In Wednesday's Asia papers
10 March 2004 02:24 [Source: ICIS news]
A summary of political, economic, trade, business and product news affecting the chemical and related industries.
International Economics & Politics
Japan Oct-Dec revised real GDP up 1.6%
Japan's economy grew a bit more slowly than expected in the last three months of 2004, revised government data showed on Wednesday. Gross domestic product (GDP) expanded 1.6% from October-December from a year ago, the Cabinet Office said. That compares with a preliminary estimate of 1.7% growth released in February. A decline in private inventories shaved 0.3 of a percentage point from real growth, the data showed. The revised GDP rise translates to 6.4% growth in annualised terms, down from an initial estimate of 7.0%, but still the strongest quarter of expansion since the end of Japan's land-and-stock-price bubble in 1990. Nominal GDP growth, not adjusted for price changes, was revised down to a rise of 0.4% from a preliminary estimate of 0.7%. The GDP deflator, a measure of the impact of price changes on real economic growth, stood at minus 2.7 in the quarter, slightly worse than the initial minus 2.6. Consumer spending rose 0.9% in the quarter compared with 0.8% growth reported in February. Corporate capital spending jumped 6.3%, over an initially reported 5.1% rise. Exports, which flourished thanks to strong demand from China and other Asian markets, expanded 4.6% from the previous period, while imports increased 1.9%. Overall, external demand, the balance of exports minus imports, contributed 0.4 percentage point to growth, unchanged from the preliminary data.
Nihon Keizai Shimbun, Japan (online edition)
Beijing aims to create 14m jobs in '04
Faced with 24m people in need of work this year, China on Tuesday (9 March) announced a slew of measures to contain urban joblessness and improve social security guarantees. They include creating jobs for at least 14m people, vocational training and wider unemployment insurance coverage. Rural residents seeking work in cities can also be assured of equal access to jobs when a plan to establish a 'unified' labour market is implemented within the year. Labour and Security Minister Zhen Silin admitted at a press conference on the sidelines of the current session of the National People's Congress that employment will continue to be a major issue in coming years and the situation is grim. Urban unemployment is expected to rise this year from last year's 4.5%, but will be capped at 4.7%. The jobless rate in 2002 was 4.3%. China has seen urban unemployment rise as restructuring of troubled state-owned enterprises leads to redundancy and as new workers enter the job market. In addition, surplus rural labour has been placed at between 150m and 300m. On social security, Zheng said work would continue to put in place a social security system that would cover the entire urban population, ranging from health and unemployment to pensions for retirees. For a start, a trial social security system in Liaoning will be extended this year to two other rust-belt provinces in the north-east, Heilongjiang and Jilin.
Straits Times, Singapore (online edition)
China Daily, China (online edition)
China's welfare fund invests abroad
China said it allowed its Rmb130bn ($15.7bn/Euro12.7bn) national welfare fund to start investing overseas, easing controls on capital flows as it seeks higher returns to cover a surge in pension obligations. The fund has invested in markets including Hong Kong, Zheng Silin, director of the Labour and Social Security Commission, said at a press conference in Beijing. He did not say how much the fund spent or which other markets it has targeted. China needs to pay pensions for an estimated 200m people who will retire in the next 30 years, according to World Bank estimates. The government is easing controls on outflows of Chinese renminbi as record foreign-exchange reserves create pressure for the currency to strengthen. China's foreign-exchange reserves reached $416bn in January after surging a record 40.7% last year. The government has been considering allowing the pension fund to invest abroad as part of a so-called qualified domestic institutional investor programme. The social security fund would be allowed to invest as much as Rmb5bn in Hong Kong-listed stocks, state-controlled China Central Television said. Over the weekend (6-7 March), the country's top foreign-exchange regulator, Guo Shuqing, said that China aimed to lift most capital controls within five to six years.
Business Day, Thailand (online edition)
China Daily, China (online edition)
High stakes for HK finance chief
When Henry Tang delivers his maiden budget speech on Wednesday, all eyes will be on his proposals to restructure Hong Kong's tax base and to eradicate the government's budget deficit in five years. At stake for the ambitious Financial Secretary, who took over from Antony Leung last August, is the post of chief executive, which will be available when incumbent Tung Chee Hwa steps down in 2007. Through the budget, Tang has to win over the business community which enjoys significant political influence in Hong Kong. He will also have to get the budget passed through the not-always-cooperative Legislative Council (Legco). In previous years, lawmakers had forced the government to water down some fiscal proposals before they would endorse the budget. Tang's budget address is not expected to be controversial. In radio talk shows and other forums, he has indicated that he would outline his thoughts on a controversial goods and services tax, the issue of bonds to finance infrastructure works, and the privatisation of government assets such as the airport. For the 2004-05 budget which covers the fiscal year beginning on 1 April, expectations are that he will not propose any bold initiatives. He has said he would give taxpayers a breather.
Straits Times, Singapore (online edition)
Taiwanese opposition to mass rally
Taiwan's opposition alliance is planning to hold a mass rally on Saturday (13 March) as its response to the hugely successful one on 28 February that boosted President Chen Shui-bian's chances of being re-elected. The objective of the so-called '3-13 March Against Ah-Bian' is to tell the world ahead of the 20 March election that Taiwanese want a change of president. It will be a key test of public support for the 'pan-blue' alliance of the Kuomintang, or Nationalist Party, and its two splinter groups, the People First Party (PFP) and the New Party. The alliance hopes to draw one million supporters to the streets on Saturday to show support for presidential candidate Lien Chan, who has teamed up with his PFP counterpart James Soong to run against Chen and Vice-President Annette Lu. Beginning Wednesday, 11 pan-blue mayors and magistrates will take leave to campaign for Lien, a sign that the opposition is now very concerned about the narrow lead in opinion polls enjoyed by Chen. Analysts said the pan-blue camp believes it must step up campaign efforts or face defeat. About 20% of Taiwan's 16m eligible voters have yet to decide who to vote for. Commenting on the planned march, President Chen on Tuesday (9 March) mocked the pan-blue camp for being a copycat, saying the rally not only lacked public support, but was also tasteless.
Straits Times, Singapore (online edition)
Taipei Times, Taiwan (online edition)
S Korea to deploy Russian tanks at border South Korea will deploy a battalion of Russian tanks and armoured vehicles for the first time along the border with North Korea, military officials said. The deployment of T-80 U tanks and BMP-3 combat vehicles will bolster South Korea's capability to deter any aggression by North Korea, which relies on Russian-built weapons for its ground forces, the defence ministry said. North Korea deploys more than 6000 tanks and armoured vehicles along the heavily armed border with South Korea. The two Koreas are still technically at war. T-62 tanks and BMP series vehicles are the mainstream of North Korean ground forces, while South Korea is heavily dependent on US-designed equipment. South Korea began purchasing Russian weapons in 1996 in repayment in kind to offset part of a loan to the former Soviet Union. As of June last year, Russia has paid back $460m (Euro372m) in its debt service to South Korea in the form of military equipment and raw materials including uranium. South Korea agreed last year to write off $660m dollars of the amount due and will allow the remaining $1.58bn in principal and overdue interest to be repaid over the next 23 years.
Channel News Asia, Singapore (online edition)
Korea Herald, South Korea (online edition)
Opposition MPs join forces to impeach Roh
Political turmoil deepened in South Korea on Tuesday (9 March) as opposition lawmakers approved a motion to impeach a South Korean president for the first time in history. The presidential office branded the move to topple reformist leader Roh Moo Hyun as "unfair and irrational" after senior presidential advisers held an emergency closed-door meeting late Tuesdsay. A total of 159 opposition legislators endorsed the motion to open an impeachment debate on Roh's violation of election law. That was well above the majority of the 273-member National Assembly needed to introduce the Bill. Once the Bill is formally introduced on Wednesday, members must vote on it within 72 hours. A two-thirds majority in the 273-member Chamber is required to pass the measure. Should that be achieved, Roh's fate will lie with the Constitutional Court. At least six votes on the nine-person panel will be required to remove him from office. Local media said that court deliberations could take up to six months. In the meantime, Roh will have to cede power to the Prime Minister, constitutionally his No. 2. Roh was admonished in February for breaking election law by violating presidential impartiality ahead of the 15 April general election.
Straits Times, Singapore (online edition)
Korea Herald, South Korea (online edition)
Pakistan tests nuclear-capable missile
Pakistan has test-fired an intermediate range surface-to-surface ballistic missile, capable of carrying a nuclear warhead deep into rival India, the military announced. The test, falling on the eve of India's first cricket tour to Pakistan in 14 years and in the midst of a peace process with its nuclear neighbour, proved Pakistan's intention to maintain a nuclear deterrent, the military said. The test was the first of the locally-built Shaheen II or Hatf-VI missile, which can carry warheads up to 2000 kilometres (1240 miles). Pakistan and India are currently mending ties after coming to the brink of conflict two years ago. The peace moves, combined with international condemnation of nuclear proliferation by Pakistan's nuclear program founder Abdul Qadeer Khan, triggered fears among some Pakistanis that the government would be pressed to wind down its nuclear program. President Pervez Musharraf, previewing the test during a press conference last month, had dimissed apprehensions of a roll back, the military stressed in its statement. President Musharraf and Prime Minister Zafarullah Jamali congratulated personnel involved in the successful development and launching of the Shaheen-II missile system, the statement said. Military analysts believe the latest Pakistani test was to prove that its missiles can cover almost all of India's territory.
Channel News Asia, Singapore (online edition)
Times of India, India (online edition)
Embattled Thaksin to reshuffle Cabinet
Thailand's Prime Minister Thaksin Shinawatra is expected to shake up his Cabinet on Wednesday as he battles to fend off attack on two fronts -- angry state workers and fears of resurgent separatism in the south. In the biggest protest since Thaksin came to power, more than 40 000 workers marched on Government House to demand that he scrap privatisation plans for the state-owned Electricity Generating Authority of Thailand (Egat), or at least call a referendum on its sale. The government's plan to partially privatise Egat in a national record initial public offering next month worth about Baht70.0bn ($1.8bn/Euro1.4bn) has led to mounting protests during the past two weeks. Thaksin said at the weekend (6-7 March) the sell-off would be postponed indefinitely. The Cabinet reshuffle, the eighth since Thaksin's landslide victory in 2001, is expected to affect up to 10 ministers. Deputy Prime Minister Chavalit Yongchaiyudh said the King might approve the reshuffle on Wednesday. Analysts said the reshuffle is an attempt to buff the government's tarnished image over an eruption of violence in the largely Muslim southern provinces, the Egat fiasco and the avian flu outbreak. The authorities have been sharply criticised for failing to curb violence in the south that has left up to 50 government officials, members of security forces and Buddhist monks dead since the start of the year. Some officials believe the new violence marks a revival of Muslim separatism thought to have been curbed 20 years ago.
Straits Times, Singapore (online edition)
Tamil renegade vows no war in Sri Lanka
A top rebel who led an unprecedented split within the Tamil Tigers vowed he would not return Sri Lanka to its three-decade war but rejected an amnesty offered by the guerrilla chief. Breakaway regional commander V Muralitharan, better known as Karuna, said in an interview he would not start a factional war against his former boss Velupillai Prabhakaran, whom he said had been preparing for war despite a truce of more than two years with the Sri Lankan government. Karuna, who was a member of the peace negotiating team of the Liberation Tigers of Tamil Eelam (LTTE), said the estimated 6000-strong force under his command in the eastern districts of Batticaloa and Ampara would be maintained for self-defence. Karuna said one of the reasons for him to lead the unprecedented breakaway from the LTTE last week was Prabhakaran's preparations for war despite a Norwegian-brokered truce with the Colombo government in place since February 2002. Diplomats said the failure to peacefully resolve the stand-off could further undermine Norwegian-led diplomacy to end three decades of ethnic violence that has claimed more than 60 000 lives. Peace talks have been on hold since April last year.
Channel News Asia, Singapore (online edition)
Philippines plans $750m bond sale
A plunge in US Treasury yields and growing investor appetite for risk has given the Philippines a window of opportunity to sell up to $750m (Euro607m) of sovereign dollar bonds to plug its funding shortfall. Banking sources said on Tuesday (March) that the Philippines, the most active issuer of dollar-denominated sovereign debt in Asia, had mandated HSBC, UBS and Credit Suisse First Boston to sell a new bond due 2015. The bond sale will be a litmus test of investor demand for towards Philippines risk. The country has been beset by political uncertainty because of a looming presidential election in May, endemic corruption, a nagging budget deficit and a wobbly currency. The government needs to raise at least $680m from the offshore market to meet its 2004 funding needs, primarily its chronic fiscal deficit, which by January had grown 15.6% from a year ago. Bond fund managers said despite the political and economic risks, it was a good time to buy Philippine sovereign bonds, which offered attractive yields. BB-rated Philippine sovereign bonds due 2014 are currently quoted at 490 basis points (bps) over Treasuries, about 16 bps wider than on Monday (8 March) before the news of new supply emerged.
Business Day, Thailand (online edition)
Energy
China set to build 2nd nuclear plant in Pakistan
China is on the verge of finalising with Pakistan an agreement to build a second nuclear plant for civilian use despite the US urging Beijing repeatedly to halt nuclear cooperation with Islamabad. The 300-megawatt power plant at Chashma, in the central Pakistani province of Punjab, will be built next to the first Chinese-supplied plant, which became operational in 1999. The Financial Times quoted Pakistani officials as saying the deal was "in the final stages", with technicalities being hammered out at secret talks in Beijing last week. The paper said a price now had to be settled, ending several months of Sino-Pakistani negotiations after President Pervez Musharraf and Chinese leader Hu Jintao discussed the deal in Beijing in November. The China National Nuclear Cooperation confirmed that the talks had taken place but refused to reveal the outcome. Observers have noted that Beijing's help in the second phase of the Chashma project would allow Islamabad to obtain enriched plutonium while being a non-signatory to the Non-Proliferation Treaty. China said on Tuesday (9 March) that safeguards for the reactors at Chashma would ensure they were used only for generating electricity. Pakistan has relied heavily on China for its defence equipment since 1990 when the US stopped supplying it with military hardware amid claims that it had acquired the capability to produce nuclear weapons.
Straits Times, Singapore (online edition)
Cairn Energy strikes oil in India again
British group Cairn Energy announced the second significant oil find in just two months at an onshore field in northwest India, as it reported a sharp rise in annual profits. The company's shares shot up by almost 20% after it revealed the discovery of oil at a site in the northern Rajasthan Basin region. Initial estimates put the new reserve at between 130m and 470m barrels, with 20m to 80m barrels recoverable, Cairn said. The company, based in Edinburgh, focuses on oil production in south Asia and has significant exploration and production operations in India and Bangladesh. In January, it announced it had struck oil in the Mangala field in the same block. That find was estimated at between 450m and 1.1bn barrels, of which 50m to 200m barrels was thought recoverable.
Channel News Asia, Singapore (online edition)
Company News
Japan-US tax treaty to take effect in July
A bilateral tax treaty between Japan and the US that will reduce the tax burden on companies with businesses in both countries is likely to take effect in July, six months ahead of schedule. The treaty addresses the corporate withholding tax on dividend, licensing and other income. Dividends distributed between a parent firm in one country and a subsidiary in the other are currently subject to a 10% tax in the subsidiary's place of business. Under the new treaty, subsidiaries that are majority-owned by the parent will be exempt from the tax. Licensing income from such sources as trademarks and patents, which also face a 10% tax, will also become exempt. Reducing or waiving dividend taxes will enable companies to build up their internal reserves. The US Senate is expected to approve the treaty this week, and the Diet is likely to follow suit by the 31 March fiscal year-end.
Nihon Keizai Shimbun, Japan (online edition)
Toyota faces tax probe in Australia
Australia is reviewing Toyota Motor's local tax payments for 1994 to 1999, the company said on Tuesday (9 March), after a newspaper reported the car manufacturer faced a tax bill of up to A$1bn ($758m/Euro613m). The company rejected suggestions in the Herald Sun newspaper that the tax probe might lead it to cut operations in Australia, where it overtook General Motors' Holden as the largest car producer last year. Toyota declined to comment on the size of the tax bill, but a spokesman said the tax probe, which has been underway for about two years, would not interfere with local growth.
Business Day, Thailand (online edition)
Nihon Keizai Shimbun, Japan (online edition)
Mitsui Chem's resin fibre for Barbie's hair
Mitsui Chemicals has developed a fine resin fibre that can bend and retain its shape like metal wire, but is soft and will not pierce the skin. From this spring, US toy giant Mattel, intends to use the material for the hair of its Barbie dolls. Resin fibres with wirelike properties are used as clasps to close produce bags at supermarkets and inside hats to maintain their shape. Such applications add up to a market estimated to be worth nearly Yen200m ($2m/Euro1m) this fiscal year. Mitsui Chemicals' wirelike resin fiber is about 0.1mm in diameter, one-fourth the thickness of such typical products. Mattel has given the company an order for materials for some 2m Barbie dolls, each with about 15 grams of the fibres on its head.
Nihon Keizai Shimbun, Japan (online edition)
Hyundai Group proxy war heats up
The battle for control of Hyundai Group is moving into the open as the conglomerate and Kumgang Korea Chemical seek proxies from minority investors ahead of pivotal general shareholder meetings this month. The two sides are backing competing sets of candidates for board seats at Hyundai Merchant Marine and at Hyundai Elevator, the de facto holding company of Hyundai Group, the nation's 13th largest conglomerate. A victory by any Kumgang candidate, would give the company a huge lift in its hostile takeover campaign against Hyundai, giving the paint and construction material manufacturer access to inside information about the Hyundai units.
Korea Herald, South Korea (online edition)
(Some stories may not appear in all editions of the cited news media.)
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