In Thursday's Asia papers

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

 

 

 

 

Rising oil prices hit Japan's trade surplus

Japan's trade surplus in August fell sharply for the first decline in 14 months as higher costs for imported oil combined with weaker export growth, prompting concerns about the country's economic outlook, the finance ministry said. The surplus fell 26% from a year ago to Yen576.1bn ($5.2bn/Euro4.2bn), far below consensus forecasts of economists polled by the Nihon Keizai economic daily for a surplus of Yen833.4bn. Imports jumped 18.4% to Yen4.21trn, the second highest total ever, as crude oil hit $37.6/barrel, up from $28.4 a year ago, the ministry said. Exports rose 10.4% to Yen4.78trn. The trend of declining growth in exports, following 14.3% in July, when the trade surplus totalled Yen1.14trn, and 19.4% in June, has some economists worried about Japan's overall recovery. Exports of scientific optical instruments such as semiconductor manufacturing equipment boosted by Asian demand rose 20% in August, while steel exports fed by Chinese demand rose 20.5%. Automobile exports rose 4.7% from a year ago. However, crude oil imports surged 33.7%, adding some Yen100bn to the import column, the ministry said. Oil product imports rose 49.5%, while coal was up 47.7%. Increased Asian imports of oil-related chemicals such as naphtha trimmed Japan's trade balance with Asia. Exports of scientific optical instruments rose 26.8%, while imports of semiconductors and electrical parts rose 19.8%. Japan's surplus with the US shrank 0.2% to Yen472.1bn as exports rose 2.3% to Yen1.02trn, while imports rose 4.6% to Yen552.0bn.

 

 

China, Kyrgyzstan tap co-operation potential

Co-operation between China and Kyrgyzstan is expected to increase in the coming decade. The two countries plan to work together in such fields as trade, communications, energy and mining in the next ten years, said visiting Prime Minister Wen Jiabao during talks with Kyrgyz President Askar Akayev on Wednesday (20 September). Wen is the first Chinese prime minister to visit Kyrgyzstan since Li Peng in 1994. Wen said the China-Kyrgyzstan Good Neighbourly Treaty on Friendship and Co-operation, signed in 2002, and the settlement of border issues paved the way for more political trust. Akayev said establishing and developing friendly and co-operative relations with China was his country's most significant achievement since its independence. In a joint statement, both countries pledged to jointly tap potential areas such as politics, economy, trade, security and culture. The two prime ministers also signed a compendium on co-operation priorities and programmes for the next ten years. Noting that economic and trade collaboration spearheads bilateral relations, Akayev said the compendium will effectively enhance such ties. Priorities include maintaining a constant and steady growth in trade and joint efforts on economic and technological projects. Trade reached $314m (Euro254m) last year and $307m in the first eight months of this year. China and Kyrgyzstan will also work together in communications, ports, energy, agriculture, food processing, aviation, textile, science and technology, telecommunications and finance.

China Daily, China (online edition)

Russia raps S Korea on nuclear tests

Russia rapped South Korea over its recently disclosed secret nuclear experiments, calling on Seoul to cooperate fully with international experts investigating them. In a statement, the Russian foreign ministry said the atomic experiments in South Korea four years ago were discussed in a meeting of diplomats on the sidelines of President Roh Moo-Hyun's visit to Russia. The statement came a day after Russian President Vladimir Putin called on neighbouring North Korea to resume six-party talks on its own nuclear weapons program and reiterated Moscow's support for a nuclear-free Korean peninsula. North Korea meanwhile has balked at returning to the negotiating table before end September as hoped and has said it would not discuss its nuclear arms program until the South Korean experiments were clarified. The South Korean government revealed earlier September that its scientists had secretly enriched uranium in 2000 and had also extracted a small amount of plutonium in 1982.  Seoul has however reiterated pledges not to develop nuclear weapons and described those incidents as one-off experiments. Putin and Roh had a private three-hour dinner on Monday (20 September) followed by summit talks at the Kremlin on Tuesday, and both leaders afterwards were full of praise for each other and promises of stronger Russia-South Korea bonds in the future.

Channel News Asia, Singapore (online edition)

Korea Herald, South Korea (online edition)

Singh-Musharraf summit could speed peace

The first summit between India's new prime minister and Pakistan's president could give an impetus to the nations' slow-moving peace process but a solution on Kashmir remains distant, analysts said. Manmohan Singh, who became prime minister in May after his left-leaning coalition's shock election victory, is to meet President Pervez Musharraf on Friday (24 September) on the sidelines of the United Nations General Assembly in New York. But even basic discussions could hit the familiar roadblock of Kashmir, the Himalayan territory divided between the nuclear-armed neighbours and at the heart of two of their three wars since independence from Britain. Pakistani foreign secretary Najmuddin Sheikh said a "breakthrough is unlikely" due to India's frequently stated position that the peace process with Pakistan will be gradual. India has also denied any plans to offer territorial concessions after Time magazine said it was ready to propose shifting the military frontier in Kashmir. The US spearheaded international diplomacy that prevented a fresh war in 2002 after an attack on the Indian parliament which New Delhi said was carried out by Islamists backed by Pakistan. Singh and Musharraf were meeting separately with US President George W Bush before their summit.

Channel News Asia, Singapore (online edition)

Saudi Arabia, Qatar, Kuwait still risky

Investing remains risky in Saudi Arabia, Qatar and Kuwait, notably because the presence of US forces in the region makes these countries vulnerable to terrorist attacks, a security consulting firm said. Kroll, a global risk consulting company, said it released a report examining business risk in the region in response to client concerns over stability in the region. Saudi Arabia "clearly presents the highest risk," the report noted. Qatar and Kuwait were second highest, even though Qatar is a current favoirite with international investors and has tried to offset its small size and scant military with an American presence, Kroll said. But due to questions over the long-term role of US forces and the country's proximity to Saudi Arabia and Iran, Qatar is exposed to "potential instability." Kuwait's location meanwhile "exposes it to tensions in Iraq, Saudi Arabia and Iran," the report said. Kroll said the situation is complex, because the presence of US forces helps improve security in some cases, but their departure could lead to greater vulnerabilities. Bahrain, the United Arab Emirates and Oman are all in the lowest tier of risk, according to the report.

Channel News Asia, Singapore (online edition)

Susilo wins vote majority, prepares Cabinet

Indonesian ex-general Susilo Bambang Yudhoyono has achieved a clear majority in the presidential election, voting figures showed as the leader-in-waiting worked to finalise the cabinet team he needs to fulfil high public expectations for change. With almost 101m votes counted so far from Monday's (20 September) poll, Susilo had nearly 62m, a majority based on turnout estimates of 123m. With a 61.1% share of the vote so far, he commands a landslide lead over the 38.9% for incumbent Megawati Sukarnoputri. Promises of economic transformation, as well as an end to endemic corruption and better security in the face of terrorist attacks, were key elements of the campaign which helped Susilo trounce the increasingly unpopular Megawati. The stock market on Wednesday (22 September) slipped back from a record high as investors cashed in gains to focus on the new cabinet, while local media engaged in heavy speculation on what shape it would take. Potential candidates include Susilo's close aide and former general Sudi Silalahi and human rights lawyer Todung Mulya Lubis. Also on the hot list is International Monetary Fund economist Sri Mulyani, current Finance Minister Budiono and current justice minister Yusril Ihza Mahendra. Analysts see a strong financial team as key to rejuvenating an economy which enjoyed stability under Megawati but failed to gain the momentum needed to transform Indonesia into a regional player.

 

 

Malaysia's Anwar mulls multi-party alliance

Malaysia's former deputy prime minister Anwar Ibrahim said he has made no commitment yet to join any political party but is likely to play a role in a multi-party alliance, probably in opposition. In an interview in Munich, southern Germany on Monday (20 September), Anwar portrayed himself as a reformer looking to move the country on from what he calls the corruption and bigotry of its past. Anwar said he wanted to improve the country's democracy, encourage a more independent judiciary and make more positive economic changes that would generate faster growth and inject new political confidence. Anwar's remarks came at a specialist Munich clinic where he is recovering from spinal surgery for an injury he said was inflicted during a police beating after his arrest in 1998. The charismatic and popular politician travelled to Germany after being released earlier this month from prison, where he had served six years on corruption charges. As a convicted criminal he cannot hold public office until 2008. Anwar has exhausted the legal process in a bid to get his conviction for corruption overturned and his only chance of an immediate return to elected office lies with a pardon from the king. His conviction and nine-year sentence for sodomy were overturned in court on 2 September.

Channel News Asia, Singapore (online edition)

Thailand's imports increase trade deficit

Thailand experienced a trade deficit of $216m in August, the third this year, on the back of a sharp increase in the country's imports and a rise in the cost of oil. Deputy Commerce Minister Pongsak Ruktapongpisal said the country's import value in August rocketed to a record high of $8.50bn, a 35.4%t rise from the same month in 2003. The rise in import value was in line with economic growth and export expansion, he added. However, there was positive news; August was the fourth consecutive month where exports exceeded $8bn. He said the global oil price added to the country's import costs, making the country's import value over the first eight months of the year stand at $62.26bn, up by 30.4% from a year ago. He added that despite having faced a trade deficit for the third time this year – in March, April and now August – Thailand still gained a total trade surplus of $492.9m over the first eight months of the year. He noted that Thailand's trade deficit in August increased due to a rapid rise in oil imported to the country. The country's imported energy demands was valued at $1.54bn, up by $568.2m or 45.31 % from a year ago, he added.

Business Day, Thailand (online edition)

 

 

Jock McKenzie, former President for Asia, Middle East and Africa at ChevronTexaco has been appointed Chairman of a high-level nine-member Energy System Review Committee. Following the major blackout on 29 June, Parliament was informed that the Trade and Industry Ministry would set up the committee to take a fresh look at Singapore's electricity and gas systems, and make recommendations on improvements. The aim is to strengthen system reliability so that there are robust systems, resilient against accident or disaster. The ministry said McKenzie had broad and deep experience in the energy sector, and will provide a balanced perspective to the study, taking into account the need for energy reliability and security, as well as maintain competitive electricity pricing. The Committee's other members include industry experts and experienced individuals from local and foreign companies, and academia. They will interview key stakeholders, conduct site visits and hold discussions with policy-makers, gas and electricity companies and large electricity customers. The Committee is expected to complete its review and to submit its report to the Government in 2005.

 

 

 

The Electricity Generating (Egcomp), Thailand's second-largest private electricity producer, said it will hold talks on a deal to acquire a stake in Laos' Hongsa lignite power plant project next year with the aim of increasing its electricity production capacity. Egcomp senior vice-president Sakda Srisungkom said his firm needs to buy a stake in a foreign country's power plant because local power plant projects will be completed only after 2011. He said buying a stake in the Hongsa project will help increase Egcomp's production capacity in line with its investment proportion. However, he did not provide details on the Hongsa project and Egcomp's stake purchase deal. According to Sakda, the 1070 megawatt capacity Nam Thern 2 project is the largest hydropower project in southeast Asia with an investment cost of about $1.1bn. Most of its output will be supplied to Thailand from 2008 onwards, he said, adding that Egcomp holds a 25% stake in the Nam Thern 2 project. He projected that the Nam Thern 2 project would generate an investment yield of about 13-15%. The project is now waiting for loan guarantee approval from the World Bank.

 

 

 

Getting hydrogen from ethylene by-product 

 

Japan's Ebara has co-developed with Maruzen Petrochemical and Toyo Engineering a technology to extract hydrogen from the by-product of ethylene manufacturing and plans to put it to practical use by 2008. The technology will help reduce the amount of crude oil needed to produce hydrogen and trim production costs by more than Yen4bn ($36m/Euro29m)/year, the companies said. The partners will market the technology to petrochemical firms as crude oil prices remain high. Currently, use of the byproduct is limited to boiler fuel. By converting it to hydrogen, its application can be broadened to oil refineries and fuel cells. The companies intend to test the technology at an Ebara factory this fiscal year. They have earmarked Yen3bn-5bn to build a test furnace in a domestic petrochemical plant in fiscal 2006, and plan to construct a production facility capable of processing 200-300 tonnes/day in 2008.

 

 

Singapore kicks off first 3G trial

The first public trial of third-generation or 3G mobile phones will start in Singapore on Friday (24 September), ahead of a nationwide rollout due by year's end. Dominant player SingTel is first of the three telcos off the starting block, picking 150 people to try out the system which, among other things, will allow them to make video calls, watch the news and surf the Internet, all on their cellphones. The month-long trial will see if users take to 3G technology, which has received mixed reviews elsewhere. SingTel also needs to know if the 3G network performs well, for example in delivering clear sound and video over different geographical areas.  Its trial had been delayed for nine months because of the lack of handsets, said Lim Chuan Poh, SingTel Mobile's chief executive officer. Now trial users will be armed with Sony Ericsson Z1010 handsets, which have built-in cameras for video calls. Lim said SingTel has spent about S$100m ($58m/Euro47m) so far on its 3G network. He thinks that the ability to make video calls will be a big selling point. 3G, or third generation, mobile telephone technology lets you send and receive huge amounts of data quickly compared to today's phones. That makes it ideal for video, the Internet and other applications.

Straits Times, Singapore (online edition)

 

Qingdao Doublestar of China and Continental the world's fourth largest automobile tyre manufacturer, plan to form a joint venture (JV) in the future. Continental, based in Hannover, Germany, will start negotiations on financial and other venture details, Doublestar said in a statement to the Shenzhen stock exchange. Continental, with 27 companies outside Germany, produces more than 100m tyres/year. Analysts said the JV plan will help Doublestar sharpen its competitive edge to withstand increasingly fierce rivalry in the local market, and will be conducive to promoting its products in the global market. The company, once a shoe manufacturer, has become a diversified manufacturer of tyres, castings, machinery and embroidery. Tyre making has become the company's mainstay business in terms of revenues, according to Doublestar's half-year report. The company's tyre output increased 36% year-on-year to 1.54m from January to June, bringing in revenue of Rmb745m ($90m/Euro73m).

 

 

KIC Oil and Gas plans to build a $400m oil storage facility in southern Malaysia by 2007, in a bid to grab a piece of the growing tankage business in Asia, its chief executive said on Wednesday (22 September). The 1.2m-cubic-metre Malaysian government-backed project at the Port of Tanjung Pelepas will add to the firm's floating fuel oil storage and blending facilities at the terminal in southern Johor state, KIC's CEO Rashid Isa said. He said the facility would be able to blend fuel oil and gasoline, with 40% of its capacity for light oil products and the rest for fuel oil, to take advantage of surging Asian fuel demand. The extra storage is likely to compete for customers with Singapore, which is expected to increase its independent oil tankage capacity by 22% by the end of 2005, analysts said. Rashid said the terminal would complement Singapore's facilities to turn the southern tip of Malaysia into a regional storage centre