skip to Main Content
Private Enterprises To Form Backbone Of Vietnam’s Global Growth

Private Enterprises To Form Backbone Of Vietnam’s Global Growth

According to Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), private conglomerates hold the key to Vietnam’s successful global integration and they currently account for 40 percent of the GDP and employ a major proportion of the workforce. And he believes that these players would ultimately  hold a flagship role in the economy and be the pioneers in the Fourth Industrial Revolution.

In fact, since 2018, investments from private conglomerates have prospered and this can be seen in the case of Vingroup and its investments in automobile and supporting industries and the Truong Hai Auto Corporation and its investments in the automobile and spare parts sector. Additionally, through the economic movement that private conglomerates generate, positive spillover effects for small and medium enterprises can be witnessed and this in turn creates a positive impact on the local economy.

According to Loc, although nearly 98 percent of Vietnamese enterprises are of small and medium size, but it is through the creative application of technologies and adoption of e-commerce that these companies are able to contribute to Vietnam’s trade turnover of USD 450 billion. And moving forward, it is important for there to be a stronger development between the country’s large conglomerates and small and medium enterprises through measures such as administrative reforms, regulatory changes and enforcement of legal rights.

WANT MORE INSIDER NEWS? SUBSCRIBE TO OUR DIGITAL MAGAZINE NOW!

FOLLOW US ON: LinkedIn, Facebook, Twitter

Indonesia To Launch Foreign Investor Focused Stimulus Package

Indonesia To Launch Foreign Investor Focused Stimulus Package

JAKARTA, INDONESIA: Indonesia is looking to launch an economic stimulus package that will promote the rupiah and thus, lead to domestic growth. This announcement comes ahead of the 2019 presidential election and is an acknowledgement of the country’s need for economic development. Opposition leader Prabowo Subianto has also announced that he will reduce corporate and personal income taxes in order to attract more investments if he wins the upcoming elections.

The impending stimulus package announced by the government include tax cuts from 2019 onwards for exporters of commodities in the mining, plantation, forestry and fishery sectors who are able to retain their export revenues in the domestic banking system. It will also include a tax holiday for two industrial sectors – agriculture-based manufacturing and digital industry – and will encompass a relaxation of the country’s Negative Investment List for some priority sectors.

Finance Minister Sri Mulyani has commented that a reduction of income tax will apply to the interest of time-deposits both in local and foreign currencies deriving from export revenues.
However, exporters who do not keep their export earnings domestically may be barred from moving their goods overseas as this would lead to capital outflows and a depreciation of the local currency as witnessed in the 1998 Asian Financial Crisis. A scenario that President Joko “Jokowi” Widodo has reaffirmed to 40 local exporters in July that the country is looking to avoid.

Mr. Satria Sambijantoro, an economist at Bahana Securities, has said that by retaining export revenues within the country, foreign exchange reserves can increase and this will prevent capital outflows from Indonesia in the future. With the change induced by the new stimulus package, foreign ownership in 54 business sectors, including the steel, chemical and petrochemical industries can now be increased to 100 percent, which is a drastic increase from the present 30 to 67 percent ownership allowed. This reflects the 2015 policies that were made to facilitate foreign investments and complements the last stimulus package that was introduced in August last year, which had an aim of increasing foreign investment. Regarding this, Coordinating Economic Minister Darmin Nasution has said, “We cannot address current account [deficit] issue[s] only. That’s important, but not enough. We must formulate policies to give investors confidence and allow capital growth.”

Although, the country is still lagging behind President Joko’s 7 percent growth target, the central bank has projected that the economy will grow by 5.1 percent this year, compared to last year’s 5.07 percent. This follows the government projection in August that the country’s economic growth will be 5.18 percent this year. Currently, Indonesia has been struggling to stabilise its fluctuating currency as well as the loss of confidence amongst investors. Centre of Reform on Economics Indonesia Executive Director, Mohammad Faisal, has said that with the United States intensifying efforts to boost its own economy, including adopting a highly domestically centred monetary stance, capital has been diverted away from emerging economies like Indonesia. He has further commented that, “All emerging markets are affected by shocks from the US, but our currency depreciation is among the deepest.”

Despite an increase in the value of the rupiah since early November, analysts have warned that risks remain on the horizon, especially for imports that traditionally spike during the year-end holidays as depreciations might contribute to a higher current account deficit. A trend that was observed in October when the Statistics Indonesia posted that deficit figures had reached US$1.82 billion which was the country’s second highest deficit figures in 2018 and have led to a weakening of the rupiah.

Last week, the Bank of Indonesia (BI) raised its benchmark rate by 25 basis points for the sixth time this year, to 6 percent. This is aimed at protecting the value of the rupiah in anticipation of a potential fourth hike this year in US rate, which will likely occur in December. BI Governor, Perry Warjiyo, has argued that with interest rate increases, along with instruments to control imports, the current account deficit can be narrowed to 2.5 percent of GDP next year. Although this year, the central bank estimates the gap will remain below 3 percent.

WANT MORE INSIDER NEWS? SUBSCRIBE TO OUR DIGITAL MAGAZINE NOW!

FOLLOW US ON: LinkedIn, Facebook, Twitter

Digital Transformation Of Manufacturing To Add US$387 Billion To APAC’s GDP By 2021

Digital Transformation Of Manufacturing To Add US$387 Billion To APAC’s GDP By 2021

If the region’s manufacturing sector embraces digital transformation—Asia Pacific’s GDP is expected to gain additional US$387 billion by 2021 with extra one percent growth annually, according to new figures released by Microsoft on 23 April 2018.

Results for manufacturing are outlined in the study, “Unlocking the Economic Impact of Digital Transformation in Asia Pacific”, produced by Microsoft in partnership with IDC Asia/Pacific. It was based on the survey of 615 business leaders from the manufacturing sector across 15 markets in Asia Pacific.

“Those organisations that had already embarked on their digital transformation journeys gained improvements in the range of 13 percent to 17 percent last year. They will see at least 40 percent improvements in three years, with customer advocacy registering the highest improvement rate,” said Victor Lim, vice president, IDC Asia/Pacific.

The Study identifies the top three benefits of digital transformation that have a direct impact to bottom line performance:

  • Improvement in productivity
  • Improvement in profit margins
  • Costs reductions

Businesses are seeing long-term benefits in embracing digital transformation. Increased revenue from new products and services and improved customer advocacy rounded up the top five tracked benefits.

The Study identified key traits of Manufacturing Leaders against other Leaders, including the former’s higher likelihood to have a key executive leading their Digital Transformation efforts. It also recommends organisations to adopt a three-step data strategy to become a digital transformation leader—including collection of data, optimisation of existing products and services through data, and creating new business models with data.

 

WANT MORE INSIDER NEWS? SUBSCRIBE TO OUR DIGITAL MAGAZINE NOW!

FOLLOW US ON: LinkedIn, Facebook, Twitter

 

 

Back To Top