Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Asia House Advisory takes a look at the top developments in Asia this week affecting trade, investment and public policy.
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FRIDAY 26 FEBRUARY
Indonesia has designated 245 new industries as ‘priority sectors’ as part of a presidential order that supersedes the recently passed Omnibus Law. Priority industries include nickel ore processing and refining; electronic components including semiconductors; wireless communication equipment; and electronic audio and video equipment. New incentives are being rolled out to attract capital in these sectors, although the minimum level of investment to unlock these benefits has been set at US$710,000 for foreign investors. Incentives will include both fiscal and nonfiscal benefits, including tax breaks, streamlined licensing, and guaranteed access to energy and raw materials. The presidential regulation also eases foreign investment in Indonesian start-ups by exempting them from an investment minimum. Though investment in Indonesia has remained fairly robust, the country has yet to see much benefit or new entrants from the ongoing shake up in global supply chains.
Read Asia House Advisory’s briefing exploring Indonesia’s digital ambitions.
China’s central bank has joined its counterparts in Thailand and the UAE to explore the use of digital currencies in cross-border payments. The move is an expansion of an ongoing project being conducted by the People’s Bank of China and the Hong Kong Monetary Authority, which is looking to build a system using blockchain technology to handle overseas transfers in digital currencies issued by central banks. China has already been conducting trials of its digital currency in major cities, and plans to make the e-currency recognised as legal tender. China’s central bank has been calling on other Asian central banks to join its digital currency project, which could help China become a central player in setting the global rules for international transactions handled in national virtual currencies.
Digital currencies could be a point of discussion when Paul Chan, Financial Secretary, Hong Kong SAR, briefs Asia House Corporate Members on 19 March. Find out more.
India this week announced extensive new rules for social media companies, many of which could force platforms to break into encrypted messages and take down controversial posts. The announcement follows months of back-and-forth with social media companies such as Twitter, particularly after the company refused to block accounts that were posting about the ongoing agricultural protests. Indian Information Technology Minister Ravi Shankar Prasad described the new measures as ‘soft touch oversight’ and has called on companies to self-regulate. The new rules will require companies to take down content that threatens the “unity, integrity, defence, security, or sovereignty” of India. Companies will also have to appoint a chief compliance officer and create new positions for law enforcement coordination and grievance redressal. The new rules have already drawn criticism, mostly around compromised privacy.
Amid intense global interest in what is a test case for Big Tech regulation, Australia passed its contentious new law this week mandating digital companies, such as Facebook and Google, to pay domestic news outlets for their content. According to the legislation, passed on Thursday, a government arbitrator will be authorised to decide the fee that digital companies should pay to news outlets if the two sides fail to reach an agreement. The law does, however, include a set of amendments as part of an agreement reached earlier this week between the Australian government and Facebook, including a two-month mediation period allowing for social media companies and news publishers to broker agreements. The government has said the laws will ensure that news businesses are fairly renumerated for their content, but major tech platforms have argued fiercely against it, with Facebook going as far as blocking Australian news content on its platform last week.
South African banking start-up Tyme has raised US$100 million to expand and launch a digital bank in the Philippines, becoming one of the first fintech players to span both Africa and Asia. Tyme will apply for a digital banking license in the Philippines and plans to enter a joint venture with JG Summit, which has retail businesses in the Philippines. Online lenders in the Philippines and South Africa share similar market dynamics, including large unbanked populations looking for low-cost accounts. Tyme co-founder and executive chairman Coen Jonker has moved to Singapore to lead the bank’s Asia expansion.
China’s Two Sessions: China will hold its annual meeting of parliament next week, where China will announce goals for 2021 and its next five-year plan for development.
Australia and Malaysia central banks to meet: Australia and Malaysia’s central banks are scheduled to hold their policy meetings next week, and are expected to maintain support for COVID-19 hit economies.
CHINA: China has approved two more COVID-19 vaccines for public use – one from CanSino Biologics and the other from Sinopharm affiliate Wuhan Institute of Biological Products.
HONG KONG: Hong Kong’s economy is expected to expand by 3.5 per cent to 5.5 per cent this year, compared to a 6.1 per cent contraction in 2020. The government has introduced stimulus measures worth US$15.5 billion to jumpstart the economy.
JAPAN: Vaccination Chief Taro Kono says the government will complete deliveries of COVID-19 vaccines for the elderly – around 36 million people – to all local governments by the end of June. The government will end its COVID-19 state of emergency early in Fukuoka, Osaka, Nagoya, and surrounding areas.
SOUTH KOREA: South Korea has rolled out AstraZeneca COVID-19 vaccines for 289,000 residents and workers at nursing homes under the age of 65.
MALAYSIA: Malaysia kicked of its COVID-19 immunisation programme on Wednesday.
THAILAND: Thailand is preparing to ease restrictions for travellers vaccinated against COVID-19, including shortening or waiving mandatory quarantine. Thailand received its first 200,000 doses of Sinovac’s COVID-19 vaccine. The cabinet approved an extension of its state of emergency until the end of March to control the COVID-19 situation.
PHILIPPINES: The Philippines will take delivery of its first shipment of COVID-19 vaccines this weekend – 600,000 doses of Sinovac’s vaccines donated by China.
VIETNAM: Vietnam has approved Russia’s Sputnik V vaccine for COVID-19. The country received its first batch of 117,000 doses of the AstraZeneca COVID-19 vaccine ahead of its vaccination programme next month.
SINGAPORE: Singapore received the first batch of the Sinovac COVID-19 vaccine, though the vaccine is still awaiting government approval. The country is discussing mutual recognition of vaccine certificates with other countries, as part of steps towards resuming global travel.
EGYPT: Egypt has approved Russia’s Sputnik V COVID-19 vaccine.
BAHRAIN: Bahrain has approved Johnson & Johnson’s one-dose COVID-19 vaccine for emergency use, becoming the first country to do so.
These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.
FRIDAY 19 FEBRUARY 2021
Indonesia has named Bank Permata head Ridha Wirakusumah as Chief Executive of the country’s new sovereign wealth fund, the Indonesia Investment Authority. The appointment of several experienced private sector executives to the fund’s board also signals the government’s intent to set a professional tone, with attention paid to governance structures. The fund, designed to attract greater foreign investment into Indonesia, will be the first test of a package of extensive reforms passed last year. It will also be the first serious test of investor appetite for sovereign wealth funds in the region since the 1MDB scandal in Malaysia.
Asia House Corporate Members were briefed on Indonesia’s investment environment by Dr Desra Percaya, Indonesian Ambassador to the UK, this week. Read more.
Investors have poured more than US$50 billion into shares listed in Hong Kong this year, with stock trading volumes reaching four times those of London’s main exchange. This is due largely to greater appetite for technology stocks from foreign investors. Average daily turnover in January and February has measured around US$25 billion, compared to about US$10 billion in the same period a year ago. Hong Kong this month has already held the biggest tech IPO since Uber in 2019, with the US$5.4 billion listing of Chinese video app and TikTok competitor Kuaishou.
Paul Chan, Financial Secretary, Hong Kong SAR, will discuss the future of Hong Kong as a leading trade and investment hub amid strained international relations during a briefing with Asia House Corporate Members on Friday 19 March. Find out more.
From yesterday (Thursday 18 February), Facebook has restricted the sharing of news content in Australia, including banning the sharing of news articles of Australian news outlets in the country. This comes as Facebook fights a controversial proposed law that would require technology companies to pay publishers when their articles are posted by users. The move would force Facebook, Google, and other major technology platforms to pay publishers for the value their articles generate on the digital platforms. Facebook’s decision threatens to remove one of the most widely used ways for millions to access news online. Australia’s proposed law would be the first of its kind, but has raised a number of questions over the future of the sharing of data and news content. Prime Minister Scott Morrison today said he will press ahead with laws to force Facebook to pay news outlets for content.
The Indian government this week called on social media platforms in the country to ‘follow the law of the land’ as New Delhi increases scrutiny on social media platforms, including warning Twitter to block certain handles during the recent farmer protests. Under new proposals and suggested amendments to the Information Technology (Intermediaries Guidelines) Rules of 2011, the government has argued that social media companies need to be more responsive in handling requests regarding the removal of unlawful content. New rules could include requiring social media companies to take down ‘unlawful’ content within 36 hours instead of the currently stipulated 72 hours, and mandate that companies with more than 500,000 users be required to have an office in India and appoint an officer to liaise with law-enforcement agencies. There is increasing concern over the future of social media in the country, given increasing checks on such technology companies.
Thai Union Group, the world’s biggest canned tuna producer, has secured its first sustainability-linked loan of US$400 million from a group of financial institutions, under lead managers Mizuho Bank, MUFG Bank, and Bank of Ayudhya. Thai Union sees around 70 per cent of its overall revenue from the US and Europe, where awareness and appetite for ESG factors is strong among retailers and consumers. If the company achieves set targets, such as strengthening the traceability of its seafood, interest rates for the loan will be lowered by lenders. The group of lenders will also take into consideration the Dow Jones Sustainability Index, which evaluates companies in terms of greenhouse gas reductions and economic, environmental, and social aspects, when setting the interest rate for the company.
Thailand’s economic outlook will be discussed by Arkhom Termpittayapaisith, Minister of Finance, Thailand, during a briefing with Asia House Corporate Members on Thursday 4 March. Find out more.
NEXT WEEK IN ASIA
Central bank meetings across Asia: Central banks in China, South Korea, and New Zealand are set to review their monetary policies next week, with all expected to leave interest rates on hold.
COVID-19: ASIA ROUND UP
HONG KONG: Hong Kong will kick off its six-month COVID-19 mass-vaccination programme next week.
INDIA: India has offered COVID-19 vaccinations to all United Nations peacekeepers, covering nearly 95,000 troops worldwide.
JAPAN: Japan began its COVID-19 vaccination programme this week, starting with a group of 40,000 health workers.
INDONESIA: Jakarta has warned that it may enforce fines of up to US$356 for residents refusing COVID-19 vaccines. A presidential order earlier this month stipulated that anyone who refuses a vaccine could be denied social assistance or government services, or made to pay a fine. The central bank cut its benchmark interest rate for the first time in three months.
PHILIPPINES: Johnson & Johnson’s Janssen Pharmaceuticals has started late-stage clinical trials for its COVID-19 vaccine in the Philippines.
BAHRAIN: Bahrain has launched a digital COVID-19 vaccine passport.
These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.
FRIDAY 12 FEBRUARY 2021
The UK and India this week announced an Enhanced Trade Partnership (ETP) and further bilateral investment between the two countries on the back of a five-day visit by UK International Trade Secretary Liz Truss. New investments include an announcement from Tata Consultancy Services of 1,500 new high-skilled UK jobs in technology. The ETP is part of a roadmap that could lead to a more comprehensive free trade agreement. The move comes as the UK looks to deepen global trade ties, particularly in Asia. The UK-Singapore free trade agreement also came into force this week.
Crawford Falconer, Chief Trade Negotiation Adviser, UK Government, briefed Asia House Corporate Members on the UK’s trade agenda in Asia, including its aim to join the CPTPP, yesterday. Read more.
US President Joe Biden and Chinese President Xi Jinping held their first phone call this week, in which Biden raised concerns about China’s ‘coercive behaviour’ and human rights abuses, and Xi said that China-US confrontation would hurt both sides. The tone of this call is reported to have been less confrontational than that between the countries’ top foreign affairs officials last week. Biden also outlined a Pentagon task force this week, which will develop a new, comprehensive China policy ranging from US forces deployment around the world to relations with the Chinese military.
The likely direction of the US’s China policy was explored by Timothy Stratford, Former Assistant US Trade Representative for China Affairs, during an Asia House briefing this week. Read more.
Saudi Arabia and Qatar formally restored diplomatic ties this week following a four-year rift. Saudi’s Ambassador to Qatar Ali al-Qahtani met with Qatari Foreign Minister Sultan bin Saad al-Muraikhi on Wednesday. The two countries established bilateral relations in January 2021, after a trade, political, and diplomatic blockade against Qatar was established in May 2017. Wednesday’s meeting was the first publicly announced engagement between the two countries, during which they pledged to review bilateral cooperation and relations. Flights between Qatar and Saudi Arabia were restored on 11 January, and the Abu Samra land border crossing will be reopened.
Chinese Premier Li Keqiang this week met with Central and Eastern European leaders in Bulgaria this week as part of the seventh 16+1 summit. The 16+1 format, launched in 2012, has been viewed by some commentators as an instrument for Beijing to divide the European Union, with 11 of the 16 European members also part of the EU; others view it as an integral part of continuing China-EU cooperation. The meeting this week, originally postponed from April 2020 due to the COVID-19 pandemic, charted a course for greater post-pandemic cooperation. China and the EU last month signed an investment treaty – the EU-China Comprehensive Agreement on Investment, signalling a strengthening of economic ties.
Helena König, Deputy DG, Directorate General of Trade, European Commission, will discuss EU-China relations during a briefing with Asia House Corporate Members on 23 February. Find out more.
China’s market regulator released new anti-monopoly guidelines this week, targeting its technology firms in particular by tightening existing restrictions. The regulations formalise an earlier anti-monopoly draft law that was released in November, and clarify a number of monopolistic practices. The new regulations are likely to increase pressure on the country’s leading technology firms, including Alibaba, JD.com, Taobao, Ant Group’s Alipay, and WeChat. The rules will bar companies from a range of activities, including forcing merchants to choose between different internet players. The rules will also prevent companies from price fixing, restricting technologies, and using data to manipulate the market. The move comes as the government increases scrutiny of its tech giants, including through the launching of antitrust investigations into major players such as Alibaba Group.
Singapore 2021 budget: Singapore will announce its 2021-22 budget on 16 February. The focus will be on accelerating recovery and GDP growth this year, particularly by supporting jobs and business.
Much of the region breaks for Lunar New Year holidays: Businesses across the region are closed for Lunar New Year holidays, which last until 17 February.
CHINA: China has administered 40.52 million doses of COVID-19 vaccines to key groups of people as of 9 February.
HONG KONG: Social distancing rules have been relaxed as the number of COVID-19 cases continues to drop. People are now able to gather in groups of up to four and dine at restaurants until 10pm.
JAPAN: The Japanese government will not lift its COVID-19 state of emergency this week ahead of the 7 March end date. Prime Minister Yoshihide Suga has said that COVID-19 vaccinations will begin from next week. The European Union has approved the first shipment of the Pfizer-BioNTech COVID-19 vaccine to Japan, which arrived in the country on Friday.
AUSTRALIA: Melbourne will enter a five-day COVID-19 lockdown, as a fresh cluster of COVID-19 cases has been linked to a quarantine hotel in Melbourne.
SOUTH KOREA: South Korea approved AstraZeneca’s COVID-19 vaccine on the condition that the drug maker submits additional clinical data in the US.
MALAYSIA: Malaysia’s GDP contracted 3.4 per cent in Q4 2020, resulting in a 5.6 per cent decline in GDP for the full year 2020.
SINGAPORE: Singapore Airlines has begun operating flights with full sets of crew members vaccinated against COVID-19.
NEW ZEALAND: New Zealand will first administer COVID-19 vaccines to quarantine personnel, frontline health workers, and airline staffers, likely from 20 February. The government formally approved the use of the Pfizer-BioNTech COVID-19 vaccine on Wednesday.
CAMBODIA: Cambodia launched its inoculation drive against COVID-19 this year, using 600,000 vaccine doses donated by China.
UAE: Abu Dhabi’s Etihad Airways is only operating flights with pilots and cabin crew who have been vaccinated against COVID-19.
These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.
FRIDAY 5 FEBRUARY 2021
India spends big in 2021-2022 budget
Indian Finance Minister Nirmala Sitharaman presented the Union Budget 2021 this week, announcing an expansionary package for the next fiscal year with a focus on digitisation and infrastructure. Healthcare spending is set to double to US$30.2 billion, with US$4.8 billion earmarked for COVID-19 vaccines. Other key points include plans to reduce the fiscal deficit from an estimated 9.5 per cent of GDP this year without raising tax burdens. The budget is expected to support greater foreign and domestic investment and boost economic growth, after record GDP contractions last year.
Read more in Asia House Advisory’s analysis of this year’s budget.
UK formally applies for CPTPP accession
The UK this week formally submitted its application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), reflecting the UK’s renewed focus on the Indo-Pacific region. UK International Trade Secretary Liz Truss said that joining the CPTPP will create opportunities for UK businesses and “deepen ties with some of the fastest-growing markets in the world.” Formal negotiations are expected to start in the coming months. If admitted, the UK will be the first country outside the original CPTPP members to join the partnership. China, South Korea, and Thailand have also expressed interest in joining and there is speculation around a US return to the deal.
Crawford Falconer, Chief Trade Negotiation Adviser, UK Government, will brief Asia House Corporate Members on the UK’s trade agenda in Asia on Thursday 11 February. Find out more.
Alibaba set for one of China’s biggest dollar bond sales
Alibaba is set to raise up to US$5 billion from international debt markets this week, in what could be one of China’s biggest-ever dollar bond sales. Alibaba, the country’s biggest e-commerce group, announced this bond sale just months after regulators suspended the US$37 billion stock market listing of its payments affiliate Ant Group, and launched an antitrust investigation into the group. Alibaba will sell the debt in tranches with maturities of up to 40 years, with a separate 20 year ‘sustainability’ tranche tied to green projects. Response from investors has been strong so far, but the next few days will show whether the actions taken against Alibaba and Ant Group by the Chinese government have had an impact on investor appetite for Alibaba.
Companies pause operations in Myanmar following military coup
Myanmar’s military seized control of the government on 1 February, declaring a state of emergency in the country for one year. President Win Myint, State Counsellor Aung San Suu Kyi, and members of the National League for Democracy (NLD) party have been detained. This comes following general elections in November, which the NLD party won in a landslide. The military contests the election result. Power has now been handed over to commander-in-chief Min Aung Hlaing. Local and foreign companies have begun suspending operations in the country as a result of the events – industrial estate developer Amata has stopped work on a US$1 billion project; Suzuki Motor has halted operations at its two plants; and ANA Holdings is reviewing its business in Myanmar.
UK-China tensions rise as media regulator pulls CGTN licence
UK-China tensions escalated this week as Britain’s media regulator, Ofcom, withdrew the domestic broadcast licence of Chinese news channel CGTN. Ofcom made the decision following an investigation into the controller of the licence, which it concluded was not the named holder, Star China Media Ltd. An attempt to transfer the licence to another entity, CGTNC, was unsuccessful, the regulator said, as CGTNC is “ultimately controlled by the Chinese Communist Party.” Under Ofcom rules, licences cannot be held by networks controlled by governments. China’s Foreign Affairs Ministry has described the decision as an act of “political oppression” and has also criticised BBC coverage of COVID-19 in China. CGTN is no longer broadcasting in the UK, but has the right to request a judicial review and apply for a new licence in the future.
UK-China relations will be discussed during an Asia House briefing with Tom Tugendhat, Chairman of the UK Foreign Affairs Select Committee and Head of the China Research Group, on Thursday 18 March. Find out more.
Twitter accused of censorship amid Indian agricultural protests
Twitter temporarily blocked access to some politicians’ and activists’ accounts in India this week, following pressure from the Indian government. The suspensions targeted protestors opposing India’s contentious new agricultural laws, which aim to loosen regulation in the sector. The suspensions by Twitter have drawn accusations of censorship, as the government continues to implement measures against farmers protesting the reforms, including the blocking of internet access near New Delhi. Though Twitter has now lifted the suspensions, the Indian government has threatened penalties under Indian law if they are not reinstated, asking the social media giant to focus on accounts using a hashtag connected to the protests.
NEXT WEEK IN ASIA
Malaysia Q4 2020 GDP figures: Malaysia will announce its Q4 GDP figures next week. COVID-19 is likely to have weighed on the country’s economic performance, with a steeper contraction than seen in the previous quarter expected.
COVID-19: ASIA ROUND UP
CHINA: The Foreign Ministry has lodged ‘stern representations’ to the BBC over what it says was ‘fake news’ coverage of COVID-19. China plans to provide 10 million doses of COVID-19 vaccines to COVAX.
INDIA: A government survey shows that 21.5 per cent of the country may have been infected by COVID-19.
JAPAN: Prime Minister Yoshihide Suga has extended the state of emergency in 10 prefectures, including Tokyo, through to 7 March.
AUSTRALIA: Australia will buy 10 million additional doses of the Pfizer-BioNTech COVID-19 vaccine.
SOUTH KOREA: South Korea will apply to import 117,000 doses of the Pfizer-BioNTech COVID-19 vaccine through the global COVAX initiative this month.
MALAYSIA: Malaysia expects to complete its COVID-19 immunisation programme by February 2022, covering 80 per cent of its population. Malaysia has extended its lockdown and movement control restrictions by two weeks until 18 February.
SINGAPORE: Singapore has approved the Moderna COVID-19 vaccine and expects the first shipment to arrive next month.
NEW ZEALAND: Medical regulator Medsafe has provisionally approved use of the Pfizer-BioNTech COVID-19 vaccine.
These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.
