Retail News CRM

Author: Mei Ling Tan

  • Jollibee Expedites North American expansion

    Jollibee Expedites North American expansion

    Filipino fast-food chain Jollibee plans to expand its store network in North America to 250 by 2023.

    Its parent company Jollibee Foods Corporation (JFC) said it is committing to further expand the brand in North America, having identified the region as a key growth market.

    There are currently 46 Jollibee outlets in North America, with the first store opened in 1998 in California.

    The expansion plan was announced at the inauguration of its new North American headquarters in West Covina, California on Friday. It says the new 28,000sqft headquarters will serve as a center of operations for Jollibee and its sister brands Chowking and Red Ribbon.

    “The new Jollibee headquarters will ably support operations around North America in its quest to become a major fast-food player in the region,” says the company.

    Jollibee has a restaurant network of more than 1400 at home and more than 230 elsewhere abroad.

    Parent company JFC has more than 5800 restaurants in 35 countries globally, with recent investments including a joint venture to open Tim Wan Ho restaurants in China.

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  • United Colors of Benetton expanding into Myanmar

    United Colors of Benetton expanding into Myanmar

    Italian fashion brand United Colors of Benetton, has released a new collection to celebrate its presence in the Burmese market.

    Benetton entered Myanmar in October 2017 and now has two stores in prominent areas, with plans to further expand its base in the territory over the coming decade. Benetton Group has a global network of 5000 stores.

    “We brought our strong heritage to Myanmar in October 2017 with our first store in Junction City Level 2,” read a statement from the brand.

    “We further expanded with the store in Yangon International Airport … We have interesting plans of expansion in Myanmar next year and are looking forward to catering to the audience with our unique product offering. We have received an overwhelming response so far and will strive towards exciting our consumers with knit, colors and sustainability.”

    With the new global creative director Jean-Charles de Castelbajac coming onboard, Benetton has showcased two collections – The Rainbow Machine and The Colour Wave at Milan Fashion Week (AW2019 & SS2020). The collection is expected to hit Myanmar stores in the coming year.

    Benetton’s AW2019 collection has hit stores to offer a chic winter to fashion enthusiasts in the region. The collection was celebrated with a special showcase followed by a creative session at the Junction City store on November 17 attended by the city’s glitterati.

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  • LVMH takeover of Tiffany & Co looks to be settled

    LVMH takeover of Tiffany & Co looks to be settled

    Luxury jeweler Tiffany & Co looks set to be bought by French luxury group LVMH after the latter increased its offer to more than US$16 billion.

    Sources have told multiple international media organizations that a deal may be announced as early as today, Europen time before stock markets there open.

    The two companies’ boards met yesterday to finalize the deal, which would be LVMH’s largest acquisition yet and substantially boost its North American business.

    LVMH initially bid $14.5 billion for Tiffany in late October when it had a market valuation of $11.9 billion, but the target company’s board rejected the offer saying it undervalued the business.

    An analyst at OC&C Strategy Consultants in Hong Kong said adding an iconic American brand to its portfolio would enable the French luxury group to get closer to the heart of American luxury customers.

    “It would reinforce LVMH’s jewelry portfolio, which was relatively limited until now compared to rival luxury groups like Richemont. Acquiring Tiffany provides LVMH not only the entry into the fine jewelry segment but also the more accessible segment, which is growing at a faster pace than fine jewelry,” he said.

    During recent years, Tiffany has achieved success in rejuvenating the brand, expanding its jewelry collections from a wedding and engagement-focused jewelry to more fashionable, everyday collections to better cater to younger consumers’ increasing need of self-indulgence.

    “To satisfy consumers’ pursuit of “newness”, they shortened the cycle of new product launches. In addition, they are also one of the pioneer luxury players in embracing digital platforms by opening a pop-up store on Tmall Luxury Pavilion and engaging with consumers creatively through WeChat, among others,” said the analyst.

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  • Gap’s outlook is gloomy due to week profits

    Gap’s outlook is gloomy due to week profits

    There is no real surprise from Gap’s third-quarter figures released last week: sales are poor, profit is weak – although marginally better than forecast – and the outlook remains gloomy.

    Given the relative lack of effort from management on resolving the underlying issues plaguing the company, it would be unreasonable to expect a different outcome. However, there is some hope that the recent change in the CEO may result in a more aggressive pace of advancement. (Art Peck stepped down from the role earlier this month after five years in the role and a replacement is being sought).

    The biggest problem within the company is the Gap brand. Here total sales within the US fell by 6.6 percent over the prior year, while global comparable sales fell by 7 percent. As much as Gap remains a sizeable business, it continues to suffer from customer attrition as shoppers defect or reduce the amount they spend at Gap in favor of other retailers. The reason for this is relatively simple: assortments are dull, and every new season Gap churns out more of the same bland product rather than innovating and trying new things. This makes it very easy for consumers to overlook Gap.

    It used to be the case that, in the absence of compelling ranges, Gap could use discounting as a mechanism to drive customer interest and footfall. However, over the past half-year, this has become far less effective. Part of this is down to the fact that discounting has become a lot more prevalent elsewhere in the market, which means shoppers have a lot more choice of stores they can visit to get discounted goods. But part also is down to fatigue with Gap itself: offering 40- or 50-per-cent off may have once been eye-catching, but Gap has educated consumers to expect this to be offered as standard.

    Unfortunately, there is no real remedy to the discounting-drug other than for Gap to rebuild its proposition and give customers new reasons to buy.

    While the Gap story is an old one, Old Navy’s recent slide from grace is a more interesting tale. Previously Old Navy had been motoring along nicely, posting consistently good sales results. However, last quarter US sales shrunk and these quarter sales are flat.

    Admittedly, Old Navy has been lapping tough prior year comparatives, however, we believe there is more to the waning performance. Extensive discounting elsewhere in the market has been unhelpful, especially as it has pulled some more price-sensitive family shoppers away from Old Navy. But the biggest reason for underperformance has been a series of missteps on assortments. Usually, Old Navy can be relied upon to produce good seasonal edits that reflect fashion trends. Over the past two seasons, these have largely been absent, and the range has become tired and relatively bland.

    In a highly competitive environment, this isn’t good enough to drive growth and it leaves Old Navy exposed to players like Target which has been making excellent progress in apparel. Unfortunately, question marks over the future of Old Navy are unhelpful when Gap Inc is looking to spin the business off.

    In a rare turn of events, Banana Republic is the star of the show with a 4.3-per-cent uplift in total sales in the US. Improvements to the quality and some better pieces within the assortment have helped to lift conversion and basket sizes from existing customers. A continued recovery at the brand will be helpful to the group, not least because within the US Banana Republic’s sales are now only a fraction behind those of Gap – so it is able to make a more meaningful contribution to the top line.

    Overall, Gap remains in a very weak position and the spin-off of Old Navy will do nothing to remedy this. The change of management provides the company with an opportunity to shift its mindset. Whether it grasps it remains to be seen.

  • Walmart China opening 500 more stores

    Walmart China opening 500 more stores

    US retailer Walmart is planning to launch 500 new outlets in China within five to seven years.

    The expansion will more than double the firm’s presence in the territory in time for China to emerge as the world’s biggest grocery market come 2023. The move comes in the face of an economic slowdown as China grapples with the US trade war and slow growth.

    In spite of the setback, Chinese consumers are still buying from Walmart, which experienced 6.3-per-cent year-on-year growth in the last quarter. Its global growth during the period was just 2.5 percent.

    “We will continue to collaborate with partners and policymakers in China to accelerate our expansion,” Walmart China senior VP James Ku said.

    The firm will also remodel more than 200 of its stores in China in the coming years, including installing self-service checkouts using facial recognition technology.

    Walmart China has operated for more than 20 years.

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  • Korean retail giants expect improved profits next year

    Korean retail giants expect improved profits next year

    After a tough year, South Korean retail giants are tipped to log a modest improvement in their earnings next year on the back of improved business conditions and cost-cutting efforts, industry sources say.

    This year has been the toughest ever for two homegrown South Korean retail giants, Emart and Lotte Shopping, as they struggled to battle with e-commerce giants such as Coupang and TMON, which launched aggressive promotion and free delivery services to woo more customers.

    Hit by increased competition and an economic slowdown, Emart, the country’s No 1 retailer, suffered a 40.3 percent year-on-year fall in its third-quarter operating income to 116.2 billion won (US$98.8 million).

    Analysts said Emart will be on a roll next year, as the company’s efforts to improve margins have started to bear fruits since the third quarter, according to IBK analyst Lee Myung-hee. The brokerage estimated an 18 percent on-year rise in sales for 2020 and a 60 percent jump in operating profit.

    Emart saw the number of its underperforming or loss-making offline stores fall to 141 this year, down from 147 in 2016. The company also expanded shipping infrastructure for its online-only retail corporation SSG.com, launched on March 1, in a bid to win back customers from e-commerce operators.

    To bolster its delivery services, Emart also plans to open its third pick-and-packing station in Gimpo, 29 km west of Seoul, by the end of the year. The company currently runs two facilities, one in Gimpo and another in Yongin, 49km south of Seoul.

    Lotte Shopping, the operator of the supermarket chain Lotte Mart, also suffered a sharp fall in its third-quarter earnings because of poor performance by its supermarket chain. Lotte Mart takes up about 30 percent of its business portfolio.

    Lotte Shopping’s July-September operating income stood at 87.6 billion won, falling 56 percent on-year. The earnings shock came due to the nationwide boycotting of Lotte’s products since July, triggered by trade tensions between Korea and Japan.

    But the market consensus is that the discount store chain’s quarterly operating profit will go up thanks to reduced costs stemming from layoffs of contract workers.

    Ju Young-hoon, an analyst at Eugene Securities, forecast a 2.9 per-cent year-on-year gain in Lotte Mart’s annual sales for next year, compared to a 1.3-per-cent decline this year.

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  • M&G Acquires Second Logistics Facility In Asia

    M&G Acquires Second Logistics Facility In Asia

    M&G Real Estate, the real estate fund management arm of M&G Investments, has acquired a $131 million (155.5 billion Won) modern logistics center close to Seoul on behalf of its core Asian property strategy managed by Richard van den Berg.

    Located south of Seoul, Yongin Baegam Logistics Centre is in an established logistics cluster close to the city’s major highways. The approximately 100,000 square-meter four-story asset comprises all the characteristics of a high specification logistics center, catering to all the demands of modern occupiers. The new building tenants include established third-party logistics operators and retailers.

    We are positive about the fundamentals in Asia Pacific’s logistics sector, particularly in Korea, where supply is limited and demand is strong. The relentless demand for faster delivery will push third-party logistics companies to larger, more centralized distribution centers near key transport hubs and highway interchanges, such as ours, said Richard van den Berg in a media statement on Monday.

    The location will remain a key requirement as transportation typically accounts for at least half of logistics providers’ total costs. Yongin Baegam Logistics Centre will provide stable and core income to our investors said Berg.

    This is the second logistics facility for the M&G Asia Property Fund in Korea after Homeplus Hub Logistics Centre, the 64,250 square-meter distribution center acquired in 2017. This purchase coincides with an uptick in consumer spending with expectations for online retailing to grow in Asia Pacific markets from 14 percent to 23 percent by 2023.

    As the logistics sector matures and attracts more interest from investors, spreads between logistics and other asset classes in developed markets have narrowed and Korea is expected to follow the demand for modern well-located facilities.

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  • Grab Rolling Out Low-Cost Wealth Products

    Grab Rolling Out Low-Cost Wealth Products

    Grab is looking to tap the trillion-dollar wealth market across South-east Asia by offering low-cost investment products.

    Armed with a huge ambition of seizing South-east Asia’s wealth management market, Grab will first offer simple cash products offering a yield above the small interest derived from cash sitting in banks, said Reuben Lai, senior managing director of Grab Financial Group.

    What we don’t want to do is what typical financial institutions do where they charge 3 percent to 5 percent upfront – it’s a huge put-off. We are going to do away with all these upfront fees and have a pay-as-you-go model in a very transparent way,” said Lai, who was quoted.

    Grab will work with various asset managers and banks to offer cash products by the first half of next year, followed by more complex products later. It will study whether the products are relevant for mass consumers in both pricing and liquidity, he added.

    The firm could also partner or invest in a platform, which could be a regional or global player. As local banks have not been aggressive in pushing exchange-traded funds (ETFs) despite their low-cost nature, Lai believes therein lies opportunities for Grab Financial.

    I don’t think fees (out there) are low, said Lai, even though some banks here have savings plans tied to investments such as ETFs.

    DBS has recently launched ETF products with a flat annual management fee of 0.75 percent without a further sales charge, platform fees and lock-in period.

    To boost the team in its next phase, Grab recently hired Philip Chew, an investment veteran from powerhouse BlackRock, to run Grab’s investment and new business unit.

    It has also hired Leslie Teo, former GIC chief economist, to head up its data science team, with the aim of looking at how to better price financial products, Lai said.

    Grab’s pay-as-you-use models for its consumer finance push gained traction as 70 percent of its drivers in Malaysia have signed on the usage-based insurance sold by Grab’s partner Zhong An Insurance that offers per-day coverage for a daily payment.

    Given the bigger push into wealth and insurance, GrabPay will look to engage the mass affluent in the coming months as well, having become the dominant e-wallet in Singapore, Malaysia and Vietnam, said Ooi Huey Tyng, who manages the GrabPay business in most of Southeast Asia.

    In about 18 months, GrabPay secured e-money licenses in six countries, and now commands the largest total payment value (TPV) in three, she said, while declining to disclose the absolute figures. With the rapid build-out of the GrabPay wallet, the TPV has also more than doubled in the last six months.

    Many people will say: ‘Are you trying to do an Ant Financial?’ And my answer is: ‘China is one country, we are 10 countries’. It’s very, very different. With the one time the partners plug into us, they get access to our 170 million subscriber base in South-east Asia… and the licenses that we’ve acquired,»said Lai.

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  • DBS Acquires 40,000 Clients in Hyderabad

    DBS Acquires 40,000 Clients in Hyderabad

    Singapore bank DBS acquired 40,000 clients in Hyderabad after just opening its office earlier this year with plans to accelerate growth through new customer touchpoints.

    After launching just six months ago, clients from the Hyderabad now make up for 30 percent of DBS India’s customer base. When compared to other geographies in the Indian market, Hyderabad’s new accounts boasted especially high balances with a quarter of its wealth management clients being non-resident Indians.

    We will continue to invest where we believe the market provides an opportunity,» said Priyashis Das, head branch banking & wealth management, consumer banking, India, in a local media report. Hyderabad has a great opportunity for us.

    Moving forward, DBS will seek to further its growth in Hyderabad with plans to establish 100 customer touch points in the next 12 to 18 months through a combination of branches and e-kiosks across 25 cities. In addition to direct client acquisition, DBS will also invest in improving client experience by opening an experience center in local hub Waverock.

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  • ICE Bitcoin Futures Slated for December Launch

    ICE Bitcoin Futures Slated for December Launch

    Atlanta-based Intercontinental Exchange (ICE) is planning to launch bitcoin futures on December 9 in Singapore, following regulator’s new papers permitting the trading of derivatives tracking certain cryptocurrencies.

    The Bakkt bitcoin cash-settled monthly futures contract, denominated in U.S. dollars, will be settled against data from physically delivered Bakkt bitcoin monthly futures contract. The new contract will be listed on ICE Futures Singapore and cleared by ICE Clear Singapore.

    «Our new cash-settled futures contract will offer investors in Asia and around the world a convenient, capital-efficient way to gain or hedge exposure in bitcoin markets,» said Lucas Schmeddes, president and chief operating officer of ICE Futures and Clear Singapore.

    ICE Futures is the first of four exchanges approved by the Monetary Authority of Singapore to launch regulated futures contracts for payment tokens like bitcoin. This follows a recent MAS consultation paper green lighting crypto-linked derivatives driven in part by observed intuitional demand for a regulated product.

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  • Facebook reportedly tested a facial recognition app

    Facebook reportedly tested a facial recognition app

    It would be interesting to see how many people flat out don’t trust Facebook. This is the company that got fined $5 billion by the Federal Trade Commission (FTC) for failing to adhere to a consent decree it signed back in 2011. The terms of the consent decree prevented Facebook from using member profiles without the express consent of subscribers. In 2015-2016 Aleksandr Kogan, a Russian-American professor at Cambridge University, collected profiles through the use of an app he developed ostensibly for research purposes. But Kogan sold as many as 87 million user profiles to a company called Cambridge Analytica, which was hired by the Trump campaign to turn the data into information that it could use.

    As recently as the first day of this year, an organization called Privacy International issued a report claiming that certain Android apps sent users’ personal information to Facebook. The social-media site allegedly received this personal data even if the user did not have a Facebook account.

    What brings up Facebook’s apparent inability to keep members’ private data private is a report from Business Insider stating that the company had developed a facial recognition app between 2015 and 2016 that was developed for employees. The app was never released to consumers and has been discontinued. The frightening thing about the system is that according to one source, it could identify any Facebook member if enough data about the member was available. The app was in the early stages of development, according to the report. Facebook employees with the app installed on their phones could point the camera at a person and seconds later the display would show their name and Facebook profile photo.

    Last year, a lawsuit against Facebook was certified as a Class Action meaning that several similar suits were consolidated into one. The plaintiffs claimed that the app was using facial recognition on their phones without permission. Since 2010, the company had been collecting facial templates based on users’ physical characteristics in order to show members’ names in photographs. But the plaintiffs say that this violates the 2008 Illinois Biometric Information Privacy Act which prohibits companies from collecting and storing biometric data without permission. Facebook’s defense is that facial templates do not count as biometric data. This feature remains on the app, and when someone “tags” a Facebook subscriber in a photo it links back to the subscriber’s Facebook profile. This feature used to be enabled by default on the app, but users must now opt-in.

    Facebook is also reportedly developing its own AI assistant similar to Google Assistant, Siri and Alexa. The company would use it for its Portal line of smart displays; currently, the Portal speakers use Amazon’s Alexa digital helper. Back in 2015, Facebook did add such a feature for the Messenger app which it called “M.” While “M” used AI to answer certain questions, those it couldn’t handle were sent to a call center manned by humans. In January 2018, Facebook eliminated the feature.

    Meanwhile, Facebook is one of four tech firms (along with Apple, Google, and Amazon) that is being investigated by the House of Representatives’ Judiciary Committee for possible antitrust violations. Just this past week, the committee released written responses from the four tech firms to questions it asked each of the companies. Facebook admitted in its reply that it dropped certain apps from its developer platform if they competed with Facebook’s own features. As an example, the company admitted that it dropped Vine, Twitter’s now-defunct app that created six-second video loops. Facebook said that Vine was a copy of its News Feed. Committee members also wanted to know the “exact circumstances” behind Facebook’s decision to drop apps like Phhhoto, MessageMe, Voxer, and Stackla. The company said that it “will restrict apps that violate its policies.”

    If Facebook cannot be trusted with personal and biometric data, we should be breathing a sigh of relief that it stopped developing the aforementioned facial recognition app. Or did it? Can we believe Facebook when they say that it is no longer developing such a tool?

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  • Qualcomm’s anti-competitive business practices get support from the Trump administration

    Qualcomm’s anti-competitive business practices get support from the Trump administration

    Back in May, Judge Lucy Koh (of Apple v. Samsung fame) made a ruling that still might change the way Qualcomm sells its chips to phone manufacturers. The judge ruled in favor of the Federal Trade Commission and against the chipmaker after a 10-day non-jury trial was held at the beginning of the year. The FTC argued that Qualcomm’s “no license, no chips” policy is anti-competitive.
    Other Qualcomm policies attacked in court included the way royalty payments are calculated based on the entire price of a phone instead of the chip being used. And Qualcomm was also cited for not licensing its standards-essential patents (SEP). These are patents that must be licensed by rivals to guarantee that their products meet technical standards; as a result, they are supposed to be licensed on a fair, reasonable and non-discriminatory fashion (FRAND). In its defense, Qualcomm says that the argument of royalties is an issue of contract law that should not be heard in a forum designed for antitrust cases. And it also says that there is nothing wrong with getting compensated for the money it spends on R&D.
    In her decision, Koh said that Qualcomm needs to renegotiate its current contracts with phone manufacturers. In her written decision, Judge Koh said, “Qualcomm’s licensing practices have strangled competition in the CDMA and the premium LTE modem chip markets for years, and harmed rivals, OEMs, and end consumers in the process.” As you might expect, Qualcomm has appealed the decision and even managed to get the Ninth U.S. Circuit Court of Appeals to issue a stay. This prevents Qualcomm from having to follow Koh’s orders until all of its legal options have been exhausted. The firm did have a compelling reason to request a stay; it would be a waste of time and energy to renegotiate all of its contracts only to win on appeal and reverse all of the changes made.
    And speaking of the appeal, the FTC is actually on the opposite side of the Trump administration. Before Judge Koh released her decision, Trump officials asked her to limit any penalties that she was planning to impose on the chipmaker. And now that the case is being heard in appeals court, the administration is concerned that a Qualcomm loss will negatively impact America’s global leadership in technology and national security. And the Justice Department, under the leadership of U.S. Attorney General William Barr, has contradicted the FTC by stating that there is nothing anti-competitive about Qualcomm’s business practices. That is unusual because the FTC and the DOJ both handle antitrust cases. The Justice Department is joined by the Defense Department and Energy Department which told the appeals court that a ruling against Qualcomm could affect the country’s military and its energy and nuclear infrastructure.
    But perhaps even more important to the Trump administration is the possibility that should Qualcomm lose on appeal, it will negatively impact the rollout of 5G in the states. The next generation of wireless connectivity will initially deliver download data speeds 10 times faster than 4G LTE and will lead to the creation of new businesses and industries. The nations that harness 5G first will have a big advantage in the global economy. Qualcomm’s Snapdragon X50 and X55 modem chips allow smartphones to connect to 5G networks. The former is compatible with the super zippy ultra-high mmWave spectrum while the latter works with both mmWave and sub-6GHz  airwaves.
    But as far as the FTC is concerned, Qualcomm and the Justice Department have not shown how Judge Koh’s ruling “threatens national security in any way — or how those considerations could justify allowing Qualcomm to continue to violate” U.S. antitrust law. The 9th circuit appeals court, located in San Francisco, could start hearing arguments in February and issue a ruling sometime in 2020. For Qualcomm, there is plenty at stake.
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  • Niantic increases Pokemon GO storage limit

    Niantic increases Pokemon GO storage limit

    Great news for Pokemon GO players, especially veterans who’ve played the game for a very long time, as Niantic has just announced another limit storage increase for its mobile game. This means that Trainers will now be able to catch and store no less than 3,000 Pokemon without having to transfer any of them.

    Keep in mind that you will still have to pay for the extra storage space, just like you did until now. Pokemon GO has a free storage limit of 300 Pokemon and 350 items, but you can purchase additional storage space up to 3,000 Pokemon and 2,500 items.

    Last year, Niantic increased the Pokemon GO storage limit from 1,500 to 2,000, and once again to 2,500 several months ago. Well, it looks like many players have already hit that limit forcing Niantic to further expand storage limit.

    In case you’re wondering how much it will cost you to hit the 3,000 Pokemon limits, you can do the math considering 200 Pokecoins will get you 50 slots (Pokemon or items). Of course, you can buy Pokecoins for real money or get them via in-game rewards and bonuses.

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  • Vietnamese carmaking startup VinFast gets $950 million credit line

    Vietnamese carmaking startup VinFast gets $950 million credit line

    VinFast, which aims to become Vietnam’s first domestic car manufacturer, said it has secured a 12-year credit facility for as much as $950 million to help buy machinery and equipment from German suppliers.

    The company, a unit of Vietnam’s largest conglomerate Vingroup JSC, plans to have its first production models built under its own badge hit the streets next August. Vingroup has earmarked about $3.5 billion for the project.

    VinFast, led by former General Motors executive Jim DeLuca, showed off its BMW-based LUX A2.0 sedan and LUX SA2.0 crossover at the Paris auto show last week. Assembly is scheduled to begin next week year.

    Credit Suisse AG and HSBC were the lead arrangers and the financing agreement was guaranteed by German export credit agency Euler Hermes, Vingroup and Vinfast said in a statement.

    The statement also said that in August Vinfast completed syndication of a $400 million term loan facility led by four international banks.

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  • Toyota to invest $2 billion in developing EVs in Indonesia

    Toyota to invest $2 billion in developing EVs in Indonesia

    Toyota Motor Corp. plans to invest $2 billion to develop electric vehicles in Indonesia over the next four years, starting with hybrid vehicles, Indonesia’s coordinating minister for maritime affairs said.

    “From 2019 to 2023, we will progressively increase our investment to 28.3 trillion rupiahs ($2 billion),” Toyota president Akio Toyoda was quoted as saying in a statement released by the ministry on Thursday.

    Toyota said this month that it aimed for half its global sales to be from electric vehicles by 2025, five years ahead of schedule, and will tap Chinese battery makers to meet the accelerated global shift to electric cars.

    The deal was agreed at a meeting in Osaka on Thursday between Indonesia’s Coordinating Minister for Maritime Affairs Luhut Pandjaitan and Toyoda.

    “Because the Indonesian government already has an electric vehicle development map, Toyota considers Indonesia a prime EV investment destination,” Toyoda said in the statement.

    He said Toyota would follow the government’s EV plan by investing in stages, starting with the development of hybrid vehicles.

    Monet, the self-driving car joint venture of Toyota and SoftBank Corp., separately told Reuters in June it plans to begin operating in Southeast Asia next year

    Indonesia, the region’s largest economy, has plentiful reserves of nickel laterite ore, a vital ingredient in the lithium-ion batteries used to power EVs, and has been making a push to attract foreign carmakers.

    Officials are betting Indonesia, which is already Southeast Asia’s second-largest car production hub, can become a major regional player in lithium battery production and feed the fast-rising demand for EVs.

    The country announced earlier in 2019 plans to introduce a financial program that will offer tax cuts to EV battery producers and automakers, as well as preferential tariff agreements with other countries that have a high EV demand.

    Indonesian ministers told Reuters in December that Korean carmaker Hyundai Motor Co. plans to start producing EVs in Indonesia as part of an around $880 million auto investment in the country.

    Mitsubishi, meanwhile, announced in mid-2018 it would work with the Indonesian government to research infrastructure that could accommodate EVs.

    Analysts are cautious however on how quickly Indonesia’s EV ambitions can be carried out, as some of its lithium battery projects require complicated nickel smelter technology.

    The ministry’s statement on Thursday gave no details on how Toyota, which already makes batteries for hybrids and hybrid plug-ins, would implement its investment plans.

    Toyota was not immediately reachable for comment, but said in June it would partner with China’s Contemporary Amperex Technology Co. and EV maker BYD Co. for battery procurement.

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