Category: General

Retail News Asia is committed to providing both local and global retailers with the latest General Retail news throughout the Asian market. This on a daily base.

  • Jakarta Great Sale Casts Its Net Beyond Indonesia

    Jakarta Great Sale Casts Its Net Beyond Indonesia

    Last month, Jakarta celebrated its 488th anniversary. The capital, which was established by Indonesian national hero, Fatahillah, in 1527, is definitely getting old. But despite being home to more than 10 million people, the city never slows down.

    New high-rises pop up on every corner of the city. And each of them outdoes the previous in size and grandeur. Major developments are currently underway, promising that the city is on track to become one of the most glam and sophisticated in Southeast Asia.

    To celebrate its birthday, the city’s modern landmarks and shopping malls again present the Festival Jakarta Great Sale (FJGS). FJGS has been held annually since 2008.

    “FJGS has always been an important highlight of the city,” said Ellen Hidayat, chairwoman of the executive committee of FJGS 2015. “And it’s going to be much bigger and better this year.”

    This year, the event is organized by Association of Shopping Mall Management in Indonesia (APPBI), in collaboration with 12 other shopping and tourism-related associations in the country.

    Until mid-July this year, 78 malls in Jakarta will offer discounts on their merchandise by up to 70 percent.

    The event is also supported by Jakarta’s Tourism Office and featured in its official calendar of events.

    “Our office fully supports FJGS,” said Purba Hutapea, chief of Jakarta’s Tourism Office. “We hope to attract more local and international tourists with the event.”

    Jakarta is targeted to attract three million tourists this year — a 25 percent increase on tourist arrivals last year, which were about 2.4 million.

    “And FJGS is indeed a great way to attract more visitors to the city,” said Purba.

    Among the top five international tourists visiting Jakarta are Malaysians, Chinese, Singaporeans, Japanese and South Koreans. And their main reason of visit is to go shopping.

    “Malaysians love our Muslim attire, as they have very good quality at affordable prices,” said the chief of the tourism office.

    Besides Malaysians, according to Purba, the Chinese, Japanese and South Koreans are currently eyeing our fashion products.

    FJGS is also targeting Indonesian shoppers.

    “Indonesians have a habit of going to Singapore for shopping, as Singapore usually offers more products of international brands at cheaper prices,” said Ellen Hidayat. “But it’s a different story this year.”

    Ellen and her team have recently surveyed the malls in Singapore during the currently ongoing The Great Singapore Sale.

    “With today’s foreign exchange rate [between the Singaporean dollar and the rupiah], the prices of the branded products in Jakarta are actually a lot cheaper,” said Ellen. “So, this year, we hope that the locals will choose to shop in Jakarta instead of going to Singapore.”

    Ellen believes that FJGS and a series of fun activities organized in the malls during the event will see an increase in visitors by 30-40 percent to the city’s malls.

    The executive committee of FJGS 2015 hopes to achieve a total transactions of Rp 14.3 trillion this year, or about a 10 percent increase from last year’s transactions of Rp 13 trillion.

    It seems a high aim during Indonesia’s current economic slow-down, but the chief of Jakarta’s economic bureau, Adi Ariantara, remains optimistic.

    “FJGS, which is held during the school holiday season, as well as the fasting month, will surely encourage people to spend more,” said Adi. “And hopefully, it will also instigate positive economic growth for us.”

    A series of attractive events have been prepared to draw more visitors to the malls during FJGS 2015.

    One of them is Jakarta’s iconic Midnight Shopping events. During FJGS this year, a total of 19 shopping malls will take turns to hold ‘Midnight Shopping’ on weekends.

    “It’s one of the most awaited events during FJGS, as the malls will usually offer a series of entertainment, as well as special prizes for shoppers,” said Ellen.

    This year, Jakarta’s shopping malls also open their doors to traditional craftsmen and small-to-medium enterprises (SMEs) belonging to the National Handicraft Council (Dekranasda) of Jakarta.

    During FJGS 2015, these craftsmen and SMEs are allowed to offer their products at stalls dedicated to them along the corridors of the malls.

    This year, BayWalk Mall, Puri Indah Mall and Grand Indonesia Shopping Town will host these craftsmen and SMEs.

    “In the future, Dekranasda will work together with all shopping malls in Jakarta and encourage them to dedicate a special section within their malls for the craftsmen and SMEs in their regions,” said Veronica Basuki Tjahaja Purnama, chairwoman of Dekranasda Jakarta.

    But the excitement of FJGS 2015 is not only felt within the glitzy malls and shopping centers of Jakarta.

    For the first time ever, the event will also be held in traditional wet markets in Jakarta.

    “We want every layer of the community to feel the excitement of FJGS,” said Djangga Lubis, director of PD Pasar Jaya, government-owned company that manages traditional wet markets in Jakarta.

    There are currently 153 traditional wet markets in Jakarta. But only 10 are featured in FJGS this year.

    “These 10 markets are those that are most ready, in terms of cleanliness and comfort, to present the ‘Pasar Murah’ (Affordable Market) bazaars during FJGS this year,” said Djangga. “And these 10 markets also represent Jakarta’s five main regions.

    Among the 10 wet markets are Pasar Santa in South Jakarta, Pasar Gembrong in Central Jakarta, Pasar Pos Pengumben in West Jakarta, Pasar Cibubur in East Jakarta and Pasar Koja Baru in North Jakarta.

    During FJGS 2015, these traditional wet markets will take turns to present ‘Pasar Murah’ on weekends.

    The items offered during Pasar Murah are staple food items, including rice, eggs and meat. These items will be offered discounts of about 20 percent.

    It seems that FJGS is indeed getting more solid this year. Unfortunately, the growth of shopping destinations has yet to be supported by proper infrastructure development that could further push the city to become a destination that is on par with neighboring countries such as Singapore.

    Recognizing this issues, Jakarta Governor Basuki Tjahaja Purnama ensured during the opening night of FJGS 2015 that projects are underway.

    “We’ve just designed seven routes for the Light Rapid Transportation (LRT), which will connect major shopping centers and hotels in Jakarta,” said Basuki. “We’re also buying a lot of new buses for Jakarta as we plan to provide 24-hour bus transportation in the capital,” said Basuki.

    Ahok also plans to develop 12 new traditional markets in Jakarta to accommodate street-side peddlers.

    “On top of these traditional markets, we’ll also build apartments for rent at affordable prices for the peddlers,” he said.

    With these plans, Jakarta promises to be a much nicer city to visit and live in.

    “We’re planning to save Rp 10-15 trillion from corruption each year and use the money to build more infrastructure, parks and public facilities for Jakarta,” said the governor.

    “Once they are in place, we can confidently announce that Jakarta is a shopping paradise to the whole world,” said Basuki.

  • Fast Retailing, Seven & I mull partnership

    Fast Retailing, Seven & I mull partnership

    Two of Japan’s largest retail businesses are eyeing a “comprehensive business alliance” according to Japanese news reports.

    A strategic relationship currently under discussion could see a range of mutually beneficial co-operations spanning physical stores and eCommerce.

    Details are still sketchy, but according to news reports, Fast Retailing, the parent of Uniqlo, could work with Seven & I, parent of 7-Eleven convenience stores and the Ito-Yokado supermarket chain, on areas including product design, house brands, marketing and distribution.

    Uniqlo may use 7-Eleven stores as collection points for online purchases.

    The two companies may also launch a joint venture clothing brand outside the Uniqlo network.

    To date, that’s as much information as has leaked out.

  • 7-Eleven Vietnam plans 1000 stores

    7-Eleven Vietnam plans 1000 stores

    The world’s largest convenience store operator has confirmed the signing of a master franchisee in Vietnam and now plans 1000 stores over the next decade.

    7-Eleven Vietnam will be a partnership between the Japanese-headquartered US subsidiary and a new venture called Seven System Vietnam Co. While the US announcement did not identify the parties behind Seven System, Japan’s Nikkei news agency identified the partner as IFB Vietnam, which owns the Pizza Hut franchise in Vietnam.

    Nikkei says the first store will open in the nation’s commercial hub, Ho Chi Minh City, with a target of 100 stores within the first three years and 1000 within 10.

    7-Eleven has 56,400 stores globally and Vietnam will mark its 18th international market.

    Japan’s Seven & I Holdings has openly been assessing a Vietnam entry for some years. The convenience store sector is still at an early development stage with Circle K and FamilyMart the early entrants and Thailand’s B-smart, part of the Berlei Jucker Group, playing a cameo role.

    Given the booming convenience store market in other Southeast Asian countries, especially Thailand, the Philippines, Indonesia and Malaysia, 7-Eleven’s superior logistics, product mix, marketing and location selection should see it assume market leadership there well within the first 10 year window.

    7-Eleven’s US statement says, somewhat enigmatically, the new Vietnam business will “construct 7-Eleven stores [and] convert existing locations to the 7-Eleven brand” without disclosing which brand is to be swallowed up.

    While the initial stores will be company-owned, the company says it will eventually franchise stores to local entrepreneurs.

    “7-Eleven’s entry into the country aims to enhance the convenience-shopping experience for Vietnamese customers and contribute to modernizing small retailers in the world’s 13th most populous country.”

    7-Eleven US and its parent company, Seven-Eleven Japan, will provide start-up support for its newest master franchisee by assisting Seven System Vietnam in implementing 7-Eleven’s strategies of market concentration, team merchandising and item by item management. Vietnam marks 7-Eleven’s first new market in the Pacific Rim since it entered Indonesia in 2009.

    It already operates in the US, Canada, Mexico, Japan, Thailand, South Korea, Taiwan, China, The Philippines, Australia, Singapore, Malaysia, Indonesia, Norway, Sweden, Denmark and the UAE, where the first 7-Eleven store will open in the third quarter of this year.

  • Laucala Island welcomes a new managing director

    Laucala Island welcomes a new managing director

    Laucala Island, the luxurious private island resort located in the Fijian Pacific archipelago, is pleased to announce the appointment of Christoph G. Ganster as its new Managing Director commencing July 2015. Austrian born and veteran of the luxury hospitality industry, Ganster has more than 23 years of experience as an international hotelier, most recently serving the last 11 years with FRHI Hotels & Resorts.

    “It is an extreme pleasure and honor having been entrusted to manage one of the world’s most prestigious private islands. The philosophy of the owner to establish the ultimate in luxury and privacy, combined with the holistic approach of self-sustainability, make this one of the most unique destinations. All of us are fully committed to provide true Fijian hospitality and create beautiful moments that last for eternity” said Ganster.

    “Ganster has a body of knowledge and depth of experience in the luxury industry that he will share with the island and in turn will further enhance guest experience. We are delighted to have the opportunity to work with such a consummate professional and leader in the industry.” stated Laucala Island owner Dietrich Mateschitz.

    Previously, Ganster was General Manager in Seychelles, Ukraine and Egypt with Raffles Hotels & Resorts as well as Fairmont Hotels & Resorts. Prior to that he worked in various senior management positions in United Arab Emirates, Caribbean, Maldives, Mauritius, Switzerland, USA and Germany. Most recently he was based in Seychelles as General Manager of Raffles Praslin. In addition to his role he was a Member of the Board of the Seychelles Hospitality & Tourism Academy as well as the Seychelles Tourism Board, the Government Body, promoting Seychelles. Ganster graduated from the School of Tourism & Hotel Management Schloss Klessheim, Salzburg, Austria.

    About Laucala Island

    Set in 3,500 exclusive acres on its own 12 sq km island in the Fiji archipelago in the South Pacific, Laucala Island brings a new meaning to the term “all-inclusive resort”.

    This private island paradise, accessible by its own airport has just 25 luxurious villas, each individually designed with an eye to traditional Fijian style and all with private pools, which are set amidst the swaying palms of coconut plantations, powdery white sand beaches, turquoise lagoons, lush green mountains and breathtaking natural beauty.  

    True luxury comes in the complete privacy of the villas and in the freedom to enjoy an outstanding range of sports and leisure activities with spontaneity, from a round of golf on the island’s 18-hole 72-par championship course, to water sports and beachside horseback riding.

    Laucala Island features 5 exclusive restaurants and bars overseen by top international chefs and offers a superb choice of Western, Asian and local cuisines, complemented by an impressive cellar of fine wines.  

    With over 385 staff, the highest staff-to-guest ratio in the world, as well as on-island professionals such as a PGA Golf Professional from New Zealand, a spa manager from Thailand, diving and fishing experts, and a Super Falcon Hydrobatic Craft, there is no other private island in the world which offers such a range of leisure facilities.  

    In its mission to offer a sublime tropical experience, Laucala Island prides itself on a philosophy which brings elements of the island into each guest experience, through produce which is raised and grown organically on the island.

  • Strong Vietnam retail sales growth

    Strong Vietnam retail sales growth

    Vietnam retail sales growth reach 8.3 per cent in the first half of this year, according to government data.

    In the first seven months of this year, the private sector accounted for 85.6 per cent of total retail sales, earning $73.4 billion or a year-on-year increase of 9.5 per cent, according to the Vietnam News Service..

    Vu Manh Ha of the General Statistics Office, says the nation’s retail sales stabilised during the first quarter. Sales rose eight per cent in the first four months, 8.2 per cent in the first five months and 8.3 in the first six.

    He attributed the stabilisation in the growth rate to a low increase in the Consumer Price Index.

    Total retail sales reached US$85.8 billion.

  • Indonesia’s Bank Mandiri partners ASCO, Tunas for multifinance biz JV

    Indonesia’s Bank Mandiri partners ASCO, Tunas for multifinance biz JV

    PT Bank Mandiri Tbk (BMRI), the largest bank by assets in Indonesia, is planning to tap the growing automotive credit market through a joint venture (JV) with a multifinance firm PT Mandiri Utama Finance (MUF).

    The bank plans to collaborate with automotive distribution company ASCO Automotive and Tunas Group for establishing the JV company. In the new JV, Bank Mandiri will hold 51 per cent, while US ASCO will hold 37 per cent stake and Tunas Group 12 per cent.

    MUF expects the new JV firm to begin operations in September.

    MUF was established in January 2015 as a leasing sub unit of Bank Mandiri, which has 10 subsidiaries, including Syariah lender PT Bank Syariah Mandiri (BSM), securities firm PT Mandiri Sekuritas and life insurer firm PT AXA Mandiri Financial Services.

    Hery Gunadi, Consumer Banking Director for the bank told that Bank Mandiri intends to capture market share of 30 per cent by 2018. Currently, the bank has around 10 per cent market share in the multi finance sector.

    MUF plans to open between five and eight branches (Jakarta, Bandung and Surabaya) in the second half of this year.

    Meanwhile, Mandiri Tunas Finance will provide financing for car, heavy equipment and motorcycles, while Mandiri Utama Finance will focus on new and used car and motorcycle financing, said Gunadi.

    President Director and CEO Group of Bank Mandiri, Budi Gunadi Sadikin added that the potential market for automotive credit could reach Rp200 trillion ($14.93 billion) this year with estimated car sales around 1 million units and motorcycle 8 million units.

    “There are a lot of multifinance firms that are encountering funding difficulties. This creates opportunities for us to enter (the financing) business. At present, income contribution from multifinance business, on average grows, by around 31 per cent per annum; and it is the third largest income contribution from subsidiaries after AXA Mandiri and Bank Syariah Mandiri,” he said.

    ASCO Automotive and Tunas Group are among largest automotive distributors in the country. ASCO Automotive, previously called Adira Mobil, was jointly established by former CEO of PT Astra International Tbk (ASII) Teddy P Rahmat and former CEO of financing firm PT Adira Finance TbkStanley Setia Atmadja in 1989.

    Tunas Group was established by businessman Anton Setiawan in early 1970s. In 1980, he establishedPT Tunas Ridean Tbk (TURI) as holding company of Tunas Group and listed the firm in 1995. In 2009, Bank Mandiri acquired 51 per cent shares of PT Tunas Financindo Sarana, a subsidiary of Tunas Group and later changed the company’s name to PT Mandiri Tunas Finance (MTF).

  • Dairy Farm Indonesia reviews struggling Starmart

    Dairy Farm Indonesia reviews struggling Starmart

    Dairy Farm Indonesia is reviewing the future of its Starmart convenience store chain after closing nearly a third of its stores in the latest half year.

    The chain has been hit hard by the Indonesian government’s moves to limit the sale of alcohol, banning liquor sales in c-stores in April.

    Since then, Hong Kong headquartered Dairy Farm Indonesia subsidiary PT Hero Supermarket group has closed 39 stores leaving just 95.

    “A detailed strategic review of this business is currently being undertaken,” the company said in its earnings statement released Tuesday.

    The company said the closures would improve the profitability of the banner, but its prospects do not appear bright.

    PT Hero operates 641 stores in all, including 53 Giant Ekstra hypermarkets, 155 Hero Supermarkets and Giant Ekspres stores, 337 Guardian health and beauty stores and one Ikea.

    Overall, the group experienced a 15 per cent increase in revenue in the first half year, with gross profit up nine per cent, but it still posted a net loss of Rp 32 billion (HK$18.4 million).

    Food and health & beauty sales, showed strong like for like growth in the half year, despite a soft trading environment, and Ikea showed “very promising” early trading figures, the company said.

    “Despite the sales momentum, profitability was negatively impacted by outpacing costs resulting from minimum wage increases, stocktake improvements and store rationalisations. Strong actions on energy saving and productivity are being taken to mitigate the impact of increasing costs. In Food, investment in price has led to a reduction in the gross profit margin.”Besides the Starmart closures, PT Hero shuttered another 24 stores across its brands.

    Stephane Deutsch, president director, said in food, the company was concentrating on increasing fresh produce sales.

    “This has helped to increase like for like sales, especially in Giant where progress is being made on growing its market share. Action is also being taken to improve the efficiency of the supply chain.”

    The hypermarket operation, Giant Ekstra, and the supermarket operation, Giant Ekspres, are both taking steps to improve the customer shopping experience in selected stores prior to rolling out the initiative more broadly across the country, he said.

    “The upscale format, Hero Supermarket, is continuing to enhance its offer across the fresh, imported and exclusive ranges to provide a more distinctive choice for customers.”

    In Health and Beauty, Guardian’s store expansion program is “progressing well” alongside the introduction of refreshed branding and increasing private label development, leading to further improvements in like for like sales.

    “The strategic partnership with the local pharmacy operator Apotik Melawai, which combines their local pharmacy strengths with the broader health and beauty offering of Guardian, is showing encouraging results.”

  • Japan retail sales growth slows

    Japan retail sales growth slows

    Japan retail sales grew 0.9 per cent in June – ahead of expectations but much slower than May’s three per cent.

    Analysts had been tipping a rise of just 0.5 per cent after the relatively strong May growth.

    Government data showed rising fuel prices could have unduly affected the figures in the first half of the year – fuel accounts for about eight per cent of total retail sales, and fuel prices have risen by about six per cent since January.

    Capital Economics, in a research note, warned not to pay too much attention to retail sales data as a measure of consumer sentiment.

    “We would instead pay more attention to core household spending, due on Friday. This measure of consumer expenditure has done a good job lately in explaining moves in the Cabinet Office’s synthetic consumption expenditure, the monthly equivalent of private consumption as measured in the national accounts.”

    A Reuters survey of economists projects a 1.7 per cent growth in household spending year on year in June – far lower than the 4.8 per cent of May.

    Nevertheless, May’s retail spending increase marks the third month in a row of growth after mixed results for a year.

    In March, retail sales fell nine per cent, although that was largely due to an irregular March 2014 when consumers brought forward spending prior to a sales tax increase on April 1.

  • Bridgewater Clarifies China View After Client Document Leaks

    Bridgewater Clarifies China View After Client Document Leaks

    “While the report to Bridgewater clients is a private communication which they want to continue to try to keep private, Ray Dalio and Bridgewater believe that too much has been made of the shift in their thinking and want to clarify their thinking,” the statement said. The Wall Street Journal first published an article based on a July 21 client memo that outlined their thoughts on China. ValueWalk later reported on the client memo based on a copy it had received, noting the retail focus and the fact that concern was expressed after a stock market crash.

    As the largest hedge fund in the world whose respected economic and political viewpoint has become increasingly important in public economic policy discussions, Dalio and his global analysis is in consistent demand from sophisticated institutional and high net-worth retail investors. Over the past year ValueWalk has published nearly two dozen articles chronicling the organization’s thoughts on significant economic matters.

    In regards to statements about China’s faltering economy and the odd focus on the retail investor, Bridgewater says they were simply and accurately noting a market fact that had repercussions. It was an observation not to be given an extraordinary amount of significance.

    “The observations that were made simply noted that falling stock prices have a negative wealth and negative psychological effect. When a classic stock market bubble (supported by unsophisticated investors buying stocks on a lot of margin) bursts there are negative growth effects,” the statement said, downplaying the significance of the retail aspect of the analysis in making forward looking projections.

    In the original Bridgewater analysis the firm was clear to point out that it was economic statistics that would determine their outlook going forward. “When combined with the debt and economic restructurings underway, that will most likely result in slower growth, and more simulative government policies to offset these downward pressures,” the report said.

    Rather than sound an entirely negative note, the world’s largest hedge fund looked on the positive side as well as considering the negative. “Bridgewater’s view that China faces debt and economic restructuring challenges, and that it has the resources and the capable leaders to manage these challenges, remains the same.”

    Two distinct approaches going forward: “Hunting time” and cautiously monitoring economic statistics

    For investors there appear to be two approaches.

    Goldman Sachs Group Inc said “its hunting time” in China, potentially being the first and most aggressive to call the low in the region. This comes at a time when certain algorithmic signals are also pointing to stock market normalization and the market experiencing a normal mean reversion retracement off a dramatic market move over the past year. Past performance is never indicative of future analysis, and algorithmic systems based on past performance statistics, like all investment analysis, is never perfect. In fact, when considering algorithmic investment signals degrees of probability are used to evaluate different future paths.

    Bridgewater appears to be rather pointing out issues with China that investors should consider and taking a wait and see attitude on economic numbers and the economic fallout before making such a bold claim. Its a fundamental, discretionary analysis that is watching for further impact.

    Who will be correct, Goldman and their early call on China or Bridgewater’s wait and see approach? Its hard to tell at this point, but the next several months could be an interesting time to watch as China, the potential withdrawal of quantitative easing and yes, even Greece, may all come into market focus this fall.

    The full Bridgewater Associates statement is below:

    While the report to Bridgewater clients is a private communication which they want to continue to try to keep private, Ray Dalio and Bridgewater believe that too much has been made of the shift in their thinking and want to clarify their thinking.

    The observations that were made simply noted that falling stock prices have a negative wealth and negative psychological effect. When a classic stock market bubble (supported by unsophisticated investors buying stocks on a lot of margin) bursts there are negative growth effects. When combined with the debt and economic restructurings underway, that will most likely result in slower growth, and more simulative government policies to offset these downward pressures.

    Bridgewater’s view that China faces debt and economic restructuring challenges, and that it has the resources and the capable leaders to manage these challenges, remains the same.

  • Retailers remain pessimistic about industry prospects

    Retailers remain pessimistic about industry prospects

    Hong Kong’s retailers remain pessimistic about their industry prospects, with a survey from the Hong Kong Productivity Council suggesting that the sector’s business confidence is at three-year low.

    The Standard Chartered Hong Kong SME Leading Business Index showed the retail industry sub-index sliding to 43.1 for the third quarter from 49.9 in the preceding three months, marking the weakest level in three years.

    Meanwhile, the overall gauge of the SME Business Index stood at 49.6, up 0.6 point from the previous months but remaining below the 50 mark that separates positive and negative outlooks, the Hong Kong Economic Journal reported.

    The sub-index that reflects interest in hiring dropped below 50 to reach 48.5 for the first time, according to the survey which was conducted by the Hong Kong Productivity Council in association with Standard Chartered Bank Hong Kong.

    Kelvin Lau, senior economist for Asia at Standard Chartered, said slower growth in the number of mainland tourists and structural change in their consumption behavior have brought prolonged adverse impact on the city’s retail environment.

    He noted a 1.3 percent fall in mainland visitors as of the end of May this year, the largest decline since August 2009.

    However, DBS Bank Hong Kong economist Lily Lo said the actual impact is not so bad because 70 percent of retail sales in the city come from local consumers.

    Lo expects Hong Kong’s economy to expand at 2.5 percent rate this year, with retail sales likely to recover.

  • Singapore Savings Bonds: Good intent, bad timing, say analysts

    Singapore Savings Bonds: Good intent, bad timing, say analysts

    Singapore’s plan to launch a savings bond to encourage long-term retail savings is unsettling domestic banks and economists who fear this bond will push interest rates up and suck cash out from an already anaemic economy.

    The new bond, which will begin selling in October, will have a term of 10 years. It will offer the same yields as government bonds or ten times the returns on bank deposits, and can be redeemed without penalty at any point.

    Such a juicy proposition could cause a flight of cash from bank deposits into these bonds and force interest rates higher as banks compete to attract savers.

    The government says it will issue a maximum of S$4 billion worth of bonds this year, which is still more than a fifth of deposit growth in 2014.

    The timing of these bonds, which are aimed at meeting a long-felt need for long-term investment options in the low-yielding economy, couldn’t be worse, say analysts.

    The economy contracted sharply in the second quarter as manufacturing slumped and is at risk of tipping into technical recession. Price pressures are subdued and expectations are building for the central bank to ease policy once again at a twice-yearly review in October.

    “Launching a retail savings bond now is almost like reverse QE,” said Chua Hak Bin, an economist with BofA Merrill Lynch in Singapore, referring to the unorthodox quantitative easing (QE) policies the United States and other major economies have pursued in the years since the 2007 financial crisis.

    Chua points to the already slowing deposit growth in the Singapore banking system, with just S$3.8 billion ($2.8 billion) of deposits being added in the first five months of 2015, just 20 percent of the total growth last year.

    He suspects the government would invest the savings bond flows overseas. That would further pressure loan growth, by tightening available cash and triggering a rise in deposit rates, he said.

    “So the timing is not ideal. The economy has stagnated in the first half and this will worsen the situation,” Chua said.

    Citibank analysts expect that of a total S$559 billion of deposits in the banking system, 36 percent are savings deposits held by households. If on average the MAS issued about S$6 billion worth of bonds each year, S$30 billion would flow from the deposit base into bonds over five years, they estimate.

    RISK-FREE AND REWARDING

    Singapore’s central bank, the Monetary Authority of Singapore (MAS), has set a cap of S$100,000 on individual investments in the bond.

    MAS Managing Director Ravi Menon played down fears the bond will cannibalise bank deposits.

    “The savings bonds issuance numbers pale in significance compared to the total size of the banking deposits,” he said at a news conference this week.

    Yet there is little doubt the bonds will draw savers from banks. Government bonds yield about 0.95 percent for one-year and 2.6 percent for 10 years. Bank deposits fetch around 0.25 percent for a year and just double that for 24 months.

    “The Singapore Savings Bond is bending the risk-reward paradigm in investors’ favor,” said Zal Devitre, head of investments at Citibank in Singapore.

    Devitre believes retail investors and consumers will be keen to buy the bonds, and yet thinks it is premature to be projecting the impact that will have on rates and banking system liquidity.

    Local banks such as DBS, Oversea-Chinese Banking Corporation and UOB are expected to be impacted if there is a heavy migration of deposits.

    But analysts also expect there will be more pressure on global banks such as Citibank, Standard Chartered, HSBC and Malayan Banking Bhd, which have been deemed systemically important by Singapore and therefore need to maintain higher capital than stipulated under the Basel 3 guidelines.

  • Hong Kong airport executes summer promotions

    Hong Kong airport executes summer promotions

    Hong Kong International airport (HKIA) has welcomed the summer season with various promotions. These include special offers such as cash coupons with savings of up to HK$700 ($90) and complimentary local delivery service.

    From July 31 to August 11, travellers spending over HK$2,000, HK$5,000 and HK$10,000 by electronic payment can redeem HKIA cash coupons of HK$100, HK$200 and HK$600 respectively. Travellers using UnionPay cards to make purchases of over HK$5,000 and HK$10,000 can enjoy an extra HK$100 HKIA cash coupon.

    HKIA is also collaborating with retailers to provide travellers with exclusive shopping and dining offers and a selection of special complimentary gifts during the summer. Travellers spending with UnionPay cards can enjoy further offers. Details can be found by scanning QR codes on the promotional materials or by visiting https://www.hongkongairport.com/eng/shopping/special-offers.html.

    In addition, travellers spending over HK$1,000 in one single transaction at HKIA can enjoy complimentary local delivery service, while HKIA’s “Guaranteed Downtown Prices” mascot dresses up to welcome the summer and greet travellers. The mascot will make special appearances at terminal one and pose for instant photos with travellers and distribute  gifts. Travellers can also enjoy music performances while shopping in the Departures East Hall.

    HKIA has also teamed up with the Hong Kong Tourism Board as part of the Hong Kong Summer Fun campaign, providing travellers with two rounds of lucky draws. Travellers entering Hong Kong through HKIA can participate in the “Instant Mega Draw” until August 31. Before leaving Hong Kong, travellers can also enter the “Return to Hong Kong like a Millionaire” draw to win prizes, including a return-trip to Hong Kong.

  • Lotte to open Bangkok duty free store

    Lotte to open Bangkok duty free store

    South Korean conglomerate Lotte is to open a “major downtown duty free store” in Bangkok. Lotte has confirmed the new store will open in early 2016. The location has not yet been revealed.

    Retail News broke news of the plan last week, reporting the store would be a joint venture between Lotte Group and Lotte Holdings of Japan, with the Korean partner holding 80 per cent.

    “The opening in the Thai capital is part of an ambitious international strategy designed to bolster Lotte’s strong sector leadership in South Korea, the world’s biggest duty free market,”

    Lotte, the world’s third largest duty free retailer, is involved in a strident expansion program which has seen it open in Japan’s Kansai International Airport, at Guam, Singapore and Indonesia in recent years. It is targeting the fast growing legions of newly cashed up Asian consumers travelling regionally and spending increasing amounts on duty free goods at airports, and downtown department stores.

    Lotte is also planning to open its first downtown duty free store in Japan – located in the upmarket Ginza shopping district.

  • 7-Eleven Smart Convenience Store

    7-Eleven Smart Convenience Store

    Customers of a 7-Eleven convenience store in South Korea can literally go dancing in the aisles…

    The new 7-Eleven Smart Convenience Store allows customers to enjoy virtual reality based on IT technologies. On the second floor of its Chinese Embassy store in Seoul’s Myeongdong, 7-Eleven placed six smart tables where customers can enjoy web surfing, gaming and watching Youtube videos in partnership with SK Telecom.

    Among the six tables, one features virtual reality technology. If a customer pushes a button saying “Together with Hyeri” (a member of K-pop girl group Girl’s Day), he or she will appear on a wide screen in the floor standing together with Hyeri, a spokesmodel for 7-Eleven.

    Customers can dance with Hyeri, and even take photos with the idol star. The photos will be forwarded directly to the customer’s smartphone.

  • Thai retailers cut growth forecast

    Thai retailers cut growth forecast

    Thai retailers have cut their growth forecast for 2015 by nearly half, citing economic conditions and the drought.

    Last year’s Thailand’s retail growth was 6.3 per cent despite widespread protests, a military coup and curfews. But this year, with the nation running more normally at business level, the Thai Retailers Association is now expecting a growth rate of just 3.2 per cent.

    TRA president Jariya Chirathivat says the drought, growing household debt and slow government investment in infrastructure ‘mega projects’ is subduing consumer confidence and retail spending.

    In the first half of 2015, Thailand’s GDP rose by three per cent… but retail sales grew by a lacklustre 2.8 per cent, despite inbound tourism numbers beginning to grow again after 2014’s disruptions. Foreign tourist arrivals rose 27.4 per cent in the first six months of this year.

    By category, supermarket sales rose a strong 8.5 per cent – faster than hypermarkets and convenience stores which grew by 1.5 per cent and 2.8 per cent. Specialty store sales rose 2.7 per cent.

    Observes Jariya: “In my opinion, the retail business in the second half will not be bright, as many economic measures such as infrastructure investment may not achieve what the government