MNCs in the News-2016-07-22

China’s Ministry of Commerce (MOFCOM) reported that inward FDI (IFDI) over the first six months of 2016 increased 5 percent year over year (YOY) to reach USD $70 billion. IFDI grew even though there was a very large drop—57 percent YOY—in FDI from Association of Southeast Asian Nations (ASEAN) in June. MOFCOM spokesman Shen Danyang said the “decline is normal and is not necessarily related to the South China Sea disputes.” Shen noted that a greater proportion of FDI is going into high-tech industries and said “investment from developed countries including the United States and Europe has increased” (Coco Feng, “Inbound Investment from ASEAN Drops 57 Pct. to 1.87 Bln Yuan in June,” Caixin, July 19, 2016, http://english.caixin.com/2016-07-19/100968096.html)

After an unfavorable ruling by the Permanent Court of Arbitration (Hague) on a case brought by the Philippines about China’s South China Sea claims, there were protests at numerous KFC outlets in various cities with police involvement here and there. “Protestors” called for a boycott of the Philippines, Japan, South Korea, and the United States (US) and American firms like Apple and Starbucks. The government has been censoring social media and warning against illegal behaviors. It opined protests could backfire because many foreign firms in China “‘have been localized and mostly employ local people and purchase raw materials from China’” (Austin Ramzy, “KFC Targeted in Protests over South China Sea,” The New York Times, July 19, 2016, http://www.nytimes.com/2016/07/20/world/asia/south-china-sea-protests-kf... Shan Jie, “Netizens Demand Celebs Defend China, Boycott Foreign Goods,” Global Times, July 19, 2016, http://www.globaltimes.cn/content/995256.shtml; “Media Watch: Colonel Sanders Becomes Unexpected Victim of South China Sea Ruling,” Caixin, July 20, 2016, http://english.caixin.com/2016-07-20/100968422.html; “KFC, Apple in China Hit by South China Sea Spat,” The New York Times, July 20, 2016, http://www.nytimes.com/aponline/2016/07/20/world/asia/ap-as-south-china-...)

A Chinese consortium’s (Golden Brick Capital Management, Beijing Kunlun Tech, and Qihoo 360 Technology) effort to buy Norwegian browser company Opera Software for $1.24 billion has fallen apart because it failed to get the necessary Chinese government approvals especially from China’s State Administration of Foreign Exchange. Opera Software said, though, “no regulatory body had explicitly said no to the deal and that the consortium had agreed to buy “a number of consumer businesses [internet browsers, apps, and technical permissions] from Opera Software for $600 million. Generally, it seems much more difficult for private Chinese firms to get necessary government approvals (Don Weiland, “Opera Software Deal Crumbles after China Hold-Up,” Financial Times, July 18, 2016; “Chinese $1.2b Takeover of Norway’s Opera Fails, but Alternative Deal Set,” China Daily.com, July 18, 2016, http://www.chinadaily.com.cn/business/2016-07/18/content_26132572.htm; “Opera Software to Sell Internet-Browser Application to Chinese Consortium,” China Daily.com, July 19, 2016, http://www.chinadaily.com.cn/business/2016-07/19/content_26143846.htm)

Recently, Japanese Minister of Land, Infrastructure, Transport, and Tourism Keiichi Ishii went to Singapore to meet with Singapore Senior Minister of State for Transport Josephine Teo to discuss the Malaysia-Singapore high-speed rail project. Ishii told reporters “‘Japan’s private and public sectors are trying very hard to have a high-speed railway that adopts the shinkansen technology to be run here in Singapore.’” He touted the safety and reliability of the shinkansen. Malaysia and Singapore announced they would ask for tenders next month to select “a joint development partner to provide technical support…on the project.” Both countries seek project completion by 2026 (“Japan Cranks Up Pitch for Shinkansen in Singapore,” Japan Times, July 22, 2016, http://www.japantimes.co.jp/news/2016/07/22/business/japan-cranks-pitch-...)

Two years ago or so, South Korea’s Fair Trade Commission (FTC) acquitted Google of infringing fair market competition by forcing mobile phone makers that use its Android operating system to preload its search engine. At that time, Korea’s FTC concluded as Google’s browser share hoovered around 10 percent Google’s preload requirement did not restrict market competition. However, Korea’s FTC has relaunched an investigation. According to industry sources, the Korean FTC’s action resulted from the European Union charging Google for similar anticompetitive behavior earlier this year (“Antitrust Watchdog Probes Google over Anti-Competitive Behavior,” Korea Herald, July 21, 2016, http://www.koreaherald.com/view.php?ud=20160721000381)

Indonesia’s Investment Coordinating Board (BKPM) has started a roadshow in Guangzhou Province to attract more foreign investment from China. The head of the BKPM, Franky Sibarani, plans to meet with more than 80 Chinese investors to promote Indonesia’s improving investment policy, including the 11th economic package which includes fiscal intensives, a minimum wage scheme, changes in the negative investment list, and so on. Total Chinese FDI into Indonesia topped $52 billion between 2010 and 2015. Between January and March this year, Chinese investment in the country reached $464 million and created around ten thousand jobs (Sarah Yuniarni, “BKPM starts China roadshow to attract more investment to Indonesia,” Jakarta Globe, July 22, 2016, http://jakartaglobe.beritasatu.com/business/bkpm-starts-china-roadshow-a...)

Indonesia’s BKPM is working on providing assistance to companies to help them realize their planned investments. According to BKPM head Franky Sibarani, the assistance is for those who have obtained principal permits and started construction of their projects this year. Of the approximately 5,000 projects falling into this category, four-fifths (worth USD $6.9 billion) of the projects entail foreign investment and are expected to employ 190,610 workers. The assistance program started in June and is aimed at expediting project construction. Assistance includes identification of problems hampering construction and aid to solve problems such as no land procurement authorizations from ministries (“BKPM sinks teeth into projects to boost realization,” The Jakarta Post, July 19, 2016, http://www.thejakartapost.com/news/2016/07/19/bkpm-sinks-teeth-projects-... )

Malaysia hopes to attract more than 20 local and multinational companies to invest in the country and use the country as a regional or global base for their businesses. According to the Malaysia Investment Development Authority (MIDA), 15 companies have joined the principal hub scheme, which encourages Malaysian businesses to provide headquarters services and expertise to their ventures outside of the country. Investments already have been taking place in industries like aerospace, electric and electronics, food, engineering and resources. MIDA hope more companies will follow in the footstep of Super Group and leverage the scheme to raise efficiency and profits (Nelson Benjamin, “Attracting Big Investments,” The Star Online, July 23, 2016, http://www.thestar.com.my/metro/community/2016/07/23/attracting-big-inve...)

Vietnamese Deputy Prime Minister Hue Vuong Dinh said his country should be more selective in attracting FDI to make sure that “it’s suitable for economic development.” He noted that “‘FDI should not be attracted at all costs’” and that the country should lure more FDI projects of high technology, with good governance, and generating more jobs and income as well as promoting the development of the private sector.” Vietnam’s Ministry of Planning and Investment recently issued a directive on inspecting and evaluating FDI projects to ensure conformity with the law and the country’s development goals (“Pick FDI with care: Deputy PM,” Vietnam News, July 19, 2016, http://vietnamnews.vn/economy/299740/pick-fdi-with-care-deputy-pm.html#C...)

*The information compiled in the MNCs in the News digest is gathered from sources believed to be reliable, but the Wong MNC Center does not guarantee their accuracy. The content of the MNCs in the News digest does not necessarily represent the view of the Wong MNC Center, its Board of Directors, or its Advisory Board, but is intended for the non-commercial use of readers in order to foster debate and discussion and to facilitate and stimulate research.