MNCs in the News-2017-03-17
The resurgence of the Communist Party in China is leading foreign companies and their associations to revise how they try to affect policy development and implementation. For example, instead of going to government bodies, they are “‘going straight to the party leading small groups,’” given small groups are not just the key agenda setting bodies, but have gotten more involved in day-to-day affairs. Some observers are unsure if this will change policy or just the policy environment with some arguing the environment will become more opaque (“Multinationals are Rethinking How They Lobby Xi’s China,” Bloomberg News, March 14, 2017, https://www.bloomberg.com/politics/articles/2017-03-13/as-xi-empowers-pa...)
Boeing has agreed to work with Commercial Aircraft Corporation of China Ltd. (COMAC), a Chinese state-owned enterprise (SOE) plane maker, to construct a Boeing 737 completion center in Zhoushan, about 300 kilometers southeast of Shanghai. The plant, which already helps with plane coating, repair, and maintenance, will install flight entertainment systems and seats in Boeing 737s. Boeing’s venture will upgrade the ability of Chinese interior suppliers in areas like raw materials and assembly (“Boeing’s First Overseas Factory to be Built in China’s Zhoushan,” China Daily, March 13, 2017, http://europe.chinadaily.com.cn/business/2017-03/13/content_28536081.htm; “Boeing Facility to Transform Zhoushan,” China Daily, March 14, 2017, http://europe.chinadaily.com.cn/business/2017-03/14/content_28542077.htm)
In Beijing, Saudi Arabia’s King Salman signed agreements with a potential value in the tens of billions of dollars. Deals included cooperation between China North Industries Group Corp. and Saudi Aramco on the construction of refining and chemical plants in China. Beyond this, Sinopec and Saudi Arabia “agreed to develop petrochemical projects in both China and Saudi Arabia.” The deals help Saudi Arabia diversify its economy and foster increased energy exports to China. The visit also produced ecommerce and renewable energy deals (Ben Blanchard, “China, Saudi Arabia Eye $65 Billion in Deals as King Visits,” Reuters, March 16, 2017, http://www.reuters.com/article/us-saudi-asia-china-idUSKBN16N0G9)
Zhou Xiaochuan, the head of the People’s Bank of China, China’s central bank, said at the recent National People’s Congress (NPC)/Chinese People’s Political Consultative Conference (CPPCC), that recently imposed limits on outbound capital flows were justified. They were needed to “rein in the irrational tendency in some sectors” which entailed “‘overheated and hasty outbound investment in industries such as sports and entertainment, which does little good to China’s economy and is not welcome abroad either.’” Still, the government was supportive of the deepening of beneficial interactions (“Policy Guidance for Outbound Investment Necessary: Central Bank Governor,” Xinhua, March 10, 2017, http://news.xinhuanet.com/english/2017-03/10/c_136118368.htm)
Japanese Prime Minister Abe Shinzo recently met with Saudi Arabian King Salman bin Abdul-Aziz al-Saud in Tokyo. During the meeting, both parties agreed “to launch a feasibility study to set up special deregulated economic zones to attract Japanese companies to the Middle Eastern country,” which would help realize the Saudi Japan Vision 2030 and advance both country’s respective economic interests. Concurrently, media reported Toyota plans to start studies shortly on building a car assembly plant in Saudi Arabia (Reiji Yoshida, “Abe courts Saudi king as pair agree to launch study on special economic zones,” Japan Times, March 13, 2017, http://www.japantimes.co.jp/news/2017/03/13/national/politics-diplomacy/...)
Solving the Toshiba problem has become a priority for the Japanese and American governments, with “intervention under consideration to protect valuable nuclear and chip technology and jobs.” Raising additional concerns is the fact Chinese businesses have shown interest in buying into Toshiba’s Westinghouse Electric, which is building nuclear reactors in the United States (US). Furthermore, Toshiba is considering spinning off its memory chip business, which has military value, to generate funds. “From a business and security perspective, letting advanced technologies fall into foreign hands is an unwelcome prospect” (“Toshiba's trials entangle Tokyo, Washington,” Nikkei Asian Review, March 18, 2017, http://asia.nikkei.com/Spotlight/Toshiba-in-Turmoil/Toshiba-s-trials-ent...)
Japan is worried about the implications of Toshiba’s planned sale of its memory chip unit to raise moneys to offset the huge losses on its US Westinghouse nuclear unit. Consequently, it may use various laws to ensure the unit is sold to a bidder not deemed a national security risk (which may advantage US bidders). A sale to US bidders also may buy goodwill given the frictions likely to emerge as Toshiba deals with its American unit (Kentaro Hamada and Makiko Yamazaki, “Exclusive: Japan to Vet Bidders in Toshiba Chip Sale for National Security Risks-Sources,” Reuters, March 10, 2017, http://www.reuters.com/article/us-toshiba-accounting-exclusive-idUSKBN16...)
Korea’s KB Kookmin Bank recently announced that Myanmar’s local financial authorities have given the final approval for the establishment of KB Micro Finance Myanmar (KB Myanmar) and will start operating its first branch soon. KB Myanmar is the first micro finance company to cooperate with the Myanmar Government and non-governmental organizations in order to provide housing improvement and new construction funds to the country’s low-income class with poor residential environments. KB Myanmar expects to become a leading foreign financial institution in Myanmar (Michael Herh, “KB Kookmin Bank Launches Microfinance for Improving Myanmar’s Housing Environment,” Business Korea, March 13, 2017, http://www.businesskorea.co.kr/english/news/money/17548-microfinance-mya...)
Korea’s Doosan Heavy Industries & Construction Co. recently won a USD $408 million deal to upgrade an existing Indonesian power plant. It clinched the deal by forming a consortium with an Indonesian state-run constructor, with USD $260 million of the aforementioned deal amount contributed by Doosan. In December 2016, the company already succeeded in winning a USD $156 million deal for Indonesia’s Grati combined cycle power plant. This year, Doosan aims to win USD $9.2 billion worth of new orders globally (Jung Min-hee, “Doosan Heavy Industries Wins $260M Deal to Upgrade Indonesian Power Plant,” Business Korea, March 15, 2017, http://www.businesskorea.co.kr/english/news/industry/17524-deal-indonesi...)
To attract foreign investment, Indonesia recently held an “Indonesia Investment Week Singapore Chapter 2017” event, with around 5,000 international business leaders expected to visit over the course of the government-supported event. Indonesian Investment Week aims at accelerating infrastructure development in Indonesia as well as providing numerous cooperation opportunities for foreign investors. The Indonesian Ambassador in Singapore stated the country intended to host more events in order to commemorate the 50th year of diplomatic relations between the two countries (“Indonesia holds investment week in Singapore,” Jakarta Post, March 14, 2017, http://www.thejakartapost.com/news/2017/03/14/indonesia-holds-investment...)
In late March, the Indonesian Tourism Ministry will hold a conference with potential Singaporean investors to discuss opportunities for investing in Lake Toba in North Sumatra. The expansion of the Silangit Airport runway could be the main reason why Singaporeans have expressed interest in investing as after the expansion of the runway it will be able to accommodate direct flights from Singapore. While there was, as of yet, no definite investment commitment figure, the area was estimated to require USD $749.5 million in investment (Farida Susanty, “Ministry, Singapore investors to discuss investment in Toba,” Jakarta Post, March 16, 2017, http://www.thejakartapost.com/news/2017/03/16/ministry-singapore-investo...)
Yuthana Praiwan, “Chevron pays B2bn in tax,” Bangkok Post, March 18, 2017, http://www.bangkokpost.com/business/news/1216797/chevron-pays-b2bn-in-tax
Phusadee Arunmas, “Thailand, Cambodia to forge 16 partnership deals,” Bangkok Post, March 14, 2017, http://www.bangkokpost.com/business/news/1214181/thailand-cambodia-to-fo...
Fernando Fong, “Increase in FDI reflects investors' confidence in Msia economy, says Najib,” New Straits Times, March 17, 2017, http://www.nst.com.my/news/2017/03/221667/increase-fdi-reflects-investor...
Liz Lee, “Jack Ma to launch Alibaba's regional distribution hub in Malaysia: sources,” Reuters, March 17, 2017, http://www.reuters.com/article/us-malaysia-alibaba-idUSKBN16P041
“China increases investments in Vietnam,” Vietnam Net, March 13, 2017, http://english.vietnamnet.vn/fms/business/174219/china-increases-investm...
“Foreign investors contribute more capital to businesses,” Vietnam Net, March 14, 2017, http://english.vietnamnet.vn/fms/business/174221/foreign-investors-contr...