South Korea’s New President Faces Choices on Economy

February 24, 2013, 6:37 p.m. ET

South Korea’s New President Faces Choices on Economy

By EVAN RAMSTAD

SEOUL—When Park Geun-hye, the daughter of the man who led South Korea’s rise out of poverty, is sworn in as president on Monday, she will take control of an economy that is far larger and more important in the world—but that remains shaped by some of the institutions and regulations her father created in the 1960s.

One of the fundamental choices Ms. Park faces is whether to maintain the South Korean government’s enormous influence on the economy, which ranges from running dozens of regulatory agencies to owning about 400 companies, including several of the nation’s biggest banks.

Ms. Park is set to be sworn-in Monday morning before an invited crowd of 70,000 people on the grounds of the National Assembly, where she has been a member and leader of the ruling conservative party since the late 1990s.

Ms. Park, 61 years old, is the first woman to become president of South Korea. Thai Prime Minister Yingluck Shinawatra, the only other woman now leading an Asian nation, will attend Monday’s ceremony.

Since her election in December, Ms. Park has said little about the economy. The most substantial policy proposals announced by aides have been to expand welfare benefits for the elderly. Read more of this post

Unpredictable Policies Thwart Investment in Southeast Asia

Unpredictable Policies Thwart Investment in Southeast Asia
Karl Lester M. Yap | February 23, 2013

An unpredictable legal environment in Southeast Asia is the top concern of investors, according to an Economist Corporate Network survey, highlighting the challenge the region faces as it seeks to integrate by 2015 in an effort to boost growth and attract more investments.

Governments change their minds about important legislation with little warning, according to a report based on a survey of 147 companies including Unilever and General Electric released on Friday. “Even when laws remain unchanged, court decisions and interpretations of the laws can be highly arbitrary,” the report said.

While China remains the manufacturing capital of the world, companies including Nissan Motor and Google are expanding in Southeast Asia, lured by the prospect of a $2.2 trillion market. Nations including the Philippines are stepping up efforts to regain investor confidence after regulatory reversals and contract disputes in the past prompted Frankfurt, Germany-based Fraport to leave the country.

“The region’s diversity and uncertain legal environment remain major challenges for many multinationals,” said Clive Cook, a senior consultant at law firm Baker & McKenzie that commissioned the report. Companies are looking for legal advisers with expertise across different Association of Southeast Asian Nations markets, he said in a statement. Read more of this post

The most widespread margin squeeze in at least 10 years pushing some S’pore companies out of the city

Updated: Monday February 25, 2013 MYT 8:08:55 AM

The most widespread margin squeeze in at least 10 years pushing some S’pore companies out of the city

SINGAPORE: The most widespread margin squeeze in at least a decade is pushing some Singapore companies out of the city state as rising costs and slow growth sap profitability.

A Reuters study of 268 listed Singapore companies showed that 57 percent reported a year-on-year drop in operating profit margin for the first three quarters of 2012. That was the biggest percentage for the nine-month period on record, according to Thomson Reuters data going back to 2002. Full-year data for 2012 was not yet available.

A severe labour shortage is hobbling businesses in Singapore as the government tightens its immigration policies, while growth has been hard to come by as exports languish in a dull global economy.

Across Southeast Asia, 54 percent of companies reported shrinking margins, equalling the percentage recorded in 2009, when the global economy had tipped into a recession following the Lehman Brothers bankruptcy.

In all, Reuters examined the balance sheets of nearly 1,000 companies in Singapore, Malaysia, Indonesia, Thailand and the Philippines with a market value of at least S$100 million ($80.8 million).

The pain is particularly acute in Singapore, a smaller and more mature market lacking the burgeoning consumer classes of its emerging market neighbours. Inflation has heated up, with the consumer price index, due on Monday, expected to show a 4.0 percent rise in January, according to a Reuters poll.

The head of a Singapore business association is among those moving their corporate headquarters elsewhere, in search of lower costs and a larger market. Read more of this post

Chinese ‘Dubai’ turns into deserted island

Chinese ‘Dubai’ turns into deserted island
Posted: 24 February 2013 1349 hrs

SANYA, China: It was billed as China’s Dubai: a cluster of sail-shaped skyscrapers on a man-made island surrounded by tropical sea, the epitome of an unprecedented property boom that transformed skylines across the country.

But prices on Phoenix Island, off the palm-tree lined streets of the resort city of Sanya, have plummeted in recent months, exposing the hidden fragilities of China’s growing but sometimes unbalanced economy. Read more of this post

China’s local government debt crisis has been getting worse as national statistics show that 53% of local government debt will be due by the end of 2013

Crisis looms as local government debt to mature this year

Han Hwa-yu and Staff Reporter

2013-02-24

China’s local government debt crisis has been getting worse as national statistics show that 53% of local government debt will be due by the end of 2013, when local governments enter a peak period for repaying loans.

Financial reports recently issued by various local governments have all issued warnings, including information that they have been under heavy pressure to repay debts and deal with local financial risks that could not be ignored.

China’s National Audit Office says 42% of the debt was due by the end of 2012.

This year the local government debt crisis is greater than in the past few years due to increasing debts and mounting pressure to repay amid an economic slowdown and declining financial revenue, warned Zhao Quanhou, director of the Research Office of Finance under the Ministry of Finance’s Research Institute for Fiscal Science. Read more of this post

Malaysia will focus on turning domestic companies into regional champions

Malaysia Champions New Focus of Stock Exchange

By Matthew Winkler, Elffie Chew and Gan Yen Kuan – Feb 20, 2013

Bursa Malaysia Bhd. Chief Executive Tajuddin Atan said the exchange will focus on turning domestic companies into regional champions after spending the past five years boosting corporate governance and investor protection.

The Southeast Asian nation will promote companies in industries such as palm oil, Islamic finance and oil and gas, after putting in place governance rules that match standards in Singapore and Thailand, Tajuddin said. He declined to specify what steps the exchange would take.

“We have to start moving outside our borders,” he said in an interview at the bourse’s headquarters in Kuala Lumpur yesterday. “Now the challenge for us is to liberalize the market and start profiling what we have.” Read more of this post