This will mean that the SilkAir name and aircraft livery – founded in 1992 – will be phased out in a few years.

The announcement by SIA yesterday comes a day after the airline announced an almost 150 per cent hike in its full-year profits, with earnings for the 12 months to March 31, 2018, hitting $893 million.

SIA said the SilkAir upgrade programme will comprise an investment of more than $100 million to upgrade aircraft cabins with new lie-flat seats in business class and the installation of seat-back in-flight entertainment systems in both business and economy class.

This will ensure closer product and service consistency across the SIA Group’s full-service network.

In his annual post-results briefing yesterday, SIA’s chief executive Goh Choon Phong said that there is still a demand for “SilkAir-type services, especially to bigger regional cities”.

However, the short-haul regional market is extremely competitive, with budget carriers accounting for more than half of total capacity within South-east Asia. This makes it challenging for SilkAir, he added.

Aircraft cabin upgrades are expected to start in 2020 due to lead times required by seat suppliers, including to complete certification processes.

The actual merger will take place only after a sufficient number of aircraft have been fitted with the new cabin products.

It is not clear how the merger will affect SilkAir staff, especially, and whether jobs could become redundant.

The Straits Times had first reported on a possible merger between the two carriers in August 2017 when part of SilkAir’s finance operations went to SIA. It was said then that this would likely pave the way for further consolidation and eventually, a full merger.

The merger follows a similar consolidation between the group’s budget carriers. In July 2017, Tigerair was folded into Scoot to drive commercial and operational synergies between the two airlines.

SIA’s full-year earnings is the highest since 2011 and easily surpassed a Bloomberg consensus estimate of $717.46 million. SIA shares closed up 14 cents to $11.14 yesterday before the results were released.

Around 84 per cent of executives surveyed across six Asean states – Thailand, Indonesia, Malaysia, Myanmar, the Philippines and Vietnam – had positive or very positive expectations for local business conditions in the coming 12 months, while 72 per cent were likely or very likely to make a significant capital investment.

The upbeat results emerged from the inaugural Business Barometer: Oxford Business Group in Asean CEO Survey.

They reflect Asia’s emergence as the main driver of global economic expansion. The IMF forecasts the GDP of the Asean-5 – defined by the fund as Indonesia, Malaysia, the Philippines, Thailand and Vietnam – to grow by 5.4 per cent and 5.3 per cent in 2018 and 2019, respectively. It projects that emerging and developing Asia will expand by 6.5 per cent annually over the same period, making it the fastest-growing geographic grouping by some distance.

“This is the first time we have collated our proprietary data from individual Asean markets covered by OBG into a collective sample, allowing us to provide commentary on regional investor sentiment, as well as observe differing national perceptions within the bloc,” Oxford Business Group (OBG) said.

As Asean’s main trade partner and an increasingly important source of foreign direct investment and inbound tourists, China’s growing influence is reflected by the fact that 33 per cent of CEOs surveyed across the six countries cited a slowdown in Chinese demand as the top external factor that could impact their national economies in the short to medium term.

China’s trade with Asean grew 13.8 per cent to hit a record high of US$514.8 billion in 2017, according to official Chinese figures. While its share of global trade in the mid-1970s was just 0.5 per cent, it is now the world’s largest exporter and the top trading partner for all six countries covered in our survey.

It notes that the two countries in the survey with the greatest concern about a potential slowdown in Chinese demand – Thailand and Indonesia – have been cited in various studies as among the Asean members most vulnerable to China’s economic rebalancing towards consumption as the main growth driver. Thailand’s vulnerability stems from its particularly close trade linkages and Indonesia’s from being a net commodities exporter.

With the exception of Singapore, no Asean country features in the top echelons of respected global indicators on national business environments or competitiveness.

Overall, 47 per cent of respondents said transparency in their market was high or very high relative to the region, while 41 per cent said it was low or very low.

This varied picture was replicated on the matter of tax competitiveness, with half of the respondents saying their country’s tax environment was either uncompetitive or very uncompetitive on a global scale, while 41 per cent said it was competitive or very competitive. CEOs from Malaysia, Vietnam and Thailand were more positive about their respective tax environments.

Further disparities can be observed in regard to access to credit, with 55 per cent saying it is either easy or very easy, and 40 per cent saying it is difficult or very difficult, the survey found.

Perhaps what this mixed picture of the business environment demonstrates above all else is that despite ongoing efforts towards the harmonisation of certain laws, standards, regulations and practices across the bloc, significant development disparities and competing fiscal regimes remain obstacles to the smooth integration of the Asean Economic Community (AEC), which by 2025 aims to create a cohesive single market and production base that promotes “shared prosperity” among all members.

On education systems in the region, Asean states have consistently ranked relatively low in international assessments over the years, with the exception of world-leading Singapore.

Recognising the need for improvements in human capital, 31 per cent of respondents across the six participating countries chose leadership as the skill in greatest need, while 28 per cent opted for engineering.

However, the perceived absence of leadership qualities represents a more fundamental challenge that will need to be addressed, as the region looks to cultivate a new generation of innovators that can translate ideas into sustainable wealth and job generation, OBG said.

International Monetary Fund (IMF) spokesman Gerry Rice has extended his condolences to the victims of the recent terrorist attacks in East Java’s capital of Surabaya, saying that the organisation was ready to work closely with Indonesia to ensure the safety of the participants of the 2018 IMF-World Bank Annual Meetings in Bali in October.

Rice said he was confident that the meeting would take place successfully as the Indonesian government had made “extraordinary efforts” to assure the security of the island during the meeting.

“We look forward to having a successful meeting, and, you know, the Indonesian authorities, I can tell you, are making extraordinary efforts to make sure that is the case, and we’re working closely with them on that,” he added.

“The cooperation is excellent and we’re confident that we will have a successful annual meeting in October. “

Previously, Finance Minister Sri Mulyani Indrawati said that the bombings would not affect the government’s preparations for the meeting.

She said the government, Indonesian Military (TNI) and the National Police were closely working together to ensure the resort island’s security during the meeting, which is expected to be attended by about 15,000 participants. – The Jakarta Post

Holcim sets 2.4 bn pesos to hike cement output

The Philippines’ leading cement-maker Holcim Philippines Inc has earmarked 2.4 billion pesos for capital outlays this year, mostly to boost production capacity and ride on the local construction boom.

Holcim will prioritise operational improvements, tighter cost management and new building solutions to better benefit from and support strengthening construction activity in the country, newly appointed president and chief executive officer John Stull said during the company’s stockholders meeting yesterday.

During his address to shareholders, Stull said the company would boost its equipment maintenance programs while continuing to streamline logistics systems and processes for more reliable customer service.

“Last year, we started projects to raise cement production capacity nationwide to 12 million metric tons by 2019. While these projects have just started, we are already considering more investments to raise clinker capacity given the positive projections for the construction industry,” he said.

– Philippine Daily Inquirer

ESR-Reit, VIT to merge to form S$3 bn group

Managers of ESR-Reit and Viva Industrial Trust (VIT) yesterday announced a proposed merger to create Singapore’s fourth largest industrial Reit with a combined $3 billion in assets.

The deal, which will be the first in the history of Singapore Reits if successful, will be completed by way of a trust scheme of arrangement.

ESR-Reit will acquire all of VIT’s stapled securities, and in return issue new ESR-Reit units to the stapled security holders, providing VIT with an implied equity value of about $936.7 million.

Based on the issue price of $0.54 per new ESR-Reit unit, VIT stapled securityholders can expect to receive $9.60 in cash, and 160 new ESR-Reit units for every 100 stapled securities held.

ESR Funds Management will be the manager of the enlarged trust, which will benefit from a larger market cap of $1.7 billion, said the managers.

Subject to regulatory approvals, certain key management executives and board members of Viva Industrial Trust Management will also be joining the ESR-Reit Manager. – The Straits Times

The central bank’s seven-day reverse repo rate was increased by 25 basis points to 4.50 per cent, while lending facility and deposit facility rates were also raised by 25 bps, to 5.25 and 3.75 per cent, respectively.

“Bank Indonesia will continue to monitor the development of the economy and is ready to undertake stronger measures to ensure macroeconomic stability is maintained,” said Bank Indonesia Governor Agus Martowardojo in Jakarta on Thursday.

As part of its policy mix, the central bank also decided to keep its counter-cyclical capital buffer at 0 per cent in a bid to maintain stability of the financial system and encourage banking intermediation.

Agus also said BI would continue its effort to maintain stability of the rupiah in accordance with its fundamental values, while pushing for market mechanism through monetary market operations directed toward ensuring sufficient liquidity in the market.

External risks

Among external risks that the central bank has continued to monitor are the increase of the United States treasury yield and the Federal Reserve’s interest rate, the increase in the global oil price, tension between the US and China over trade, and geopolitical risks from the US decision to call off the Iran nuclear deal.

Agus said the previous policy mix and the current policy response aligned with its target to maintain inflation between 2.5 and 4.5 per cent in 2018 and 2019.

Task Force Bangon Marawi chair Eduardo Del Rosario told reporters that the rehabilitation of “ground zero,” or the area most affected by the five-month fighting between government forces and Islamic State supporters last year, was estimated to cost 22 billion pesos.

Another 55 billion pesos will be allocated for intervention in surrounding areas, according to Del Rosario.

The total cost of rebuilding Marawi and its outskirts in the next four years could reach 80 billion pesos, Del Rosario said, adding that the final figure would be determined by the first week of June.

The government had already allocated 10 billion pesos under the 2018 national budget, while the Bureau of the Treasury planned to issue so-called “Marawi bonds” to raise funds, Finance Secretary Carlos Dominguez III said.

“We will be issuing bonds specifically for Marawi, and they will be retail bonds because we think every Filipino will want to share in the rehabilitation of Marawi.

“We will also offer international agencies and countries an opportunity to participate in the financing of the rehabilitation of Marawi,” Dominguez said.

The decision to sell its stake is in line with ANZ Group’s ongoing strategic review of international partnerships, in order to simplify their business and operate wholly owned entities in the region, according to the announcement.

The company did not disclose the value of the deal and said the transaction has been approved by the Royal Group, the local partner in the venture.

The proceeds, however, including transaction costs, taxes and the release of accumulated foreign currency translation reserves equates to a A$30 million (US$22.5 million) loss on sale completion for ANZ, according to the announcement.

The agreement remains subject to final regulatory approval from the National Bank of Cambodia and the Ministry of Commerce.

ANZ Group Executive Farhan Faruqui said this joint venture has been beneficial to both ANZ and the Royal Group over the past 13 years, with ANZ Royal now a strong and successful bank.

“We view the business environment in Cambodia as attractive and recognise it’s an important growth economy in the Asean region; however the sale is in line with our efforts to exit minority investments and partnerships to focus on our Institutional business in Asia”, said Faruqui.

ANZ also announced a withdrawal from the Philippines and the sale of Shanghai Rural Commercial Bank in China.

“We remain committed to our Institutional presence in Asia. Our regional network is an important differentiator for ANZ and key to our ambition to be the best bank to support companies with trade and capital flows throughout the region,” said Faruqui.

J Trust is a Japanese diversified financial holding company listed on the Tokyo Stock Exchange with a current market capitalisation of $800 million.

In the press release on Thursday, Royal Group, owned by tycoon Kith Meng, expressed thanks to ANZ for its efforts over the past 13 years in building a strong world-class bank and welcomed J Trust as a new partner Royal Group said it looks forward to an exciting period of growth and expansion for the bank.

“Cambodia’s economy will continue its impressive growth and J Trust along with Royal Group will be actively assisting this growth,” the group said.

J Trust has operations in five countries including banking operations in South Korea and Indonesia.

ANZ will continue to own its 55 percent stake and manage the ANZ Royal business for up to 12 months, working closely with J Trust to ensure a smooth transition of ownership.

The relationship between ANZ and the Royal Group has seen some controversy in the past.

Last year, the Australian financial institution distanced itself from its local partner following a report by Cambodia’s National Police that linked Meng to illegal timber smuggling operations.

A report published by Cambodia’s National Police this week accused Royal Group, owned by Meng, of laundering illegal timber through the Lower Sesan II hydropower project. It accused the conglomerate of using its licence to clear the reservoir area as cover for its subsidiary’s laundering of timber from elsewhere.