Southeast Asian countries, which are recovering from the COVID-19 pandemic, can benefit from investments in green infrastructure, digital transformation, big data, and revenue mobilisation through tax reform, said the Asian Development Bank (ADB).

“As countries slowly begin to emerge from the devastating health and economic impacts of the pandemic, we now stand at a critical juncture. The COVID-19 pandemic offers a unique opportunity to rebuild for a more resilient, inclusive, and sustainable recovery,” its president Masatsugu Asakawa said in his keynote address at the Southeast Asia Development Symposium themed “Innovation through Collaboration: Planning for Inclusive Post-COVID-19 Recovery” in Manila today. The event was streamed live.

Asakawa said the pandemic presents all with unprecedented challenges; hence the need to forge a new path forward together, one which taps new ideas and technologies, and leverages the existing platforms for innovation and partnership.

According to him, developing economies in Southeast Asia can benefit from action in three key policy areas.

These include investing in environmentally sustainable development in five sectors, namely agriculture, oceans, urban and transport, waste management, and clean energy which could create 30 million jobs in the region by 2030.

“Second, they need to expand the tax base, by maximising tax compliance and simplifying the compliance process which will significantly boost governments’ revenue and better position them to finance pandemic recovery.

“Third (is) by making better use of big data, whereby countries can capitalise on the region’s digital transformation to enhance the delivery of health care, social protection, and education,” he said.

Asakawa noted that these green growth opportunities will require financing and one way ADB is collaborating with countries in the region to address these financing needs is through the ASEAN Catalytic Green Finance Facility, which is owned by the finance ministries of the 10 ASEAN member countries and ADB.

Southeast Asian countries can use this facility to access finance and knowledge for sovereign green infrastructure projects on sustainable transport, clean energy, and resilient water systems, he said.

In making better use of big data, he said, Southeast Asia’s digital transformation is well underway. As such, countries can capitalise on this opportunity by making better use of big data to transform key government sectors to allow for more effective service delivery.

“One area where innovation and collaboration using big data can play an important role is in supporting safe and effective vaccine programs,” Asakawa said.

In addition to collaboration, knowledge, and innovation, governments need reliable streams of revenue and this is a sobering reality, he said.

Countries in Southeast Asia have already allocated over US$420 billion for COVID-19 response measures, he noted.

“This unparalleled fiscal expenditure has been accompanied by a substantial reduction in the tax base.

“This is due in part to subdued economic growth. But there are also underlying public finance management issues that have been exacerbated by the pandemic.

“In fact, even before the pandemic, the average tax yield of most Southeast Asian countries was far below the 15 per cent of Gross Domestic Product threshold required for sustainable development,” he said.

Asakawa said that with long-term interest rates rising in the United States, it may put further pressure on many ADB developing member countries, in terms of macroeconomic management and fiscal policy.

Against this backdrop, as governments help the nascent recovery in the region to gather steam, they also need to begin preparing measures to strengthen domestic resource mobilisation (DRM), he said.

DRM not only helps secure sufficient funding, it also creates positive conditions to spark greener and more inclusive recovery.

“Introducing more progressive income tax and property tax systems can help address the worsening income gaps that have proliferated after the pandemic.

“A carbon tax can also be pursued to accelerate green investment. Countries in the region can work together to close tax loopholes that multilateral businesses can use to avoid tax burdens,” he said.

He added that as all of the measures being described required knowledge sharing and collaboration, ADB has recently established a regional hub for DRM and international tax cooperation, a hub that will promote greater collaboration among the region’s fiscal authorities as they pursue needed reforms.

Source: Bernama

Green investment, revenue mobilisation, big data can help in Southeast Asia’s recovery — ADB

The global semiconductor industry is on track to register three consecutive years of record highs in fab equipment spending with a 16% increase in 2020 followed by forecast gains of 15.5% this year and 12% in 2022, said US-based Semiconductor Equipment & Materials International (SEMI).

In its quarterly World Fab Forecast report released yesterday, SEMI said fabs worldwide will add about US$10 billion (RM41.18 billion) worth of equipment in each of the three years as spending climbs to top US$80 billion at the end of the forecast period.

It said explosive demand for electronics that are the backbone of communications, computing, healthcare and online services — sectors that mounted robust responses to the Covid-19 outbreak as the world rallied to curb the coronavirus’s spread — would account for much of the spending.

SEMI said fab equipment spending had historically been cyclical, with one or two years of growth typically followed by a downtrend of roughly equal length.

It said the semiconductor industry last saw three straight years of fab equipment investment growth in a run that started in 2016.

The industry association said it was nearly 20 years before that streak that the industry recorded an expansion of at least three years. In the mid-1990s, the chip industry boasted a four-year period of growth.

SEMI said the bulk of fab investments in 2021 and 2022 will be seen in the foundry and memory sectors.

Driven by leading-edge investment, foundry spending is expected to grow 23% in 2021, reaching US$32 billion and flatten in 2022.

Overall memory spending will increase in the single digits to reach US$28 billion in 2021, while DRAM will surpass NAND Flash, and then surge by 26% in 2022 on the strength of both DRAM and 3D NAND investment.

SEMI said the power and microprocessor, microprocessor unit (MPU) segment will also see strong spending growth over the forecast period.

Power is forecast to show strong investment growth of 46% and 26% respectively in 2021 and 2022, driven by strong demand for power semiconductor devices.

MPU will add to the momentum with a 40% growth in 2022 as microprocessor investment increases.

The World Fab Forecast report lists 1,374 facilities and lines globally, including 100 future facilities and lines with various probabilities that will start volume production in 2021 or later.

Source: The Edge Markets

Global fab equipment spend to log three years of record highs, says SEMI

Financial impact and work-life disruption caused by the pandemic COVID-19 has spurred employers in Southeast Asia (SEA) to focus on defining future workforce needs by restructuring and active reskilling to future-ready their business and workforce, says Mercer’s 2021 Global Talent Trends study.

Also high on the priority list is reinventing business sustainably, as companies expand their view on the organisation’s responsibilities to communities, extending success metrics beyond shareholders to include the interests of the consumers, employees and the environment, said the study.

According to Mercer, a global consulting firm and technology-driven solutions provider, nearly half of the employers in SEA, namely, Indonesia, Thailand, Malaysia and the Philippines, are assessing longer-term organisational structures and workforce needs in 2021.

The study found that 82 per cent of companies in SEA are reexamining what benefits are most relevant to different employee persona groups, though more can be done to support employee’s financial education as only 27 per cent of the companies are planning to offer more this year.

As remote working becomes mainstream and new ways of working demand new skills, 63 per cent of SEA companies are seeking to focus on targeted workforce upskilling of critical talent pools; 59 per cent on reinventing flexibility for their workforce and 48 per cent on expanding their talent and learning eco-system.

While 63 per cent of firms are identifying new skills needed for their post-pandemic operations, just 11 per cent of human resources (HR) leaders are planning to move to pay-for-skills structures or reward skill acquisition.

“Companies across SEA recognise that adapting employees’ skills and roles to post-pandemic ways of working will be critical to building organisational resilience.

“However, while 63 per cent of HR leaders report that skill development will continue to be a focus in 2021, two in 10 plan to maintain their reskilling budgets at 2020 levels,” said Mercer’s Talent Strategy Lead for Malaysia, Natasha Yusof.

She emphasised that organisations need a clear view of existing skills within their talent ecosystems to determine which jobs include the skills and competencies that overlap with new jobs.

“This will help them create reskilling pathways and identify critical experiences employees need to move to new roles and opportunities smoothly,” she said.

Despite the financial impact of the pandemic, many employers stepped up in 2020 to protect jobs, where 63 per cent of SEA HR leaders reported that their company has continued or stepped up the pace towards an environmental, social, and governance (ESG) and multi-stakeholder business approach, with 32 per cent saying they will invest responsibly.

In considering how to better support their employees with new ways of working and at different life stages, nearly half of the companies are planning to improve analytics in psychological, mental and emotional well-being, significantly more than the global average of 31 per cent, the study revealed.

Additionally, the study also found that SEA companies are lagging when it comes to meeting the needs of older, experienced workers via flexible career pathways.

It said 66 per cent of SEA companies do not use or plan to look into investing in analytics to predict when older workers with critical skills are likely to retire, and only nine per cent allow for phased retirement.

Source: Bernama

SEA firms to focus on restructuring, re-skilling, reinventing business sustainably

One of the primary rules of investing is don’t get carried away by the madness of crowds. Still, markets are signaling that many investors are ignoring that rule.

Asset prices suggest that many believe most everyone will be vaccinated against by mid-year, or at least herd immunity will be achieved by then. So homebound-weary consumers will burst forth and spend the 11.4% jump in personal income they received from the December federal stimulus bill, to say nothing of their chunk of the US$1.9 trillion relief and stimulus package.

Despite the recent wobble in technology-related stocks that depend on ultra-low interest rates to discount future earnings into high current valuations, stocks have mostly soared in response, especially those sensitive to changes in the economy. The jump in long-term Treasury note and bond yields is in anticipation of rapid economic growth, credit demand and much faster inflation that the Federal Reserve will be slow to confront.

Forecasts of 6% to 8% growth in real gross domestic product this year are common, but where will it come from? Not from plant and equipment outlays, which remain subdued by business uncertainty and excess capacity. Real capital spending has risen at only a 1.6% annual rate since 2007. Housing has been strong, but residential construction is just 3.7% of GDP. Besides, rising mortgage rates are curbing mortgage purchase applications, which fell 19.4% in February, according to the Mortgage Bankers Association.

The foreign sector remains a drag on the economy. Former President Donald Trump’s trade war with China netted little, as that country continues to fall short of its promises to buy more American exports. President Joe Biden is less confrontational than Trump when it comes to trade. Also, further restrictions on imports from China will only speed up the exodus of low-cost manufacturing to cheaper locales that are, thus far, out of the trade war line of fire. Vietnam is one example, and its exports have leaped almost 60% in the last three years. So, even if imports from China are drastically restricted, goods entering the US from Asia as a whole will continue and keep the foreign sector a net negative for the American economy, as well as depressing US manufacturing jobs.

So the economy’s fate is in the hands of consumers who account for 69% of GDP, and they may continue to not spend government stimulus money freely, but instead, save most of it for rainy days. According to the Federal Reserve Bank of New York, consumers saved 71% of the government money they received a year ago, while spending 18% on essentials, just 8% on non-essentials and 3% for donations. The layoffs due to the pandemic were a shock to many households that were financially unprepared. Fed surveys found 16% of millennials and 12% of Americans overall wouldn’t be able to come up with US$400 for an emergency.

That exercise was repeated with the year-end stimulus money. That US$900 billion included US$600 for those with incomes below US$75,000. Even though lower- and middle-income Americans typically save little, they did so again. Some 82% of the increase in after-tax income was saved, pushing the household saving rate from 13.4% in December to 20.5% in January.

Americans are using their savings to build assets and reduce debt, a long-term trend that was already well underway. Back in the 1960s and 1970s, household debt averaged 60% of after-tax income. That debt includes home mortgages, auto and credit card loans, as well as student loans. But starting in the early 1980s, free-spending and big-borrowing consumers pushed that ratio to 134% in 2007. The rate began to fall with the financial crisis and has nosedived recently. Nevertheless, at a recent 92% in last year’s third quarter, it’s still a long way from the 60% norm, and I’m a believer in reversions of long-term trends.

This pattern implies that most of the pending stimulus bill money also will be saved and used to further reduce debt and build contingency assets. Any discretionary spending will no doubt be concentrated on services like restaurant meals and travel, as cooped-up consumers leave home. Stay-at-home households have already loaded up on goods ranging from exercise equipment to cooking gear to vehicles used to avoid close proximity on public transportation. As I noted in January, unlike goods, services are consumed when purchased, so there’s no inventory to rebuild. Also, people may eat out more frequently but probably not every night.

Inflation fears are unwarranted, as long as protectionism doesn’t prevent the global supply of most products from exceeding worldwide demand. Asian nations are big producers but have subdued consumers, so the resulting saving glut insures worldwide excess supply and low inflation for goods and services, if not outright deflation. Slow economic growth also widens the supply-demand imbalance. Furthermore, low rates of inflation are self-feeding and induces consumers to resist price increases.

Monetary and fiscal stimulus, however, has spawned rampant asset inflation. As a result, with stocks in the stratosphere and rampant speculations like GameStop, IPOs, SPACs and electric vehicles, there’s no room for economic disappointments later this year. Even a twitch by the Fed in response, might touch off an agonizing reappraisal.

Source: Bloomberg

The coming economic boom will be just a mirage

Source: The Edge Markets

Bridging the digital divide in Southeast Asia

KUALA LUMPUR (Feb 18): Apple, Samsung and Huawei retained lead positions as the top original equipment manufacturers (OEMs) and semiconductor buyers in 2020.

According to research data analysed and published by online trading portal Comprar Acciones on Tuesday, in total, the top 10 semiconductor buyers in 2020 spent a cumulative US$188.73 billion (RM761.53 billion), marking a 10% increase over 2019.

They accounted for a 42% share of the global market, which was worth US$449.84 billion during the year, it said.

The portal said compared to Apple’s 2019 expenditure, which amounted to US$43.24 billion, that was an increase of 24% year-on-year (y-o-y).

Also, Apple accounted for an 11.9% share of the global semiconductor market in 2020.

Meanwhile, Samsung occupied a distant second spot, spending US$36.42 billion, a 20.4% increase over 2019’s US$30.25 billion.

Its market share was 8.1%.

Though Huawei managed to retain its third spot, its spending reduced considerably in comparison to 2019.

Due to US government trade restrictions on the company, its ability to purchase semiconductors was limited.

As a result, both its smartphone supply and market share decreased over the year.

Its spending on semiconductors totalled US$19.09 billion in 2020, down by 23.5% from US$24.93 billion in 2019.

Huawei’s market share was slightly higher than the fourth-ranked company, at 4.2%, versus 4.1% for Lenovo.

Lenovo’s spending was just US$500 million less than Huawei’s, at US$18.56 billion, up by 10.6% y-o-y.

Rounding up the top five was Dell Technologies, which spent US$16.58 billion and had a 3.7% share of the market.

Apple’s iPhone sales up 17% in 1QFY21

Apple retained the top spot, thanks to heightened demand for tablets and mobile PCs as consumers shifted to a work-from-home model.

Its semiconductor demand also increased due to a transition from Intel processors to Apple silicon chips for the Mac line of products.

Apple reported an increase of over 17% in iPhone sales during the fiscal first quarter (1QFY21).

iPhone revenue hit US$65.6 billion against an expected US$59.8 billion, according to Refinitiv analysts.

The figure set an all-time high for quarterly iPhone revenue, up from US$61.58 billion, a record set in 1QFY18.

Source: The Edge Markets

Top 10 OEMs accounted for 42% of global semiconductor market in 2020

LONDON (Reuters) – Tens of millions of workers in developed economies will have to retrain for secure careers in post-COVID labour markets reshaped by the pandemic and the remote working revolution, a report by consultancy McKinsey said on Thursday.

The analysis by MGI, McKinsey’s economics research arm, concluded the pandemic’s biggest impacts will be concentrated in four work areas: leisure and travel venues; on-site customer interaction such as in retail and hospitality; computer-based office work; and production and warehousing.

Its scenarios suggested more than 100 million workers in the countries covered by the study – Britain, China, France, Germany, India, Japan, Spain and the United States – may need to switch occupations by 2030, up to 25% more than expected pre-pandemic.

“These workers will face even greater gaps in skill requirements,” it warned, noting that job growth may concentrate more in high-wage jobs as middle- and low-wage jobs decline.

“Workers without a college degree, women, ethnic minorities, and young people may be most affected,” it added .

Other types of work – such as medical care and personal care – may see less change because there is little alternative to the high level of proximity they require.

Overall, the study found that remote work and virtual meetings are likely to continue – less extensively than at the pandemic’s peak but still with considerable knock-on effects for real estate, business travel and urban centers.

While leisure travel and tourism are seen rebounding, McKinsey estimated some 20% of business travel may not return after the pandemic as companies and workers acknowledged a lot of earlier travel for face-to-face meetings was superfluous.

“This would have a significant knock-on effect on employment in commercial aerospace and airports, hospitality, and food service,” it noted.

Source: Reuters

Pandemic to widen skill gaps as workplaces change, McKinsey says

KUALA LUMPUR, Feb 17  —  The pandemic has indeed placed limitations on how renewable energy (RE) players conduct business and it is now considered as the biggest challenge faced by the sector.

However for Ko Chuan Zen, co-founder and chief executive officer of solar photovoltaic (PV) solutions provider Plus Solar Systems Sdn Bhd, there are opportunities and RE players have been trying to change the mindset of Malaysians as well as the business community in seeing the potential in RE.

“We have succeeded on many platforms with clients such as Ajiya Bhd and Mah Sing Plastics Industries Sdn Bhd, the established names who have adopted RE and have enjoyed savings of up to 25 per cent,” he told Bernama.

He said while the pandemic has indeed proven challenging, with the earliest potential recovery only in the second half of 2021, Plus Solar is confident of the prospects in 2021 as well as to contribute towards the newly revised RE target of 31 per cent in 2025 and 40 per cent in 2035.

“The net energy metering (NEM) 3.0 programme provides an opportunity for more users to instal the solar PV systems on the roof of their respective buildings or homes for electricity bill reduction.

“Through the programme, end-users in the industrial and commercial sectors have seen significant savings, and this will continue to drive up the trend for clean energy,” he said, adding that energy consumption has been identified as one of the top operational expenditures for business owners along with raw material, labour and rent, when they invest.

NEM 3.0 which covers both NEM Rakyat (domestic households), NEM GoMEn (government buildings) and NOVA (for commercial and industrial buildings), to be in effective from 2021-2023, with the total allocation of up to 500MW (megawatts).

Ko said that with the attractive Green Investment Tax Allowance (GITA) by the Malaysian Investment Development Authority and NEM 3.0 in place till 2023, people will begin to realise that solar energy is no longer a luxury but an affordable essential.

“Digitalisation of energy will also be our concentration with Plus Solar’s AIoT (artificial intelligence Internet of things) energy performance management system called SOURCE which empowers business owners to turn their building energy data into smart energy savings.

“We rolled out this system last year as we saw how much it would resolve the concerns of business owners where they can gain up to 25 per cent energy savings,” he added.

Ko said Plus Solar would continue to expand its businesses overseas such as in Vietnam following the government support for solar energy.

Source: Bernama

Plus Solar sees opportunity to change Malaysian mindset on RE potential

KUALA LUMPUR (Feb 17): The global buy now pay later (BNPL) market as a whole is on a rapid uptrend and is projected to surge 400% to US$352 billion by 2025 from US$89 billion in 2020.

According to research data analysed and published by online trading portal Comprar Acciones yesterday, it was estimated that the BNPL industry will process US$680 billion worth of transactions in 2025, adding that it would translate to a compound annual growth rate of 13.23%.

Meanwhile, it said credit card debt fell to unprecedented lows in 2020 and is expected to keep dropping.

It said that for instance, in the US, there was an 11.9% decline in credit card balances for the year according to the Federal Reserve.

Comprar Acciones said prior to the pandemic, the figure had been growing steadily.

It explained that in May 2020, it dipped below the US$1 trillion mark for the first time since September 2017 and has been on a downtrend since.

Elsewhere, the highest valued fintech globally is Stripe, a US-based company with a US$36 billion valuation.

India-based One97 Communications, which is valued at US$16 billion, is second, while US-based Robinhood is third with US$11.6 billion.

Source: The Edge Markets

Global e-commerce buy now pay later spending to surge 400% to US$352b by 2025

TAIPEI/SEOUL (Feb 8): Asian chipmakers are rushing to expand their production capacity to meet a global shortage that has been acutely felt by carmakers, but the firms warn that the supply gap may take many months to plug as they struggle to keep up with strong demand.

Automakers from General Motors to Stellantis and Honda Motor are shutting assembly lines due to the shortages, which in some cases have been exacerbated by the former US administration’s sanctions against Chinese chip factories. Some firms have also furloughed staff.

Eight-inch chip manufacturing plants owned mostly by Asian firms, which tend to make older, less sophisticated chips, are particularly under strain primarily due to under-investment in recent years. The majority of such factories are used to make auto chips.

Consumer demand in China, especially for cars, has snapped back unexpectedly quickly from the coronavirus crisis, and orders for products such as laptops and mobile phones in regions still struggling with pandemic restrictions, such as Europe and the United States, have also picked up.

The global concerns about the chip shortage were underscored at recent quarterly earnings calls held by companies from Taiwan Semiconductor Manufacturing Co Ltd (TSMC) to South Korea’s SK Hynix.

“We are under great pressure now,” said Zhao Haijun, co-CEO of China’s top chipmaker Semiconductor Manufacturing International Corp, which last week announced plans to expand capacity by 45,000 wafers per month at its 8-inch fabrication plant this year.

However, the company cautioned that the capacity boost would not occur quickly due to longer lead times for equipment procurement, as it grapples with supply chain disruptions caused by sanctions imposed by the former Trump administration.

“We basically have at least one video conference a day with a customer on how we can increase capacity, what adjustments we can make on products,” Zhao said.

TSMC, the world’s top contract chipmaker, said it was “expediting” auto-related products through its wafer fabs and reallocating wafer capacity and now expects to lift capital spending on the production and development of advanced chips to between US$25-28 billion this year, as much as 60% higher than the amount it spent in 2020.

United Microelectronics Corp (UMC), another Taiwanese chipmaker, plans to spend US$1.5 billion on new equipment this year, up 50% from US$1 billion last year, it said.

South Korea’s SK Hynix, the world’s No.2 memory chip maker, said it was speeding up plans to relocate its 8-inch facilities to China, which is expected to reduce costs, in light of the 8-inch boom. The company wants the relocation to happen “as soon as possible” rather than over an initially planned two-year period.

Renesas Electronics Corp said on Monday it is in talks to buy Anglo-German chip designer Dialog Semiconductor for about US$6 billion in cash, as the Japanese chipmaker looks to take advantage of the growing demand for automotive chips. Renesas is due to release its latest result on Wednesday.

The combination of supply shortages and surging demand has put pressure on prices. UMC expects overall chip prices to rise 4-6% this year due to supply constraints set to last for another few quarters, while Renasas told Reuters that they have been negotiating for a 15% increase on auto chips and between 10% to 20% for other chips.

Japanese companies with automotive semiconductor related business have so far provided few details related to any shortages or how customers have been affected.

“We are working hard with semiconductor manufacturers, and the supply crunch should ease as capacity growth catches up this summer,” Yasushi Matsui, the chief financial officer at key Toyota Motor Corp part supplier Denso Corp, said last week.

Fang Leuh, the chairman of Vanguard International Semiconductor Corp, whose biggest single shareholder is TSMC, said the demand frenzy “would not last forever”.

“Sooner or later it will overheat, there will be some come down or set back.”

Source: Reuters

Asian chipmakers rush to boost production to meet global shortage

KUALA LUMPUR (Feb 3): Global silicon wafer area shipments in 2020 increased while revenue remained unchanged from 2019 at US$11.17 billion, according to the US-based Semiconductor Equipment & Materials International (SEMI).

In a statement on its website yesterday, the SEMI Silicon Manufacturers Group (SMG) reported in its year-end analysis of the silicon wafer industry, it said silicon shipments totalled 12.41 million square inches (MSI), compared to 11.81 MSI shipped in 2019, a rebound in volume of 5% year over year, recovering close to the historic high set in 2018.

SEMI SMG chairman and vice-president for product development and applications engineering at Shin Etsu Handotai America, Neil Weaver said 2020 silicon wafer shipment growth was driven by healthy 300mm demand and a strong second half of 2020 despite disruptions to the semiconductor industry caused by Covid-19.

Silicon wafers are the fundamental building material for semiconductors, which, in turn, are vital components of virtually all electronics goods, including computers, telecommunications products, and consumer electronics. The highly engineered thin, round disks are produced in various diameters — from one inch to 12 inches — and serve as the substrate material on which most semiconductor devices, or chips, are fabricated.

Source: The Edge Markets

Global silicon wafer revenue stayed stable in 2020 as shipments edged up, says SEMI

NEW YORK, Feb 2 — Business travel spending is forecast to grow 21 per cent this year worldwide, helped by the rollout of Covid-19 vaccines, but will not recover to pre-pandemic levels until the middle of the decade, a business travel association said today.

Spending on business travel is projected to rise to US$842 billion (RM3.4 trillion) in 2021, according to the Global Business Travel Association’s (GBTA) BTI Outlook, after dropping 52 per cent in 2020 to US$694 billion due to the pandemic.

After a decade of steady annual growth, business travel is expected to have shown losses in 2020 that were 10 times greater than the declines after the September 11, 2001, attacks or the 2008 recession, GBTA said.

Despite the expected growth in travel in 2021, uncertainty around vaccination progress and US President Joe Biden’s policies can affect the recovery.

“The continued rollout of the vaccine will be central to recovery globally, as will decisions the new Biden Administration makes regarding global trade and border and quarantine policies,” said Dave Hilfman, GBTA’s interim executive director in a statement.

As US airlines also expect, the group said businesses are likely to spend more on travel that cannot be duplicated with online meetings such as sales calls and service trips.

The proportion of companies’ travel budget spent on internal meetings is estimated to decline 6 per cent, compared with 2019, the group said.

By the end of 2024, business travel spending is projected to reach about US$1.4 trillion, nearly equaling the 2019 pre-pandemic revenue peak of US$1.43 trillion, the group said. It projects a full recovery in 2025.

Key developing economies in Asia Pacific will drive global growth in business travel over the next decade, the group said.

Source: Reuters

Global business travel to grow 21pc in 2021, trade group forecasts

KUALA LUMPUR (Feb 1): Global semiconductor industry sales rose 6.5% year-on-year (y-o-y) in 2020 to US$439 billion, from US$412.3 billion a year earlier, said the US-based Semiconductor Industry Association (SIA).

In a statement on its website today, SIA said global sales in the month of December 2020 were US$39.2 billion, an increase of 8.3% compared to the December 2019 total and 2% less than the total in November 2020.

It said fourth-quarter sales of US$117.5 billion were 8.3% more than the total in the fourth quarter of 2019 and 3.5% higher than the total in the third quarter of 2020.

Monthly sales are compiled by the World Semiconductor Trade Statistics (WSTS) organisation and represent a three-month moving average.

SIA president and chief executive officer (CEO) John Neuffer said global semiconductor sales increased moderately on an annual basis in 2020, weathering a challenging macroeconomic environment brought on by the pandemic and other factors.

“While global demand for semiconductors is on the rise, the share of global chip production done in the US has declined from 37% in 1990 to 12% today, and that disparity will only intensify without US government action to level the global playing field.

“It’s imperative the federal government fully funds incentives for domestic chip manufacturing and investments in chip research so the US can benefit from growing demand and produce more semiconductors needed to strengthen our economy, national security and critical infrastructure,” he said.

The SIA said that on a regional basis, sales into the Americas market stood out, increasing annually by 19.8% in 2020.

It said China remained the largest individual market for semiconductors, with sales there totalling US$151.7 billion in 2020, an increase of 5%. Annual sales also increased in 2020 in Asia-Pacific/all others (5.3%) and Japan (1%), but decreased in Europe (6%).

Source: The Edge Markets

Global semiconductor sales rose 6.5% y-o-y to US$439b in 2020, says SIA

The International Monetary Fund on Tuesday raised its forecast for global economic growth in 2021 and said the coronavirus-triggered downturn in 2020 would be nearly a full percentage point less severe than expected.

It said multiple vaccine approvals and the launch of vaccinations in some countries in December had boosted hopes of an eventual end to the pandemic that has now infected nearly 100 million people and claimed the lives of over 2.1 million globally.But it warned that the world economy continued to face “exceptional uncertainty” and new waves of COVID-19 infections and variants posed risks, and global activity would remain well below pre-COVID projections made one year ago, reports Reuters.

Close to 90 million people are likely to fall below the extreme poverty threshold during 2020-2021, with the pandemic wiping out progress made in reducing poverty over the past two decades. Large numbers of people remained unemployed and underemployed in many countries, including the United States.

In its latest World Economic Outlook, the IMF forecast a 2020 global contraction of 3.5%, an improvement of 0.9 percentage points from the 4.4% slump predicted in October, reflecting stronger-than-expected momentum in the second half of 2020.It predicted global growth of 5.5% in 2021, an increase of 0.3 percentage points from the October forecast, citing expectations of a vaccine-powered uptick later in the year and added policy support in the United States, Japan and a few other large economies.

It said the US economy – the largest in the world – was expected to grow by 5.1% in 2021, an upward revision of 2 percentage points attributed to carryover from strong momentum in the second half of 2020 and the benefit accruing from $900 billion in additional fiscal support approved in December.The forecast would likely rise further if the US Congress passes a $1.9 trillion relief package proposed by newly inaugurated President Joe Biden, economists say.

China’s economy is expected to expand by 8.1% in 2021 and 5.6% in 2022, compared with its October forecasts of 8.2% and 5.8%, respectively, while India’s economy is seen growing 11.5% in 2021, up 2.7 percentage points from the October forecast after a stronger-than-expected recovering in 2020.

The Fund said countries should continue to support their economies until activity normalised to limit persistent damage from the deep recession of the past year.Low-income countries would need continued support through grants, low-interest loans and debt relief, and some countries may require debt restructuring, the IMF said.

Source: Reuters

IMF lifts global growth forecast for 2021

The global economy is expected to recover this year, driven by support from governments worldwide and vaccine rollouts, led by China, according to Asia Pacific Investment Bank (APIB).

Its asset management department director Heow Gran Lai said China was the first globally significant economy to begin recovering from the Covid-19 crisis.

China recorded a gross domestic product growth of 6.5% in the fourth quarter of 2020, compared with the same period a year earlier, pushing its economic growth to 2.3% for the full year.

Speaking at the webinar titled, ‘2021 Financial Outlook: Why You Should Be Optimistic” tonight, he said the prospect of vaccines being available earlier than expected had cheered stock investors.

“We hope to have the vaccines as earlier as possible and whether it is 100% effective or not, or yet to be tested, anyhow the existence of the vaccines will definitely help the recovery,” he said.

Furthermore, he believed that adequate fiscal and monetary policies introduced by the governments worldwide will be the engine of the growth.

“(Looking) at the progress today, we believe the neutral or moderate recovery more likely to happen (this year),” he said.

Statistically, Heow said China’s production level grew fast amid stability as both value added of the industrial enterprises and service production rebounded strongly since October 2020.

In fact, the year-on-year growth rate of both the downstream consumer goods industry and the upstream raw material industry increased significantly.

“From the micro point of view, although the year-on-year growth rate of power generation has dropped, the year-on year growth rate of production of traditional industries has generally rebounded,” he added.

Source: Bernama

World economy to make a comeback this year, led by China, says APIB

ASEAN member states need to strengthen their connectivity and move as one bloc in accelerating digitalisation in the region, especially during the COVID-19 pandemic. 

Ministry of Communications and Multimedia Malaysia (KKMM) secretary-general Datuk Seri Mohammad Mentek said this is because the digital sector works as a critical enabler for almost all other sectors.

Therefore, he said it is important that the sector ensures the security and safety of the digital ecosystem that is being increasingly relied upon by the other sectors.

“I believe and trust that we have had a very fruitful deliberation, and Malaysia ensures its utmost dedication during its tenure of chairmanship,” he said in his closing remarks at the first ASEAN Digital Senior Officials Meeting (ADGSOM1) here today.

Earlier, ASEAN digital senior officials met with their dialogue partners from the United States (US), China, Japan, Republic of Korea, India, European Union (EU) and the International Telecommunications Union (ITU).

Mohammad also co-chaired the ADGSOM1+EU Meeting virtually with Petri Koistinen, the principal administrator (international affairs) for the European Commission’s Directorate-General for Communications Networks, Content and Technology.

Among the matters discussed during the meetings were the progress of the ICT Work Plan of ASEAN and its dialogue partners and the preparation for the ministerial-level meeting scheduled to be held tomorrow.

The two-day virtual ADGSOM participated by all 10 ASEAN member states is hosted by Malaysia with the ASEAN secretariat acting as the facilitator.

The meeting will then proceed to the ministerial level ASEAN Digital Ministers Meeting (ADGMIN1) tomorrow, chaired by Communications and Multimedia Minister Datuk Saifuddin Abdullah with Prime Minister Tan Sri Muhyiddin Yassin delivering his keynote address virtually at 10 am during the opening ceremony of the event.

Source: Bernama

ASEAN member states need to move as one bloc in accelerating digitalisation

Global semiconductor industry chip sales are expected to grow to US$1 trillion in the early 2030s as the global economy is seen returning to pre-pandemic growth levels in 2021 on the back of an uneven gross domestic product (GDP) rebound.

Speakers at the US-based Semiconductor Equipment and Materials International (SEMI) virtual Industry Strategy Symposium (ISS) expect global semiconductor revenue to grow in 2021.

In a wrap-up of the event on its website yesterday, SEMI quoted Citibank managing director and global chief economist Catherine Mann as saying that global GDP is expected to return to a 5% growth rate this year and rise to more than 7% in late 2021 or 2022 on the back of widespread availability of Covid-19 vaccines, though the 2021 net gain will be slight after a 4% contraction last year.

Mann said the US and China, together accounting for 50% of global GDP, will drive much of the recovery.

“China has returned to its pre-pandemic GDP growth rate and the US is not far behind, with projections that the world’s largest economy will normalise growth in the second quarter of 2021 (2Q21).

“The prospects reflect consensus forecasts of economists polled by Citigroup,” she said.

Mann said Europe, the world’s third largest economy, is not expected to restore economic growth to typical levels until 4Q22.

“Among emerging markets, Latin America is forecast to return to pre-Covid-19 growth no sooner than 2023, with those in Asia riding the coat-tails of China to a faster recovery,” she said.

Mann said that trade growth across the world’s economies will also “remain asynchronous”.

Meanwhile, cloud computing will be a key force behind chip industry growth in 2021 as cloud infrastructure build-out drives higher server demand stemming from the pandemic-inspired surge in online shopping and increasing adoption of the public cloud, said Andrea Lati, the vice-president of market research at VLSI Research.

Lati said a doubling of fifth-generation (5G) smartphone shipments and surging 5G base station deployment following the 2020 slowdown will also fuel the semiconductor industry expansion this year. One big contributor: 5G smartphones feature at least 50% more silicon than 4G models.

Lati said semiconductor industry sales will increase 8% this year as memory leads the recovery — DRAM and NAND are forecast to grow 13% and 12% respectively.

The global information technology (IT) infrastructure buildout, 5nm demand ramp and continuing liquidity measures by central banks will also help drive industry growth in 2021.

Lati predicted a bright future for the chip industry as technology figures prominently in much of global economic growth over the next 10 years.

Equipment and semiconductor sales are expected to reach US$200 billion and US$1 trillion respectively in the early 2030s.

The SEMI ISS examines global economic, technology, market, business and geopolitical developments influencing the global electronics manufacturing industry.

Source: The Edge Markets

Global semiconductor chip sales expected to grow to US$1 trillion in early 2030s

Conditions in Asia Pacific (APAC) are expected to improve in 2021, supported by the gradual recovery of economic activities, given the early containment of the pandemic in several Asian economies, said Moody’s Investors Service.

In a report, Moody’s said the ongoing fiscal and monetary support in both the advanced and emerging markets will also aid in improving conditions, but noted that renewed lockdowns in parts of the world have stalled the nascent global economic recovery and create uncertainty around improving credit conditions.

Moody’s group credit officer and senior vice-president Clara Lau said the rating trend for APAC corporates was overwhelmingly negative in 2020, with the number of negative rating actions hitting a record high of 254, against a low of 30 positive actions during the year.

“That said, the negative rating trend somewhat abated in the second half of the year, with the share of ratings with negative implications improving to 26 per cent at the end of 2020 from a high of 29 per cent in the second quarter of 2020,” Lau said.

Moody’s said although the negative rating trend will continue to ease over 2021, credit conditions for APAC corporates will differ by sector and region.

“China, as a result of early containment of the virus, is having a healthy improvement on the supply side, and its increasing household consumption will help to slowly broaden the recovery, offsetting the impact of slowing exports due to the resurgence of the virus elsewhere,” it said.

Moody’s expects that central banks will likely keep interest rates at very low levels and continue to provide fiscal and monetary stimulus, including asset purchase programmes and lending facilities for banks to boost lending to the private sector.

It said these supportive measures will be credit positive across sectors as they will lower funding costs and support corporates’ debt repayment capacity, but companies with weak liquidity and/or high leverage will continue to face refinancing risk.

Lau said ultimately, a sustained economic recovery, and thus a continued improvement in credit trends will depend on effective pandemic management, progress of vaccinations, and government policy support.

Source: Bernama

Conditions in APAC to improve in 2021: Moody’s

ASEAN should build a new economic ecosystem by promoting the development of digital infrastructure that is accessible for both small businesses and individuals to reinforce its economic recovery efforts and promote sustainable and inclusive growth.

The Royal Thai Embassy in Malaysia said this will help to ensure that the group can be part of the growing digital economy in the region, which is estimated to contribute more than US$240 billion in the next five years.

“On our part, Thailand is developing ‘ASEAN Digital Hub’, which will help enhance digital infrastructure in ASEAN, as well as ‘Digital Park Thailand’, as part of our Eastern Economic Corridor.

“The private sector will play an important role in the development of infrastructure and technology and innovation businesses through PPP (Public-Private Partnerships) investment,” the embassy said in an email interview with Bernama in conjunction with the 1st ASEAN Digital Ministers’ Meeting (ADGMIN1) to be chaired by Malaysia on Jan 21 and 22.

Malaysia’s Minister of Communications and Multimedia Datuk Saifuddin Abdullah will chair the ADGMIN1 via teleconference.

The embassy said that apart from building physical infrastructure, it is equally important to promote digital integration to inclusively enhance business opportunity in the region.

It said that in 2019, ASEAN has successfully completed the live operation of the ASEAN Single Window (ASW) for all ASEAN Member States, which serves as an important milestone.

The ASW is the environment that provides the secure information technology (IT) architecture and legal framework that will allow trade, transport, and commercial data to be exchanged electronically among government agencies and private sectors in the region.

“But ASEAN needs to look beyond ASEAN Single Window and work towards full digitalisation to become ‘Digital ASEAN’. This involves the promotion of digital payment connectivity and comprehensive digital trade,” it added.

The embassy said the Thai government developed the country’s National Digital Economy Masterplan which covers a period of 20 years; and over the past few years, it has launched various new laws and regulations to support the implementation of its digital economy policy.

It said that in 2018, it was estimated that approximately 17 per cent of Thailand’s Gross Domestic Product (GDP) was derived from the digital economy. It is forecasted that the contribution will increase to 25 per cent in 2027.

Thailand’s market value of its digital economy is considered the second largest in ASEAN, it said.

Meanwhile, the embassy said Thailand and ASEAN member states recognise the importance of technology and the increasing pace of digital transformation, especially the accelerated adoption of digital technologies in coping with the impacts of the COVID-19 pandemic. 

“The issue of digital disparity has always been one of the key elements in the ASEAN ICT Masterplan.  ASEAN is committed to addressing the manifold digital gaps in skills, infrastructure, and regulations both within and across the ASEAN Member States, as well as the risks and challenges that digitalisation entails,” it added.

The embassy said ADGMIN1 will provide a good opportunity for ASEAN member states to discuss and share experiences on their responses to the emerging challenges in the digital spectrum, especially in the current COVID-19 pandemic’s socio-economic landscape.

It said the COVID-19 situation provides the region with an opportunity to accelerate inclusive digital transformation, and being well-equipped with technological skills and capabilities will open a door for ASEAN that will lead to future progress and success.

“We would like to emphasise the important role of digital technology in achieving an inclusive, resilient, and sustainable economic growth in the region. Thailand is looking forward to the adoption of the ASEAN Digital Masterplan 2025 which will serve as the roadmap for ASEAN towards achieving that vision,” it said. 

The ASEAN Digital Masterplan 2025 is expected to be adopted at the ADGMIN1.

Themed “ASEAN: A Digitally Connected Community”, the meeting seeks to strengthen cooperation among ASEAN countries towards building digital ecosystems as a pillar in the post-COVID-19 development plan.

Source: Bernama

ASEAN needs to promote digital infrastructure development for small businesses, individuals

Vaccines and fresh economic stimulus promised by US President-elect Joe Biden will give the global economy a chance to put the coronavirus pandemic behind it in 2021, policymakers and industry leaders told the Reuters Next conference.

Their optimism came despite a resurgence in Covid-19 cases that has prompted the World Bank to downgrade its growth forecast for this year and warn that delays in vaccination programmes could pinch recovery even further.

The head of German engineering giant Siemens AG said China is currently driving the world economy but was optimistic about recovery in the United States, where Biden has promised a faster roll-out of vaccines and more economic stimulus.

“In the US … they are holding all the cards and if they put the money to work in a wise way, there is going to be a very, very, strong second half of 2021 and especially 2022,” Siemens CEO Joe Kaeser told the digital forum.

The fight against the pandemic, which has claimed 1.9 million lives globally, has now entered a critical stage as countries around the world roll out vaccination campaigns aimed at immunizing large sections of their populations by year-end.

At the same time, emerging new variants of the virus have raised concerns about vaccine resistance and a faster spread of the disease, while China is battling a rise in cases that has seen more than 28 million people put under home quarantine.

The Washington-based World Bank last week cut its 2021 global growth forecast to 4% from 4.2% and said the rise in output could be as little as 1.6% if there were vaccine delays.

Despite delays in the US inoculation programme, St Louis Federal Reserve president James Bullard said he was optimistic that vaccines heralded a way out of the pandemic, and that economic activity would revive as fatalities started to fall.

He compared the present moment to the D-Day landings of 1944 which ultimately hastened the victory of allied forces over Nazi Germany and the end of World War Two.

“It doesn’t mean the war is over but it certainly puts you in the right direction,” he said, adding that he doubted there would be a clearly defined “all-clear date” but instead a growing sense that the pandemic was being defeated.

European Central Bank (ECB) president Christine Lagarde was also upbeat, reaffirming the ECB’s existing growth forecasts for the eurozone on the proviso that lockdown measures are lifted by the end of March and vaccines adequately distributed.

She cited as positives the fact that, after elections in the state of Georgia, Biden could count on US Senate support for his economic programme and that Britain and the European Union had managed to avert a no-deal Brexit on Dec 31.

“Some of the uncertainties we had on the horizon that made us look at the future with a dark cloud over our heads, some of that has been cleared,” Lagarde told the conference.

The ECB sees growth of 3.9% this year across the 19 countries that use the euro currency, more optimistic than many private sector economists.

Even in the best-case scenario, global recovery is not expected to be even, and concerns are growing that low-income countries could be left even further behind while some sectors most exposed to the pandemic fight for their very existence.

Chris Hyams, chief executive of job listings website Indeed, said it was still unclear whether demand in sectors such as construction that have managed to hold up during the pandemic has now been sucked out for years to come.

“What we don’t know is, when things return, have people just pulled in the next five years of construction and it will all slow down, or is there more work to be done?” he said.

Asked about the risk that developing nations could be left behind in the economic recovery as their people struggle to pay for Covid-19 vaccines, Lagarde said it would “backfire” on the rich world if they did not show solidarity.

“It is in the self-interest of developed countries to make sure that low-income, developing, fragile states have access to vaccination as it is needed,” the ECB chief said.

World Bank chief economist Carmen Reinhart said increasing debt distress in many of those countries meant that China, now the world’s largest official creditor, would need to start restructuring the debt it is owed.

“What I think China will need to do to confront this is what previous other creditors in the past had done, which is you have to restructure,” Reinhart told a panel on economic inequality.

“And restructure big time, meaning either lower interest rates, longer maturities, write-off in principal or some combination of that.”

Source: Reuters

Global economy can shake off pandemic in 2021, say policymakers, industry leader

Japan’s major automakers have cut production at various factories due to the worsening global semiconductor shortage brought about as chipmakers struggle to meet soaring demand from consumer-electronics companies.

Lockdowns and travel restrictions are prompting housebound shoppers to snap up more phones, game consoles, smart TVs and laptops, which in turn has fueled demand for the chips used in those devices. That means carmakers from Toyota Motor Corp. to Volkswagen AG are at risk of not getting enough parts to fuel a fledgling recovery in their own industry.

That’s forced automakers all around the world to cut back on production.

Here’s the state of play for Japan’s firms:

Toyota Motor Corp

Toyota said on Jan. 10 that it’s cutting production of its full-size pickup truck Tundra due to the global shortage of semiconductors. The company expects to trim output of its Tundra model manufactured in San Antonio by 40% this month as a result of limited chip supplies.

In China, Toyota halted lines at its factory in Guangzhou on Jan. 11 due to parts shortages. Toyota jointly operates the facility with Guangzhou Automobile Group Co.; the plant has produced upward of 300,000 vehicles annually in recent years, including the Camry. The lines resumed operation on the eve of Jan. 12 as the necessary parts were able to be procured, spokeswoman Shino Yamada said.

Chen Shihua, a deputy secretary general of the China Association of Automobile Manufacturers, said the chip shortage had caused a relatively big impact on China’s automobile industry from late December and may persist into the second quarter. He noted that some chipmakers have boosted their prices, so it’s hard to measure the impact in terms of vehicle-sales reductions.

Honda Motor Co

Honda was among the first global automaker to warn of chip shortages, announcing a two-day halt in output at its U.K. plant on Jan. 5 and 6. Established in 1985, the Swindon facility produces Civic hatchbacks and employed about 2,900 workers as of November. The plant is set to operate until July 2021, when it has been marked for closure, a decision that was announced in 2019.

On Wednesday, Honda again said it would stop production at Swindon from Jan. 18 due to supply issues, and aim to restart on Jan. 22.

In North America, Honda said this week it will reduce production of the Accord, Civic and Insight sedans, as well as the Odyssey minivan and Acura RDX, a crossover sports-utility vehicle. Honda will adjust production at its Marysville and East Liberty plants in Ohio, as well as at facilities in Alabama, Indiana and Canada. Honda will cut output by a few thousand units by the end of January, and the adjustment will likely continue, according to the Nikkei, which earlier reported the decreases at Honda North America.

Honda is also seeing the impact of chip shortage in China and is considering cutting production. “We will replace some models and adjust our work shifts when necessary,” a Honda spokesperson said Wednesday.

Nissan Motor Co

Nissan said on Jan. 8 that it’s cutting back on production at one of its plants in Japan this month. “A global shortage of semiconductors has affected parts procurement in the auto sector,” spokeswoman Azusa Momose said. “As a result of this shortage, the Oppama plant in Japan will adjust production in January, reducing production of the Nissan Note.” The Nikkei reported that the Note’s production would be reduced to 5,000 from 15,000 a month.

Subaru Corp

Subaru will cut output by a few thousand units each in January at factories in Japan and the U.S., a spokesperson said Thursday.

“We are adjusting production of multiple models in our Gunma and U.S. facilities due to chip-delivery delays,” the spokesperson said. “The adjustment started from Jan. 11 for Gunma and from Jan. 8 in the US. We are checking the end dates. Other companies are involved in the delivery delays, so our plan depends on them. The impact on output in February and beyond is unclear.”

Suzuki Motor Corp

There will be an impact on production, but the automaker is still checking details including which models may be impacted, a spokesman said by phone.

Mitsubishi Motors Corp

While Mitsubishi Motors is still checking regarding any impact on output, it hasn’t been forced to adjust its production for the time being due to chip shortages, a spokeswoman for the company said Jan. 12.

Mazda Motor Corp

Mazda is currently examining whether there has been any impact on production, spokesman Naoto Mawatari said by phone Tuesday.

Source: Bloomberg

How global chip shortage is impacting Japan’s carmakers

Analysts expect a strong turnaround in profits at Asian companies as regional economies see a surge in factory activity and an expansion in exports, helped by approvals for multiple coronavirus vaccines.

Asia’s large- and mid-cap companies are expected to post profit growth of 26.4% in 2021, after an estimated 5% growth last year, according to Refinitiv data.

Asian companies estimated profit growth in 2021 https://fingfx.thomsonreuters.com/gfx/mkt/rlgvdqryrpo/Asian%20companies%20estimated%20profit%20growth%20in%202021.jpg

Singapore, South Korea and Japanese firms lead the earnings growth for the region this year, boosted by a surge in electronics exports.

Breakdown by country for estimates changes in last 30 days https://fingfx.thomsonreuters.com/gfx/mkt/dgkvlqnnkpb/Breakdown%20by%20country%20for%20estimates%20changes%20in%20last%2030%20days.jpg

The data also showed Chinese firms were to likely record an 18.8% rise in profits this year, compared with 10.5% in 2020.

“China could see further earnings upgrades driven by sustained business activity growth and online/offline retail sales growth albeit at a slower pace,” Goldman Sachs wrote in a report.

“India and Korea are also likely to see earnings revision upgrades helped by sustained strong manufacturing activity data and exports,” it said.

In different sectors, industrials and consumer discretionary companies are expected to post a faster recovery this year, after being hit heavily by the COVID-19 pandemic last year.

Breakdown by sector for estimates changes in last 30 days https://fingfx.thomsonreuters.com/gfx/mkt/qmyvmqzzqvr/Breakdown%20by%20sector%20for%20estimates%20changes%20in%20last%2030%20days.jpg

Energy and mining firms are also poised to see a strong growth this year, thanks to a surge in commodity prices.

Iron ore prices have risen more than 40% in the past two months, while crude oil gained 28%.

Some analysts expect earnings growth in Asian firms to bolster the equity markets this year after a sharp rally in 2020.

The MSCI Asia Pacific index has gained 3.7% so far this year, after climbing 17.2% last year.

Source: Reuters

Asia’s corporate earnings expected to rise 26.4% in 2021, Refinitiv data shows

The Asia-Pacific (APAC) region’s economic recovery will take the lead from the rest of the world as it recovers from the COVID-19 recession.

Moody’s Analytics chief APAC economist Steve Cochrane said this is after much of the region will have regained all of its lost output by the end of 2021, although India and the Philippines will struggle to reach this benchmark by the end of 2022.

“The region has much managed to contain the spread of COVID-19 as governments continue to work in obtaining sufficient vaccine supplies,” he said in an analytics note Wednesday.

Cochrane said the region’s manufacturing supply chains are fueling economic rebound on demand for goods related to the pandemic recovery such as computers, mobile phones, information technology (IT) systems, pharmaceuticals, and personal protective equipment-and consumer durable goods such as autos and household appliances, as well as holiday-related consumer goods.

On the other hand, he said policy has remained consistently supportive and should continue to be so through 2021.

In addition, the expected shift in US foreign policy under the upcoming administration of President-elect Joe Biden will also benefit the region, especially in deescalating the tensed relation between Washington and Beijing.

“The uncertainty that has weighed on global trade over the past two years will be lifted. The threat of higher tariffs on China’s exports to the US, or broader tariffs applied to goods exported by other APAC countries that have trade surpluses with the US, is expected to be stepped back,” he said.

In terms of monetary policy, he said that all the region’s central banks have quickly lowered their policy interest rates either to near zero or to historic lows when the pandemic became evident.

“Fiscal policy is also supportive and should remain so in the coming year.

“Malaysia, Singapore, Australia, Japan and Thailand stand out in terms of the amount of fiscal stimulus, and the targeted nature of their spending plans toward direct payments to households, support of small and medium industries, and extended assistance to hard-hit industries such as travel and tourism, which may well be the last sector to recover from the impacts of the pandemic,” he said.

However, Cochrane warns of near-term risks which could impact the regions recovery, including emerging COVID-19 clusters in the region that are not effectively contained, and similarly, much more strict economic shutdowns in Europe and North America that would staunch the rebound in global demand for goods.

Source: Bernama

APAC to Lead Economic Recovery Post COVID-19 Recession

ASEAN countries should work towards international standards in providing universal internet connectivity in order for the digital economy to grow, said a digital marketing and personal branding trainer.

The founder of Digital Marketing Rider, Shalini Subramaniam, said an education system that will adapt to demands for a digital future and stronger safety nets for data protection is needed for the growth of the digital economy.

In an exclusive interview with Bernama recently, she said that Southeast Asia has the potential to become one of the world’s top digital economies because it is the fastest-growing internet market in the world.

She also quoted a report by the Communications Department of the International Monetary Fund (IMF) which says that the Internet has reached most people in Brunei Darussalam, Malaysia, and Singapore, but more than 70 per cent of Cambodia, Indonesia, Laos and Myanmar remains offline and can’t fully participate in the digital economy.

Shalini said connectivity is a critical tool to enhance opportunities for individuals and companies and added that access to a broadband network is essential for the success of digital entrepreneurs, namely from the ASEAN member states.

She opined that key obstacles like lack of digital awareness and trust in digital technologies need to be addressed first in each ASEAN member state in order for the small and medium enterprises (SMEs) to achieve full potential in the access and use of digital technologies.

“It is important for ASEAN  to identify reliable broadband services besides strengthening the key enablers of Internet growth. Forming a task force will help to identify these key matters to shape and support the implementation,” she said.

Asked whether specific laws are needed to help guide and regulate the digital economy in Malaysia, Shalini said as the government continues to support and focus its efforts on building the nation’s digital economy, more specific policies to monitor and supervise online transactions to secure customer privacy, trust and security need to be introduced.

In a related development, Shalini said Malaysians are also increasingly looking towards online solutions for their everyday needs.

She said Malaysians understand that digital payments are not only safer but also efficient and cost-effective as they don’t need to manage physical money.

The digital marketing trainer said according to Malaysia Digital Marketing Statistics 2020, an average Malaysian spent time using the internet for 8 hours and 5 minutes a day.

“Malaysia has 80 per cent of Internet penetration by total population as of Jan 8, 2019.

“Understanding this, more businesses will adopt digitalisation, which means Malaysia’s digital economy is set to continue its growth momentum,” said the certified eUsahawan Trainer from Malaysia Digital Economy Corporation (MDEC).

Shalini said the COVID-19 pandemic has severely impacted business start-ups in Malaysia and it is crucial for the government to provide them with – among others – tax exemptions at a certain rate, besides mentorship programme and training opportunities.

She said this should be done across all different industries and sizes of businesses.

Malaysia will chair the first ASEAN Digital Ministers’ Meeting (ADGMIN1) via teleconference from Jan 21 to Jan 22.

Themed “ASEAN: A Digitally Connected Community”, the meeting seeks to strengthen cooperation among ASEAN countries towards building digital ecosystems as a pillar in the post-COVID-19 development plan.

The Association of Southeast Asian Nations or ASEAN has 10 member states namely Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Laos, Myanmar, Cambodia, and Vietnam.

Source: Bernama

ASEAN Should Work Towards International Standards in Providing Universal Internet Connectivity

After a tumultuous 2020, a better outlook awaits Asian companies, on expectation of a recovery in the macro economy and corporate earnings.

There is a bright earnings outlook for 2021, and further boosting returns will be expectations of an earnings recovery in 2022.

Citigroup, Goldman Sachs and Nomura have pencilled in more than 20% earnings growth for Asian stocks.

While Citi analysts see prospects for profit growth to be strongest in South Korea, how would the prospects be for some of the listed companies in Malaysia?

A random survey revealed that some are looking at a 10% to 20% earnings growth while others will stay on track to achieve their medium-term growth targets.

They see risks such as a prolonged pandemic, rising commodity prices and shortage of containers hampering exports and imports, and have come up with some survival strategies.

International energy services group Serba Dinamik Holdings Bhd expects a 15% to 20% growth for next year and the subsequent two years, propelled by a sustainability and technology-based strategy.

“As sustainable elements are put in place, we expect the risks to be manageable,’’ said Serba Dinamik CEO Datuk Abdul Karim Abdullah.

Some of its strategies include planning a sustainable financial model to ensure the group has sufficient cash in hand, and strengthening its geographical presence to focus on more stable countries.

With the implementation of environment, social and governance elements, Serba Dinamik employs local workers in its move to create harmonious relationships, and help narrow the gap between rich and poor.

The company also aims for minimal damage to the environment to avoid protests from people around areas where jobs are carried out, and any summons from authorities.

In terms of governance, it will run its operations according to rules and regulations to avoid any disruptions in the implementation of services, or project delays.

For this year, industrial chemicals supplier Luxchem Corp Bhd which supplies raw materials to the glove industry, has set a higher growth target of 10% to 15%, compared with its previous targets of just 10%.

“Against the roll-out of the Covid-19 vaccine and expectations of market recovery, we foresee the glove industry will continue to grow,’’ said Luxchem CEO Tang Ying See.

There are risks involving, among other things, a shortage of containers, demand and supply of raw materials, fluctuations in foreign exchange and further lockdowns.

But Luxchem will stay focused on its main industries, expand its product range and also stay close to its customers while providing good technical support.

Noting current challenges such as worldwide container shortages and rising raw material prices, Scientex Bhd, a supplier of industrial and consumer packaging, believes these should normalise in the near term.

“We expect continued growth over the next few years based on the uptrend in demand for flexible packaging globally,’’ said Scientex chief operating officer (packaging business) Choo Seng Hong.

While accelerating the development of sustainable flexible packaging solutions, the next milestone in the group’s target to “double up every five years,” would be financial year 2023.

To mitigate issues related to timeliness of logistics and raw material prices, Scientex keeps close communication with its customers and suppliers to minimise potential disruptions.

To address environmental concerns on the use of plastic packaging, the company takes part in the circular plastic economy that emphasises on restoration and regeneration.

Having acquired 2,600 acres of new land, Scientex will accelerate the scale of affordable property launches, expanding beyond its stronghold in Johor and Melaka to the Klang Valley, Seremban, Ipoh and Penang.

“Demand for affordable homes is expected to be resilient, as the property division is also aligned to the group’s target to achieve a doubling of growth every five years,’’ said Scientex chief operating officer, property division, Datuk Alex Khaw Giet Thye.

Meanwhile, IHH Healthcare Bhd, Asia’s largest private healthcare group, is on track to double its return-on-equity in the next five years, by growing in a capital efficient manner.

“Despite facing the most significant crisis of our lifetime in Covid-19, IHH has remained resilient and is in a strong financial position,’’ said IHH managing director and CEO Dr Kelvin Loh.

As patients returned in strength since June, IHH had also created new revenue streams including Covid-19 related services, and improved its case mix that provides a consistent method of classifying patients while keeping tight cost controls.

IHH also stands ready to support governments in administering the vaccines once they are available in the markets it operates in.

Amid the pandemic, the group accelerated its move into telemedicine globally, and has completed its acquisition of Prince Court Medical Centre under its strategy to expand clusters in metro areas.

As companies increase or maintain their growth expectations, they stay nimble to cope with any sudden, unwelcome changes in the virus scene.

A random survey revealed that some are looking at a 10% to 20% earnings growth while others will stay on track to achieve their medium-term growth targets.

Source: The Star

Asian companies hope for better prospects