Economy Myanmar
Bigger Economic Zone, Bigger Returns
Following the success of the Thilawa project, which was jointly developed with Japan, Myanmar State Counsellor, Aung San Suu Kyi has proposed the development of a new special economic zone in the Mon State, east of the country in a move to attract foreign investments as well create more jobs.
The Myanmar government will also be rolling out several proposed major undertakings in the new economic zone which will include the build of a seaport, industrial park and a proposed highway construction linking Thailand and Vietnam.
Investment and Foreign Economic Relations Minister Thaung Tun states, “This new economic zone shall be bigger and better connected than any other economic zones in Myanmar.” With Japanese investment in Myanmar exceeding US$1.7 billion since 2011, Myanmar hopes to attract more investments from Japan in a bid to revive the economy.
Energy Australia
Australia Powers Singapore
The world’s biggest solar farm being developed in the Top End could possibly supply electricity to Singapore by 2027 through an undersea cable. The electricity would flow 750km to a solar battery in Darwin, and then operate through submarine cable with each cable roughly 30 centimetres in diameter. It will run 4,500km kilometres to Singapore, conceivably supplying over a quarter of the city-state’s energy demand before potentially being extended to Indonesia.
Construction is planned for 2023 in Elliot, hallway between Darwin & Alice Springs and this extensive project will be visible from space. The development of the solar farm is also anticipated to generate 1,500 construction jobs and 12,000 indirect jobs during construction.
M&A New Zealand
ANZ sells UDC Finance to Shinsei Bank for US$479m
Australia and New Zealand Banking Group (ANZ) has sold New Zealand-based asset finance company UDC Finance to Japan’s Shinsei Bank for NZ$762 million (US$479 million). This follows the successful sale of wealth pension and investments company OnePath to IOOF for A$825 million (US$560 million), and is a further sign of AZN divesting its non-core assets.
Shinsei Bank Group is in the business of asset financing as well as vehicle and consumer lending. The acquisition is seen as a sign of trust in the New Zealand economy according to ANZ Bank New Zealand CEO, Antonia Watson.
“With a strong outlook for infrastructure and agriculture projects as the New Zealand economy rebuilds post-Covid-19, there is a significant role for UDC Finance to play. As such, it needs an owner that can invest in and grow the business,” she says.
Economy Indonesia
Rates Cut to Boost Economy
In a drastic move to boost the economy which has been affected, Bank Indonesia (BI) has cut its benchmark interest rate for the fourth time this year from 25 basis points (bps) to 4 percent, the lowest it has been since 2016.
The central bank have also lowered its deposit facility rate to 3.25 percent and its lending facility rate to 4.75 percent which is expected to translate into lower rates for consumer and corporate loans as well as mortgages and yields among others.
The country seem to be on course for another recession, their first since the 1998 financial crisis, as the government is anticipating Indonesia’s gross domestic product (GDP) to shrink by 3.8 percent in Q2 and further shrink in Q3.
In response to the COVID-19 after effects, the central bank is working with the government to offload some the burden by buying IDR397.5 trillion (US$27.16 billion) in government bonds and to absorb the interest rate as well. The debt cost, estimating to reach IDR177 trillion (US$11.9 billion) from the government’s stimulus package for SMEs and bigger businesses, will also be borne by them.
“This policy rate cut will provide stimulus for the demand side and boost domestic consumption and investment, which will be key to keep Indonesia’s economy from falling into recession this year and would stimulate credit growth that could support economic recovery.”
– Josua Pardede,Bank Permata Economist
Energy Vietnam
Chan May LNG Seizes Opportunity
Vietnam is facing an energy crisis as increased demand for power coupled with a lack of power plants is expected to result in a power shortage by the year 2021. This has opened up the doors for energy companies to explore businesses in the country.
One such company is Chan May LNG – a US-Vietnamese joint venture which aims to invest US$6 billion in a 4GW power plant, an LNG terminal and storage facilities. Upon completion, the project in the Thua Thien province will import US$1.2 billion worth of LNG annually.
The China-US trade war and the tariff threat from President Trump has Vietnam looking for opportunities to do more business with US, namely in the import of coal and LNG.
Technology Indonesia
Temasek Backs Tokopedia
Indonesia’s largest online marketplace and backed by SoftBank Group’s Vision, Tokopedia, which has been said to attract the interest of US internet giants including Facebook, Microsoft and Amazon, is currently in talks with Google and Singapore state investment firm Temasek.
Both the American and Singapore firms are in negotiations to fund between US$500 million and US$1 billion in one of South East Asia’s biggest e-commerce operators. The financial backing would increase the presence of Tokopedia and boost their operations to keep ahead of their competitions, like Shopee and Alibaba.
Indonesia’s e-commerce market is forecasted to increase from US$21 billion last year to US$82 billion by 2025, based on a recent study by Google, Temasek and Bain & Co.
Caption
Tokopedio has over 350 million products listed on their platform.
Manufacturing China
End of the Production Line
Once the choice destination for foreign manufacturers, China has been losing its lustre of late. Owing to rising labour costs, the US-China trade war and the effects of the COVID-19 pandemic, investors have been pulling out of the country.
South Korea’s Samsung Electronics is the latest to join this exodus, as it announced the closure of its Samsung Electronics Suzhou computer plant – its last in the country. This will reportedly affect 800 of the 1,700 staff working in the factory, mainly in the production line. The remaining employees, who are mostly in R&D, will reportedly remain with the company.
Samsung Electronics Suzhou’s revenue generation has dipped over the years, falling from US$4.3 billion in 2012 to just US$1 billion in 2018. Aside from its computer factory, Samsung Electronics also closed its smartphone factory in China in 2019, leaving just two semiconductor manufacturing sites as their remaining plants in the country.
Economy China
China Shifts Focus Inwards
As the US-China trade war and rivalry escalates, President Xi Jinping has decided to focus more on domestic consumption and home grown technologies. While they are not shying away from international economic relations, the “dual circulation” strategy he is introducing will put an emphasis on domestic production and consumption and less reliance on exports. This will set a blueprint for economic policies in the future.
However for a country heavily dependent on exports, with a majority of manufacturers producing goods for the export market, a significant change in this could result in a weaker economy for China. China’s wealth gap is one of the widest in the world, with much of the population being low income. According to Fu Peng, the Chief Economist of Brokerage Northeast Securities, the consumption power of China is far below its production capabilities, stating, “Ordinary Chinese people are unable to consume more because they are burdened by as an uncertain job and income outlook.”
“Rather than embracing a change of direction, China appears to be doubling down its existing state-led model.”
– Julian Evans-Pritchard, China economist at Capital Economics
Energy South Korea
Equis to Repurpose Waste
In a joint-venture with Hana Financial Investment, Singapore-based renewable energy and waste infrastructure developer Equis Development has raised KRW100 billion (US$85 million) to build waste-to-energy facilities in South Korea.
Numbering four in total, these facilities will be operated by Vine Enviro, and are expected to be constructed in the fourth quarter of 2020, in time for operations by 2022. The total investment in this project is expected to reach KRW300 billion (US$253 million), and aims to repurpose and process over 470,000 tonnes of waste a year. With a 10 percent stake in the company, Equis will manage the development, construction and operations of the assets.
Energy Spain
Sabic’s Renewable Energy Aspirations
One of the largest petrochemicals manufacturers in the world, Saudi Arabia’s Sabic aims to be the first of its kind to build a chemicals plant fully powered by renewable energy. Located in Cartegena, Spain, the polycarbonate facility – which is due to come online in 2024 – will be run using solar energy.
This will be generated using 263,000 solar PV panels, for which Spanish utility company Iberdrola has invested Euro70 million. The Cartegena plant is just one part of Sabic’s long-term plan to have 4GW of wind or solar energy installed in all its facilities by 2025, rising to 12GW by 2030. Aside from Spain, Sabic has also installed solar panels in its facilities in India and Thailand.
“Partnerships of this kind are the cornerstone of our business growth model. In recent years, the many breakthroughs in renewable energy technology have made deployment at this kind of scale possible.”
– Bob Maughon,EVP Sustainability,Technology & Innovation, Sabic
ENERGY Netherlands
The joint development wind farm of Shell and Eneco is on course to achieve the Dutch government’s goal of gradually increasing its offshore wind capacity in the next few years, from 1 GW today to potentially 11 GW by 2030.
The CrossWind venture will combine a variety of ‘technology demonstrations’ including floating solar and hydrogen production and even “short term battery storage” produced by electrolysis. Owing to these components of system integration and storage, the Crosswind coalition was granted the right to develop the subsidy free Hollandse Kust Noord offshore windfarm. The project aims to be up and running by 2023.
“Crosswind would test a variety of innovations in the field of energy storage and flexibility, with the possibility of rolling them out on a larger scale at other wind farms in the future.”
– Netherlands’ Ministry of Economic Affairs and Climate Policy
ENERGY Netherlands
The joint development wind farm of Shell and Eneco is on course to achieve the Dutch government’s goal of gradually increasing its offshore wind capacity in the next few years, from 1 GW today to potentially 11 GW by 2030.
The CrossWind venture will combine a variety of ‘technology demonstrations’ including floating solar and hydrogen production and even “short term battery storage” produced by electrolysis. Owing to these components of system integration and storage, the Crosswind coalition was granted the right to develop the subsidy free Hollandse Kust Noord offshore windfarm. The project aims to be up and running by 2023.
“Crosswind would test a variety of innovations in the field of energy storage and flexibility, with the possibility of rolling them out on a larger scale at other wind farms in the future.”
– Netherlands’ Ministry of Economic Affairs and Climate Policy
ICT Kenya
Bird? Plane?… Cell Towers??
In an ambitious endeavor by Loon – a unit of Google’s parent company Alphabet – 35 balloons have been released into the skies of Kenya. The aim of this exercise is to beam internet over western and central parts of Kenya – an area covering 50,000 km.
According to Loon, these “floating network of cell towers” and the build of a “third layer” in the stratosphere is an alternate solution to providing internet from high altitudes to remote regions of the world where internet service is not available.
While Africa has the highest concentration of youth in the world, access to internet is only available to only a quarter of the continent’s population. This development looks set to increase opportunities for tech companies wanting to invest in Africa and also a rise in demand for internet services.
Economy Oman
VAT move an Economic Boost for Oman
In an unpopular move, the Omani government has decided to introduce a Value-Added Tax (VAT), potentially giving Oman’s economy a US$780 million boost. This was done as the Sultanate – the largest non-OPEC oil exporter in the Arab world – is struggling with the impact of COVID-19 and the related fall in oil prices.
Aside from introducing VAT, Oman’s Ministry of Finance has also embarked on cost cutting measures such as curtailing spending and reducing the salaries of government employees. This is expected to result in OMR500 million (US$1.3 billion) being freed from the national Budget.
Oman’s revenue is largely generated by the export of oil and its derivatives. However, there has long been a move to pare down reliance on the commodity and to diversify the Omani economy.
Technology India
Google Buys into Jio Platforms
Jio Platforms – the technology arm of Mukesh Ambani’s Reliance Group – received a boost in July when Google bought a 7 percent stake in the company. Valued at US$4.5 billion, this stake sees Google joining other tech giants such as Facebook, Intel and Qualcomm investing in the US$58 billion valued Jio Platforms.
Presently, Jio Platforms controls India’s largest mobile network with more than 388 million subscribers. Aside from mobile telco services, it also provides a mobile app ecosystem that allows users to stream videos, do online shopping, and make digital payments among others.
While not officially confirmed as such, Google’s purchase of the stake in Jio Platforms is seen to be reflective of the US tech giant’s aim to invest US$10 billion into India to help the country develop its internet infrastructure. This was announced by Google CEO Sundar Pichai just days before the Jio Platform deal.
Energy UAE
Electrifying feat for UAE
The UAE has once announced another first for the Arab world with the build of the Baraqah nuclear power plant, becoming the first Arab country to produce nuclear energy. This, follows the maiden launch of their mission to Mars.
The end game is for four nuclear power plants to provide a quarter of the country’s energy and with the first reactor activated, it marks a controversial yet historic moment for the nation.
Once the plant is fully operational the four reactors will be able to produce 5,600 megawatts of electricity which is almost 25 percent of UAE’s electricity. Commercial operation is slated for the end of the year with unit 1 connecting to the UAE’s electricity grid and providing electricity to homes and businesses.The nuclear power plant is also an initiative towards their long-term objective of elevating their image and status to become a regional leader in Science & Technology.
“This is a historic milestone for the nation with a vision set to deliver a new form of clean energy for the nation.”
– Sheikh Mohammed bin Rashid Al-Maktoum,The UAE Premier andRuler of Dubai
