MNCs in the News-2017-08-18


China’s State Council released a document “allowing global companies to establish new business through mergers and acquisitions of domestic firms,” guaranteeing full profit remittance rights, and “encouraging them to participate in the ongoing mixed-ownership of State Owned Enterprises” (SOEs). To lure in more inward FDI (IFDI) China will open sectors like new-energy vehicles, railway passenger service, and banking. Chinese researchers noted inward foreign direct investment (FDI) benefits China’s industrial upgrading and technological advancement, and brings management expertise and access to markets (Zhong Nan and Ren Xiaojin, “Opening to Foreign Business to Boost Industrial Upgrade,” China Daily, August 18, 2017,

Beyond the measures noted above China will adopt to encourage greater IFDI, China’s State Council stated the country “will roll out nationwide a negative list for foreign investment that has been tested in pilot free-trade zones.” In addition, China “will make fiscal and taxation support policies to encourage foreign investors to expand investment and make use of their role in optimizing the service trade structure.” As well, China will encourage more regional headquarters, investment in western areas and old northeastern industrial bases, and better protect intellectual property (“China Focus: China to Promote Foreign Investment Growth,” Xinhuanet, August 16, 2017,

In mid-August, United States (US) President Donald Trump signed an executive order directing the US Trade Representative to “determine whether to launch an investigation” of China’s alleged theft of US intellectual property which would provide Trump “broad authority to retaliate” if there is an adverse finding against China. While the order “likely will trigger an investigation,” the eventual penalties that might result are unclear. Trump’s action was welcomed by corporate executives who feel China forces technology transfers or outright steals it (Ana Swanson, “Trump Administration Goes after China over Intellectual Property, Advanced Technology,” The Washington Post, August 14, 2017,

China’s Ministry of Commerce (MOFCOM) reported IFDI for the first seven months of 2017 ran USD $72.79 billion, a drop of 1.2 percent year over year (YOY). A significant portion of IFDI went into high-end sectors like high-tech manufacturing and high-tech services, the latter experiencing an increase of 16.8 percent. In contrast, Chinese outward FDI (OFDI) plunged 44.3 percent YOY over the first seven months. Nevertheless, OFDI in countries involved in the Belt and Road Initiative (BRI) was up 5.7 percent for the first seven months YOY (“China FDI Falls 1.2%, ODI Down 44.3%,” China Daily, August 16, 2017,


The Philippines is looking to Japan and China to fund investments in energy and power generation projects worth more than USD $135 billion and has had discussions with their governments and others. It promises quick approval for investment in projects that enhance the country’s power generation capacity. For its part, Japan has recommended Tokyo Gas Co., Osaka Gas Co. and Mitsui & Co. to oversee the construction of a proposed Liquefied Natural Gas terminal with the Philippine’s state-owned National Oil Co. (Cecilia Yap and Clarissa Batino, “Philippines Courts China, Japan for $135 Billion Power Push,” Bloomberg, August 18, 2017,

Japan’s Mitsubishi UFJ Financial Group Inc. (MUFG) is planning to open banking services in Saudi Arabia after receiving approval from the country’s central bank. Saudi Arabia plans to reduce its reliance on oil by seeking infrastructure investment and opening up some sectors to privatization. MUFG will ramp up offices and employees in Saudi Arabia over the next five years to capture the potential USD $350 billion lending, debt-financing, structured financing, public offering, and acquisition deals which will take place (“MUFG plans to hire in Saudi Arabia to tap privatizations valued at $350 billion,” The Japan Times, August 14, 2017,

South Korea

South Korean tire maker Kumho Tire Co. is likely to be bought out by its Chinese competitor, Qingdao Doublestar Co. for USD $857 million in the wake of South Korea’s state-owned development bank selling its 42 percent stake in the company to Doublestar in March. The Chinese firm, however, must await takeover approval from South Korea’s Ministry of Trade, Industry, and Energy which must consult the Defense Acquisition Program Administration because Kumho sells a small number of tires used on South Korea’s military vehicles (“Chinese firm seeks approval to take over Kumho Tire,” Yonhap News Agency, August 16, 2017,

South Korean carmaker Hyundai Motor Co. is looking to secure a joint venture (JV) partner for a new manufacturing plant in Indonesia. It is targeting Indonesia due to the country’s high potential for auto sales growth, high tariff barriers that reduce the competitiveness of imported cars, and the Association of South East Asian Nations (ASEAN) Trade in Goods Agreement which will remove car import duties between ASEAN member countries in 2018, boosting car sales to Indonesia’s neighbors (Jung Min-hee, “Hyundai Motor to Promote Indonesia as Production Base in Southeast Asia,” BusinessKorea, August 15, 2017,


Indonesia’s Trade Minister announced increased Indonesian investments in Vietnam’s property, coal exploration, and cement industries at the 7th Indonesia-Vietnam Joint Commission on Economic, Science, and Technical Cooperation. Indonesia is increasingly recognizing Vietnam’s position as a manufacturing hub in ASEAN and is taking measures to ensure Indonesia remains connected to the region’s supply network. Indonesia’s government is pushing private companies to invest in Vietnam to take advantage of Vietnam’s numerous free trade agreements, allowing Indonesian firms to enhance their export and production potential (“Indonesia, Vietnam to boost trade and investment,” Antara News, August 14, 2017,

Facebook has opened a full office in Indonesia after years of only having a representative branch in the country. The move to open the business center came after the Indonesian government started requiring foreign internet firms to have permanent business licenses, store data on local servers, and pay a greater share of taxes to operate in the country. Given the increasing presence of Internet firms in the country, Indonesia’s government is reviewing and considering tougher Internet regulation (Nadine Freischlad, “Facebook finally opens permanent office in Jakarta, the world’s most active city on Instagram,” Tech in Asia, August 15, 2017,


PwC’s recent investor guide to Greater Kuala Lumpur (KL) highlights that Malaysia’s “strategic location and competitive position” make it attractive for foreign firms. The report states that various key factors enhance the Greater KL area’s potential as a regional business hub, including a “robust pool of talent, world-class infrastructure and attractive government incentives to spur investments.” The report also points out various sectors of opportunity including oil and gas, technology, consumer goods and industrial products, and engineering and construction services (“Malaysia Strategic Location Continues to Attract Foreign Investment,” New Strait Times, August 15, 2017,

The United States (US) is deepening its investigation into money stolen from a Malaysian state investment fund that was allegedly used to obtain around USD $1.7 billion in real estate, jewelry and art. The US investigation is part of “a global effort” to find out how much of the USD $6 billion that 1Malaysia Development Bhd. (1MDB) raised for development projects was purportedly misappropriated or involved in money laundering. Malaysian Prime Minister Najib Razak, who was in charge of the fund, denied any wrongdoing (Edvard Petterson, “Stolen 1MDB Funds Are Focus of U.S. Criminal Investigation,” Bloomberg, Aug 11, 2017,

*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.