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  • Demand for North Sumatra`s rubber shrinking

    Demand for North Sumatra`s rubber shrinking

    North Sumatras exports of natural rubber has continued to shrink, down 8.23 percent in volume to 137,826 tons in the first four months of the year from 150,194 tons in the same period in 2015.

    “The decline in exports was on weak demand and as a result of an agreement by worlds largest producers to cut exports,” executive director of the North Sumatra branch of the Indonesian Association of Rubber Companies (Gapkindo) Edy Irwansyah said here on Sunday.

    Thailand, Indonesia and Malaysia which are grouped in the rubber cartel International Tripartite Rubber Council (ITRC), had decided to cut exports in a bid to drive up the commodity price.

    The three Asean countries, which account for around 80 percent of the worlds production of natural rubber decided to cut exports by 615,000 tons to be shared proportionally by the three ASEAN countries. Indonesia is to cut exports by 238,736 tons.

    The ITRC said it was optimistic the export cuts would drive rubber market to recovery after six years of being in deep slump.

    The price of natural rubber has remained low to follow the oil price fall.

    Edy said the export volume would likely fall lower not only because of the ITRC agreement but also because of weaker demand.

    The price of the commodity on May 13 was US$1.4 per kg for delivery in July down from US$1.417 for Junes delivery.

    The price of latex in North Sumatra has also dropped to around Rp13,477 per kg Rp13,477 – Rp14,201 per kg.

    However, reports said earlier that the price of rubber in othyer areas of the country had been picking up .

    In Lebak regency of Banten , the price rose in the fourth week of April reaching Rp21,500 poer kg of slab.

    “I think the price rise would encourage the rubber farmers,” said Rulyy Yanrila, head of the marketing section of the district Forestry and Plantation Office.

    The increase in price would at least help cover the production cost, Rulyy Yanrila said .

    Many rubber farmers have been on the brink of bankruptcy after years of slump, he said, adding some farmers already stopped tapping as the result was not worth the work.

    Jayadi (55),a rubber farmer in the village of Leuwidamar, said rubber production declined over the past several weeks as most of the rubber trees have been too old and on poor maintenance.

    In Kalimantan, Chairman of the South and Central Kalimantan branch of the Indonesian Association of Rubber Companies (Gapkindo)Andreas Winata said the price of natural rubber from that region has increased to Rp16,000 per kilogram from Rp12,000 earlier.

    Andreas said the cut in exports apparently has caused panic in international market on shortage in supply, resulting in surge in price. In addition, supplies from other countries also declined on long drought, he said.

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  • Bank Mandiri chalks up Rp3.8 trillion in Q1 net profit

    Bank Mandiri chalks up Rp3.8 trillion in Q1 net profit

    The state-owned lender Bank Mandiri reported Rp3.8 trillion in net profit in the first quarter of 2016 thanks to increases in net interest income and fee-based income.

    The countrys largest bank in asset recorded a 19.1 percent in increase in net premium and net interest income to Rp13. trillion and 8 percent rise in fee-based income to Rp4.2 trillion.

    President Director of the bank Kartika Wirjoatmodjo said the increase in net interest income and fee-based jacked up operating income that surged 16.3 percent on-year to Rp17.2 trillion.

    The increase in income contributed to 15.9 percent growth in operating profit to Rp9.3 trillion, Kartika said here on Sunday.

    “Productivity of assets, liability and transaction business have been well managed amid the domestic and global economic slowdown,” he said.

    The liquidity of the bank was marked with the increase in third party funds held by the bank to Rp655.1 trillion in the first three mo9nths of the year, he said.

    Around 62 percent or Rp406.5 trillion of the third party funds were in giro and savings . Savings dominated the cheap fund growing Rp18.2 trillion to Rp248.8 trillion.

    Its outstanding credits totaled Rp574.7 trillion by the end of the first quarter of the year, and 85.7 percent of the credits were categorized as productive credits, Kartika said.

    Infrastructure credits totaled Rp46.42 trillion and credits for micro, small and medium enterprises (UMKM) reached Rp74.6 trillion.

    Its people credit facility called KUR reached Rp3.7 trillion or 28 percent of the whole years target of Rp13 trillion with 466,000 recipients in the first quarter of the year.

    Earlier a bank director Tardi said the target set for this year is more than quadrupling the target of only Rp3.2 trillion in 2015.

    The bank has established more small branch offices in the regions to facilitate disbursement of KURs for micro, small and medium enterprises.

    The small branch office would bring the bank closer to small depositors, Tardi said.

    In 2016, Bank Mandiri hopes to increase the number of its small branch offices to around 400 units all over the country.

    By April 2016, at least 26 new units have been in operation and by September the remaining 374 units are expected to be ready for operation.

    With the additional branch offices, the bank hopes to expand its market among the small and medium enterprises, which have proved more resistant to economic crisis.

    The small and medium enterprises provide a potential market for banking business in the country, banking observers have said.

    Currently, Bank Mandiri has 3,021 outlets including 600 units of kiosk all over the country.

    Bank Mandiri also has 17,000 agents for financial services without office for inclusive finance in various areas in the country.

    They include 8,759 individual agents and the rest institutional agents .

    In 2015, the bank reported a better-than-expected net profit but its bad loans crept up partly due to its exposure to the commodities sector.

    The bank posted a net profit of Rp20.3 trillion in 2015, or about 2 percent higher than in 2014.

    Its outstanding credits surged 12.4 percent to Rp595.5 trillion.

    Growth in net profit was the smallest in a decade, as the bank stepped up provisions. But the lenders 2015 profit was still higher than the average forecast of Rp19.59 trillion.

    Its gross non-performing loans (NPL) rose to 2.60 percent of total loans by the end of 2015, from 2.15 percent in the previous year.

    Gross NPL is predicted to be around 2.5 percent to 3 percent in 2016, Kartika has said.

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  • Pos Indonesia to expand storage facilities

    Pos Indonesia to expand storage facilities

    State postal service firm PT Pos Indonesia plans to expand its warehouse facilities from 3 hectares to 3 hectares to improve its logistics services.

    The land acquisition and development is estimated to cost US$250 million to $300 million.

    PT Pos Indonesia president director Gilarsi Wahju Setijono did not say how the firm would finance the land procurement, but did say the company was in talks with other state-owned enterprises ( SOEs ) for asset swaps. The company has many assets in strategic locations that it could exchange for larger plots of land in other locations.

    “We are asking them to exchange their plots, such as at the airport or seaport with our assets in strategic places,” Gilarsi said.

    Despite having assets in strategic places, PT Pos is struggling with increasing expenditure that is eating away at its profits. It posted Rp 16 billion ( US$ 1.2 million ) in profit last year.

    “Our revenue increased a bit from Rp 4.3 trillion ( US$ 324 million ) in 2014 to Rp 4.6 trillion ( US$ 326 million ) in 2015, but our expenditure increased more than our revenue,” Gilarsi said.

    PT Pos is currently conducting restructuring in its logistics business. The company will also revive its financial services business, such as offering money transfers and utilizing postmen as payment agents in the next four years.

    “Sixty percent of the Indonesia population do not use online banking. We’ve got many branches and will employ our postmen as payment agents,” he said.

  • Indonesian Culinary Fair 2016 to be held in Japan

    Indonesian Culinary Fair 2016 to be held in Japan

    The Indonesian Culinary Fair 2016, dubbed “The Taste of Indonesia,” will be organized at the Shinagawa Prince Hotel, Tokyo, from May 16 to June 16.

    The organization of the culinary promotion event was in line with the governments policy to intensify culinary diplomacy, Tourism Minister Arief Yahya stated here, Friday.

    The promotion event has been organized to achieve three targets. The short-term target is to introduce Indonesias diverse flavors and tastes, as well as to promote the countrys culinary delicacies.

    The mid-term target is to encourage restaurants and hotels in Japan to offer Indonesian dishes as well as to attract more Japanese tourists to visit Indonesia.

    The long-term target is to send Indonesian chefs to work in restaurants and hotels in Japan and to introduce halal food cooking techniques as well as Indonesian dishes in Japans culinary schools.

    Japan ranks fifth in the list of major countries contributing tourists to Indonesia, according to Deputy Minister in charge of International Tourism Marketing Development of the Tourism Ministry I Gde Pitana.

    During the culinary fair, various Indonesian traditional arts, such as Sasando, will be performed.

    The Japanese government has promoted international cuisines, including halal food, to attract foreign tourists from Muslim majority countries, among others.

    Japan has set a target to attract 30 million foreign tourists by 2020. Six to eight million, or 20 percent of the 30 million tourists, are expected to be Muslims.

    “This is an opportunity for Indonesia to promote its various culinary delicacies and food products, including spices,” Pitana affirmed.

    Last month, the “Wonderful Indonesia” Restaurant was opened in Anhui Province, China, to offer typical culinary delicacies from the archipelago as part of the efforts to promote the countrys tourism and culture.

    Situated in the densely populated area of Hefei in Anhui Province, the Wonderful Indonesia Restaurant was inaugurated by Minister Yahya.

    “There is a growing trend of using culinary diplomacy to support tourism, and almost all television stations are also highlighting this aspect as one of their flagship programs,” Yahya remarked.

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  • UberJEK Launched in Jakarta

    UberJEK Launched in Jakarta

    UberJek, an app-based transport service, has officially started operation on Sunday, May 15. Aris Wahyudi, UberJEK’s co-founder, claims cheaper tariffs compared to its competitors.

    “Our tariff is different from those of the competitors. Our tariff will continue to drop from the first kilometer,” Aris said after UberJEK launch at Euro Management Indonesia, Sunday, May 15, 2016.

    He illustrated that on kilometer 1-5, the tariff is Rp2,500 per kilometer; on kilometer 6-10, it’s Rp2,000; above 11 kilometers, customers will be charged for Rp1,500 per kilometer.

    He added, other benefit of using UberJEK is no minimum tariff set for short distance travels. Thus, customers wanting to travel within 1 kilometer can pay Rp2,500. “We do not set a minimum distance, unlike our competitors. The benefit of using UberJEK is in short distance travels.”

    To attract customers, in addition to cheaper tariffs, UberJEK also entices its customers with giveaways. It is part of the promotional strategy to introduce UberJEK to the market. UberJEk claims to have earmarked seven million smartphones as giveaways for customers.

    UberJEK was founded by Aris and three other Indonesian businessmen in late October 2015. Aris said UberJEK services can now be enjoyed in 30 cities in Indonesia with a total of 2,200 drivers.

  • Johnnie Walker House Singapore a first for SE Asia

    Johnnie Walker House Singapore a first for SE Asia

    Johnnie Walker House Singapore joins the international network of by-invitation-only whisky lounges, the first in Southeast Asia.

    It will offer connoisseurs the Diageo-owned brand’s range of rare and collectable Scotch whiskies.

    Johnnie Walker Houses are stand-alone and airport boutiques dedicated to presenting the brand’s whiskies in a curated lifestyle setting. These include rare blended and single-malt Scotch whiskies from Diageo’s 28 operating and 11 closed malt distilleries.

    Experts can provide guests with advice on whisky cellar curation, and offer direct access to blending rooms, distilleries and craftsmen.

    The expansion complements a venture with Moet Hennessy Diageo (MHD) Singapore and Johnnie Walker’s distributor partner Singbev. MHD will continue to sell and distribute only Johnnie Walker core and standard portfolio products to trade channels, while SingBev will continue to sell and distribute only the single-malt portfolio.

    “With whisky appreciation in Asia significant and growing, there is great opportunity for Diageo,” says Apurvi Sheth, the company’s MD for emerging Southeast Asia and joint ventures.

    “In Asia, there is rapid growth of interest in rare whisky, not only as a collectible asset, but also for investing and gifting. As consumers become more discerning, they are also actively seeking out access and rare experiences.”

    There are six Johnnie Walker Houses in Scotland, with others in such cities as Auckland, Beijing, Chengdu, Melbourne, Seoul and Shanghai, as well as retail units in Taoyuan International Airport, Taipei, and Mumbai International Airport.

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  • Nepal Telecom lays fiber to Nepal-China border

    Nepal Telecom lays fiber to Nepal-China border

    Nepal Telecom has revealed it has completed a project to lay fiber at the Nepal-China border, paving the way for an interconnection with China Telecom.

    The company has deployed fiber from Kathmandu to the Rasuwagadhi border point via two other Nepalese districts. The deployment uses all-dielectric self-supporting (ADSS) technology, which allows fiber to be deployed without the use of a support or messenger wire to save on deployment costs.

    A spokesperson for Nepal Telecom told that the operator has already commenced installation of equipment for an interconnection with China Telecom’s extensive fiber footprint.

    This will allow the operator to directly link to the Hong Kong Data Centre – one of the two largest data centers in the Asia region – and to establish global connectivity through Hong Kong via China. The company will also connect with a hub in Singapore via India.

    Through these arrangements Nepal Telecom plans to improve the speed and increase the price of its services.

  • AIS abandons plan to rent TrueMove’s 2G network

    AIS abandons plan to rent TrueMove’s 2G network

    Thailand’s AIS and TrueMove have abandoned plans to enter a mobile network rental agreement after being unable to accept mutually agreed upon terms.

    AIS no longer intends to rent TrueMove’s 900-MHz network to allow it to continue serving its 900-MHz 2G customers in the wake of the expiration of its 900-MHz license, telecoms regulator NBTC’s secretary-general told.

    The two operators had been negotiating a network rental agreement since mid-April, concentrating on network roaming on the 900-MHz spectrum and customer migration between AIS’s and TrueMove’s networks.

    The government had been encouraging AIS to rent True Move’s existing network to allow it to retain some of its existing 2G customers in order to end a dispute over an extension of AIS’s use of its 900-MHz network.

    AIS is reportedly also facing government pressure to hand over 8 million 2G customers to TrueMove to free up the 900-MHz spectrum due to be re-auctioned on May 27.

    But AIS intends to participate in the auction, and may therefore be able to secure the spectrum needed to ensure service continuity.

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  • Exchange rate turn may aid Hong Kong retailers

    Exchange rate turn may aid Hong Kong retailers

    Hong Kong’s retail sales decline may have bottomed out.

    And a leading factor in the downturn – the value of the Hong Kong dollar – may now bring a much-needed boost for Hong Kong retailers.

    China’s central bank policy this year has been to peg the value of the yuan to the US dollar – the same currency the Hong Kong dollar is pegged to.

    This means that since January, the yuan’s value relative to the Japanese yen has fallen 11.1 per cent, and to the Malaysian ringgit by 6.7 per cent.

    Last year the yuan fell against the Hong Kong dollar, making alternative destinations more attractive for cashed up Mainland Chinese shoppers who chose Japan, Korea or Europe instead, possible due to relaxed visa conditions.

    Now, the value balance is shifting back to Hong Kong, albeit there has been negligible difference in the cross rate between the Hong Kong and mainland currencies. The yuan has fallen just 0.1 per cent against the US currency this year, and risen 0.1 per cent against the Hong Kong dollar.

    “It will help perhaps put a floor in terms of retail sales,” Sandy Mehta, CEOof Hong Kong-based Value Investment Principals said in an interview with Bloomberg. “The currency by itself may not lead to a recovery, but it will surely help things bottom out.”

    Hong Kong retail sales fell 12.5 per cent in the first quarter of 2016, largely due to an ongoing decline in visitor arrivals.

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  • Food drives Korean department stores

    Food drives Korean department stores

    Cooking is big in Korea. There are currently more than a dozen cooking shows on Korean television, featuring variety of cuisines, restaurants, and famous chefs, and Korean department stores are benefiting from this food-frenzy phenomenon.

    Major department stores like Shinsegae are hosting well-known restaurant franchises at their outlets, attracting consumers who seek ‘good food’ to their doorsteps.

    Shinsegae’s Yeongdeungpo branch opened a variety of new restaurants from April 25 to May 5, and saw its number of customers increase by 20,000 compared to the same period last year. Samsong Bakery from Daegu, Hop Chou Cream from Osaka and Itaewon’s Bistecca were among the newly opened establishments.

    Shinsegae saw a total increase in sales of food products of 6 per cent, while the Yeongdeungpo branch showed an increase of 26 per cent. With more customer visits, the department store’s total sales also increased by 12.1 per cent, an impressive figure compared to Shinsegae’s total increase of 7 per cent.

    Customers in their 20s and 30s made up the majority of visitors contributing to the store’s growth.

    “The new restaurants helped attract more customers to our store. We’ll be hosting more restaurants and dessert cafes this coming June,” said Nak-hyeon Kim, chief manager of Shinsegae Yeongdeungpo.

  • Vingroup more than triples revenue to $98m

    Vingroup more than triples revenue to $98m

    Retail has proved the shining segment for Vietnamese conglomerate Vingroup, with revenue jumping 363 per cent year-on-year to VND2.19 trillion (US$98.3 million) for the first quarter.

    Vingroup has been investing in retail properties for more than a decade, and since announcing two years ago that it aims to become Vietnam’s largest retailer has opened 50 supermarkets under the VinMart brand and 750 convenience stores under VinMart+ brand.

    Its other retail businesses include Vincom shopping centres, VinFashion stores, VinPro electronics shops and Adayroi eCommerce platform.

    With interests also in education, health, entertainment and real estate, the group reports an after-tax profit of VND1.04 trillion – three times higher than the same period last year. Its revenues more than doubled to hit VND15.16 trillion.

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  • Thailand retail growth trails other destinations

    Thailand retail growth trails other destinations

    While Thailand retail industry growth is up slightly and there have been more international tourists, more Thais are shopping abroad, and tourists are spending more in other regional destinations.

    Thailand’s first-quarter growth in the retail industry was 2.6 per cent – failing to hit the Thai Retailers Association (TRA) projection of 3 per cent.

    President Jariya Chirathivat says same-store sales growth for several retail formats declined year-on-year, particularly hypermarkets and convenience stores.

    “This is the first time in two decades that Thailand’s retail industry has [shown] declining rates for several years,” says Jariya. Growth has fallen from 12 per cent in 2012 to 2.8 per cent last year.

    She says retail consumption has weakened because of declining farm product prices hitting the purchasing power of middle- and low-income consumers.

    While there were 12 per cent more foreign tourists in Thailand last year (29.5 million), there was no effect on the sales of semi-durable goods such as clothes, make-up, leather products, shoes and watches.

    Tourists in Singapore and Hong Kong on average spent 1900 baht (US$54) and 5300 baht ($150)respectively per head per day, while the figure for Thailand was 1155 baht ($33).

    Tourism Authority of Thailand figures show that the number of Thais shopping abroad grows by 9 per cent a year. Thais spent 170 billion baht on shopping overseas last year, with brand-name products accounting for 50.8 billion baht.

    “We’re concerned the retail industry might not be able to maintain investment levels in the long run if consumer spending continues to decline,” says Jariya.

  • Zara Vietnam to launch in July

    Zara Vietnam to launch in July

    Zara Vietnam says it will open its first store in July, just as Euromonitor International reveals the Vietnamese branded goods market may reach $2.7 billion in value by next year.

    As more than more people can afford branded goods, international fashion brands such as Gap, Mango, Nine West, Ralph Lauren and Topshop have become the choice of many young Vietnamese, especially office workers, says Euromonitor.

    Zara is owned by Inditex, which at the end of its latest fiscal year on January 31 had 7013 shops in 88 markets, including 2000 Zara outlets. If the Spanish fast fashion giant follows its normal international expansion course, it will likely roll out some of its other brands in the market, including Bershka, Pull & Bear, Massimo Dutti, Stradivarius and Zara Home.

    There is already a Vietnamese website selling Zara items, with a showroom in Ho Chi Minh City, but the shop sells alternatively-sourced and end-of-season lines.

    Mango, which targets customers between 18 and 40 years old, has been in Vietnam since 2004 through a franchise contract signed with Maison JSC. It also has other franchise partners, including DAFC, a subsidiary of IPP, and BFF, belonging to Vingroup.

    In 107 markets internationally, Mango had $2.6 billion in revenue last year.

    A survey by Nielsen on Vietnamese consumer confidence has shown that Vietnamese are willing to spend money on holidays, tourism, fashion and high-technology products.

    Meanwhile, Mango and Zara are among brands that have garment factories in Vietnam.

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  • International supermarket chains might soon start operating in the Philippines

    International supermarket chains might soon start operating in the Philippines

    With the Philippine economy expected to continue along its growth path, it might not take long before international supermarket chains start operating in the country.

    This developed as the British Chamber of Commerce of the Philippines (BCCP) said it will continue to push for a bigger market share for its food and beverage products here in the country.

    Philippine Amalgamated Supermarket Association President Steven Cua said the current influx of imported brands in groceries and supermarkets might be the way of testing the market.

    “The international chains are hot on our market.  We have a good economy, and investor confidence is here.  Instead of stores, there are goods now.  They are also joining trade shows,” Cua said.

    However, Cua said what is preventing these chains from starting operations in the country are the low margins on sales.

    “Our margins are too low.  We are the lowest in the world, at 2 percent to 12 percent,” Cua said, while pointing at the Department of Trade and Industry’s suggested retail price as the main factor.  He said that within Asia alone, the sales margins are between 13 percent and 25 percent.

    Cua also cited rent, salary, electricity and taxes as the other factors that might prevent international supermarkets from setting operations in the country.

    Then he said there are the Big 5 in local-supermarket operations, including SM, Robinsons, Puregold, Super 8 and Metro Gaisano, which controls a big chunk of the market.

    “We have a free enterprise.  It is either the smaller ones sell or they open up beside them,” Cua said, while adding that the Big 5 are now using real-estate brokers in their expansion.

    He also said that recently Walmart pulled out its operations in Indonesia and South Korea.

    Meanwhile, BCCP Chairman Cris Nelson said British food and beverages are making inroads in the local market, while stopping short of saying if British supermarket chains will actually be entering the country.

    “Marks & Spencer [M&S] is here in the Philippines but like a lot of companies, it needed to establish itself first. Based on my experience in this market, you have to get yourself successfully introduce in key areas and to develop thereafter,” Nelson said.

    He added: “The Philippines is a very interesting market.  It is a challenging market with multiple points of sale.  It is a logistical challenge because of the multiple islands.”

    Aside from M&S, Nelson said Tesco, a British multinational grocery and general merchandise retailer, has some of its products now also available in Rustan’s.

    Another brand that is also being made available in Rustan’s is Waitrose and its pantry products.  However, like Tesco, it does not have physical stores yet in the country.

    However, he said international food and beverage brands trying to enter the local market would have to deal with distribution and manufacturing issues.

    “Distribution is a very critical factor in the Philippines. Let us not forget this is one of the most challenging aspects of doing business. As soon as you get the demand, you will also have to develop your supply line. You need to keep your points very close together,” he said.

    Nelson said more and more British companies are expected to enter the country and promising Filipinos will have the opportunity to enjoy their brands.

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  • Further Slowdown for Hong Kong’s Economy in Q1

    Further Slowdown for Hong Kong’s Economy in Q1

    New figures released by Hong Kong’s government suggest the city’s economy has seen a further slowdown through the first quarter. New stats show Hong Kong’s GDP grew by 0.8-percent year-on-year through the first 3-months. This is a 4-year low in term of quarterly growth.

    Hong Kong’s exports dropped 3.6-percent through Q1. Unemployment in the city has jumped by one-percent to sit at 3.4-percent.

    Hong Kong Financial Secretary Tsang Chun-wah admits the outlook for Hong Kong’s economy this year doesn’t appear promising.

    “The global economy is full of risks in 2016. With such an external environment, Hong Kong’s economy will be facing a downward pressure. As we can tell from the latest data, our exports, tourism industry, retail sectors and many other sectors have all been affected.”

    Housing prices in Hong Kong are down some 12-percent after hitting a peak in September.

    A slowdown in exports, coupled with a slowdown in spending from mainland tourists, has been dragging down Hong Kong’s economic fortunes over the past year.

    The city’s retail sector has borne the brunt of the slowdown.

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