China: Expecting 9.5% GDP in 2010

Reuters reported today that the State Council Development Research Centre (SCDRC),a leading state think-tank, has said that China’s economy would remain robust, as market-driven investment picked up while government-led stimulus spending slowed.They predict China’s economy to grow 9.5 per cent in 2010, topping 2009's expected figure, as real estate investment buoys growth and inflation remains mild.

“In 2010 the external (economic) environment will remain quite grim, but it will not deteriorate any further,” said the Centre’s report, which was published in the Chinese-language China Economic Times.

“Against a backdrop of ample production and supplies, we forecast that in 2010 there will not be marked inflation,” it said, adding that the CPI inflation index was likely to stay less than 3 percent for 2010.

The report adds to recent signs that Chinese officials and many experts are guardedly confident the country’s economy can maintain momentum in 2010, surmounting worries about inflation, investment policy and a heady housing market.

The country’s 4 trillion yuan stimulus package, complemented by a record surge in bank lending, propelled the economy to 8.9 per cent year-on-year growth in the third quarter of 2009.

While the government stimulus spending will fall off this year, investment in real estate could grow by 30 to 40 percent compared with 2009, and “become a main force driving investment growth,” said the new report, written by Zhang Liqun, a macro-economist in the Centre, which advises the government.

China’s manufacturing sector steamed ahead in December with rises in new orders and output driving the purchasing managers’ index (PMI) to 56.6 in December from 55.2 in the previous month, pushing the key indicator to a 20-month high.

Some cities in China have seen residential property prices rise by about a third this year, and real estate investment in China accelerated in November, up 17.8 percent for the first 11 months of 2009 compared with the same months in 2008.

Zhang said investment in real estate would remain strong, even as growing supply of new housing cooled price rises, especially from later in 2010.

Singapore: Casino Junket Restraints

It's not all that bad for the new casinos that will begin operating soon. There is the good news and the not so good news. These rules are found on the Casino Regulatory Authority (CRA) web-page.

So let us digest the good, the bad and the ugly asects of these rules.

"High rollers accustomed to discreet VIP access may find themselves in the spotlight if they plan to gamble in Singapore’s casinos.

The Casino Regulatory Authority (CRA) has released detailed regulations on the licensing and regulation of casino junkets here which require casino operators to make arrival reports that will include the particulars of all junket players and promoters at least one hour before any are allowed to enter the casinos.

This puts an end to gambling incognito and, more importantly, increases the level of oversight expected of casino operators here.

Indeed, the regulations, which were made public yesterday through CRA’s website, leave the onus of maintaining the integrity of junkets on the casino operators.

But this is not to say that junket promoters will have it easy.

Junket promoters organise gambling trips for high rollers and usually earn a commission on the bets placed by their clients. Some promoters offer credit to gamblers as well as ‘comps’ (complimentary items such as travel and lodging) to entice clients to gamble.

To regulate the junket industry, CRA requires all junket promoters and representatives to be licensed and undergo ‘investigations’ which are similar to probity checks for casino licences.

The cost of the checks will be borne by the junket promoters.

Licensing requirements have also been set up detailing the duties of promoters, including maintaining records of all clients, commissions, rebates and financial statements which CRA will have access to.

They will also have to declare their finances on a regular basis.

As a part of the regulations, a junket agreement between the casino operator and the junket promoter detailing the terms of business including commissions must be lodged with CRA. Disciplinary action for anyone who steps out of line could include a fine of up to S$400,000 (RM975,000).

A spokesman for CRA said: “CRA has studied the way various jurisdictions in the US and Australia as well as Macau regulate junket operations. We have also taken cognizance of Singapore’s circumstances — that we are a leading financial centre with a high level of safety and security as a competitive advantage — and developed a junket licensing regime that would be suitable for Singapore’s local context. The junket licensing regime is developed to facilitate a conducive environment for junkets to operate in Singapore, without compromising on law and order considerations.”

Melvyn Boey, an analyst with Bank of America Merrill Lynch, said that he is not surprised by CRA’s junket regulations.

He believes the main aim of the junket regulations is to restrict money laundering and this is likely to “deter” that segment. He also said that certain requirements by CRA, such as the disclosure of junket commissions, is similar to those in other gaming jurisdictions.

It has been reported that the crucial business brought in by junkets could elude Singapore. However, Boey believes “in-house” high rollers from the casinos’ own VIP lists will account for much of the high-roller business in Singapore.

“I am not inclined to change my revenue projections,” he added. For 2011, the first full-year of operations, Boey expects total gross gaming revenue from the casinos at Marina Bay Sands and Resorts World at Sentosa to hit S$4 billion.

Junkets generally refer to the VIP or high-roller business segment in casinos and depending on the country, can account for a significant portion of the gross gaming revenue.

UOB KayHian notes that for Genting in Malaysia, VIP gamblers accounted for 30 per cent of the total gaming revenue in 2008. In Macau, it noted that VIP gamblers accounted for 66 per cent of total gaming revenue while in Singapore, it has projected VIP gaming revenues of about 42 per cent at Resorts World at Sentosa.

UOB KayHian also said in a recent report that the “market may be overly optimistic on Singapore casinos’ high-roller revenues due to rising competition, client stickiness and potentially cumbersome disclosure requirements”.

Krist Boo, the spokeswoman for Resorts World at Sentosa, said: “Junket operators play an important role in bringing premium gaming customers into Singapore. They are integral to Singapore’s vision of making the integrated resort an international success, and we support that vision. We are working closely with both CRA and junket operators to ensure that our operators are regulated and licensed.”

So, let teh casinos live and let live, Singapore style.

Singapore: Full Year Contraction of 2.1% in 2009

Singapore has pulled through a difficult year.GDP growth for the fourth quarter was 3.5 per cent year-on-year, which means a 2.1 per cent contraction in GDP for the full year of 2009.

This compares with the slight 1.5 per cent GDP growth recorded in 2008, and comes in at the lower end of the government’s forecast of a 2 to 2.5 per cent decline in 2009’s GDP.

“Our economy is growing again, and has recovered much of the ground since the recession began last year,” said Premier Lee Hsien Loong in his New Year message yesterday evening.

This, he said, was achieved by both government programmes such as SPUR, Jobs Credit and the Special Risk-Sharing Initiative.

And, unions, employers, grassroots and community organizations played critical roles in keeping unemployment under control, or helping retrenched workers.

For 2010, the government expects the economy to expand by between 3 and 5 per cent. With the improved outlook, special measures such as Jobs Credit and the risk-sharing scheme are gradually being phased out.

Outlining major investments in capabilities and infrastructure, such as the two integrated resorts, extended MRT lines and new HDB townships, as well as the two new tertiary institutions, Lee said that Singapore “must also address our growth constraints” as physical limits tighten.

“We must therefore shift gears, to grow by qualitative improvement: transforming the economy, developing skills and growing talent, both our own and from abroad,” he said. This means local enterprises need to “innovate relentlessly and build the capabilities to grow into world-beating companies”, while workers too must keep upgrading their skills and remain flexible even though job prospects have now improved.

It looks like Singapore is slowly turning around on the home stretch.

I believe Singapore can do it.

Almost all Goods but...............

Beginning tomorrow, six Asean member countries namely Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand can import and export almost all goods across their borders at zero tariff.

As of Jan 1, 2010, an additional 7,881 tariff lines will come down to zero tariffs in the Asean-6, bringing the total tariff lines traded under the Common Effective Preferential Tariffs for ASEAN Free Trade Area (CEPT-AFTA) to 54,457 or 99.11 per cent.

Additionally, with the reduction, the average tariff rate for these countries is expected to further decrease from 0.79 per cent in 2009 to just 0.05 per cent in 2010, the Asean Secretariat said in a statement here today.

In 2008, intra-Asean import value of commodities for these 7,881 tariff lines amounted to US$22.66 billion, or 11.84 per cent of Asean-6 import value within Asean.

The tariff lines include final consumer products such as air conditioners; chilli, fish and soya sauces; as well as intermediate materials such as motorcycle components and motor car cylinders.

Other products include iron and steel, plastics, machinery and mechanical appliances, chemicals, prepared foodstuff, paper, cement, ceramic and glass sectors.

The statement said the elimination of tariffs by Asean-6 underscores Asean’s commitment to dismantle tariffs and keep intra-Asean trade open.

It would also serve as a catalyst for the development of the single market and production base projected by the Asean Economic Community (AEC) Blueprint.

The actual impact and how much this final instalment would be translated into savings for consumers would depend on the market dynamics of the respective Asean-6 countries, it said.

Asean Secretary-General Dr Surin Pitsuwan said: “We sincerely hope all parties will act to ensure that the man on the street will benefit from these reductions in tariffs.”

As for the business community, especially the downstream producers, Dr Surin said that they also stood to gain.

“Lower cost of inputs will allow the business community a wider choice of goods, and in the process, they will move towards becoming more competitive globally, as envisaged in the AEC Blueprint,” he added.

The CEPT-AFTA covers the entire range of products traded by the Asean member countries and provides for the gradual reduction in tariffs of these products, which has been ongoing since 1993.

Under the CEPT-AFTA schedule for tariff reduction, each member country is allowed to place their products in the normal track, where the commitment is for the tariffs to be reduced to zero by 2010 for Asean-6 and 2015 for Cambodia, Laos, Myanmar and Vietnam.

In 2010, these countries will also see tariff reductions under the CEPT-AFTA commitments to 5 per cent, where the average tariff rate will decrease from 3 per cent in 2009 to 2.61 per cent.

Under the CEPT-AFTA, agricultural products such as tobacco, coffee, live animals and animal products, which come under the Sensitive List (SL), will have their tariffs reduced to 5 per cent on 2010 and to zero tariff by 2015.

The Highly Sensitive List (HSL), comprising rice, will have their tariffs capped on a specified date. As for the General Exclusion List (GEL), the tariffs will remain based on factors such as national security and morals, health, aesthetic and archaeological grounds.

As of today, 487 tariff lines or 0.89 per cent of tariff lines for Asean-6 still remain in the SL, HSL and GEL categories. — Reuters

Watch Metronic go Global

No, it started locally even though back then. It has high hopes of going global almost immediately on listing on the MESDAQ Board those days.

Through networking it got some telemetry jobs over in Putrajaya and also made in-roads into pre-diagnostics software which was adopted by some premier hospitals in the Klang Valley.

You may not remember but Metronics was a dividend paying counter. It even gave a bonus issue when it migrated to the Main Board. As the projects in their books took off and complete,new projects were hard to find. It tried very hard going over to the Middle-east,India and China. Except for a few MOUs, nothing solid came Metronic's way.

The share price plunged below 5 sen at one time. Then it became hot again somewhere in the third quarter of 2009 when Metronics secure a build-operate and transfer water project in An-Hui province, China. The share price went as high as 16 sen.

Today's news as the year closes is good news for fatigued but loyal Metronic shareholders. That Metronic Global Bhd’s subsidiary Metronic Engineering Sdn Bhd has won an Arab Emirates dirham 21.3 million (AED100 = RM96.20) job from Sunway Engineering Sdn Bhd for the proposed Arzanah development in Abu Dhabi, the United Arab Emirates is some comfort. It is a start. I am sure shareholders would be most thankful to Sunway for off-loading the IT portion to Metronics which is its forte.It is not easy going it alone in the vast reaches of the Middle-East. That Sunway and Metronics have banded together in alliance speaks of more promising jobs in the future.

The job with Sunway Engineering is for a sub-contract to supply, deliver, install, test and commission the building management system, telecommunication and ELV services for Rihan Heights.

The project is expected to be completed by October 31 2010.

I can see more turn-around for Metronics in 2010?

Do you dare invest in Metronics? It is till below 10 sen today.

That Naughty Mug

Yes, NicoleKiss has been going around the world these past few days and picking novel items. This, cheeky mug, she just picked and posted on her blog. I though I will re-post it here. Maybe we can all look at the cheeky wordings and reflect?


How would you read it?

Prospects 2010: Almost Zero Tariff for China-ASEAN

The 1st of January 2010 is a significant date. On this day, ASEAN businessmen will have virtually unfettered access to almost two billion consumers from China. This historically signals the opening of the world's largest free trade area.

The Asean-China FTA, which has been in the pipeline since 2002, is set to be worth about as much as the European Union or the North American Free Trade Agreement (Nafta), and will be bigger than both combined in terms of population.

Under the new accord, China and the six founding Asean countries — Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand — are to remove tariffs on 90 per cent of imported goods, covering 7,000 product categories.

The other four Asean members, including Vietnam and Cambodia, will follow suit in 2015.

Officials hope the agreement will accelerate inter-regional trade — already expanding at 20 per cent a year — and reduce Asia's reliance on developed economies weakened by the economic downturn.

Trade volume in the China-Asean free trade zone, which has a combined gross domestic product of more than US$2 trillion (RM6.85 trillion), will “jump” by an annual rate of 40 per cent to 50 per cent, according to Thai embassy official Warawudh Chuwiruch, who was speaking at a press conference in Beijing two days ago.

Over the past 10 years, Asean-China trade has rocketed from US$39.5 billion in 2000 to US$192.5 billion last year, according to news agency AFP.

And China recently leapfrogged the United States to become Asean's third largest trading partner.

It is poised to overtake Japan and the EU to emerge as the single largest trading partner within the first few years of the FTA, Pushpanathan Sundram, Asean's deputy secretary-general, told AFP.

Economist David Cohen, of Action Economics, said that as China becomes an increasingly important export market for the world, the FTA will be a welcome additional boost for Singapore.

“I don't know how much material difference it is going to make, but the important thing is that China's growth is on track. And, whatever help the FTA can give to Asean economies will be beneficial,” he said.

Some Singapore economists, however, do not expect the FTA to have an immediate impact on the Republic's economy.

“In the initial stage, I think the political implication of the FTA overwhelms the economic significance,' said Nanyang Technological University economist Tan Khee Giap.

“If you talk about Singapore, even without this Asean-China FTA, we are already doing very well: We have been exporting more than we import from China over the last three or four years.”

From next year, the average tariff China charges on Asean goods will be cut from 9.8 per cent to 0.1 per cent, according to AFP.

Average tariffs imposed on Chinese goods by Asean states will fall from 12.8 per cent to 0.6 per cent.

So, are we going to have a upward shift beginning in 2010 that can see Malaysia expediting its return to better times before 2007?

Or it only on paper?