Labor shortage, rising wages top concerns in GMS development

Bangkok ( The Nation/ ANN) — Participants at a seminar in Bangkok yesterday raised concerns over labor shortages and how to share resources in the growing economy of the Greater Mekong Sub-region.

The labor market in the GMS was one of the topics at “GMS and the Asean Economic Community: Convergence, Opportunity and Challenges”, a seminar arranged by Euromoney Conferences.

The GMS consists of Cambodia, Laos, Myanmar, Thailand, Vietnam, and China’s Yunnan province.

The participants agreed that the sub-region was an attractive market for trade and investment ahead of the AEC, and the economies of the riparian countries were improving as a result.

However, labor shortages might become a barrier to business competitiveness, said Virasak Sutanthavibul, senior executive vice president of Bangkok Bank.

Virasak said the GMS was the place for businesses that want low costs, citing Cambodia as an example.

The shortage of labor, however, is a more serious issue for Thailand than other countries in the GMS because it is no longer considered a low-wage market, so many labor-intensive businesses have shifted to Cambodia.

Thai businesses should seriously think about mechanizing their production because they cannot rely on workers from neighboring countries, he said.

“Laos is not a source of labor because of the low population, while workers in Cambodia often strike. Therefore, Myanmar is the choice for Thai business, but Myanmar is developing, and once it has become a developed country, Thailand might be unable to rely on workers from Myanmar.”

He said the bank had attempted to encourage small and medium-sized enterprises to use more machines in the production process.

“Many SMEs are injecting capital into mechanization, which will fuel loan growth of financial institutions as well,” he said.

Neav Chanthana, deputy governor of the National Bank of Cambodia, noted that the free movement of labor might be a barrier for businesses’ competitiveness as companies might not be able to secure workers. Further, the slow growth of the younger population in some countries in the GMS was another challenge to the growth of the sub-region.

“Cross-border trade in the GMS means businesses have connectivity, but we have to monitor closely the conflict [for river resources] between the lower and upper Mekong countries,” she said.

Narongchai Akrasanee, former minister of commerce and member of the Bank of Thailand’s Monetary Policy Committee, said 40 per cent of the water in the Mekong River came from China and the rest from rainfall in Laos and Thailand.

“It could be a big challenge for the GMS on how to share the resources, and it might take time to reach a conclusion,” he said. – See more at: http://www.thecambodiaherald.com/cambodia/detail/1?page=13&token=NDdkMjY1N2RiOTM#sthash.3ZIynL8k.dpuf

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VietinBanksells 20% stake to Bank of Tokyo

HA NOI (VNS)— Viet Nam Industry and Trade Joint Stock Bank (VietinBank) has finished selling nearly 20 per cent of its shares to Japan’s Bank of Tokyo-Mitsubishi UFJ (BTMU).

The sale involved total net revenues of more than VND15.4 trillion(US$733 million), the bank said.

It said that it had totally sold 644.38 million shares at VND24,000($1.12), adding that there was a condition that they could not be transferred for five years.

After the sale, BTMU Capital owns 19.73 per cent of VietinBank. The above shares have been approved by Vietinbank director board, the Vietnamese bank said.

Accordingly, VietinBank now has the charter capital of VND32.66 trillion ($1.5billion) of which shareholders account for 64.46 per cent and BTMU 19.73 per cent.-VNS

HK entrepreneur tells how to do business in ASEAN countries

HONG KONG, April 24 (Xinhua) — As economic activities in the U. S. and Europe remain in the doldrums, more and more businesses and investors are shifting their focus to Asia.

Southeast Asia, a region with multi-faceted economies, diverse culture and huge population, is also a region that has been drawing increasing attention in recent years, particularly given its largely untapped market potential and cheap labor costs.

Hong Kong businessman Jonathan Choi, who has decades of experience in doing business in Southeast Asian countries including Vietnam, Cambodia, Myanmar, Indonesia, Singapore and Thailand, shared his experiences and lessons learnt in doing business there in a recent interview with Xinhua.

MAKE FRIENDS FIRST

Choi’s initial involvement with Southeast Asian countries dated back to the 1970s, when his company Sunwah Group established subsidiaries in Vietnam to process and export frozen and dried marine food products. He then ventured into other countries, accumulating over 30 years of business experience in Myanmar and 20 years in Cambodia. He said it is always important to get familiarized with the country and build local connections before expanding the size of business.

“We must remember when investing in these countries, we’re foreigners,” he said, adding that language, culture, the way of doing business, and mentality are all important factors to consider when investing in ASEAN countries.

He also stressed the importance of social responsibility when doing business overseas. “If you have been there for a long time, being friendly with them, showing your responsibility and care to the local people, you would have a better return and better cooperation with the local community and government,” he said.

Choi’s usual strategy of expanding business abroad is to start with the most familiar industry, in his case, sea food processing and trading. After getting fully accustomed to the business environment, he then dabbled into other types of business such as property and finance.

He cited business in Vietnam as a successful example of diversifying operations. With decades of experience on sea food processing and trading, he embarked on new business projects in real estate, becoming one of the largest property developers in the country.

Ten years ago, he seized an opportunity to venture into the financial sector and founded VinaCapital, thereby establishing his conglomerate’s asset management business in Vietnam. VinaCapital has three listed funds in the AIM market of the London Stock Exchange.

Leaping at the opportunity is also crucial for business expansion. Prior to Myanmar’s opening-up to foreign investors, Choi stayed for sea food businesses only in the country. “Now the time has come,” he said. “I’m now looking into property and financial business.”

Unstable business environment and unexpected political and social changes are some of the biggest difficulties during the years of his business operations in Southeast Asia. “Things may just happen suddenly,” Choi said, recalling some unrest in Indonesia, Vietnam and Cambodia which caused him to shut down factories and draw back investment.

When unrest broke out in Cambodia in 1997, Choi had to leave the plants idle for five years. Yet, he did not move out completely. “When everything recovered, we resumed the production and had a really good business,” he said.

“Confidence in the country is very important. You should have a long-term strategy, so you work together and grow together with the country and the people.”

NUMEROUS BUSINESS OPPORTUNITIES

Economic links between Hong Kong and the ASEAN countries are historically strong, and ASEAN now is Hong Kong’s second largest trade partner after the Chinese mainland, with 94.1 billion U.S. dollars trade value in 2012. The average trade growth between Hong Kong and ASEAN for the past 10 years is around 7 percent, with a particular big increase of 10 percent last year.

Choi noted that business opportunities in ASEAN nations are not just limited to trade, but also investment and service industries.

As the land price and salary costs are surging for Hong Kong companies operating in South China’s Pearl River Delta, Choi suggested that they could consider relocation in Southeast Asian countries like Vietnam, Myanmar, Cambodia and Indonesia.

ASEAN boasts a combined population of over 600 million, nearly half of China’s or Indian’s population. According to International Market Assessment, the hourly wage rate in China is 1.56 U.S. dollars, compared to 0.81 U.S. dollars in Vietnam and 0.51 U.S. dollars in Indonesia.

Another strength of the region is affluent natural resources. Many Southeast Asian countries, including Malaysia, Thailand, Indonesia, Myanmar and the Philippines, have vast natural gas reserves.

As developing nations, ASEAN countries also manifest huge untapped potential for infrastructure investment. Airport, toll roads, bridges, railways, to name but a few, are all in need of development, particularly given the trend of greater integration within ASEAN member states and more trade connections between China and the bloc. Choi said such infrastructure investments are not only business opportunities for Hong Kong enterprises, but also for state-owned enterprises (SOEs) in Chinese mainland.

In Choi’s opinion, the concept of Hong Kong companies should be a broad one, including those mainland enterprises listed in Hong Kong with a business operation base in the city.

When then-vice-premier Li Keqiang visited Hong Kong in August 2011, he said the Chinese mainland and Hong Kong companies should work hand-in-hand to “go out” and make foreign investment. Choi sided with this idea and said this would allow companies from both sides to demonstrate their own distinctive strengths.

“Many Chinese enterprises are strong in manufacturing, mining and power supplying, whereas Hong Kong companies have more experience in the service sector, such as financial service, professional service, management and human resources,” Choi said. “Therefore, we should work together and go to ASEAN side by side.”

A WIN-WIN DEAL

Choi has been ardently advocating Hong Kong’s access to ASEAN-China Free Trade Agreement (ACFTA) for the past few years. He said this is not just beneficial to Hong Kong, but would also spur growth and development within the region and bring benefits to all ASEAN members.

Hong Kong is widely known for its expertise in the financial service sector, such as in company mergers, fund raising, consultancy, auditing and logistics. Hong Kong’s role as a premier offshore renminbi center also helps in meeting ASEAN businesses’ financial needs, said Choi, citing that 92 percent of the Chinese mainland’s cross-border renminbi trade were settled in Hong Kong in 2011.

According to a research report from the Asia Strategy and Leadership Institute, Hong Kong’s participation in the ACFTA is projected to further enhance the city’s bridging role between the Chinese mainland and ASEAN, bringing about a 28 percent increase in the regional bloc’s exports to the Chinese mainland. It will principally benefit the ASEAN’s food processing, electronic industries, finance, insurance, construction and business services.

Hong Kong expressed its interest in joining the ACFTA to the ASEAN Secretary-General in November 2011. Acknowledging that the final decision would require consent from all 10 members of ASEAN, Choi said, “It takes time, but we hope that they will understand our wish to participate and I think it will be beneficial to both parties.”

By  Jennifer Pan  |   25 April 2013  |   English.news.cn

CP All pays B189bn for Makro

CP All Plc, the local operator of 7-Eleven convenience stores in Thailand, is extending its market dominance in the 2.2-trillion-baht retail market with the acquisition of Siam Makro Plc’s cash-and-carry chain for 188.88 billion baht.

The acquisition will not only allow CP All sales to reach 300 billion baht but also add new customer groups _ restaurants, hotels, caterers and small businesses.

The retail giant’s bargaining power with suppliers and manufacturers will also increase, with more sales channels both domestically and internationally.

The move by CP All, a retail subsidiary of Charoen Pokphand (CP) Group led by billionaire Dhanin Chearavanont, is similar to moves by whisky tycoon Charoen Sirivadhanabhakdi, who likes to take over related businesses to drive growth.

After a 10-day negotiation, Korsak Chairasmisak, the chief executive of CP All, signed a purchase agreement with Stephan Nanninga, the director of SHV Nederland NV (SHV), in Hong Kong Tuesday morning.

SHV is the Dutch parent company of Siam Makro.

CP All beat out two other Thai retailers _ Berli Jucker and Central Retail Corporation _ to buy SHV’s 64.346% in Siam Makro at 787 baht a share, or US$4.239 billion via tender offer. The two are thought to have a solid relationship because they jointly formed Siam Makro to run the cash-and-carry chain in Thailand in 1988.

“Mr Dhanin has been a long-time friend of the former chairman of SHV for 20 years. He told SHV if it wanted to sell Siam Makro, CP Group should get the first chance to buy it,” said Mr Korsak.

CP All agreed to buy the remaining 35.654% for $2.349 billion. The total deal is valued 188.88 billion baht.

It is the largest merger and acquisition transaction globally in the retail sector this year, and the largest M&A in Asia-Pacific as well, according to Thomson Reuters.

CP All only owns the rights to operate 7-Eleven stores in Thailand. It wants to use Makro to penetrate other Asean countries, with the region slated to become a single market with 601 million people in 2016.

“We can open Makro in every country in Asean as well as China and other Asian countries except India. Laos and Vietnam are the top two priority markets for Makro stores,” said Mr Korsak.

Laos, Cambodia, Vietnam and Myanmar buy mostly Thai products at the borders. Makro stores in these countries are expected to create sales opportunities for consumer products, frozen food, instant food and agricultural raw materials.

The takeover deal is being scrutinised by the Commerce Ministry, which fears it could create market dominance breaching the Trade Competition Act.

Vatchari Vimooktayon, the commerce permanent secretary, said officials are examining whether the move violates the Act.

23 April 2013  |   Bangkok Post

CLMV’s GDP per capita doubles in last decade

(KPL) The gross domestic product (GDP) per capita based on purchasing power parity (PPP$) of new Asean member states namely Cambodia, Laos, Myanmar and Vietnam, mostly known as CLMV, has doubled in the last decade jumping from 1,055 USD in 2000 to 2,587 USD in 2011.
ASEAN Brief 2012: Progress Towards the Asean Community, released last month by the Asean Secretariat in Indonesia]s Jakarta, also indicates that the GDP per capita of the six old member states -ASEAN 6: Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand – has risen from 3,597 USD in 2000 to 6,743 USD in 2011.
As a result of strong economic growth the extent of absolute poverty (people living on less than $1.25 a day in purchasing power parity terms) in ASEAN declined significantly between 2000 and 2010, from around 45 to 16 per cent in CLMV countries and from around 29 to 15 per cent in ASEAN6.
The ASEAN countries also showed progress in terms of the United Nation’s broader Human Development Index, which rose from 0.635 in 2005 to 0.657 in 2010. The CLMV countries are gradually catching up to the more developed members of ASEAN on this measure, closing the gap from 25 down to 23 per cent.
*We are pleased to note that the work we did over the past years have resulted in positive outcomes in terms of targets met and initiatives implemented. Although there is definitely much work still to be done in achieving increased economic growth and narrowed development gaps, Asean continues to direct its efforts toward improving the welfare and well being of its citizens in unison with the ultimate goal of increasing the region’s share in the global arena,* said ASEAN Secretary General Le Luong Minh.
ASEAN Brief 2012 contains 18 indicators to assess the extent that Asean member states have conversed or diverged over the last decade, focusing on the first two pillars of the Asean economic Community and the Asean Socio-Cultural Community.
These indicators illustrate some of the positive outcomes of economic integration initiatives, for instance: reductions in border restriction, such as tariffs, and beyond-border barriers, including distorting domestic regulations and inadequate infrastructures; increased intra-ASEAN flows of goods and services, investment and tourism; and any tendency towards convergence in prices and income per capita.
They also illustrate some of the positive outcomes relating to socio-cultural characteristics such as poverty incidence, life expectancy and health in general, education opportunities and attainment, and overall level of human development.

IMF forecasts Cambodia’s GDP growth at 6.7 pct this year

PHNOM PENH, April 17 (Xinhua) — Cambodia’s economy is projected to grow by 6.7 percent in 2013 and further rise to 7.2 percent in 2014, according to the International Monetary Fund (IMF) ‘s report released late Tuesday.

The country’s economy is mainly supported by garment industry, tourism, agriculture, real estate and construction.

“The garment and textile sector continues to dominate the economy — accounting for three-quarters of total exports of goods– followed by tourism and agricultural products,” the IMF said in its April 2013 World Economic Outlook.

The report recommended that sustaining strong growth in Cambodia will require further economic diversification and strengthened macroeconomic policies.

It added that removing infrastructure bottlenecks and improving the business climate will remain critical for attracting private investment and for further diversification.

In the report, the IMF predicted that Cambodia’s inflation will be at 4.6 percent in 2013 and 4 percent in 2014.

The IMF’s growth forecast for Cambodia is lower than the prediction by the Asian Development Bank. Last week, ADB said Cambodia’s economic growth is projected at 7.2 percent this year, picking up to 7.5 percent next year as recovery in Europe and the United States takes hold.

It said industry sector is expected to expand by 10.5 percent in 2013, while the service sector is expected to grow by about 7 percent, with strong growth in tourism and real estate activity.

Agriculture is likely to grow by 4 percent, assuming favorable weather.

The government of Cambodia predicted that the country’s economic growth is expected at 7 percent this year, Hang Chuon Naron, Secretary of State of the Ministry of Economy and Finance, said last week.

He said the nation will get out of the classification of a low- income to a lower-middle-income country at the end of this year.

Lower-middle-income countries are those with GDP per capita between 1,006 U.S. dollars and 3,975 U.S. dollars, as defined by the World Bank.

Last year, the country’s GDP growth was recorded at 7.3 percent and GDP per capita was nearly 1,000 U.S. dollars, he said, forecasting that GDP per capita will increase to 1,080 U.S. dollars this year.

By Zhu Ningzhy   |   17 April 2013  |   Xinhua

Firms rush to export rice despite limitations

According to a recent report by the Ministry of Industry and Trade, there has been a sharp increase in the number of companies seeking a licence to export rice.

This race to rice export has placed many food companies in a risky situation and State management agencies in difficulty.

There are 100 companies in the country meeting the necessary requirements for a rice-export licence stipulated in the Government Decree 109, and 40 others that can possibly meet them.

The stipulations include having a warehouse with a capacity of at least 5,000 tonnes, a rice husking mill with a capacity of at least 10 tonnes of rice per hour, and capacity to export at least 10,000 tonnes of rice a year.

The country turns out 42-43 million tonnes of rice per year of which only 7.5 million tonnes can be exported.

Production of rice is concentrated in the Cuu Long (Mekong) Delta provinces of Kien Giang, An Giang, Dong Thap, Long An, Tien Giang, Can Tho, Soc Trang, Tra Vinh, Vinh Long, and Hau Giang.

To qualify for an export licence, many firms have invested or plan to invest in warehouses and husking mills.

In 2010 the storage capacity was only 2.63 million tonnes, but this increased to 4.4 million tonnes by last year. The figure is expected to reach 6.4 million by the end of this year.

The problem with this is that it would exceed the actual need, resulting in waste of resources.

Besides, though many companies are ready to build warehouses and husking mills, they lack the capability to efficiently carry out exports.

Of the 100 licensed exporters, only 69 managed to export more than 10,000 tonnes in 2011.

Last year the figure came down to 68 firms.

The trade ministry has already withdrawn licences issued to three companies because they were unable to export rice within 12 months as required by the decree.

To address the situation, the ministry has suggested temporarily stopping the issue of new rice export licences except to those who can meet the decree’s requirements and also already have warehouses and mills.- VNS

By  Thien Ly  |   8 April 2013  |   Vietnam News