As U.S. coronavirus cases rose steadily, the White House and Congress negotiated measures on Tuesday to bolster the U.S. economy and Americans’ paychecks against the outbreak’s impact, although there was no immediate sign of a deal.

The rise in the number of U.S. cases of COVID-19, a highly contagious and sometimes fatal respiratory illness, has concerned health officials and spurred calls within Congress for action to expand testing and avert an economic meltdown.

“We had a good reception on Capitol Hill. We’re going to be working with Republican and Democratic leadership to move a legislative package,” Vice President Mike Pence, who is leading the White House’s coronavirus task force, told a White House briefing.

Almost three-quarters of U.S. states have confirmed cases of COVID-19. A running national tally kept by the Johns Hopkins University center tracking the outbreak puts the number of cases at 1,025, with 28 deaths. Washington state’s governor warned of tens of thousands more cases without “real action,” and New York’s governor deployed National Guard troops as a containment measure in a hard-hit New York City suburb.

U.S. stocks rebounded in their largest daily gain since late 2018 on hopes that a government stimulus package was in the making. In Asia, though, on Wednesday, Asian shares and Wall Street futures fell as growing scepticism about Washington’s stimulus knocked the steam out of the rally.

A central feature of the administration’s legislative proposal is payroll tax relief, although the extent and duration of the proposal were unclear.

White House officials have also said the administration could undertake executive action to help small businesses and workers, including those who do not receive paid sick leave.

Trump is scheduled to meet with bank executives at the White House on Wednesday.

U.S. Treasury Secretary Steven Mnuchin, who is leading negotiations on behalf of Republican President Donald Trump, met with Democratic House Speaker Nancy Pelosi to discuss a possible deal.

“We’re going to work together on a bipartisan basis to figure out how we can get things done quickly that are going to help the Americans that are most impacted by this and small and medium-sized businesses that are impacted,” he said.

Pelosi said the meeting was aimed at seeing “where our common ground was” on a set of legislative proposals.

In remarks to reporters, she warned that any package should not contain “trickle-down solutions that only help a few.”

Democrats are challenging the Trump administration to tightly target new measures at people directly affected by the coronavirus. Any measure would need to pass the Democratic-controlled House as well as the Republican-controlled Senate before reaching Trump’s desk.

“I hope we don’t play politics with this. Mixing politics with a pandemic is not good. It’s terribly counterproductive,” said Republican Senator Pat Roberts.

‘MIXED REVIEWS’

All three major U.S. benchmark stock indexes on Tuesday rose nearly 5%, one day after suffering their largest losses since the 2008 financial crisis.

Prospects for a second day of gains on Wednesday dimmed as U.S. equity index futures slid 1% after the overnight trading session got under way.

Trump met with Republican lawmakers and again downplayed the risks from the coronavirus. “It will go away. Just stay calm. It will go away,” he said.

A senior Senate Republican aide said Trump’s payroll tax proposal got “mixed reviews” among Republican senators who attended.

Some Senate Republicans said a potential deal could include $300 billion in payroll tax relief that could help people make rent and mortgage payments, or pay medical bills if family members’ work hours are reduced during the outbreak.

Democrats accused Trump of being more focused on soothing Wall Street’s nerves than on protecting the public from the health and economic fallout of the fast-spreading epidemic. The White House has been accused of inadequate preparation for the outbreak and a slow rollout of coronavirus testing.

“President Trump and his administration should be putting people before corporations, and they should be focused on taking appropriate steps to keep the American people and their economic security safe,” Senate Democratic leader Chuck Schumer said.

Democrats are pushing for paid sick leave, expanded and free testing for the coronavirus and other measures.

OUTBREAK EXPANDS

More than 116,000 people have contracted the coronavirus worldwide since it surfaced in China late last year, according to the World Health Organization. More than 4,000 people have died.

Italy, which has the highest death toll outside of China, has put its entire population of 60 million on virtual lockdown.

At least 35 U.S. states and the District of Columbia have reported infections of COVID-19. New Jersey on Tuesday reported its first death.

New York Governor Andrew Cuomo said schools would be closed and public gatherings suspended in a coronavirus “hot zone” in New Rochelle, a New York City suburb, and deployed National Guard troops there.

The United Nations said it would be closing its headquarters in New York to the public until further notice.

As the outbreak spreads, daily life in the United States has been increasingly disrupted, with concerts and conferences canceled and universities telling students to stay home and take classes online.

Democratic presidential contenders Joe Biden and Bernie Sanders both canceled rallies in Ohio on Tuesday night, citing warnings from public health officials, as six states voted in the party’s nominating contests.

The Democratic National Committee said its presidential debate in Arizona on Sunday would be conducted without a live audience because of health concerns.

Source: Reuters

Thailand is preparing to restrict some aspects of daily life after the country’s biggest spike in coronavirus cases, further damaging one of Asia’s weakest economic outlooks.

The steps to be considered Monday include placing more curbs on foreign arrivals, canceling events with big crowds and closing entertainment venues deemed risky for spreading the virus. Confirmed cases jumped by 32 on Sunday to 114, sparking fears of a bigger outbreak and some panic buying of groceries.

The Thai economy was already reeling from a collapse in the critical tourism sector amid lock-downs worldwide to slow the transmission of the disease known as Covid-19. A drought and delayed public spending are additional blows, leaving Thailand with the highest odds of recession among Asian nations — at 30% — after Japan, according to data compiled by Bloomberg.

“We may need a sudden stop of economic activity, like China, as it proved effective in tackling the spread,” said Somprawin Manprasert, chief economist at Bank of Ayudhya Pcl, a Thai unit of Mitsubishi UFJ Financial Group. “With such disruption, the economy will likely contract this year.”

Stock Slump
Investors have taken fright, making the benchmark SET equity index emerging Asia’s worst performer with a drop of about 29% so far in 2020. The baht has tumbled almost 6% against the dollar over the same period, the second-largest decline in an Asian basket tracked by Bloomberg.

Prime Minister Prayuth Chan-Ocha’s ruling coalition last week rolled out stimulus steps designed to deliver a near-US$13 billion economic boost, but their effectiveness is in doubt after previous packages fizzled.

The Bank of Thailand’s scope to follow in the footsteps of the U.S. Federal Reserve by slashing borrowing costs to near zero, from the current 1%, may be limited by rules making 0.5% an effective lower bound.

Contingency Plan
Sunday’s abrupt jump in virus cases raised the specter of widespread community transmission of the kind that sickened thousands of people in nations such as China, South Korea, Iran and Italy.

Prayuth said Sunday that officials are mulling contingency options in case infections climb, such as setting up a hospital specifically for Covid-19 patients. Operators of riskier entertainment venues like pubs and sports stadiums could be ordered to close, he said.

“Today, health is the most important issue,” he told reporters in Bangkok.

Tourism accounts for about a fifth of the economy, but the government estimates arrivals may drop 24% from last year, to 30 million people.

Citigroup has chopped its Thai growth forecast to 0.2% for this year from 2.2%, while Bangkok-based brokerage Phatra Securities Pcl predicts a 0.4% contraction.

“There’s going to be a big trade off,” Bank of Ayudhya’s Somprawin said. “Economic losses, for the control of
the epidemic.”

Source: Bloomberg

Italy, the U.K. and Australia were among the latest governments to add to a fast-rising global tally of government stimulus to counter economic damage from the 2019 novel coronavirus (Covid-19) outbreak.

U.S. President Donald Trump outlined a package of measures on Wednesday in Washington, and Indonesia took further steps to support businesses and consumers with tax relief.

About US$130 billion in budget support has been pledged or is under consideration by governments around the world. Some have allocated new money for cash handouts and medical care, while several are planning targeted measures like tax breaks and loan support.

The fiscal response to the virus outbreak has accelerated alongside the global tally of confirmed cases, which now exceeds 126,000, with more than 4,600 deaths reported.

The World Bank separately has allocated US$12 billion in virus aid for developing economies, while the International Monetary Fund (IMF) said it’s making available US$50 billion to help countries deal with the virus, including US$10 billion at zero interest for the poorest nations.

Here’s a look at what governments have announced so far:

China

The economy most severely affected by the outbreak, China has kept its stimulus response targeted and relatively modest, with no large-scale spending plans or monetary easing announced.

Top leaders have signaled a “more proactive” fiscal policy, alongside steps already taken by authorities to cushion the economy and support financial markets. Upcoming measures include targeted, phased tax cuts; an increase in local-government special-bond quota; and more fiscal transfers from central government to local virus-hit regions.

Japan

Prime Minister Shinzo Abe’s administration rolled out a second package to tackle virus effects, bringing the total allocation since last month to 2.03 trillion yen (US$19.6 billion)

The latest measures include 1.1 trillion yen in loan support and 430.8 billion yen in aid for medical professionals and those affected by school closures. That adds to 500 billion yen allocated last month in low-cost loans to companies affected by the virus.

Some ruling-party members are calling for an extra budget of 30 trillion yen in coming months.

South Korea

11.7 trillion won (US$9.7 billion) was allocated in a special budget to aid medical response, businesses and households; Yonhap News reports officials are discussing expanding the amount.

Tax breaks, rent subsidies announced Feb 28.

Australia

Fiscal stimulus worth A$17.6 billion (US$11.4 billion) includes A$1.3 billion to safeguard jobs of 120,000 apprentices; one-time cash payments to welfare recipients and lower-income households; wage subsidies for small- and medium-sized firms.

A$1 billion fund set up to help tourism operators and some China-exposed exporters.

Indonesia

A second support package including delayed corporate and income-tax payments and relaxed import rules on some goods, takes effect April 1.

A stimulus package worth 10.3 trillion rupiah (US$712 million) unveiled last month includes fiscal incentives, grants to local governments and a boost to social security funds.

Thailand

Government said its package of stimulus measures will inject about 400 billion baht (US$12.7 billion) into the economy to counter virus effects. It includes 180 billion baht of concessionary loans, as well as tax cuts.

That would add to just-passed budget that’s expected to spur 640 billion baht in investment.

Singapore

Policy makers have signaled willingness to tap national reserves for the first time in more than a decade, to fund a potential second stimulus package.

S$6.4 billion (US$4.6 billion) allocated in annual budget toward virus response, support for businesses and consumers. Of that, S$800 million — most of which will go to the Health Ministry — is dedicated to combating the virus.

Hong Kong

HK$120 billion (US$15.4 billion) relief package announced in annual budget. Includes HK$10,000 payment to each permanent resident 18 years or older.

Malaysia

20 billion ringgit (US$4.7 billion) allocated in a special stimulus package; includes aid for businesses, especially tourism, lower minimum pension contributions, tax payment extensions and infrastructure upgrades.

The new government is reviewing the package to see whether it can add to the stimulus and give support to the poorest 40% of the population.

Italy

Government is ready to spend as much as 25 billion euros (US$28.3 billion) on virus-related stimulus; provisions could include aid for workers facing temporary layoffs and compensation for affected firms.

Finance Minister Roberto Gualtieri said the Cabinet is likely to approve a first package worth about about 12 billion euros by Friday; the rest will be a reserve for further measures.

Germany

German Chancellor Angela Merkel’s government took steps to assist businesses affected by virus fallout including loosening rules for short-term work compensation and providing tax breaks to firms.

Government has refrained from major stimulus in response to the outbreak, amid reluctance to boost debt, as confirmed cases surpass 1,500.

U.S.

Lawmakers are set to vote on Thursday on a package of measures including paid sick leave for hourly workers staying at home.

Trump said on Wednesday that he’s deferring tax payments for individuals and businesses affected by the virus, estimating this would pump US$200 billion into the economy, and that he’s calling on the Small Businesses Administration to provide emergency capital to certain firms.

A US$7.8 billion emergency spending bill to fund response to the outbreak, was signed on March 6.

Canada

The government is set to announce measures soon to help buffer the economy from virus and oil-price effects.

Finance Minister Bill Morneau has said the focus will be on targeted measures for the health system and businesses, while downplaying the need for major spending or tax package.

U.K.

A 12 billion-pound (US$15.3 billion) virus package was announced as part of a 30 billion-pound budget, including 5 billion pounds for a National Health Service emergency response fund, statutory sick pay for those self-quarantined, and aid for businesses.

The fiscal pledge came shortly after a surprise interest-rate cut by the Bank of England.

Source: Bloomberg

The Chinese manufacturer plans to invest 18 billion yuan ($2.54 billion) to construct a facility in eastern Hefei province that will be able to produce 60 gigawatts of solar panels a year, GCL System said in a filing to the Shenzhen stock exchange on March 27. It didn’t provide a timeline.

The plant’s maximum output is double the 30 gigawatts of capacity installed in China in 2019, and would be able to supply to almost 51% of solar installations worldwide. The project will boost GCL System’s ability to produce panels more than nine-fold from 7.2 gigawatts, according to data from BloombergNEF. The world’s biggest solar-panel maker, JinkoSolar Holding Co, . has 16 gigawatts of capacity.

Chinese solar manufactures have announced expansion plans in recent months amid a push to grab greater market share and reduce costs, which analysts say could signal more pain ahead for the industry.

GCL System said it will spend 5 billion yuan on the first phase of the project, for 15 gigawatts of production capacity. Another three phases will be implemented later, with the timing based on sales and utilization of the facility, it said.

The company said it wants to seize opportunities that are emerging with solar-power costs now closer to coal power and meet demand for the new type of larger photovoltaic panels. GCL System will use its own funds and loans to finance the investment, it said.

GCL System had a market value of almost 17 billion yuan as of Friday’s market close. It had 4.03 billion yuan of cash as of the end of the third quarter last year.

Source: Bloomberg

Australia is considering a second round of economic stimulus, three sources familiar with the deliberations told Reuters, as Canberra accelerated efforts to contain the spread of the coronavirus that has now killed five people in the country.

Australia has recorded nearly 300 cases of coronavirus and authorities fear a rapid rise in the flu-like respiratory disease.

The spread of the virus has roiled global markets despite pledges of stimulus packages, including Australia’s plan to inject A$17.6 billion ($11.4 billion) into its economy.

Prime Minister Scott Morrison met on Monday with senior Cabinet officials to discuss a potential “scaling-up” of its stimulus package, three sources told Reuters.

But the prospect of further government support did little to support the share market, with the benchmark S&P/ASX index plunging 9.7% in a late sell-off, its the biggest one-day fall since 1987.

Australia’s corporate regulator had earlier asked some participants in the equity market to limit the number of trades they execute each day by up to 25% after a huge spike in volumes last week.

Australia’s central bank also pumped more money into financial markets and said it was ready to purchase local government bonds to support the smooth functioning of the market while planning further policy measures later this week.

STATE OF EMERGENCY

After a 77-year-old woman and a 90-year-old woman died in New South Wales, Victoria state and the Australian Capital Territory (ACT) – home to the capital city of Canberra – both declared a state of emergency that will give health officials sweeping powers.

The proclamations allows the Victoria state and ACT’s chief health officers to issue fresh quarantine orders to cover entire suburbs, businesses or professions if deemed necessary.

“These powers have never been used before,” Victorian Premier Daniel Andrews told reporters in Melbourne, the state capital of Victoria. “This, I hope provides a clear sense about the unprecedented nature of this public health emergency, this really significant challenge.”

The Victoria state of emergency will run for four weeks, while the ACT declaration will be in force for at least  a week.

Western Australia state declared a state of emergency on Sunday.

Nationally, Australia is tightening its borders, with Morrison on Sunday ordering everyone arriving from overseas to self-isolate for 14 days.

Australia has also banned non-essential social gatherings of more than 500 people, though this not apply for public transport, work or schools.

Scores of events have been canceled, including Anzac Day war memorial services in New South Wales state, which on Monday recorded 37 new coronavirus cases, its biggest one-day rise yet.

Many offices are asking employees to work from home and several leading universities on Monday shuttered for at least a week.

Australia’s parliament, which is scheduled to sit next week has also restricted access to visitors, while Morrison said lawmakers will be asked to limit the number of staff members that come to Canberra next week.

Hundreds of Australians have begun stockpiling goods, from staples to sanitizers, clearing supermarket shelves.

The country’s biggest grocer, Woolworths Group, said on Monday it would open exclusively for an hour in the morning from Tuesday until at least Friday for elderly Australians and people with disabilities.

Source: Reuters

Global sales of semiconductors rose 5% year-on-year in February to US$34.5 billion from US$32.9 billion previously, according to the U.S.-based Semiconductor Industry Association (SIA).

In a statement on its website April 3, SIA said sales dipped 2.4% month-on-month from US$35.4 billion in January.

All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.

SIApresident and CEO John Neuffer said global semiconductor sales in February were solid overall, outpacing sales from last February, but month-to-month demand in the China market slipped significantly and the full impact of the COVID-19 pandemic on the global market has yet to be captured in available sales numbers.

“Semiconductors underpin our economy, infrastructure, and national security, and they are at the heart of many advanced technologies being used to find treatments, care for patients, and help people work and study from home,” he said.

SIA said regionally, month-to-month sales increased in Japan (6.9%) and Europe (2.4%), but decreased in Asia Pacific/All Other (-1.2%), the Americas (-1.4%), and China (-7.5%).

It said sales increased year-to-year in the Americas (14.2%), Japan (7.0%), and China (5.5%), but were down in Asia Pacific/All Other (-0.1%) and Europe (-1.8%).

Source: The Edge Markets

Acmultitude of 3D printers hum nonstop at Spanish firm BCN3D, which like dozenscof others across Europe has switched gears to supply hospitals with equipmentcto fight the coronavirus.

Acfew days ago the company still was printing parts for other printers, but now it is churning out black frames for face shields needed by doctors and nurses.

“We want to tell the healthcare sector that we are here, they can count on us… to use all our technology in the fight against this serious pandemic,” communications director David Martinez said.

From Castelldefels, 10 kilometres (six miles) down the coast from Barcelona, the company has already supplied more than 1,500 face shields to around 60 hospitals. By the end of the week they hope to have supplied more than 3,500.

Similar changes are happening across Europe, where a variety of companies are retooling to produce health equipment that is in short supply, from masks to life-saving ventilators.

Spanish perfume maker Puig is whipping up hand sanitiser, while automakers Seat and Renault have altered assembly lines to boost ventilator supplies and Fiat is focusing on face masks.

European planemaker Airbus is also making face shields at plants in Spain and Germany.

The fashion industry is doing its part as well against the pandemic that was killed more than 30,000 people in Europe, with more than three-quarters of the deaths registered in Italy and Spain.

Italian retailer Calzedonia, which makes lingerie and beachwear, and Barcelona-based bridal wear firm Pronovias are both now sewing face masks.

“This country’s industry is indispensable now. We are talking about a war industry, a war economy,” Spanish Industry Minister Reyes Maroto said.

Overtime

While many Spaniards are working from home under a nationwide lockdown or have been temporarily laid off, BCN3D employees are doing overtime at their plant.

“We are working many more hours than we did before and are coming in at the weekend voluntarily,” said Nacho Lopez, an engineering student who runs the company’s printer workshop.

Wearing gloves and a face mask, the 23-year-old completes the design of pieces at his computer before sending them to be printed.

The printers heat plastic to 85 degrees Celsius (185 Fahrenheit) so that mechanical arms, with quick and precise movements, can inject the material onto a glass grill where the visors take shape under a bluish light.

“The idea is that they be reusable, that each person has their own and can disinfect them,” said Lopez, who also designed a prototype face mask that is awaiting authorisation to be used by health care workers.

Windshield wiper motors

The crucial need for health officials’ approval often slows down the process.

Seat, the Spanish unit of German carmaker Volkswagen, developed 13 prototypes of a ventilator before coming up with one powered by a windshield wiper motor that was cleared for production.

But “knowing that we tried to help one life makes all this work worth it,” Francesc Sabate of the company’s research and development department said in a statement.

Czech carmaker Skoka, another VW brand, halted production for two weeks because of the pandemic but it is now using 3D printers to help make 60 ventilators and 500 FFP-standard face masks per day.

“The advantage of this (face mask) model is its homogeneity,” prototype director David Vanek told AFP. “There are no holes or imperfections on the surface, so it can be disinfected and there are no corners where the virus can be trapped.”

Skoda is footing the bill for the high-end masks, which cost five euros (US$5.5) a piece.

For its part, Swiss perfume group Givaudan is retooling its production lines to make disinfectant gel, the firm said today.

Source: AFP

Japan has earmarked $2.2 billion of its record economic stimulus package to help its manufacturers shift production out of China as the coronavirus disrupts supply chains between the major trading partners.

The extra budget, compiled to try to offset the devastating effects of the pandemic, includes 220 billion yen ($2 billion) for companies shifting production back to Japan and 23.5 billion yen for those seeking to move production to other countries, according to details of the plan posted online.

The move coincides with what should have been a celebration of friendlier ties between the two countries. Chinese President Xi Jinping was supposed to be on a state visit to Japan early this month. But what would have been the first visit of its sort in a decade was postponed a month ago amid the spread of the virus and no new date has been set.

China is Japan’s biggest trading partner under normal circumstances, but imports from China slumped by almost half in February as the disease shuttered factories, in turn starving Japanese manufacturers of necessary components.

That has renewed talk of Japanese firms reducing their reliance on China as a manufacturing base. The government’s panel on future investment last month discussed the need for manufacturing of high-added value products to be shifted back to Japan, and for production of other goods to be diversified across Southeast Asia.

“There will be something of a shift,” said Shinichi Seki, an economist at the Japan Research Institute, adding that some Japanese companies manufacturing goods in China for export were already considering moving out. “Having this in the budget will definitely provide an impetus.” Companies, such as car makers, that are manufacturing for the Chinese domestic market, will likely stay put, he
said.

Testing Times

Japan exports a far larger share of parts and partially finished goods to China than other major industrial nations, according to data compiled for the panel. A February survey by Tokyo Shoko Research Ltd. found 37% of the more than 2,600 companies that responded were diversifying procurement to places other than China amid the coronavirus crisis.

It remains to be seen how the policy will affect Prime Minister Shinzo Abe’s
years-long effort to restore relations with China.

“We are doing our best to resume economic development,” Foreign Ministry spokesman Zhao Lijian told a briefing Wednesday in Beijing, when asked about the move. “In this process, we hope other countries will act like China and take proper measures to ensure the world economy will be impacted as little as possible and to ensure that supply chains are impacted as little as possible.”

The initial stages of the Covid-19 outbreak in China appeared to warm the often chilly ties between the two countries. Japan provided aid in the form of masks and protective gear — and in one case a shipment was accompanied by a fragment of ancient Chinese poetry. In return, it received praise from Beijing.

In another step welcomed in Japan, China declared Avigan, an anti-viral produced by Japan’s Fujifilm Holdings Corp. to be an effective treatment for the coronavirus, even though it has yet to be approved for that use by the
Japanese.

Yet many in Japan are inclined to blame China for mishandling the early stages of the outbreak and Abe for not blocking visitors from China sooner.

Meanwhile, other issues that have deeply divided the neighbors — including a territorial dispute over East China Sea islands that brought them close to a military clash in 2012-13 — are no nearer resolution.

Chinese government ships have continued their patrols around the Japanese-administered islands throughout the crisis, with Japan saying four Chinese ships on Wednesday entered what it sees as its territorial waters.

Source: Bloomberg

Global automakers reeling from the COVID-19 pandemic are accelerating efforts to restart factories from Wuhan to Maranello to Michigan, using safety protocols developed for China and U.S. ventilator production operations launched in recent weeks.

Certain safety measures differ from manufacturer to manufacturer. Italian sports car maker Ferrari NV said on Wednesday it would offer voluntary blood tests to employees who wanted to know if they had been exposed to the virus.

General Motors Co’s head of workplace safety, Jim Glynn, told Reuters on Wednesday GM is not persuaded blood tests are useful. But Glynn said GM has studied and adapted measures taken by Amazon.com Inc to protect warehouse workers, such as temperature screening to catch employees with fevers before they enter the workplace.

Auto manufacturers and suppliers are converging on a consensus that temperature screening, daily health questionnaires, assembly lines redesigned to keep workers 3 to 6 feet (0.9 m to 1.8 m) apart, and lots and lots of masks and gloves can enable large-scale factories to operate safely.

“We know the protocols to keep people safe,” Gerald Johnson, GM’s executive vice president for global manufacturing, told Reuters in an interview. GM has relaunched vehicle plants in China and kept factories running in South Korea, he said.

GM has not said when it will reopen assembly plants in the United States. Other automakers are putting dates out in public, even though health officials and federal and state policymakers are wary of lifting lockdowns too soon.

“You see vehicle manufacturers … putting a stake in the ground,” said Brian
Collie, head of Boston Consulting Group’s automotive practice. By setting a public date to restart production, they signal suppliers to get ready to ramp
up, he said.

The COVID-19 pandemic has thrown the global auto industry into the worst tailspin since the 2008-2009 financial crisis. Consumer demand for vehicles has collapsed as governments have enforced lockdowns in China, and then in Europe and the United States. For the Detroit automakers and their suppliers, the shutdown of profitable truck and sport utility vehicle plants in North America has choked off cash flow.

In Europe, major automakers have said they hope to begin building vehicles again in mid-to-late April. In the United States, several big automakers, including Fiat Chrysler Automobiles NV, Honda Motor Co Ltd and Toyota Motor Corp, are aiming to restart production during the first week of May.

Fiat Chrysler (FCA) and unions are discussing plans for beefed-up health measures at Italian plants to pave the way for production to restart as soon as the government eases a national lockdown due to expire on April 13, unions said on Wednesday.

Among the proposals from Fiat Chrysler’s Italian unions: move meals to the end of shifts, allowing employees to chose to avoid canteens, eat their food elsewhere and leave half an hour earlier without losing pay.

FCA did not comment on specific measures.

In the United States, some non-union automakers have also said they hope to restart vehicle plants as soon as next week.

Tire maker Bridgestone said on Wednesday it plans to restart U.S. production on April 13.

But the Trump administration has said people should continue to practice social distancing until April 30.

VENTILATOR ASSEMBLY

For the Detroit automakers, the United Auto Workers union will play a key role in deciding when and how plants will restart.

UAW President Rory Gamble said in a statement on Wednesday the union is in “deep discussions with all three companies to plan ahead over the implementation of CDC [Centers for Disease Control and Prevention] safety standards and using all available technologies to protect all UAW members, their families and the public.”

Among the union’s concerns is that members who report being ill can take time away from work without penalty, Gamble added.

The UAW has supported GM and Ford Motor Co’s efforts to launch production of ventilators in U.S. plants – operations that have allowed the companies and the union to road-test safety measures at small scale.

At GM’s ventilator assembly plant in Kokomo, Indiana, workers and managers have been fine-tuning details such as when employees are handed masks, and when they step in front of a temperature screening device.

At first, ventilator assemblers in training at Kokomo walked down a hall before getting a mask, said Debby Hollis, one of the UAW-represented workers. Last week, she said, “They met us at the door and had us get in the masks there.”

The time workers spend putting on extra protective gear, the time spent doing extra cleaning, and spreading workers out on assembly lines designed to have one vehicle roll off the end every 60 seconds could undercut productivity.

“If we can protect employees we can get work done,” said Johnson, the GM
manufacturing chief. “The magnitude of the incremental cost is irrelevant. Costs will be managed.”

Source: Reuters

Developments in the digital economy arising from China’s anti-coronavirus fight are set to accelerate the country’s economic transformation and upgrading beyond the epidemic, according to analysts.

New “digital infrastructures” including the internet of things and big data that have significantly contributed to the headway made against the COVID-19 outbreak, in sectors ranging from healthcare and medical supplies to education and logistics, will further stabilize and spur investment, growth and consumption, analysts agreed at a major online forum organized by leading think tank Center for China and Globalization on Thursday.

The latest technologies help form “an important way to resolve the adverse effects of the epidemic and achieve stable and orderly economic development. In the long run, the new infrastructure is a cornerstone for high-quality development”, the think tank’s vice-president and secretary-general Miao Lu said.

Zhang Lianqi, member of the National Committee of the Chinese People’s Political Consultative Conference and vice-head of the Chinese Tax Institute, said the fresh impetus fueling the Chinese economy called for a broad awareness of the changes, even as markets and sectors took hold of the digitization opportunities through innovation.

“Digital technology has improved significantly. We have accumulated a lot of experience and a lot of so-called infrastructure for emerging industries… there are signs that the country is ready to invest, in the digital transformation of traditional industries, including services transformation, information management and intelligent manufacturing,” Zhang said.

Huo Jianguo, former head of the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, said investment in the digital sphere marks a significant move away from that in traditional sectors such as railways, roads, airports and ports which have more or less matured in their development－it is now time to turn to new areas, including the upgrading of domestic consumer levels and behavior that can better meet the challenges and opportunities of the global economy.

Huang Rihan, executive director of the think tank’s Belt and Road Institute, and executive director of the China Digital Economy Institute, said the wide-ranging “digital disruptions” seen in the Chinese economy reflect an important time for the country and its future economic development that extends to its global role as it emerges from the COVID-19 challenge. Innovation in digital information technologies for healthcare have, for instance, complemented the resumption of Chinese production of medical supplies to other countries still struggling with the pandemic, Huang said.

“China’s digital economy has also contributed to the development of internationalization. In fact, not only is the government helping the world, China’s private enterprise is also helping the world … the digital economy has had a huge economic effect not only on the domestic front but also in the international sphere, which is why it is important to strengthen its development,” Huang said.

The next steps include comprehensively integrating enterprises with production and supply chains with the digital networks, so that artificial intelligence, big data, algorithms, and e-commerce technologies are combined more fully with the real economy, he said.

“Building China into an ‘electronic hub’ for these business ‘routers’…continuously connected to the world’s goods … This will also promote the development of the real economy … and promote the rise and rebirth of the consumer,” Huang said.

Jiang Rongsheng, assistant president of Venustech group, a major provider of network security products, services and management platforms, said the new digital infrastructure includes leading technology like 5G communications, artificial intelligence and the internet of things that form a “digitization empowering the Chinese economy and propelling the digital transformation of entire society with new trends in the country’s economic development”.

“It is about integration. The new infrastructure will further accelerate the integration of the digital world and the physical world, and the boundary between the two will become increasingly blurred,” Jiang said.

Zhai Shanying, chairman of Peogoo digital and financial services group, said Chinese entrepreneurs need to fully grasp the concept of a digital economy to better tap its opportunities.

“The real digital economy has completely revolutionized the traditional economic system. For example, current e-commerce is a complete change from traditional commerce. It is actually a complete, comprehensive system of digital thinking, operations, management, services, marketing, sales and finance,” he said.

Wang Jian, professor of international business and e-business at the University of International Business and Economics, said the COVID-19 battle has sparked innovation and the development of the country’s economic model, but there must now be a careful and calibrated approach toward the support and application of the digital infrastructure.

“Application issues include how we view existing infrastructure and make good use of these infrastructures. I propose a term, ‘integration’, on how to truly integrate the existing digital infrastructure effectively so that companies can use it well,” Wang said.

“This may be much more than building a few data centers. The construction of digital infrastructure is not a simple construction or improvement of hardware facilities. It is about using our existing infrastructure resources to serve more enterprises, especially small and medium-sized enterprises that fuel business.

“Since it is about infrastructure construction, it should be inclusive in all aspects.”

Source: China Daily

Vietnam has approved a plan to delay the collection of 180 trillion dong (US$7.6 billion) worth of taxes and land rent to help businesses hit by the new coronavirus, which has infected 251 people in the country, the government said on Thursday.

The government will delay the collection of value-added tax, corporate income tax, personal income tax and land rent for five months for various businesses and households, it said in a statement.

Source: Reuters

 The lockdown gripping much of the world economy has spurred a real time stress test of the long-heralded digital future.

Virtual brown bag lunches have replaced office gatherings; schools have rushed out internet-based learning; the International Monetary Fund will this week hold its Spring meetings online; and the U.S. Supreme Court for the first time will hear arguments by telephone and allow live audio broadcasts.

Virus lockdowns have seen millions lose their jobs as waiters, flight attendants, Pilates instructors and other service providers are shuttered. That means sustaining those sectors that can function online has never been more important for a global economy facing one of its darkest periods since the Great Depression.

Guaging the exact size of the digital economy isn’t easy: The United Nations Conference on Trade and Development estimates a range of 4.5% to 15.5% of global gross domestic product. While that varies by country, it’s clear the companies and nations which can migrate the most commerce online will go some way to cushioning the damage.

“The futurists are going to have a field day,” said Mark Herlach an international lawyer at Eversheds Sutherland LLP in Washington D.C. “It will change the way we build our cities, the way we move around in those cities and that in turn changes our energy use. A whole series of knock on effects are coming.”

Herlach — who has had to steer negotiations between clients and government from his home and has used video happy hours and dinner parties to stay in touch with colleagues and friends — is positive on the experience so far, but worries about a lingering sense of isolation if more opt to work remotely once the lockdowns ease.

Cheaper internet connectivity has enabled explosive growth in online tools, allowing many white collar roles to be done at home and keeping managers and business owners in touch with their staff.

Users of Microsoft Teams soared to a new daily record of 2.7 billion meeting minutes in one day, a 200% increase from 900 million on March 16, the company said on April 9. Even amid security concerns, Zoom has gone from being used by 10 million office workers a day to more than 200 million people.

“‘Zooming’ has become a new verb,” said Michael Bowes, a barrister and joint head of Outer Temple Chambers in London. He and his colleagues hold a ‘Virtual Tea Zoom Group’ at 4pm every Wednesday, where everyone brings their own tea and cake for a general chat about non-work issues.

Already, some companies have an eye on how they’ll change operations even when the virus dissipates. Some are looking at cutting expensive travel and real estate budgets in favor of investing in better technology and home office set ups, said Satish Shankar, regional managing partner of Bain & Company Asia-Pacific.

“We are poised for a dramatic wanton increase of the digitalization of our economies,” he said.

Viewed through metrics such as online government services, fiber internet connection and the share of people who already work from home, Scandinavian nations score highly in terms of online readiness. In tech rich economies such as Japan and South Korea, the sectors most impacted can’t readily switch to a remote stance, according to London based HSBC economist James Pomeroy.

Ed Yardeni, who coined the term “bond vigilantes” in the 1980s, dedicated a recent research note to clients on how he has adjusted to a world of meetings and cocktails over video link during what he calls the great virus crisis, or GVC.

“Technology has become a GVC staple, right up there with food and toilet paper,” wrote the president and chief investment strategist of Yardeni Research Inc.

Perhaps no sector has been as upended as education, with school closures affecting 90% of the world’s students, or more than 1.5 billion people according to UNESCO. That has forced teachers to scramble online courses with little warning, with knock on consequences for the wider economy as parents are forced to adapt their working schedule around their children’s needs.

Exam timetables have been threatened as authorities grapple with canceling or postponing critical final year exams, or basing grades on past performance.

Wong Mo Yee, a primary school teacher and a member of the Hong Kong Professional Teachers’ Union executive committee where schools have been shut for months, said the crisis highlighted the need for clear goals about what should be taught at home instead of rigidly sticking with the in-class room curriculum. She also flagged dangers of too much screen time.

“Home learning is completely different, the interaction is different, the dynamic in the so-called video classes is also different,” Wong said. “It’s not so easy to engage students in video teaching.”

Poorer children have been hardest hit, where families either have to share devices or don’t have them at all. Families where parents have to leave home for work and cannot supervise their child’s learning have had it tougher still.

“The longer children are out of school and not learning, the increased likelihood they will never return to school,” said Heather Simpson, chief program officer of Room to Read.

Tech Limits

Manufacturers have also discovered the limitations of tech. One of them is Colin Ng, who is co-founder of Hong Kong-based Lincogn Technology Co. that designs and makes smart home appliances such as facial recognition door locks and mobile phone controlled lights for the Hong Kong, China, U.S. and European markets.

Travel restrictions on the border between Hong Kong and mainland China have disrupted the main artery between Ng’s small R&D team in Hong Kong and the company’s manufacturing staff in neighboring Guangdong. That’s complicated the process for when a product is meant to move from the R&D laboratory to the factory floor.

“Video conferencing the discussion is very difficult,” Ng said. “It is difficult to explain a lot of the detail through the camera, the conversation becomes very inefficient.”

Joerg Wuttke, president of the European Chamber of Commerce in China and a veteran of doing business in the world’s second-biggest economy, said remote working can only do so much for those in due diligence, sales or manufacturing.

“Companies are pushing the envelope,” Wuttke said. “But at the end of the day someone still has to get the coal and oil out of the ground and put solar panels together.”

There have been other strains too.

Surging web usage prompted President Donald Trump to hold talks with telecom giants to ensure the networks could cope. In Europe, Amazon.com Inc., Netflix Inc. and YouTube had to reduce the quality of their video streams to ensure networks can handle increased usage.

In China, mobile broadband downloading speed slumped between mid-January and early February before gradually recovering by mid-March, according to network speed testing platform Ookla. Downloading speed in India and Malaysia has started to dip since early March as the pandemic outbreak spread.

The shift online has been a crucial safety net for a collapsing world economy and will change how we study, work and play even when the virus passes, said Chua Hak Bin, senior economist at Maybank Kim Eng Research Pte. in Singapore.

“Quarantines and lockdowns for such long periods would have been near impossible to impose and bear without the tech devices available today,” he said.

Source: Bloomberg

French automaker Renault said today that it would start building only electric vehicles for China’s huge passenger car market, dropping conventional internal combustion engines as well as its joint venture with local manufacturer Dongfeng.

The strategy shift comes after years of sluggish sales in China, where Renault hoped its 50-50 venture with Dongfeng, announced in 2013 and focused on a factory in Wuhan, would allow it to make inroads quickly.

But the coronavirus outbreak in Wuhan forced the factory to shutter, just as Renault was wrestling with slowing growth worldwide and a cashflow squeeze that has prompted ratings agencies to cut its credit ratings to “junk” status.

“We are opening a new chapter in China. We will concentrate on electric vehicles and light commercial vehicles, the two main drivers for future clean mobility,” Renault chairman for China operations, Francois Provost, said in a statement.

The automaker will transfer its stake in the DRAC venture to Dongfeng, which will stop marketing the Renault brand. No financial details of the transaction were disclosed.

To bolster its all-electric push, Renault said it will “reinforce” its eGT venture, also formed with Dongfeng as well as Renault’s Japanese alliance partner Nissan, to further development of its City K-ZE model, a low-cost crossover vehicle that Renault plans to launch in Europe next year.

Renault said its other Chinese venture, Jiangxi Jiangling Group Electric Vehicle Co., aimed to have four core models for the Chinese market by 2022.

It said 860,000 electric vehicles were sold in China last year, making it the largest market in the world — though they were still just a small fraction of the 25 million vehicles of all types bought.

Renault sold just 180,000 cars, both traditional and electric, in China in 2019, down from 217,000 the previous year, and representing less than one per cent of the overall market.

It said electric vehicles are forecast to account for 25 per cent of the Chinese market by the end of this decade.

Renault chairman Jean-Dominique Senard said this month that he hoped to get up to five billion euros (US$5.5 billion) in loans guaranteed by the French state to help the automaker weather the coronavirus crisis, which has seen sales nearly grind to a halt in affected markets.

Source: AFP

Vietnam’s garment industry wassuffering an unprecedented crisis due to COVID-19, but the pandemic alsobrought significant opportunities for the country to become the world’s face mask factory, reported Vietnam News Agency.

Many garment producers hit hard by the COVID-19 pandemic recently invested in producing face masks as a solution to cope with the difficult time and take the opportunities arising from the supply shortage.

Some received export orders worth millions of dollars, a positive sign for the garment industry, which was under huge pressure from the pandemic.

Recently, Garment 10 Corporation Joint Stock Company said that it received an export order for 400 million medical face masks worth US$52 million together with orders for 20 million cloth masks from a US partner and two million cloth masks and six million medical face masks from a German partner.

TNG Investment and Trading Joint Stock Company also shipped millions of anti-bacterial cloth masks to the European Union during the past month. TNG was also investing in producing medical face masks, which was expected to start production from May.

Anti-bacterial cloth masks helped TNG’s sales in the domestic market in the first quarter of this year increase by 10 percent against the same period last year.

TNG’s director Nguyen Van Thoi said that there were large opportunities to export face marks.

According to the Ministry of Industry and Trade, 50 domestic producers that reported to the ministry alone had a total production capacity of eight million face masks per day.

Besides, some companies, such as Nam Dinh Silk Textile Joint Stock Company, were now capable of producing anti-bacterial cloth.

The ministry said that Vietnam’s face mask production capacity could be increased much further.

Tran Thanh Hai, Deputy Director of the ministry’s Import-Export Department, in an interview with Vietnam News Agency said that Vietnam was capable of becoming a big cloth face mask producer in the world.

Trade promotion must be enhanced to raise consumers’ awareness about cloth masks and encourage them to switch to cloth masks instead of medical masks, Hai said.

He, however, noted that firms needed to give careful consideration when investing in face mask production as a long-term or large-scale investment because demand for masks could drop when the pandemic was over.

Face mask producers must pay attention to meeting quality and safety requirements of the import markets and obtain certificates to expand exports, he added.

According to the Vietnam Trade Office in the EU, many face mask and medical protective clothing producers in Vietnam contacted the trade office for supports in finding partners for exports of these products.

Source: Bernama

Social media recently circulated reports about some people in Japan and the United States calling for the withdrawal of their companies from China. This is a result of misinformation getting amplified because of fears and uncertainty triggered by the global spread of the novel coronavirus.

First of all, the US has not asked American companies to leave China; it is only a suggestion White House economic adviser Larry Kudlow made while responding to a query on how the US can avoid relying too heavily on Chinese manufacturing.

Second, after the outbreak in China disrupted some supply chains, the Japanese government did propose supporting the return of some production bases from China, even offering subsidies to Japanese manufacturers willing to shift base. However, the idea was to diversify Japan’s supply chain and avoid putting all its eggs in one basket, given that its supply chain gets disrupted from time to time thanks to earthquakes and tsunamis in Japan or elsewhere in Southeast Asia.

Globalization has helped establish a new international division of labor in the past few decades. After the 2008 global financial crisis, Western countries tried to promote re-industrialization, but failed to do so even after more than a decade of trying. The novel coronavirus crisis has made them redouble their efforts, but it is unrealistic to assume that every major economy can build a more independent, complete and secure industrial chain of its own in such a short term.

The outbreak in China did initially impact part of the global supply chain, but the subsequent global spread of the novel coronavirus shows it is not China alone that faces such a risk. On the contrary, by quickly bringing the epidemic under control and resuming production, China has shown a stronger resilience to deal with natural disasters than other major countries, cementing China’s vantage position in the global supply chains.

China has become a global manufacturing hub because of a complete, efficient and low-cost supply chain for large-scale production to meet domestic and international market demands. Any company moving out of China will end up losing this advantage, putting itself at a competitive disadvantage in the global market. Also, China’s booming digital economy infrastructure construction will further consolidate the advantage of its supply chain, something that developed countries and low-cost production bases intent on replacing Chinese manufacturing do not have.

Source: China Daily

From Africa to Asia and Latin America, emerging countries disproportionately bruised by the Covid-19 pandemic are allowing some key industries to start back up in a bid to soften the economic blow.

This tentative unlocking highlights the balancing act for developing nations as they seek to protect their people while averting an economic collapse some fear could do more damage than the disease itself.

While academic study of Covid-19 containment policies is in its infancy, one model by Yale economists argues social distancing measures deliver far fewer benefits, at much greater economic cost, in poorer countries.

“They’re battling competing tensions. It’s being framed as lives versus livelihoods,” said Ronak Gopaldas, director of Africa-focused consultancy Signal Risk.

Unlike wealthier economies, developing countries cannot afford to spend trillions of dollars protecting people and businesses from the economic fallout of the pandemic. That has prompted some to start reopening key sectors.

“What’s clear is that lockdowns can’t go on forever and they’re having to strike a balance between safety and productivity,” said Gopaldas.

South Africa announced on Thursday it will allow mines to operate at 50% capacity during its lockdown, allowing workers to be called back gradually.

Mining contributed 360.9 billion rand (US$19.74 billion), around 7% of GDP, to the economy in 2019. Amid mass unemployment, it provides more than 450,000 jobs.

Getting mines back to full production will take weeks, said Jacques Nel, of research firm NKC African Economics. But opening them early is essential.

“Some countries are going to recover quicker than others, so you have to position yourself as one of the more attractive ones when this blows over,” he said.

Shock absorbers

Other governments are making similar calculations, generally favouring large employers or generators of crucial foreign exchange. JPMorgan calculates that emerging market FX reserves fell by more than US$190 billion in March.

“They won’t be able to borrow anymore,” said Wayne Camard, an ex-IMF official in Africa and Latin America who now heads the Camard Group, a business intelligence consultancy. “Mining and agricultural commodities are the main foreign exchange earners for a lot of developing countries.”

Investors pulled a record US$83.3 billion from emerging market stocks and bonds in March. At the same time, borrowing costs have soared, making it effectively impossible for many countries to raise funds on international capital markets

Malaysia has allowed its palm oil industry — the world’s second-biggest — to operate during a six-week lockdown. Its electronics industry, which produces nearly 8% of the world’s semiconductors, is running on a third of its normal workforce.

Colombia, the world’s fifth-biggest coal exporter, allowed coal producer Drummond to partially restart on April 9.

Coal is Colombia’s second-largest source of foreign exchange, and royalties paid by coal firms are “fundamental” to coping with the health emergency and reviving the economy, the energy ministry told Reuters.

Governments that cannot afford to replace workers’ lost incomes are under pressure to reopen labour-intensive sectors.

Pakistan on Tuesday extended its lockdown by two weeks but said some industries, starting with construction, would reopen in phases.

“If the construction sector can be stimulated in these testing times, it can prove to be an important shock absorber,” said Sakib Sherani, chief executive of Islamabad-based economics research firm Macro Economic Insights.

Construction and related sectors account for about 8-10% of Pakistan’s GDP, he estimated, and 10-12% of jobs.

Ugandan President Yoweri Museveni is keeping open factories, which he called “the life-blood of the country”, provided employees live in on-site accommodation. Manufacturing employs 10% of
the formal workforce.

Targeted measures

Other countries have implemented targeted quarantines to isolate critical industries from the pandemic.

Nigeria, Africa’s top crude producer, is allowing staff to travel to oilfields only when essential in a bid to avoid infections that could force a broad shutdown.

In Chile, where mining constituted 50% of exports last quarter, the government’s preference for targeted, local action has helped keep large mines of Atacama and Antofagasta open.

The northern desert provinces account for most of Chile’s copper and lithium output but fewer than 2% of its Covid-19 cases as of April 12, health ministry figures showed.

But in an interconnected world, damage limitation policies can only go so far.

Mexico’s president last week said the auto sector, which contributes 3.8% of GDP, would only reopen when the U.S. industry ramps up again.

Developing countries also have large informal sectors which are harder to measure and lack financial safety nets.

In Jakarta, Indonesia’s capital, Covid-19 restrictions ban motorbike taxis from carrying passengers, threatening the livelihood of thousands who work for ride-hailing apps.

“We pleaded for the president’s help,” said Igun Wicaksono, who heads “Garda Nasional”, an association of 100,000 motorbike taxi drivers.

“Of course we’re worried and we’re scared. But if we stay at home, we won’t have food.”

(US$1 = 18.2778 rand)

Source: Reuters

Global semiconductor equipment sales fell 7% year-on-year in 2019 to US$59.8 billion from the all-time high of $64.5 billion in 2018, said the U.S.-based Semiconductor Equipment and Materials International (SEMI).

In its Worldwide Semiconductor Equipment Market Statistics (WWSEMS) Report released, SEMI said Taiwan claimed the largest market for new semiconductor equipment last year with sales of US$17.12 billion after a 68% growth surge, dislodging Korea from the top spot.

SEMI said China maintained its position as the second largest equipment market with sales of $13.45 billion, followed by Korea, at $9.97 billion, after receipts fell 44%.

It said while the new equipment markets in Japan, Europe, and Rest of World contracted, North America equipment sales jumped 40% to US$8.15 billion in 2019, the region’s third consecutive annual increase.

Meanwhile, global sales of wafer processing equipment fell 6% in 2019, while other front-end segment sales grew 9%.

Assembly and packaging along with test equipment sales also faltered, declining 27% and 11%, respectively, while sales to China rose across all major equipment segments except for assembly and packaging.

Source: The Edge Markets

Japanese Prime Minister Shinzo Abe recently declared a state of emergency for the coronavirus pandemic and unveiled a massive stimulus package to help the economy overcome the crisis.

The rescue package, which at JPY108 trillion (US$992 billion) or about 2.7 times Malaysia’s gross domestic product (GDP) is the biggest in Japan’s history. The stimulus package is equivalent to 20 percent of the country’s GDP, contains measures aimed at mitigating the economic and social impact of the pandemic and targets individuals, multinational corporations and small and medium-sized enterprises (SMEs).

The rescue package includes an economic support fund worth about US$2.4 billion to help finance local businesses bringing manufacturing back to Japan from China, or to move it to other countries in Southeast Asia. The move is aimed at reducing future risks of supply chain disruption in case of another black swan. Until the COVID-19 outbreak, China was Japan’s biggest trading partner.

In the last couple of decades, China has become the factory of the world. Manufacturers have moved production to China to reduce costs, and to be close to one of the biggest markets in the world. Besides, it often was the only way to sell their products in the Chinese market. Over time, manufacturing in China has moved up the value chain from producing low added-value products such as clothing and basic components to high added-value industries such as 5G technology and aerospace.

The effects of the recent virus lockdown in China were soon felt by many Japanese, Korean and other manufacturers that saw the supply of components for their factories grind to a halt as factories in China shuttered.

That has given a new impetus to the effort of reducing Japan’s reliance on factories in China. Bloomberg reports that according to a February survey by Tokyo Shoko Research Ltd., 37 percent of the 2,600 respondents were diversifying procurement outside of China during the pandemic.

The coronavirus pandemic is just the latest contributing factor in a trend which started with the trade war between China and the United States (US). Many companies with manufacturing bases in China have started shifting some of their operations to Southeast Asia to avoid growing US sanctions.

According to a February 2020 report by the Nikkei Asian Review, Google and Microsoft are moving some of their production lines to Vietnam and Thailand from China. Google, Nikkei reports, is expected to start selling its smartphones partially produced in Vietnam, the Pixel4A and Pixel5 in May and in the second half of 2020, respectively. Google, the report adds, will also start selling its Nest Mini smart speakers made in Thailand
with a local partner later this year.

Microsoft is expected to start manufacturing in Vietnam some models of its popular Surface desktop and laptop computers in the second quarter of 2020.

Malaysia was among the beneficiaries of this new trend in 2019. In the January to September, 2019 period, the ASEAN member state saw a foreign direct investment (FDI) inflow of slightly over US$8.9 billion according to the Malaysian Investment Development Authority (MIDA).

Japan invested about US$800 million during the same period, while the US was the largest investor with US$2.8 billion followed by China (US$1.5 billion) and Taiwan (US$1.1 billion) according to data compiled by MIDA.

In particular, the northern state of Penang was the top FDI destination with US$2.7 billion in the first nine months of 2019, or about 31 percent of the national total for the period, according to InvestPenang, the investment promotion agency of the Penang state government.

Heng Huck Lee, CEO of Globetronics, an integrated contract manufacturer of semiconductor-based products and services, and also member of MIDA’s electronic advisory committee, in January said that “if you were to look back into 2019, Penang’s foreign direct investment was the highest in many, many years.”

Among the firms that chose to expand or set up their manufacturing base in Penang are US chipmaker Micron Technology, American manufacturing solutions provider Jabil Circuit and United Kingdom (UK) medical technology firm, Smith & Nephew.

While the trend to relocate manufacturing both, of low and high added-value products outside of China is mainly a move to manage risk and prevent supply chain disruptions in case of major natural disasters, infectious disease outbreaks and trade wars among major economies, we can spot a less structured, but no less important trend: the containment of China.

China’s industrial and economic development has been accompanied by the country’s increased presence and influence on the international stage. Through a mix of economic development projects such as the New Silk Road plan, the establishment of the Asian Infrastructure Investment Bank (AIIB), and muscle diplomacy – the Seven-Dash Line, territorial claims and an increased investment in its military apparatus – China has definitively become a world power to be reckoned with.

It would not be surprising that in order to enact containment policies beyond a concerted diplomatic effort by the West, there is more subtle and less organised action to reduce or at least manage China’s economic prowess and therefore its ability to influence the world’s politics.

Source: The Asean Post

IMF Chief Economist Gita Gopinath said that this is not a time to restrict the trade of medical supplies and essential equipment around the world.

WASHINGTON, April 19 (Xinhua) — The International Monetary Fund (IMF) and the World Bank Group (WBG) have called on countries to keep trade open as the world battles the COVID-19 pandemic, warning that export controls on medical supplies and other essentials could backfire.

At a virtual press conference during the just-concluded spring meetings of the two multilateral institutions, IMF Chief Economist Gita Gopinath said that this is not a time to restrict the trade of medical supplies and essential equipment around the world.

“It is very important that this does not become a future where we reverse all the gains that we’ve got from globalization,” said Gopinath, in response to a question from Xinhua.

Echoing her remarks, Kenneth Kang, deputy director of the Asia and Pacific Department at the IMF, told Xinhua in a recent written interview that countries should avoid trade restrictions on medical and health products to ensure that they go to where they are most needed.

“Countries with limited health care capacity and resources will need international aid to prepare for and weather the pandemic,” Kang said. “The health emergency is a powerful reminder of the need for policy coordination and solidarity in an interconnected world,” he said.

The IMF official said that countries should cooperate to reduce tariff and non-tariff barriers that impede cross-border trade and investment and to strengthen global supply chains as the recovery takes hold.

Zhang Tao, deputy managing director of the IMF, told Xinhua that he hoped these supply chains would work as best as they can to maximize global production and supply, which makes global collaboration “essential.”

“Today more than ever, the global economy would benefit from a more open, stable, and transparent, rules-based international trade system,” Zhang said.

World Bank President David Malpass, meanwhile, said at a virtual press conference Friday that big countries need to step forward and pledge not to use the crisis as a reason to close or block the markets.

“We should allow markets to function, markets to clear and the supplies to go to those most in need,” said Malpass, adding that China is exporting medical supplies to the rest of the world, which is “very welcome.”

The IMF and World Bank’s advocacy for free trade came as protectionist sentiments are growing across the globe amid the pandemic. Some 46 export curbs on medical supplies have been introduced by 54 governments since the beginning of the year, according to a report published on March 23, by Global Trade Alert, a trade policy monitoring initiative.

Thirty-three of those export curbs have been announced since the beginning of March, “an indication of just how quickly new trade limits are spreading across the globe,” the report showed.

Aaditya Mattoo, chief economist for East Asia and the Pacific Region at the World Bank, said it is a bit understandable for countries to impose export restrictions, but these actions are “almost always counterproductive.”

“If each country imposes restrictions, then the global price increases even more than it would have. And it can end up being a self-defeating policy,” Mattoo said at a recent press call, in response to a question from Xinhua.

The World Bank economist also noted that such measures would hit those countries who rely on these badly needed medical supplies, especially poor countries, which import a lot of drugs, ventilators and masks.

Despite that, Jeffrey Sachs, a renowned economics professor at Columbia University, told Xinhua that he thinks there will be more protectionism in Western countries, both in the United States and the Europe.

China will have to work hard to secure long-term supply chains and two-way trade, including with Association of Southeast Asian Nations (ASEAN), Africa and South America, said Sachs, also a senior United Nations advisor.

“I believe that China, Japan, (South) Korea, and ASEAN should work hard for a swift recovery and open trade amongst themselves,” said Sachs. “East Asia could be back in business because East Asia never lost control of the epidemic.”

As the global economy is on track to shrink “sharply” by 3 percent this year due to the pandemic, the IMF chief economist highlighted the importance of keeping trade open in global recovery.

“The world needs a healthy recovery. It needs a strong recovery. And that will not come about if the world de-globalizes because that would severely reduce productivity in the world,” Gopinath said. “And that’s the last thing we want at this time.”

Source: Xinhua

Stimulus measures announced by several ASEAN governments were timely, but the assistance provided to the small and medium enterprises (SMEs) is limited and targeted at providing support and relief in the short term, according to panellists at a web seminar.

They were speaking during the first online ASEAN Roundtable Series organised by the CIMB ASEAN Research Institute (CARI) today with the theme “ASEAN’s Response to COVID-19: Medium-term Outlook and Urgent Stimulus Measures for the Business Sector”.

Kearney Singapore partner Chua Soon Ghee said most of the stimulus packages have been focused on alleviating the pain of a sudden sharp drop in demand through some combinations of wage assistance, fees rebates or deferrals as well as loan support.

New rounds of support should go beyond the short term, he said.

“With continued social distancing until a vaccine is widely available, there will be reduced demand for industries such as travel, hospitality, food and beverages (F&B), retail, energy, and therefore longer-term support for a year would be required,” Chua said.

His views as well as those of other panellists were contained in a statement issued by CARI on the webinar, which brought together business leaders from Malaysia, the Philippines, Singapore, Thailand, and Indonesia.

In the statement, Chua was further quoted as saying that critically, governments need to help SMEs address cash flow problems directly by providing loan support to keep them afloat until demand returns to normal.

Equally important, he said, is the need to de-bottleneck the assistance to the SMEs due to slow flow-through within the channels which are tasked to distribute the benefits to downstream companies.

The flow-through has been slow in many circumstances and will need to be accelerated through either moral exhortation, legislation, or direct cash to affected individuals and companies, he opined.

Additionally, the panellists agreed that diversification of supply chains also involves reducing the region’s overdependence on Chinese manufacturers and raw materials.

Disruptions in the supply of raw materials, labour, and sub-assembly components to ASEAN, particularly from China, had a significant impact on ASEAN industries.

“The sudden China shutdown triggered a global supply chain shock and will accelerate the movement of some manufacturing from China to ASEAN and elsewhere.

“China has a 28 per cent share of global manufacturing, while ASEAN is only at 4-5 per cent. For those countries who are prepared with policy tools such as incentives and schemes, this will be a golden opportunity,” Chua said.

Meanwhile, Sintesa Indonesia chief executive officer (CEO) Shinta Widjaja Khamdani said that although there are limits to the extent what ASEAN countries can do to save themselves from the economic damages and crisis projection caused by the pandemic, all policy responses and government spending that are aimed at alleviating financial burdens on business, such as reducing tax and credit burdens as well as compliance cost, will translate into survivability for business in the longer term.

“This pandemic has raised the alarm that regulatory efficiency; the accuracy of the overall economic activities data (particularly the informal ones); interconnectivity and diversification of supply chain, both domestic and cross-border supply chains included, are capital that saves our economy in a crisis,” said Shinta, who is also deputy chairman (international relations) of the Indonesian Chamber of Commerce and Industry.

Other roundtable panellists were Map Ta Phut Industrial Gasses Co Ltd Thailand chairman Arin Jira and RFM Corporation Philippines president and CEO Jose Ma Concepcion III.

The panel discussion was chaired by CARI chairman, Tan Sri Dr Munir Majid, who said ASEAN countries should not be in a state of COVID-19 paralysis.

While confronting the attack on health and lives, they must also open up corridors to livelihoods and economic activity, he said.

“This calls for imaginative policy implementation and enforcement, as well as for personal and corporate discipline,” he added.

Source: Bernama

Alibaba Group Holding Ltd. will invest 200 billion yuan ($28 billion) on cloud infrastructure such as datacenters over the next three years, a major effort to extend one of its fastest-growing business segments to more countries.

The Chinese e-commerce giant plans to build more datacenters to complement an existing network covering 21 regions around the world, the company said in a statement. It will continue to develop its own technologies in areas such as AI-inference chips to support that expansion in cloud services, it added.

Cloud computing has been one of the fastest-growing initiatives for Alibaba as it expands beyond its traditional e-commerce focus. The sector’s revenue rose 62% to 10.7 billion yuan in the December quarter, driven by contributions from the company’s public cloud and hybrid cloud operations.

Alibaba warned in February that the coronavirus outbreak would have a broad impact on the Chinese economy and its business. While certain operations like grocery delivery and online entertainment benefited, others were hurt by complications with delivery and quarantine.

Alibaba shares fell earlier this year, but have recovered in recent weeks and are now little changed for the year.

Source: Bloomberg

German automobile group Daimler said today it was partnering with Sweden’s Volvo to make hydrogen batteries for trucks, as car giants accelerate a push to wean vehicles from fossil fuels.

The joint venture between the two, valued at €1.2 billion (US$1.3 billion), is “a milestone in bringing fuel cell powered trucks and buses onto our roads,” said Daimler Truck chairman Martin Daum.

“By forming this joint venture, we are clearly showing that we believe in hydrogen fuel cells for commercial vehicles,” added Martin Lundstedt, chief executive of the Volvo group.

Hydrogen-powered electric cars, which emit nothing but water vapour, offer a longer range than electric battery-powered vehicles and are fast to refuel.

But a number of technological hurdles and a lack of refuelling infrastructure have stood in the way, leaving hydrogen engines to account for only a fraction of vehicles on the road.

Most major carmakers have focused instead on ramping up their fully electric and hybrid offerings as they scramble to meet tough new EU emissions targets to combat air pollution.

The Volvo Group, which makes Volvo trucks and busses, and Daimler have a top shareholder in common, China’s Geely company owned by Chinese billionaire Li Shufu.

Geely has also owned Volvo Cars, which is separate from Volvo Group, since 2010.

In their joint statement, the Volvo Group and Daimler’s truck division said teaming up would allow them to share costs and speed up the process of bringing fuel cells to market for heavy-duty vehicles.

“In the context of the current economic downturn cooperation has become even more necessary,” they said, in a nod to the economic fallout of the coronavirus pandemic.

The companies said they aimed to roll out their hydrogen offers “in the second half of the decade”.

Auto experts have repeatedly urged the industry not to overlook the advantages of hydrogen fuel cells.

German car parts maker Bosch last year announced it would team up with Swedish firm Powercell Sweden to develop key components for hydrogen fuel cells.

The firms said they expected to bring the first fuel cells to market by 2022, with commercial vehicles likely to be the early adopters.

By 2030, Bosch estimates that 20 per cent of all electric vehicles worldwide will be powered by fuel cells.

Source: AFP

Asia-Pacific hotel investment activity picked up in the second half of last year after a sluggish 1H, says CBRE in its report titled “Marketview: Asia Pacific Hotels 2H2019”. In 2019, transaction volumes were up by 10% year-on-year, recording US$15.8 billion.

CBRE observed yield compression across the region, with yields remaining low in most markets.

“Japan, China and Singapore reported growth in investment turnover in 2H2019. With its cap rate spread and relative economic and political stability, Japan remains an appealing investment destination within the region. Hotel transaction volume was high [in Japan], owing to several big-ticket deals,” says CBRE.

The Japan market saw six hotel transactions worth at least ¥10 billion each in 2019, amounting to a total value of ¥131.1 billion. CBRE notes that most of these were for full-service hotels, which is a reflection of increasing investor interest in categories with a relatively weak supply pipeline.

In Singapore, hospitality assets continued to draw interest from domestic and foreign investors.

“The market gained further traction in 2H2019, concluding the year with total transaction volume of about S$2.48 billion (excluding land sale transaction and mergers), quadruple the volume recorded in 2018,” reports CBRE.

Seven transactions were recorded in 2H2019 in Singapore, led by Hoi Hup Realty’s acquisition of the 342-key Andaz Hotel for S$475 million, or S$1.38 million per key. The year-end also saw major transactions, with hotels such as Novotel Clarke Quay and W Singapore Sentosa Cove sold for S$375.9 million and S$324 million respectively. Both deals are scheduled to be finalised this year. “While Singapore’s strong fundamentals and stable market conditions will ensure it remains an attractive and highly sought-after hotel investment destination in the long term, the Covid-19 outbreak is expected to have a considerable impact on purchasing activity in the short term,” says CBRE.

Meanwhile, domestic investors drove the hotel market in Australia, accounting for 46% of the total registered volume of A$360 million in 4Q2019. Icon Oceania’s sale of Vibe Sydney to a Thai investor for A$108 million was the largest transaction in the quarter.

“While limited availability in capital cities, coupled with easier access to capital, had been likely to underpin asset values, the Covid-19 outbreak is set to prompt a revision to these expectations,” says CBRE.

Hong Kong did not fare as well, seeing a quiet second half, with only a few small and medium-sized assets changing hands. Hanison Construction acquired the Citadines Mercer in Sheung Wan for HK$740 million and Weave Co-Living added Silka West Kowloon Hotel to its portfolio of co-living properties for HK$515 million.

“Th limited number of quality assets for sale and the price gap between purchasers and owners continued to deter transactions. Initial yields in the market remain compressed while terminal yields were flat,” says CBRE.

In Bangkok, the year saw Malaysia’s TA Global Bhd acquiring Four Points by Sheraton for THB2.25 billion and the sale of the Anantara Baan Rajprasong for THB750 million.

“The lower number of sales was a result of a limited number of quality assets for sale, following two very active years — 2017 and 2018,” says CBRE.

Source: The Edge Markets

Thailand could expect a boost to its economic growth, investment and exports to help offset the negative impact of the new coronavirus pandemic, if it participates in an Asia-Pacific trade agreement, the commerce ministry said on Monday.

The country has before said it aimed to seek membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), as competition intensifies in electronics and agriculture from rivals such as Vietnam and Malaysia.

Membership is opposed by opposition parties and some business groups.

But Auramon Supthaweethum, director general of the Department of Trade Negotiations, said on Monday that it would boost Thailand’s gross domestic product (GDP) by 0.12% or 13.3 billion baht (US$409.61 million), with investment up 5.14%, and exports up 3.47%.

Without that, the economy will lose 26.6 billion baht or 0.25% of GDP, with investment down 0.49% and exports down 0.19%, she said in a statement, citing the ministry’s study on CPTPP membership.

“After the coronavirus pandemic, trade and investment rules will change… It’s necessary for Thailand to seek new partners or trade pacts, such as CPTPP, to make it competitive for trade and attractive for investment,” Auramon said.

The study will be presented to the cabinet to decide whether Thailand will join the pact, Auramon said. The cabinet meets every Tuesday, but it is not clear whether this week’s session will debate the matter.

If Thailand decides to join, it will set up a committee to negotiate rules and conditions. The decision would then need approval from parliament, Auramon said.

Those opposed to membership include Move Forward opposition partly leader Pita Limjaroenrat, who has said it would have a negative impact on the economy.

Member countries including Japan and Canada signed the CPTPP deal in 2018, without the United States.

The original 12-member agreement, known as the Trans-Pacific Partnership (TPP), was thrown into limbo in early 2017, when President Donald Trump withdrew from it.

(US$1 = 32.47 baht)

Source: Reuters