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Tag: Business

  • Reliance has true potential to evolve into India’s Amazon or Alibaba

    Reliance has true potential to evolve into India’s Amazon or Alibaba

    A week after Reliance Industries (RIL) reported a 8.82 percent rise in consolidated net profit for its third quarter at Rs 10,251 crore, global financial services firm UBS on Thursday said the Mukesh Ambani-led RIL has the true potential to evolve from an integrated energy company into a consumer giant like Amazon or Alibaba.

    In a comprehensive 100-page report, UBS said RIL can become a market leader in telecom and media, while gaining a significant share in retail/e-commerce.

    “Its success could be built on an ecosystem or bundling strategy, and a home-court advantage, similar to Alibaba’s success in China, beyond explicit or implicit policy support,” noted the report.

    RIL posted a net profit of Rs 9,420 crore in the corresponding quarter of 2017-18. The company’s consolidated revenue from operations during the quarter in consideration at Rs 1,60,299 crore jumped a massive 56.38 per cent over Rs 1,02,500 crore earned in the October-December quarter of FY18.

    According to the UBS report, its China Internet analyst, Jerry Liu, has listed some comparables between Alibaba and Reliance such as pursuing an ecosystem or a bundling strategy in a high-growth fragmented retail sector with lower online penetration and home-turf advantage.

    “Similarly, Eric Sheridan, our US internet analyst, thinks Amazon’s core value proposition to customers is its Prime subscription, which offers free shipping and video and music content,” the report noted.

    “Our assessment of the capital framework, regulations, business positioning and emerging trends in each of its consumer-facing business indicates RIL can lead in telecom and media and gain significant share in retail/ecommerce,” it added.

    The report found another similarity RIL shares with Amazon and Alibaba – an ecosystem strategy.

    “The biggest difference is that the Chinese and American internet platforms do not own telecom networks.

    “But based on the success of Amazon Prime, and similar memberships such as Alibaba’s 88VIP and JD’s Plus in China, we believe bundling of products and services is a tried and true strategy, and this should play to Reliance’s advantage,” the report highlighted.

    Addressing the “Vibrant Gujarat Global Summit 2019” on January 18, Reliance Industries Chairman and Managing Director Mukesh Ambani announced that Reliance would double its investment and employment numbers over the next decade.

    He said Reliance Jio and Reliance Retail would soon launch a new commerce platform for small retailers — a mega mission which will first be launched in Gujarat and then across the country, urging Prime Minister Narendra Modi to lead a fight against ‘data colonisation’.

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  • Indonesian Conglomerate Passes Away at 98

    Indonesian Conglomerate Passes Away at 98

    Eka Tjipta Widjaja, founder of the Sinar Mas Group, one of Indonesia’s largest conglomerates, passed away on Saturday, one month short of his 98th birthday. Eka, born Oei Ek Tjhong in Quanzhou in China’s Fujian Province on Feb. 27, 1921, was known as a tough and proven entrepreneur, which saw him become one of Indonesia’s richest tycoons, despite his humble origins.

    “He will be buried in his family’s cemetery in Marga Mulya village, Karawang district, West Java,” Sinar Mas managing director Gandi Sulistiyanto Soeherman said in a statement on Sunday.

    Eka passed away at his home in Menteng, Central Jakarta, at 7.43 p.m. His body was taken to the Gatot Soebroto Army Hospital in Senen, Central Jakarta, for a funeral service.

    Gandi said colleagues, relatives and friends were expected to express their condolences on Sunday, starting from 7 p.m., after the funeral service.

    The statement did not specify the cause of death, but Gandi mentioned in another statement to local media that Eka’s health had been deteriorating due to his advanced age.

    Eka’s family controls a widely diversified business through the Sinar Mas Group, which he founded in 1962. The group’s interests span palm oil, pulp and paper, real estate, financial services, agribusiness, telecommunications and mining, represented by various entities listed on the Indonesian and Singaporean stock exchanges.

    GlobeAsia’s 2018 Rich List estimated Eka’s net worth at $13.9 billion.

    Moved to Indonesia

    Eka and his mother migrated to Indonesia in 1931, during the Dutch colonial era, to join his father who had already settled in Makassar, South Sulawesi. There he helped his father run a small shop.

    Eka, who according to his biography only had an elementary school education, became a door-to-door salesman, peddling various goods, including candies, biscuits and various products from his father’s shop.

    He experienced both success and failure in various businesses, which included sales of coconut oil, biscuits and sesame oil, during the Japanese occupation, the early period of Indonesia’s independence and the rule of the country’s first two presidents, Sukarno and Suharto.

    King of Copra

    His business empire started in 1955 when he became a copra trader in North Sulawesi, which earned him the title, “king of copra.”

    Through the Sinar Mas Group, which he founded in 1968, Eka managed to expand his business into various areas, including banking, vegetable oil and real estate. He became well known after the establishment in 1969 of Bitung Manado Oil, which catered to up to 50 percent of demand in the Indonesian cooking oil market at the time.

    In 1972, Eka acquired caustic soda producer Tjiwi Kimia, which he transformed into the Sinar Mas Group’s first pulp and paper manufacturer. In the same year, he started Duta Pertiwi, a property developer and real estate business, and 10 years later, Sinar Mas Multiartha, an integrated financial services company.

    The group started operating its own industrial forest in 1986 through Sinar Mas Forestry, while it also has interests in communications and technology, including mobile phone operator Smartfren.

    Eka overcame many downturns during his nine decades in business, with the largest being the $14 billion default by his crown jewel, Asia Pulp and Paper, due to the 1998 Asian financial crisis. The crisis also forced him to relinquish control of many of his businesses to the government, including his flagship lender, Bank Internasional Indonesia, now known as Maybank Indonesia.

    However, Eka bounced back and his Singapore-listed Golden-Agri Resources has since become the world’s second-largest palm oil producer.

    “Despite only having completed elementary school, there was no hope or ambition too high for him,” Gandi said in the statement. “The philosophy of being honest, credible and responsible, toward family, work and social affairs, became his life’s compass.”

    The tycoon spent millions in scholarships to Indonesian students over the past decade through the Eka Tjipta Foundation and also distributed necessities to disaster-affected areas across the archipelago.

    The patriarch is survived by six children and dozens of grandchildren, who now run the family businesses.

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  • New commercial landmark set to open at Huaihai Road

    New commercial landmark set to open at Huaihai Road

    Chinese mall operator Bailian is merging two disused department stores on Shanghai’s Huaihai Road in partnership with urban renewal firm URF to create Theatre X. The two malls on the city’s prime retail street were formerly trendy shopping destinations. Huating Isetan on 527 Huaihai Road M was the first Japanese Isetan outlet in China, while Bailian’s No.1 Department Store next door once enjoyed great popularity – both commercial gems of the 1990s.

    The new Theatre X shopping mall will merge the two sites, according to an announcement, and offer “interactive and immersive experiences” to consumers. The 25,000sqm property will offer popular international brands, shared spaces for pop-ups, and exhibition stages for Ted Talks – with developers expecting the venue to become a “pilgrimage site for trendsetters.” It will feature a 40m-high waterfall and giant digital screens.

    Theater X is set to open in September, with further developments in the immediate vicinity expected to follow.

  • Gucci adds 6 new intriguing Gucci Places

    Gucci adds 6 new intriguing Gucci Places

    Luxury fashion brand Gucci has labelled six international destinations as ‘Gucci Places’ – a list that includes Daelim Museum in Seoul. The Gucci Places were selected by the Italian Fashion House as destinations that “surprise, arouse interest, and inspire a creative response”, according to a report in Prestige Online. They were chosen in collaboration with well-known artists who were tasked with visiting the place and record their impressions, establishing a visual journey of photographs, travel notes and sketches.

    Daelim Museum was named for its association with Coco Capitan, an artist whose calligraphy has appeared on Gucci collections.

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  • Time for South Korean cosmetics to face challenges

    Time for South Korean cosmetics to face challenges

    South Korean cosmetics stores that have been the drivers of the ‘K-Beauty’ industry for the past 15 years are facing a crisis, exposing their limitations. The cosmetics industry is undergoing a series of transformations due to decreased demand from China and a change in distribution structure resulting from stagnant domestic demand and increased competition.

    Nowadays, it is common to see health and beauty shops (H&B) such as Olive Young and LOHBs reorganise and shift their main focus online.

    According to cosmetics industry analysts, the size of the South Korean cosmetics stores’ market was 2.29 trillion won (US$2.05 billion) in 2017, which reflects a rapid decrease since the peak in 2016. It is estimated that total sales last year decreased by 15 per cent from the previous year.

    With sales decreasing, the industry is closing down branches. The number of South Korean cosmetics stores began to shrink in 2017 and is estimated to have fallen to 5200 last year.

    Popular brand Skinfood is facing an imminent crisis. The company, once a huge hit with the phrase “Don’t eat, give it to your skin” entered corporate restructuring last October, after encountering difficulty securing liquidity due to excessive debts.

    Those who suffer the most in the process are franchise owners, who are protesting that the company is trying to avoid the worsening situation without taking responsibility.

    The causes of the decline of the retail shop are numerous. The first reason is the excessive competition within the industry.

    Add to this, China’s retaliatory actions as part of the THAAD missile crisis in 2017 led to huge decrease in sales.

    Changes in distribution structure have also played a role. H&B shops are now leading the market, offering a variety of brands in one place, instead of a closed structure.

    These types of stores are a gaining competitive edge as they can sell occupy low and medium-priced brands and new venture brands as well as establish strategic products.

    Retail shops became a mainstream cosmetics market in the early 2000s. Amid the economic slump, retail shops continued to grow in number as brands gradually added fast product launch strategies and functional products aligned with trends based on affordable prices.

    Chinese tourists clearing out the shops in the wake of the Korean wave contributed to the growth of retail shops. However, in the current situation, retail shops are only beginning to restructure.

    While some chains of South Korean cosmetics stores are choosing to downsize their branches, others have chosen to invest aggressively.

    Those who chose aggressive investment plans in a bid to become global cosmetics companies hope to achieve economic success despite the difficult situation and uncertain prospects for the future.

  • Lotte’s Ministop deal falls through

    Lotte’s Ministop deal falls through

    The sale of convenience store chain Ministop fell apart as potential bidder Lotte and the Japan-based convenience franchise failed to agree on a price. The AEON Group of Japan, the largest shareholder of Ministop Korea, filed a notice on Monday that it has suspended the sale process to sell its full stake in the unit. The AEON Group owns a 76.06 percent share while Daesang Group, a Korean food conglomerate, has a 20 percent stake. Japan’s Mitsubishi holds 3.94 percent.

    Ministop Korea also notified its workers of the suspension, vowing to keep searching for a potential suitor.

    Executives from AEON and Ministop visited Seoul over the weekend to meet Shin Dong-bin, chairman of Lotte Group, which also owns 7-Eleven in Korea.

    The retail giant has been considered the likeliest buyer since it reportedly offered the highest price of around 400 billion won ($357.3 million).

    Other competitors include Shinsegae, which owns convenience store franchise Emart24, and Glenwood Private Equity, a local private equity firm.

    Ministop opened a bidding process back in November, but delayed selecting a preferred bidder.

    The introduction of a government regulation banning the opening of convenience stores within 80 meters (262 feet) of another store led to Ministop requesting a higher price, according to local media outlets.

    Ministop’s sale garnered attention from the beginning because it could impact the highly-competitive convenience store chain market in Korea.

    Ministop operates 2,500 stores across the country. If Lotte had succeeded in acquiring Ministop, it could have increased its number of stores from 9,500 to 12,000.

    CU runs the most stores, at 13,109, while the second player is GS25 with 13,018.

    Emart24 ranks fourth with 3,564 stores.

  • Korean firm to set up halal ramen plant in Malaysia

    Korean firm to set up halal ramen plant in Malaysia

    FGV Holdings Bhd is looking to partner with South Korea’s Samyang Foods Co Ltd for the establishment of Samyang Halal’s production facilities in Malaysia. FGV told Bursa Malaysia that it had signed a memorandum of understanding (MoU) with Samyang. The production facilities will focus on serving halal ramen and instant noodle products for Malaysia and global markets.

    FGV’s newly appointed CEO Datuk Haris Fadzilah Hassan said the collaboration is part of he group’s strategic direction to expand its downstream business by diversifying the product offerings and penetrating into new markets.

    Its logistics and support businesses sector is also set to benefit from this partnership by providing a total logistics supply chain solution.

    “With this MoU, FGV hopes to explore the opportunity for both parties to establish a halal ramen and instant noodle manufacturing plant in Malaysia. The global halal food market is one of the fastest growing segments in the food industry and is expected to reach more than US$740 billion in value by 2025,” Haris said.

    FGV said the collaboration will also give FGV access to Samyang’s supply chain, which includes cooking oil, vegetable fats and sugar for its existing ramen plant in Wonju, South Korea.

    Samyang is listed on the Korean Stock Exchange with a market capitalisation of KRW459.514 billion (RM1.68 billion). It is in the business of manufacturing and selling various food products such as ramen, snacks, dairy products, sauces, and frozen dumplings.

    FGV noted that its downstream entity Delima Oil Products Sdn Bhd (DOP) can leverage on Samyang’s strong R&D and global distribution networks to improve quality and expand the reach of its “Saji” products regionally and globally.

    “In addition, DOP will benefit from Samyang’s ver 50 years’ experience in the ramen and instant noodle industry to strengthen its own products and brand positioning.”

  • French furniture brand Roche Bobois opens showroom in Singapore

    French furniture brand Roche Bobois opens showroom in Singapore

    French high-end furniture brand Roche Bobois has announced the opening of its Singapore showroom with a brand new design concept. The 5300sqft Roche Bobois Singapore showroom is located in the Boon Siew Building on Bukit Timah Road features an expansive floor-to-ceiling window to frame the brand’s collections, designed to resemble a jewel box from a distance.

    “Singapore is a city known for its appreciation of modernity and open-mindedness and these ideals are central to the Roche Bobois brand”, said company CEO Gilles Bonan.

    “This opening demonstrates the brand’s ambitions in Asia; we are already present in China, Hong Kong, South Korea, the Philippines, Japan, Vietnam and India and we intend to increase our presence in this strategic part of the world.”

    Roche Bobois operates more than 265 showrooms in more than 55 countries. After 17 new stores opened in 2017, it continued its growth last year in cities such as Hanoi, Washington, Tokyo and San Diego, with the Roche Bobois Singapore showroom its latest globally.

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  • Excess car demand for Tet holiday drives prices up in Vietnam

    Excess car demand for Tet holiday drives prices up in Vietnam

    The surge in demand for cars before the Lunar New Year means customers have to wait or pay extra to get immediate delivery. With only weeks to go for the Lunar New Year Festival (Tet), which falls on February 5 this year, consumers are rushing to order automobiles leading to a shortage in the market. They either have to wait for a long time for delivery or, for quick delivery, opt for accessories which can cost an extra VND70-150 million ($3,013-6,458).

    For instance, Hyundai SUV Santa Fe requires an extra VND70-160 million ($3,013-6,887), which is 7-16.1 percent above the minimum listed price, while for the Toyota Fortuner it is VND100-150 million ($4,305-6,457). But most customers will have to wait until March for delivery if they signed the purchase agreement last November or later.

    The only way to get guaranteed delivery before Tet is to buy from someone who signed earlier, car dealers said, explaining that a dealership only gets around 20 units in each model per month but demand is two to three times that number.

    The shortage is because of difficulties in importing at the beginning of 2018 as a result of a new regulation tightening imports, Tran Thanh Binh, director of Thanh Binh Automobile Import Export Trading Service Co Ltd, said.

    The regulation stipulates that traders are only permitted to import if they can provide valid vehicle registration certificates issued by authorities from the countries of origin.

    Original quality control certificates for each vehicle and letters of authorization regarding recalls of defective vehicles from the manufacturers are also required, along with copies of quality assurance certificates provided by the countries of origin.

    “This made companies stop ordering from factories in Indonesia and Thailand. The second half of 2018, however, with these difficulties resolved, businesses have started to order again. But, since the factories also produce for many other markets, Vietnam was not able to order enough,” he explained.

    Vietnam imported 6,362 cars, including 4,264 personal cars, 1,820 trucks in the first 15 days of 2019, according to Vietnam Customs.

  • Thai’s King Power Duty Free, World’s Leading Airport Duty Free Operator 2018

    Thai’s King Power Duty Free, World’s Leading Airport Duty Free Operator 2018

    Thailand’s King Power Duty Free has won the world’s ultimate accolade for travel, tourism and hospitality industry excellence, voted ‘World’s Leading Airport Duty Free Operator 2018 in the 25th World Travel Awards. King Power Duty Free triumphed ahead of than a hundred duty free operators worldwide including shortlisted finalists China Duty Free Group, Hong Kong’s DFS, Dubai Duty Free, Swiss-based Dufry, Duty Free Americas, Germany’s Heinemann Duty Free, France’s Lagardere Travel Retail, and South Korea’s Lotte Duty Free and The Shilla Duty Free.

    “The award strengthens Thailand’s tourism image as a world class destination while underlining the outstanding capability of a Thai company,” said King Power Group CEO, Mr Aiyawatt Srivaddhanaprabha. “King Power is proud to be Thai and committed to the national travel retail business, setting a new benchmark for world-class duty free shopping experience.”

    Operated by King Power International, King Power Duty Free was earlier voted Asia’s Leading Airport Duty Free Operator 2018 in the regional finals of the World Travel Awards.

    World Travel Award was established in 1993 to annually acknowledge, reward, and celebrate excellence across key sectors of the travel, tourism and hospitality industries. Today the brand is recognized globally as the ultimate hallmark of industry excellence, voted by travel, tourism and consumer trade executives.

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  • Vietnamese banks report plunge in profits

    Vietnamese banks report plunge in profits

    While profit across the banking sector grew by an estimated 40 percent last year, VietinBank, LienVietPostBank and SaigonBank have reported steep declines. The biggest surprise came from state-owned VietinBank, the country’s second biggest lender by assets, which reported a 25 percent fall in profits before tax to go out of the group of five most profitable banks in the country.

    Le Duc Tho, its chairman, said this was a result of having to restrict operations last quarter to begin restructuring.

    Asset growth, credit growth and capital mobilization grew by 6-10 percent, lower than targeted.

    LienVietPostBank reported a 30 percent decline in profit before tax as a result of losses related to securities investments and low marginal interest rates.

    It achieved losses of nearly VND5 billion ($215,140) from securities investments whereas in 2017 it had made a profit of VND380 billion ($16.35 million).

    SaigonBank’s profit before tax fell by more than 26 percent due to provisioning for bad debts. The bank had to increase provision for bad debts by 22 percent to an amount equivalent to 87 percent of its profit from business operations.

    Its bad debts doubled in the first half of 2018 to nearly VND900 billion ($38.72 million), but by the end of the year it brought the rate down from 6.48 percent during mid-year to 2.2 percent. It involved provisioning of VND287 billion ($12.35 million).

    HSBC Vietnam CEO Pham Hong Hai said from 2019 bad debts could reemerge as a problem for banks after the recent lending spurt and the instability of the global financial markets.

    As a result, banks’ profits would most likely see a downward trend this year, he warned.

    The State Bank of Vietnam targets credit growth of 14 percent this year, the same as last year, and keeping non-performing loans to below 2 percent.

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  • Vietnam’s largest brewery, foreign-owned, refuses to humor taxman

    Vietnam’s largest brewery, foreign-owned, refuses to humor taxman

    While Sabeco is still at loggerheads with the taxman over alleged back taxes of $135.73 million, it has not provisioned for it. Its 2018 accounts make no mention of the amount in dispute though the HCMC Tax Department has claimed it owes that in taxes and fines and even tried to seize the money from the company’s bank account. Vietnam’s largest brewer, Saigon Beer Alcohol Beverage Corporation (Sabeco), claims it has accurately declared and paid taxes based on guidance from the Ministry of Finance and tax authorities.

    A month ago the department said it would seize VND3.1 trillion ($135.73 million) from the brewery’s bank account for overdue special consumption tax payable between 2007 and 2015 and penalties for administrative violations. But there was reportedly no money in the account.

    Le Duy Minh, deputy head of the tax department, said the account has been temporarily blocked.

    “We have asked Sabeco to provide details of other bank accounts, but it has not fulfilled that request.”

    Sabeco general director Neo Gim Siong Bennett said in a statement on December 30 that Sabeco had not violated any tax regulations.

    Thus, the enforcement action by the tax department was a violation of Vietnamese laws since it was taken “without a valid administrative decision” and “contradicts the written guidance issued by the finance ministry, General Department of Taxation and the city department itself.”

    Speaking about the dispute, Prime Minister Nguyen Xuan Phuc earlier this month asked the tax authorities to desist from action and wait for related ministries and other agencies to come to a decision.

    Mai Tien Dung, Chairman of the Prime Minister’s Office said that government agencies are scrutinizing the case as it involves “foreign elements.”

    Sabeco’s revenues last year rose 5 percent to more than VND36 trillion ($1.56 billion) but higher expenses and falling profits at its joint venture and affiliate companies caused its profit after tax to fall by 11 percent to VND4.4 trillion ($191 million).

    In December 2017 Thai Beverage acquired a 53.59 percent stake in Sabeco from the Ministry of Industry and Trade for $4.84 billion through a local entity, Viet Beverage (VietBev).

    Sabeco now has a 42.8 percent of the beer market, according to the Ho Chi Minh City Securities Corporation. It produced nearly 1.85 billion liters of beer last year.

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  • Viettel sole Vietnamese brand in global 500 listing

    Viettel sole Vietnamese brand in global 500 listing

    Military-run telecom giant Viettel is the only Vietnamese firm in the list of 500 most valuable brands in the world. Valued at $4.32 billion, Viettel’s brand was ranked 478th on the list of 500 most valuable brands in the world for 2019, Brand Finance, a leading global brand valuation consultant, announced at the ongoing World Economic Forum in Davos, Switzerland.

    This is the first time a Vietnamese brand has been named in this list.

    Accordingly, Viettel’s brand value in 2019 has increased 35.8 percent year over 2018. The telecom giant’s high brand valuation was largely due to its presence and contribution in 10 foreign markets, suggesting the company was internationally competitive.

    2018 was a successful year for Viettel in  foreign telecommunication sectors, with service revenue growing by 20 percent, mobile subscribers base growing by 70 percent and net cash flow from international operations by $240 million, 3 percent higher compared to 2017.

    Brand Finance’s Global 500 list ranks the most valuable brands in the world covering all business fields including telecommunications, technology, automotive, oil and gas. Some big names in the list include Amazon, Apple, Google, Mercedes-Benz, Shell and Telstra.

    “Every year Brand Finance conducts an assessment of about 5,000 global brands across 40 different areas on various criteria such as revenue, brand strength, and financial health,” said David Haigh, CEO of Brand Finance.

    Out of a total 5,000 global businesses surveyed, there were 500 Southeast Asian businesses, of which only 8 brands made it to the Global 500 list. The listed brands were in three categories: telecommunications, oil and gas, banking.

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  • OCBC: Malaysia could restore fiscal health in 3 years

    OCBC: Malaysia could restore fiscal health in 3 years

    Malaysia has a reasonable chance of restoring its fiscal health within three years if the economic growth remains stable with new revenue streams and stable expenditure, according to OCBC Bank chief economist Selena Ling. “But if you have a case where the global environment is very serious and dire and there is no deal between US and China… then it becomes a very hostile environment for any developing country to operate in,” she said last Friday.

    She noted that if the global economy remains at a status quo for the rest of the year and crude oil prices stabilise, Malaysia may miss the fiscal deficit target by 0.1-0.2 percentage points.

    Having said that, the potential slippage is not expected to be “very severe” that will derail Malaysia off its targets.

    “Rating agencies also want to see a multi-year plan. If it’s just a slippage of one year that you can attribute to a lot of external factors, probably the rating agencies will give you a pass. It’s really not a one year story they’re looking for,” she explained.

    The government has projected fiscal deficit to ease to 3.4% of gross domestic product (GDP) this year from 3.7% in 2018. It looks to further narrow the fiscal deficit to 3% and 2.8% in 2020 and 2021, respectively.

    Ling projects Malaysia to record a full-year GDP growth of 4.4% for 2019 amid slowing global growth and the ongoing external headwinds.

    Malaysia’s ringgit, on the other hand, could appreciate to RM4 against the greenback in the event of a weak dollar.

    She said the strengthening of the ringgit will have less to do with domestic factors as the slowdown in economic growth is seen as benign, coupled with an unlikely change in the Overnight Policy Rate (OPR).

    Another reason that could be supportive of strong ringgit is the risk of the US economy falling into a recession next year.

    Meanwhile, Ling expects oil prices to be subdued and could result in a shortfall in government coffers if they remain at the current level of around US$50 per barrel until year-end.

    Although Budget 2019 is based on the oil price assumption of US$70 per barrel, she does not see a need to recalibrate the budget at this juncture, but it will exert pressure on seeking new revenue sources.

    “As far as the budget revision is concerned, I suspect (it will) not be so soon because the US$70 is a medium-term price target and oil prices have been volatile in the last six months.

    “But if you look at the average price, it is relatively stable and maybe for the next budget in October 2019, they (the government) may revise the oil price assumption,” she added.

  • Indonesia’s Danamon Bank Plans Merger With BNP

    Indonesia’s Danamon Bank Plans Merger With BNP

    Bank Danamon, Indonesia’s fifth-largest private lender, announced a plan on Tuesday to merge with local lender Bank Nusantara Parahyangan. “The proposed merger is subject to approval by the relevant regulatory authorities, both banks’ shareholders, and to meeting the legal formalities for such a transaction,” Bank Danamon said in a statement on Tuesday.

    This is part of a larger plan by Japan’s Bank Mitsubishi UFG (MUFG) to acquire a 73.8 percent stake in Bank Danamon.

    Bank Danamon and Bank Nusantara Parahyangan (BNP) are now able to merge after MUFG acquired 40 percent of Danamon in August last year.

    Aside from owning Bank Danamon, MUFG also holds a majority stake in BNP through its subsidiary, Acom, one of Japan’s largest loan companies.

    Bank Danamon and BNP are required to merge as Indonesia applies a single-presence policy, which ensures that one single entity does not hold a majority stake in more than one company.

    MUFG’s plan for acquiring a majority stake in Danamon has been laid out in three stages.

    In the first stage, which was completed in December 2017, MUFG acquired a 19.9 percent stake in Danamon from Singapore’s wealth fund firm Temasek for $1.17 billion.

    The Japanese lender subsequently raised its stake in Danamon to 40 percent last August with the acquisition of a further 20.1 percent. In the final stage, the Japanese lender will seek approval to acquire the remaining shares, which in total, will give it a 73.8 percent stake.

    The acquisition is the part of MUGF’s ambitious plan to expand its presence in the region.

    The deal marks the largest acquisition of an Indonesian company by a foreign entity after American multinational cigarette and tobacco manufacturer Philip Morris International bought a 60 percent stake in HM Sampoerna for $3 billion.