Indonesia’s Coordinating Economic Minister Darmin Nasution inaugurated the special economic zone (KEK) in Galang Batang, Riau Islands, over the weekend.

“The economic zone, which has an estimated investment value of 36.25 trillion rupiah (Bt82 billion), is expected to become a major production centre for aluminium and its downstream products,” he said as reported by Antara news agency. Darmin added that the new KEK would lift economic activity in the region through the employment of over 23,300 workers.

In turn, the minister urged the local community to “support” the zone by supplying it with the necessary skilled workers and supporting businesses such as food and accommodation.

This year, the zone secured 5.6 trillion rupiah worth of investment from the zone’s advocate, aluminium producer PT Bintan Alumina Indonesia. The investment includes 951 billion rupiah for a seaport, 1.65 trillion rupiah for an aluminium refinery, 196 billion rupiah for a dam and 1.93 trillion rupiah for a power plant.

The government has attracted investors using a series of fiscal and nonfiscal incentives exclusive to the economic zone.

Bintan Alumina Indonesia director Santoni said he hoped the investment in the economic zone would increase to US$5 billion over the next 10 years.

Meanwhile, construction is ongoing for three other special economic zones – Arun Lhokseumawe, Bitung and Morotai – slated to begin operations next year. – The Jakarta Post

SingPost customers to get SMS alerts

Those expecting parcels delivered to their homes will be able to receive an SMS alert 30 minutes before the courier arrives when Singapore Post rolls out its last-mile platform with artificial intelligence (AI) features next year.

SingPost announced on Monday that it is working with San Francisco-based logistics optimisation company LogiNext to tap machine learning and AI route-planning software in its new LastMile Platform (LaMP), which will serve Southeast Asia.

LogiNext’s software will be able to analyse and proactively alert stakeholders, including customers, on courier movements, SingPost said in a statement.

Sending such alerts will bring about greater convenience to customers, especially in the denser cities in the region, such as Bangkok and Jakarta, it added.

Currently, customers are given vague parcel arrival times due to a variety of factors, including traffic and weather conditions.

With LogiNext’s capabilities, multiple GPS tracking systems and APIs can be connected and accessed via a single screen called the control tower.

Another key feature of LaMP would be its ability to autonomously plot the best courier delivery routes, based on factors such as parcel destinations, customer preferences and real-time traffic and weather data.

From next January, all 1,000 SingPost postmen will use a mobile app to aid delivery tracking and e-signing for registered mail. SingPost group chief digital and technology officer Alex Tan said that introducing AI to its platform will translate into convenience for customers.

LogiNext chief executive officer Dhruvil Sanghvi said: “Couriers have much better planned routes, so they can handle more parcels. “It’s a win-win for everyone – SingPost raises its already high delivery agility and the customer gets a much better experience with it.”

SingPost customers told The Straits Times that the SMS alerts would allow them to better anticipate when their parcels would arrive and make plans in advance, instead of having to wait at home for the entire day. – The Straits Times

Lao ODOP producers ‘need more assistance’

The One District One Product (ODOP) national units in Laos are still not developed enough despite their participation at many domestic and overseas exhibitions, according to a leading official.

Goods packaging is not attractive to many consumers, products are of low quality and standard compared to some neighbouring countries, and most ODOP national units are still finding it difficult to access food and drug certification, Minister of Industry and Commerce Khemmani Pholsena told the National Assembly (NA) recently.

However, to help national ODOP efforts, the Ministry of Industry and Commerce is focusing on training producers on packaging, developing effective labelling for products and business matching, she said. Other initiatives include exposing products to larger markets through trade fairs at central and local levels as well as participating in exhibitions in foreign countries particularly China.

“We are cooperating with the private sector to establish outlets selling ODOP items at well-known tourism sites such as Inpeng Waterpark, Vientiane Centre, That Luang Plaza as well as Jilin City in China and negotiating with the floating market in Thailand,” Khemmani reported.

The ministry is finding other potential markets with its Trade Promotion Department negotiating to help producers export sugar, coffee and tea to China, she informed the NA.

Currently, there are 165 ODOP national units producing more than 626 products at 176 villages in 83 districts of 18 provinces. ODOP development is a major government priority for alleviating poverty in Laos with its ability to build up the capacity of local people so they can help themselves in creating jobs and income. – Vientiane Times

Indonesia’s e-commerce sales set to hit $65 bn

Global management consulting firm McKinsey & Company has forecast fast growth for e-commerce in Indonesia, predicting sales to reach US$65 billion (Bt2.1 trillion) annually by 2022, eight times the $8 billion recorded in 2017.

“Our research suggests some 30 per cent of online commerce – sales worth US$2.5 billion in 2017 – is additional spending that would not have existed if not for online commerce,” said Simon Wintels, a partner of McKinsey, in a statement received on Monday. McKinsey noted that the buzz around year-end online shopping festivals – notably Single’s Day, or November 11 (11.11), and December 12 (12.12) – reflected the potential of online commerce in Indonesia. McKinsey estimated that e-commerce could facilitate up to $26 billion in new exports, or equal to 40 per cent of manufacturing exports today. It also identified that jewellery exports in particular had benefited from online commerce. “The interest of major, global consumers reflects the growing demand for Indonesian products from international markets,” said Phillia Wibowo, McKinsey Indonesia’s managing partner. – The Jakarta Post

An Ipsos study commissioned by PayPal found that around 73 per cent of online shoppers here bought items from overseas in the past year, with 14 per cent shopping on foreign websites exclusively. Ipsos is a market research and consulting firm based in France.

Released on Monday, the results showed that 75 per cent of shoppers in Hong Kong made cross-border online purchases. Ipsos surveyed more than 34,000 respondents in 31 countries from March to May this year for the study, including 1,000 from Singapore.

Clothing, footwear and accessories topped the list of most popular categories of items bought online, with around 70 per cent of respondents in Asia buying at least one item in the past year.

Global shoppers mostly headed to online stores based in China, with respondents citing better prices as the primary reason. The rise of international e-commerce in Singapore is a positive sign at a time when countries are putting up more barriers as trade protectionism sentiments grow around the world, a panel of industry insiders concluded while discussing the report at the PayPal Industry Roundtable at Republic Plaza on Monday.

The trend towards protectionism means businesses here must adjust with these changing headwinds, said Asian Trade Centre senior fellow Alex Capri.

“In the short-term, we are looking at localisation and fragmentation of the trade landscape, and we are stuck with that.”

Referring to the ongoing United States-China trade conflict, PayPal senior vice president of international markets Rohan Mahadevan said the problem is knowing with certainty where these winds are blowing. “With so much uncertainty, where is the end goal? If there is going to be a trade tariff, then let us know when and where, and (businesses) will figure out how to make this change work. The uncertainty and variability is the biggest challenge,” said Rohan.

The panel also discussed Australia’s imposition of a goods and services tax (GST) on low value imported goods this year, which has been criticised by some as a protectionist move.

From July this year, shoppers in Australia purchasing electronics, clothing and furniture from overseas sellers with a value of under 1,000 Australian dollars (Bt23,600) incurred a 10 per cent GST. Such a tax is an additional barrier for smaller players and would also raise their regulatory costs, said Capri.

Switzerland plans to follow suit from 2019, and European Union member countries from 2021.

Currently, Singapore does not tax low value goods under 400 Singapore dollars (Bt9,550), and are reviewing international developments before deciding on a GST for such imports. In the meantime, e-commerce merchants would do well to diversify their markets, thus avoiding putting all eggs in one basket, said Rohan. Singapore Management University’s Professor Annie Koh, who chairs the finance and investment committee of GovTech Singapore’s board, said companies can also identify “sweet spots” within global trade flows.

Department of Budget and Management (DBM) estimates showed that expenditure in 2019 will be cut by a total of 219.8 billion pesos (Bt136.6 billion) if a re-enacted budget is spent instead of passing the proposed 3.757-trillion-peso (Bt2.34-trillion) cash-based appropriations. In particular, disbursements for personnel services will be reduced by 54.4 billion pesos; maintenance and other operating expenses by 14.3 billion pesos; subsidies by 28.3 billion pesos; and capital outlays by 122.9 billion pesos.

Based on estimates of the state planning agency National Economic and Development Authority (NEDA), this reduction in government spending would result into lower gross domestic product (GDP) growth, such that economic expansion would be 1.1-2.3 percentage points below the lower end of the 2019 target range of 7-8 per cent.

According to NEDA, GDP growth would only be 4.7-5.9 per cent next year if the national government operates under a re-enacted budget.

In turn, slower economic growth falling behind 6 per cent would lead to job losses as well as many Filipinos becoming poor.

“It is estimated that employment could be reduced by as much as 600,000 if the budget is re-enacted in 2019. Among the sectors to be affected are the following: construction, public administration and defence, wholesale and retail trade, land transport, and education,” a document obtained by finance beat reporters on Monday read.

As such, “it is estimated that 200,000-400,000 individuals will be pushed into poverty as a result of contraction [in budget],” it added.

The 13th four-day Cambodia Import-Export and One Province One Product Exhibition is aimed at promoting local products, along with import and export opportunities.

The event was launched at Koh Pich, with a total of 272 display booths and participants from local enterprises, companies and provincial commerce departments.

Participants from Thailand, China, South Korea, Japan, Vietnam, Indonesia, Malaysia, Singapore, the US, Laos and Myanmar were present.

‘More opportunities’

Minister of Commerce Pan Sorasak said the annual trade exhibition is aimed at promoting trade, investment and especially exports to the international market, which contribute to Cambodian economic development.

“The trade fair will create more opportunities and impact local trading activities in the provinces, as well as help to establish links between Cambodian and foreign traders,” said the minister. Minister for Economy and Finance Aun Pornmoniroth said at the exhibition’s opening that Cambodia is regarded as the heart of Asean countries for potential investment. “Cambodia is the location of the Asean heart, an open space for commerce that welcomes all investors. The private sector is the head of the economic growth promoting machine,” Pornmoniroth said.

The minister said the government is trying to reduce logistics costs by linking infrastructure and bringing down energy costs.

Federation of Associations for Small and Medium Enterprises of Cambodia president Te Taingpor said the trade fair is a key player in promoting Cambodian products. Cambodia is a regional hub of agricultural raw materials. However, local products still struggle to compete in the international market.

“The trade fair is not only a link to local and international consumption. Our SMEs could forge links to the business network to promote their products within standard and technical packaging.

“Our challenge is financial shortages,” he said. “SMEs need to support access to finance to promote better production lines to reduce costs.”

Kampong Speu Mangoes Association president In Chayvan said the trade fair was an opportunity to promote agricultural products and build up further trading networks.

Vietnam’s ability to attract FDI is due to its consistent economic reform, a young and increasingly urbanised population, affordable labour, constant improvements to its business climate, and political stability, said Berly D Alvarez, chairman of the Philippines’ Kaunlad Lending Investors Corporation

The fact that it hosted the 2017 APEC meetings highlights its regional economic integration and steadily improving business climate, Alvarez told the 2018 Horasis Asia Meeting held recently in Binh Duong Province.

Vietnam has been attracting investment in infrastructure, including power projects, road and rail construction and renewable energy.

Don Lam, CEO of VinaCapital, said the country’s economy remains strong with 6.6 per cent growth targeted next year, inflation remaining under control and manufacturing expanding.

“More foreign investment is expected to flow into Vietnam in the coming time,” he said.

Pakpoom Vallisuta, chairman of The Quant Group Corporation, a leading Thai investment banking advisor, told Viet Nam News that the country is expected to achieve 6.8 per cent GDP growth in 2019. Market reforms also help attract investment, he said.

Pham Hong Hai, CEO of HSBC Vietnam, said, “We also see potential trade diversion as US import demand shifts away from China to other Asean markets like Vietnam.”

While this trend is a good sign for the development of the country, it also puts more pressure on the country and businesses to develop infrastructure, he said.

“So improving labour productivity through better education and vocational training, I think, should thus be a priority for the government.”

While it is true that a large portion of the workforce can transition from agriculture, most might move only to low-end manufacturing, he said, and there remains a dearth of qualified workers to advance to higher positions.

The government has made efforts like improving the quality of primary and secondary education, but more needs to be done, he said.

Improving tertiary education and vocational training, boosting private-sector-led in-house training, and providing lifelong learning opportunities are some of the reforms needed if the country wants to take full advantage of its current demographic “sweet spot” and the possible trade diversion, the meeting heard.

Experts recommended that Vietnamese businesses take advantage of Industry 4.0, investing more in technology to enhance their competitiveness.

In addition, policy reforms to attract even more foreign investment are important for future growth and for raising the country’s competitiveness, especially in sectors like infrastructure and manufacturing, they said.

Challenges

Vietnam’s business climate still faces numerous challenges, including an underdeveloped legal framework, relatively high risk of corruption, poor protection of intellectual property rights and limited availability of skilled and productive workers, according to Alvarez.

The country’s judicial system and infrastructure need improvement as do higher education and vocational training, he added.