from page 16 gdp upgrade for taiwan - asia todaychina and indonesia are both net importers of rice....

TAIPEI: Although the political tem-perature across the Taiwan Strait

has risen in the wake of the disputed re-elec-tion of Taiwan’s President Chen Shui-bian, itis business as usual for investors.

In Taipei, the Directorate-General ofBudget, Accounting and Statistics (DGBAS),Hale Liu, told reporters that Taiwan’s grossdomestic product “is likely to grow morethan five per cent this year over 2003. Theforecast exceeds the DGBAS forecast of 4.7per cent made in February, which was raisedthen from a previous estimate of 4.1 per cent“as resurgent domestic consumption joinedalready strong exports to fuel growth”.

Liu said private investment and exportgrowth this year will be even stronger thanthe February forecast, while private con-sumption will be “slightly better”.

HSBC has adjusted its forecast for econom-ic growth from 5% to 6.5%, based onTaiwan’s economic recovery, solid manufac-turing sector and the diminishing impact ofthe March 20 presidential election. In terms

B U S I N E S S O U T L O O K TAPPING RURAL RESOURCES

ASIA TODAY INTERNATIONAL JUNE/JULY 2004 17

Gold, alumina miners setting up in ChinaFrom JAMES YAPPASIA TODAY INTERNATIONAL Correspondent

HONG KONG: A Toronto-listed min-ing company, Silk Road Resources,

has agreed to jointly explore gold prospectsin China’s north-western Gansu provincewith the Gansu Qinqi Minerals CompanyLimited, a wholly-owned subsidiary of theGansu Bureau of Geology MineralExploration and Development.

The deal is another strike by a group offoreign companies tapping one of China’smost vast regions for mineral resources.

Silk Road, which holds 70 per cent in thejoint venture (the remaining 30 per cent isheld by the Chinese partner) is expected toput in at least US$5 million over three yearsduring the initial exploration phase. It willalso shoulder all exploration risk. In theevent of commercial findings, the two com-panies will jointly invest in development andproduction and split cost and profits accord-ing to their shareholdings. Investment in thedevelopment period is expected to run ashigh as US$500 million.

Silk Road President and CEO AleenPalmiere is reported by the Chinese press assaying that prospects in the exploration areaare attractive. “We know there is gold there.The only question is whether it is economi-cally feasible to produce,” Palmiere wasquoted as saying.

After more than two years of negotiations,Aluminium Corp. of China (Chalco) has

received Central Government approval to setup a US$440 million joint venture with theworld’s largest aluminium company, Alcoa.Analysts says Chalco and the US-based Alcoawere bogged down by prolonged talks withthe Guangxi provincial government over thethorny issue of power supply.

“There have been difficulties in the nego-tiations on power tariffs between Chalco,Alcoa and the Guangxi government,” DaiwaSecurities analyst Geoffrey Cheung said.However, Chalco said later that the two par-ties had made substantial progress in garner-ing support from government bureaus.

The joint venture will be set up inPingguo in the Guangxi AutononmousRegion, and will begin operations by theend of this year. The Pingguo plant has ayearly capacity of 850,000 tonnes of alumi-na and 150,000 tonnes of tones of alumini-um. This compares with Chalco’s output lastyear of 6.05 million tonnes of alumina and760,000 tonnes of aluminium.

From JAMES YAPPASIA TODAY INTERNATIONAL Correspondent

Gold plant takeoverTHE LISTED Australia gold explor-er Michelago Limited is to acquire

the operating BioGold production facility inShandong Province on China’s easternseaboard. The BioGold plant has more than280,000 ounces of gold production sched-uled for this year.

Acquisition of an 82 per cent stake in theBioGold plant will generate Michelago’s

maiden production revenue, with first enti-tlements expected in the September 2004quarter. The Company will fund theBioGold acquisition from existing cashreserves, exercise of existing share optionsand a proposed debt facility and a pro-posed share placement to Canadian-basedBactech Corporation, a joint developer ofthe BACOX bioleaching process used in theBioGold plant.

The acquisition entitles Michelago to theexclusive licence for BACOX for up to 10years in China, Mongolia, Siberia andKorea. The BACOX process is able to treatmetallurgically complex ores.

Michelago has three other regional goldprojects in China:

■ Guangxi Province (southeast China):An interest in the Jinya Gold Project (cur-rently under negotiation). This hosts aninferred gold resource of 650,000 ouncesof gold, in addition to a registered 90 percent SFJV interest in gold exploration proj-ects located near the Jinya Gold Project.

■ Shandong Peninsula (eastern China): ALetter of Intent allowing the Company toearn a 51 per cent interest in any goldresources below 500 meters depth in anarea of 45sq km on the Peninsula; and

■ Xinjiang Province (far western China):An exploration project entitling theCompany to earn a 100 per cent interest ina 2,700 sq km gold and copper explo-ration area, west of the city of Urumqi.

From page 16

indicate that individual projects are normallyapproved on the basis of a direction that theproject is allocated to a domestic companywhich can involve foreigners but usuallyonly under consultancy agreements.

Consistent with the priority for domesticfunding, it is not unusual to see directionsthat allows the four State-owned banks tolend above their limits for individual projects.

The tendering rules are also slanted infavour of domestic companies. Many State-owned corporations also try to get aroundthe tendering rules by splitting a project intosmall packages. The Government itself hasallocated at least six power projects (somefairly small and some medium-sized) to amain contractor by way of EPC, so that ten-dering is only for the supply of equipment.

Reinold says the BOT legislation was sup-posed to resolve a lot of problems. But in factthe BOT method of investment has only beenused for a handful of projects because theGovernment, or some of the main Ministries,do not like this method of investment, in partat least because it can take a long time tonegotiate the projects.

“There are no real legislative barriers toFDI. It is more a matter of an unwritten poli-cy not to involve foreigners unless absolutelynecessary,” says Reinhold.

GDP upgrade for Taiwanof offshore investment, the TaiwanSemiconductor Manufacturing Co (TSMC)believes mainland investment by Taiwanchipmakers is unlikely to abate. “We are stilltargetting to start commercial production inShanghai before the end of the year,” saidTSMC spokesman Tzeng Jin-hao.

TSMC is among a number of Taiwan chip-makers setting up foundries on the mainlandto compete with rivals such asSemiconductor Manufacturing InternationalCorp and Grace Semiconductor, both ofwhich were started up with Taiwan funds.

However, they must first secure approvalfrom Taiwan’s Democratic Progressive Party(DPP) government, which wants to see chip-makers ramp up production of advanced 12-inch wafers in Taiwan before it allows themto shift older eight-inch wafer productiontechnology to the mainland.

TSMC, the world’s largest contract chip-maker, plans to build an eight-inch waferfacility in Songjiang, a suburb of Shanghai.The plant will have a total investment ofUS$898 million and will be fitted out primari-ly with used equipment from the company’sfacilities in Taiwan.

B U S I N E S S O U T L O O K ‘ECONOMIC, POLITICAL STABILITY AT RISK’

ASIA TODAY INTERNATIONAL JUNE/JULY 200418

RICE, THE STABLE diet of Asians,could become the weak underbelly

of the region’s economic progress andpolitical stability in the next decade or two.

Asia’s rice industry is facing an emergingcrisis, caused by land and labour shortageand declining production, says well-knownagricultural economist Keijiro Otsuka. At atime of abundant supplies and record lowprices, many may laugh at such a statement,says Otsuka, but people and governmentsmust look beyond today into the future.

Across Asia, 200 million rice farmers arefacing increasing problems in supply of suchessential resources as land, labour and water.Unless they can grow new high-yieldingcrops, their livelihoods will be threatened incoming years.

The main issue is land. Increasingly, indus-

trialisation and urbanisa-tion have encroached onfarmland in many coun-tries. Farm workers aredrawn to factories, creat-ing a shortage of labour.Half of water usage in Asiais channelled into rice.Asia’s looming water crisismeans that traditional useof up to 3,000 litres of water to produce onekilogram of rice is unsustainable.

“We are worried that declining productionwill lead to social problems and politicalinstability in populous countries,” he says.More people will plunge into poverty —against the stated aim of the United Nationsto halve the number of Asia’s poor by 2015.“At this rate,” he says, “it will be impossible

to achieve this target. Ibelieve rice prices willsteadily increase over thenext five years.”

China and Indonesiaare both net importers ofrice. With investment inirrigation and research,Bangladesh and WestBengal (in India) are still

maintaining productivity gains. Bangladeshis now self-sufficient. But in five to six yearstime, it may be forced to start importing riceto feed its growing population.

For more than four decades, researchorganisations, especially the InternationalRice Research Institute (IRRI), based inManila, have developed new breeds andtechnology to enhance Asia’s rice pro-duction. The so-called Green Revolutionof the 1960s was the result of a break-through in research that brought newstrains of rice to the industry.

Otsuka, who is also Vice President of theInternational Association of AgriculturalEconomists, says that in the early years (upto the early 1980s), the rice-producingnations of Asia enjoyed annual rice yieldincreases of 2.5 per cent and productiongains of more than three per cent.However, between the mid-1980s and thelate 1990s, the rate of annual yield increasewas nearly halved and the rate of productionincrease fell even further. Many rural ricecommunities in Asia are growing increasing-ly restless, as productivity stagnation leavesthem trapped in poverty.

Since the mid-1990s, rice production hasstagnated, except for Vietnam, now the sec-ond producer in the world, and WestBengal. Today, Vietnam enjoys the highestyields in Asia.

Otsuka says Vietnam and West Bengal arestill benefitting from planting newer vari-eties of rice and better irrigation and tech-nology. But in the world’s biggest rice-pro-ducing country, Thailand, production hasnot increased. “There is nothing moreimportant to any country than its ability tofeed itself,” he says. “In Indonesia, thismeans growing enough rice. Food security isan essential pillar of national security.”

Otsuka says the challenge is on theresearch community to develop newstrains of rice that grow with less water, onhigh lands and are of more nutritious vari-eties. He says work is going on to developnew types of dry-field rice. As well,researchers are trying to develop strains towithstand such complex stresses asdrought and saline soil.

An investment of just 40 cents per farmerfor each of the next 20 years would go along way toward ensuring that they canearn a decent living sustainably supplyingrice consumers with plentiful of supplies ofaffordable rice, says Otsuka.

❝ Across Asia, 200 million rice farmers faceincreasing problems insupply of essentialresources such as land,labour and water❞

Rice the weak underbelly of future growth

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T R A D I N G I N F I N A N C E LIFTING FINANCIAL STANDARDS

19

Why China is swelling Hong Kong bourseALREADY, 40 per cent ofdaily transactions on themain board of the HongKong Stock Exchangecome from the stocks of Chinese and Chinese-related companies. HongKong is seen as a step-ping stone to the globalmarket . . .

HONG KONG: The symbiotic rela-tionship between Hong Kong and

China is best manifested in the area of finan-cial services, especially in capital raising.

China is widely expected to allow Chinesesavings to be invested in offshore assets, andHong Kong is well-positioned to receive suchfund inflows when the tap begins to turn. Aswell, at any one time at least 100 Chinese andChina-related companies are in the queue tolist on the Hong Kong Stock Exchange.

At the current rate of listing, Hong Kong’scombined stock exchanges — its main andsecond boards — will likely have a marketcapitalisation of almost US$1 trillion in fiveyears. Already, 40 per cent of daily transac-tions on Hong Kong’s main board come fromthe stocks of Chinese companies. That pro-portion is set to grow as more Chinese com-panies are listed in China’s SpecialAdministrative Region.

Ten years ago, recalls Tony Miller,Permanent Secretary responsible for FinancialServices and Treasury in the HKSAR, therewas just one Chinese company on the HongKong Stock Exchange (HKSE). That was theChinese brewer Tsingtao. Says Miller: “It wasa great success.” Tsingtao achieved twoobjectives — it raised the capital it neededand it received considerable internationalexposure. “It became trendy to drinkTsingtao beer. International sales picked up.”

Since then, says Miller, the so-called Chinafactor has changed Hong Kong’s financiallandscape. Today, Chinese companies repre-sent 15 per cent of all companies listed onthe HKSE and the GEM (Growth EnterpriseMarket). These Chinese and China-relatedcompanies make up about 20 per cent of theboards’ combined market capitalisation, andare responsible for more than 40 per cent ofdaily transactions.

Hong Kong has become the centre of theChina play for global institutional investors(see page 20). Hong Kong sees a net capitalinflow of between HK$130 and HK$150 bil-lion a year — 10-12 per cent of its GDP.

“Chinese companies have raised aboutHK$750 billion, and the rationale for listinghas changed — it is not just capital or

exposure to the international market.Increasingly, it is about exposure to interna-tional scrutiny for international standards.”Miller says Chinese officialdom regards a list-ing on the HKSE as the best way to bringChinese companies up to par with interna-tional financial standards. Hong Kong is thestepping stone to the global market. Most listin Hong Kong, then seek secondary listing onthe New York Exchange, for example.

The first wave of Chinese companies to listwere the large State-owned industrial enter-prises, which continue to seek listing. Millersays there are now two other sub-sets seek-ing to list. “These are companies establishedin Hong Kong, Taiwan or Japan whichrequire extra capital for their operations inChina, usually in the Pearl River Delta or theYangtse region; and new private companiesin the Mainland which can’t get in the queueto be listed in Shanghai.”

The emergence of Chinese companies hasfilled a gap in Hong Kong. Most Hong Kongcompanies suitable for listing have alreadylisted. “In terms of opportunity, it is comingfrom the Mainland.”

Miller says the opportunity to list Chinesecompanies will last for some years to come.Large Chinese banks, suchas the Construction Bankof China, AgriculturalBank of China, Industrialand Commercial Bank ofChina and large propertycompanies are amongthose waiting to list. Heagrees that after this grouphas listed, the rest will notbe so “dramatic”.

“The role for us is there,provided we play ourcards right. The essential part of (that) is notto go getting greedy and not to list justbecause someone applies. We cannot affordto list every company that applies just tokeep our numbers up.” On average, Millersays one in two companies qualifies for HongKong’s listing requirements. “Our policy is tohave the same standards for corporate gover-nance as other major financial centres. Welook for quality. And when we come acrossstupidity, then we will punish the company.

With the sort of numbers we aretalking about, we are never goingto get it right every time.” But leg-islation is being stiffened to min-imise mistakes. Hong Kong hasamended its legislation to providepenalties for misdemeanour bylisted companies.

The Hong Kong exchange,Miller says, is no longer a domes-tic stock exchange. It is an inter-national exchange. And to consol-idate its international links, it istalking to exchanges in bothLondon and New York for closerco-operation. In five years time,

he expects non-Hong Kong companies tomake up 40 per cent of market capitalisationand, by then, combined market capitalisationcould likely reach US$1 trillion. At the time ofwriting, the HKSE market cap was US$740billion and the GEM market cap US$30 bil-lion.

Miller says officials and executives from theIndian public and private sectors regularlyvisit regulators in Hong Kong to discuss theprospect of listing their companies on theHKSE. “Assuming that convertibility of therenminbi is the ultimate goal of Beijing,” saysMiller, “we can expect a series of moves (andthis) will progressively turn the tap.”

One of those moves is allowing HongKong banks to establish renminbi accounts.This has proved to be a boon to Hong Kongresidents, and particularly shop-keepers whoaccept renminbi for payments of goods andservices from Chinese tourists.

The next most interesting development forHong Kong, says Miller, is a proposal to allowthe National Social Security Fund to invest inoverseas securities. Market sources estimatethe assets of the fund at 132.5 billion yuan, ofwhich only five per cent or 6.6 billion yuan isinvested in A-share markets.

Miller says the Chineseauthorities are talkingabout allowing the fund toinvest three per cent of itsassets offshore. “Theassumption is that theywill use their own banksto invest. We will have nocontrol of that. I canunderstand that theywould want to do it cau-tiously.” Last year, Chinabegan approving foreign

institutions to invest in the Mainland and inChina’s large banks. “The other side of thecoin is allowing Mainland domestic institu-tional investors to invest offshore.”

Miller says the Chinese are attempting toimprove their systems and have, in fact, inrecent times employed key executives fromHong Kong. Likewise, says Miller, “HongKong is hiring Mainland brains to comedown here to learn the ropes and extendthe networks”.

By FLORENCE CHONGEditor ASIA TODAY INTERNATIONAL

❝ The role for us isthere, provided we playour cards right. Theessential part is not togo getting greedy andnot to list just becausesomeone applies just tokeep our numbers up❞

SINGAPORE BANKS operate in atight domestic market, given the

country’s small population and the increasedcompetition posed by foreign banks.

Aware of their limited core market, thethree main Singapore banking groups, withslightly differing strategies, increasingly arelooking at offshore regional markets to growtheir business. “The Singapore banks stillhave opportunities to reap further organicgrowth, but as the Singapore economymatures, the high growth rates enjoyed overthe past decade or so are less likely in themedium term, limiting the opportunities forbanks to enjoy higher interest margins,” saysSingapore-based Standard & Poor’s creditanalyst, Nancy Koh.

Given their conservative nature, Singaporebanks are selective about whom and wherethey will do business. “Their strategy is forthe acquired financial institutions to leverageproducts and services off the parentSingapore banks, which will adapt them tosuit the local market conditions,” says Koh.

But while the banks’ regional-marketexpansion strategies are more pronouncedthis year than previously, the domestic bankgroups are re-entering the markets at a time

T R A D I N G I N F I N A N C E


HONG KONG: The Hong KongGovernment issued bonds in April

to raise HK$6 billion in its first securitisationof Government assets. It has established aspecial purpose vehicle, Hong Kong Link2004 Ltd, to securitise toll revenue from fiveexisting tunnels and one bridge/road linkover a maximum of 12 years. Involved arethe Aberdeen, Cross-Harbour, Lion Rock,Shing Mun and Tseung Kwan O tunnels andone bridge, the Lantau Link.

Standard & Poor’s said in a pre-sale reporton the issue that, with the exception of theLantau Link, all facilities have more than 10years of operating history and have shown astable traffic pattern over the past few years— even during the first-half of 2003, whenthe economy contracted as a result of theSARS outbreak. At the time, Frederick Ma,Hong Kong’s Secretary for Financial Servicesand Treasury, said the issue was an impor-tant step forward in creating and developingthe local bonds market. The Government istrying to deepen the bond market by pro-viding more diversified products for retailand institutional investors.

Hong Kong’s Permanent Secretary forFinancial Services and Treasury, Tony Miller,has signalled that the Government intends toissue more bonds, aimed at establishing abond market in Hong Kong. This year, theGovernment intends issues totalling no morethan HK$20 billion. Miller says the money isnot for funding operational expenditure(even though Hong Kong will run a budgetdeficit of HK$40 billion in its current finan-cial year, ending March 31, 2005). Instead,Miller says the money will be used to fundmajor infrastructure projects. “The motivationis not because we need the money — wehave huge reserves — the idea is to get aproduct into the market and to help developthe market.”

Historically, Miller told ASIA TODAYINTERNATIONAL both the private and publicsectors have not issued bonds. The privatesector looked for short-term finance frombanks, while the public sector enjoyed budg-et surpluses year after year. “I would arguethat, from a purely public sector point ofview, in the modern world it would makesense for the Government to issue bonds ona regular basis simply to provide flexibilityand to provide the market with something itcan use. Several things are coming together.Apart from slight changes in mindset in theGovernment, we also have come under pres-sure from insurance companies, which wantHK-dollar-denominated debt.”

Miller says that, 20 years ago, Hong Kongpeople did not buy life insurance policies.Only expatriates living in Hong Kong werecustomers, and these policies were denomi-nated in other currencies, particularly the USdollar. Over the past 10 years, insurancecompanies have begun marketing toyounger generations of Hong Kong people,

leading to large volumes of policies sold.“We now have a willing buyers and willingseller situation,” he says.

Miller adds that quasi-Government organ-isations like the Airport Authority have beenencouraged to issue bonds, and significant-ly, to consider maturity of longer than fiveyears. “We are looking at how we can makebonds more user-friendly for retailinvestors,” he says. Part of the approach isto educate investors to shift from propertyand bank accounts and look to otherlonger-term investments, such as insuranceannuities or bonds.

It is not just Hong Kong that sees the needto develop a deep and liquid bond market.Analysts have long said that East Asia needsto have regional bond markets. They claimthat the presence of such markets will helpaddress the problem of a “double-mismatch”— financial institutions financing long-termdomestic debt by borrowing short-term inUS dollars. It was such a double-mismatchthat was blamed for the 1997/98 Asian finan-cial crisis. Last month, the APEC BusinessAdvisory Council and the Pacific EconomicCo-operation Council (PECC) organised aconference on the development of AsiaPacific bond markets in Taipei. The AsianBankers’ Association and the Association ofCredit Rating Agencies in Asia were amongagencies involved.

Hong Kong moves to bonds

Singapore’s bankslooking offshore

Continued page 21

Assessing forward market opportunities and business

trends for 2005 into 2006 withspecific sections on countryrisk, currency movements,emerging legal issues andchanges to tax/tariff laws.

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ASIA2005The ASIA TODAY INTERNATIONAL Yearbook






Continued page 22

T R A D I N G I N F I N A N C E HAVE ASIA’S MARKETS PEAKED?

From page 20

when the emerging economies are on themend, having digested assets acquired since2001. “Their investments in Asia are beingmade in a measured manner, and in marketsalready familiar to the banks,” says Koh.

Oversea-Chinese Banking Corp Ltd. intendsto diversify its earnings base through a bancas-surance platform. In late February, OCBC pro-posed to acquire the remaining 51.1 per centstake it currently does not own in Singapore-based Great Eastern Holding life insurancecompany to help grow organically its life insur-ance products in Asian markets. “The GreatEastern stake, which is being made on an all-stock transaction, will deepen its franchise inthe core markets of Singapore and Malaysia,and is expected to provide greater opportuni-ties for cross selling of financial products andservices for the group,” says Koh.

OCBC also has acquired a 22.5 per centstake in Indonesia’s P.T. Bank NISP Tbk.(Bank NISP), for about S$119 million (US$70million), which represented slightly aboveone per cent of shareholder funds at end-December 2003, The acquisition is likely tobe funded through internally generatedresources. “Although Bank NISP is a relative-ly small bank in Indonesia, it is one of thefew banks that did not require capital injec-tion by the Indonesian Government duringthe 1997-1998 Asian financial crisis, and has a

niche position in thesmall and midsizeenterprise (SME)market that fits intoOCBC banking strat-egy,” says Koh. DBSBank acquired HongKong-based bankDao Heng Bank in2001, with a view todiversify its earningbase, and now abouta third of DBS Bank’sconsolidated revenue

stems from its Hong Kong operations. DBSBank is not ruling out opportunities toexplore other markets for growth, and hasincluded tapping into the Chinese, Thai, andIndian markets as other areas of interest,either through strategic alliances or existingnetworks built by their offshore branches.

United Overseas Bank also is stepping upits regional strategies, potentially throughmergers and acquisitions and the formationof strategic alliances, as it acknowledges theneed to diversify outside its domestic marketin Singapore. UOB has just signed a sales andpurchase agreement for the 80.8 per centstake in Thailand’s Bank of Asia Public Co.Ltd., sold by major shareholder, ABN AMROBank N.V., although the transaction is subjectto regulatory approval. “BoA is not a hugecomponent of the larger UOB group, but theacquisition is expected to strengthen itsstrategic footprint in Thailand, whose econo-my has been improving,” says Koh.

UOB also announced in April that it wasconsidering acquisition of a 23 per cent stakein P.T. Bank Buana Indonesia. Due diligenceis still being conducted.

Too late for fund managers?GLOBAL investors flockedto hot Asian markets formost of 2003, but it is onlynow that Australian fundsmanagers have caught thefever — at a time whensome economists arepredicting a reversal ofcapital flow . . .

JUST AS AUSTRALIAN fundsmanagers have built up enough

courage to put their toes into emergingstockmarkets in Asia, the market appears tobe turning for the worse because of loominguncertainties. Although global investorsflocked to hot Asian markets for most of2003, it was only this year that Australianfunds managers caught the emerging mar-kets fever. At least two China-specific fundshave been launched in the last two months,and Australian international funds managersare now assessing demand for India funds.

Australian investors, mostly institutionsand superannuation funds, have ploughedhundreds of millions of dollars into existinginternational funds with exposure to emerg-ing markets and a range of Asia funds. Butthis is a drop in the ocean of cash that hasflooded into the region for short-term invest-ment from the United States and Europe.

In his latest note on Asia’s economy,Morgan Stanley’s Andy Xie writes that the“super easy monetary policy” in the UnitedStates until now has caused liqudity to flowinto Asia through various channels.

“East Asia’s foreign exchange reservesincreased by US$279 billion more than tradein 2003 compared toUS$40 billion in 2002 andminus US$28 billion in2001,” he writes. “The fig-ure for the first quarter ofthis year at an annualisedrate was US$747 billion.East Asia is again sittingon a massive amount ofshort-term foreign capi-tal.”

Xie warns that a rever-sal of capital flow wouldhave an “enormousimpact” on Asian asset markets. He saysAsian financial markets go to extremes inboth directions. “In the current environment,the market correction tends to end with amajor credit accident. Considering howmuch speculation has occurred in the pastfour quarters, the tightening liquidity condi-tions and the worsening operating environ-ment are the recipe for such an accident.”

However, investors are generally told tolook at a five-year horizon when investing in

emerging markets. To cushion risk, retailinvestors are being offered capital protectionto assauge their concern about the high risksin emerging markets. The trade-off for capi-tal and currency protection is lower returnsand higher fees. Some funds invest in indicesrather than directly in stock.

The AMP Capital China Fund, whichlaunched in May, offers retail investors expo-sure to 25 top Chinese companies listed onthe FTSE/Xinhua China 25 Index. The AMPfund came after the unveiling of Australia’sfirst China fund, Capital Protected ChinaOpportunity Receipts, managed by DeutscheBank and distributed by Westpac Bank. Thelatter fund invests in 30 selected stocks basedon market capitalisation and liquidity, price-to-book ratio, prices to-earnings ratio anddividend yields.

Elio Garino, Head of Marketing andProduct at HSBC Asset Management(Australia) Ltd, says: “We are assessing theappetite in Australia for Chinese equities.’’Instead of creating a new fund, he says, if itcan be justified, HSBC will find a way toallow Australian investors to access its HSBCGlobal Investment Fund — Chinese EquityFund, set up in 1992. The HSBC GIF-ChineseEquity and HSBC GIF-Indian Equity fundsmanage US$2.2 billion and US$1.8 billionrespectively. Both rank among the largest oftheir kind in the world.

Garino says: “With resurging interest inemerging markets and China in particularover recent months, our Asian funds contin-ue to enjoy relatively strong support fromadvisers and investors.’’ Similarly, globalfunds manager Aberdeen Asset Managementis assessing demand in Australia and willconsider opening its specialised China fund— and possibly its India fund — toAustralian investors in “the near future’’.Most players however, offer Asian funds

with exposure to selectedAsian economies.

Colonial Mutual FirstState, which became thefirst large Australian fundsmanager to launch anemerging market fund lastyear, expects to haveabout AUD500 millionunder management by theend of this year. The fundwas launched a little overa year ago with seedinvestment of AUD60 mil-

lion from four superannuation funds.Platinum Asset Management has seen a

five-fold increase in fund inflows to itsPlatinum Asia Fund, launched last year. Sinceinception, the total return from the Platinumfund — measured as dividend and capitalgrowth — is 48.4 per cent. But newer funds,including ING Global Emerging Fund andAberdeen Asian Opportunities Fund, arebuilding up slowly, mainly because they are

❝ Market correctiontends to end with amajor credit accident.Tightening liquidity con-ditions and the worsen-ing operating environ-ment are the recipe forsuch an accident❞

Nancy Koh:Investing in a

meaasured manner.

T R A D I N G I N F I N A N C E COMMODITIES


not yet included in established sales and dis-tribution platforms used by asset managersand financial planners.

Few international funds managers investdirect in Chinese stock markets because ofthe immaturity of the market. Most seekexposure through China-related companieslisted in Hong Kong, Singapore, South Koreaand Taiwan. In fact, the CommonwealthBank division Commonwealth Securities(CommSec), runs a three-year fund, whichinvests in the Hang Seng China EnterprisesIndex. The investment is hedged against currency exposure.

According to Morgan Stanley CapitalIndex, emerging Asian stock marketsreturned 49 per cent last year, comparedwith 29 per cent from Wall Street, 13 per centfrom the Australian Stock Exchange and 19per cent from the London Stock Exchange.

Eric Siegloff, ING Australia’s head of assetallocation and investment strategy, says thebest gains occurred in 2003 when there wasa shift towards emerging markets. He saysthe gains this year are expected to be 15-20per cent — still well above expected returnsfrom the global market (10-12 per cent).

Specialist stock-pickers like Angus Tullochand his team call on 1,000 companies inemerging markets regularly to keep abreastof their performance. Tulloch, whose teammanages Colonial First State’s emerging mar-ket fund, says the focus on China has raisedthe price of its stocks. “They are now morefully priced,’’ he says,adding that valuation isstill attractive for Koreanstocks. Korean companieshave exposure both totheir strong domestic mar-ket and China trade.

Devan Kaloo, seniorinvestment manager of Aberdeen AssetManagement, agrees thatChina is a great macro story, but on a micro-level, its companies need to improve theirperformance. Kaloo says the Chinese stockmarket itself is not big. At the end of theJanuary, the market capitalisation of China’sA shares was US$580 billion, B shares wasjust US$13 billion and the H shares index inHong Kong totalled US$40 billion. The draw-back is that 70 per cent of China’s A sharesare held by State-owned companies and can-not be traded, Kalou says. Beijing intends toeventually lift this restriction.

While the pool of China stocks willexpand greatly in future as hundreds ofChinese companies, including China’s fourbig State-owned banks, plan to list — at least100 Chinese companies are seeking listing inHong Kong. China-related companies nowmake up 27 per cent of the market capitali-sation in Hong Kong, and 20 per cent of thesmaller Singapore Stock Exchange.

THE HONG KONG Noble Group,one of the world’s largest com-

modities traders, runs its business on aUS$2.5 billion credit line, and cash of someUS$750 million.

Paul de Fries, the Group’s risk manager,says the company learned its lesson in the1997-98 regional financial meltdown, whenlocal banks dramatically tightened credit.

Noble realised that toensure its trade was notdisrupted again, it neededa huge warchest, de Friessaid, addressing a road-show in Sydney on behalfof the Singapore StockExchange, where Noble is listed. The SingaporeExchange was promotinga joint service with the Australian StockExchange, known asWorld Link).

de Fries says Noble will lift its credit linefrom US$1.5 billion to US$2.5 billion by theof this year because of a huge increase incommodities prices. He says a valuable ship-ment of commodities which cost US$15 mil-lion last year may now cost US$20 million.

According to de Fries, the short-termfinancing goals of Nobleare to deal with fewerbanks which are willing toprovide larger and moreflexible facilities andenhanced global facilities.“We need the credit line tofinance our transctions.For example we movecocoa from Indonesia toRussia, and we are the

biggest buyers of coffee from Vietnam.” Because Noble deals with many develop-

ing countries, de Fries says the Group relieson letters of credit rather than open account.It accepts LCs from buyers, including those inChina. But de Fries says the firm will seek tohave on LC reconfirmed if it is issued by anindependent or lesser-known bank.

Noble expects its annual turnover this yearto reach US$7.5 to US$8 billion — up fromlast year’s US$4.4 billion. de Fries says highercommodities prices and higher freight costshave added to the higher turnover.

Despite the size of Noble’s turnover andexposure, de Fries says: “We rarely suffer amajor credit default. The last time we had adefault was in 1997-98 when a Thai compa-ny, with which we had traded over 25 years,got into trouble.”

de Fries says concern about the collapse ofdemand for steel in China is overblown. Themarket has become very jittery followingBeijing’s move to ban new steel projects tocurb over-investment and production in thesteel sector. Aside from large players likeAnshan and Baoshan Steel, de Fries says

many privately-funded ‘mini-steel mills’ inChina produce 300,000-500,000 metric tonnesa year. “When you look at the inflow of for-eign direct investment into China, it isresponsible for just 10 per cent of investmentin that country. The rest is invested by theChinese themselves,” he says.

He does not expect the global commodi-ties market to collapse because of slower

demand from China. Theslowdown, he says, willbe offset by a resurgentUS economy and a grad-ual pick-up in Europe.“As a risk manager, welike to see a nice stablisa-tion of prices.”

Noble, which delistedfrom the Hong KongStock Exchange in 1994and was relisted inSingapore, claims to bethe largest non-producing

coal and iron ore company in the world. Itshipped 20-25 million metric tonnes of ironore last year — which de Fries says is fivetimes more than what was shipped by BHPBilliton and Rio Tinto.

The Group has become an investor in twoAustralian mines — Donaldson and Australcoal mines in NSW. It has a controlling stakein Donaldson and, in January this year,

From page 21

Juggling cash, credit lines

New political riskpolicy from EFIC

AUSTRALIA’s Export Finance andInsurance Corporation (EFIC) has

introduced a new political risk insurance pol-icy for Plant and Equipment to meet the spe-cific needs of the mining, engineering andconstruction sectors.

“Our new policy can cover Australianinvestors or contractors if a specified politicalevent damages or deprives them of the use ofassets employed in an overseas investment orproject,” says Chang Foo, Head of ProductManagement and Risk Transfer.

This new policy adds to EFIC’s existingpolitical risk insurance policies, which pro-vide PRI cover for investors or lenders.

EFIC’s political risk insurance policiescover lenders financing projects, overseasinvestors or export contractors against lossesarising from any one of a combination of thefollowing risk events: expropriation, such asnationalisation or an investment or plant andequipment by the overseas host government;war damage or political violence; currencyinconvertibility and exchange transfer block-age; and sovereign breach of contract.

EFIC’s political risk insurance policies aregenerally available for extended terms of upto 10 years, reflecting the nature of the invest-ment of corresponding to the underlying loanor contract period.

❝ Market correctiontends to end with amajor credit accident.Tightening liquidity con-ditions and the worsen-ing operating environ-ment are the recipe forsuch an accident❞

❝ China is a great macrostory, but on a micro-level, its companies needto improve their performance❞

COPYRIGHT ©: All material appearing in ASIA TODAY INTER-NATIONAL is copyright and remains the property of thepublisher, East Asia News and Features (Australia) Pty. Limited.Reproduction in whole or in part in any form is not permitted with-out written permission of the publisher.

AUSTRALIAN EXPORTERS arenow able to obtain factoring or

debtor finance through a major bank, HSBC. Until now, says Alex Fernandez, HSBC

product manager for debtor finance, interna-tional factoring in Australia has been avail-able only through Scottish Pacific, a financecompany associated with St George Bank.

Since the mid-1990s, all major Australianbanks have offered factoring services, buttheir coverage has been limited to domesticsales, says Fernandez. Finance companieshave offered factoring since the early 1960s,but for a long time this was regarded as last-resort financing.

The global market for factoring, whichinvolves selling receivables (invoices) to abank or a financial institution, has beengrowing at around 20 per cent a year.Growth is faster in Australia, which has seenthe market expand around 30 per cent year-ly. The factoring market in Australia is esti-mated at $21 billion a year.

Fernandez says that, in 2002, HSBC wroteUS$26.1 billion in debtor finance, mostly inthe United Kingdom. The product is alsogrowing rapidly in Asia. In the last threeyears, the bank has launched debtor financein Japan, China and India.

The move into factoring is logical for abank that is deeply involved in financinginternational trade. Fernandez says that, withtrade barriers coming down, global trade isexpanding rapidly. With the internationaltrend moving to trade on open account, anda decline in use of letters of credit,Fernandez says exporters who want to becompetitive have to offer open account.

Exporters use factoring to improve theircashflow. He says HSBC will provideexporters with limited recourse finance for90 per cent of the value of the invoice.Exporters will be required to pay a premiumfor export credit insurance. If the buyerdefaults, HSBC will claim on the policy.

Fernandez says domestic invoices will becovered up to 80 per cent of their value. Thebank offers both a disclosed and undisclosedfactoring service, where the exporter collectshis own debts from buyers. In domestic busi-ness, he says, most Australian companiesprefer undisclosed service. But in exports,HSBC with its network in 79 countries, iswell-positioned to collect debts on behalf ofAustralian clients.

“Australian companies have come torecognise that debtor finance is a flexibleway of funding cashflow, particularly whena company is growing and needs to competewith overseas competitors by providingopen account to buyers,” Fernandez says.

He adds that the interest rate is on parwith that for overdraft. Australian banks gen-erally charge between 8 and 11 per cent forthe finance for domestic sales.

T R A D I N G I N F I N A N C E INFRASTRUCTURE FUNDS LIFT EARNINGS


Growth market in global factoring

Macquarie growing offshoreINTERNATIONAL INCOME ofAustralia’s Macquarie Bank was up

61 per cent for the year to March 2004, andcontributed more than 30 per cent of totalincome (excluding earnings on capital)despite a weak dollar.

Announcing an after-tax profit for theperiod of AUD494 million, up 48 per cent onthe previous year, Macquarie Bank CEOAllan Moss said the bank’s international strat-egy was to focus on particular skills andexpertise.

“During the year we embarked on somestrategic fund initiatives in Europe, NorthAmerica, Asian and Africa, while we contin-ued to grow our offshore business in areasincluding infrastructure, equity derivatives,US mortgages and oil and gas financing,”Moss said. “This year we also acquired ING’sAsian equities business, giving us a solidinstitutional stockbroking platform in theAsia-Pacific region.

Macquarie is now the third-largest fundmanagement in Australia. Total assets undermanagement increased by AUD11 billion toAUD63billion, with significant increases fromgrowth in Macquarie’s specialist infrastruc-ture and property funds.

The bank in 2003/4 continued to expandits infrastructure and specialised funds acrossdomestic and international markets.

Growth in infrastructure and specialisedfunds saw assets under management, includ-ing undrawn commitments, increase by 13per cent to AUD17.8 billion and the estab-lishment of three new international funds:

■ Macquarie Essential Assets Partnership(MEAP) — an unlisted fund focussing oninvestments in regulated and utility assets inNorth America;

■ Macquarie /First Trust GlobalInfrastructure/Utilities Dividend and IncomeFund (MFD) — a listed US closed-end fundfocussing on investing in listed infrastructurestocks;

■ African Infrastructure Investment Fund(AIIF) — an unlisted fund focussing pre-dominantly on investing in South Africaninfrastructure assets, established as a jointventure between Macquarie Bank and OldMutual Asset Managers of South Africa.

Other infrastructure initiatives includes:

■ Global Infrastructure Fund II (GIF II) — anAustralian unlisted closed-end fundfocussing on smaller investments in infra-structure assets in OECD countries.

■ Diversified Utilities Energy Trust (DUET)— an Australian-based energy utility fundwhich is proposing to list on the AustralianStock Exchange later in 2004 as a joint ven-ture between Macquarie Bank and AMPCapital.

■ Japan Infrastructure Group (JIG) — estab-lished as a joint venture between MacquarieBank and the Development Bank of Japan

with a mandate to invest in Japanese infra-structure assets, acquired the HakoneTurnpike south-west of Tokyo.

■ Korea Road Infrastructure Fund (KRIF) —achieved a third close and announced twonew investments in the Baekyang Tunneland Machang Bridge in Korea.

The bank assumed the economic benefitand risk of ING’s Asian equities businessfrom March 1, 2004. Completion of the pur-chase is subject to regulatory approvals, withformal close expected by July 31.

The Group’s Hong Kong business pro-duced a record result, despite significantdepreciation of the Hong Kong dollar againstthe Australian dollar. The business has sig-nificantly increased its market volumes tobecome the leading issuer in local warrantsand a major issuer of unlisted equity-linkedproducts. Hong Kong also successfully diver-sified both its product range and its customerdistribution channels and achieved strongsales in higher margin structured products.

Appointments■ EFIC has appointed Peter L’Green to headup its Structured Trade & Project FinanceTeam. He will focus on growing the exportfinance business across multiple sectors andto all regions.

L’Green was formerly Director and JointHead, Project and Structured Finance,Australasia, at ANZ Investment Bank inSydney. He was also a member of both theANZ Investment Bank Corporate Financeand Advisory Management Committee andthe ANZ Senior Management Team.

■ HSBC has appointed Mark Evans as SeniorTrade Services Manager for Australasia. Hejoints from Commonwealth Bank ofAustralia, where he was Head of Trade andInternational. Prior to this he was DeputyGeneral Manager of State Street Bank andTrust Company’s Global Trade Banking busi-ness in Australia.

■ AUSTRALIA’S Commonwealth Bank ismerging its Premium Financial Services(PFS) and Institutional and BusinessServices (IBS) divisions. The combinedunit, to be known as Premium BusinessServices (PBS) will be headed by MichaelKatz, who was previously in charge of theInstitutional Banking Division, where hedeveloped what is now Australia’s leadingonline broking service, CommSec.

EFIC’s Peter L’Green (left) and HSBC’s Mark Evans

T R A D I N G I N F I N A N C E 2004 CONTACT DIRECTORY


Continued page 25

THE FOLLOWING Contact Directoryis a guide to many of the Asia region-

al offices of Australian and international bank-ing institutions and the Australian offices ofinternational banks. It is not a complete listing.

www.abnamro.com

AUSTRALIA (ABN AMRO Bank NV): ABN AMROTower, Level 29, 88 Phillip Street, Sydney, tel (612) 8259-5000, fax (612) 8259-5444. Also at Level 27, 367 CollinsStreet, Melbourne VIC 3000, tel (61 3) 9612-1311, fax (612) 9612-1377.

CHINA — SHANGHAI (ABN AMRO Bank NV):28th Floor, Jin Mao Tower, 88 Shiji Dadao (CenturyBoulevard) Pudong New Area, Shanghai 200121, tel (8621) 5049-9303, fax (86 21) 5049-5199. Also in Beijing,Guangzhou, Shenzhen, Tianjin, Wuhan.

HONG KONG (ABN AMRO Bank NV): 38F CheungKong Centre, 2 Queens Road Central, tel (852) 2700-3000, fax (852) 2700-5000.

INDIA — MUMBAI (ABN AMRO Bank NV): 302,Dalamal House, Nariman Point, Mumbai 400021, tel (9122) 2285-2093, fax (91 22) 2285-2092. Also in NewDelhi, Baroda, Calcutta, Chennai, Pune.

INDONESIA — JAKARTA (ABN AMRO Bank NV):Jakarta Stock Exchange Building, Tower 2, 10th FloorSudirman Central Business District, Jl. Jend SudirmanKav 52-53, Jakarta 12910, tel (62 21) 515-6000, fax (6221) 515-6999. Also in Balikpapan, Bandung,Denpasar, Juanda, Kelapa Gading, Kemang,Manado, Makassar, Medan, Pondok Indah, PuriIndah, Semarang, Solo, Surabaya.

JAPAN — TOKYO (ABN AMRO Bank NV):Shiroyama Hills, JT Mori Building, 4-3-1 Toranomon,Minato-ku, Tokyo 105-6013, tel (81 3) 5405-6500, fax (813) 5405-6900.

KOREA — SEOUL (ABN AMRO Bank NV): SeoulCity Tower, 11/12 F, 581 Namdaemunro 5-ga Jung-gu,Seoul 100-095, tel (82 2) 2131-6000, fax (82 2) 2131-6010.

MALAYSIA — KUALA LUMPUR (ABN AMROBank Berhad): Levels 25, 26 and 27, Tower 2, MNITwins, 11 Jalan Pinang, 50450 Kuala Lumpur, tel (60 3)2162-7888, fax (60 3) 2162-5693. Also in Labuan,Penang.

PAKISTAN — KARACHI (ABN AMRO Bank NV):16 Abdullah Haroon Road, PO Box 4096, Karachi 74000,tel (92 21) 568-3097, fax (92 21) 568-3432. Also inIslamabad, Lahore.

PHILIPPINES — MANILA (ABN AMRO Bank NV):LKG Tower, 18th floor, 6801 Ayala Avenue, 1200 Makati City,Manila 6784,tel (632) 884-2000, fax (632) 884-3950. Also inAlabang, Bacalod City, Baguio, Binondo,Bulacan, Butan City, Cabanatuan City, Cagayande Oro City, Cebu, Dagupan City, Davao City,Loloya Heights QC, Pampanga, Pasig City,Quezon City, San Pablo City, Scout Delgado QC.

SINGAPORE (ABN AMRO Bank NV): 63 ChuliaStreet, Singapore 049514, tel (65) 6231-8888, fax (65)6532-3108.

TAIWAN — TAIPEI (ABN AMRO Bank NV): 18F, 7Sung-Jen Road, Taipei 110, tel (886 2) 8722-5000, fax(886 2) 8722-5082. Also in Kaohsiung, Taichung.

THAILAND — BANGKOK (ABN AMRO Bank NV):1-4 Floor, Bangkok City Tower, 179/3 South Sathorn Road,Bangkok 10120, tel (66 2) 6795-900, fax (66 2) 6795-901/2. Also in Cachoengsao, Chaiyaphum,Chanthaburi, Chiang Mai, Chon Buri, KhonKaen, Lampang, Lamphun, Nakhom Pathom,

Nakhon Ratchasima, Nakhon Sawan, NakhonSi Thammarat, Phangnga, Phitsanulok, PhraNakon Si Ayutthaya, Phrae, Phuket,Ratchaburi, Rayong, Samut Sakhon, Saraburi,Songkhla, Suphan Buri, Surat Thani, Surin,Ubon Ratchatani, Udon Thani, Yala.

VIETNAM - HANOI (ABN AMRO Bank NV): DaehaCentre, 3rd Floor, 360 Kim Ma Street, Hanoi, tel (84 4)8315-250, tel (84 4) 8315-275.

www.anz.com/asia

ASIA (Australia and New Zealand Banking GroupLimited): 10 Collyer Quay #16-01A, Ocean Building,Singapore 049315, tel (65) 6535-8355, fax (65) 6539-6013.Contact: John Winders, Managing Director, Asia.

CHINA (Australia and New Zealand BankingGroup Limited): Level 39, Shanghai Senmao Intíl Bldg,101 Yin Cheng East Road, Pudong New Area, Shanghai200120, PRC, tel (86 21) 6841-0111, fax (86 21) 6841-0222. Contact: Andrew McGregor, President China.

HONG KONG (Australia and New ZealandBanking Group Limited): 31st Floor, One ExchangeSquare, 8 Connaught Place, Central, Hong Kong, tel(852) 2843-7111, fax (852) 2868-0089. Contact: JohnBuckley, General Manager.

INDONESIA (PT ANZ Panin Bank): Panin BankCentre, Jl. Jend Sudirman (Senayan), Jakarta 10270, tel(62 21) 545-0300, fax (62 21) 572-7447. Contact: ScottArmstrong, President Director.

JAPAN (Australia and New Zealand BankingGroup Limited): 33rd Floor, Marunouchi Building 4-1Marunouchi 2-Chome, Chiyoda-ku, Tokyo 100-6333, tel(81 3) 6212-7770, fax (81 3) 6216-7719. Contact:Michael Black, General Manager.

KOREA (Australia and New Zealand BankingGroup Limited): 18th Floor, Kyobo Building, 1 Chongro1, Chongro-ku, KPO 1065, Seoul, tel (82 2) 730-3151, fax(82 2) 737-6325. Contact: Frank Gamble, GeneralManager.

MALAYSIA (Australia and New ZealandBanking Group Limited): Wisma Genting, 4th Floor,Jalan Sultan Ismail, 50250 Kuala Lumpur, tel (60 3) 2161-6088, fax (60 3) 2161-3210. Contact: Allen Tuite, GroupRepresentative.

PHILIPPINES (Australia and New ZealandBanking Group Limited): 23/F, GT TowerInternational, 6813 Ayala Avenue, cnr HV Dela CostaStreet, Makati City, Philippines, tel (63 2) 818-8117, fax(63 2) 818-8112. Contact: Johnny Co, GeneralManager.

SINGAPORE (Australia and New ZealandBanking Group Limited): 10 Collyer Quay, #17-01/07Ocean Building, Singapore 049315, tel (65) 6535-8355, fax(65) 6539-6111. Contact: Bill Foo, General Manager.

TAIWAN (Australia and New Zealand BankingGroup Limited): 8/F, 44 Chung Shan North Rd, Sec. 2,Taipei, tel (886 2) 2568-3353, fax (886 2) 2511-1232.Contact: Albert Burgio, General Manager.

THAILAND (Australia and New ZealandBanking Group Limited): 9th Floor, Tower A,Diethelm Towers, 93/1 Wireless Road, Bangkok 10330, tel(66 2) 256-6350, fax (66 2) 256-6347. Contact: AcharaBoonyahansa, Country Representative.

VIETNAM (Australia and New Zealand BankingGroup Limited): 14 Le Thai To Street, Hanoi , tel (84 4)825-8190, fax (84 4) 825-8188. Contact: Adil Ahmad,General Manager.

www.atradius.com.au

AUSTRALIA: Level 5, 22 Pitt Street, Sydney NSW 2000,tel 1800 467 448, fax (61 2) 9201-2210. Contact: GavanEvans. VIC: Melbourne, tel (61 3) 8605-2050; SA:Adelaide, tel (61 8) 8400-7800; QLD: Brisbane, tel (61 7)3405-2600; WA: Perth, tel (61 8) 9231-4222.Ba

Bangladesh

Bangladeshi banks have correspondent relationships inAustralia. There are no representative offices.

Bank of America

www.bankofamerica.com

AUSTRALIA: Level 63, MLC Centre, 19-29 MartinPlace, Sydney NSW 2000, tel (61 2) 9931-4200, fax (61 2)9921-1023. Contact: John Liles, Country ExecutiveOfficer.

ASIA REGION OFFICES: China, Hong Kong,India, Indonesia, Japan, Korea, Malaysia,Philippines, Singapore, Taiwan, Thailand.

Brunei Darussalam

Brunei banks have correspondent relationships inAustralia. There are no representative offices.

Cambodia

Cambodian banks have correspondent relationships inAustralia. There are no representative offices.

Bank of China

www.bank-of-china.com

AUSTRALIA: Bank of China, Sydney Branch, 39-41York Street, Sydney 2000, tel (61 2) 8235-5888, fax (61 2)9262-1794. Contact: Shiqiang Wu, General Manager.

NSW: Bank of China, Haymarket Branch, 681 GeorgeStreet, Haymarket Sydney 2000, tel (61 2) 9212-3877, fax(61 2) 9212-3962. Contact: Shiqiang wu, GeneralManager.

NSW: Bank of China, Parramatta Office, Shop 2104,Westfield Shoppingtown Parramatta 2150, tel (61 2)9893-8833, fax (61 2) 9687-2919. Contact: ShiqiangWu, General Manager.

VIC: Bank of China, Melbourne Branch, 270 QueenStreet, Melbourne 3000, tel (61 3) 9602-3655, fax (61 3)9602-3383. Contact: Fanqiang Kong, Branch Manager.

Commonwealth Bank

www.commbank.com.au

AUSTRALIA: Level 15, 52 Martin Place, Sydney, tel (612)9513 1000, fax (612) 9312 4802. Contact: Ian Saines,Executive General Manager, Institutional Banking.

CHINA — Beijing: 2509 China World Tower 1, 1 JianGuo Men Wai Avenue, Beijing, 10004, tel (86 10) 6505-5357, fax (86 10) 6505-5354. Contact: Paul Au, ChiefRepresentative.

CHINA — Shanghai: Room 4007 Bund Centre, 222Yan An Road East, Shanghai 200002, tel (86 21) 6335-1686, fax (86 21) 6335-1766. Contact: Harry X Liu,Representative

HONG KONG: 1501-1505 Chater House, 8Connaught Road, Central, tel (852) 2844-7572 Fax(852) 2845-9194. Contact: Stephen Holden, RegionalGeneral Manager Asia.

INDONESIA: Ground Floor, Wisma Metropolitan II, Jl.Jendral Sudirman Kav. 29-31, Jakarta 12920, tel (62 21)5296-1222, fax (62 21) 5296-2293. Contact: SymonBrewis-Weston, President Director.

JAPAN: 8th Floor Toranomon Waiko Bldg, 5-12-1



From page 24

Continued page 26

Toranomon, Minato-ku, Tokyo 105-0001, tel (81 3) 5400-7282, fax (81 3) 5400-7288. Contact: Lillian Xia, GeneralManager.

SINGAPORE: 3 Temasek Avenue, #20-01 CentennialTower, Singapore, tel (65) 6359-7000, fax (65) 6349-7001.Contact: Rob Buchan, General Manager.

TOKYO: 8th Floor Toranomon Waiko Bldg, 5-12-1Toranomon, Minato-ku Tokyo 105-0001, tel (813) 54007280, fac (813) 5400 7288. Contact: Lillian Xia, GeneralManager

VIETNAM: Suite 202-203A, The Central Building, 31 HaiBa Trung Hanoi, tel (844) 824-3213, fax (844) 824-3961.Contact: Ms Nguyen Thi Bich Hanh, DeputyRepresentative.

Deutsche Bank

www.db.com

NSW (Australia Head Office): Level 18, GrosvenorPlace, 225 George Street, Sydney, 2000, tel (61 2) 9258-1234, fax (61 2) 9258-1400. Contact in Australia:Chum Darvall, Chief Executive Officer. VIC: Level 23, 333Collins Street, Melbourne, 3000, tel (61 3) 9270-4141.

In Asia, Deutsche Bank has offices in China (includingHong Kong), India, Indonesia, Japan, Korea,Malaysia, New Zealand, Pakistan, Philippines,Singapore, Sri Lanka, Taiwan, Thailand andVietnam.

www.efic.gov.au

AUSTRALIA Head Office: Export House, 22 PittStreet, Sydney NSW 2000, tel Tollfree 1800 887 588, fax(61 2) 9251 3851, email [email protected] OutsideAustralia: tel (61 2) 9201 2111. Contact: Angus Armour,Managing Director or Peter LíGreen, Head of StructuredTrade & Project Finance.

www.tradeservices.hsbc.com

www.hsbc.com.au

AUSTRALIA & NEW ZEALAND (Head Office) —HSBC Bank Australia Ltd: HSBC Building, Level 31,580 George Street, Sydney NSW 2000, tel (61 2) 9006-5086, fax (61 2) 9006-5871. Contact: Mark Evans, SeniorTrade Services Manager, email [email protected]

NSW — HSBC Bank Australia Ltd: HSBC Building,Level 31, 580 George Street, Sydney 2000, tel (61 2) 9006-5859, fax (61 2) 9006-5871. Contact: NoelMcNamara, Manager Corporate Banking, email [email protected]

VIC — HSBC Bank Australia Ltd: Level 29, 140William Street, Melbourne 3001, tel (61 3) 9618-3635 fax(61 3) 9225-3727. Contact: David Morton, StateManager Corporate Banking Victoria and South Australia,email [email protected]

QLD — HSBC Bank Australia Ltd: Level 11,300Queen Street, Brisbane 4000, tel (61 7) 3835-7843, fax (617) 3835-7830. Contact: Jim Millar, State ManagerCorporate Banking Queensland, [email protected]

WA — HSBC Bank Australia Ltd: Level 1, 190 StGeorge’s Terrace, Perth 6000, tel (61 8) 9320-9800, fax(61 8) 9320-9820. Contact: Geoff Farr, State ManagerWest Australia, email [email protected]

SA — HSBC Bank Australia Ltd: HSBC BankAustralia Ltd, Ground Floor, 55 Grenfell Street, Adelaide

5000, tel (61 8) 8112-8610, fax (61 8) 8112-8612.Contact: Winnie Da Silva, Executive Trade Services,email [email protected]

BANGLADESH: Anchor Tower, 1/1b Sonargaon Road,Dhaka 1205, Bangladesh, tel (880 2) 966-0536/231, fax(880 2) 966-0554. Contact: Nazre Murshed, ManagerTrade Services.

BRUNEI DARUSSALAM: Corner Jalan Sultan andJalan Pemancha, Bandar Seri Begawan BS8811, BruneiDarussalam, tel (673 2) 252-333, fax (673 2) 241-316.Contact: Noorhayati Han A R, Assistant Manager TradeServices.

PEOPLE’S REPUBLIC OF CHINA: 36/F HSBC Tower,101 Yincheng East Road, Pudong, Shanghai 200120, tel(86 21) 6841-1888 ext 1507, fax (86 21) 6841-2626.Contact: David Koh, Manager Trade Services.

HONG KONG SAR: Level 8, HSBC Building Mongkok,673 Nathan Road Mongkok, Kowloon, tel Hotline (852)2748-8222, Direct line (852) 2951-3383, fax (852) 2288-2401. Contact: Bernard Yap, Head of Trade ServicesHong Kong.

INDIA: 52/60 Mahatma Gandhi Road, 1st Floor, Mumbai400 001, tel (91 22) 2268-1022, fax (91 22) 2269-2305.Contact: Rajeev Bhargava, Senior Trade ServicesManager.

INDONESIA: 2/F, World Trade Centre, JI JenderalSudirman Kav 29-31, Jakarta 12920, Indonesia, tel (6221) 524-6342, fax (62 21) 524-6622. Contact: CindralelaDarsia, Vice President National Trade Finance.

JAPAN: HSBC Building, 11-1, Nihonbashi 3-chome,Chuo-ku, Tokyo 103-0027, Japan, tel (81 3) 5203-3210,fax (81 3) 5203-3239. Contact: Tetsuo Koizumi,Manager Trade Services.

KOREA: HSBC Building #25, 1-Ka, Bongrae-Dong,Chung-Ku, Seoul, tel (82 2) 2004-0631, fax (82 2) 318-9105. Contact: B K Yook, Vice President and ManagerTrade Services.

MACAU: No. 639 Avenida da Praia Grande, Macau, tel(853) 599-2131, fax (853) 355-655. Contact: Kitty Ho,OIC Trade Services.

MALAYSIA: HSBC Bank Malaysia Berhad, L9, No. 2Leboh Ampang, 50100 Kuala Lumpur, tel (60 3) 2270-3777, fax (60 3) 2070-6234. Contact: Peter Chee-YongCheah, Manager Trade Services.

PAKISTAN: G/F, Shaheen Commercial Complex, M. R.Kayani Road, Karachi, tel (92 21) 263-7693, fax (92 21)263-1526. Contact: Salaam Mir, Manager TradeServices.

PHILIPPINES: The Enterprise Center Tower 1, 6766Ayala Avenue corner Paseo de Roxas, Makati City, MetroManila, 1200 Philippines, tel (63 2) 830-5347, fax (63 2)886-5744. Contact: Paula Felipe, Vice President TradeServices.

SINGAPORE: 21 Collyer Quay, 04-01 HSBC Building,Singapore 049320, tel (65) 6530-5193, fax (65) 6227-7396.Contact: Parizad Setna, Vice President Trade Services.

SRI LANKA: 24 Sir Baron Jayatillaka Mawatha,Colombo 1, tel (94 1) 2341-005, fax (94 1) 2439-605.Contact: Hemantha Gunetilleke, Manager TradeServices.

TAIWAN: 16/F, No.3-1, Yuan Qu Street, Taipei 115,Taiwan, tel (886 2) 2652-7255, fax (886 2) 6616-5998.Contact: Lily Fung, Vice President Trade Services.

THAILAND: HSBC Building, 968 Rama IV Road, Siom,Bangrak, Bangkok 10500, Thailand, tel (66 2) 614-4991,fax (66 2) 614-4559. Contact: Suleeporn Chantararatn,Manager Trade Services.

VIETNAM: The Metropolitan, 235 Dong Khoi Street,District 1, Ho Chi Minh City, Vietnam, tel (84 8) 8292-288,fax (84 8) 823-0530. Contact: Anh T M Bu

State Bank of India

www.sbi.co.in

AUSTRALIA: Suite 2 & 3, Level 12, 234 George Street,Sydney NSW 2000, tel (61 2) 9241-5643, fax (61 2) 9247-0536, email [email protected] Contact: AshokKhurana, Chief Executive Officer.

BANGLADESH: 24-25 Dilkusha Commercial Area, POBox No. 981, Dhaka-1000, tel (8802) 955-9935, fax(8802) 956-3991, email [email protected] Contact: J KKanjilal, Chief Executive Officer.

CHINA: 1108, Shui On Plaza, 333 Huai Hai Zhong Lu,Shanghai 200021, tel (86 21) 6385-2770, fax (86 21)6385-2769, email [email protected] Contact:Rakesh Sharma, Chief Representative.

HONG KONG: 801-805 Wheelock House, 20 PedderStreet, Central, tel (852) 2523-3166, fax (852) 2868-1966,email [email protected] Contact: Amitabh Narain, ChiefExecutive Officer.

INDIA: International Division, Madame Cama Road,Mumbai 400 021, tel (91 22) 2202-2709, fax (91 22) 2204-0073. Contact: Indrajit Gupta, Chief General Manager(Foreign Offices).

JAPAN — Tokyo: Yurakucho Denki Building, SouthTower 352, 1-7-1, Yurakucho 1-Chome, GPO Box 580,Chiyoda-ku, Tokyo 100 0006, tel (81 3) 3284-0096, fax (813) 3201-5750, email [email protected] Contact: J KSinha, Chief Executive Officer; Osaka, Nomura FudosanOsaka Building, 6/F, 8-15 Azuchimachi 1 Chome, Chuo-ku, Osaka 541 0052, tel (816) 6271-3237, fax (816) 6271-3693, email [email protected] Contact: JibanGoswami, Chief Executive Officer.

PHILIPPINES: Room No. 202 (A) Gammon House, 110Rada Street, Legaspi Village, Makati, Metro, Manila, tel(63 2) 817-6820, fax (63 2) 817-1849. Contact: SSangameswar Rao, Regional Representative.

SINGAPORE: 22-08 DBS Tower II, 6 Shenton Way,Singapore 068809, tel (65) 6222-2033, fax (65) 6225-3348, email [email protected] Contact: Mrs PRamasubban, Chief Executive Officer.

SRI LANKA: 16, Sir Baron Jayatilaka Mawatha, P.B.No.93, Colombo 1, tel (94 1) 326-133, fax (94 1) 439-404,email [email protected] Contact: Vinay Jain, ChiefExecutive Officer.

Indonesia

Indonesian banks have correspondent relationships inAustralia. There are no representative offices.

Japan

AUSTRALIA — Mizuho Corporate Bank Ltd:Level 33, 60 Margaret Street, Sydney NSW 2000, tel (612) 8273-3888, fax (61 2) 8273-3999, [email protected] webwww.mizuhocbk.co.jp/english Contact: Hiroshi Higaki,General Manager.

AUSTRALIA — The Bank of Tokyo-MitsubishiLtd. (Sydney Branch): GPO Box 4210, Sydney 2001,tel (61 2) 9296-1111, fax (61 2) 9247-4266. Contact:Soichi Asaba, Regional Head for Australia and NewZealand and General Manager.

AUSTRALIA — The Bank of Tokyo-MitsubishiLtd. (Melbourne Branch): Level 18, 600 BourkeStreet, Melbourne 3000, tel (61 3) 9602-8999, fax (61 3)9600-0920. Contact: Saburo Yao, General Manager —Melbourne Branch.

JP Morgan Australia

www.jpmorgan.com

AUSTRALIA (Head Office): Level 32, GrosvenorPlace, 225 George Street, Sydney NSW 2000, tel (61 2)9220-1333, fax (61 2) 9920-1318.


Korea

AUSTRALIA: KEB Australia Ltd., Level 6, AIGBuilding, 220 George Street, Sydney 2000, tel (61 2)9251-3355, fax (61 2) 9251-3853. Contact: S L Park,Managing Director.

Laos

Lao banks have correspondent relationships in Australia.There are no representative offices.

Macau

Macau banks have correspondent relationships inAustralia. There are no representative offices.

Macquarie Group

www.macquarie.com

AUSTRALIA (Head Office): No 1 Martin Place,Sydney NSW 2000, tel (61 2) 8232-8333, fax (61 2) 8232-7780, email [email protected]

CHINA (Beijing Office): Suite 902, Block E2, TheTowers, Oriental Plaza, No. 1 East Chang An Avenue,Dong Cheng District, Beijing 100738 PRC, tel (86 10)8518-8938, fax (86 10) 8518-9716.

CHINA (Shanghai Office): Suite 5C, Level 5, Dong YiBuilding, 88-90 Chang Shu Road, Shanghai PRC 200040,tel (86 21) 6249-2212, fax (86 21) 6249-2810.

CHINA (Tianjin Office): 145 Munan Dao, HepingDistrict, Tianjin 300050 PRC, tel (86 22) 2313-4528, fax(86 22) 2313-4529.

HONG KONG: 17/F Citic Tower, 1 Tim Mei Avenue, Central,HONG KONG, tel (852) 2823-3700, fax (852) 2823-3790.

INDONESIA: Jakarta Stock Exchange Building, Tower2, 17th Floor, Jalan Jend, Sudirman Kav. 52-53, Jakarta12190, tel (21) 515-7615, fax (21) 515-7799.

JAPAN: Taisho Seimei Hibiya, Building 10F, 9-1Yurakucho, 1-Chome, Chiyoda-ku, Tokyo 100-0006, tel(813) 5220-2727, fax (813) 5220-2726.

KOREA: 4th Floor, Hanwha Building, 110 Sokong-Dong, Chung-Ku, Seoul 100-755, tel (822) 3782-2218,fax (822) 3782-2299.

MALAYSIA: Level 12, Menara Dion, 27 Jalan SultanIsmail, 50250 Kuala Lumpur, tel (603)†2381-3081, fax (603)2381-3082. Labuan (Macquarie Bank Limited (LabuanBranch)): Unit Level 3 (A) Main Office Tower,Financial ParkLabuan, Jalan Merdeka, 87000 Federal Territory Labuan, tel(60 87) 583-080, fax (60 87) 583-088.

SINGAPORE: 23 Church Street, #11-05 Capital Square,Singapore 049481, tel (65) 6536-3875, fax (65) 6536-3926.

Malaysia

Malaysia banks have correspondent relationships inAustralia. There are no representative offices.

Myanmar

Burmese banks have correspondent relationships inAustralia. There are no representative offices.

National Australia Bank Ltd

www.national.com.au

AUSTRALIA: Andrew Tait, Head of Trade Solutions SalesAustralia, tel (61 3) 8634-4533, fax (61 3) 8634-1899;

NSW/ACT: Garry Hay, Head of Trade Solutions Sales, tel(61 2) 9325-2865, fax (61 2) 9325-2878

VIC/TAS/SA/NT: Peter Dockery, Head of Trade SolutionsSales, tel (61 3) 8636-5531, fax (61 3) 8636-5530;

QLD: Tony McCabe, Head of Trade Solutions Sales, tel(61 7) 3234-5066, fax (61 7) 3234-5293;

WA: Rodney Tonkies, Head of Trade Solutions Sales, tel(61 8) 9441-9443, fax (61 8) 9441-9339.

CHINA (Representative Office): Unit 26, Level 23,China World Tower 1, No 1 Jian Guo Men Wai Avenue,Beijing 10004, PRC, tel (86 10) 6505-2255, fax (86 10)6505-7156. Contact: Michael Xu, Group Representative.

HONG KONG (Asia Regional Office): Level 27,One Pacific Place, 88 Queensway, tel (852) 2822-9800,fax (852) 2822-9801. Contact: Frank Mallia, GeneralManager, Asia.

JAPAN: Mitsui Nigokan, 2-1-1, Nihonbashi MuromachiChuo-ku, Tokyo 103-0022, tel (81 3) 3241-8781, fax (81 3)3241-5369. Contact: Evan Armstrong, General Manager.

KOREA: 16th Floor, Korea Deposit Insurance Building,33 Da-Dong, Chung-ku, Seoul 100-180, tel (822) 3705-4600, fax (822) 3705-4601. Contact: Mark Edmonds,General Manager.

MALAYSIA (Representative Office): Level 5,Tower 2, MNI Twins, 11 Jalan Pinang, 50450, KualaLumpur, tel (60 3) 2163-6545/46, fax (60 3) 2163-6559.Contact: Lionel Lim, General Manager. Also in Labuan.

SINGAPORE: 5 Temasek Boulevard #15-01, SuntecTower Five, 038985, tel (65) 6419-6800, fax (65) 6338-0039. Contact: Chai Hong Cheo, General Manager.

Pakistan

AUSTRALIA: Habib Finance Australia Ltd, Level5, 345 George Street, Sydney NSW 2000, tel (61 2) 9262-2977, fax (61 2) 9262-2433. Contact: MohammadAslam, Regional General Manager.

Philippines

Philippine banks have correspondent relationships inAustralia. There are no representative offices.

www.qbe.com

AUSTRALIA: Level 13, 82 Pitt Street, Sydney NSW2000, tel (61 2) 9375-4411, fax (61 2) 9375-4604.Contact: John Rumpler, Group General Manager, [email protected]

QLD: Level 15, 133 Mary Street, Brisbane 4000, tel (617) 3031-8500, fax (61 7) 3031-8544. Contact: PaulGunning-Stevenson, Assistant General Manager, [email protected]

VIC: Level 13, 628 Bourke Street, Melbourne 3000, tel(61 3) 9246-2903, fax (61 3) 9246-2990. Contact: TerryPhillips, Assistant General Manager, [email protected]

WA: Level 2, 95 William Street, Perth 6000, tel (61 8)9213-5971, fax (61 8) 9213-6005. Contact: ColinWagstaff, Manager, Western Australia, [email protected]

Hong Kong: 6/f DCH Commercial Centre, 25 WestlandsRoad, Quarry Bay, tel (852) 2877-8488, fax (852) 2164-8022. Contact: Christopher Siu, Manager Trade Credit,email [email protected]

New Zealand: Level 11, Quay Tower, 29 CustomsStreet West, Auckland, tel (64 9) 308-8578, fax (64 9)308-8619. Contact: Mike Kayes, Manager TradeCredit, email [email protected]

Singapore: 65 Chulia Street #36-01, OCBC Centre(West Lobby), 049513, tel (65) 6224-6633, fax (65) 6533-3270. Contact: Albert Lim, Manager Trade Credit, [email protected]

Rabobank Australia Group

www.rabobank.com.au

AUSTRALIA (Head Office): Level 7, RabobankHouse, 115 Pitt Street, Sydney NSW 2000, tel (61 2)

9234-4200, fax (61 2) 8233-8224, [email protected] Contact: Andrew Davis,Deputy Chief Executive Officer.

Rabobank International has offices in Asia in the fol-lowing locations: China, Hong Kong, India, Indonesia,Japan, Singapore, Taiwan and Thailand.

Singapore

AUSTRALIA (Oversea-Chinese BankingCorporation): Level 3, 565 Bourke Street, Melbourne3000, tel (61 3) 9612-7588, fax (61 3) 9614-2290. Contact:Ramona Enconniere, Head of Corporate Banking.

AUSTRALIA (Oversea-Chinese BankingCorporation): Level 2, 75 Castlereagh Street, Sydney2000, tel (61 2) 9235-2022, fax (61 2) 9221-4360.Contact: Helen Yap, General Manager Australia.

Sri Lanka

AUSTRALIA (Bank of Ceylon): Sole agent in Australiaeffecting remittances and other services - SerendibFinancial Services, 1136 Heatherton Road, Noble Park VIC3174, tel (61 3) 9574-1100, fax (61 3) 9574-1155, free call1800 642 124, email [email protected] Contact:Haneef Badrudeen.

Taiwan

AUSTRALIA (International Commercial Bank ofChina): 6th Floor, 275-281 George Street, Sydney 2000,tel (61 2) 9267-7511, fax (61 2) 9264-5492. Contact:Steve H Y Hsieh, General Manager, mob 0409 015 999,email [email protected].

Thailand

Thai banks have correspondent relationships in Australia.There are no representative offices.

Vietnam

Vietnam banks have correspondent relationships inAustralia. There are no representative offices.

www.westpac.com.au

AUSTRALIA (Westpac Institutional Bank HeadOffice): Level 4, 255 Elizabeth Street, Sydney 2000, tel(61 2) 9284-8611, fax (61 2) 9284-8533. Contact: OlgaZoutendijk, Group General Manager Corporate andInstitutional Banking.

CHINA (Representative office): Suite 2210,SCITECH Tower, 22 Jian Guo Men Wai Da Jie, Beijing 100004, tel (86 10) 6512-3465, fax (86 10) 6512-3780.Contact: Hao Chi, Chief Representative.

INDONESIA (Representative Office): Level 16, Jl.Jend Sudirman Kav 33-A, Jakarta 10220, tel (62 21) 574-3719, fax (62 21) 574-3720. Contact: Yanti Handaya,Country Representative.

JAPAN (Tokyo Branch): Level 4, Toranomon WaikoBldg II, 5-2-6 Toranomon, Minato-ku, Tokyo 105-001, tel(81 3) 3438-3090, fax (81 3) 3438-3058. Contact: YuzoIzumitani, Branch Manager & Head of ForeignExchange.

SINGAPORE (Singapore & Regional Office): #19-00 SIA Building, 77 Robinson Road, Singapore 068896, tel(65) 6530-9527, fax (65) 6530-9889, Contact: Mr ChrisRand, Head of Westpac Institutional Bank, Asia.

THAILAND (Representative Office): Level 8, Unit E,Kamol Sukosol Building, Bangkok 10500, tel (66 2) 234-2650, fax (66 2) 234-2996. Contact: Gary White, ChiefRepresentative.

INTERNATIONAL BUSINESS: Level 8, 255 ElizabethStreet, Sydney NSW 2000, tel (61 2) 9284-9583, fax (61 2)9284-9585. Contact: John Kerr, Head of International,Westpac Institutional Bank.



A S I A P U L S E THE INFORMATION HEARTBEAT OF ASIA

© Asia Pulse Pte Ltd.Each day Asia Pulse creates up to 250 items of news, businessopportunities, expert commentary and industry profiles. Asia Pulse isa unique joint venture involving the resources of Asia’s major newsand information groups.

Contact: Asia Pulse Production CentrePhone: (612) 9322 8634Fax: (612) 9322 8639http://www.asiapulse.comEmail: [email protected]

The information heartbeat of AsiaASIA PULSE is a joint venture involving the resourcesof (AAP) - AAP Information Services Pty Ltd (Australia);(ANTARA) - LKBN ANTARA (Indonesia); (Bernama) -Bernama (Malaysia); (Nikkei) - Nihon Keizai Shimbun Inc(Japan); (ONA) - Oman News Agency (Oman); (IRNA) -Islamic Republic Newsagency (Iran); (PNA) - PhilippinesNews Agency (Philippines); (PPI) - Pakistan PressInternational (Pakistan); (PTI) - The Press Trust of IndiaLtd (India); (Yonhap) - Yonhap News Agency (Korea);(VNA) - Vietnam News Agency (Vietnam); and (XIC) -Xinhua Information Centre (China).

SECOND KIA PLANT FOR CHINASEOUL - Kia Motors Corp. has signed a con-tract to build its second car plant in China by2006. Under the deal signed with the govern-ment of Jiangsu Province, South Korea’s sec-ond-largest automaker is to set up a 300,000unit-per-year auto plant in Yancheng City at acost of US$644 million. The plant will lift Kia’scapacity in China to 430,000 units a year. Kiasaid its Chinese joint-venture automakerDongfeng Yueda Kia Motors Co. will payUS$290 million of the total construction bill.

ICICI LOMBARD LEADING PRIVATE INSURERNEW DELHI - India’s three state-owned insur-ers — New India Assurance, United India andOriental Insurance - managed a meagre two tofour per cent growth in business in 2003-04,while private players grew by 70 per cent tograb over 14 per cent of the general insurancemarket. ICICI Lombard posted 135 per centgrowth in business at Rs5.07 billion (US$111.8million) to topple Bajaj Allianz and emerge asthe leading private player in 2003-04, accordingto data compiled by the Insurance Regulatoryand Development Authority. Stiff competitionamong State-owned insurers and private play-ers pushed up general insurance business by13 per cent, with premium income rising toRs161.18 billion.

MATSUSHITA ACQUIRES PANASONIC GOBEL JAKARTA - Japan’s Matsushita Electric hasacquired 60 per cent of PT Panasonic GobelIndonesia (PGI) to take over Panasonic productmarketing in Indonesia. Panasonic Gobel is ajoint venture between the Gobel family andMatsushita, operating as a sales agent forPanasonic products in Indonesia. Before thedeal, Matsushita was only an indirect share-holder in PGI, through PT PanasonicManufacturing Indonesia in which the Gobelfamily also has a stake.

JAKARTA MONORAIL PROJECT TO BE GO AHEADJAKARTA - The Jakarta administration is set tosign a memorandum of understanding (MoU)with a private consortium for construction of amonorail in the capital city. The consortium,called PT. Jakarta Monorail, comprises investorsincluding PT Indonesia Transit Central, Hitachi

of Japan, SMRT (Singapore Mass Rapid Transit),Omnico and Temasek of Singapore. The build-ing of the infrastructure of the light rapid tran-sit (LRT) type, will take two years, and go intoservice by 2006. The monorail is estimated tocost US$540 million.

COCA-COLA TO FOCUS ON RURAL INDIAKOLKATA - Soft drinks major Coca-Cola Indiawill try to reach another 40,000 villages thisyear as part of its strategy to penetrate ruralmarkets, which are characterised by low percapita consumption of carbonated soft drinks,Vice President Sunil Gupta said. The company,which invested $US100 million in India in 2003,has decided to invest another $US70 millionthis year on brand development and marketpenetration and is confident of maintaining lastyear’s growth of 22 per cent in sales.

JAPANESE LISTED FIRMS’ NET PROFITS JUMPTOKYO - Fuelled by the stock market rally,export growth and robust demand for digitalhome appliances, net profits of listed compa-nies rose sharply to a record Y3.26 trillion($US29.02 billion) for the year ended March 31,up 68 per cent from fiscal 2002, according tofigures compiled by Nihon Keizai Shimbun.After securing profits through restructuring infiscal 2002, companies have shifted towardsgenerating income through higher sales to seta new high for the first time in three years.

JAPAN’S IHI WINS THAI POWER ORDERS TOKYO - Ishikawajima-Harima Heavy IndustriesCo. has received orders worth about 5 billionyen (US$44.8 million) from Thailand for the pur-chase and installation of power generation facil-ities. The deal involves delivering 45,000kw gasturbines and related facilities to two industrialparks on the outskirts of Bangkok.

INDONESIA TO BUILD US$300 M LNG TERMINALMAKASSAR, S Sulawesi - State electricity com-pany PLN is planning to build a US$300 millionliquefied natural gas (LNG) terminal in WestJava. President director Eddie Widiono said theproject was important for PLN to reduce therisk of a shortage of LNG or coal supplies.

CHINA REPORTS BIG RISE IN DIAMOND TRADINGSHANGHAI - Business turnover in diamondtrading reported a 39 per cent rise year-on-yearto US$80.8 million during the first quarter ofthis year at the Shanghai Diamond TradingCenter, the bourse for diamond trading in theChinese mainland. A continuing rise in dia-mond wholesale prices on international mar-kets shored up trading in Shanghai, with vol-umes registered in March hitting a record high.In March, the trading of diamonds totalledUS$40.7 million, up 91 per cent year-on-year,with diamond imports rising 48 per cent to

US$12.2 million, and raw diamond trade soar-ing 270 per cent to US$3.71 million.

CENTRAL BANK PREDICTS 5.5% GROWTH JEJU - Bank of Korea Govenor Park Seung hasforecast that South Korea’s economy will grow5.5 per cent this year, helped by the dissipationof uncertainties about the economy. It is thefirst time that Park has made a specific forecastfor economic growth, according to financialobservers. The ADB recently said SouthKorea’s GDP would rise 4.8 per cent in 2004.

HYUNDAI SHAPES UP TO HONDA SEOUL - Hyundai Motor Co., South Korea’s No.1 automaker, is now preparing to go head-to-head with Honda Motor Co. following theJapanese carmaker’s entry into the domesticmarket, Hyundai Motor officials said. Honda,Japan’s third-biggest automaker, has introduced3.0-litre and 2.4-litre models of its best-sellingmid-sized sedan, Accord, in Seoul. It also plansto debut its new sport utility vehicle CR-V herein October. Honda will sell the 3.0-litre Accordat 38.9 million won (US$33,220) and the 2.4-litre Accord at 33.9 million won, prices slightlyhigher than those of Hyundai’s rival sedan, theGrandeur XG.

CHINA UNICOM BOOKS 100 MLN MOBILE USERS BEIJING - China United Telecom (ChinaUnicom) says its number of mobile phone sub-scribers exceeded 100 million by May 5, mak-ing it the third-largest mobile phone networkoperator in the world after China Mobile andVodafone. Among the subscribers, 22.56 mil-lion are CDMA mobile phone users.

VIETNAM COFFEE EXPORTS UP HANOI - Vietnam exported 329,000 tonnes ofcoffee worth US$221 million over the past fourmonths, a year-on-year increase of 29.2 percent. The Vietnam Coffee Corporation aloneexported 94,000 tonnes of coffee worth US$63million, 47 per cent more than the same periodof last year. Its member companies began toreport profits after several years of incurringlosses. Vietnam has pledged not to export low-quality coffee and it will harvest almost 11.7million sacks or 702,000 tonnes of coffee thisyear, said Doan Trieu Nhan, Chairman of theVietnam Coffee Association.

TAIWAN APPROVES MORE PROJECTSTAIPEI - The Investment Commission underthe Ministry of Economic Affairs has approved10 mainland China investment projects with acombined value of US$654.4 million. The proj-ects include one by the Taiwan SemiconductorManufacturing Corp. (TSMC), Taiwan’s largestchip maker, which plans to set up an eight-inchchip foundry in Shanghai with a total invest-ment of US$371 million over three years.


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access to the military to its trans-port facilities and food and shelterfor routine security details.

But the military presence alsoresults in poorly-paid soldierslooking for opportunities to makemoney by extortion of local vil-lagers, stealing from Freeport, andoperating illegal businesses.Worse still for Freeport are thenow-documented beatings, tor-ture and killings of local peopleby the army. “Through its historyof silence and inaction. Freeportis arguably implicitly involved in

the military’s action,” writes Leith.The military association has prevented

Freeport from achieving a more harmoniousrelationship with local communities and hasdamaged its image internationally more thananything else. Yet, unlike the issues of envi-ronmental and social impact, where thereare no easy answers, the military entangle-ment should have been much more simpleto cut away. Freeport, Leith points out, is aUS company with powerful connections andshould have been able to force theIndonesian Government to reform the con-duct of the military.

Leith’s book may start to appear as historyas the Suharto period recedes in time, butFreeport’s experience remains of crucial rel-evance today. One company taking heed isBP, which is developing very large gas fieldsfor liquefied natural gas export at Tangguh,in the Bird’s Head area of western Papua. Aninitial seven million tonnes per year facility isto start in 2007, with plans to double or morethe output over the longer term.

BP is going to great lengths to ensure theproject’s environmental impact is minimaland its affect on local communities is benefi-cial. To ensure it can show the world it isindeed doing this, it has set up an inde-pendent panel of prominent internationaland Indonesian figures to make yearlyreports of its progress.

BP faces enormous political challenges.Like Freeport, it will inevitably become a keypart of the relationship between Jakarta andPapua. The LNG project promises hugeincome to Papua under new resourceincome-sharing arrangements with the cen-tral government. But Jakarta does not wantthis new wealth to encourage separatism. BPdoes not want to have to pick sides.

How well BP negotiates the obstacles itfaces will be a test case for post-SuhartoIndonesia. The multi billion dollar Tangguhis the largest foreign-invested project since1998. Its success would encourage other for-eign companies to return to Indonesia.

■ The Politics of Power: Freeport inSuharto’s Indonesia, Denise Leith,University of Hawaii Press, 2003, (US $25.00). [email protected] Reviewedby Andrew Symon.

come of this was favouritismtowards the Suharto family andcronies in business dealings —and compromising relations withthe military.

In the last years of Suharto, andsince his fall, Freeport hasbecome a target of attack domes-tically and internationally foralleged environmental damageby its mine, and association withhuman rights abuses by the mili-tary against the indigenousMelanesian peoples in its minearea. “Freeport’s... insurance pol-icy with Suharto actually became a politicaland economic liability,” Leith writes.

Leith’s account of Freeport, the product ofa doctorate in politics at MacquarieUniversity in Australia, is not a one-sidedleftist or green diatribe. A former stockbro-ker, she sees that there are profound prob-lems with no simple solutions when a west-ern company enters a tribal environmentsuch as Papua. “Cultural differences can blurlines of communication, leading to misun-derstandings, resentment, and inappropriatedevelopment programmes,” she writes.

Freeport executives are not simply paintedas villains. People do not always appreciate,she says, “the strong emotional attachment”for geologists and engineers that results fromdiscovering, building and working on a mineas isolated and as spectacular an engineeringfeat as is Freeport’s operation in Papua’sCarstenz Range, 4,000 m above sea level. In2003, the mine produced 690,800 tonnes ofcopper, 3,163,900 ounces of gold and4,978,600 ounces of silver. Total sales wereworth US$2 billion.

Leith underlines that Freeport has paidever more attention to overcoming adverseeffects of the mine on the local communi-ty and environment. The company pro-vides considerable support for communityhealth and education programmes, localbusiness development and infrastructure.But it has been prompted to do so by the

changing political cli-mate, non-governmentorganisation activism andan international spotlight.Some measures may betoo late. The massivescale of the mine meansthat it is currently impos-sible to appreciate thefull extent of the damageto the environment.

Where she believesFreeport is clearly guilty is

in its relationship with the military. The mili-tary, whose soldiers are almost all from otherparts of Indonesia, guards the mine area onthe grounds that it is a national asset and thatit must be policed against the Melanesian sep-aratists, the OPM (Free Papua Movement).Freeport is contractually obligated to provide

P E R S P E C T I V E THE POLITICS OF POWER


Faustian deals: Mining in Suharto’s IndonesiaPUBLICATIONSFREEPORT became en-

meshed in the workings ofthe former Suharto gov-ernment, and its dealingswith the military then con-tinue to cause it problemsin today’s Indonesia. BP,now developing large gasfields in western Papua,has taken heed . . .

WHEN INDONESIA was beinglauded as the next Asian economic

tiger in the mid 1990s, often overlooked wasthe importance of the country’s naturalresources industries — petroleum, mining,and timber.

The prevailing view among economistswas that Indonesia was at a new stage ofdevelopment based on its abundant supplyof low-cost labour and large domesticmarkets. Manufacturing would be the key.

Yet the resources companies were produc-ing a major share of Indonesia’s export rev-enue, attracting some of the largest foreigninvestment who were among the largest tax-payers. Much manufacturing was, in fact,based on resources alongside emerginglabour-intensive manufacturing in clothing,footwear, electrical and computer parts.

And it was the dollar-earning export-ori-ented resources industries that helped arrestsomewhat Indonesia’s economic collapsewhen the rupiah crashed in 1998.

Today, they continue to help underpinthe economy. While oil output is falling,this is offset by exports of natural gas, coal,copper, gold, silver, nickel, tin and bauxite,and timber products.

But resources development is not just aneconomic story. During the two decades offormer president Suharto’s rule until his fallin 1998, large resources companies becameenmeshed in the workings of his authoritar-ian regime. Usually oper-ating in provinces distantfrom Jakarta, they wereoften seen by local peo-ple as providing money tothe central governmentand leaving little benefitto them.

They were an integralpart of Suharto’s system ofpatronage, as Denise Leithargues in the case of theUS miner, Freeport-McMoran, in The Politics of Power: Freeportin Suharto’s Indonesia*.

To develop and operate what is todayone the world’s largest copper, gold and sil-ver mines in Indonesian Papua (Irian Jayaas it was in the Suharto period), Freeportbecame a close ally of Suharto. The out-

❝ (Resources companies)were an integral part ofSuharto’s system ofpatronage. The outcomewas favouritism — andcompromising relationswith the military❞


F I R S T, BU S IN E S S FAR E S TO R I S E ?

The OtherSide OfBusiness

TRAVEL • ACCOMMODATION • NATIONAL HOLIDAYS

JUNE: 1 Laos (National Tree Plantation Day); 2 Singapore(Vesak Day); 2 Sri Lanka (Poson Full Moon Poya Day); 3Indonesia (The Birth, Death and Enlightenment ofBuddha/Waisak); 12 Philippines (Independence Day); 22 HongKong (Tuen Ng Festival); 22 Macau (Dragon Boat Festival); 22Taiwan (Dragon Boat Festival); 24 Philippines (Araw ngMaynila/ Manila City only); 25 Korea (Memorial Day).JULY: 1 Hong Kong (Special Administrative RegionEstablishment Day); 1 Thailand (Asanha Puja); 2 Sri Lanka(Esala Full Moon Poya Day); 2 Thailand (Buddhist Lent); 17Korea (Constitution Day); 19 Japan (Maritime Day); 19Myanmar (Martyrs Day); 31 Myanmar (Full Moon Day of Waso);31 Sri Lanka (Adhi Esala Full Moon Poya Day). AUGUST: 9 Singapore (National Day); 12 Thailand (H MQueen’s Birthday); 14 Pakistan (Independence Day); 15 Korea(Liberation Day); 17 Indonesia (Independence Day); 29 SriLanka (Nikini Full Moon Day); 31 Malaysia (Merdeka Day).

TIMEZONES (taking Australian Eastern Standard Time asstandard) — Japan, Pyongyang, Seoul, minus one hour; China,Hong Kong, Kuala Lumpur, Manila, Singapore, Taipei minustwo hours; Bangkok, Jakarta, Vietnam, minus three hours;Bangladesh, minus four hours; India minus four-and-half hours;Pakistan minus five hours.(taking Greenwich Mean Time as standard) — Australia,plus 10 hours (Australian Eastern Standard Time), plus 11 hours(Australian Eastern Summer Time); Japan, South Korea, NorthKorea, plus nine hours; China, Hong Kong, Malaysia,Philippines, Singapore, Taiwan, plus eight hours; Thailand,Indonesia, Vietnam, plus seven hours; Bangladesh, plus sixhours; India, plus five-and-a-half hours; Pakistan, plus fivehours (from 1st Sunday in April - 1st Saturday in October: plus6 hours)

Holidays & Times

S. Korea becomestwo-hour rail zone

EXECUTIVES can now breakfast inSeoul, do business and lunch in

Busan, and return to Seoul in the afternoonon Korea’s new High Speed Railway,dubbed the KTX. The whole of Korea isnow in a two-hour travel zone. KTX almosthalves travel time between Seoul andBusan, and reduces travel time to other partsof Korea such as the southwest by almosttwo hours. The train runs at more than 300km per hour. Fare from Seoul to Busan is49,900 won (approx AUD60), to Cheonan11,400 won, to Daejeon 20,600 won and toDaegu 40,000 won. On the Seoul-Mokpoline, fares are 28,600 won to Iksan, 39,200won to Gwangju and 42,900 won toMokpo. Discounts of up to 20% are avail-able for advance purchases. Ultimately,Korea plans to link its KTX network to theTrans-Siberia Railway (TSR) and theTrans China Railway (TCR) via NorthKorea to Japan. www.korail.go.kr

■ SINGAPORE-based budget airline startupValuAir has won approval from HongKong’s Civil Aviation Department to start fly-ing between Singapore and Hong Kong,making it the first budget carrier offeringflights to the HKSAR. An operating permitallows ValuAir to operate daily scheduledservices using Airbus 320 jets. The carrier,which has started twice-daily servicesbetween Singapore and Bangkok, will alsolaunch flights to Jakarta.

■ AN agreement between Australia andHong Kong will see an immediate increasefrom 35 to 55 flights weekly, with CathayPacific operating additional flights toSydney, Melbourne, Brisbane and Perth,and a doubling of flights over two years.Virgin Atlantic is planning to begin dailyLondon-Hong Kong-Sydney flights laterthis year. Additional capacity will also beavailable to Australian operators, who will beable to use Hong Kong as a stopover enroute to London for the first time. QantasCEO Geoff Dixon said Qantas has thepotential to offer four Hong Kong-Londonflights immediately, increasing to sevenflights a week in 2006.

■ VIRGIN ATLANTIC added a fifth serviceweekly between London to Shanghai fromMay 14, and hopes to move to daily servicesby the (northern) summer of 2005, accordingto Chairman, Sir Richard Branson.www.virgin.com/atlantic

■ UNITED AIRLINES is to begin a daily SanFrancisco-Ho Chi Minh service via HongKong as soon as regulatory procedures arecompleted. United will be the first US carrierto fly into Vietnam for nearly three decades.

■ SINGAPORE AIRLINES will add an extraweekly service between Sydney andSingapore from June 30 to September 30,

departing Singapore on Sunday night andreturning to Singapore Monday to connectwith onward flights to European and NorthAsian ports. Flights between Brisbane andSingapore will increase by three weekly to17 from November 1, with inbound flights toBrisbane opening connections for passen-gers from China, Taiwan and Korea. InEurope, SIA has expanded codeshare services with Lufthansa to eight new destinations out of Frankfurt —Frederichschafen, Paderborn andMunster in Germany and Copenhagen,Gothenburg, Helsinki, Oslo andStockholm in Scandinavia. The flights areoperated by Lufthansa.

■ SIA will begin daily non-stop servicesbetween Singapore and New York fromJune 28, using A340-500 aircraft. Aimed atbusiness travellers, the aircraft will have only181 seats in two-class configuration —Raffles (business) Class with SpaceBedsand the airline’s new Executive EconomyClass, with 117 seats in 2-3-2 configuration.Both Raffles and Executive Economy cabinsfeature specially-designed passenger cornersoffering an areas for passengers to stretchtheir legs and help themselves to snacks andbeverages inflight. www.singaporeair.com

Air fares to rise?AMERICAN EXPRESS is predicting‘sizeable’ increases in Business

Class and First Class air fares for Asia overthe next six months, but says Economy classfares should remain stable as low-cost carri-ers continue to build their presence in theregion.

It says comparing the first quarter of 2004with the same period of 2003, First Classfares in the Asia Pacific increased 4.7 percent and Business Class by 4.1 per cent.

Meanwhile, airlines have begun addingfuel surcharges. Qantas, which says jetfuelprices at US$44 per barrel are at their high-est level for 14 years, has added AUD15 perinternational sector, SIA has added US$5 persector, and BA US$4 per sector.

■ THE Qantas subsidiary AustralianAirlines is planning twice-weekly flightsfrom Sydney and the Gold Coast toSapporo from November 3 to March 26 dur-ing the (northern) ski season. Australian cur-rently has 17 flights weekly to Nagoya,Osaka and Fukuoka.

■ CHINA SOUTHERN has moved to dailyflights between Guangzhou and Ho ChiMinh City until October 30, and is offeringits Sky Pearl members double FF miles on

the route until June 30. Passengers connect-ing in Guangzhou are offered freeovernight accommodation is there is noconnecting flight to HCMC on the same day.In May, it launched four flights weekly toSaipan, a popular choice with Chinese hol-idaymakers, from Shanghai — it alreadyhas a 95 per cent load factor on itsGuangzhou-Saipan services. ChinaSouthern has also begun operating servicesbetween Nanchang in Jiangxi Provincevia Guangzhou to Singapore, three timesweekly. It is the first international servicefrom the province. www.cs-air.com/en

■ CHINA SOUTHERN is offering two-for-one Business Class fares from Australia toGuangzhou and beyond to Shanghai,Beijing and Hong Kong. For two passen-gers, the total fare to Guangzhou isAUD3,399 (including taxes) return, for theadd-on to Hong Kong, AUD3,599 and toBeijing or Shanghai, AUD3,799. The faresare available till March 2005. ChinaSouthern operates four 777 services weekly— two from Melbourne and two fromSydney — to Guangzhou. www.cs-air.com

■ INTERCONTINENTAL hotels and resortsworldwide are participating in LuxuryEscapes packages available till September5. Examples — IntercontinentalBangkok, a 50% discount at US$153 pernight (including buffet breakfast and latecheckout), Intercontinental Resort Balifrom US$151 per night., Paris for 204 ster-ling per night (including breakfast for two).www.intercontinental.com/luxuryescapes,or toll-free in Australia 1800 211 335, China1800 830 1218, Singapore 1800 245 7615.

Looking to establish your business in Asia? Use our checklist of Hong Kong advantages to compare us with any other location. None match up. And now we’ve signed a CloserEconomic Partnership Arrangement with Mainland China(CEPA). It brings zero tariffs on Hong Kong exports to theworld’s largest marketplace, and many other benefits too.

Our dedicated team of advisers have all the details to help youmake an informed decision – at absolutely no cost. Or visit ourwebsite:

www.InvestHK.gov.hk

The Government of the Hong Kong Special Administrative Region Suites 1501-6, Level 15, One Pacific Place88 Queensway, Hong Kong Tel: (852) 3107 1000 Fax: (852) 3107 9007 Email: [email protected]

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from page 16 gdp upgrade for taiwan - asia todaychina and indonesia are both net importers of rice....

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