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Asian Economy: Overview, Growth & Development

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IMF sees Philippine economy shrinking further by 3.6pc in 2020

The Philippine economy will contract further this year due to the global economic disruption brought about by the COVID-19 pandemic, International Monetary Fund projections indicate. In its World Economic Outlook update released Wednesday night, the IMF expected the Philippine’s gross domestic product (GDP) to shrink by 3.6 percent in 2020. This latest IMF projection is a downgrade by 4.2 percentage points from its earlier forecast of 0.6 percent growth this year in its April report. “This downward revision is mostly attributable to larger-than-expected supply disruptions related to COVID-19 and weaker demand in major trading partners,” IMF resident representative to the Philippines Yongzheng Yang said in an emailed response to questions raised over forecast. Also, the forecast is worse than the government’s -2 percent to -3.4 percent projection. In the first quarter of the year, the Philippine economy contracted by 0.2 percent —its weakest pace since 1998. “We now expect the resolution of COVID-19 to be more gradual, and hence the impact of the pandemic on the economy to be larger than previously anticipated,” Yang said. “With the latest downgrade of the global outlook, the external environment for the Philippines has also worsened, posing additional headwinds to growth this year,” he added. The IMF projects that the global economy will shrink by 4.9 percent this year. “The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast,” the IMF warned. Nevertheless, the IMF projected the Philippine economy will revert to growth by 6.8 percent in 2021. Government economic managers expect that the country will recover next year with a GDP growth of 7.1 percent to 8.1 percent

97PC Bangladeshi products get duty free access in China

As many as 97 percent Bangladeshi products, in a products list basket, will enjoy duty free access in the Chinese market effective from July 1, according to Bangladesh officials.

The opportunity of zero duty in the pandemic is expected to bring new opportunity for Bangladeshi exporters and businesses, said top officials in Bangladesh.

The development came following a formal approach of the Bangladeshi Foreign Ministry which has finally been approved by the State Council of the Chinese Finance Ministry, said a press statement by Bangladesh’s Foreign Ministry on Friday.

Bangladesh’s highest import is being done from China whereas Bangladesh is still lagging behind manifolds in terms of exporting goods to China, according to the available data.

According to the Federation of Bangladesh Chambers of Commerce and Industries, the trade volume between China and Bangladesh was around $14.68 billion in 2018-19 fiscal year.

And, of the total trade count, there was import trade of $13.86 billion and export of $831 million.

“We still import more than export from China, it will create more possibilities to minimize the trade deficit,” Md. Obaidul Azam, an additional secretary at the Bangladeshi Commerce Ministry told Anadolu Agency.

Also, capacity enlarging of Bangladeshi exporters and businesses are important in this regard, Azam added.

And, this will help the country as its economy has already been hit by the pandemic. Bangladesh on Friday reported 45 new deaths and 3,243 fresh cases, surging the total confirmed cases to 105,535 and fatalities to 1,388.

Bangladesh will get the zero treatment as a Least Developed Country, and 8,256 Bangladeshi products will come under treatment as some 3,095 products are already enjoying duty free access under the Asia-Pacific Trade Agreement, it added.

“Business will certainly see a big jump with the latest 97 percent duty free access to these products,” Borhan Uddin, the director-general for East Asia and Asia-Pacific in the Bangladeshi Foreign Ministry, told Anadolu Agency.

Uddin added: “Defiantly, it’s a good sign in pandemic. And we for a long time were examining the access and working with the country, and will work to nourish the bilateral relationship.”

Japan business lobby expresses concern over US work visa halt

The head of Japan’s most powerful business lobby expressed concern Wednesday over the United States’ decision to halt the issuance of certain work visas this year, saying the group is asking the governments of the two countries to take measures to prevent disruption to Japanese companies’ operations.

The visa halt “poses a serious problem to business operations,” Hiroaki Nakanishi, chairman of the Japan Business Federation known as Keidanren, said in a press conference in Tokyo.

The U.S. government on Monday extended a pause in the issuance of “green cards,” or permanent resident cards, until the end of December, and also expanded the measure to include some work visas such as the H-1B, which is largely used by technology companies, the H-2B for nonagricultural temporary workers, as well as those for exchange visitors and intracompany transferees.

“We need to make the case that (the visa halt) definitely has a negative effect on the U.S. economy,” he said.

Nakanishi, who is also chairman of Hitachi Ltd., added that his company’s employees currently working in the United States may be forced to cut their stay short.

The administration of U.S. President Donald Trump has said it aims to ensure that American workers are first to get jobs amid a high unemployment rate in the country in the wake of the novel coronavirus outbreak.

Google launches first cloud region in Indonesia

Google Cloud announced the opening of its new Jakarta region on Wednesday, bringing services closer to its Indonesian and Southeast Asian consumers.

The company’s Indonesia country director, Megawaty Khie, said the Jakarta region would allow businesses to comply with national regulations and ease recovery options for consumers.

“We chose Jakarta as the next region because Indonesia has one of the highest gross domestic product growth [rates] in the region and is home to many of Asia’s unicorns,” she said in an online press conference, referring to large start-ups.

Indonesia’s digital economy is well on track to dominate Southeast Asia as its market value is projected to triple to US$130 billion by 2025 from $40 billion in 2019, according to the latest “e-Conomy Southeast Asia” study.

The newly launched cloud platform marks the first Google region in the country and the ninth in the Asia Pacific. In total, Google Cloud has 24 regions with 73 zones in 17 countries around the globe.

Google first announced the plan to open Google Cloud in Indonesia during its Cloud Summit in 2018. It plans to launch two cloud regions Asia Pacific, namely in Delhi and Melbourne in the coming years.

Google Cloud Platform offers cloud computing services, data analytics, machine learning and security and management tools for businesses.

Several companies in the country utilize Google Cloud services, including e-payment solution GoPay and telecommunication company XL Axiata.

“Having Google Cloud available in the region means that we can comply with regional regulations and requirements. This also means that latency and traffic can be more manageable,” said XL Axiata chief information and digital officer Yessie Yosetya.

 

Meanwhile, GoPay CEO Aldi Haryopratomo said the company utilized cloud computing to manage, analyze and capture data quickly for making data-driven decisions.

According to a 2019 study by Boston Consulting Group BCG commissioned by Google Cloud, companies that use public cloud services could add around $36 billion to Indonesia’s GDP between 2019 and 2023. They could also create around 350,000 jobs across different industries.

To help the country capture the potential, Google Cloud Indonesia plans to roll out 150,000 training labs in Indonesia this year to enable cloud computing training and certification for Indonesians.

“Going into digital transformation era, Indonesia will see higher demand for digital talent, so we created this program along with other initiatives,” Megawaty said, adding that Google was also partnering with the Information and Communications Ministry in the latter’s Digital Talent Scholarship program.

Indonesia is currently home to two data centers from Alibaba Cloud and Google. Meanwhile, Amazon’s cloud subsidiary Amazon Web Services revealed that it would build a data center in 2022.

WhatsApp to launch payments service in india after Brazil blow

After Brazil suspended newly launched WhatsApp’s payments service to “preserve competitive environment” just after a week of its launch, the Facebook-owned messaging platform said it is committed to launching the digital payment service in India, a process that has been in the works since over two years now.

“Even as we continue to work with our local partners and the Central Bank in Brazil, we remain committed to launching WhatsApp Payments in India. UPI (Unified Payments Interface) is a lighthouse model for the rest of the world, with local banks and institutions driving innovation on a local stack that is capable of delivering financial services for all,” said a WhatsApp spokesperson.

On Wednesday, Brazil’s central bank said that Visa and Mastercard should immediately stop processing payments and transfers made through WhatsApp, while it investigated further.

Banco Central do Brasil posted a notice on its website Tuesday, reading (translated from Portuguese): “Within the scope of its duties as regulator and supervisor of payment arrangements in Brazil, the Central Bank ordered Visa and Mastercard to suspend the start of activities or immediately stop using the WhatsApp application to initiate payments and transfers within the scope of arrangements instituted by these supervised entities. The BC’s motivation for the decision is to preserve an adequate competitive environment, which ensures the functioning of an interoperable, fast, secure, transparent, open and inexpensive payment system.”

This comes on a day when the Competition Commission of India (CCI) cleared WhatsApp parent Facebook’s $5.7-billion investment in Reliance’s Jio Platforms.

Meanwhile, in an ongoing case in the Indian Supreme Court, WhatsApp said last week that it was fully compliant with the country’s data localisation requirements as specified by the banking regulator Reserve Bank of India.

India is WhatsApp’s largest market with over 400 million users. It launched WhatsApp Pay, based on the UPI system in February 2018, as part of a trial with one million users, where Google Pay, PhonePe, Paytm and Amazon Pay are leading players.

More China companies seek Hong Kong dual listings as US pressure rises

Yum China, the operator of Pizza Hut and KFC on the mainland, has confidentially filed for a $2 billion listing in Hong Kong while Alibaba-backed delivery company ZTO Express is also considering selling shares in the city, joining a line of U.S.-listed Chinese companies hoping to go public closer to home.

People familiar with the plans said that the decisions were made by the companies in view of mounting tensions between Beijing and Washington.

“Chinese companies are warming up to the idea of holding a second listing,” said one of the people close to the plans. “While the companies can’t be forced off U.S. exchanges for at least three years, they are considering the move given strong reception in Hong Kong.”

If successful, the companies will join Alibaba Group Holding, game developer NetEase and online retailer JD.com on the Hong Kong Stock Exchange. Alibaba, NetEase and JD.com have raised a cumulative $20 billion through secondary listings in Hong Kong since November last year.

Chinese companies are tapping the Hong Kong market after the U.S. Senate last month approved a bill that could force mainland companies to delist if they fail to comply with U.S. regulations for three consecutive years.

Foreign companies are now subject to a lower standard of scrutiny. The bill is awaiting approval by the U.S. House of Representatives.

The secondary offerings of JD.com and NetEase this month were multiple times subscribed. Their retail tranches were oversubscribed by 179 times and 360 times, respectively. Those shares have held above their issue prices since their successful listing.

New York-listed Yum China, which has picked China International Capital Corp. and Goldman Sachs as advisers for its Hong Kong offering, will seek approval from the stock exchange in the “coming weeks,” one person familiar with the deal said.

Yum China was spun off from U.S. parent Yum Brands in 2016 and is China’s largest restaurant chain operating over 9,200 outlets in over 1,400 cities and towns.

Chinese investment firm Primavera Capital Group is one of its largest shareholders, with a 4.4 percent stake as of May. Fred Hu, group founder, is now Yum China’s chairman and William Wang, another Primavera partner, is also a board member.

ZTO Express is in talks with banks about a potential listing, which could happen as early as the end of the year, a person familiar with the discussions said.

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