The total volume of derivatives traded on the Singapore Exchange (SGX) grew 46 per cent from a year ago to 24.2 million contracts in May this year, as global investors sought to manage their overall Asian exposures and macro risks, according to the SGX’s latest market statistics released on Monday.

There were also broad-based declines across most Asian equity indices amid the market uncertainty.

The daily average traded value of securities fell 18 per cent from a year ago in May to S$1.1 billion (Bt26.22 billion).

Market turnover value of structured warrants and daily leverage certificates also slumped 42 per cent year on year to S$814 million (Bt18.682 billion).

In Singapore, the total securities market turnover value in May rose 5 per cent from April to $23.1 billion.

As fears from the US-China trade war roiled global markets and reduced investor tolerance for uncertainty, investors with exposure to Asian asset classes – particularly currency and equity – managed their price and risk exposures on SGX, the bourse operator said.

Trading volumes of SGX FTSE China A50 Index futures spiked 82 per cent year on year in May, while those of SGX MSCI Taiwan Index futures moved up 28 per cent. The SGX Nikkei 225 Index futures increased 36 per cent from a year ago.|– The Straits Times

Lion Air admits request for airport payment deferral

Lion Air group has said that it had previously requested payment deferral through a letter to state-owned airport operator PT Angkasa Pura I.

The airline made the statement following rumours that the group had been struggling to pull through its finances, forcing it to postpone airport services payment.

“The postponement is for January, February and March,” Lion Air Group strategic communication officer Danang Mandala Prihantoro said.

Danang ensured that the group would fulfill its payment starting from April within the “normal scheme” that other airlines followed. The group has to pay for airplane parking, luggage handling systems, check-in counters and aviobridge. As quoted by an unnamed source through tempo.com, Angkasa Pura I has already received the letter from the airline.|– The Jakarta Post

Clark IE5 reclassified commerce, leisure hub

Philippine President Rodrigo Duterte has signed an executive order reclassifying the Clark Industrial Estate 5 (IE5) as an international centre of commerce, industry, leisure and recreation.

Duterte signed EO No 81, amending EO No. 716 signed in 2008.

EO No. 716 has declared Clark IE5 “as a logistics centre and mandated, among others, that the Clark International Airport Corporation (CIAC) shall only engage in aviation, aviation-related services and aviation-related logistic activities”.

But Duterte said the Clark Special Economic Zone and Clark Freeport Zone, including the IE5, has “attracted international attention and interest as the Asia Pacific Region’s emerging premier hub for aviation and international logistics, as well as an international centrefor commerce, industry, leisure and recreation”.

“The IE5 area, measuring approximately 290 hectares, is hereby reclassified as an international centre for commerce, aviation, logistics industry, leisure and recreation, without prejudice to any rights and interests under existing contracts, leases and business arrangements covering areas with the IE5, which have been lawfully entered into by the CIAC, prior to the effectivity of this order,” Duterte said. – Philippine Daily Inquirer

PTP departs vessel with world record load

Malaysia’s Pelabuhan Tanjung Pelepas Sdn Bhd (PTP) has set a new world record to depart a vessel with a final load over 19,000 twenty-foot equivalent units (TEUs).

The milestone was accomplished recently when Monaco Maersk left the port with the record load of 19,284 TEUs, surpassing the previous record load of 19,190 TEUs achieved by MOL Tribune vessel in February this year.

PTP recorded a total throughput volume of 9 million TEUs in 2018 and was projected to handle a total throughput target of 9.5 Million TEUs this year.

PTP chairman and MMC group managing director Datuk Seri Che Khalib Mohamad Noh said the latest achievement was a testament to PTP’s commitment in providing best in class service for the customers. – The Star

The ministry’s Agricultural Product Processing and Market Development Department said cassava is the latest export from Vietnam to China to face strict controls on labelling, packaging and information as well as a tightening of import procedures at border gates.

The department said cassava exports to China are expected to be reduced in the second quarter of this year due to lower demand.

Cassava is one of the agricultural products to have seen billions of US dollars of exports in recent years. But in the first five months of this year, the sector earned a revenue of about $414 million from shipping 1.08 million tonnes, down 11 per cent in value and 17.6 per cent in volume year-on-year, vietnamnet.vn reported.

China continues to be the largest export market for Vietnamese cassava, but the first four months of this year saw exports of the product to the Chinese market fall by 16.4 per cent in volume and 3.5 per cent in value compared to the same period last year.

Previously, the most populous market in the world also strengthened barriers to Vietnamese rice exports.

From the beginning of last year, China increased import duties on sticky rice from 5 per cent to 50 per cent and added stricter controls on other rice imports.

Only 20 out of 150 rice export enterprises in Vietnam have received permission to bring their products to China.

Le Thanh Hoa, deputy director of the Agricultural Product Processing and Market Development Department, said the new fees and standards have made it hard to sell rice in the traditional export market.

Vietnam exported a total of 2.83 million tonnes of rice in the first five months of this year, earning $1.21 billion. These numbers were down 4 per cent in volume and 20.7 per cent in value year-on-year.

China dropped to Vietnam’s seventh largest rice export market in the first two months of this year, according to the General Department of Customs.

Although there are many trade barriers, Hoa still expects Vietnam’s high quality rice exports to China to increase after China announced that 22 Vietnamese enterprises will be permitted to export to this market. The Ministry of Industry and Trade will also negotiate rice export quotas to South Korea.

Vietnam expects to increase rice exports to the Indonesian market in the third and fourth quarters. It has also opened talks with the Philippines on contracts to import the product, according to the department.

China has promoted traceable origins and quality management and has asked fruit exporters to register codes showing where the fruits were planted. The changes have created disadvantages for Vietnamese fruit exporters, especially for those that sell fresh local fruits. For instance, exports of pineapples from Lao Cai province and bananas from Lai Chau province have slumped severely.

The vegetable and fruit sector promoted exports to highly demanding countries in the first four months of this year, including Australia (up 39.9 per cent), the Netherlands (up 29.22 per cent), South Korea (up 25.53 per cent) and France (up 24.81 per cent).

Recently, Vietnamese mangoes have begun to be exported to the US. Mangoes are Vietnam’s sixth fruit licensed for export to the US market after dragon fruit, rambutan, longan, lychee and star apple.

The export value of Vietnamese fruits and vegetables in the first five months of this year reached $1.83 billion, a year-on-year increase of 10.3 per cent.

Experts in the sector said the efforts to find alternative markets will help Vietnam’s agricultural sector reduce its dependence on the Chinese market and grow despite China’s new trade barriers.

David Dai, a vice president at what is China’s third-largest 4G mobile operator, has expanded its pilot programme from 17 cities to 40 as it regards the 5G network as a strategic development for industry and the nation.

China handed out commercial 5G licences to its three big state-owned telcos and a major TV network on Thursday, accelerating the roll-out of this high-speed, low latency network.

This all-out push comes as the United States is blacklisting Huawei, a key Chinese 5G-network equipment provider.

Both China and the US are racing to lead the world in deploying 5G, which promises to bring frontier applications such as self-driving cars to reality.

Observers have said the US ban on Huawei could be a major setback for China in its 5G ambitions.

Dai told a panel discussion at the Future China Global Forum on Friday that work on building the 5G network in China is moving at a very fast pace, with 790,000 base stations slated to be erected by the three telcos this year.

The country aims to have three million 5G base stations within three years, which is about half of all the numbers globally, he noted.

“We are to get the entire network built before there are any commercial applications of the technology,” added Dai.

He said that all three telcos have poured in a lot of resources in the past few years to test commercial applications of 5G in areas such as Internet of Things and Internet of Vehicles, which refers to connecting vehicles to other vehicles or traffic infrastructure like traffic lights using a wireless network.

Dai said the industry has achieved good progress in broadcasting, Internet of Vehicles as well as telemedicine.

Fellow-panellist Nikhil Batra, research director at technology consultancy IDC Asia Pacific, said Australia could have been too quick to ban Huawei from participating in its 5G rollout.

Australia-based Batra noted that many European countries and Asian carriers are still open to using Huawei as part of their 5G ecosystem, the latest being Russia’s largest mobile carrier.

“Networks are the lifeline of modern society and the governments are taking a very conservative view,” he told a packed audience of businessmen, scholars and policymakers.

They are treating mobile networks as a critical infrastructure, just like how they are treating the electricity grid and water supply, he added.

Batra noted that Australia’s Huawei ban has effectively crippled plans by one of its three major telcos from participating in the 5G roll-out.

With fewer players involved, it invariably impedes innovation in the sector. “This slows down the development of 5G in the country and across the entire region.”

When asked by the audience what would be the best- and worst-case scenario in China’s 5G development over the next two years, panellist Caroline Gabriel, an analyst from telecoms consultancy Analysys Mason, said the best case will be for the barriers to go away, allowing China to fully participate in the global industry again.

As for the worst-case scenario, she said: “5G will be rolled out but the operators will not find a strong business case in the first few years and they will get discouraged by that.”

IGSS Ventures founder and group chief executive officer Raj Kumar said the country has a “multinational companies appeal” that is attractive to international businesses looking to carve a foothold here.

“By this, I mean factors like ready access to a pool of highly skilled manpower for research and development, English-speaking population, business-friendly laws, well-developed infrastructure including excellent transportation connectivity, and integrated telecommunication systems,” he told Bernama news agency.

IGSS Ventures is a technology holding company focused on developing and commercialising mainstream and niche semiconductor technologies.

Additionally, Kumar said the industry’s management of intellectual property packaged with growing capabilities in engineering design activities and supporting industries had enhanced the country’s value as the preferred location for semiconductors.

He said the industry needed a cleanroom, a critical component in the production of wafer fabrication, which requires 100 times purity.

“In the industry, the production of semiconductor wafers are done in spaces that are much more sanitised than operating theatres. This level of high-tech wafer fabrication production and level of sophistication, which forms the heart of the semiconductor supply chain, is today more prominent in Asia.

“In fact, only Singapore and Malaysia currently have wafer fabrication infrastructure and capabilities in Southeast Asia,” said Kumar, who has been involved in the industry for about 30 years.

Malaysia is growing to be a part of what Kumar considers an elite club of six nations in the world that offers attractive semiconductor ecosystem – from a cost and infrastructure perspective.

Backed by growing know-how to effectively support a semiconductor industry, the nation had the potential to play a bigger role in the semiconductor industry than it does today, especially in specific capabilities and sectors with multiple advantages that can be better optimised and commercialised, he said.

Globally, the semiconductor industry needs viable alternative locations to build their new fabrications or relocate their existing niche fabrications due mainly to increasing operational costs.

“China is attracting several fabrications owned by overseas entities and supported by significant investments by the state or central government in building wafer fabrications in the country … it has grown in its appeal,” he said.

Malaysia, on the other hand, has the makings of being a strategic location for companies that are looking for destinations as part of their “dual-source supply” or relocation strategies.

“As a dual-supply site, Japanese and Western integrated-device manufacturers consider Malaysia’s competitive advantages to be its socio-economic factors and familiarity with the Malaysian culture, coupled by regulatory efforts to protect intellectual properties,” Kumar said, adding that this combination had given Malaysia an edge in Asia.

If Malaysia develops an intensive national (sectoral) marketing strategy and further enhances or implements supporting incentives for semiconductor operators, it can very likely attract five to 10 other wafer fabrications in the next 10-15 years, besides strengthening the demand for existing fabrications in the country.

“The potential is there for Malaysia to be akin to South Korea in branding itself as an ideal ‘fabrication relocation’ destination in chosen semiconductor fields in the next 15 years,” he added.

Following two consecutive years of double-digit sales growth, the global semiconductor industry is expected to see a sharp slowdown in sales growth in 2019.

The World Semiconductor Trade Statistics has projected global semiconductor sales to expand by only 2.6 per cent in 2019 and this represents a marked difference compared with 21.6 per cent and 13.7 per cent sales growth recorded in 2017 and 2018, respectively.

Kumar said local semiconductor companies should penetrate the niche areas of wafer fabrication, including wafer foundries, semiconductor OSAT (outsourced semiconductor assembly and test) industries or design services for growth and expansion.

These sectors, he said, could help to differentiate the local players from the much bigger global competitors.

“These sectors are already being undertaken in the country and it provides a strong base for new industry players to further tap into them, thus strengthening the country’s position as a dual-source destination,” he told Bernama.

But should the Infocomm Media Development Authority (IMDA) decide to assign the 5G airwaves to two winning proposals, Singtel has “all the right ingredients” to win the rights to operate the network, its consumer chief Yuen Kuan Moon said.

The two nationwide networks could roll out as early as next year.

IMDA is currently holding public consultations to get feedback from industry players and members of the public on a set of proposed 5G regulatory framework, including how it plans to pick operators. The consultation ends at noon on June 19.

It does not plan to hold an airwaves auction, it had said last month.

Yuen, speaking to reporters at the launch of Singtel’s first unmanned pop-up store day, said his company is “appealing to our regulator to reconsider” its plan to hand out the licences to the two winning proposals. “Some other countries have given 5G licences for free, without an auction or without a beauty contest,” he told The Straits Times.

While the 5G mobile network will benefit frontier applications such as self-driving cars and virtual-reality content streaming services in the future, there are currently hardly any immediate ways for industry players to effectively monetise the service.

In Britain, mobile operators paid 1.1 billion pounds (Bt43.44 billion) on licence fees alone for access to 5G airwaves.

With all the preparatory work Singtel has put in place, Yuen thinks it can put in a strong case for the proposed beauty contest.

“We have all the right ingredients… We believe we will put up a very strong proposition for the beauty contest.”

He also said he was not overly concerned with who will win the 5G licences as the winners have to sell network services wholesale to mobile operators who are not issued with the airwaves.

“In fact, there could potentially be only one network operation with everyone sharing it. We’d be happy to roll out, deploy that network and wholesale to all the rest of the people,” he added.

In Singapore, there are no immediate applications for the consumer sector and he thinks the application of 5G technologies will largely be in the business-to-business sector, although very few commercial applications of the technology exist currently.

The unmanned pop-up store Yuen launched, which is a pilot effort, is at 20 Pickering Street. It is a self-service store that allows customers to try out mobile phones, sign up for subscription plans and buy mobile phone accessories round the clock and every day.

There are no shop assistants but customers are greeted by a customer service staff via a video screen on a roving robot.

When they are ready to sign up for a mobile phone plan, they will be guided step-by-step by a sales staff via a video screen.

Singtel plans to deploy more of such unmanned stores across the island, including at key transport hubs and school campuses.

Until then, the unmanned store will stay at 20 Pickering Street for “a couple of months”, said Singtel.

Such unmanned stores could be one of the ways to apply the 5G technology, Yuen noted.

“If 5G is available, I can move the pop-up store everywhere… and provide all the connectivity to the store without having to lay any fibre cables to provide the Internet connection,” he said.

This will be one commercial application that can be used by all pop-up stores in Singapore, he added.

“We will need to step up monitoring the issue,” said an official from one of the major companies based in Seoul. “Companies here will watch the situation closely, hoping to hear from the Korean government.”

The comment was made after the New York Times reported that the Chinese government had summoned representatives of global tech companies, including Samsung and SK hynix, from South Korea to Beijing and warned of “dire consequences” if they cooperated with the Trump administration’s ban on Chinese firms. The meeting also included representatives of Microsoft and Dell from the US, and Arm from the United Kingdom, the newspaper reported.

Samsung and SK hynix declined to comment, saying that doing so could worsen the situation in which they both find themselves – caught in the middle of escalating trade disputes.

Since the US President Donald Trump’s executive order issued on May 15, barring American companies from using telecommunications equipment manufactured by China’s Huawei, South Korean companies having business ties with the Chinese tech group have been monitoring the situation closely in the hope that it will have no direct impact on their businesses. It is yet to be seen how the order will impact their relations with Huawei. But the South Korean companies are feeling greater tensions in recent days because the Chinese government is putting pressure on their Beijing-based entities.

Huawei, a manufacturer of telecommunications equipment and mobile devices, is a major customer of South Korean chipmakers Samsung and SK hynix.

Samsung is engaged in rivalry with the Chinese company in the smartphone market, but it also sells DRAM and NAND flash chips to Huawei. The company is known as one of its five biggest customers, accounting for about 5 per cent of its sales. Huawei accounts for 5 to 10 per cent of SK hynix’s total revenue, according to financial industry forecasts. In the short run, some say the sanctions on Huawei could help Samsung increase its share in the global smartphone market.

A report by Strategy Analytics said Samsung could ship out around 315 million smartphones this year, easily maintaining the top position with a 23 per cent share. If the sanctions continue, Samsung’s market share could further expand to 24.5 per cent in 2020. “The losses Samsung is facing due to decreased memory chip sales to China could be offset by gains in the smartphone business,” a market watcher said.

However, some in the South Korean business community fear the possibility of the US-China dispute spiralling into a crisis similar to the so-called “THAAD crisis” of 2017, when South Korean retailers such as Lotte suffered massive losses in China. Chinese consumers boycotted Korean products due to their ire over South Korea’s decision to deploy the US missile defence system.

“Korean firms as well as the government are in a dilemma, being unable to do anything as they are sandwiched between the US and China,” said a Korean industry insider. “It reminds me of the past THAAD crisis.”

While the THADD crisis dealt a blow to South Korea’s retail sector, the latest US-China fight seems to be having an impact on its industries as a whole – including the IT, retail and K-pop sectors.

Due to the trade war between the two superpowers, South Korean semiconductor exports to China plunged 38.7 per cent month-on-month in May, according to data from the Ministry of Trade, Industry and Energy.

“It is more worrying that if any of our actions [by the Korean government or companies] creates anti-Korean sentiment again like back in 2017, the impact on IT exports will hit the retail and cultural sectors as well,” he said.