In Monday's Asia papers

A summary of political, economic, trade, business and product news affecting the chemical and related industries.

International Economics & Politics

Eleven-member Asian Bond Fund launched

The Asia Cooperation Dialogue (ACD) produced its first concrete result on 22 June when 11 members of a new $1bn (Euro860m) Asian Bond Fund drawn from their huge central bank reserves pledged to speed development of a regional bond market. Founding countries of the Thai initiative said the fund will act as a catalyst for more efficient bond markets to woo back some Asian assets invested outside the area. Economists said it will harness only a tiny portion of Asia's $1.3trn of foreign reserves. Thai Prime Minister Thaksin Shinawatra said it is a powerful instrument, which will enable surplus capital from one Asian country to create wealth in another. While the fund may still be small, given that Asia holds about two-thirds of global foreign reserves, the agreement by 11 of the 18 ACD members may signal it is achieving its goal of bringing those countries closer. India, which has record foreign exchange reserves of around $75bn, said it was interested in putting in $1.0bn after conducting a study, Thai Foreign Minister Surakiart Sathirathai said.

Business Day, Thailand (online edition)

Korea Herald, South Korea (online edition)

Straits Times, Singapore (online edition)

Japan's trade surplus expands 12.5% in May

Japan's merchandise trade surplus grew 12.5% in May from a year ago to Yen694.4bn ($5.8bn/Euro5.0bn), the Finance Ministry said Monday, confounding expectations for a contraction as exports showed surprising resilience. The second straight month of expansion came as exports rose 3.5% for the 14th consecutive month of gains. That outpaced the 2.0% increase in imports, which marked a ninth straight rise. While Japan's trade surplus has continued to fluctuate since the start of the year, analysts have warned that external demand is clearly running out of steam and clouding the outlook for the economy going forward. Japan's exports to the US have been steadily declining, while those to Asia, though resilient at present, could still be hurt down the line by belated effects from Sars-related factors, analysts said.

Nihon Keizai Shimbun, Japan (online edition)

Wen for trade pact signing ceremony

Chinese Prime Minister Wen Jiabao is to attend the signing of Hong Kong's first bilateral free trade agreement with China. His three-day visit will coincide with 1 July celebrations marking the former British colony's handover of sovereignty from Britain to China in 1997. He will attend the landmark signing of the close economic partnership agreement between Hong Kong and China on 30 June. The pact will cover trade in services, trade in goods and trade facilitation and is part of Beijing's effort to support the territory's economic recovery. Under the agreement, many Hong Kong goods will be given a zero tariff and the deal will provide access for Hong Kong businesses and professionals, according to Hong Kong Chief Executive Tung Chee Hwa.

Straits Times, Singapore (online edituion)

South China Morning Post, Hong Kong (online edition)

China Daily, China (online edition)

Business Day, Thailand (online edition)

China to turn Pearl River Delta into mega-city

China plans to make the entire Pearl River Delta area of southern Guangdong province a megalopolis, with six big cities as the nodes for spreading urban development by 2010, state press reported on 22 June. Each of the chosen cities: Guangzhou, Shenzhen, Foshan, Dongguan, Zhuhai and Jiangmen, will provide impetus to neighbouring cities to bring the urbanisation of the province beyond the 70% it would then have attained, Xinhua news agency said, citing a plan unveiled by the Guangdong Development Planning Commission. The ambitious development includes programmes on infrastructure, environmental protection, wide application of IT and growth of the high-technology sector in the region, one of the major manufacturing centres of electronic goods.

China Daily, China (online edition)

India seeks stronger ties with China

Indian Prime Minister Atal Bihari Vajpayee, who on Sunday (22 June) became the first Indian leader to visit China in a decade, said he hopes to build trust and trade ties between the two nuclear armed former rivals. Accompanied by a large business delegation, he arrived at Beijing's Capital Airport on Sunday (22 June). His six-day visit will include talks with Prime Minister Wen Jiabao, and other Chinese leaders. The two Asian giants are stressing trade and other positive aspects of their relations. Indications are that Vajpayee and Chinese leaders will spend little time on potentially divisive issues. China and India, which together have more than 2.3bn people, fought a war in 1962 and claim portions of each other's territory. But relations are improving, due in part to a focus on trade, which last year totalled $5bn (Euro4bn). China's exports to India in the first four months of 2003 were double the level of the same period last year.

Straits Times, Singapore (online edition)

China Daily, China (online edition)

Times of India, India (online edition)

Taiwanese investment in China up 43%

Taiwanese investment on the Chinese mainland totaled $1.7bn (Euro1.5bn) during the first five months of 2003, up 43.69% year on year, according to figures released by Taiwan authorities. The investment, which was approved by Taiwan's so-called 'Ministry of Economic Affairs', involved 797 projects, up by 55. 66% over the same period last year. There was a total of 797 investment projects run by Taiwanese companies from January to May this year. In May alone, 138 project ratified by Taiwan authorities involved nearly $318m, up by 4% over April, when Sars hit the Chinese mainland and Taiwan. Analysts said the rapid increase in investment indicated Taiwanese investors' confidence in the mainland's economic prospects. China Daily, China (online edition)

Taiwan Economic News, Taiwan (online edition)

Megawati arrives in Japan for state visit

Indonesian President Megawati Sukarnoputri arrived on Sunday (22 June) in Tokyo for a four-day official visit. She is scheduled to meet with Prime Minister Junichiro Koizumi on Tuesday. A meeting with Emperor Akihito and Empress Michiko as well as talks with other ministers and government representatives are also planned. Megawati is the first Indonesian president to travel to Japan as a state guest since 1968, when then President Suharto visited. She made an unofficial visit as president in 2001 and a private trip in 1989. According to Japanese government sources, Japan and Indonesia are discussing setting up a study panel with the aim of concluding a bilateral free trade agreement (FTA). Other regional issues such as the conflict in Aceh, terrorism and collaboration on nonproliferation of weapons of mass destruction, and fighting drug smuggling, will also be taken discussed.

Nihon Keizai Shimbun, Japan (online edition)

Jakart Post, Indonesia (online edition)

Malaysia lifts curbs on manufacturing foreign investment

Malaysia has lifted all export and equity curbs on foreign participation in manufacturing to woo investment amid stiff regional competition, Trade Minister Rafidah Aziz said on 21 June. Foreign investors can take 100% equity in new manufacturing projects with immediate effect, irrespective of their export level. The new ruling is not applicable to existing foreign investment but flexibility will be given based on merit. The Trade Minister said the full liberalisation of the manufacturing sector, the mainstay of the economy, was a "good indication of the kind of policies to come" as Malaysia sought to remain competitive.

Channel News Asia, Singapore (online edition)

Signs of US recovery raise S'pore hopes

Singapore's economy will shrink in Q2, but if the US economy lives up to promising signs of a recovery, there is reason to be optimistic about the rest of the year, Deputy Prime Minister Lee Hsien Loong made that assessment in response to reporters' queries on 22 June. Last week, the New York-based Conference Board's key index of leading indicators for the US economy showed a 1% rise for May, its sharpest rise since Dec 2001, prompting some observers to conclude that a post-Iraq war rebound was on the way. Lee, however, stressed that the Singapore government's concern was not the short-term question of whether the economy will recover in Q2 or next year. Its preoccupation is how to deal with a changed competitive environment. That was why structural adjustments had been made to the tax regime, the Central Provident Fund and wage structures over the last two years.

Straits Times, Singapore (online edition)

Energy

Fund to boost Asean power grid plan

Association of South East Asian Nations (Asean) energy officials have proposed the setting up of a fund to enhance intra-regional cooperation on energy affairs, said Sithiporn Rattanapas, governor of the state-owned, Electricity Generating Authority of Thailand (Egat). Sithiporn said high-ranking energy officials from Asean's 10 member countries met in Indonesia in early June and agreed that a new investment fund be set up to make it possible to construct necessary infrastructure, such as transmission lines linking the entire region. The officials did not decide on the size of the fund or when it should be set up, but another meeting planned for Bangkok in July should provide more details. Under the power grid agreement, all Asean members would have their transmission lines inter-connected and each could supply excess electricity to countries that require more. The Asean power grid is expected to be fully functional by 2020, and Thailand has been pushing itself as the focal point for the interconnection of power grids in the region.

Business Day, Thailand (online edition)

Environment & Health

A market for greenhouse gas emissions rights

The Japanese government is set to create in fiscal 2004 a market trading in emissions rights for gases that cause global warming. The plan is to enable companies that have curbed their emissions beyond targeted amounts to sell excess quotas to firms that have not been able to do so, government sources said. The aim is to reduce domestic emissions of greenhouse gases to meet the requirements of the Kyoto protocol, which is expected to come into force soon. Once the protocol comes into effect, Japan will be required to trim emissions of such gases in 2008 to a level 6% below what they were in 1990. To meet the goal, the government is set to assign gas reduction quotas to major companies. The Environment Ministry estimates annual trading in the planned market at Yen2.6trn (Euro22.0bn/Euro18.9bn) in 2010.

Nihon Keizai Shimbun, Japan (online edition)

Oil & Gas

Iraqi crude now back on world market

Iraqi crude was to hit the world market on 22 June, for the first time since the US-led war began, while a top oil official said exports from Iraqi fields would resume next month, boosting a scarred economy. Acting oil minister Thamer Ghadhban said Iraq will export crude stored at Turkey's Ceyhan terminal on the Mediterranean for the first time since early March. Exports from oil fields within Iraq are to begin in July, he said on 22 June from the sidelines of a meeting of the World Economic Forum in Jordan. Iraq has the second-largest oil reserves in the world.

Business Day, Thailand (online edition)

Iraqi pipeline sabotaged

An oil fire raged on Sunday (22 June) after saboteurs blew up a vital pipeline, threatening supplies to Baghdad's main refinery and fresh torment for drivers in the capital, Iraqi oil ministry officials said. It was the second major fire to damage Iraqi oil pipelines in June. US officials blamed the first on a gas leak on the main export pipeline from the Kirkuk oilfields to Turkey. The pipeline connects Iraq's southern and northern oilfields to ensure smooth-flowing exports. An oil ministry official said any disruption would affect Baghdad's al-Doura refinery, forcing it to rely on crude from the south, where oil installations are in poor shape. The refinery serves a city whose five million people have barely had time to forget the misery of petrol queues that snaked through sweltering streets for weeks after US-led forces toppled Saddam Hussein on 9 April.

Business Day, Thailand (online edition)

China Daily, China (online edition)

Company News

Hitachi plans panel for group business strategy

Japan's Hitachi, as part of its effort to promote business reorganisation, will create a committee of top executives to work out its group business strategy on biotechnology and automobile parts. In January, Hitachi launched a three-year program to promote bioengineering, medical and auto-related fields as promising business areas. The new management committee will coordinate business projects across group companies and develop a long-term business strategy for the whole Hitachi group.

Nihon Keizai Shimbun, Japan (online edition)

Steel, auto giants in close cooperation

China's most modern steel company, Baosteel, on Saturday (21 June) has signed an agreement on full cooperation with the First Automobile Works Group (FAW), the biggest automobile producer of China. As a part of the deal, the two partners and Japan's Sumitomo will jointly invest Rmb176m ($21m/Euro18m) to set up a joint venture for steel processing and product delivery to meet the needs of FAW for steel sheet.

China Daily, China (online edition)

(Some stories may not appear in all editions of the cited news media.)