Indonesia is expected to record year on year (YoY) economic growth of 5.1 per cent this year amid increasing exports and investment, Bank Indonesia (BI) has announced.

BI Governor Agus Martowardojo said economic conditions in 2017 were better than in 2016, although the recovery was slow.

Gross domestic product (GDP) growth in the first, second and third quarters ranged between 5.01 per cent and 5.06 per cent YoY, slightly better and more stable than growth of 4.92 per cent to 5.18 per cent yoy in the corresponding periods of last year.

“Looking at the growth in the previous quarters, we may end this year with nearly 5.1 per cent growth,” he said during a visit on Friday to the Mount Agung observation post in Rendang district in Karangasem regency, Bali.

Pointing to investment growth of 7.11 per cent yoy and export growth of 17.27 per cent yoy in the third quarter, the governor noted that those two segments would support economic growth in the final quarter of the year. Household spending, however, remains the crucial factor.

“Consumption is still a dominant factor for our economy. It contributes 55.68 per cent to the total GDP,” he said.

Growth in this segment has been stable throughout 2017. In the third quarter, household spending grew at a rate of 4.93 per cent yoy, compared to 4.95 per cent yoy in the second quarter and 4.93 per cent yoy in the first quarter. – The Jakarta Post

MIC invites proposals for import substitution

The Myanmar Investment Commission has invited companies to submit proposals for investments in import substitution industries, it said in a statement.

The Commission identified the industries in which it is most interested in encouraging import substitution. They are: auto and auto parts, tractors and trailers, telephone and telecom equipment, machines and machine parts, power distribution and installation, iron and steel construction materials, fertilisers, plastic raw materials, paper, chemicals, edible oil, medical products and beauty products.

Myanmar now has to mainly import these products. The MIC will ensure the availability of land and electricity supply for investors.

For more information, interested persons can contact the MIC office in Yankin Township in Yangon.

According to the Commerce Ministry’s trade figures, the total trade volume reached US$22.61 billion up until December 15 this fiscal year. That is up $3.78 billion the same period over last year. Export values amounted to $9.75 billion while import value was equal to $12.86 billion. Myanmar has a trade deficit of over $3.1 billion. – Myanmar Eleven

Lao livestock export value rises despite high cost of beef

The price of beef continues to remain high due to short supply but the export value of livestock, mostly comprising buffalo and cattle, has increased.

In 2015, Laos earned about US$23.3 million (Bt764 million) from buffalo and cattle exports and the figure rose to $45.5 million last year, according to the Laos Ministry of Industry and Commerce.

This year, the country plans to earn $50.1 million from livestock exports, although only just over $26.4 million has been earned in the past nine months.

Vietnam is Laos’ largest export market for livestock. However, the price of beef is still high at 70,000-75,000 kip per kilogram at large markets in Vientiane, which is more than in Thailand and Vietnam.

Vientiane markets must import beef and bring in cattle from the provinces, especially from the south, to supply demand.

Vientiane alone needs at least 500 cattle to supply its slaughterhouses daily, according to the Vientiane Cattle Breeding and Entrepreneurs Association.

Local farms have only been able to meet about 10 per cent of the domestic market demand.

The government has not banned the export of livestock, believing this would have no impact on the economy or consumers, a senior agricultural official who asked not to be named told Vientiane Times recently.

However, the Ministry of Agriculture and Forestry is trying to encourage farmers and businesses to raise more livestock.

This year, the ministry is targeting 1.21 million head of buffalo and more than 2 million head of cattle.

Last year, the number of buffalo being farmed increased by about 4 per cent, comprising more than one million head, while the number of cattle increased by 9 per cent to 1.8 million head, the ministry reported.

The number of livestock farms grew by about 10 per cent last year on the previous year, up from 1,247 farms to 1,370 farms.

The ministry plans to enhance livestock breeding with a view to exporting 80,000-100,000 head of cattle and buffalo this year.

Livestock breeding methods are shifting from traditional practices to farming systems that are geared to industrial processing.

To promote livestock breeding and sustainable growth for domestic supply and export, the ministry is focusing on producing breeding pairs, animal feed, vaccine supply and disease treatment, animal management and movement, slaughterhouses and meat processing, and capacity building of veterinarians. – Vientiane Times

Money-losing Indonesian SOEs urged to consider mergers

Thirteen out of the 115 state-owned enterprises (SOEs) are projected to suffer financial losses to the tune of Rp 4 trillion (Bt9.7 billion) this year, with national carrier PT Garuda Indonesia and steel giant PT Krakatau Steel accounting for at least half of the sum. In comparison, the SOEs combined losses amounted to Rp 5 trillion last year.

Minister for State Enterprises Rini Sumarno blamed fierce competition and management troubles at some of the companies for the losses.

Some of them have suffered losses for years, she added, as reported by Tempo.

Garuda and Krakatau Steel would likely see their losses amount to more than Rp 1 trillion, Rini said at a meeting with the directors of 115 SOEs.

Garuda faced stiff price wars this year and some of its international routes were inefficient, she said.

Krakatau Steel struggled against Chinese products being dumped on the Indonesian market, Rini added.

Papermaker PT Kertas Leces, aircraft manufacturer PT Dirgantara Indonesia and PT Merpati Nusantara Airlines were the other big losers in 2017, she said.

Rini told the SOE directors to strive for efficiency and look for ways to merge some of the companies that are in the same line of business. – The Jakarta Post

He expects a staggered hike implemented over two years to help cushion the impact on households.

His predictions follow comments by Prime Minister Lee Hsien Loong, who recently said that Singapore will be raising its taxes as government spending grows. This sparked speculation among economists and tax specialists about the format and timing of the tax increase.

Higher tax revenues are unlikely to come from raising corporate tax rates, given the need for Singapore’s economy to stay competitive, Seah noted in a report out on Tuesday. Personal income tax rates for top-income earners have also been recently adjusted.

This makes GST the top candidate, especially since Singapore’s rates are relatively low compared with its regional peers. “The GST is perhaps the most direct and effective tool in terms of raising tax revenue. It has a relatively broader tax base and it is also the second-largest source of revenue, just behind the corporate income tax,” said Seah.

“Hiking the GST is politically challenging given its regressive nature. In this regard, timing is crucial. With the next general election due in 2020, policymakers will have to act fast.”

He estimates that a one percentage point hike would raise tax revenue of about S$1.6 billion (Bt39 billion) to S$1.8 billion (Bt43.9 billion), equivalent to about 0.4 per cent of Singapore’s nominal gross domestic product. Singapore needs to hike taxes to meet growing needs, particularly in healthcare and infrastructure, Seah said.

Singapore’s Budget spending has been higher than operating revenues since the 2015 financial year. The primary deficit for the 2017 financial year, projected to come in at S$5.6 billion, could also be the deepest on record, he noted.

The report was based on responses from 1,026 employees in the manufacturing, sales, marketing, finance and accounting industries. About 84 per cent of the respondents said they are not anxious about being replaced by robots, while 58 per cent felt that robots and AI will create more opportunities in the labour market.

Peter Smith, managing director of Michael Page China, said such technology advancements would allow people to take on more innovative jobs. This is especially true for high-tech projects like driverless cars propelled by new technology, as more talent would be needed to invent and develop allied products. He also pointed out that the adoption of robotics and AI in more scenarios means upgrading in a large number of industries. In this sense, people will have more free time for leisure, thus creating more job opportunities in the service and lifestyle industries.

However, 18 per cent of the respondents expressed concerns that human beings might be replaced in the job market eventually, and 48 per cent of them said that this would happen in the next five to 10 years.

Smith admitted that robots and AI technology would exert a negative impact on entry-level jobs. For example, receptionists, entry-level auditing and banking jobs, as well as some jobs in public relations, were likely to be the first to disappear. But on the other hand, the demand for creative and technical jobs will increase, he added.

Alex Gu, director of Michael Page China, said it was too early for candidates to be intimidated by the possible challenges from robots or AI.

“Most of the robots are simply taking on complementary roles in the job market. It will take years for them to make a fundamental change in the landscape,” he said. The Chinese government has stressed the development of AI technology in a number of guidelines. In the national technology innovation blueprint for the 13th Five-Year Plan (2016-20) released by the State Council in July 2016, AI has been listed as one of the pioneering technologies for research and development. The State Council stated in an announcement in July this year that China should lead the world in terms of AI theory, technology and application by 2030.

According to global market consultancy Roland Berger, AI will create 10 trillion yuan (about Bt49 trillion) of added value by 2030 for sectors including the Internet, motor vehicles, retailing, finance and medicine. Both multinational and domestic companies of various industries are responding to the AI wave. According to Gu, there is a huge shortage of AI talent in China at present, while the demand for people with an engineering background is extremely high.

“Candidates with five years of experience can hardly be found in the domestic job market. Therefore, companies are looking for talent in the US, Japan, India and Israel where AI development started relatively earlier,” he said. Over time, companies have also been able to screen the right people who are able to carry out academic research independently, he added.

The country expects to attract 17-20 million foreign visitors and 82 million domestic ones by then.

Visitors are expected to spend US$35 billion (795 trillion dong) in the country in 2020, on-the-spot exports through tourism are expected to reach $20 billion and the sector is hoped to create jobs for four million people including 1.6 million direct jobs.

Such ambitious goals are part of a politburo resolution on developing tourism into a key economic sector, issued early this year.

Nguyen Van Tuan, General Director of National Administration of Tourism, told a workshop on restructuring Vietnam’s tourism sector yesterday that the resolution created motivation for the sector’s development and it also helped change public awareness about tourism – as not a single sector but a collective one relating to other sectors.

He said that last year, Vietnam welcomed 10 million foreign visitors and the World Tourism Organisation ranked it in the top 10 countries with highest tourism growth globally.

In 2017, Vietnam expected to host 13 million foreign visitors and it was ranked in the top six countries with highest tourism growth, Tuan said, adding that the expectation would likely become real and the National Administration of Tourism would greet the 13 millionth visitor next week.

“The tourism sector made achievements but these are still modest compared to Vietnam’s tourism potential and expectations as well as those made by neighbouring countries,” Tuan said.

“Restructuring is an urgent need for Vietnam’s tourism sector,” he said, noting six issues that need restructuring – resources and funding for tourism, tourism products, devel-oping tourism markets, tourism companies, human resources for tourism and management.

Vietstar Airlines Deputy General Director Luong Hoai Nam said that Vietnam’s tourism was “good at some things but bad at many things”.

Last year, Vietnam received 10 million foreign visitors but Thailand received 32.6 million, Malaysia 26.8 million, Singapore 16.4 million and Hong Kong 26.7 million.

Cambodia, with a population of about 15 million people, received 5 million foreign visitors. This means a neighbouring country with a population a sixth as big as Vietnam has welcomed half as many visitors.

Nam said that with advantages in natural resources and human resource, Vietnam’s tourism was hindered by bottlenecks relating to visa policies, information and communications technology readiness, health and hygiene, safety and security, airport infrastructure, ground and port infrastructure and tourist service infrastructure.

According to Travel and Tourism Competitiveness Index 2017 of World Economic Forum, Vietnam’s tourist service infrastructure ranked 113 out of 136 economies.

“Few tourist products with high creativeness are available in Vietnam,” Nam said, adding that there were opportunities to develop new tourist products based on the conditions of individual localities.

Certain types of tourism could be exploited, for example, war tourism allows visitors to learn about wars in Vietnam through battle sites, golf tourism is popular in Asia and hiking and trekking tourism has possibilities as Vietnam has much natural beauty.

Vietnam ranked 82 out of 136 economies in the same survey index in terms of health and hygiene, necessitating an improvement in fighting rubbish and better quantity and quality of public toilets.

In addition, Nam said that the country should have more tourist-friendly visa policies.

“The matter is not the visa fee but the inconvenience and displeasure people experience when applying for a visa,” he said.

Vietnam exempts tourist visas for citizens from 23 countries but Thailand does the same for 61 countries, Singapore 157 countries, Malaysia 155 countries, Indonesia 169 countries and the Philippines 157 countries.

Nguyen Quoc Ky, chairman and director general of Vietravel said tourism consists of four major components – travel, accommodation, transport and services. So, restructuring the tourism sector means implementing synchronised measures in related sectors like transport, commerce, services and customs.

Nguyen Dinh Cung, director of the Central Institute for Economic Management said that investment priority should be given to developing tourist infrastructure.

In any economic restructuring plan, enterprises should be placed at the centre, he said, calling for stronger administrative reform and improved business environment so enterprises can run freely, safely and more creatively.

The partnership allows visitors from China to access Pi Pay merchants through Alipay.

Chinese tourists have been visiting Cambodia in record numbers, accounting for almost a quarter of the 5 million tourist arrivals last year, with a jump of 40 percent expected this year.

Pi Pay CEO Tomas Pokorny explained that this was a natural expansion for his company, whose app has reached 168,000 downloads across Cambodia, although participating merchants are located largely in Phnom Penh. Pi Pay anticipates expanding services in the New Year to Siem Reap and to Sihanoukville, a city dominated by Chinese casinos and businesses.

“With more than 2 million Chinese tourists per year expected by 2020, the partnership we are announcing today is … about building warm and mutually beneficial partnerships between two countries,” he said, adding that Alipay customers would now have immediate access to the 1,400 merchants in Cambodia already accepting Pi Pay payments.

The partnership should not only be beneficial to the tourism industry, he added, but should also further support efforts to create a cashless society and strengthen financial security, literacy and infrastructure in the Kingdom.

“We believe that the rapid adoption of Pi Pay by over 150,000 users in Phnom Penh alone is a strong indicator that Cambodia is becoming an international player in financial technology on a par with the best in the region and the world,” he said.

Alipay, which was launched 13 years ago by an affiliate of Jack Ma’s e-commerce company Alibaba, currently has 520 million active users in China, operates in seven countries and offers its users access to over 70 million merchants. All of its users must have a Chinese bank account.

Cherry Huang, Alipay’s general manager of cross-border business for South and Southeast Asia, said the partnership would be well received by Chinese customers anxious for the comforts of home while travelling through the Kingdom.

“The Alipay platform will allow local merchants to not only sell goods and services to Chinese tourists when they visit the country, but also reach active Alipay users remotely through the app before and after their trips to Cambodia,” she said.

“This will enhance and create a new retail experience for consumers, [generating] a mobile marketplace in Chinese tourists’ smartphones.”

She added that Alipay’s commitment to enabling a smart lifestyle at home and abroad for its Chinese users would be beneficial to Cambodian businesses.

“I strongly believe that this win-win partnership will benefit Chinese consumers and local businesses and at the same time, play a part in making Cambodia a truly cashless destination for our users,” she said.

Net profit came in at Bt34.7 billion for the 12 months to September 30, a 38.5 per cent jump from the same period last year. Earnings were also buoyed by a decrease in net losses at its non-alcoholic beverages business.

Excluding Bt8.5 billion of fair valuation gains on financial assets, net profit from operations would have risen by a smaller 4.6 per cent to Bt26.2 billion. ThaiBev holds a 28.5 per cent stake in F&N and 28.4 per cent of FCL.

Revenue was Bt190 billion, nearly flat from the same period last year.

A decrease in beer sales of 4.7 per cent and a 0.9 per cent fall in non-alcoholic beverage turnover were offset by an increase in spirits revenue of 2.6 per cent while the food unit was up 1.5 per cent.

ThaiBev has changed its fiscal year-end to September 30 from December 31.

Earnings per share was Bt1.37, up from Bt0.75 a year earlier, while net asset value per share was Bt5.13, up from Bt4.78. It is paying a final dividend of Bt0.47 for the 12 months to September 30, up from Bt0.4 for the nine months ended September 30, 2016.

The group noted that Thailand’s beverage industry had been affected by the slowdown in consumption during the mourning period for His Majesty the late King Bhumibol Adulyadej and the implementation of the new excise tax act.

The new act changes the base of excise tax calculation from last wholesale prices to recommended retail prices, and imposes tax on sugar content in non-alcoholic beverages.

Agents and retailers were alerted by the new excise tax effective from mid-September 2017, resulting in higher purchase orders before the excise tax increase.

“Our product prices have been adjusted to cover the cost from both the new alcohol excise tax and the first-ever sugar tax on non-alcoholic beverages,” the group said. “Nevertheless, the business still delivered a good performance this year.”

Eliseo Rio Jr said the third player might not necessarily come from China, despite President Duterte’s earlier pronouncements.

According to presidential spokesperson Harry Roque, the President wants the third telco player to be “up and about” by the first quarter of next year and the government would name the prospective third player by the end of that deadline. The third player would need to have a war chest of at least $2.7 billion to be able to compete with existing players, he said.

Rio did not identify the four companies, opting to let them make the announcements themselves but said they were from the United States, Japan, South Korea and Australia.

While he did not officially identify the interested parties, Rio cited familiar names such as Australia’s Telstra Corp. and Japan’s NTT Communications Corp.

To recall, Telstra earlier negotiated with San Miguel Corp. to partner in a telecommunication venture last year but later decided against pursuing the project. NTT Communications, on the other hand, is already in partnership with telco giant PLDT Inc.

Rio said he was not sure how NTT’s possible next move would affect its existing arrangement with PLDT.

Nothing is definite or official, Rio said. “They just indicated through some publications that they are interested.”

Since the Philippine Constitution limits foreign companies from having full ownership of telcos in the country, the third player would have to be a partnership between foreign and local parties, he said.

In the end, he said, this remained a “business decision” since it would be up to local telcos to decide whether or not they would wanted to enter into a partnership with foreign firms. Only after the joint ventures are formed would the government be able to determine which would be the best for the job, he added.

Rio said the government would not want another incident wherein a potential third player would be “gobbled up” by PLDT and Globe Telecom, which is what happened when the two companies bought the telco assets of San Miguel Corp. last year.

Presidential Communications Secretary Martin Andanar previously quoted Rio as saying that China had selected state-run China Telecom to invest in the Philippines as the potential third telecom industry player. A Reuters report confirmed this based on an interview with Rio.

He, however, clarified that this did not necessarily mean that the state-run Chinese company would be the third player.

“I must emphasise here that for that slot, it is not [necessarily] the China telco. What came out in the news was the President ordered us to open up the industry and the China telco would be the third player. That’s not true,” he said, explaining that the third player would have to be a company owned by Filipinos. This Filipino company could, however, have a foreign partner, he added.