asean Review

Transcription

asean Review

asean Review
Southeast asian growth prospects brighten
indonesia to let foreigners own property
thaksin urges snap poll to end thai crisis
cambodia coffee roaster seeks global buzz
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APRIL 2010
CONTENTS
APRIL 2010
CONTENTS
FINANCE, POLITICS AND ECONOMICS.......................................................................................................... 3-11
COMPANY NEWS............................................................................................................................................12-17
LIFE IN THE REGION......................................................................................................................................18-19
Finance, Politics & Economics
investors set to rediscover Southeast
Asia
A year after Asian stocks began to rise, investors
should turn their attention to Southeast Asia, which
lagged the wider rally and where exporters are set
to thrive on growth in China and India.
A year on, Malaysians still await PM’s
reforms
When he was about to take office a year ago
Malaysian Prime Minister Najib Razak appealed to
reporters to “judge me by my actions”, but a year on
his benchmark reforms are still at the consultative
stage.
Opposition chief tells Singaporeans:
Don’t be afraid
It is time for people in one-party ruled Singapore
to have more say in politics and not be fearful of
a change of government, a hedge fund manager
turned opposition leader, Kenneth Jeyaretnam said.
Company News
............................................................................
DBS indentifies M&A targets in Indonesia
DBS, Southeast Asia’s biggest bank, has identified
several acquisition targets in Indonesia, its chief
executive said, as it embarked on an ambitious plan
to expand in fast-growing emerging markets.
2 ASEAN Review • [email protected]
Siamgas bullish on 2010 as energy demand
up
Thailand’s Siamgas and Petrochemicals PCL said
it expected 2010 net profit to rise 15 percent, better
than market expectations, because the recovery in
the economy will boost energy demand.
Malaysia’s Sime to spend 3-5 bln rgt on
palm
Malaysia’s top planter Sime Darby will spend 3-5
billion ringgit ($918.3 million-1.53 billion) on its oil
palm estates this year as global demand for the
vegetable oil grows, a senior official said.
Life in the Region
............................................................................
UNIVERSAL STUDIOS SINGAPORE COURTS 8 BUT
GETS BAD LUCK
The world’s fourth Universal Studios welcomed
its first visitors with a lavish ceremony aimed at
attracting luck to the Singapore theme park. But it
has been hit by mishaps.
contributors
Managing Editor:
Neil Chatterjee
Neil.Chatterjee@thomsonreuters.
com
Cover picture:
An anti-government “red shirt”
protester takes a photo of where
a bullet hit the windscreen of a
vehicle during clashes near the
Democracy monument in central
Bangkok.
REUTERS/Eric Gaillard
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FINANCE, politics AND ECONOMICS
APRIL 2010
southeast Asia growth prospects
brighten, led by singapore
A Singapore one dollar coin rests
on top of Singapore two dollar
notes. Singapore’s central bank
tightened monetary policy by
re-centering its exchange rate
policy band upwards and saying
it will allow a modest and gradual
appreciation of the Singapore
dollar.
REUTERS/Tim Chong
By Gde Anugrah Arka
Southeast Asian economies should post brisk
growth this year and next as the global economy
recovers, attracting strong capital inflows but also
the risk of sudden reversals in investment.
Singapore’s economy is forecast to outperform the
other five main economies in Southeast Asia that
were covered by a Reuters quarterly poll.
Singapore revalued its currency in April after posting
stronger-than-expected growth of 13.1 percent in the
first quarter from a year ago, the highest since 1994.
The poll, conducted just before the Singapore data,
showed analysts expect Singapore’s economy to
grow 6.8 percent this year, higher than 6.0 percent
predicted in a similar poll in January.
Indonesia’s growth will be the second strongest,
while Thailand and the Philippines will trail the
grouping although projections for both countries
were upgraded from January.
Asian economies are leading the global recovery
from the financial crisis, drawing waves of
investment capital. However, that also presents
risks.
“The region’s early recovery is attracting large
capital flows, the perils of which were made clear
in the 1997/98 Asian financial crisis; volatile capital
flows could again have serious implications for
exchange rates and money supply,” the Asian
Development Bank said in a report.
Indonesia’s rupiah has gained more than 4 percent
against the dollar this year as capital flowed into
the country’s high-yielding bonds and stocks. It
gained 17 percent last year, making it Asia’s bestperforming currency.
Analysts expect it to rise close to 1.5 percent by the
end of the year, although the currency strength will
help dampen inflation.
The poll raised its forecast for Thai growth this year
to 4.3 percent despite the escalation in the country’s
long-running political crisis. More than 20 people
were killed in protests in April in the country’s
bloodiest political violence since 1992.
As the region’s economies recover, central banks in
Indonesia, Thailand, Malaysia and the Philippines
are all expected to raise their policy rates by the end
of the year.
ASEAN Review • [email protected] 3
APRIL 2010
Investors set to rediscover Southeast Asia
Indonesians line up to buy shares
in Indonesia’s Benakat Petroleum
Energy, an oil and gas company,
in Jakarta.
REUTERS/Beawiharta
By Saikat Chatterjee and Kevin Plumberg
A year after Asian stocks began to rise, investors
should turn their attention to Southeast Asia, which
lagged the wider rally and where exporters are set
to thrive on growth in China and India.
Southeast Asian markets, suffering from export
weakness and political risk, were overshadowed
until late last year by China’s investment-fuelled
growth, which boosted neighbours South Korea and
Taiwan.
That rebound has now fed through to Southeast
Asia, whose exporters look set to turn around
quicker than economists had expected to drive
economic growth in the region. One result -Malaysia’s surprise decision to raise its policy rate
for the first time since 2006.
Investors will likely focus more on high returns
and value with some tipping another strong year
for Indonesian bonds and Thailand as offering the
strongest earnings yield.
They will largely push aside serious political risks,
though Indonesian stocks have been hurt recently by
a parliament call for a criminal investigation of the
two top reformers in southeast’s biggest economy.
March 9 marked the one-year anniversary of the
S&P 500’s 3-year closing low. Since then, the MSCI
index of non-Japan Asia Pacific stocks has risen
105 percent. In contrast, Malaysia’s main index has
risen 57 percent, Thailand’s 75 percent and the
Philippines’, 78 percent.
Indonesia was one of Asia’s star attractions last year,
thanks to domestically driven growth, relatively
low inflation and high bond yields that continue to
attract foreign investors.
In addition, equity markets in Malaysia, the
Philippines and Thailand have been outperforming
non-Japan Asia this year based on value and may
continue to do so as growth forecasts rise.
“Taiwan, China, Korea -- these stories have been
very well documented for more than a year and to
some extent Southeast Asian markets have been
neglected by investors,” said Tai Hui, an economist
with Standard Chartered in Singapore.
“As markets calm down, investors will be looking
for new trade ideas and the forgotten ones will be
brought back.”
In Malaysia, Indonesia and Thailand, exports
to China are running far above their long-term
averages while shipments to the United States and
Europe are lagging, indicating a greater reliance on
Chinese growth.
India’s trade with Southeast Asia is worth only a
fifth of China’s, but Tai Hui believes it will catch up
quickly because of its domestically-driven growth
model.
higher returns, better value
Higher growth of course means interest rates later
this year, but holding local currency bonds may
continue to be lucrative, with currency strength and
high coupon payments offsetting potential capital
losses.
Take Indonesia for example. After equity-like returns
of near 40 percent in dollar terms on rupiah bonds
in 2009, HSBC expects another 10-13 percent this
year, even factoring in a full percentage point of rate
increases.
“Funds are beginning to gravitate towards (ASEAN)
debt because of their strong fiscal positions relative
to what they were like in the wake of the Asian
financial crisis and prospects of currency gains,” said
Desmond Soon, head of fixed income at DBS Asset
Management in Singapore.
“These flows, barring a crisis of seismic positions,
will gain,” said Soon, who manages $4 billion in
assets.
Memories of central banks constantly behind the
curve in dealing with double-digit inflation are
one reason why investors have been slow to gain
exposure to Southeast Asia.
However, Malaysia’s move last week, at a time when
inflation was subdued and growth just picking
APRIL 2010
up, is seen as a sign of changing times, where
policymakers are becoming more proactive on
containing price pressures, a plus of bonds.
Equities also look like they have upside. Southeast
Asian stocks have been outperforming the region so
far this year, resilient to the waves of profit taking
hurting last year’s standouts, like South Korea,
Taiwan and Hong Kong.
An equal-weighted index based on the the MSCI
indexes for Indonesia, Malaysia, Philippines and
Thailand has risen 2.9 percent year-to-date, and
without Indonesia up 2.3 percent.
However, the MSCI index of non-Japan Asia Pacific
stocks slipped 0.6 percent in the same period.
Earnings yields, expected earnings per share divided
by share price, are also quite attractive compared
with government bond yields, especially in Thailand.
Thailand’s average earnings yield based on
12-month forecasts is 10 percent, above the 5-year
bond yield of 3.43 percent, I/B/E/S data shows.
Paul Chan, chief investment officer with Invesco,
said Thailand had become one of his top picks
based on its cheap valuation and improving growth.
He has become cautious on China because of the
risk of a reversal in aggressive lending. Indeed, Sean
Darby, regional strategist with Nomura International
in Hong Kong, recommended increasing allocations
for Southeast Asian stocks to mediate the risk that
unexpected policy changes in India and China hurt
financial returns.
He is particularly keen on shares of banks, including
Kasikornbank, PT Bank Central Asia Tbk and
Malayan Banking Bhd.
APRIL 2010
Indonesia to let foreigners
own property
Apartment buildings are seen in
a developing residential area in
central Jakarta.
REUTERS/Enny Nuraheni
By Neil Chatterjee and Nopporn Wong-Anan
Indonesia’s investment chief said he expected
foreigners to be allowed to own apartments in
Indonesia by the third quarter of this year, giving
the country an additional source of foreign capital
inflow.
The move is likely to draw investors seeking
exposure to Southeast Asia’s biggest economy and
increase the flow of capital into a country whose
improving fiscal stability could earn it an investment
grade sovereign rating within a few years.
“The thinking is anything above a certain floor,
you can buy ... anything closer to the ground
has political sensitivity,” Gita Wirjawan, head of
Indonesia’s investment agency, said in an interview.
Currently foreigners can only buy property in
Indonesia through a nominee or via a local
Indonesian firm, putting the buyer at increased
risk. The move would also allow investment in
commercial property, Wirjawan said.
Asian residential property prices have been booming
on strong investor interest and low interest rates,
leading to fears of bubbles in some countries.
Wirjawan said Jakarta condominium prices were
undervalued versus Singapore and Vietnam’s Ho Chi
Minh City.
“Investors are optimistic about Indonesia relative to,
say, Thailand and Malaysia,” said Colin Tan, director
of research and consultancy at Chesterton Suntec, a
real estate advisory firm.
“If you open a new channel for investments, some
money will definitely come in ... It can only be good
for Indonesia’s property market.”
Indonesian property developers who may benefit
from the new regulation include Summarecon
Agung, Lippo Karawaci and Bakrieland
Development.
Tan said foreign buying will take time to materialise
since residential investors will want to study the
rules and assess how easy it is to exit the market.
Investors poured into Indonesia’s bond, currency
and stock markets last year.
APRIL 2010
Indonesia pension fund favours
mining, bank stocks
By Janeman Latul
Indonesia’s largest pension fund, PT Jamsostek, has
increased its holdings of Jakarta stocks and likes
state-owned miners benefiting from strong growth
in China and India, as well as banks exposed to
robust local growth.
Indonesia’s benchmark stock index hit an all-time
high in April and is up nearly 13 percent so far this
year, making it Southeast Asia’s best performer.
“We are changing our approach to the capital
market from a conservative view to be more
progressive this year,” said Hotbonar Sinaga,
president director of Jamsostek, which manages 82
trillion rupiah of funds.
The pension fund was burned in 2008 when the
global crisis hit local stocks and caused it an
unrealised loss of 2 trillion rupiah but after turning
more cautious Jamsostek missed out on a near-90
percent rally in the Jakarta market last year.
This year, Jamsostek is putting about 20 percent of
funds under management into equities, up from 16
percent last year.
The pension fund is holding and trading bluechips, including state-owned listed firms in the
commodities and banking sectors.
Sinaga’s picks include state-owned coal miner PT
Tambang Batubara Bukit Asam and the country’s
biggest lender PT Bank Mandiri, also state
controlled.
Sinaga said that the preference for state-controlled
firms was due to good fundamentals and the
government’s support.
The fund also holds shares in other state-controlled
firms including copper and gold miner PT Aneka
Tambang (Antam), tin producer, PT Timah and
the country’s top telecommunications firm PT
Telekomunikasi Indonesia.
Sinaga also likes other state-controlled lenders
including Bank Tabungan Negara, and BRI.
He declined to give a value of the fund’s holdings,
but shares in Timah are up 15 percent this year,
while Bukit Asam and Antam are up 1.2 percent and
almost 5 percent, respectively.
But some of its banking stocks have significantly
outperformed the market with BTN rallying 72.3
percent and BNI up 17.4 percent.
Telkom stocks are down 14.29 percent so far this
year.
Sinaga expects the Jakarta index, which hit an alltime high of 2,916.1 on April 7 before falling back to
around 2,850, to rise above the 3,000 level soon.
Jamsostek, which manages funds for about 27
million Indonesian workers, also holds shares in
private companies including PT Astra Agro Lestari, a
leading palm oil producer.
downside risks
Sinaga said Jamsostek had a strict policy of
avoiding volatile stocks such as PT Bumi Resources,
Indonesia’s biggest coal miner by production.
Bumi, which is controlled by powerful businessman
and politician Aburizal Bakrie, was badly hit by the
global financial crisis in late 2008 and its shares
have underperformed this year.
Elvyn Masassya, Jamsostek’s chief investment
officer, said Indonesia stood out as an attractive
emerging market.
“From the global perspective, the developed
countries, especially their fund managers, are
currently facing too much liquidity and they are
looking at Indonesia as one of the most promising
emerging markets,” Masassya said.
He expected the Jakarta stock market to rise 30 to
35 percent from current levels by the end of the year,
citing strong domestic growth and an improving
global economic environment.
But Masassya said that gains in the market were
likely to slow in the third quarter.
“The acceleration will not be as strong as the first
half, even a temporary setback could happen,
because companies usually evaluate their
business plan as well as investors evaluate their
investments,” Masassya said.
He also said that stronger inflation and higher
interest rates could weigh on stocks in the next
quarter.
“Therefore, we have anticipated the downside risk
by putting a few portions of our investment into
‘defensive’ stocks, like Telkom,” Masassya said.
Indonesia’s annual inflation has been contained
below 3.5 percent so far this year, allowing the
central bank to keep interest rates at a record low.
APRIL 2010
Malaysians still await PM’s reforms
Malaysia’s Prime Minister Najib
Razak giving a speech unveiling a
raft of economic measures that he
said would propel the Southeast
Asian country to developed
nation status by 2020.
REUTERS/Stringer
By David Chance
When he was about to take office a year ago
Malaysian Prime Minister Najib Razak appealed to
reporters to “judge me by my actions”, but a year on
his benchmark reforms are still at the consultative
stage.
By setting up a series of non-government bodies
-- the latest one is the “Economic Delivery Unit”
-- to oversee the reform process, Najib has divorced
acceptance of reform from the political process,
critics say, leading to a series of policy flip-flops that
have unnerved investors.
That has allowed anti-reform pressure groups to
spring up and the main party in the ruling coalition
that Najib leads appears to have washed its hands
of responsibility for policies announced on Tuesday
which aim to more than double Malaysia’s income
by 2020.
“Najib is not willing to stand up, when you have
political pressure he buckles,” said Bridget Welsh,
a Malaysia expert at Singapore Management
University.
The urbane 56-year old British-trained economist
appeared to be a breath of fresh air when he took
office last April after the National Front coalition
scored its worst ever results in elections in 2008
under the grey Abdullah Ahmad Badawi.
Najib pledged economic and social change to
reinvigorate a country once one of Asia’s favoured
investment destinations, but which in 2008 and
2009 saw net portfolio and direct investment
outflows of $61 billion as the global economic crisis
unfolded and political risk mounted after the polls.
“Last year he sold the investment community on the
right talk and doing things in a progressive fashion
but a year on, the substance is not there and he is
still talking,” said Welsh.
In a sometimes passionate speech Najib hinted he
would roll back an affirmative action programme
that favours the majority Malay population and
which was introduced by his father, Abdul Razak
Hussein, who took the helm of the country in the
wake of race riots in 1969.
But there was little meat on the policy bones and
the country’s ringgit currency and the bond markets
have barely budged in reaction to what was a “bold
transformation”.
Najib’s government appears ill-at-ease actually
implementing reforms such as planned electricity
and petrol price hikes and the introduction of a
goods and services tax so as to cut a bloated budget
deficit that hit a 22-year high of 7.4 percent of gross
domestic product.
While tough and politically unpopular actions
languish, there is however a stream of
announcements, ranging from the concept of
1Malaysia brand that is supposed to bring together
Malays and the minority ethnic Indian and Chinese
populations to the grandly named “government
transformation programme”.
“The government has too many visions and so far
there have been too many announcements but very
little success, so people doubt these programmes
will be implemented,” said independent political
analyst Khoo Kay Peng.
government tenders to end graft?
Key to making Malaysia more competitive so that
its economy will grow at the 6.5 percent annual rate
to get the country to “developed” nation status will
be to shake up a system of government tenders that
favours mainly Malay contractors.
The majority of the tens of thousands of “Class F
Contractors”, which are the smallest businesses that
can tender for government projects -- in their case
those worth up to 200,000 ringgit -- are the core
support of the United Malays National Organisation,
the main party in the governing National Front
coalition.
These businesses often carry out building works in
schools and for local councils and are the smallest
cog in a web of government-linked graft that has
seen Malaysia’s ranking drop to a record low of 57th
in anti-corruption body Transparency International’s
2009 report.
APRIL 2010
Often government tenders get subcontracted to
non-Malay businesses for a cut of the fee, wasting
government money, and many of the “Class F”
contractors would go to the wall if they had to
compete in an open market.
Najib said he would seek to end this “rent seeking”
behaviour with “clear rules for the whole of the
Bumiputera community” (referring to Malays and
other indigenous people), although he failed to spell
it out.
“With respect to competitive tender process when it
comes to government procurement the commitment
seems to make it competitive within the Bumiputera
community first,” said Ibrahim Suffian of
independent pollster the Merdeka Center.
“Beyond that it does not speak more clearly that
procurement will be made competitive to include
everyone,” Ibrahim said.
There are warning signs flashing for Najib such
as the formation of a group known as Perkasa
(Strength) that has sprung up to “defend” Malay
rights and Islam.
Although it attracted a few thousand people to its
first meeting this weekend, including former Prime
Minister Mahathir Mohamad, it is not clear how
strong a force it could become.
Mahathir himself adopted a cagey position in an
interview with Reuters saying Najib needed to push
ahead with reforms and at the same time engage
Perkasa.
Signals like that will likely make investors sit on
their money. A recent rally in the ringgit currency
that has added 4.63 percent to its value this year
against the dollar was due to the central bank’s preemptive rate hike, economists say.
APRIL 2010
Thaksin urges snap poll to end thai crisis
An anti-government “red shirt”
demonstrator looks at the
pictures of his killed comrades
displayed outside a shopping
mall.
REUTERS/Damir Sagolj
By Nopporn Wong-Anan
Thai Prime Minister Abhisit Vejjajiva must dissolve
parliament immediately and call a snap election to
end a tense standoff between troops and protesters,
fugitive former premier Thaksin Shinawatra told
Reuters.
“The political crisis must be resolved by political
means and the only way is for Abhisit to dissolve
parliament and call a snap election,” Thaksin said
in an telephone interview during a brief stopover in
Brunei after a trip from Fiji.
Thaksin said Abhisit’s resistance to demands by
“red shirt” protesters, who have occupied key parts
of central Bangkok for more than 5 weeks, means
he intends to order a crackdown on protesters or a
coup.
“Lauching a coup wouldn’t be an easy thing like in
the past, as it will face a lot of resistance from the
people,” said the 60-year-old telecoms billionaire,
still the only Thai prime minister to win two
consecutive elections, both by landslides.
Analysts say cracks in the armed forces along the
country’s colour-coded fault lines have the top brass
worried about leaks and unsure of who to trust.
Speculation is growing hardliners may try to stage a
coup to end the five-year political crisis.
Thaksin, ousted in a bloodless 2006 coup, said he
had stopped speaking by telephone and video links
at red shirt rallies in Bangkok over the past couple
of weeks because the movement had gone beyond
fighting for his cause.
“Initially, people were fighting for me, who they felt
was unfairly treated, but now more and more people
are fighting for justice and democracy. They don’t
want the elite to keep interfering in democracy,”
Thaksin said.
The former policeman has been living abroad to
avoid jail after being convicted in 2008 on graft
charges, which his supporters saw as an attempt to
keep him from holding office.
Thaksin said he has no plans to return to Thailand
as long as his opponents are trying to “hunt me
down.”
Thai soldiers have thrown a cordon around
Bangkok’s business district as red shirt protestors
demand early elections.
The Thai finance minister told Reuters the prime
minister had no intention to bow to street protestor
demands. He said the weaker baht was good for
exports and said the central bank would factor in
violence at its April meet to discuss interest rates.
APRIL 2010
Opposition chief tells Singaporeans:
Don’t be afraid
Leader of Singapore’s opposition
Reform Party Kenneth
Jeyaretnam speaks in front of
portraits of his late father J.B.
Jeyaretnam, who was also a
prominent opposition figure,
during an interview with Reuters.
REUTERS/Vivek Prakash
By Nopporn Wong-Anan and Kevin Lim
It is time for people in one-party ruled Singapore
to have more say in politics and not be fearful of
a change of government, a hedge fund manager
turned opposition leader said.
Kenneth Jeyaretnam, whose late father and veteran
opposition leader was bankrupted in defamation
lawsuits by the ruling People’s Action Party (PAP),
said his two-year-old Reform Party was encouraging
people to come out and offer different views.
“Firstly, do not be afraid. You have a right to
exercise, to have a say, in how your country is run,”
Jeyaretnam told Reuters in an interview at his
apartment, filled with pictures of his father, in an
upmarket neighbourhood of Singapore.
“Singapore is not going to collapse. Competition
in politics is as necessary as it is in economics to
ensure efficiency.”
Jeyaretnam, 51, who graduated from Cambridge in
1983 with double-first class honours in economics
and once ran a London-based hedge fund, said his
party was aiming for the same audience as the PAP
in the next election, due by February 2012.
The Reform Party plans to field 10-15 candidates in
the next poll, fewer than 20 percent of the current
seats.
The government has offered to nominate more
opposition members to parliament, but few analysts
expect real change.
The Reform Party was founded in July 2008 by
Jeyaretnam’s father, Joshua Benjamin Jeyaretnam or
JBJ, just before he died.
Choosing his words carefully, Jeyaretnam
said he would focus his political campaign on
offering alternative policies rather than attacking
personalitities in the PAP.
Jeyaretnam would keep taxes low to make
Singapore a top investment destination, but said a
wider healthcare system was needed to deal with an
ageing population.
The Reform Party also proposes the possible
privatisation of Singapore’s two multi-billion dollar
state wealth funds -- Government of Singapore
Investment Corp and Temasek -- to allow more
transparency.
The PAP, which has led Singapore for 50 years, has
never lost more than four seats in any poll.
COMPANY NEWS
APRIL 2010
DBS hires Morgan Stanley’s
Su Shan to head private bank
A participant walks past a poster
at the Asian Financial Forum.
REUTERS/Bobby Yip
By Saeed Azhar and Neil Chatterjee
Southeast Asia’s biggest lender, DBS Group, has
poached Morgan Stanley’s high-profile Tan Su Shan
to head its private bank, in a bid to bolster its wealth
business and seize share from foreign rivals.
The hiring shows fierce competition among Asian
and foreign banks to tap business from the rich in a
region where wealth is growing at a faster pace than
in the United States and Europe.
DBS, confirming an earlier Reuters story, said the
hiring of one of Singapore’s best known wealth
management talents would take its private
bank, ranked as Asia’s sixth-biggest in 2008 by
consultants Calamander Group, to the next level.
New DBS CEO Piyush Gupta, a former Citibanker,
wants to aggressively grow the bank’s wealth
business as part of his newly laid out growth
strategy.
“Asia is creating wealth faster than anywhere else in
the world,” said Gupta in a statement on the hiring.
Tan, 42, previously worked at Citigroup and
currently heads Morgan Stanley’s private wealth
unit in Singapore, having earlier overseen Southeast
Asia and Australia. She will join DBS in July.
A Morgan Stanley spokeswoman confirmed Tan’s
departure.
“She is very good with clients and has strong
experience in Southeast Asia,” said a private banker,
who asked not to be identified.
DBS, which currently earns about 90 percent of its
revenue from Singapore and Hong Kong, is trying
to grow in other Asian markets such as Indonesia,
India, Taiwan and China.
The Singapore bank, 28 percent-owned by state
investor Temasek had close to $21.5 billion assets
under management last year.
Singapore’s second-biggest lender, OverseaChinese Banking, last year bought the Asian private
banking unit of ING for $1.4 billion.
Asia is becoming a hot market for private banks,
with the number of millionaires expected to grow
by around 15 percent a year in the next few years,
and the region as a whole will soon overtake North
America, said Jonathan Larsen, head of consumer
banking for Asia Pacific at Citigroup.
“The wealth management space typically grows at
double GDP growth,” he said.
COMPANY NEWS
APRIL 2010
DBS indentifies M&A targets in Indonesia
DBS Bank’s new Chief Executive
Piyush Gupta attends a news
conference in Singapore
By Kelvin Soh and Denny Thomas
DBS, Southeast Asia’s biggest bank, has identified
several acquisition targets in Indonesia, its chief
executive said on Thursday, as it embarks on an
ambitious plan to expand in fast-growing emerging
markets.
“There are at least several targets that we can see in
Indonesia that might work,” DBS’s Chief Executive
Piyush Gupta told Reuters in an interview, without
naming specific targets.
“The issue is one of valuation, timing and finding
the right fit,” he said at the sidelines of Credit Suisse
Asia investment conference.
DBS makes most of its money from its operations in
Singapore and Hong Kong. But, in February, it said
it was aiming to have 30 percent of its revenue from
South and Southeast Asia, excluding Singapore, 30
percent from Greater China and 40 percent from
Singapore within five years.
Morgan Stanley estimates that DBS would have
to grow at a compounded annual growth rate of
40 percent a year in South and Southeast Asia to
achieve its stated target in that region.
Gupta, a one-time dotcom entrepreneur and
graduate of the prestigious Indian Institute of
Management, said DBS has enough traction to
grow organically, but remained open to acquisition
opportunities.
“In South and Southeast Asia we are underrepresented,” said Gupta, adding that India,
Indonesia, Malaysia and Thailand are the countries
where DBS would look for acquisition opportunities
where regulations allow.
The company’s revenue in China and India grew 45
percent and 70 percent, respectively, in 2009.
“Our focus on the India business is likely to be more
affluent, so if we can figure out how to do affluent
business with this thing (JV), then it would be
attractive. If not, we will have to rethink what we
have to do with it,” Gupta said.
Days later DBS sold its stake in Indian mass market
financial services provider Cholamandalam DBS
Finance.
The company is ruling out buying minority stakes
in banks, Gupta said, in a move that could point to
a newly emboldened DBS that is actively seeking
possible acquisition targets.
DBS has been conservative in pursuing any
acquisition opportunities after it paid $5.8 billion for
Dao Heng Bank in Hong Kong in 2001.
COMPANY NEWS
APRIL 2010
Bangkok Metro eyes signs of turnaround
By Khettiya Jittapong and Manunphattr Dhanananphorn
Loss-making subway operator Bangkok Metro
Pcl said it expects core earnings to be positive for
the first time since beginning operations in 2004,
signalling a rise in passenger traffic and sending its
shares up.
Bangkok Metro, which runs a 20-km underground
train system, expects growing demand for mass
transit in the sprawling city of 15 million people with
the opening of an airport rail link this year and plans
for new shopping malls and condominiums.
That should boost revenue 10 percent rise and help
the operator narrow its net loss to about 1 billion
baht ($31 million) this year, in line with analysts’
forecasts, Managing Director Sombat Kitjalaksana
told Reuters in an interview.
“We’re very optimistic because the overall economy
is improving,” he said.
Bangkok Metro, which is known as BMCL, reported
a net loss of 1.33 billion baht last year and a 1.46
billion baht loss in 2008. Earnings before interest,
tax, depreciation and amortisation (EBITDA) were
negative at about 200 million baht last year.
“We are confident that EBITDA will be positive this
year,” said Sombat, an engineering Ph.D graduate
of Austria’s University of Innsbruck. “Losses will be
lower this year, while we continue to control costs.”
Sombat’s comments pushed BMCL’s shares up 1.35
percent to 0.75 baht on the day, outperforming
Thailand’s benchmark stock index. The stock has
been a relative laggard over the past 12 months,
rising just 21 percent against a 81 percent gain in the
index. Against regional peers it also looks cheap,
trading at 2.1 times price per book, compared with
4.1 for Singapore subway operator SMRT Corp Ltd,
according to earnings tracker Thomson Reuters
I/B/E/S.
passenger traffic projections
Awarded a 25-year contract to operate the nearly $3
billion city subway, BMCL was expected to make a
profit in 2013 when the 36 billion baht ($1.1 billion)
“purple line” mass transit line begins operations,
Sombat said.
Although the number of passengers fell to
190,000 late last week as protesters began
arriving in Bangkok for anti-government rallies,
daily passenger numbers were expected to rise to
an average of 230,000 during weekdays in 2010,
Sombat said.
That compares with below 200,000 last year.
“The better economic situation encourages
commuters to use our service several times a
day,” he said, adding BMCL will stop offering fare
discounts in July, which should help revenues.
Only 6 percent of Bangkok commuters use the mass
transit system, compared with more than 30 percent
in Hong Kong and Singapore, but that is expected to
change.
The capital plans to expand its track to 100 km
from its current 44 km, which also includes a 24-km
elevated “Skytrain” operated by unlisted Bangkok
Mass Transit System (BTS).
The state-run Mass Rapid Transit Authority owns
25 percent of BMCL, the country’s number two
contractor CH Karnchang owns 24.6 percent, and
tollway operator Bangkok Expressway has a 11.9
percent stake.
The planned 23 km (14 mile) “purple line”,
stretching from Bang Sue in northern Bangkok
to Bang Yai in the neighbouring province of
Nonthaburi, would be linked to BMCL’s existing
underground line, doubling BMCL’s passenger
numbers, said Sombat.
BMCL will join a bid to operate the new line in the
third quarter but faces likely competition from
skytrain operator BTS and foreign firms from Hong
Kong, Singapore and Japan.
Kim Eng Securities analyst Daowadee TeeraApisakkul said BMCL is best placed to win both the
“purple line” and a 27-km “blue line” project worth
an estimated 52.4 billion baht that consists of both
underground and elevated lines.
“It is in the strongest position (to win) because
BMCL already has skilled staff and do not need to
invest a lot of money,” said Daowadee.
That message is echoed by Sombat. “We have the
potential to win the bid. If we win the ‘purple line’,
we should be able to accelerate construction works,
reduce costs and boost revenue.”
The bid for “blue line” construction contracts is
expected in late April and a bid for operator will be
held early next year.
COMPANY NEWS
APRIL 2010
Siamgas bullish on 2010
as energy demand up
Unloading gas cyclinders in India,
where Siamgas said it would like
to invest this year.
REUTERS/Stringer
By Wirat Buranakanokthanasan
Thailand’s Siamgas and Petrochemicals PCL said
it expected 2010 net profit to rise 15 percent, better
than market expectations, because the recovery in
the economy will boost energy demand.
The country’s second-biggest liquefied petroleum
gas (LPG) firm aimed to pay a higher dividend on its
2010 performance and expected to begin booking
revenue from its investment in China in August,
Managing Director Supachai Weeraborwornpong
told Reuters.
“Our profit forecast is conservative. The 15 percent
does not include a contribution from China and
Vietnam,” Supachai said in an interview.
“The first quarter this year was better than last year
when the economy was not good. The economic
recovery has pushed up oil prices this year, which
encourages consumers to use more gas.”
Two analysts surveyed by Reuters expected the
company to post an 11 percent rise in net earnings
this year. The company made a net profit of 1.25
billion baht ($39 million) in 2009.
Siamgas, which has a market share of more than 30
percent, sells cooking gas for households and LPG
for automobile and industrial use, with customers
ranging from car maker Honda Motor to shopping
mall operator Central Pattana PCL.
overseas expansion
The company vies with energy giant PTT and
smaller rival Picnic Corp.
While domestic political unrest has had limited
impact on the company so far, Supachai said,
Siamgas aimed to develop to become a leading LPG
supplier in Southeast Asia and would also focus on
investing in China and India this year.
“We are always looking for the opportunity to invest
overseas. We will focus on the LPG business in
which we have strong experience,” he said, adding
foreign operations should generate about 50
percent of revenue within five years.
The domestic market contributes more than 90
percent of revenue now.
COMPANY NEWS
APRIL 2010
Malaysia’s Sime to spend 3-5 bln ringgit
on palm
An aerial photo of a palm
oil plantation in Malaysia.
REUTERS/David Loh
By Niluksi Koswanage
Malaysia’s top planter Sime Darby will spend 3-5
billion ringgit on its oil palm estates this year as
global demand for the vegetable oil grows, a senior
official said.
All this comes closer to Sime’s target of owning and
managing 1 million hectares but Azhar declined to
give a timeframe as to when this would become a
reality.
Sime owns 530,000 hectares of estates planted
with oil palms in Malaysia and Indonesia and has
another 300,000-400,000 hectares of concessions
from Liberia and Malaysia’s Sarawak state that are
yet to be developed.
“We would like to achieve this as quickly as possible
because our ever growing downstream operations
requires more crude palm oil for processing but it
will take time,” Azhar said.
“If you are a big player like us, you will need to
spend that kind of money to maintain plantations,
get equipment and yes, buy more land,” Sime
Plantations Managing Director Azhar Abdul Hamid
told Reuters in an interview.
He said some of the expenditure will be channeled
to Liberia in West Africa for a 63-year concession to
develop 220,000 hectares. Sime has already spent
70 million ringgit on the estates there and has set
up a nursery.
Sime, the world’s largest listed planter by landbank,
is on the lookout for brownfield land in Indonesia
and Malaysia and Azhar said the company was
eyeing 50,000-80,000 hectares but would be
happy with 30,000 hectares.
“We can only plant 40,000-60,000 hectares per
year and it takes three years to grow oil palms.
We also need to carefully monitor our holdings all
over the world before we commit to growing our
landbank.
Sime, which is expected to produce 2.4 million
tonnes of crude palm oil for the financial year
ending June 2010, has already committed 80
percent of its output.
“We have a policy to sell forward but we do not
speculate,” he said.
Sime Darby has also set up a refinery in China, the
world’s second largest consumer of palm oil, and
Azhar said the plant with a 256,000 tonne capacity
should be operational by June next year.
COMPANY NEWS
APRIL 2010
singapore’s Armstrong sees
double-digit profit growth
Electronics have been driving a
rebound in Singapore’s exports.
REUTERS/Beawiharta
By Fabian Ng
Singapore precision engineering firm Armstrong
Industrial sees double-digit profit growth this year
and in the next five years, driving its shares up as
much as 7 percent.
Armstrong, which manufactures automotive parts
and data storage drives, sees a 15-18 percent
compound annual growth rate (CAGR) for revenue
and profit in the next five years, similar to pre-crisis
levels, the firm’s deputy chief executive officer
Steven Koh told Reuters.
“This year will definitely see better results in both
top and bottom line, I am very confident. We will see
at least double-digit growth this year,” Koh said.
“CAGR should be around 15-18 percent for the next
five years.” The firm posted a 4.8 percent decline
in full year 2009 revenue from a year earlier, but
reported a year-on-year rise of 7.1 percent in 2009
net profit.
half of Armstrong’s revenue by 2015, from about 27
percent this year, on the back of strong automotive
growth and recovering consumer electronics sales.
The firm also expects India to grow to about 7-8
percent of revenue in three years and overtake
Malaysia to become the fourth largest market for
the company. Singapore, China, Thailand and
Malaysia are currently its largest markets.
Armstrong, which has a market capitalisation of
$121 million, competes against privately held firms
Kokoku Intech in the hard disk drive sector and
INOAC Thailand in the automotive industry.
Shares of Armstrong closed up 3 percent after the
interview, outperforming the overall index, which
rose 0.07 percent.
The rally took gains so far this year to 40 percent,
versus little change for the Singapore index.
Koh said the increase in revenue would be driven by
China and India. He said China would account for
LIFE IN THE REGION
APRIL 2010
Universal Studios Singapore
courts 8 but gets bad luck
An exterior view shows the castle
inside the “Far Far Away” section
of the Universal Studios theme
park in Singapore.
By Nopporn Wong-Anan
The world’s fourth Universal Studios welcomed
its first visitors with a lavish ceremony aimed
at attracting luck, and repeat business, to the
Singapore theme park.
Asked if Universal Studios Singapore could lose
its novelty quickly and suffer losses like Hong
Kong’s Disneyland, Lim said: “Definitely not, we are
different from Disney.”
Doors were flung open to the public at precisely
08:28 a.m. on March 18, after 18 Chinese lions
blazed through the entrance at 08:08 a.m, as the
number 8 is considered by many in mostly ethnic
Chinese Singapore as auspicious.
He adding the park would bring in more rides over
the next three years to keep the experience “fresh”
for visitors.
But its rollercoaster -- the world’s tallest duelling
rollercoaster -- rolled to a halt a mere week after
opening, while the new Genting resort it forms part
of was hit with more bad luck just a day later when
singer Tom Jones pulled out of a concert with throat
problems.
Since opening to fanfare in 2005, Disney’s first
magic kingdom in China struggled to attract the
expected flood of visitors from mainland China, and
has been criticised as being too small to attract
repeat visitors.
The 20-hectare Universal Studios park aims to
attract 4.5 million visitors in its first year.
In 2008, it made a net loss of $170 million and is
now undergoing an expansion aimed at bolstering
its competitiveness with a rival Disneyland
scheduled to open in Shanghai in the next five or six
years.
“We have ambitions that this would be the No. 1
destination in Asia and also Europe as far as theme
parks are concerned,” Genting Group chairman Lim
Kok Thay told reporters.
The 24 attractions at Universal Studios include the
two rollercoasters that shoot off at the same time
and loop around each other, plus a 4-D cinema and
rides based on Hollywood films.
A worker holds up robusta coffee
beans in a traditional coffee
factory.
REUTERS/Yusuf Ahmad
Cambodia coffee roaster
seeks global buzz
By Lach Chantha
Southeast Asian coffee from Vietnam and Indonesia
percolates around the world, but if a family roaster
has its way, mugs may soon be filled with a blend
from another, unlikely location: Cambodia.
Every few days, the rich, earthy aroma of roasting
coffee wafts over the dusty town of Mondulkiri in
Cambodia’s remote northeast as the employees of
family-owned Mondulkiri Coffee maintain a tradition
started in the 18th century by French colonialists.
The hills surrounding Mondulkiri are about 800
metres (2,625 ft) above sea level, an ideal climate
for the coffee plants which are irrigated by natural
streams, and the area has so far remained safe from
rubber plantations and other cash crops.
Mondulkiri Coffee owner Yon Thun is a relative
newcomer to the business but says his love of the
brew made him turn it into his livelihood.
His company roasts 150 kg of coffee beans every
couple of days, which are ground into a powder and
packaged in 250 gram boxes which sell for 6,000
Riels ($1.50) or larger half kg boxes which sell for
12,000 Riels.
“I used to drink coffee at this place and the taste
was so good I asked the locals how they made it and
I learnt from them,” Thun told Reuters recently.
“I then started to make coffee but it was not that
good at first. But I got it right after about six months
later.”
Cambodian coffee, like other coffees in Southeast
Asia, are roasted till almost black with the help of
vegetable fat. The beans are then ground into a fine
powder, and the whole process is done by hand,
creating a rich, dark blend.
Now that Mondulkiri Coffee has mastered the area’s
signature taste, Thun is eyeing the export market,
and hopes his sales to supermarkets in the capital
Phnom Penh will provide him with capital to ramp
up production.
In Phnom Penh where most Mondulkiri coffee is
sold, business is brisk, coffee shop and supermarket
owners say.
“Customers want to buy Mondulkiri coffee because
it is produced in Cambodia, they support the local
product and it is also a good coffee,” said Pen
Phanna, a supermarket owner.
In Indochina, Vietnam has long been the largest
producer of coffee, but Cambodia and Laos lag far
behind. Tourists who make it to the Cambodian hills
say the local brew has potential.
“Not bad. But I think if you prepared it with an
espresso fashion, you would have a pretty good shot
of coffee,” said American tourist Daniel Shearf.
COMPANY NEWS
APRIL 2010
Beats and exclusives
Can you afford to read this after your competitors?
Reuters breaks news of Malaysia`s plans to win
back foreign investment
Reuters broke news of Malaysia`s plan to boost its
economy and restructure taxes as well as its longterm growth prospects. The new plan was officially
announced by the prime minister at the end of
March and came after a series of policy flip-flops cut
investor confidence.
Reuters alone with Tenaga CEO`s new power
demand growth forecast
In an exclusive interview with Reuters at the
Invest Malaysia conference on March 30, the CEO
of Tenaga Nasional, Malaysia`s biggest power
producer, upgraded his forecast for power demand
growth to 6-7 percent for 2010 from 3 percent
estimated earlier.
Reuters breaks news on Bumi`s plans to list $1.9
bln non-coal assets
Reuters broke the news on April 11 that Bumi
Resources, Indonesia`s biggest coal producer, plans
to spin off its non-coal assets, valued at $1.9 billion,
in an IPO later this year, and that investment banks
Credit Suisse and JP Morgan have been approached
to advise on the deal.
Reuters breaks news of Adaro Energy`s plans to
bid for $1.5 bn coal railway project
Reuters broke news on April 17 that Indonesia`s
biggest coal producer by market value, Adaro
Energy, plans to bid for a $1.5 billion coal railway
project in Kalimantan, which would significantly
improve its coal transport facilities.
Reuters exclusive on DBS hiring high profile
Morgan Stanley private banker
Reuters scored an exclusive on April 8, reporting
that DBS hired Tan Su Shan, Morgan Stanley`s
high-profile private banker to head its private bank.
The news about Tan, the city-state`s most influential
female banker, generated a lot of buzz among
bankers as it showed that DBS`s new CEO has
aggressive plans to increase market share in Asia.
Reuters first to detail size of Temasek`s
investment in India`s GMR Energy
Reuters was first to report the exact size of
Temasek`s investment in GMR Energy on April 8.
The Reuters report was picked up by Bloomberg.
GMR shares opened about 2 percent higher on April
9.
Reuters grabs Stanchart exec for exclusive
comments on consumer banking, hiring
Standard Chartered`s CEO for global consumer
banking Steve Bertamini told Reuters in an exclusive
Singapore
Reuters News
1 Raffles Quay #28-01
North Tower
Singapore 048583
T +65 6403 5555
F +65 6534 8140
[email protected]
interview on April 1 the consumer bank had a good
first quarter and that the rise in Asian currencies
will help boost contributions to group earnings this
year. He also revealed plans to hire thousands of
relationship managers as StanChart targets Asia`s
mass affluent.
Thai Oil, PTT shares surge after Reuters
interviews
Shares in Thailand`s largest oil refiner Thai Oil
PCL hit an eight-week high in a two-day surge of
over 8 percent after a Reuters interview on March
10 in which the CEO was bullish about the 2010
revenue outlook and its investment plans. Shares in
Thailand`s top energy firm PTT PCL also jumped as
much as 4 percent on March 30 after Reuters broke
news the company expected its key gas plant to be
begin operations in the middle of this year.
Thai bank shares jump after central bank tells
Reuters deal on
Shares in Thailand`s Siam City Bank and Thanachart
Capital rose sharply for two days after Reuters
broke news on March 9 that the long-awaited sale
of a big stake in Siam City worth nearly $1 billion
would be signed quickly.
Reuters interview with finance minister pushes
down Thai bond yields
Thai bond yields fell to their lowest since late
February after an April 15 Reuters interview with
the country`s finance minister, who said the central
bank would discuss the political and social unrest
that has plagued Bangkok for more than a month,
leading many to conclude that a long-expected
monetary tightening could be delayed.
Reuters alone with news on delay in Philippine
state asset sales, borrowing plan
In an exclusive interview with Reuters, Philippine
finance minister Margarito Teves said the sale of
three state assets, meant to plug a yawning budget
deficit, may have to be done by the next government
that takes office in July. The comments suggested
difficulty ahead for Manila in managing its deficit.
Reuters Macau-Sands Special Report prompts
state regulator probe
A Reuters special report on March 30 on U.S. casino
operator Las Vegas Sands and its links to organized
crime in Macau prompted Nevada regulators to
investigate the status of VIP room operations
in Macau casinos and possible links to Chinese
criminals. Shares of Sands-China immediately fell in
Hong Kong trade.

asean Review

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