Singapore remains top Asean investment pick for big four economies

By

Mindy Tantanmindy@sph.com.sg@MindyTanBT

Singapore remains the top Asean investment pick for the world's big four economies - China, India, Japan, and the US - according to the Institute of Chartered Accountants in England and Wales' (ICAEW) latest Economic Insight report. 

PHOTO: ST FILE

SEP 15, 201512:01 PM

SINGAPORE remains the top Asean investment pick for the world's big four economies - China, India, Japan, and the US - according to the Institute of Chartered Accountants in England and Wales' (ICAEW) latest Economic Insight report.

More than 50 per cent of foreign investments from these economies are destined for Singapore. India has allocated the highest proportion, with 97 per cent of their total Asean investments sitting in Singapore.

Cebr, ICAEW's partner and economic forecaster, and which undertakes a quarterly review of South-east Asian economies, with a focus on Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, also found that China's investment pattern looks different from the other three powers.

The world's second-largest economy has allocated substantial amounts of money to Myanmar, Laos and Cambodia; 11 per cent, 7 per cent and 8 per cent respectively. In comparison, each of the other three giants has less than 0.1 per cent of their investment stocks in these emerging nations. This enables China to acquire natural resources and gives its western reaches access to potential trade and shipment routes, rather than relying entirely on the eastern seaboard, said the report.

The report also noted that the competition for influence in the region between China and other major economies will benefit Asean with the unlocking of Chinese-led capital in the form of the China-Asean Investment Cooperation Fund (CAF) and the Asian Infrastructure Investment Bank (AIIB). The Japan-dominated Asian Development Bank (ADB) also recently announced a US$110 billion plan to invest in Asian infrastructure projects.

Scott Corfe, ICAEW economic adviser and Cebr associate director, said: "Asean is showing how, rather than harming themselves through competition, structurally similar economies can complement each other and create cross-border networks. Each country can specialise to its full extent, with supply chains spreading across East Asia - so raw material extraction, processing, parts manufacture and assembly are all taking place in different locations. This means that the maximum gains from trade are being realised."

   
 

Indonesia orders action against land burning as haze chokes

Indonesian President Joko Widodo called late on Monday for strong action against anyone caught lighting fires to clear forested land, as a worsening haze blanketed the north of the country and neighbouring Singapore and Malaysia. 

PHOTO: REUTERS

SEP 15, 201511:55 AM

[JAKARTA] Indonesian President Joko Widodo called late on Monday for strong action against anyone caught lighting fires to clear forested land, as a worsening haze blanketed the north of the country and neighbouring Singapore and Malaysia.

South-east Asia has suffered for years from annual bouts of smog caused by slash-and-burn practices in Indonesia's Sumatra and Kalimantan islands, but governments in the region have failed to address the problem.

Air quality dipped to "unhealthy levels" in Malaysia and Singapore this week. Schools were closed in several Malaysian states and some flights were disrupted on Tuesday due to poor visibility. The haze can cause respiratory problems, and irritate the eyes and throat.

The fires have been exacerbated this year by the effects of the El Nino weather phenomena, as a prolonged dry season in Indonesia has parched the top soil, fuelling the flames.

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Mr Joko, who is on a state visit to the Middle East, said he had instructed security forces to accelerate efforts to extinguish the fires. "I have asked authorities to take strict legal action against those responsible for the forest fires, including revoking their land permits," Mr Joko said in a statement.

Indonesian police have named over 100 people as suspects in slash-and-burn cases in Kalimantan and Sumatra, according to local media.

The smog is usually caused by palm oil and pulp and paper companies, some of which are listed in Singapore. The firms blame small-holders for the fires but have been criticised by green groups for not doing enough to stop the haze or rampant deforestation in Indonesia.

Singapore's environment minister said late on Monday that Indonesia had agreed to share names of companies causing the fires once the information had been verified.

Indonesian Forestry and Environment Minister Siti Nurbaya Bakar last week said authorities were investigating 10 firms, which could face sanctions if found violating the law.

Indonesia's Riau province declared a state of emergency this week as, according to local media, nearly 25,000 people there and on Sumatra island suffered respiratory problems. The PSI air quality index hit a "dangerous" high of 984 in the provincial capital this week, according to the national disaster management agency.

Indonesia has deployed hundreds of military troops to fight the fires and would send in additional helicopters to water-bomb the affected areas if necessary, the national disaster management agency said.

REUTERS

    
 

Emerging economies plea for end to US interest rates agony

Tom DeWitt, of Sacramento, waves an American flag during a parade honoring Alek Skarlatos, Anthony Sadler, and Spencer Stone for their Aug 21 actions in overpowering a gunman on a Paris-bound train on Sept 11, 2015 in Sacramento, California. Some of the world's biggest emerging economies are pleading for the United States to end their drawn-out agony and raise interest rates now. 

PHOTO: AFP

SEP 15, 201510:26 AM

[PARIS] Some of the world's biggest emerging economies are pleading for the United States to end their drawn-out agony and raise interest rates now.

Already hit by a commodities crash sparked by the slowing of China's once-booming economy, the mere prospect of the US Federal Reserve raising interest rates - perhaps as soon as Thursday - has battered the emerging giants that were once the world's top performers.

Lured by the promise of bigger returns when the Federal Reserve eventually begins raising interest rates, investors are already moving their money to safer, yet profitable, US destinations.

In August alone, panicky investors dumped equities held in emerging economies to the tune of US$8.7 billion, according to the Institute of International Finance. The dollar meanwhile, has climbed.

The International Monetary Fund warned this month against a "premature" increase in US interest rates as the slowdown in Chinese growth and the ensuing commodities price collapse ripples through the world economy, and emerging economies in particular.

Some key emerging economies, however, would rather bring a swift end to the painful wait.

The Fed's decision is "probably the most anticipated event in the last century," Peru central bank chief Julio Valarde told the Nikkei Asian Review on a visit to Tokyo last week.

"What is surprising is how many central bankers with whom I talk prefer the hike to come as soon as possible," Mr Valarde said, arguing that the uncertainty of the wait was more damaging than the interest rate increase itself.

Indian central bank governor Raghuram Rajan agreed.

"It's preferable to have a move early on and an advertised, slow move up rather than the Fed be forced to tighten more significantly down the line," he told the Wall Street Journal at the Jackson Hole, Wyoming, central bankers' meeting last month.

'UNCERTAINTY CREATED THE TURMOIL'

For Indonesia's central bank, too, the doubts are of the greatest concern.

"We think US monetary policymakers have got confused about what to do. The uncertainty has created the turmoil," Mirza Adityaswara, deputy governor at Indonesia's central bank, told the Financial Times.

"The situation will recover the sooner the Fed makes a decision and then gives expectation to the market that they increase one or two times and then stop," he said.

Financial markets have not forgotten the precedent of mid-2013 when then Federal Reserve governor Ben Bernanke evoked the possibility of a future increase in interest rates and sparked a flight of capital from emerging markets.

Hopes for an end to the agony may be dashed even if the Fed pulls the benchmark US federal funds rate up from zero per cent, where it has been frozen since the financial crisis of 2008, analysts said.

Mixed figures on US employment and uncertainty over Chinese economic growth could prompt Federal Reserve chairwoman Janet Yellen to wait a little longer, analysts said.

Even if she acts, the speculation will live on, warned Philippe Waechter, economist at French investment bank Natixis Asset Management.

Emerging markets "think that if the US moves, the question of capital flight will be resolved and they can turn the page", he said.

"But I am not so sure." Mr Waechter said the Fed was unlikely to tighten in a series of small steps at every meeting. "If they raise on Thursday, then on Friday we will be asking when the next one comes."

AFP