Japanese and South Korean electronics companies Sharp Corp and LG plan to relocate their factories from Thailand and Vietnam, respectively, to Indonesia as part of their investment consolidation plans in Southeast Asia.

Industry Minister Airlangga Hartanto said the relocations would further strengthen their operations in Indonesia, where they have built their respective production bases for a number of electronics products.

“We are monitoring the process. Discussions have been going on for quite some time,” Airlangga said at a post-Idul Fitri gathering at his office in Jakarta last week.

LG’s public relations officer was reluctant to elaborate on the company’s relocation plan when contacted by The Jakarta Post, while Sharp’s government relations officer said the company’s relocation was part of plans to strengthen its Indonesian operations. He refused to elaborate further.

Meanwhile, the director for electronics and telematics at the ministry, Janu Suryanto, said Sharp would relocate its twin tub washing machine facilities from Thailand to its Indonesian production base in Karawang International Industrial City (KIIC). – The Jakarta Post

Cebu Pacific makes $6.8 bn order for Airbus planes

Philippine budget airline Cebu Pacific went on a shopping spree on Tuesday as it sealed a deal to order 31 Airbus planes during the Paris Air Show, the world’s biggest aviation trade event.

In the coming years, Cebu Pacific is set to acquire 16 A330neos, 10 A321XLRs, and five A320neos in a deal estimated at $6.8 billion (Bt212.31 billion). The airline also acquired an option for 10 more planes from Airbus’ A320 family.

The larger-capacity and more fuel-efficient planes will be used to replace Cebu Pacific’s existing fleet as they arrive from 2021 through 2026.

Cebu Pacific president and CEO Lance Gokongwei said more efficient planes will allow the budget airline to offer low fares to customers.

“The A330neo will give us the lowest cost per seat and allow us to continue offering the lowest fares. Moreover, the lower fuel burn matched with higher seat density will allow CEB to address growing demand for leisure and business travel, by upgrading aircraft and maximizing available airport slots in Manila and other megacities we serve,” Gokongwei said in a statement. – Philippine Daily Inquirer

Evonik to meet Asia’s meat demand with second plant

German chemical giant Evonik Industries has invested over 500 million euro (S$768 million, Bt17.543.46 billion) in opening a second plant in Singapore to produce a key additive in animal feed and is an example of the role that industry can play in growing the economy and creating jobs, said Deputy Prime Minister Heng Swee Keat.

With an eye on the rising demand for meat in this region, Evonik’s second methionine plant will double its capacity in Singapore. The company’s total annual production here will increase from 150,000 to 300,000 tonnes .This makes up over 40 per cent of the 730,000 tonnes made globally each year by Evonik, which has four such plants in Belgium, Germany and the United States.

The new plant started operations on Tuesday on Jurong Island. At the launch of the plant in Capitol Theatre, DPM Heng said: “Growing the economy and ensuring economic growth benefits the large majority of workers is a complex and difficult endeavour” . – The Straits Times

Commission offers faster review for certain M&As

The Philippine Competition Commission (PCC) will start offering next month a fast-tracked process that will cut by half the initial review time for certain mergers and acquisitions.

In a statement on Tuesday, the PCC said that it had set down the rules for an expedited review process for transactions that would be less likely to substantially prevent, lessen, or restrict competition.

This will cut the review time for the first phase of the review from 30 calendar days to 15 calendar days, even though the current time is already considered among the shortest review periods in the world.

“Every merger review employs different levels of technical expertise and resources. The expedited review of mergers that are less likely to pose competition issues will lead to more efficient use of Commission resources towards the implementation of a holistic merger control regime,” PCC Chair Arsenio Balisacan said. – Philippine Daily Inquirer

AirAsia X Bhd chairman Tan Sri Rafidah Aziz said, before the company makes any decision, it needs to consider various factors including the operational costs and the projected revenue.

“We must also look at the total picture whether it can meet the challenges such the changes in oil prices, the various taxes in Europe airports and so on.

“For example, the planes that were flying to London and Paris previously was not the right plane. The cost factor was the one that literally killed us from the market. Moving forward, we have to be realistic in making our decisions for the long term,” she told reporters after the unveiling of its new A330neo aircraft at the 53rd International Paris Air Show here.

Rafidah said with the new planes which use more efficient engines, it would give added flexibility to the company to strategise and give better returns to its shareholders.

On when the aircraft would be in operation, she said it would be decided by the board of directors based on the proposal by the management. Meanwhile, AirAsia X group chief executive officer, Nadda Buranasiri said the delivery of the A330neo aircraft would be in phases.

“We expect that Airbus would probably be able to provide us six aircraft a year,” he said.

The world’s leading low-cost carrier ordered a total of 100 A330-900 aircraft for RM122 billion from European planemaker Airbus, of which 66 aircraft are firmed orders and two on lease.

Buranasiri said it would take the first aircraft next month while the second aircraft would be delivered in August, to be based in its Thailand hub, Don Mueang International Airport in Bangkok.

“We have not decided where the new fleet would fly to as we are still studying each market to understand the demand and how we could leverage it.

“We are working it out to ensure that it will be profitable to us, while at the same time, make our shaeholders and passengers happy. “We are not making excessive profits but it needs to have enough volumes,” he added.

The Minister of Industry and Commerce, Khemmani Pholsena, told the assembly’s session that the enactment of the law was part of Laos’ efforts to fulfil its obligations as a member of the World Trade Organisation (WTO).

She said if Laos does not have the law, it cannot apply anti-dumping and countervailing duty measures against the unfairly imported products.

According to the WTO, if a company exports a product at a price lower than it generally charges in its home market, it is said to be dumping the product.

WTO agreements do not regulate the actions of companies engaged in dumping. However, they allow governments to act against dumping where there is a genuine injury to the competing domestic industry.

Before reacting or applying response measures, the government has to be able to show that dumping is taking place and how much the dumping threatens the domestic industry and economy.

The WTO says a member country can use the organisation’s dispute settlement procedure to seek the removal of the subsidy or the elimination of its adverse effects.

NA members agreed that with the law, Laos could launch its own investigations and decide to charge extra duty on subsidised imports if those imported products were found to be damaging to local producers.

The law will serve as a legal instrument for the Lao government to take response measures against dumping and impose subsidy duties to safeguard domestic producers from unfairly imported products.

It will create confidence for entrepreneurs and investors operating in Laos as their rights and legitimate interests will be protected.

Khemmani said the WTO reported that between January 1, 1995, and December 31, 2017, 51 countries applied anti-dumping measures in 3,604 cases. India implemented the most measures followed by the US and the EU. Indonesia, Thailand, Malaysia, the Philippines and Vietnam applied the measures.

This is two days before Hyflux is due to update the High Court on its restructuring effort.

A town hall meeting with the Hyflux perpetual securities and preference (PNP) shareholders will be arranged for the week of July 7 if the binding agreement is signed by June 27.

Utico had earlier told Hyflux it wanted a binding agreement signed by Monday for its S$400 million (Bt9.136.28 billion)investment. The embattled company is in talks with at least seven investors for a potential cash infusion and had told the court on May 29 that it planned to enter into a binding term sheet with one of them by mid-June. Its court-approved debt moratorium will end on August 2.

Utico said in a statement on Tuesday night that the decision to extend the term sheet validity was taken following negotiations between advisers of Hyflux and Utico and senior management, including Hyflux founder Olivia Lum and Utico chairman Rashed Al Balooshi.

Utico wants to acquire Hyflux as a going concern, said managing director Richard Menezes.

Its board noted that the extension to June 27 was also in the interest of stakeholders, including creditors, clients and PNP investors.

“For all stakeholders, further loss of time and uncertainty will lead to greater losses in value as well,” said Menezes.

The National Telecommunications Commission (NTC) issued on June 11 its rules for the Mobile Number Portability Act, whose goal is to promote competition in the telecommunication industry. The NTC said on Tuesday the rules would become effective on July 2.

The guidelines outlined how the telco players would implement the law, which included a contentious provision that removed all interconnection fees for local calls and text messaging.

The law also allowed subscribers to keep their numbers when switching between prepaid and postpaid plans from the same telco. The NTC said no fees and charges would be collected from subscribers.

The NTC said number portability applications should be processed within 48 hours. Processing time for those switching between postpaid and prepaid plans from the same telco would take no more than 24 hours. PLDT spokesperson Ramon Isberto said the telco supported mobile number portability but questioned the removal of interconnection fees.

“We have expressed our reservations, on constitutional grounds, regarding the rider provision in the law, which removes the interconnection fees between operators,” Isberto said. It was unclear if the company would take further action.

“At this point, we are just registering our reservation,” he said.

Number portability schemes had been proposed in previous years. However, the hanging concern was how it would be implemented and who would foot the bill.

For the latest legislation, the NTC said the telcos would need to select a mobile number portability service provider, the entity that will provide the porting services. The company will maintain an electronic database, which will include a subscriber’s porting history without the individual’s personal information.

Under the rules, the telcos will share in the costs for software and hardware needs of the number portability service provider. They should also agree on operating and maintenance expenses.

The NTC said not all subscribers could avail themselves of number portability. Restrictions cover those with outstanding debts, locked devices or those seeking to again switch less than 60 days after a ported number has been activated. Also restricted are subscribers blacklisted due to fraudulent activities.

Number portability is being implemented in the Philippines as a growing number of subscribers shift to internet-based messaging platforms, some of which do not require mobile numbers.

However, the tax reduction is only one of the incentives for Vietnamese goods when entering markets, not a “lifesaver” for businesses, said the Ministry of Industry and Trade (MoIT).

The Ministry of Finance (MoF) submitted a decree on preferential export tariffs and special preferential import tariffs of Vietnam under the CPTPP from January 14, 2019, to December 31, 2022.

Under the decree, the MoF and the General Department of Customs tried to compare the taxes of free-trade agreements (FTAs) with the CPTPP so that businesses can choose appropriate preferential tax rates.

 The preferential tariffs include two country groups. One group has implemented the CPTPP since the end of 2018, including Canada, Australia, New Zealand and Singapore and another group will start from 2019. Accordingly, when enterprises import goods, they need to read the tariff to understand the tax reduction schedule.

For example, if the goods are imported from Australia, the roadmap is the second year, while imports from Mexico will come under the first year.

It is expected that the tax reduction would be applied to some 300 products. However, businesses are required to have preferential certificates of origin to enjoy the preferential tariffs. Such a certificate in the CPTPP is one that can be issued to multiple shipments on condition of not exceeding 12 months and can be issued to many different importers.

Earlier, Canada immediately eliminated tariffs on fishery products, one of the key product categories of Vietnam. Rice and products containing rice, coffee, green tea, fruit and vegetables also saw the majority of tariffs eliminated at the time the commitments started.

According to the MoIT’s Import-Export Department, many exporters of garment and textile and leather shoes have taken advantage of the certificates of origin principles under the CPTPP when exporting to Canada. In the Japanese market, the majority of seafood products which Vietnam has an advantage, such as frozen and processed shrimp, enjoy zero tax right after the CPTPP took effect.

However, the MoIT said the tax reduction is only one of the preferential items for Vietnamese goods. Businesses still have to ensure their products meet quality and technical standards as well as have certificates of origin from importers.

Pham Thiet Hoa, director of the Investment and Trade Promotion Centre of Ho Chi Minh City (ITPC), said import and export activities of local businesses are subject to control of CPTPP’s both incentives and strict requirements.

Among the 10 members of the CPTPP, Vietnam signed FTAs with seven countries, of which four countries have relatively high bilateral import-export turnover, reaching nearly US$7 billion. For countries that have not signed bilateral FTAs, such as Canada or Mexico, export turnover stood at $4.6 billion (Bt143.62 billion) and $3.4 billion in 2018, respectively. In the first quarter of 2019, Vietnamese goods exported to Canada reached $864 million, up 42.7 per cent over the same period last year.

However, for these markets, Vietnam’s exports account for only 1-2 per cent of the total import turnover of each country. With a large market capacity and the difference in tax incentives before and after the CPTPP took effect, Canada and Mexico will be potential export markets for Vietnamese enterprises. In particular, Vietnamese industries which have advantages such as footwear, textiles, aquatic and wood products are predicted to have high export growth rates, if they make good use of incentives.

In reality, Vietnamese enterprises have often only paid attention to trade issues such as quality, quantity of goods, time of delivery and receipt, but neglect the legal factors such as applicable law and provisions on dispute resolution.

In order to limit this, even at the negotiation stage, Vietnamese enterprises need to actively agree with partners on these components as a way to prevent possible disputes.