MNCs in the News-2016-03-18

Shen Danyang, a spokesman for China’s Ministry of Commerce (MOFCOM), said “China is confident it will remain an attractive market for foreign investment,” with its confidence coming from “the existing foundation and new efforts that will be taken to attract foreign investment.” Shen said that the “government will strive to make the domestic market fairer and more transparent and predictable by further relaxing restrictions on foreign investment in service sector…supporting more opening up of key border areas” and enhancing IPR protection. In 2015, China’s utilized foreign direct investment (FDI) hit USD $135.6 billion, up 5.5 percent year over year (YOY) (“China Confident to Remain Magnetic to Foreign Investment,” China.org.cn, March 17, 2016, http://www.china.org.cn/business/2016-03/17/content_38051463.htm)

State Power Investment Corp. (SPIC), a Chinese state-owned enterprise (SOE), which just invested USD $2.5 billion in Pacific Hydro Pty Ltd., has concluded an accord with Banco Santander that will see it buy Australian Taralga Wind Farm Pty Ltd. (with existing debt) for approximately $230 million. The Taralga Wind Farm project, which was largely funded by loans from Australia’s Clean Energy Finance Corp., a Danish export credit agency, and one other entity, is located in New South Wales and has a 10-year power purchase agreement with Energy Australia. SPIC already assumed massive debt in conjunction with its Pacific Hydro acquisition (Sharon Klyne, “China’s State Power Buys Australian Wind Farm for $227 million: Sources,” Reuters, March 14, 2016, http://www.reuters.com/article/us-renewables-m-a-spic-idUSKCN0WG0S2)

Murat Mercan, Turkey’s former deputy energy minister, told the China Daily during a World Energy Council sponsored event in Beijing that he believes Chinese companies will aggressively bid to pursue a USD $22-25 billion contract for the construction of Turkey’s third nuclear power plant. He stated, “‘Chinese nuclear companies are very competitive in terms of price, safety and technology. China is building nuclear power plants using its own third-generation nuclear reactor, and I don’t see why we can’t use it.’” Russia is building Turkey’s first plant while a French-Japanese consortium consisting of EDF and Mitsubishi Electric is constructing the second (Lyu Chang, “Chinese Bidders Expected for Turkey’s Nuclear Project,” China Daily, March 15, 2016, http://europe.chinadaily.com.cn/world/2016-03/18/content_23953685.htm)

In conjunction with others, China’s Three Gorges International Corp., a subsidiary of SOE CTG, plans to bid on a contract to build and operate a hydroelectric dam/power station on the Tapajos River in Brazil. In 2015, “CTG won 30-year concession rights to operate two major hydroelectric projects—Ilha Solteira and Jupia…with a total investment of US $3.7 billion CTIG Executive Vice President Wang Shaofeng said that his firm planned to “use Brazil as a base to tap into other South American countries such as Chile, Colombia, and Peru, all of which have rich water resources and experience of dam construction” (Lyu Chang, “Three Gorges-Led Group Bids for Brazil Hydropower Plant,” China Daily, March 16, 2016, http://europe.chinadaily.com.cn/business/2016-03/16/content_23886781.htm)

Toshiba Corp. revealed last week that the U.S. Justice Department and U.S. Securities and Exchange Commission were investigating the accounting practices of its U.S. units. While Toshiba did not elaborate, the investigations seem to tie to Westinghouse’s surprise USD $1.3 billion write down of assets for the 2012 and 2013 business years as well as an accounting scandal that has led it to revise its past pretax earnings over the past seven years downward by 224.8 billion yen. The scandal and other problems have led Toshiba to shed its medical unit and white goods unit (“Toshiba says US Units are Investigated over Accounting,” Nikkei Asian Review, March 18, 2016, http://asia.nikkei.com/Business/Companies/Toshiba-says-US-units-are-inve...)

Japanese oil and gas company Inpex has decided to delay its investment in Indonesia’s Masela’s gas bloc development. Originally, it was anticipated the investment would be realized by 2018, but political infighting between a senior Cabinet minister and the Energy Minister has made the location of platform uncertain. Energy and Mineral Resource Minister Sudirman Said favors Inpex’s plan to build an offshore platform while Coordinating Maritime Affairs Minister Rizal Ramli supports an onshore facility. The delay of the US $14 billion project means it will not be operational until 2026. Indonesian President Joko Widodo will make the eventual location decision (Fedina S.Sundaryani, “Uncertainty on Masela leads to investment delay” The Jakarta Post, March 18 2016, http://www.thejakartapost.com/news/2016/03/18/uncertainty-masela-leads-i...)

Japan’s Orix, a leasing company, will enter into a joint venture (JV) with Infrastructure Leasing & Financial Services, an Indian private venture which has large Indian government and foreign government shareholders such as the Abu Dhabi Investment Authority, to participate in a US $1 billion wind power expansion project that seeks to generate new capacity of 229,000kW through projects in 26 locations across seven Indian states. The project fits into the Indian government’s initiatives to make greater use of renewable energy in order to deal with serious air pollution problems (“Orix to Invest in Indian Wind Power Project,” Nikkei Asian Review, March 17, 2016, http://asia.nikkei.com/Business/Companies/Orix-to-invest-in-Indian-wind-...)

Bank of Tokyo-Mitsubishi UFJ will become the first Japanese lender to provide Islamic compliant financing through an overseas branch, which will issue a $200 million loan to a unit of Saudi Arabian national mining company Ma’aden, but earn “repayment” through transactions in commodities like aluminum. The Mitsubishi UFJ Financial Group bank believes Islamic finance will constitute about 15% of its Middle East financing over the next three years. Previously, Japan’s Financial Services Agency only permitted Japanese banks to engage in Islamic finance through units incorporated overseas, but it recently liberalized rules and thus Japanese banks can use foreign branches, too (“Japan’s BTMU Going Local in Islamic Finance,” Nikkei Asian Review, March 16, 2016, http://asia.nikkei.com/Business/Deals/Japan-s-BTMU-going-local-in-Islami...)

The Thilawa Special Economic Zone (SEZ), which is southeast of Yangon, Myanmar’s former capital, is the country’s first SEZ and it “grants tax incentives and other benefits to companies operating there.” The zone includes a “large industrial park” that came into being with the support of the Japanese government and companies and about 60 Japanese businesses have already in the zone. However, the zone did not have any banks. To serve the financial needs of these businesses, Myanmar’s CB Bank opened up a branch in the zone and it partner with Bank of Tokyo-Mitsuibishi UFJ to operate a “Japan desk” (Motokazu Matsui, “Myanmar Bank Opens Thilawa Economic Zone’s First Branch,” Nikkei Asian Review, March 18, 2016, http://asia.nikkei.com/Business/Companies/Myanmar-bank-opens-Thilawa-eco...)

The Korea Electric Power Corporation (KEPCO) has signed a Memorandum of Understanding (MOU) with Ecuador’s Ministry of Coordination of Production, Employment and Competitiveness. The MOU aims to facilitate bilateral technical cooperation in areas such as electric vehicle chargers, technology exchange concerning electric vehicles, smart grids, energy storage systems, advanced metering infrastructure, and the sharing of power generation technology. At the signing event, KEPCO, which is planning to provide its EV charging infrastructure operation systems via a project worth US$30 million, presented a study on the construction of electric vehicle charging infrastructure in three Ecuadorian cities (Jung Min-hee, “KEPCO Signed MOU for EV Charge Project with Ecuador,” Business Korea, March 14, 2016, http://www.businesskorea.co.kr/english/news/politics/14080-cooperation-e...)

Next month, the Korea Rural Community Corporation is expected to secure a government of Gujarat (India) contract worth about $35 million relating to the construction of the Kalpasar sea wall project. Indian Prime Minister Modi was impressed by Korea’s Saemangeum Seawall when he visited Korea in 2007 and has wanted to build a similar one in India since then, but could not obtain the financing. The seawall will help to deal with the chronic shortage of water in the hinterlands of Mumbai because the lake surrounded by the seawall will have a storage capacity of 10 billion tons of freshwater (Jung Suk-yee, “South Korea to Build Sea Wall in India,” Business Korea, March 18, 2016, http://www.businesskorea.co.kr/english/news/industry/14131-indian-water-...)

According to Indonesia’s Investment Coordinating Board (BKPM) chairman Franky Sibarani, a French sports apparel company is planning to invest US$500 million in Indonesia. The company “will cooperate with local companies to build a sports research and development center, an integrated department store, and an import-export system.” Indonesia sees France as one of the European countries having big promise as an inward investor. Apart from France, other European countries have displayed interest in the minerals, infrastructure, and manufacturing sectors. BKPM seeks to attract more investors from European countries and will maintain communication with investors to ensure their projects come to fruition (“French apparel-maker to invest in RI,” The Jakarta Post, March 14 2016, http://www.thejakartapost.com/news/2016/03/14/french-apparel-maker-inves...)

The President of the European Association for Business and Commerce (EABC) Rolf-Dieter Daniel said the Thai government should consider what is needed to secure long-term investment and should move to improve the country’s competitiveness. In order to attract more foreign investment, the EABC believes that the Thai government need to improve transparency on government procurement projects, liberalize investment in the service sector, relax some laws to make investments easier for new companies, simplify work-permit and immigration procedures, embrace European product standards, and pursue customs reforms (Suchat Sritama, “Call for Thai-EU Private Sector Cooperation,” The Nation, March 14, 2016, http://www.nationmultimedia.com/business/Call-for-Thai-EU-private-sector...)

*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.