for bad debts of S$13.7 million and the absence of fair value gains on investment properties.

The allowances for doubtful debts for the full-year swelled 337 per cent to 16.3 million.

For the full year, net loss came to S$27.5 million from a net profit of S$1.0 million a year ago. Revenue rose 13 per cent to S$370.7 million from S$327.4 million.

“2015 was the perfect storm for the Banyan Tree Group,” said its executive chairman Ho Kwon Ping.

“We started the year with great momentum in property sales and hotel bookings. But due to a confluence of factors, ranging from the devaluation of the Russian rouble to problems in many of our source markets as well as stoppages in hotel design projects affecting our fee based income, we posted the worst loss in our history.”

He said that given the global economic slowdown, the group is currently streamlining its business and relooking at its business structure “to create a more lean and integrated platform for sustainable growth”.

No dividend was declared compared to a payout of 0.13 cents per share for 2014.

This was revealed in the FAST 500 Ranking Lists 2016, drawn up annually since 2011 which was announced by the Vietnam Report and online newspaper VietnamNet yesterday.

Accordingly, over 22 per cent of the surveyed businesses would maintain their current operation while only 1.6 per cent planned to narrow their scale.

This has been considered a vital development trend as Vietnam’s economy witnesses a new growth phase after entry into Trans-Pacific Partnership Agreement (TPP), and the ASEAN Economic Community (AEC), it said.

The survey also revealed that businesses would have three priorities including turnover and profit growth, cost reduction and introducing new products and services.

In addition, the TPP which will take effect in 2018 would offer opportunities for the economy in the future. The investment is expected to be higher while tariff barriers would be removed, creating more transparency. These factors are forecast to promote development, of businesses, especially small-and-medium sized enterprises.

However, the companies in the list should be careful while choosing their business plans, improving productivity, and quality to avoid hot growth trap, it said. The reality showed that several firms were in a hurry to increase investment and expand markets while they had not predicted the difficulties ahead.

The businesses in the list also expected a reduction in personal income tax to better support their operations.

More than 70 per cent of the businesses also proposed to further enhance administrative reforms and reducing interest rate.

The list is based on independent research and assessment of Vietnam Report JSC. It complies with international standards and was drawn up in consultation with domestic and foreign experts.

The FAST 500 rankings are also based on international standards including the models of the Inc. 500, Fortune 500 and Deloitte 500.

This is the fourth consecutive year of the FAST 500 list in Vietnam. The performance of the companies was calculated by the compounded annual growth rate (CAGR) on revenue in the 2009-2012 period and also based on criteria such as total assets, the number of workers, after-tax profits and prestige in the media.

Top 10 of FAST500

1. An Long Food JSC

2. Advanced Network Systems Vietnam Co., Ltd

3. HCM City Petroleum Co., Ltd

4. FLC Group JSC

5. Novaland Group JSC

6. Hoa Binh Co., Ltd

7. Tuan Loc Construction Investment JSC

8. Power Generation Corporation (EVNGENCO 2)

9. PetroVietnam Power Nhon Trach 2 JSC

10. European Plastic JSC

Syed Mohammed Izhaar Mohammed Sebirm, who represents manufacturers in Rawang, said many employers had started complaining that they did not have enough workers to continue with their production.

He said 1.3 million workers had returned to their home countries under the 6P legalisation programme which started in 2011.

“Now we are unsure when the next batch of workers will be coming in.

“If the government does not reverse the decision, many of the factories will be forced to stop operations,” said Syed Mohammed Izhaar here, yesterday (February 24).

Last Friday, the government suspended the recruitment of all ­foreign workers pending a review of the levy and rehiring programme.

The move came just a day after Malaysia inked a deal with Bangla­desh to bring in its workers here over the next three years.

Deputy Prime Minister Dr Ahmad Zahid Hamidi said the suspension would allow the govern­ment to reconsider the revised two-tier levy on foreign workers.

Syed Mohammed Izhar, who ­represents 60 companies in Rawang, said many local workers were not interested to work in the manufacturing sector, including in the textile industry, due to the long hours and low wages.

“Although we hire 100 per cent local workers at the management level, we still need the expertise of foreign workers to handle heavy ­machinery in the textile plants and other factories,” he said.

Qube Medical general manager Teo Yoek Leong said that after training the foreign workers for a long period of time, some of them chose to go back to their home countries.

“It takes about three years to train them, but after they leave, we have to start training the new ­workers all over again.

“Without a guarantee from the government on the supply of ­foreign workers, we will be facing a shortage of well-trained workers in our factories,” he said.

He said the new intake of foreign workers would not affect Malaysian workers as most jobs available were categorised as dangerous, dirty and difficult (3D).

Karisma System general manager Azhar Arshad, who represents the service industry, said the govern­ment should have engaged industry representatives before making such a drastic decision.

“We appeal to the government to reconsider as it is affecting our livelihood. They have to meet us as we are in dire need of workers,” he said.

The finding, revealed at a seminar in Ha Noi, was part of JETRO’s 2015 survey on the business operations of Japanese-affiliated firms in 20 countries and regions in Asia and Oceania.

The survey, conducted between October and November of 2015, received valid responses from 4,635 Japanese companies, including 557 operating in Vietnam.

Speaking at the seminar, Atsusuke Kawada, Chief Representative of the Japan External Trade Organisation (JETRO) in Vietnam, said that the per centage of respondents in Vietnam planning to expand operations was rather high compared with other countries in the region such as Indonesia, Thailand, the Philippines, China, and Malaysia, with per centages of 52, 49, 55, 38 and 45, respectively.

The survey said the main reason for business expansion was a rise in revenue with 85 per cent of respondents choosing it as the most encouraging factor.

In 2015, nearly 60 per cent of Japanese companies operating in Vietnam gained profits, down 3 per centage points year-on-year. However, in an absolute value, the number of firms reporting profits increased from 281 to 326.

Vietnam currently ranks third out of 15 countries in ease of recruitment, with respondents praising “market scale and growth ability” and the “stable social-political situation” of the country, the survey said.

It added Vietnam’s labour costs were relatively low in comparison to other countries. For example, labour costs in the manufacturing industry are less than a half of those costs in China, Thailand and Malaysia.

However, roughly 80 per cent of Japanese firms in Vietnam cited an “increase in employee wages,” the survey said.

In term of risks stemming from the investment environment, 60 per cent of the survey respondents said that administrative formalities, customs formalities, the tax system, laws and increasing wages in Vietnam posed the greatest risk to investors in the country, the survey said.

Vietnam’s localisation rate, or the per cent of supplies that can be sourced locally, has reached 32 per cent, down 1 per cent year-on-year. This rate is higher than the Philippines (26 per cent) but much lower than China, Thailand, Indonesia and Malaysia, which have 65 per cent, 56 per cent, 41 per cent and 36 per cent, respectively, the survey said.

Kawada said in order to increase competitiveness in costs, Vietnam should develop capacity for local parts suppliers helping Japanese firms increase the amount of locally-produced parts.

According to the Ministry of Planning and Investment, as of June 2015, Japan is the second largest investor to Vietnam, after South Korea, with nearly 2,700 in-effect investment projects with capital of US$37.7 billion.

The annual survey has been conducted since 1987 by JETRO to understand the business activities of Japan-affiliated companies in Asia and Oceania, including Vietnam.

The surveyed firms operate in a wide range of sectors, including automobiles, machinery, chemicals and pharmaceutical products, food, textiles, retail, transport, ICT and finance.

Japanese firms keen to invest more

Japanese enterprises wish to expand their investment cooperation with Vietnam as the country continues to enjoy strong growth, especially after the recent signing of a number of trade deals.

This statement was made by Kishimoto Yoshio, Director General of Japan’s Kyushu region’s Bureau of Economy, Trade and Industry, who led a delegation of 30 Japanese businesses to visit Hiep Phuoc Industrial Park in HCM City on Monday.

At the reception for the delegation, head of the HCM City Export Processing and Industrial Zones Authority (Hepza), Vu Van Hoa, said 17 industrial parks in the city have so far attracted about 1,300 projects with total investment capital of US$9 billion.

Of the figure, 559 projects worth $5.4 billion are sourced from Foreign Direct Investment (FDI) .

Japan is the largest investor in the city’s industrial parks with 119 projects capitalised at $1.3 billion.

The approved foreign investments by seven investment promotion agencies (IPAs) in 2015 rose by 31.2 per cent from P187 billion in 2014. IPAs give away fiscal and nonfiscal incentives to investors.

The IPAs covered by the PSA report were the Authority of the Freeport Area of Bataan (Afab), Board of Investments (BOI), Board of Investments-Autonomous Region in Muslim Mindanao (BOI-ARMM), Cagayan Economic Zone Authority (Ceza), Clark Development Corp. (CDC), Philippine Economic Zone Authority (Peza) and Subic Bay Metropolitan Authority (SBMA).

In terms of sectors, the top recipients of foreign investment commitments last year were manufacturing (P134.6 billion); electricity, gas, steam and air conditioning supply (P46.5 billion), and administrative and support service activities (P22.9 billion).

However, two sectors did not receive pledges from foreign investors in 2015, namely mining and quarrying, and public administration and defense.

In the fourth quarter of 2015, approved foreign investments climbed by 45.6 per cent to P138.6 billion from P95.2 billion a year ago.

During the October-to-December period, the sectors with the highest amount of commitments were manufacturing (P95.8 billion or 69.1 per cent of the total); electricity, gas, steam and air conditioning supply (P18.1 billion or 13.1 per cent), and administrative and support service activities (P14.3 billion or 10.3 per cent), PSA data showed.

The top prospective investing countries during the fourth quarter were Japan (P39.4 billion in pledges or 28.5 per cent of the total); Netherlands (P37 billion or 26.7 per cent), and United States (P16.5 billion or 11.9 per cent).

However, investments pledges by foreign and Filipino-led companies combined dropped by 9.1 per cent to P686.9 billion in 2015 from P755.9 billion in 2014. The bulk of IPA-approved commitments came from domestic investors.

The 3rd International Conference on AEC ended yesterday, with participants discussing infrastructure development, Special Economic Zone development, migration of skilled labour, and small/medium enterprise development.

The meeting follows on from the establishment of the Asean Community at the beginning of this year. The AEC aims to have single market and production base by encouraging the free flows of goods, skilled labour and capital within the 10-member bloc.

However, in order to fully implement the AEC and maximise the potential benefits, many challenges need to be addressed.

Speaking at the meeting, the National University of Laos’s Vice Dean of the Faculty of Economics and Business Management, Associate Prof. Dr Phouphet Kyophilavong, said the AEC would bring opportunities and challenges to Laos.

“Lao enterprises will suffer in the short term due to a lack of competitiveness and capacity, but there might be positive impacts in terms of increased productivity and technical transfers.”

In order to benefit from the AEC, Associate Prof. Dr Phouphet said the government should formulate effective policies and strategies.

“Strengthening coordination and cooperation between policy makers and researchers is crucial in order to implement effective policies and strategies,” he added.

A representative from Kyoto University in Japan, Prof. Kiyoshi Kobayashi, noted that the goal of theAEC is to bring about economic integration of the Asean member states. The AEC aims to become a single market and production base that is fully integrated into the global economy

Kobayashi said the economic integration of Asean states will have a massive impact on both the Asian economy and the global economy. Their combined population of 620 million is larger than that of the EU or the North American Free Trade Agreement (NAFTA).

Between 2001 and 2013 the combined Asean per centage economic growth was second only to China in all of Asia. Combining the skills and financial weight of its high and middle income members with the low labour costs of its low income members, the AEC is poised to become another “workshop of the world” next to China.

“If this is to happen, however, a number of cross-border challenges must be met. Tariff elimination is only a first step towards integration; eliminating non-tariff barriers may prove even more difficult,” he said.

Kobayashi stressed that inefficient border management and inadequate transportation infrastructure in some member states further inhibit integration both internally and with global markets.

Enhancing “Asean Connectivity” to facilitate cross-border supply chains in the region is a vital issue for the AEC. Institutional differences, as well as income gaps among Asean members, make overcoming these challenges more difficult.

At this crucial moment for the AEC, Kobayashi added that analysis and discussion by researchers and practitioners on addressing cross-border challenges is crucial.

The creation of academic platforms enabling scientists and practitioners in regions world-wide to identify promising ways to success should be one of the most important policy measures.

Lao Sat-1 officials met in Vientiane yesterday to introduce the satellite to potential government and private sector clients. In attendance were Minister of Posts and Telecommunications Mr Hiem Phommachanh, General Manager of the Lao Asia-Pacific Satellite Co., Ltd. Mr Ding Yongbing, and other government and private sector officials.

“After Lao Sat-1 was successfully launched on November 21, 2015 we trialled operations for about two months and we expect to officially begin commercial service in the middle of March,” Mr Ding told media at the meeting.

An official said the cost of renting Lao Sat-1 would be cheaper than using other satellites for communication purposes, with the life of the satellite being 15 years.

Lao Sat-1 was launched by a LM-3B laun ch vehicle from the Xi Chang Launch Centre in Sichuan province, China. After several orbiting manoeuvres, the satellite was successfully parked in a 128.5 E orbit slot on November 26 last year.

The satellite is equipped with 22 transponders (14 in C-band and 8 in Ku-band) which will provide various services such as satellite transponder leasing services, satellite telecommunications and teleports, satellite TV broadcasting, emergency support and other uses.

The satellite was designed, developed and delivere d on-orbit by China with the total project cost amounting to US$259 million.

The satellite is designed to provide communication links for government work, television transmission and a range of telecommunication applications in Laos.

A shareholders’ agreement for the Lao Sat-1 Joint Venture Company was signed in Vientiane on October 30 between the Lao government and three Chinese developers.

The Lao government holds a 45 per cent stake in the Lao Sat-1 Joint Venture Company, while APMT has a 35 per cent shareholding, SSTC has 15 per cent, and APST has a 5 per cent stake.

A ground station for the satellite was built on a 12.16 hectare site in Vientiane close to the MekongRiver and Thadeua Road about 3.6 km from the Lao-Thai Friendship Bridge.

Korean Chamber of Commerce and Industry in Indonesia (Kocham) chairman CK Song said on Tuesday that Indonesia was already on the right track for becoming as competitive as Vietnam in attracting foreign investment, but that it would take time for Southeast Asia’s largest economy to fix numerous problems.

“I have a very strong positive feeling about future Indonesia. Even now it’s quite difficult, but I think they’ll get over the situation very quickly,” he said on the sidelines of Kocham’s 2016 business dialogue.

Everyone now wants to go to Vietnam because it started providing incentives for foreign investors earlier, treating them like kings, he said.

Vietnam is a sweetheart for most investors willing to invest in Southeast Asia, ranked 90th in the 2016 World Bank’s ease-of-doing-business index.

Foreign direct investment (FDI) flowing into the country of 90 million people hit a record high of US$14.5 billion last year. Indonesia recorded a higher FDI of Rp 365.9 trillion ($27.3 billion), but it was ranked 109th in the index due to an unfavorable investment climate.

Recognizing the weakness, President Joko “Jokowi” Widodo has launched 10 economic stimulus packages over the last six months to boost investment and the business climate in the Southeast Asia’s economic giant.

Song emphasized that communications and synergy among ministries would be the key to implementing all the stimulus packages.

Both the Indonesian Chamber of Commerce and Industry (Kadin) and the Indonesian Employers Association (Apindo) have lauded all the packages and expressed an expectation that they will be well-implemented and create jobs for many.

The stimulus packages address many different things, ranging from licensing procedures to the “negative investment list” (DNI), which covers sectors in which restrictions on foreign investment apply.

“The purpose of deregulation is not liberalization but modernization. We need to analyze how developed countries achieve their success […],” said Trade Minister Thomas Lembong in his opening speech at the event.

He said in front of dozens Korean business players attending the event that Indonesia was among the countries with the least number of trade agreements, and it aimed to increase its number to gain greater market access.

Having joined the ASEAN Community, Indonesia is now in the process of resuming talks on the Indonesia-European Union (EU) comprehensive economic partnership agreement (CEPA) and is reviewing benefits and drawbacks of joining the US-led Trans Pacific Partnership.

The TPP is expected to expand the country’s market access to the 12 Pacific Rim countries also in the partnership.

South Korean Ambassador to Indonesia, Choi Tai Young, said that many Korean businesses were now also looking at whether Indonesia would eventually join the TPP.

Korean FDI to Indonesia increased by 8 per cent year-on-year to $1.2 billion last year, while its investment through other countries or through joint-ventures with other countries surged by 26 per cent to $1.6 billion, according to data from the Investment Coordinating Board (BKPM).