Peugeot’s Chinese JV to start production in Vietnam

French automaker PSA Peugeot Citroen and its Chinese joint venture partner Dongfeng Motor Group will open an assembly plant in Vietnam and have already begun production in Malaysia, according to a Dongfeng Peugeot Citroen Automobile spokesperson.
Dongfeng Peugeot is producing compact cars in cooperation with local firm Naza Group in Malaysia and plans to begin assembling in Vietnam later this year in partnership with THACO Group, the official Xinhua news agency reported on Wednesday.
The venture aims to sell 8,700 cars in the ASEAN region this year with plans to raise sales of imported and locally produced cars to 70,000 units by 2020, the spokesperson said in an emailed response to Reuters’ request for comments.
Last year, Peugeot and Dongfeng agreed on a 3 billion euro ($3.34 billion) capital tie-up, giving the French carmaker much needed funding to turn its business around.
The two firms also agreed that their China JV would aim to sell 1.5 million vehicles a year starting in 2020, as well as consider setting up a new company responsible for sales in the Asia-Pacific region, especially in Southeast Asia.
Source : Thanh Nien Daily | May 21, 2015
Thomas D’Innocenzi
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Ticon enters rental factory JV in Indonesia


Ticon Industrial Connection has formed a joint venture in Indonesia with local partner SSIA and Japan’s Mitsui to build international-quality warehouses and factories for lease to the automobile, electronics, consumer products, logistics and other industries.

“This is our first expansion into Indonesia together with high-potential partners like SSIA, which is a leading property developer listed on the Indonesian Stock Exchange, and Mitsui, one of the world’s most diversified and comprehensive trading, investment and service companies,” managing director Virapan Pulges said yesterday.

SLP Surya Ticon Interusa was set up with registered capital of US$46.4 million (Bt1.6 billion). SSIA holds 50 per cent and Ticon and Mitsui 25 per cent each.

The initial development covers 16 warehouses with rental space of 2,160 square metres each. Rental space of 34,560sqm in the first phase is now completed and 81 per cent occupied. 

The next phase will follow next quarter. When the Technopark project is completed, SLP will have a total of 146,195sqm of warehouse and factories for lease.

This collaboration reflects the partners’ confidence in Ticon’s more than 25 years of professional experience as a developer of rental warehouses and factories with high standards in Thailand. 

The company is confident that with a strong connection with customers – mostly global and multinational companies from the manufacturing and logistics industries – Ticon can leverage its long-term expertise to ensure the success of this JV.

Ticon comes especially with the ability to understand customer needs and to provide engineering and design support to the construction and development of the facilities to meet international standards, Virapan said.

Johannes Suriadjaja, president director of Surya Semesta Internusa (SSIA), said Indonesia was a prime investment destination, as its government is seeking to add to the $22 billion worth of large infrastructure projects already planned for this year. 

The government plans to spend annually to maintain and upgrade its logistical network and utilities, and it is quite clear that demand for warehouses and factories for lease will increase significantly, he said.

Eiichi Tanabe, general manager of the second overseas business development department in the Urban Development Division at Mitsui & Co, said Indonesia had become an increasingly important investment hub for foreign companies, especially from Japan, which accounted for 9.5 per cent of the market last year. 

Indonesia will become a valuable manufacturing base to serve the fast-growing demand of the domestic market and help fulfil potential growth in the export sector, especially after integration into the Asean Economic Community by the end of this year. 

“We are confident that Mitsui, along with our professional partners SSIA and Ticon, will drive SLP to become Indonesia’s leading and largest industrial property [developer] for rental warehouses and factories in the future.”

Source : The Nation | May 20, 2015
Thomas D’Innocenzi
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Thailand : Board of Trade predicts economic resurgence, maintains 3.5% GDP growth forecast


The economy has already bottomed out and should head up steadily in the remaining months, driven mainly by rising private investment, increasing tourism arrivals and incomes, and the “digital economy” policy, which will help promote business, according to the Board of Trade of Thailand and Thai Chamber of Commerce.

The Board of Trade yesterday left its GDP growth prediction at 3.5 per cent for this year after seeing that the economy had already reached its low point. “After hearing comments from every provincial chamber of commerce, businesspeople shared the view that the economy is on a roll, particularly in tourism, retailing and investment,” Isara Vongkusolkit, chairman of the two associations, said yesterday.In April, the Board of Trade’s figures showed retail sales up by 1.5-2 per cent, compared with growth of just 0.5 per cent in the first quarter of the year. Collections of value-added tax were up 10 per cent in the first four months of the year.

Sales of life insurance policies grew 13-14 per cent year on year in the first quarter, while sales of non-life insurance were up 7-8 per cent, reflecting more investment by companies to build factories.

Despite the slowdown in exports, shipments from Bangkok Port expanded by 6.07 per cent and from Laem Chabang Port by 7.5e per cent in the first quarter, showing more trade with many markets, especially the United States and CLMV (Cambodia, Laos, Myanmar and Vietnam).

Isara said that with the brighter business outlook, the economy should show strength throughout next year.

Under the government’s digital economy policy, more companies would be promoted to expand in both the domestic and international markets, he said.

Vichai Bencharongkul, chairman of the Board of Trade’s Creative Digital Economy Committee, said that after more investment in telecommunications businesses, more sales in the industry and more services, the information and communications technology sector is expected to grow by 10 per cent a year and could reach Bt1.5 trillion this year.

The ICT sector was worth Bt1.2 trillion in 2013, accounting for 10 per cent of gross domestic product.

The Board of Trade has supported the government’s plan to invest more in expanding Internet broadband access to every household, to adopt technology for distance learning and to promote the growth of e-commerce.

For every 10-per-cent expansion in Internet broadband, GDP will grow by 1.3 per cent, the organisation believes. For every 10-per-cent growth of mobile phones, GDP will grow by 0.7 per cent.

Source : The Nation | May 20, 2015
Thomas D’Innocenzi
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Vietnam dong devaluation inevitable, good for economy


Economists have hailed the State Bank of Vietnam’s decision to depreciate the dong, saying the move will help cool down the forex market and decrease the trade deficit, which has been growing since early this year.
The central bank Thursday devalued the currency for the second time this year, reducing its reference rate by 1 percent to 21,673 dong to a dollar. The currency is allowed to trade up to 1 percent on either side against the dollar.
ANZ said the devaluation did not come as a surprise, pointing out it had highlighted the possibility last month.
It said in a statement, “Indeed, the spot rate had been trading closely to the top side of the +/-1 percent band this week.
“We maintain that pressure on the dong has emanated from the deterioration in the trade balance, even though FDI inflows have remained robust.”
Vietnam recorded a US$3 billion trade deficit in the first four months, compared with a surplus of $2 billion in the same period last year.
Economist Nguyen Tri Hieu said it was a reasonable decision amid rising demand for the greenback for imports.
The government also has greater demand for the dollar for its economic development goals and paying overseas loans, he said.
In a historic move, the government has issued international bonds worth a total of US$1 billion specifically for Vietcombank, the country’s top lender by market value, he said.
Keeping the rate unchanged would raise pressure on foreign currency reserves while the devaluation would make it easier for the central bank and commercial banks to buy dollars from businesses and individuals, he explained.
The country now has reserves of around $35 billion, according to the central bank.
The depreciation would also help boost exports, Hieu said.
Over 20 central banks around the world, following the lead of the European Central Bank and the Bank of Japan, have weakened their currencies against the dollar to boost economic growth and employment by seeking export led-growth, he said. “If the dong is not devaluated, the country’s exports cannot compete in the US, Vietnam’s biggest export market.”
January-April exports rose 8.2 percent to an estimated $50.1 billion, while imports surged 19.9 percent.
The government has projected export growth of 10 percent this year compared to 13.7 percent last year.
HSBC said in a statement: “While we had been expecting further dong weakness this year, the move happened slightly earlier than we had thought.
“With the exchange rate closing in on the topside of the band for the past few weeks, especially in the last few days, the decision today should not be a complete surprise.”
After the adjustment, the dong fell to 21,650/21,730 per dollar on the interbank market, from 21,620/21,670 the previous day.
The total forex transactions at banks were estimated at $700 million by 2 p.m. Thursday, central bank deputy governor Nguyen Thi Hong said.
Overseas loan burden
Hieu said the dong depreciation, while having a positive impact on the economy, would also worsen Vietnam’s external borrowings situation.
Besides, currency volatility generally makes it harder to issue bonds overseas in a country’s own currency, and usually entails higher coupon rates.
But HSBC did not think so. External debt sustainability is not a major concern for Vietnam as most of its debt can be rolled over, it explained. While a weaker dong poses a bigger burden on interest payments, the amount is still rather small, it said.
For example, in 2013 Vietnam paid only $500 million in interest expense payments on its government external debt. Government domestic payments, however, topped $2.3 billion.
Vietnam’s external debt had risen to close to $70 billion by end-2013. However, most of the government’s external debts are concessional in nature and almost half of it carries interest of less than 1 percent.
“In contrast, we believe that a weakening of the dong will help Vietnam grow, relieving some of its domestic debt burden,” it said, noting that the domestic debt burden, both public and private, is rising.
Concerns of importers
Macroeconomic factors such as rising trade deficit and overseas loan repayment burden later this year could raise pressure on the currency, and the dong may be devalued by a total of 3 percent this year, Hieu said.
Last December central bank Governor Nguyen Van Binh had said the dong would depreciate by less than 2 percent in 2015.
But ANZ has said the dong could fall to 22,050 to the dollar by year-end, taking the annual spot depreciation to 3.1 percent, compared to 1.4 percent in 2014.
If the dong continues to depreciate, the cost to produce steel will rise, Do Duy Thai, general director of Viet Steel Company, said. Eighty percent of the inputs for steel production is imported.
Even without the dong depreciation, local steel producers are already struggling and sales fell 30 percent year-on-year in the first quarter, he said.
“Higher dollar prices will create difficulty after difficulty for our firm.”
A travel company executive said the exchange rate fluctuation would greatly affect her company’s business plans and cut into its profits since it would have to hike rates meaning fewer customers.



Source : Thanh Nien News | May 8, 2015

Thomas D’Innocenzi

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Mazda makes Thailand its hub for parts exports


Mazda has designated Thailand as its spare-parts distribution hub for Asean and global exports, and has officially opened a new parts distribution centre in Samut Prakan in order to improve the quality of its after-sales service.

Set up by Mazda Logistics & Yusen (Asia) – a joint venture between Mazda Sales Thailand and Yusen Logistics (Thailand) with registered capital of Bt40 million – the new facility stocks up to 53,000 Mazda parts worth more than Bt360 million.Yusen is the largest logistics company in Japan.Last year, Mazda’s Thai operations sold Bt1.7 billion-worth of spare parts for the domestic market and Bt800 million for export to more than 100 countries.

However, the export proportion of sales is bound to grow dramatically in the near future, as Mazda has just opened its Bt11-billion transmission plant in Chon Buri to produce 400,000 SKYACTIV gearboxes annually. Then, during the fourth quarter of this year, construction of its first engine plant in Thailand will be completed.

Mazda has yet to announce the production figures for the Bt3-billion engine plant, but similar numbers to the transmission facility are expected.

“In the past, Mazda’s parts management in this region was handled by our business partner, and we lagged behind our rivals,” said Hidesuke Takesue, president of Mazda Sales Thailand.

“The new parts distribution centre will dramatically help us improve our parts management system, since we can fully control all of our operation on our own. Thailand and other Asean countries have high potential for economic growth, and this is the largest market for Mazda to grow our business,” he said, adding that the new centre would help raise the level of customer satisfaction for the brand.

Exports of Mazda spare parts are now incorporated into its vehicle exports, resulting in lower operating costs, said the company chief.

“There is also more pricing competitiveness, because we have combined our spare-parts export business with our export operation from the AutoAlliance Thailand plant [in Rayong] to share costs,” he added.

During the past 10 years, Mazda sold more than 320,000 vehicles in Thailand. 

The new distribution centre has about 260 suppliers, with parts packaged for delivery to 125 Mazda service centres nationwide.

Source : The Nation | May 13, 2015
Thomas D’Innocenzi
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Thailand : Investors’ confidence turns from bearish to neutral in May


INVESTORS overall are regaining some confidence in the Thai market even though foreign players are deserting it, according to the securities industry.

“Investor confidence in the next three months has changed from bearish to neutral in May because of greater tangibility in the government’s fiscal policies and the acceleration of its budget disbursements,” Voravan Tarapoom, chairwoman of the Federation of Thai Capital Market Organisations (FETCO) and chief executive officer of BBL Asset Management, said yesterday.

“The sectors that investors pay most attention to is public utilities followed by energy,” she said.

Foreign investors are net sellers because Thailand’s stocks are less appealing than those of the developed and North Asian markets.

Last month’s survey found the FETCO NIDA Investor Sentiment Index for the next three months improving 30.2 per cent from 78.90 points in April to 102.72 in May.

The index measures the confidence of all four types of investors – retail, institutional, proprietary and foreign – and ranges from 0-200 points, where 0 is extremely bearish and 200 is extremely bullish.

“Factors that investors said would affect their confidence in the next three months are economic policies and the real economic situation going forward, while the current political situation is not part of domestic individual and institutional investors’ concerns at the moment,” Voravan said.

Investor confidence should keep picking up in the second half of the year as the situations of the capital market and the economy improve because of increases in government spending, private investment and tourist arrivals.

Disbursement up

“Government spending has improved tangibly and spending is being used in the right way, while private investment has responded with movement.

“Things should be better going forward because tourism was the only industry that looked good and now there are government spending and private investment to look forward to,” she said.

The latest figures show that government spending in the first seven months ending in April of the 2015 fiscal budget had reached 58.4 per cent, with disbursement of the Bt449-billion investment budget climbing to 36.2 per cent.

This disbursement rate for investment is better than 35.7 per cent in 2012, 35.5 per cent in 2013 and 33.6 per cent in 2014.

The Thai stock market is currently “boring”. There is no clear high or low, Voravan said.

Thanomsak Saharatchai, executive vice president of investment research at KT-ZMICO Securities, said capital markets in Europe and Japan were more appealing for investors because of their quantitative-easing policies. North Asian markets such as South Korea and Taiwan also tell a better story, so foreign investors are trimming down their investment here.

“There is an outflow but it is not at an alarming rate and this is not hot money that is running towards the EU and Japan from emerging markets,” he said.

Foreign investors have unloaded a net Bt8.89 billion of Thai stocks from January 1-May 8.

The factors that will affect the Thai stock market in the second half of the year are the expectation and the actual raise of the US interest rate along with the internal political situation.

BBL Asset Management forecasts gross domestic product expanding by 3.5 per cent this year. The International Monetary Fund forecasts 3.7 per cent and KT-ZMICO 3.4 per cent.

Source : The Nation | May 12, 2015
Thomas D’Innocenzi
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China slashes key rates for third time


China’s central bank cut interest rates for the third time in six months as it steps up support for an economy grappling with a debt overhang and property slump.

The People’s Bank of China will reduce the one-year lending rate 0.25 percentage point to 5.1 per cent, and cut the one-year deposit rate by the same amount to 2.25 per cent, effective Monday, the central bank said on its website Sunday.

The deposit-rate ceiling will be expanded to 150 per cent of the benchmark from 130 per cent, it said.

Policy makers took the step after reports in recent days showed inflation remains subdued and exports and imports both slid in April − underscoring the economy’s continuing struggle to match Premier Li Keqiang’s 2015 growth target of about 7 per cent.

With capital flowing abroad and local governments embroiled in a complex debt cleanup, officials are turning to cheaper borrowing costs to help bolster lending.

“Economic growth is weaker than expected, and inflation is low,” said Xu Gao, the chief economist with Everbright Securities Co.

in Beijing.”In fact, the rate cut is very mild with just a quarter of a percentage point, and the PBOC may have to cut interest rates again quite soon.”

In a gathering of the Communist Party’s Politburo April 30, President Xi Jinping and his colleagues vowed to step up targeted measures to counter downward pressure on the economy.

One area that has benefited from stimulus is China’s stock market, with the Shanghai Composite Index soaring since early March.


The leadership is juggling the need to keep growth from slipping too far with plans to press ahead with structural reforms to the economy reducing the role of investment and enhancing that of private companies, the services sector and consumer spending.

One step officials have been reluctant to take is letting the yuan depreciate along with the currencies of other emerging markets in the past year, as the US Federal Reserve prepares to raise interest rates.

While a cheaper exchange rate may help export competitiveness, one concern is that it could unwind long-term bets on yuan gains and spur further capital flight. China is battling a property slump, excess industrial capacity, local-government debt and capital outflows, with the economy expanding at the slowest pace since 2009 in the first quarter.

Consumer prices in April rose at half the pace the government is targeting for 2015, data showed Saturday.



Source : China Daily | May 11, 2015

Thomas D’Innocenzi

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