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June / July Asia
ESCAP region records 5.6% growth
The economy of the ESCAP (Economy and Social Commission for Asia and the Pacific) region witnessed a resurgence in 1999 recording a growth rate of 5.6 percent, form nearly zero in the previous year.
Nepal recorded a GDP growth of 3.4 percent during the same year, up from 2.6 percent in 1998, according to the Economic and Social Survey of Asia and the Pacific 2000 released recently.
The survey report said that the agregate output is expected to remain on an upward trend, rising by 4.0 percent in 2000.
The agriculture sector grew by 2.4 percent and non-agricultural sector activities by about 4.0 percent in 1999. The volume of principal food crops went up by just over 2.0 percent while the volume of cash crops was estimated to increase by around 15 percent in 1999, said the report.
Of the non-agricultural activities, a higher level of value added was registered for manufactured goods, transport and communications, electricity generation, gas and water supplies, construction and mining. The report said that the growth in domestic trade and restaurant and hotel services comparatively slower.
As a proportion of GDP, gross domestic savings rose by one percentage point to 10.6 percent in 1999 while investment fell noticeably for the fourth consecutive year to reach 17.3 percent in 1999, the report said.
The consumer price index in urban areas of Nepal went down marginally to 9.6 percent in 1999 from over 10 percent in the previous year. The prices for food and beverages were rising much faster than for non-food items. The rates of increase in retail prices were much steeper in the hill regions, and more moderate in Kathmandu, having negative distributional implications.
The foreign exchanges reserves increased considerably to 11months of import cover (or 1.1 billion US dollars) in 1999, from just over seven months (or 700 million US dollars) in the previous year.
Wollen carpets and readymade garments provided about 54% of trade receipts. The export value of ready-made garment alone was 9.7 billion rupees, according to the report.
Inward foreign direct investment was down by over three-fifths in the past two years, from 1.6 billion to 600milllion rupees between 1997 and 1999.The servicing burden of external debt, which went down slightly from just over 31 to 28.3 percent of budgerty expenditure between 1997 and 1998 was further aggravated by a depreciation of the local currency in the recent years, the report said.
The GDP growth of Bangladesh, Bhutan and India remained 5.2, 5.1 and 5.9 respectively during 1999. Pakistan and Sri Lanka had a growth rate of 3.1 and 4.0 percent respectively.
The inflation rate of Bangladesh, Bhutan and India remained at 8.9, 9.2 and 7.0 percent respectively while the inflation rates in Pakistan and Sri Lanka were 5.7 and 6.0 percent during the same year.
Chinese company plans insurance business in HK
Investment group China Everbright Ltd. said it is planning to launch its first insurance business in Hong Kong in November through 20 percent owned Standard Life (Asia) Ltd.
“China Everbright wants to use Hong Kong as a base in developing the insurance business, after China is admitted into the World Trade Organisation (WTO),” the company’s chief executive Guo Yu said.
“China Everbright will be glad to work with other international insurance companies to penetrate the insurance market on the mainland,” he said.
Standard Life is a joint venture between Standard Life As surance Co. of Britain and China Everbright, a Hong Kong listed diversified company majority owned by the Chinese state.
China’s financial system opening up slowly
China’s financial regulators are still finding their feet and it is still unclear whether they will help or hinder the country’s creaky financial institutions prepare for foreign competition, analysts said.
With China due to enter the World Trade Organization within a year, domestic banking and insurance sectors will have to open their doors wider to foreign firms but China is concentrating on cleaning its own house first.
“Many reserchers recommend the country allow securities, banking and insurance businesses to combine operations so they will have a better chance against foreign firms that have already diversified,” the Shanghai Daily said in an article.
However, while western banks and insurance firms are offering a broader range of services in the wake of financial services mergers, China is so far sticking to its original formula of policing financial sectors using different regulators and drawing clear lines between them.
Japanese economy a step closer to recovery
Japan’s economy is one step closer to a self sustaining recovery, through overall conditions are still severe, the Economic Planning Agency said recently upgrading its assessment of the economy for the second straight month.
In its monthly report for June, the agency was more upbeat on personal consumption a continual weak spot in the economy. It also upgraded its view of business investment. Together those two areas account for nearly three quarters of gross domestic product.
That view was echoed by Finance Minister Kiichi Miyazawa, who said that a recovery in private demand could start after the autumn.
“I think private demand will overtake (public demand) as aresult”, he told reporters.
The EPA said that while consumer spending remains flat, conditions in the labor market have improved, noting that personal incomes have started to bottom out while overtime pay and job offers have been rising.
In the business sector, the EPA said corporate profits have “improved by a wide margin,” while investment is showing “clear signs of picking up.” Last month, the EPA said overall investment was in the process of bottoming out, with investment in manufacturing industries picking up.
“Centered on the business sector, moves toward a self sustaining recovery are gradually becoming more pronounced,” the EPA report said.
The report follows other encouraging sings for Japan’s economy, which is trying to shake off a decade long slowdown.
The government announced earlier in June, for example, that the economy grew 0.5 percent in the fiscal year ended March 31, and grew a strong 2.4 percent in the January March period, halting a two quarter slide. Gross domestic product had fallen 1.4 percent in the October December period and 1 percent in July, September.
French Companies top foreign investors in Japan
French companies were the top foreign investors in Japan in the financial year to March, far outstripping the United States or other European firms, according to a government report.
Direct investment by French companies reached a combined 745.7 billion yen (6.9 billion dollars) in the year, more than a 44 fold jump from the 16.8 billion yen in the preceding year to March 1999.
The investment by French firms accounted for nearly one third of the 2,399.3 billion yen in total foreign direct investment in the year to March 2000, according to data from Japan’s finance ministry released recently.
The total investment represented an almost 80 percent surge from 1,340.4 billion yen for the year to March 1999.
The sum for French firms was boosted by Renault SA’s cash injection into Nissan Motor Co. Ltd.
Renault paid more than 640 billion yen to get a controlling 37 percent stake in the ailing Japanese carmaker.
Other major French investors included insurance giant AXA and business tycoon Francois Pinault’s holding company Artemis.
Pacific Internet eyes India
Singapore based Asian Internet service provider (ISP) Pacific Internet will embark on a 35 million dollar regional expansion, it said.
The Nasdaq-listed company said the expansion will focus on its e-business venture, PACfusion, and ISP business.
The ISP, which has made forays into other Asian markets such as Thailand and the Philippines, is now eying the vast Indian market.
