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Taiwan And Indonesia Deepen Economic Partnership

Taiwan And Indonesia Deepen Economic Partnership

Taiwan and Indonesia have signed a memorandum of understanding (MoU) on comprehensive economic cooperation, signifying a mutual commitment towards developing trade and investment ties. John C. Chen, a representative of the Taipei Economic and Trade Office in Jakarta, Indonesia, and Didi Sumedi, Head of Indonesian Economic and Trade Office to Taipei have signed the pact on behalf of the two countries.

This MoU is aligned to the New Southbound Policy (NSP), which is a key component of President Tsai Ing-Wen’s national development strategy that is aimed at deepening relations with ASEAN, South Asia, Australia and New Zealand. Under the agreement, both countries will work towards enhancing collaborations in areas such as infrastructure, investment and trade and working groups will be established to ascertain specific projects that could aid the entry of Taiwanese firms into Indonesia. According to the Taiwanese Ministry of Economic Affairs (MOEA), one potential area for collaboration between both countries is in the technology used to dredge reservoirs and the ministry plans to lead a delegation to Indonesia to explore joint infrastructure projects in this field.

Looking forward, this MoU is projected to raise the profile and market share of Taiwan companies while creating employment opportunities. It will also facilitate the upgrading of industrial developments in Taiwan.

Under the NSP, Taiwan’s ties with the Southeast Asia has improved and based on statistics provided by the MOEA’s Bureau of Foreign Trade, bilateral trade has increased 14.8 percent to US$8.09 billion in 2017.

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Trade War Threatens China’s High-Tech Industries

Trade War Threatens China’s High-Tech Industries

CHINA: The trade war has reduced output growth for China’s high-tech industries such as its robotics and integrated circuits sector with reports showing a slide in figures since September.

Although as recently as May, the country had reported that industrial robot production was rising by over 30 percent on the year, since June, growth has withered to single digit figures and it was reported to be 9 percent in August. This was prior to July’s tariffs whereby the robotics industry was hit with an additional 25 percent of tariffs. Integrated circuits have also experienced a similar downward trend with growth reported to be just 5.8 percent in August which is half of the observed growth in July. Additionally, the country has witnessed a reduction in the production of automobiles since July, with the decline widening to 4.4 percent in August.

That being said, China’s economy as a whole is still healthy in accordance to September’s statistics, with industrial production increasing overall and retail sales of consumer goods experiencing a growth, while the decline in the growth rate of investment in fixed assets decreased. Mao Shengyong, a National Bureau of Statistics spokesperson, has stated that the Chinese economy is highly adaptable with a capacity for mitigating external risk. This builds upon the local government’s efforts to develop infrastructure projects so as to boost the economy.

Regarding the trade war, China’s manufacturers have already signaled their concern, especially as manufacturing export orders from Guangdong Province experienced a dip to below 50 in June for the first time in two and a half years, with the figure remaining below 50, at 49.3 for August. This has spurred the local Communist Party’s Central Committee to expand local demands through fiscal policies in July as well as direct projects to the public.

In August, the central government had approved a proposal to improve subways in Suzhou, where many overseas-affiliated export companies are located. Thus, enabling infrastructural developments in the region which is aligned to the government’s infrastructural push.

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Infrastructure & Rail Developments For Indonesia Totalling US$1.9B

Indonesia: South Korea and Indonesia have recently signed five memorandums of understanding (MOUs) that are worth a total of US$1.9 billion.

Covering both public transportation and infrastructure, the signing was attended by South Korean Minister of Land, Infrastructure and Transport Kim Hyun-mi, Indonesian Minister of Transportation Budi Karya Sumadi and Indonesian Minister of Public Works and Public Housing Basuki Hadimuljono.

Korea Rail Network Authority is to be in charge of the second phase of Indonesia’s light rail transit project for reducing traffic congestion in the capital of Jakarta. In addition, the two countries plan to launch a water supply project in Karian, while cooperating for similar future projects and the completion of the hydroelectric power generation project in Bongka.

Furthermore, Hanwha Engineering & Construction is slated to participate in Indonesia’s public housing projects worth US$230 million. Regarding the first phase of the new city development project in Lido, POSCO Engineering & Construction and Indonesian MNC Group will be cooperating with each other.

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Asia-Pacific To Be Dominant Driver In Global Infrastructure Investment

Asia Pacific: International law firm CMS released a report which found that Australia, Singapore and China are driving momentum and interest for infrastructure investment in the Asia-Pacific region.

The report ranked 40 jurisdictions in order of infrastructure investment attractiveness according to six key criteria, including economic status, sustainability and innovation, as well as ease of doing business.

Four of the top 20 spots for investment attractiveness were secured by Asia-Pacific countries in the report, with robust economic growth across the region, ambitious renewables plans, and the world’s largest infrastructure project—China’s Belt And Road—set to reshape the continent’s landscape over the next decade.

Asia-Pacific To Be Dominant Driver In Global Infrastructure Investment

Top Asia-Pacific countries by ranking. Image Source: CMS

The Netherlands claimed top spot overall, despite a prolonged period with no government at all, after seeing the highest GDP growth since 2007, around 3.3 percent in 2017. The country’s success was in part down to its transparent and efficient procurement process, and its healthy multi-billion euro pipeline in road and water public-private-partnerships. Other countries in the top five included Canada, Germany, the UK and Australia.

Co-head of infrastructure and project finance in the UK and CMS partner, Kristy Duane, commented, “From China’s Belt and Road to the UK’s Brexit bump in the road, politics and policy remain central to shaping infrastructure investment flows globally.”

China’s Belt And Road initiative continues to deliver on the promised infrastructure boom in Asia. Given the longevity of this project, changes in the balance of infrastructure investment in the region are likely to be profound. Though ranked at 20th position in the Index, China is primed to become a global engine of investment, with close to a trillion dollars expected to flow through the initiative by its completion, whilst highly ranked countries such as Australia and Singapore continue to benefit from stable and prosperous economies.

Australia’s federal target of 33,000 GWh generated from renewable sources by 2020 has led to increased investment in solar and wind projects, and Singapore’s multi-billion-dollar development of Changi Airport’s Terminal 5 and the Tuas shipping megaport will solidify its position as a premier transport and trade hub globally. Further afield, opportunities in the likes of Malaysia and India are plenty— with renewable energy set to play a central role in future projects.

Adrian Wong, Partner at CMS Singapore said, “The Asia-Pacific region is home to some of the world’s fastest growing economies and most ambitious infrastructure projects, and the spread of four countries within the Index top 20 reflects an ever developing opportunity for investment. While key success factors like government stability and political certainty cannot be ignored, the potential impact of the Belt And Road Initiative alone promises to stimulate economic growth through the continent and far beyond.”

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