MNCs in the News-2016-05-27

Nathan Sheets, the U.S. Treasury Department Undersecretary for International Affairs, said “Obama administration officials will press their Chinese counterparts to take steps to improve China’s business and investment climate,” especially in regards to “growth sectors” (e.g., healthcare, logistics, and tourism) and to “improve the transparency of government regulation” at the Strategic and Economic Dialogue talks in June. The US also wants China to reduce its excess industrial capacity. Sheets stressed the administration still hopes to conclude a bilateral investment treaty before Obama leaves office, but is still waiting on a revised negative list from Beijing (David Lawder, “U.S. Treasury to Press China to Improve Investment Climate: Officials,” Reuters, May 24, 2016, http://www.reuters.com/article/us-usa-china-treasury-idUSKCN0YF2LK)

Discussing the upcoming G20 summit in Hangzhou, Chinese Foreign Minister Wang Yi stated “Beijing aims to come up with a set of guiding principles for global investment.” According to some, China’ initiative is about the country positioning itself “as a major international player reshaping rules in global trade and investment.” Wang observed “there were roughly 3,200 bilateral agreements on international investment and China would push for the G20 to define guiding principles for a global investment policy.” He added, “‘This would be the world’s first multilateral investment framework.’” Still, Wang i did not explain what principles China planned to propose (Zhuang Pinghui and Wendy Wu, “Beijing to Push for G20 Code on Investment,” South China Morning Post, May 27, 2016, http://www.scmp.com/print/news/china/policies-politics/article/1955885/b...)

Tsinghua Unigroup Ltd. has been an active investor in Taiwan, pouring $365 million last year into ChipMOS Technologies Inc. and $600 million into Powertech Technology Inc., both which are Taiwanese chip packaging and testing firms. In response to reports the new Taiwan leadership would review the investments, Zhao Weiguo, the chairman of Unigroup, said he was not worried as “‘no matter who is the leader of Taiwan, there is always a desire there for development.’” Moreover, he noted, “‘even if these deals are disapproved, we can do chip packaging and testing ourselves and it would be a loss to Taiwan’” (Ma Si and Yang Jun, “Tsinghua Unigroup Sticks to Taiwan Investment,” China Daily, May 25, 2016, http://www.chinadaily.com.cn/business/2016-05/25/content_25456189.htm)

A team consisting of China Railway Corp. (CRC), China Railway Construction Corp. Ltd. (CRCC), China Railway Signal & Communication Corp., and several banks is visiting Malaysia to lobby for a high-speed rail project connecting Singapore and Kuala Lumpur. Chinese bidders face serious competition from a Japanese group led by East Japan Railway. Yet one crucial advantage the Chinese consortium has is the ability to offer very attractive financing terms. Furthermore, the Chinese group plans on completing the project in two years, far quicker than what the Japanese consortium can do. Nevertheless, Singapore seems to favor Japanese involvement for various reasons (Lu Bingyang and Chen Lixiong, “Chinese Consortium in Malaysia to Lobby for Multi-Billion Dollar Rail Project,” Caixin Online, May 23, 2016, http://english.caixin.com/2016-05-23/100946667.html)

Indian Finance Minister Arun Jaitley will travel to Japan before the end of this month to participate in the annual international conference on the Future of Asia as well as for high-level bilateral talks. Regarding Japan’s commitment to help and provide preferential financing for India’s first high-speed rail system, Jaitley said “‘it’s an extremely important project as far as India is concerned…it’s a very high priority item…we wish to pursue it very seriously.’” He hinted that there was the potential for further shinkasen bullet trains if the initial Ahmedabad to Mumbai project worked out well (Kiran Sharma and Yuji Kuronuma, “Indian Finance Minister Says Japan Bullet Train Project is a ‘High Priority,’” Nikkei Asian Review, May 21, 2016, http://asia.nikkei.com/Politics-Economy/Economy/Indian-finance-minister-...)

Commenting on the United Kingdom (U.K.)’ s upcoming vote on leaving the European Union (EU), Japanese Prime Minister Abe Shinzo said a yes vote “‘would make the U.K. less attractive as a destination for Japanese investment.’” Japanese firms, which were the second largest investors in the U.K. in 2015 after American ones, may be disadvantaged because of a potential loss of access to the EU market and weakening of the Euro. According to one recent survey, 94 percent of surveyed Japanese firms would like Britain to remain in the UN, especially given the uncertainty that would surround the U.K.’s exit (Ayako Mie, “Much to Lose, Little or Nil to Gain in ‘Brexit,’ Says Japan Inc.,” Japan Times, May 23, 2016, http://www.japantimes.co.jp/news/2016/05/23/reference/much-to-lose-littl...)

A ceremony was held to celebrate the completion of a propane dehydrogenation facility in Ulsan, South Korea by SK Advanced, a joint venture involving SK Gas, Saudi Arabia’s Advanced Petrochemical Co., and Kuwait’s Petrochemical Industries Co. The event demonstrated SK Gas Ltd acceleration of its liquid petroleum gas-based gas chemistry business through cooperation with Saudi Arabia and Kuwait. The ceremony was attended by a representative of various Korean dignitaries and SK Gas President, SK Advanced President, Saudi Arabia’s APC Chairman, and Kuwait’s PIC President. This project is regarded as a successful case of attracting the Middle Eastern capital to Korea (Jung Min-hee, “SK Gas Joins Hands with Saudi Arabia, Kuwait for LPG-based Gas Chemistry Business,” Business Korea, May 24, 2016, http://www.businesskorea.co.kr/english/news/industry/14777-joint-pdh-pla...)

Korea Electric Power Corporation (KEPCO) has decided to pull out of a Nigerian oil exploration and development project jointly led by it and several other Korean firms. The reason is that the project has been stalled for seven years as a result of an appeal by the Nigerian government which previously nullified the contract in 2009 but, that same year, lost a Federal High Court case on the matter filed by KEPCO. Believing the project will remain stalled, KEOCO decided to liquidate its local subsidiary for the project and the future of another KEPCO project in Nigeria has become uncertain (Jung Min-hee, “KEPCO to Pull Out of Nigerian Oil Project Stalled for 7 Years,” Business Korea, May 23, 2016, http://www.businesskorea.co.kr/english/news/industry/14760-escape-swamp-...)

The Indonesian government is working on defining all the regulations in its 12 economic policy packages by the end of May. Currently, 194 of a total of 203 regulations have been completed while the nine remain under discussion. The government also intends to form a task force to monitor the implementation of the deregulation policies from the central government down to local levels. The 203 regulations will involve 26 ministries and reform will be an ongoing process. Cabinet Secretary Pramono Anung added that with the deregulation efforts, a better investment climate will be created to attract more investors to Indonesia (Ayomi Amindoni, “Govt to issue all rules in 12 policy packages this month,” The Jakarta Post, May 25, 2016, http://www.thejakartapost.com/news/2016/05/25/govt-to-issue-all-rules-in...)

Global rating agencies acknowledge Indonesia’s investment climate has improved due to the government’s effort. Fitch’s decision to affirm Indonesia’s investment grade ratings was based on many factors such as the government’s low debt burden, the country’s great economic development potential, and the banking sector’s limited risk exposure. Earlier, Standard & Poor’s (S&P) visited Indonesia’s Investment Coordinating Board and welcomed Indonesia’s streamlining efforts. The government will continue to improve the nation’s investment climate by launching economic policy packages and changing BKPM from an agency issuing permits to one that serves investors (Redaksi, “BKPM: Ratings Agencies Say Indonesia’s Investment Climate Has Improved,” Katadata, May 26, 2016, http://en.katadata.co.id/news/2016/05/26/bkpm-ratings-agencies-say-indon...)

Thailand plans to launch roadshows to promote “Food Innapolis” to “lure foreign investment to the innovation and development center” and will spend 1 billion baht to build supportive infrastructure. Thailand’s Science and Technology Ministry says international roadshows will be held in countries like Netherlands, France, and Japan. It already has signed a memorandum of understanding with stakeholders to establish “Food Innapolis” whose purpose is to increase the value of the country’s crops. The food cluster will be established at Thailand Science Park and 17 companies have agreed to cooperate with the ministry on research and development in the food industry (Chatrudee Theparat, “Roadshows to Promote ‘Innopolis,’” Bangkok Post, May 28, 2016, http://www.bangkokpost.com/business/news/991749/roadshows-to-promote-inn...)

Vietnam’s inward FDI (IFDI) reached more than USD $10 billion in the first five months of this year, an increase of 136 percent year-over-year. According to a statement from Vietnam’s Ministry and Investment and Planning, $7.56 billion went in 907 new foreign projects while $2.59 billion was registered to existing projects. South Korea remained the biggest investor among 60 countries and territories, making up 34 percent of Vietnam’s IFDI pledges. Manufacturing and processing sectors remained the largest sector for IFDI with a 65 percent share. The second largest sector was information and communication while the third biggest was real estate (“Vietnam’s foreign investment surges to over $10 billion in Jan-May,” Thanh Nien News, May 26, 2016, http://www.thanhniennews.com/business/vietnams-foreign-investment-surges... )

Foreign investors can enter the theater industry in Vietnam. According to the current Cinematography Law of 2009, they are allowed to operate in one of two ways, either through a business co-operation contract (BCC) or a joint venture (JV) with Vietnamese partners. Under a BCC, foreign investors can enter theater business without setting up an economic organization while in a JV, there are limits on the type of foreign entities that can partner with Vietnamese ones and their ownership stakes. Enterprises can import specified movies for dissemination and there are licensing requirements for the release of certain kinds of movies (“Foreign investors are interested in opening up VN theater business,” Vietnam News, May 25, 2016, http://vietnamnews.vn/politics-laws/talking-law/297224/foreign-investors...)

*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.