MNCs in the News-2013-12-20

Toyota has hinted it may withdraw from Vietnam if Hanoi does not take steps to improve the country’s automobile environment. At present, Vietnam imposes an import tariff of 60% to protect its indigenous industry. Neither has the government taken adequate measures to enhance the national demand for automobiles. Given that the Association of Southeast Asian Nations (ASEAN) Free Trade Agreement will reduce automobile tariffs to 0% in 2018 and the fact that average salaries in other ASEAN nations are lower than in Vietnam, Toyota may have no incentive to maintain its factory in Vietnam in the absence of government initiatives (Kyohei Hosono, “The day Toyota may withdraw from Vietnam,” Japan Business Press Co., Dec. 11, 2013)

On December 2, Daiwa Securities Group concluded an advisory agreement with Asia Green Development Bank to establish a stock market in Myanmar. With the support of Tokyo and various corporations, Myanmar aims to open its own Stock Exchange by 2015. This follows an agreement in May 2012 between Daiwa and the Tokyo Stock Exchange and Myanmar’s Central Bank relating to the establishment of the Myanmar stock market. The hope is that supporting local corporations, the construction of Myanmar’s capital markets, and the Myanmar government may yield great benefits for Japanese financial institutions in the future (“Daiwa Securities Group supports Myanmar bank get listed,” Nikkei Online, December 2, 2013)

Recently, the Chinese Banking Regulatory Commission (CBRC) complained about the frequent staff turnover at Kookmin Bank (KB)’s Beijing branch. While the event triggering the CBRC complaint was the KB’s appointment of a new branch head and vice head, the CBRC also expressed concern about staff turnover at other KB China subsidiaries. One issue for the CBRC is that KB needs CBRC approval to change certain staff, but had not obtained it for the staff it replaced. Korea’s Financial Supervisor Service (FSS) called upon KB to give due regard to CBRC concerns and cautioned KB that frequent staff replacement hurts consistency (Na Jeong-ju, “KB Stranded in Beijing,” The Korea Times, Dec. 20, 2013)

After the Supreme Court of South Korea ruled bonuses should be included as “normal” wages, GM Korea has fallen under the spotlight. A key reason is that it is embroiled in multiple legal disputes relating to whether or not it should pay its workers bonuses as part of their normal wages. The president of GM Korea argued that this case was not applicable to his firm. However, if it suffers a similar adverse ruling, its labor costs would soar by 15-20 percent per year. This, in turn, would undermine the economic rationale for GM keeping production and investment in Korea (Choi Kyung-ae, “Court Ruling May Affect GM Decision,” The Korea Times, Dec. 18, 2013).