Author: Mei Ling Tan

  • E-commerce startups: a wild card for the industrial market?

    E-commerce startups: a wild card for the industrial market?

    THE bulls and bears of Singapore’s industrial property market often reflect the pace of economic growth and the composition of the manufacturing sector. Since its post-independence days, the manufacturing sector in Singapore has evolved to be a key contributor to gross domestic product (GDP) at approximately 20 per cent with strong support stemming from the chemicals, electronics and precision engineering clusters in 2014.

    In recent times, however, the Republic’s manufacturing activities have slowed down due to the external and internal headwinds which this export-reliant nation is highly susceptible to.

    The government has long recognised the need to boost the island’s overall productivity and export competitiveness in the region to maintain economic growth. To this end, Singapore’s manufacturing sector has been undergoing economic restructuring to shift the value-chain upwards to focus on higher value-added industries. More emphasis is placed on higher automation and less labour-intensive manufacturing activities as firms grapple with rising labour costs and lean manpower.

    Post-Global Financial Crisis, the rapid recovery in GDP in 2010 was accompanied by a spike in manufacturing output. As one of the underlying demand drivers for industrial space, the increase in manufacturing activities propelled the demand for industrial space, as indicated by the positive net absorption islandwide. On the back of limited net supply, this translated to occupancy rates hovering above the range of 93 per cent until 2011.

    Subsequently, demand for space began to soften from 2012. The softening is primarily attributed to three key factors – the hike in labour costs, rising competition from neighbouring countries that offer an alternative cheaper manufacturing base and weakening external demand from Asian economies, especially China. Cost containment became a top priority, which led to existing demand being mainly driven by renewals and consolidations.

    On the back of rental and capital value escalations in 2011, the government introduced a slew of industrial property measures such as tighter occupation requirements for industrial space, seller’s stamp duty, shortened land tenures, and ramped up supply through the Industrial Government Land Sales (IGLS) Programme to cool the market. This eventually resulted in a surge of supply which far surpassed demand from 2013 onwards.

    Furthermore, a strong supply of industrial space is expected to be completed in 2015 and 2016. In the face of decelerating economic growth and contracting industrial output, it is likely that demand for industrial space will remain subdued in the near term, as the surge in supply corresponds to twice the amount of the 10-year average demand of 10.42 million square feet (see chart).

    Given this supply overhang situation and less favourable economic conditions, it is imperative to explore other complementary uses for industrial space while adhering to existing JTC Corporation and Urban Redevelopment Authority (URA) guidelines.

    ANCILLARY USE

    Under URA guidelines, industrial properties are segregated for use by a 60 per cent-40 per cent quantum, where 60 per cent is predominantly used for core industrial activities and 40 per cent for ancillary uses. To obtain Written Permission for the 40 per cent ancillary use such as industrial canteens, showrooms and selected commercial uses, occupiers have to comply with the following requirements:

    • Capping industrial canteens at 5 per cent of total proposed gross floor area (GFA) or 700 square metres, whichever is lower.
    • Showrooms are only allowed to display products which are typically not transacted over the counter and are predominately delivered and installed off-site.
    • Selected commercial uses include clinics, banking hall/ATMs, minimarts and fitness centres and are capped at 10 per cent of total proposed GFA per development or 200 sq metres, whichever is lower, on the first storey of the building only.

    As long as the proposed ancillary uses conform to the above guidelines, it provides landlords with the flexibility to revamp the use of existing industrial space and widen the pool of potential occupiers.

    In the past, industrial spaces were primarily used for core industrial activities namely, manufacturing and warehousing. However in 2004, the Economic Development Board (EDB) introduced the Warehouse Retail Scheme – an initiative which ended in 2007 – which led to megastores such as Ikea, Giant, Courts and Big Box operating in industrial locations.

    Notwithstanding the short-lived three-year tenure of this initiative, in 2015, Gain City and NTUC FairPrice incorporated retail components into their industrial developments under the 40 per cent ancillary use.

    While adhering to the 60 per cent allocation for warehousing, Gain City’s Sungei Kadut development, for instance, sets aside 20 per cent for retail, and incorporates other uses such as offices, café, sky terraces, a children’s play area and a diesel pump area. Consolidation of uses into one location enables industrialists to enjoy cost-saving benefits, which have been passed on to consumers. Gain City, in fact, reported 20 per cent in cost savings with its consolidation exercise.

    Through a similar re-adaptation of industrial spaces, it is plausible to extend the same cost-saving benefits to entrepreneurs. For one, e-retailers could potentially benefit from a re-think on warehouse space usage. By designating 60 per cent to store e-retailers’ inventories in self-storage, the remaining 40 per cent can be further proportioned to develop an all-encompassing pro-business environment with courier services, serviced offices, Wi-Fi-equipped cafés and showrooms.

    A development that has adopted a similar concept is the Entrepreneur Business Centre, a self-storage and serviced office facility with ancillary uses, namely baby-care retail and delicatessen.

    The purpose of incorporating Wi-Fi-equipped cafes and showrooms in industrial developments is to transform industrial estates into a one- stop e-commerce hub for startups.

    Firstly, business operations and logistics are supported through having 24/7 wireless access, storing inventories in self-storage and having shared in-built courier services. Secondly, it attracts clientele as displaying products in showrooms creates an experiential retailing concept for consumers to touch and feel e-retailers’ products prior to purchasing them online.

    One retailer that offers this omni- channel retailing experience through the online-to-offline (O-2-O) concept is Decathlon, a sporting goods firm which only had an online presence in Singapore. The introduction of the Decathlon eXperience showroom has encouraged customers to have more hands-on interaction with the products before proceeding to purchase them online. Undeniably, this creates a cost-friendly working environment as it promotes the growth of e-commerce by compressing e-retailers’ risks through reduction of overhead costs and lock-in periods.

    GATEWAY FOR E-COMMERCE

    There is strong support for Singapore to grow as an entrepreneurial hub. Firstly, more industrial spaces are being slated for entrepreneurial activities such as at JTC Launchpad @ one-north, and secondly, there is rising investment interest in Singapore’s startups, especially in the e-commerce sector.

    According to Techlist, 80 per cent of venture funds raised by Internet companies are being invested in Singapore where the beneficiaries are predominantly e-commerce players such as Lazada, Zalora and Reebonz.

    This is not surprising as Singapore is ranked 14th on the 2015 Global Retail E-commerce Index, indicating the strong fundamentals which have established Singapore as the gateway for e-commerce.

    According to Euromonitor International’s June 2015 study on retailing in Singapore, Internet retail sales grew 12.5 per cent year-on-year to S$1.08 billion, while mobile Internet retail sales expanded even more significantly by 53.9 per cent to S$280.9 million.

    All these indicate that Singapore’s e-commerce sector is poised to expand further, which could potentially be the next underlying demand driver for the industrial market.

    Leveraging on the aforementioned opportunities, the pool of end-users for industrial space may be extended further to include e-commerce startups. Previously, this group of users was hindered by barriers of entry such as high occupancy costs and inability to occupy the minimum GFA requirement in industrial developments. However, by consolidating uses and re-adapting the 40 per cent ancillary use, this creates a win-win situation for landlords, consumers and entrepreneurs.

    In addition to injecting fresh demand for a muted industrial market, it creates a viable operating business environment for startups, thus promoting the development of the e-commerce scene.

    Instead of depending on external trade and manufacturing to propel demand for the industrial market, widening the list of potential occupiers to startups may potentially inject life into industrial estates. That may be the solution to cost containment which businesses are seeking.

  • Online, mobile luxury spending rises in China

    Online, mobile luxury spending rises in China

    Online and mobile commerce for luxury brands in China has risen at an exponential pace while smartphone penetration continues to grow rapidly, results of a recent survey shows.

    The new study of online spending in the country was conducted by KPMG in partnership with Mei.com, a China-based online luxury flash sales retailer, and Weibo, an online social media platform in China.

    Among the key findings is that 45 percent of respondents said they purchased most of their luxury items through online options, and the maximum amount they felt comfortable paying online for a single item is RMB4,200 ($660.8), far higher than the RMB1,900 ($298.9) they indicated in a similar survey in 2014, or an increase of 121 percent.

    The average spend levels also went up about 28 percent compared to the previous 2014 survey.

    China’s consumers are spending close to one-third more on online purchases – averaging around RMB2,300 ($361.9) on each single luxury transaction.

    The top driver for purchasing online remains pricing and better deals, however, close to one-third of respondents had made luxury online purchases at the full, non-discounted price.

    “Price is becoming less of a driver. But value remains important as customers are well informed about global prices since most of them travel physically or digitally,” said Thibault Villet, CEO of Mei.com.

    The survey likewise points to an increase in the average amount spent on luxury purchases in most product categories.

    A higher amount was spent on average for popular categories such as bags (109 percent), women’s apparel (58 percent) and cosmetics (18 percent), and also noted a significant increase in spending on categories such as watches (126 percent) and jewelry (65 percent) that accounts for a relatively smaller share of total online luxury sales.

    Cosmetics is the most popular product bought online, followed by women’s shoes, bags and leather goods, women’s apparel and accessories.

    The survey finds that among the key online triggers to purchase luxury e-commerce, the most persuasive one is reading about a product on a blog or social site and seeing the product in an online shop.

    While online shops are setting up temporary or pop-up stores, most luxury brands are also increasingly developing their China websites and shops on popular e-commerce platforms.

    “The pace of change in today’s marketplace in China is taking retailers and brands by surprise. This change is unrelenting and now outrunning the company strategy in many cases,” Egidio Zarrella, Clients and Innovation Partner, KPMG China, noted.

    In addition to luxury items, the survey finds increased numbers of luxury services purchased online, including online hotel and restaurant bookings, followed by domestic and overseas trips.

    Forty-eight percent of respondents said they had bought items overseas over the previous 12 months, close to a majority. More than two-thirds of these claimed they increased their overseas online luxury purchases in the past 12 months.

    The survey sees a near doubling of Chinese luxury online consumers planning to buy overseas trips online – from 35 percent who indicated they bought an overseas trip online during the past 12 months, to a forecast 61 percent during the next 12 months, or a growth of more than 70 percent.

    “Chinese consumers have a significant propensity to spend, they are technology savvy and want the best quality. Therefore, both new and existing entrants to China must expect to compete in a dynamic and fast-paced market. They must develop the right strategies to survive and thrive in an increasingly disruptive environment,” Zarrella concluded.

  • Less energy-efficient air-cons to be phased out

    Less energy-efficient air-cons to be phased out

    In a bid to cut Singapore’s energy consumption, the National Environment Agency (NEA) will phase out less energy-efficient air-conditioners by September next year.

    Currently, air-conditioning models sold here must have at least one tick on the energy label, which is used to help consumers gauge how energy-efficient a particular electrical appliance is.

    From September next year, however, the Minimum Energy Performance Standards (MEPS) will be raised and all models here will be required to have at least two ticks.

    The electrical appliance will be the first to have the minimum requirement of two ticks, meaning it uses less energy.

    The switch will help a household save $100 annually in energy costs, the agency said, adding that it is giving importers, manufacturers and retailers enough time to clear their existing stocks.

    Products that are on the market or imported before Sept 1 next year will be exempted from regulations for a year, meaning that they can be on sale until September 2017.

    The NEA added that it will review the MEPS from time to time and assess whether standards for household appliances should be raised.

    Introduced in 2008, the Mandatory Energy Labelling Scheme also covers refrigerators and clothes dryers. Under it, the more ticks awarded, the more energy-efficient the product is.

    According to a 2012 NEA study on household energy consumption, air-conditioning accounted for about 37 per cent of total household electricity consumption – the highest among all home appliances.

    The labelling scheme is part of the Government’s bid to reduce its energy consumption and ecological footprint.

    Singapore has pledged to reduce the amount of greenhouse gases emitted for each dollar of gross domestic product by 36 per cent from 2005 levels by 2030.

    Retailers The Straits Times spoke to yesterday said that they generally had no issues about phasing out the less efficient air-conditioners.

    Retailer Gain City, for instance, said that only 3 per cent of its air-conditioners are one tick.

    Furniture and electronics retail giant Courts Singapore said it stopped selling one tick air-conditioners last year.

    While retailers say air-conditioners that are more energy-efficient are likely to cost more, it will not deter some, like housewife Wendy Choo, from buying them.

    “I’ll pay more for energy savings,” said the 57-year-old. “In the long term, you can save a lot in terms of usage cost.”

  • Local PEFs emerge as big players in M&A market

    Local PEFs emerge as big players in M&A market

    Breaking with their traditional role as mutual fund managers or short-term profit seekers, homegrown PEFs have now transformed into strategic investors to spearhead the recent boom of mega-sized M&As. And leading the pack is Seoul-based MBK Partners Ltd.

    Beating global big-name PEFs like KKR & Co. and Affinity Equity Partners, MBK Partners clinched a 7.2 trillion won (US$6.37 billion) deal last month to acquire U.K. retail giant Tesco Plc’s Korean unit Homeplus, South Korea’s second-largest supermarket chain with 8.6 trillion won in sales last year. It is the country’s largest takeover deal in size.

    Last year, Hahn & Co., the second-largest PEF based in South Korea, bought a controlling 70 percent stake in Hanon Systems, formerly Halla Visteon Climate Control Corp., a leading automotive thermal management solutions provider, for about 4 trillion won.

    Taihan Electric Wire Co., South Korea’s second-largest electrical materials manufacturers, was sold to No. 3 IMM Private Equity last month for 300 billion won.

    Local PEFs’ aggressive investments have spiced up the long-slumped local M&A market as they have registered huge returns from leveraged company buyout deals amid a low interest rate trend.

    Many well known brands are owned by PEFs, ranging from Burger King and KFC to NEPA Co., an outdoor apparel manufacturer, and Coway Co., a leading water purifier firm.

    PEF managers offer a series of distinct private equity funds to make investments in various equity securities after raising capital from cash-rich individuals and institutional investors such as public pension plans, insurance companies and foundations.

    South Korea opened the PEF market in 2004 to encourage corporate takeovers and investment to provide capital to venture start-ups.

    According to data compiled by the Financial Supervisory Service (FSS), a total of 51.2 trillion won in assets were under management by 277 PEFs at the end of 2014, compared with 400 billion won tallied in 2004 when two PEFs were floated for the first time in the country.

    They have attracted more than 5 trillion won every year since 2008 and collected 9.8 trillion won in investment last year alone.

    PEFs have started to draw attention from institutional investors, including the National Pension Service, as the South Korean economy has seemingly entered a low-growth cycle and the benchmark KOSPI has moved in a narrow box range since the 2008 global financial crisis.

    Recently, the South Korean government relaxed regulations in a bid to fuel the M&A market by luring PEFs. It has loosened the so-called double reviewing process by the state anti-trust agency and stakeholder filing requirements.

    MBK Partners is in the forefront to explore the PEF-led M&A market.

    Founded by former Carlyle managers in 2005, MBK Partners has grown into one of the biggest Asian buyout funds with about 14 trillion won in assets under management, with a focus on South Korea and other Asian regions.

    It has invested in 23 companies including Coway, cable TV operator C&M Co., NEPA Co. and Homeplus. Its total assets amount to that of Dongbu Group, the 20th largest conglomerate, with 14.6 trillion won.

    Hahn & Co. has assets of 3.3 trillion won with 12 businesses including Hanon Systems, Daehan Cement and Woongjin Foods Co. under management. No. 3 IMM Private Equity operates 100 firms worth 2.8 trillion won in total assets, followed by Mirae Asset Global Investments Co. with 2.2 trillion won and Vogo Investment with 1.9 trillion won.

    “In the beginning, most PEFs were founded by retired government officials and fund managers with a career in global PEFs. They were financial investors, who bought stakes and sold them to lock in profits,” said Kim Kyung-young from the Asset Management Supervision Office at the FSS.

    “Now they are changing into strategic investors, or buyout investors, playing a major role in acquiring large companies and carrying out corporate restructuring.”

    Although such PEFs have successfully made their presence felt in the local M&A market, South Korean investors are wary of such buyout funds as many PEFs have still disappeared from the market due to worse-than-expected profitability in a takeover deal.

    “PEF-led M&As are not always successful,” said Koo Kyung-hoe, a senior analyst at Hyundai Securities Research Center. “About 66 percent of PEFs reach target profit rates, but we have to bear in mind that the rest, 34 percent, end up in vain.”

    For example, MBK Partners, regarded as having the Midas touch in the financial market, took over C&M in 2008 for about 2 trillion won, but its plan to resell the company has been stalled due to a long slump in the cable TV industry.

    He said they have to expand the range of investors as nearly all local PEF clients are institutions like pension funds and financial firms.

    “In advanced countries, PEFs collect money from universities, foundations and even cash-rich individuals,” said Koo. “They need to draw up plans to lure them as they can serve as an effective, appropriate alternative investment tool in the future.”

    Experts also noted that local PEFs have to overcome the negative public perception in South Korea that they clash with labor unions over restructuring after a takeover.

    U.S. Lone Star Funds’ purchase and resale of Korea Exchange Bank has deepened such negative perceptions toward PEFs among South Koreans, according to experts. Lone Star bought KEB in 2003 for 1.38 trillion won and then sold it to Hana Financial Group Inc. in 2012, pocketing a profit of 4.5 trillion won.

     

  • CIMB Thai to target less aggressive loan growth

    CIMB Thai to target less aggressive loan growth

    For the past five years, CIMB Thai Bank has accelerated its loan growth, especially in retail banking, to comply with Malaysia-based CIMB Group’s policy.

    This has been achieved via housing loans in the retail – or individual – segment in order to build up the bank’s customer base, he said.

    The strategy has resulted in a housing-loan portfolio of Bt50 billion to Bt60 billion, against less than Bt10 billion five years ago, giving CIMB Thai Bank a total retail-banking portfolio of nearly Bt100 billion.

    During this period, the bank targeted overall annual loan growth of above 20 per cent, but this was only achieved in 2013, when lending expanded by 23.2 per cent.

    Last year’s loan growth came in at 11 per cent, with growth of just 4.7 per cent being achieved in the first nine months of this year, against a target of 15-20 per cent, said the CEO.

    In terms of asset size, CIMB Thai Bank’s Bt300 billion gives it a ranking of eighth out of the 11 listed banks in Thailand.

    “Singapore-based United Overseas Bank (Thai) has an asset size of Bt350 billion, and they are okay with this size, as well. With the current scale of CIMB Thai Bank, we should not be aggressive and we should keep to [loan] growth of 10 per cent per year,” Subhak said

    “We discussed this with the group in Malaysia and they agreed with our way. The economic slowdown of the past two years [in Thailand] has impacted on retail lending, causing the bank to spend much more time than expected on expanding business to retail clients and resulting in our return on equity being lower than the target of 5 to 6 per cent,” he said.

    CIMB Thai Bank reported a return on equity of 9.58 per cent for 2012, followed by 7.18 per cent for 2013 and 4.44 per cent for last year, while net profit came in at Bt1.58 billion, Bt1.49 billion and Bt988.8 million, respectively.

    For the first nine months of this year, the bank posted net earnings of Bt847 million, down 6 per cent from Bt900 million in the same period last year.

    Subhak said he expected full-year net profit to be similar to or a little higher than last year’s level, because even though it had posted the highest third-quarter percentage growth among its peers, the sum needed to be put aside as additional provisioning, especially during the current economic environment.

    CIMB Thai Bank recorded a year-on-year rise of 81 per cent in third-quarter net profit to Bt498 million.

    However, the Thai unit of CIMB Group hopes to achieve a return on equity of 10-12 per cent in the next three years, by focusing on non-interest income from areas such as investment banking, treasury products, bancassurance and mutual funds, Subhak said.

    While non-interest income at present contributes 30-35 per cent of the bank’s income, it will not overtake interest income as the main contributor despite the planned shift to a lower gear for loan growth in the coming years, he said.

    In the next two to three years, non-interest income should reach 40 per cent, he added.

    CIMB Group is strongly committed to its investment in Thailand, as reflected in its approval of the local bank’s capital increase of Bt3.68 billion via the issuance of new shares, he stressed.

    CIMB Thai Bank will increase its registered capital from Bt10.54 billion to Bt13.7 billion by issuing 6.325 billion new shares.

    The subscription period is October 26-30 and, after the additional funds are mobilised, its capital-adequacy ratio will rise to 15 per cent, from the current 13.7 per cent.

    CIMB Group is happy with the bank’s performance because of the quarterly profit contribution of 8-10 per cent that it makes to the group, he said.

    Furthermore, the Thai unit has a substantial role in strengthening cross-border deals for the Malaysian banking group.

    The bank is one of four institutions mandated as lead arrangers for a syndicated term loan of US$1.25 billion (Bt44.25 billion) to Charoen Pokphand Group, with CIMB Labuan – part of CIMB Group’s Malaysian operations – lending $250 million as part of the deal.

    CIMB Thai Bank, meanwhile, is the onshore security agent for a $400-million loan to Maxtop Management Corp, a TCC Group company.

    CIMB Labuan is the lender and arranger and offshore security agent, while CIMB SG – CIMB Group’s Singaporean arm – provides the bank account for the deal.

  • Tina Tam sets up new Hong Kong company

    Tina Tam sets up new Hong Kong company

    Tina Priscilla Tam has resigned from Burberry, where she was Vice President of Travel Retail Asia, to set up her own company called Paccaya Resources Ltd in Hong Kong, where she is now pursuing new personal opportunities.

    Formerly with Celine, Lancaster, and prior to that some nine years with La Prairie, Tina Tam said she ‘was pleased with her experience at Burberry’.

    Besides her professional career background, Tina Tam is also known for her extensive work with the excellent industry charity organisation, Women in Travel Retail (WiT) where she has worked hard with many other volunteers to promote the membership and subsequently raise lots of funds for good causes.

    Some of these include Hand in Hand for Haiti; seriously handicapped children in villages near Ramnagar in India; the Hong Kong-based NGO ‘A Drop of Life’, raising funds to get clean water to remote communities in Northern China; and transport facilities for children in Sierra Leone.

  • Thailand sweeps energy awards

    Thailand sweeps energy awards

    Thailand was the big winner at the Asean Energy Awards, reflecting growing awareness on energy efficiency.

    The awards were presented as part of the 33rd Asean Energy Ministers Meeting in Kuala Lumpur. Thailand submitted 30 projects for the 64 available awards and 26 of them won, said Energy Minister General Anantaporn Kanjanarat after returning from the meeting.

    The projects were selected through a national-level competition called the Thailand Energy Awards, which encouraged private companies to embark on energy-efficiency programmes.

    Of the 26 winning projects, one from Tip Sukhothai Bio Energy Co, a sugar manufacturer, was the most outstanding. The project, requiring an investment of Bt1.6 billion, uses molasses to generate electricity and steam and more than 90 per cent of the output is sold.

    Indorama Ventures issues overseas bond

    Indorama Ventures has successfully issued its first overseas senior unsecured bond to the amount of $195 million Singapore dollar (Bt4.95 billion) to institutional investors in Singapore through its wholly-owned subsidiary, IVL Singapore, according to its filing to the Stock Exchange of Thailand yesterday.

    The Bond has been rated AA (Stable) by Standard and Poor’s and has a tenor of 10 years with an interest rate of 3.73 per cent per annum. It is guaranteed by Credit Guarantee & Investment Facility (CGIF), a trust fund of the Asian Development Bank and listed on the SGX-ST. The proceeds from this issuance will be used for working capital and general corporate purposes within the group.

    Latest partner

    TMB Bank has added Manulife Asset Management as latest partners in helping strengthen its “TMB Open Architecture” mutual funds offerings.

    TMB Open Architecture allows all of TMB’s customers to invest in funds from different asset management firms, offering wider investment choices with the benefit of potentially higher returns from more quality funds. The bank expects Assets Under Management this year to rise by 30 per cent from the year before, said Marie Ramlie, TMB Bank’s Head of Retail Products.

    TMB is the only commercial Thai bank that offers Open Architecture service to all of its customers. This service responds to customer needs, simplifying their life, as quality mutual funds from leading asset management firms are centralised at one single-service point exclusively for TMB customers.

    The project has received an overwhelming response since its launch in the middle of 2014 with the number of mutual funds unit-holders rising by close to 20 per cent to 220,000.

    MPC gains new member

    Apichai Boontherawara was appointed to the Monetary Policy Committee at a special Bank of Thailand meeting on Monday, the BOT announced.

    He resigned as vice chairman of the executive board of Southeast Insurance and Finance Group and as director of the Export-Import Bank of Thailand in order to accept the MPC post.

    The appointment came into effect yesterday. Apichai replaces Veerathai Santiprabhob, who resigned from the MPC on October 1 taking over as governor of the central bank.

  • Philippines ranked among most vulnerable to retail systems hacking

    Philippines ranked among most vulnerable to retail systems hacking

    The Philippines ranked among the countries in the region most vulnerable to hackers who target electronic retail systems, cybersecurity company Trend Micro’s Philippine unit said on Wednesday in a media briefing.

    Point-of-sale (POS) system malware incidents, affecting purchases made through a credit card or a debit card, are among the most prevalent cyber crimes in the Philippines.

    In the Asia-Pacific, the Philippines had the fifth highest rate of POS attacks at 6% while the United States topped the list at 31%. Countries in second to fourth place were Australia (10%), Taiwan (9%), and Brazil (8%).

    The study covers the first half of 2015.

    POS systems are becoming increasingly available to even small to medium enterprises due to the influx of card-swiping devices employing cheap hardware, it sad.

    “It’s not just the cards, but the system server where the data is stored or the gadget being used to swipe the card is also vulnerable,” said Myla V. Pilao, Trend Micro Philippines’ Director of Marketing Communications said.

    Meanwhile, online banking was also an area of concern, as the Philippines had the fourth highest number of attacks in the region. There were over one million malware detections in the Philippines for the third quarter alone, Trend Micro said.

    As Filipinos become more accustomed to make their purchases through e-commerce, Trend Micro noted that local banks still do not use the most modern security practices for their credit and debit cards.

    Financial institutions in the Philippines still do not employ EMV cards that come with embedded chips as an added security feature to the personal identification number.

    “Anything that is connected to the Internet, we have to assume that it is a target,” said Ms. Pilao.

    “It would take us years to put up regulation (against cybersecurity threats), that is the biggest hurdle. We also need capacity building. Our law enforcement, they are used to investigating crimes on the street but to get them to investigate online won’t be easy because it’s not their habit,” she said.

    The country’s e-commerce law, which Ms. Pilao pointed out, is outdated based on what is happening in real world attacks. — Nicolo Paolo A. Pascual

  • Bank of Tokyo Mitsubishi UFJ gets ready for Myanmar’s new RTGS system

    Bank of Tokyo Mitsubishi UFJ gets ready for Myanmar’s new RTGS system

    Bank of Tokyo Mitsubishi UFJ (BTMU) is preparing its systems in Myanmar for the launch of Central Bank’s (CBM) real-time gross settlement (RTGS) system.

    Launch is set for the end of 2015 and the development forms part of Myanmar’s move to modernisation. CBM also has the backing of the Japan International Cooperation Agency and the World Bank.

    CBM is assisting local banks and foreign banks’ branch offices in preparation of the new system, which will allow the immediate settlement of large domestic interbank payments.

    In an interview with The Myanmar Times, Go Watanabe, CEO of Asian and Oceania region, BTMU, says it has seconded staff to the project development team; and it is ‘now able to provide basic financial services including foreign exchange and derivatives trading, and is preparing to launch a more comprehensive suite of trade finance solutions’.

    Watanabe says he expects CBM to ‘review regulations governing foreign exchange, which will lead to greater efficiency for cross-border transactions and international settlement’.

    The Japanese bank was the first of nine foreign banks to open its branch office in the capital Yangon in April this year, becoming the first international lender to begin operations in the country for more than 50 years.

    There will be the inevitable competition, but Watanabe expresses a desire for collaboration.

    ‘Given Myanmar’s banking industry is still in its infancy, it would make sense for the foreign banks to pull our knowledge and expertise together to develop the necessary banking and finance related infrastructure to help move it to the next level,’ he says.

    The Myanmar Times says: ‘BTMU is one of three Japanese banks permitted to offer banking services in Myanmar, and opened its Yangon branch with initial capital of $100 million. BTMU provides services including deposits, loans and foreign exchange to foreign companies and domestic banks.

    ‘Under existing regulations, foreign banks in Myanmar can only deal directly with foreign companies, local-foreign joint ventures, and Myanmar’s domestic banks. They do not yet have access to local retail or corporate clients.’

    Watanabe says, in addition to working with global corporates, BTMU plans to use its majority stake in Thailand’s Bank of Ayudhya PCL – known in Thailand as Krungsri – by ‘tapping its Thai SME segment to further attract investors into Myanmar’.

    In both Thailand and Japan, he says, many companies are looking to diversify their investments, and could potentially begin investing in Myanmar.

    The bank will also use its partnership with Co-operative Bank (CB Bank), based in Myanmar, especially in the area of transaction banking, he says. BTMU signed an agreement with CB Bank back in 2013, to act as a technical adviser.

    Watanabe says the two banks have a joint committee of senior management executives, which aims to encourage knowledge and relationship sharing.

  • Hong Kong Property Prices Expected to Fall by 2016

    Hong Kong Property Prices Expected to Fall by 2016

    Despite being the city with the 3rd most expensive real estate prices in the world and home prices hitting a record high earlier this year, Hong Kong property prices are expected to begin to drop in 2016, according to experts and analysts in the city’s residential property sector.

    With an average price at $22,814 per square meter, property values in Hong Kong have long been ranked third in the world and have been considered to be extremely pricey. One of the main leading reasons for the high prices and the constant increase in value was the limited space in the financial hub of Asia.

    Home values have been on a constant rise as proven by the 340% increase since 2003. The relentless rise in real estate prices has, in fact, renewed concerns that the government may impose more property tightening measures to puncture the trend. Example of such a measure would be stricter mortgage restrictions or higher taxes on foreign purchases.

    However, this trend seems to be changing. Both JPMorgan Chase and the global lender UBS disclosed recently that home prices in Hong Kong could be on the fall until the end of 2017 as buying demand is hurt by an economic slowdown in China and Hong Kong, rising unemployment rates, and a lower inflation rate.

    The Future of Hong Kong Property Prices?

    According to Cusson Leung, the head of Hong Kong research, conglomerates and property for JPMorgan, there is a high chance that residential prices will start falling by 5% to 10% per year starting in 2016.

    Despite the expected fall in residential housing prices starting next year, real estate prices are still expected to rise for the rest of 2015. With the new homes and existing housing expected to be 5% and 10% more expensive respectively, property values for this year will still be relatively expensive.

    Eva Lee, executive director and head of Hong Kong/China Property Research at UBS, was of the same opinion. In a briefing the earlier week, she mentioned that the upcoming cycle that will lead to the fall of Hong Kong property values will be different from previous ones, This is because it will not be triggered by global economic shocks, but rather the deteriorating local economy.

    Cusson Leung pointed out that the shrinking retail market in Hong Kong, mainly driven by the closure of many luxury brand stores, was one of the main factors in driving down the property sales. The other factors were rising unemployment, shaken investors’ confidence over concerns that China’s growth is slowing, and that the global markets may suffer from a planned in the interest rate hike in the United States.

    According to Leung, “Pressure on the economy is the biggest concern here instead of an interest rate hike.”

    Alfred Lau, a property analyst from Bocom International predicted the potential fall in prices from looking at real estate prices relative to property stocks. Lau said that Hong Kong home prices are now the highest compared to property developer stocks in almost two decades.

    “It is a sign that the property market will drop as much as 20 per cent in the last quarter this year,” he said.

    There were other signs telling the same story.

    In August, Hong Kong’s private-sector economy saw its sharpest contraction ever since 2009. This is a distress signal for the economic health of Asia’s financial capital.

    Weakest home sales in 17 months were also reported after a month-long stock rout that originated in China hurt market sentiment among buyers and investors. Comparing year to year data, the sales this year have been down by a third in terms of units sold.

    In regards to the shrinking retail market, it was found that 42% of the sales came from tourists. This is the highest proportion in the world and Hong Kong real estate values will suffer even more once the tourist arrivals fall and hit the retail market.

     

  • Sinomax Invests in Dormeo NA

    Sinomax Invests in Dormeo NA

    Sinomax Group Limited (“Sinomax,” together with its subsidiaries, the “Group”) (stock code: 1418), a leading marketer, manufacturer and distributor of quality visco-elastic (“memory foam”) pillows, mattress toppers and mattresses in the United States (the “U.S.”), Hong Kong and the PRC, is pleased to announce that Sinomax USA, a wholly-owned subsidiary of the Group, has invested in Dormeo North America, LLC (“Dormeo NA”), a mattress company in the U.S..

    This strategic move marks significant progress in enriching Sinomax’s brand recognition and broadening the sales network in the North America memory foam market. Upon completion of the investment, Dormeo NA plans to expand the manufacturing facility at Winchester, VA, tripling the production capacity within two months. In view of the growing demand for “made in U.S.A.” products in the U.S. market, the investment in Dormeo NA effectively creates a new production line for Sinomax in the country to better serve customers’ needs and further enhancing the Group’s vertically-integrated business model and cost efficiency.

    As part of the transaction, Mr. Frank Chen, President and Chief Executive Officer of Sinomax USA and Mr. Kelvin Lam, Chief Financial Officer of Sinomax will become members of the Board of Dormeo NA.

    Mr. Jon Stowe, Chief Executive Officer of Dormeo NA, said, “Sinomax’s strong financial commitment to Dormeo NA, in conjunction with their vast global supply chain, infrastructure and resources will provide us with significant advantages in advancing our market penetration, brand awareness and supply chain efficiencies. This transaction marks a very important step in significantly boosting commercial opportunities for Dormeo NA.”

    Mr. Frankie Lam, Chairman of Sinomax, said, “We are pleased to strategically strengthen Sinomax’s leadership position in the U.S. memory foam market. The investment in Dormeo NA would definitely create powerful synergies with Sinomax in terms of customer base and product portfolio, as well as broaden our sales distribution network. It presents a huge opportunity for Sinomax to further increase its market share in the U.S. Going forward, we are continuing to explore possible strategic business opportunities in line with the Group’s business vision to bolster its presence in different geographical markets which in turn would fuel sustainable growth.”

  • Esprit Q1 turnover slips 15 per cent to HK $4.7 billion

    Esprit Q1 turnover slips 15 per cent to HK $4.7 billion

    Clothing retailer Esprit Holdings Ltd reported a 14.9 percent slide in first-quarter turnover on Monday as sales in Europe lagged and it cut its store footprint.

    Turnover in Hong Kong dollar terms fell to HK$4.7 billion in the three months ended Sept. 30, while the company cut its total controlled floor space by 7.6 percent.

    Turnover in Germany, which is the company’s biggest market and accounts for nearly half of its business, fell 15.5 percent. Turnover in the rest Europe – its second biggest market – fell 15.4 percent.

    In local currency terms, turnover fell 0.4 percent.

    The majority of the floor space reduction was in Esprit’s wholesale business. Retail floor space was reduced by just 1.3 percent and comp store sales growth was 10.8 percent.

    Esprit shares closed up 3.54 percent at HK$6.72 on the Hong Kong Stock Exchange earlier in the day.

  • Pororo Park Singapore to open November

    Pororo Park Singapore to open November

    Pororo Park Singapore will open at Marina Square next month, the first for the animated penguin in Southeast Asia.

    Pororo is South Korea’s most popular cartoon character. The award-winning animation is broadcasted over 130 countries, including Disney Junior Channel and Okto Channel in Singapore. It’s dubbed ‘President of Kids’ with over 6.8 billion views on its YouTube channel.

    The new venue will open in Singapore on November 11, a collaboration between Iconix and DreamUs Edutainment. It is the first Pororo Park in Southeast Asia and the first outside South Korea and China.

    Pororo Express

    Located in Marina Square’s new retail wing, the 1000 sqm indoor edutainment playground will integrate a theme ride, indoor playground attractions, retail store, cafe, educational classes and entertaining shows under one roof.

    Pororo Park Singapore is themed around the animated series that follows the adventurous Pororo and friends, who often encounter challenges and learn practical and moral lessons through their exciting adventures in Porong Porong Forest.

    The venue includes Loopy’s Café and Rody’s Toy Store. The 60-seater Loopy’s Café serves food for both adults and children, with a view of the Marina Bay skyline.

    Pororo Park Singapore seats

    Visitors can get their retail therapy and purchase their favourite original character-themed souvenirs from Rody’s Toy Store. The store will house a variety of items ranging from toys, stationery to kid apparels and other souvenir items.

    Kim Jiwon, CEO of DreamUs Edutainment says Pororo Park Singapore aims to be the premier indoor playground in Singapore with top-quality attractions, well-loved characters and a unique mix of education and entertainment elements.

    “Modern busy parents will now have a one-stop location to entertain and educate their energetic, inquisitive young children.”

  • Sa Sa profit set to plunge

    Sa Sa profit set to plunge

    Beauty products retailer Sa Sa International has warned its half year profits will plunge by 50 per cent.

    A Sa Sa profit warning filed with the Hong Kong Stock Exchange said preliminary analysis of accounts for the six months to September 30 pointed to a record decline in profit for the group.

    It blamed “the worsening operating environment of the retail sector which has led to significant drops in both sales and gross profit and reduced operational efficiency as a result”.

    In the second quarter, to September 30, Sa Sa has reported a 12.4 per cent fall in retail and wholesale turnover.

    “Turnover in Hong Kong and Macau markets declined by 13.2 per cent, while same store sales decreased by 10.1 per cent. The number of transactions decreased by 5.7 per cent, while the average sales per transaction decreased by 7.9 per cent.

    “The group’s retail and wholesale turnover in other markets (including Mainland China, Singapore, Malaysia, Taiwan and sasa.com) recorded a drop of 8.9 per cent during this period.”

    Sa Sa said overall consumer sentiment and Mainland Chinese arrivals “continued to be adversely affected by a number of factors with no significant signs of improvement”.

    “The strength of the Hong Kong dollar and the weaker yuan adversely affected the attractiveness of shopping in Hong Kong for both local consumers and Mainland Chinese visitors. Furthermore, the impact of “one-trip-per-week” policy has gradually gained momentum, leading to a decline of 13.1 per cent and 10.1 per cent in the group’s retail sales and same store sales in Hong Kong and Macau markets during the second quarter respectively.

    “The number of transactions of Mainland Chinese customers decreased by 4.1 per cent, while their average sales per transaction decreased by 12.5 per cent on a year-on-year basis, dragging down the overall performance.”

    Sa Sa says it will work on optimising product offerings and enhancing its customers’ shopping experiences to strengthen its position.

    The company says it will release final results for the half before November 30.

  • VeganBurg relocates to US

    VeganBurg relocates to US

    Singapore-born vegetarian burger chain VeganBurg has shifted its head office to San Francisco as it prepares to launch its concept in the US market.

    The five year old company has retained its original store in Singapore – at 44 Jalan Eunos – along with its home delivery and event catering services.

    But now its main focus is on the US where it has established a new office in San Francisco and has its first restaurant under construction at 1466 Haight St.

    “Our goal is to have a successfully running restaurant in San Francisco,” says Cynthia Riddell, VeganBurg’s head of marketing.

    “San Francisco is our new home with our headquarters here, too. Customers and fans across the nation, something like 18 states, and globally, continually request us, which is really exciting news,” Riddell said in an interview with Vegan News.

    The founders and management of VeganBurg consider San Francisco as a “natural market” for its innovative gourmet (and meatless) burgers, or sandwiches’ as they will no doubt be known in the US.

    “Who we are fits so naturally in this city. VeganBurg is an innovative 100 per cent plant-based fast casual restaurant serving tasty vegan burgers with a fresh attitude. We love San Francisco, especially for its value of sustainably sourced produce and historical commitment to love, peace, and equality. There’s no better place to launch the new generation of the plant-based lifestyle.”

    The new US outlet has been opened on November 1.