ARAB TIMES, SATURDAY, FEBRUARY 27, 2016
BUSINESS
31
Hong Kong to price land sales to market: official
The Hong Kong government is prepared to sell into a falling market to
meet commitments to supply land for
flats and other developments, a senior official said on Thursday.
Hong Kong Secretary for Development Paul Chan said base prices
would be set for tenders, but the government did not have a policy requiring it obtain the high land premiums
of recent years.
He was speaking at a news conference to unveil the government’s
land sale programme for fiscal 20162017, which will make available 29
residential sites that could supply
19,200 flats - the largest such number since 2010. Two tenders were recently cancelled and a plot of land in
the northern area of Tai Po last week
sold for less than expected. Another
major tender closes on Friday.
“We don’t have a high land premium policy, so we sell land according
to market conditions,” Chan said.
Home prices, construction costs,
competition, the characteristics of
individual plots and other “difficulties”
all played a role in pricing, he added.
“If none of the tenders reaches that
base price we will not sell the land,”
he said. “We ensure that public resources are safeguarded.”
Chan also said the government
would sell eight commercial sites, for
a total area of 536,000 sq. m. (5.8
million sq. ft.) and three hotel sites,
which could provide about 2,100
rooms. (RTRS)
Thai exports suffer worst drop in four years
Thai exports fell by nearly nine percent in January, their worst drop in
more than four years as economic
woes continue to pile up on the kingdom’s military rulers, government figures released Thursday showed.
Once one of Southeast Asia’s
most vibrant and successful economies, Thailand has struggled with
lacklustre growth fuelled by more
than a decade of political instability
and slowing demand for its exports.
The economy grew by just 2.8
percent last year, one of the region’s
slowest rates, in a blow to the kingdom’s junta government, which
vowed to kickstart trading following
its 2014 coup. The country’s continued export slump, compounded by
the slowdown in key trading partner
China, is one of a number of ailments
derailing that pledge.
Ministry of Commerce figures
showed exports fell by 8.91 percent
year-on-year to $15.7 billion in January, the worst drop since November
2011 and the fourteenth consecutive
month of decline. Imports were also
down 12.37 percent to $15.5 billion.
Thailand’s exports have been declining for much of the last three years.
Last year’s total export decline of 5.78
percent was the worst drop in six
years. Former army chief turned prime
minister General Prayut Chan-O-Cha
has vowed to turn the economy round
but his government’s policies, which
include ramped up public spending,
have so far borne little fruit. (AFP)
Premier Li urges greater global coordination
China talks up economic growth agenda at G20 summit
SHANGHAI, Feb 26, (RTRS): China
sought to restore confidence in its economy as financial leaders from G20 nations gathered in Shanghai on Friday, and
Premier Li Keqiang urged greater global
coordination and consideration of policy
spillovers.
But Germany appeared to all but rule
out coordinated stimulus to counter a
deepening global chill, and US Treasury
Secretary Jack Lew said there was no
need for a crisis response, as in 2009 when
the Group of 20 (G20) major economies
agreed on coordinated stimulus to prevent
a worldwide depression.
While the health of the world’s secondlargest economy, which hosts the G20
presidency this year, is a key talking point
around the two-day summit, the threat of
the UK leaving the European Union and its
political and economic implications have
also surfaced as concerns among participants in the meeting.
“Macroeconomic policy coordination
needs to be strengthened. The global economic and financial situation may have
become more grim and complex. It is time
for countries to stand together to tide over
difficulties,” Li said in a video message at
the opening of the meeting.
Several other policymakers have urged
better coordination, but there was disagreement about what steps to take, making
it unlikely that concrete action points will
emerge from the meeting.
“Talking about further stimulus just
distracts from the real tasks at hand,” Germany’s Minister of Finance Wolfgang
Schaeuble said, rebuffing a recommendation from the International Monetary
Fund (IMF) that the G20 should start planning now for a coordinated stimulus programme.
“We, therefore, do not agree on a G20
fiscal stimulus package as some argue, in
case outlook risks materialise.”
Lew had a similar message, saying there
was a great deal of economic uncertainty
at present but no crisis.
“It would not be reasonable to expect a
crisis response in an environment that is
not a crisis,” he said told reporters.
Overhanging the summit of major economy finance ministers and central bankers
are global concerns about China’s ability
to manage its domestic markets, currency
and commitment to wider restructuring reforms. Concerns about its slowing economy and confusion over its currency policy
were among the factors which sowed turmoil in global markets in January.
China’s central bank governor Zhou
Xiaochuan repeated assurances the country would not stage another devaluation
of its currency, the yuan, to support the
economy. He also sought to manage expectations around the speed of China’s
economic reform agenda.
“China will strike a balance between
growth, restructuring and risk management,” Zhou said at a conference held by
the Institute of International Finance (IIF)
Co saddled with huge debts
Japan’s century-old Sharp
bets ‘future’ on takeover
TOKYO, Feb 26, (AFP): In 1916,
Sharp got its start making belt buckles
and sharpened pencils — hence the
name.
But a century later, the Japanese
firm, which ballooned into a global
consumer electronics giant, found itself in dire straits, saddled with huge
debts and mounting losses.
A restructuring plan failed to stop
the bleeding and on Thursday Sharp
agreed to be taken over by Taiwanese
multinational Hon Hai Precision, the
world’s biggest electronics supplier
better known as Foxconn.
The offer would be the first foreign
takeover of a Japanese electronics
giant, marking a blow to the oncemighty sector populated by other
global brands including Sony and Panasonic.
The deal stumbled Friday as Foxconn’s parent company said it would
delay signing the pact to review new
information it had received about
Sharp, but analysts widely viewed a
tie-up as all but done.
For years, Sharp — whose name
once graced the jerseys of Manchester
United players — had remained true
to its humble pencil-and-belt-buckle
roots.
But after the 1923 Tokyo earthquake, which left more than 100,000
dead, company founder Tokuji Hayakawa expanded his little firm by
making radio equipment and other
items that could be used in a similar
emergency.
Hayakawa, who died in 1980, lost
his wife and two children in the quake.
Inovation
After WWII, Sharp became the
first Japanese firm to sell televisions.
This tradition of innovation continued
throughout the 1970s, with the mass
production of liquid crystal display
(LCD) screens for calculators —
which in the 1990s was adapted for
computer screens and later for smartphones and tablets.
Sharp is a global leader in those
small and medium sized screens,
which are a key asset for Hon Hai.
The companies have worked together for years on large-sized screen
technology, including for televisions,
and jointly operate an LCD panel
plant in Japan.
But over the last decade Sharp bet
almost everything on LCD, churning
out giant screens from cutting-edge
factories and boasting the most advanced technology in the world.
“The problem is they invested too
heavily in LCD screens,” professor
Akio Makabe of Shinshu University
told AFP.
“For a while that was fine, but with
the financial crisis of 2008-9 everything changed. The market became
more competitive in terms of price
and Sharp wasn’t the best placed to
deal with that,” he said.
TOKYO, Feb 26, (AFP): Japan’s inflation rate fell to zero in January, government data showed Friday, in another blow to Prime Minister Shinzo Abe’s
three-year attempt to put an end to a
years-long battle with falling prices.
Japan has suffered deflation -- a
debilitating drop in prices -- off and
on since the late 1990s and authorities have introduced various policies
to fight it, including record low central
bank interest rates.
Abe came to power in late 2012
vowing to fix the problem for good
through an array of policies dubbed
“Abenomics” that include government
in conjunction with the G20 meeting.
“While the reform direction is clear...the
pace will vary, but the reform will be set to
continue and the direction is not changed.”
Zhou said China had monetary policy
wiggle room, a statement echoed on the
fiscal side by the Chinese finance ministry.
The case for further policy stimulus
amid rising debt levels and already extremely low interest rates was a hard sell
among some other G20 members.
Bank of England Governor Mark Carney warned cutting rates below zero carried serious risks, and blamed the recent
spending and a massive central bank
bond-buying programme.
The government’s internal affairs
ministry announced that Japan’s
growth in core consumer prices, which
exclude volatile fresh food prices, was
unchanged in January from a year ago
after two months of tepid 0.1 percent
growth. Falling oil prices -- resourcepoor Japan is a major energy importer
-- and a recent rise in the value of the
Japanese yen are seen as further
hampering efforts to achieve moderate price growth.
The latest figure underscores Abe’s
challenge with the outlook being for
further price weakness.
“In light of falling import prices and
sluggish economic activity, we think
that the slowdown in underlying inflation has further to run,” said Marcel
Thieliant, senior Japan economist at
Capital Economics.
While offering pro-business policies,
Abe has also pushed Japan Inc to
share profits with consumers via wage
hikes, saying such a move would be
key to boosting consumption, prices
and overall growth.
Despite incentives, Japanese businesses have remained cautious to
invest in their businesses and offer
global slump in shares and other assets on
the failure of governments to make bold
economics reforms.
Schaeuble said the debt-financed
growth model had “reached its limits (and)
is even causing new problems, raising
debt, causing bubbles and excessive risk
taking, zombifying the economy.”
And Japan’s Finance Minister Taro Aso
shrugged off calls from some quarters for
Tokyo to roll out fresh fiscal stimulus. Japan’s central bank stunned investors by
adopting negative interest rates last month.
Geopolitics is also a worry for European
representatives.
Speaking in Hong Kong, French Finance Minister Michel Sapin said it was
best for the UK to remain in the European Union, and expects the British people
would make the “right decision” at a June
23 referendum to remain a bloc member.
His comments follow a Financial Times
report that British finance minister George
Osborne is pushing the G20 to warn
against the dangers of a “Brexit”.
Policymakers are watching closely for
signs that China is ready to tackle the imbalances they see standing in the way of its
He started his business in 1974 making television parts with an investment of
Tw$100,000 ($3,005) from his mother,
and later began producing computer parts.
Gou — known for being a demanding
and harsh boss — faced one of his toughest challenge when high-profile suicides at
his China plants forced him to reassess his
management style.
“I’ve slept very little in the past 40
days... This is a trial for us,” he told investors in 2010.
One of the richest men in Taiwan — the
fourth wealthiest, according to Forbes,
with a net worth of $5.7 billion — his
words are widely publicised by the media
and have sometimes sparked controversy.
He reportedly had to apologise in 2012
after he was said to have compared workers to animals.
meaningful wage increases, citing the
uncertain economic outlook.
Last month, the government said
Japan’s inflation rate stood at 0.5 percent in 2015, far short of the 2.0 percent target that the BoJ had promised
to achieve by early last year.
The central bank now says the target will likely be reached next year.
The central bank and its bold governor, ex-finance ministry official
Haruhiko Kuroda, surprised the market last month by introducing a negative interest rate, meaning commercial
banks pay to park their cash in the
central bank.
economic sustainability.
Li said China has “the confidence to
handle the complex situation at home and
abroad”.
“We will expand aggregate demand as
appropriate, and focus on structural reforms. We will press ahead with supplyside structural reform,” he said.
China would cultivate an “open and
transparent” capital market, adding that
there was “no basis for continued depreciation of the RMB exchange rate. It will
stay basically stable on an adaptable and
equilibrium level”.
India sees growth above 7pct
despite slowing global economy
GDP likely grew 7.6 percent in 2015-16
NEW DELHI, Feb 26, (AFP): India on Friday offered a cautious forecast for economic growth to exceed 7 percent in the
next financial year, as the government prepares to present its
budget, with clamour for promised reforms growing.
The Economic Survey, a yearly report released by the finance ministry ahead
of the national budget on Monday, said gross domestic product (GDP) would
Curse
Sharp’s key technological blessing
today has also proven to be a curse: it
produces LCD screens favoured by industry giants Apple and Samsung, but
lacks the huge research and development funds necessary to keep ahead of
the competition.
In 2012, a state-backed fund created
Japan Display, which aimed to merge
Sharp’s small- and medium-sized
LCD screen business with those of rivals Sony, Hitachi and Toshiba.
The new company was seen as a
way for Japanese firms to mount a
strong challenge to overseas rivals.
But Sharp refused to take part.
“LCD was absolutely central to
Sharp so (a merger) was tough to accept,” Makabe said. But the firm was
not in a position to buy out its local
LCD competitors, he added.
Sharp’s decision to sell to a Taiwanese firm made clear it was turning
its back on a common move by Japanese firms to merge in a bid to fend off
overseas competition.
“This sort of consolidation probably
wouldn’t be workable,” said Kunio
Saijo, a senior technology journalist at
the leading Nikkei business daily, before the Hon Hai deal was announced.
Makabe at Shinshu University said
the offer from Hon Hai’s colourful
billionaire founder Terry Gou was
“financially superior”, and noted that
both firms count iPhone Apple as a
major client.
The Japan-based solution “would
also have meant the involvement
of (Sharp’s creditor) banks, which
wouldn’t have been ideal”, he added.
But even a foreign buy-out does not
guarantee Sharp’s future.
Taiwan’s Gou turned loan into
a multi-billion dollar empire
TAIPEI, Feb 26, (AFP): Terry Gou,
founder of the world’s biggest electronics
supplier, hasn’t shied away from a gamble
since turning a loan from his mother into a
multi-billion dollar empire.
The 65-year-old chairman of Taiwan’s
Hon Hai group, the parent of Foxconn, is
now applying that same aggressiveness
with a proposal to take control of Japan’s
ailing Sharp.
The firm said they had accepted the
multi-billion dollar bailout Thursday —
marking the first foreign takeover of a major Japanese electronics company.
Gou was born in 1950 in Taipei county
to Chinese immigrant parents, who had
fled the Communist victory in China’s
civil war. He studied shipping management in college while supporting himself
with part-time jobs.
Japan inflation falls back to zero in January: government data
expand between 7 percent and 7.75 percent in 2016-17.
The relatively upbeat prediction comes despite a weak global economy, with a slowdown in China that has worried investors, other major emerging markets in recession and
sinking global stocks. India’s GDP likely grew 7.6 percent over the 2015-16 financial
year, the government said, making it the world’s fastest-growing major economy.
However, Friday’s forecast represents a paring back of expectations from last year’s
survey which predicted growth would top eight percent this year. “We’ve learnt from the
experience of last year. The forecast for
last year went wrong, maybe it was overoptimistic,” said Arvind Subramanian, the
government’s chief economic adviser.
Last year’s survey did not anticipate
how much weak global demand would
hurt India’s exports, nor the impact of a
second bad monsoon on its vast agricultural sector, he said.
“This year’s assessment is really based
on looking out at the external environment
which seems to be very grim. It’s possible
we will do better than this year, it’s possible we won’t,” Subramanian said.
Prime Minister Narendra Modi has
made it a priority to boost India’s economic growth, vital for lifting millions out
of poverty, since sweeping to power in a
general election in May 2014.
But investors have raised concerns
about the pace of promised reforms needed
to create jobs for India’s tens of millions of
young people.
Outpaced
People buy their lunch from street vendor in Tokyo on Feb 26. Japan’s inflation rate fell to zero in January, government
data showed, in another blow to Prime Minister Shinzo Abe’s three-year attempt to put an end to a years-long battle with
falling prices. (AFP)
Bid comes under scrutiny of lawmakers
Chinese firm abandons US acquisition
BEIJING, Feb 26, (AFP): A Chinese
tech firm has abandoned a multi-billion
dollar investment in an American harddisk manufacturer, state media reported
Thursday, after the plan came under
scrutiny from US lawmakers.
Unisplendour Corp (UNIS) will rescind its $3.8 billion dollar offer for
approximately 15 percent of California-based Western Digital, the Global
Times reported.
The decision followed an announcement that the deal would be reviewed
by the Committee on Foreign Investment in the United States (CFIUS), a
group tasked with examining outside
acquisitions for potential national security concerns.
The announcement triggered a clause
that allowed UNIS, a subsidiary of
state-owned Tsinghua Unisplendour
Group, to withdraw from the deal,
Western Digital said in a statement
Tuesday.
CFIUS has increased its scrutiny of
Chinese firms in recent years as capital
increasingly flows from China into the
US.
Growth in the world’s second largest economy has waned in recent years,
and Beijing has pushed local firms to
look beyond the country’s borders for
deals that can both improve their balance books and strengthen their operations.
As a result, eye-popping acquisitions of US companies by Chinese
firms have become increasingly common.
The Unisplendour investment would
have given the company a seat on
Western Digital’s board and made it
the largest shareholder. The company’s
core business is hard drives and other
storage devices.
Last week, the Chinese firm HNA
agreed to pay $6 billion for a Ingram
Micro, a California-based tech company that distributes products for Apple
and Microsoft.
And earlier this month, state-owned
China National Chemical Corp.
(ChemChina) offered $43 billion for
Swiss pesticide and seed giant Syngenta, which, if completed, will be the
biggest-ever overseas acquisition by a
Chinese firm.
As the number of such deals has increased, so have reviews by US regulators.
Over the last three years, CFIUS
has reviewed 68 Chinese acquisitions,
more than any other country, according
to a report from the committee to the
US Congress. The UK held the number
two spot with 45 reviews, followed by
Canada with 40.
Bids in the manufacturing sector, especially in the category of “computer
and electronic product”, were most
likely to receive scrutiny, it said.
In 2014, the committee rejected only
one of the 147 deals that were notified
of the review process the document
showed.
Nevertheless, the heightened scrutiny has drawn complaints of unfairness
from Chinese analysts.
Speaking to the Global Times,
Huang Wei, an expert on economics
at the Chinese Academy of Social Sciences said that the attention to Chinese
companies “shows that the US does not
trust China”.
And while its growth has outpaced that
of powerhouse China in recent quarters,
Asia’s third-largest economy still faces
challenges.
After cooling from previously high levels, India’s once exorbitant inflation has
ticked up again over the past few months,
with prices rising 5.7 percent in January.
India’s main stocks index has lost a fifth
of its value over the past year, private investment is weak and the rupee is trading
at near-record lows against the dollar.
The Economic Survey forecast consumer price inflation would ease to 4.5 to
5 percent in 2016-17.
It also said India’s services sector remains one of the main engines of growth,
expanding more than nine percent in the
current fiscal year.
Services make up more than half of India’s economy although the government is
pushing to increase manufacturing through
its Make in India campaign.
Investors will be looking to Monday’s
budget for concrete reforms from the business-friendly government.
There are hopes it will move to overhaul
a complex corporate tax regime seen as
off-putting to investors.
The Economic Survey also said the government probably succeeded in reducing
its fiscal deficit to 3.9 percent of GDP in
2015-16 as economists expect.
It remains to be seen whether Finance
Minister Arun Jaitley will look to relax the
stringent fiscal deficit reduction target for
next year when he presents the budget.
India has in recent years successfully
managed to narrow its high fiscal deficit
-- the amount by which a government’s
spending exceeds its income. But it still
has high government debt compared with
its developing country peers, with borrowings at 64 percent of GDP, according to
ratings agency Moody’s.
India’s high debt and low number of
taxpayers means that interest payments absorb a fifth of the government’s revenues,
the ratings agency said.