MNCs in the News-2015-10-23

It was announced last week that China will pilot a Negative List approach in various regions across the country between December this year and the end of 2017. “The aim is to explore a system that could be replicated nationwide for application in 2018 as part of efforts to streamline government administration and give more freedom to the market.” The experiment will build upon the negative list that was first piloted in the Shanghai Free Trade Zone in 2013. The goal of the piloting is to spur increased investment and, in turn, greater economic growth (“China Sets Timetable for Nationwide ‘Negative List’ Approach,” Xinhua, October 19, 2015, http://news.xinhuanet.com/english/2015-10/19/c_134729043.htm)

Apple, which now powers 100 percent of its operations in China with renewable energy, announced it would build more than 200 megawatts of solar projects in various regions in China and “partner with suppliers in China to install more than two gigawatts of new clean energy.” Lisa Jackson, Apple’s Vice President of Environment, Policy, and Social Initiatives, stated “being responsible, protecting the air and water, and clean energy are at the heart of Apple’s commitment to China.” Apple recently completed a 40 megawatt solar project in Sichuan. Apple’s initiatives undercut its critics who accused it of ignoring its environment footprint (Liu Zheng, “Apple Launches New Energy Programs in China to Promote Low-Carbon Manufacturing,” China Daily, October 22, 2015, http://www.chinadaily.com.cn/business/tech/2015-10/22/content_22253281.htm; “Apple to Build More Solar Projects in China, Green Its Suppliers,” Nikkei Asian Review, October 22, 2015, http://asia.nikkei.com/Business/Companies/Apple-to-build-more-solar-proj...)

In 2013, GlaxoSmithKline (GSK) had to pay almost a USD $500 million fine because Chinese authorities had found it guilty of bribing doctors, hospital administrators, and others in order to boost its drug sales. GSK CEO Andrew Witty said his company had learned from the experience and created a “‘new commercial model and incentive system.’” Moreover, the company has in place systems to ensure no bribes are paid while improved information is provided to Chinese doctors. Witty also noted that his company planned a number of CSR initiatives such as partnering with China to help it deal with Hepatitis B (Cecily Liu, “GSK Puts China Corruption Case Behind It, Forms New Business Model,” China Daily, October 22, 2015, http://www.chinadaily.com.cn/business/2015-10/22/content_22258828.htm)

Prior to Chinese President Xi Jinping’s visit to the U.K., U.K. Prime Minister David Cameron touted the visit would witness around $46 billion in deals and investment, leading to the creation of 3900 jobs in energy, finance, health care, retail, and technology. One marquee deal that was struck was an agreement by China General Nuclear Power Corporation (CGN) to invest more than $9 billion in the EDF led Hinkley Point nuclear power plant. CGN also struck partnerships regarding the development of new power plants in Sizewell and Bradwell. The deal gives China a chance to showcase its own nuclear technology (Robert Hutton and David Tweed, “Cameron Says China’s Xi Brings $46 Billion in Deals to U.K.,” Bloomberg Business, October 19, 2015, http://www.bloomberg.com/news/articles/2015-10-19/cameron-says-china-s-x... “Hinkley Point Nuclear Agreement Reached,” BBC News, October 19, 2015, http://www.bbc.com/news/business-34587650; Christopher Adams, “China to Take One-Third Stake in Hinkley Nuclear Project,” Financial Times, October 19, 2015)

Alibaba recently sent letters to the US Trade Representatives (USTR) office to highlight its efforts to protect other’s intellectual property rights (IPR). It has stressed its institution of a mechanism allowing for the more rapid removal of fake merchandise from its various websites and new mechanisms to allow for the registration of IPR. Alibaba’s move comes in response to rising complaints about counterfeit goods being sold on its websites and is aimed at keeping itself off the USTR’s list of “‘notorious’ online and physical marketplaces that reportedly sell pirated goods.” The USTR previously put Alibaba on the list in 2012 (Gillian Wong, “Alibaba Lobbies U.S. to Keep Its Online Bazaars Off Piracy Blacklist,” The Wall Street Journal, October 19, 2015, http://www.wsj.com/articles/alibaba-lobbies-u-s-government-to-be-kept-of...)

Following the release of investment data for the third quarter of 2015, Indonesia’s Investment Coordinating Board (BKPM) expressed confidence that figures for total realized investment, domestic and foreign, for the year would exceed government goals. Of total realized investment for the first nine months of the year, BKPM officials reported that foreign direct investment (FDI) accounted for more than 66 percent, reflecting almost a 17 percent growth rate year-over-year. Top foreign investors over the first three quarters of the year included Singapore, Malaysia, Japan, South Korea, and the Netherlands. Substantial amounts of foreign investment went into transportation, telecommunications, and mining (“Investment Realization to Exceed Full-Year Target,” The Jakarta Post, October 23, 2015, http://www.thejakartapost.com/news/2015/10/23/investment-realization-exc...)

While overall investment statistics were promising, Indonesia’s BKPM has highlighted that investment in labor-intensive industries—i.e., textiles and textile products, footwear, food and beverages, and furniture—actually declined by 11.74 percent for the first nine months of 2015. Investment in the footwear sector especially was under pressure. The BKPM expects the situation to improve somewhat due to the government’s economic stimulus packages and a declining rupiah. Nevertheless, the BKPM is being proactive and has recommended that the government expand tax allowance regulations to include investment in labor-intensive industries on Java in order to boost investment levels and create more jobs (Ayomi Amindoni, “Labor-Intensive Investment Shows Negative Growth: BKPM,” The Jakara Post, October 22, 2015, http://www.thejakartapost.com/news/2015/10/22/labor-intensive-investment... Ayomi Amindoni, “Investment Board Proposes Tax Allowance Relaxation,” The Jakarta Post, October 22, 2015, http://www.thejakartapost.com/news/2015/10/22/investment-board-proposes-...)

PT Semen Indonesia, Pertamina, and PT Pindad and other state-owned enterprises (SOEs) are seeking to work with PT Freeport Indonesia which holds the contract of work for the Grasberg mine. Said Didu with Indonesia’s Energy and Mineral Resources Ministry stated, “‘cooperation with the SOEs is necessary, particularly to increase the utilization of local goods and services. Moreover, cooperation is expected as a method of knowledge and technology transfer.’” Freeport Indonesia, a subsidiary of Freeport McMoRan, annually procures around $1 billion a year. Indonesian President Joko “Jokowi” Widodo has stressed the necessity of increasing local content in support of mining activities (Raras Cahyafitri, “SOEs Want Piece of Grasberg Pie,” The Jakarta Post, October 19, 2015, http://www.thejakartapost.com/news/2015/10/19/soes-want-piece-grasberg-p...)

Kasikornbank (KBank) Executive Vice-President Chongrak Rattanapian reported Thai companies were increasingly investing money outside the country with the annual value of Thai outward FDI as a percent of GDP jumping to 1.3 percent of GDP from 2012-2014 from a lowly 0.15 percent from 2009-11. He said this figure would only grow with Thai companies pouring the bulk of money into neighboring countries like Cambodia, Laos, Myanmar, and Vietnam. One new trend is that an increasing number of medium-sized companies are looking at investing abroad whereas previously only large firms went overseas. Chongrak sees good potential in consumer goods and services (Somruedi Banchongduang, “Cross-Border M&As likely to Increase,” Bangkok Post, October 22, 2015, http://www.bangkokpost.com/business/news/738932/cross-border-m-as-likely...)

Fires in Indonesia have covered many Malaysian states in smoke. The haze has been so bad that there have been flight delays, school closures, and other costly health measures. Citing Singapore’s Transboundary Haze Pollution act which “allows regulators to prosecute companies or individuals responsible for causing fires,” various Malaysian MPs have called upon the government to enact similar laws. The government said it was not yet ready to propose legislation as it was studying if such laws made sense, was already working with ASEAN to deal with the haze problem, and was trying to help Indonesia put out the fires (Eunice Au, “Malaysia MPs Seek Laws to Punish Firms Causing Haze,” The Straits Times, October 22, 2015, http://www.straitstimes.com/asia/se-asia/malaysia-mps-seek-laws-to-punis...)

*The information used herein is gathered from sources believed to be reliable, but the Wong MNC Center does not guarantee their accuracy. The content in this section does not necessarily represent the official view of the Wong MNC Center, its Board of Directors, or its Advisory Board.