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  • Sunday, 19 Jun 2016

Emerging Asia falls into two camps

EMERGING Asia falls into two camps — the open, highly-sensitive economies and the more closed economies, according to HSBC Global Research.

In a research note, HSBC said, the open economies co-incidentally, were also the ones with the highest debt loads with a significant pick-up in growth seems unlikely any time soon. For the more closed economies, the leverage was much lower and it is here that the potential for significant acceleration in growth was the greatest, it said.

It said leverage-driven growth was losing its punch, and with debt saturation, lenders and borrowers alike were increasingly cautious about splurging further.

“South Korea, Taiwan, Hong Kong, Singapore, Malaysia, and Thailand are highly exposed to external demand and carry relatively high debt burdens as well, making it increasingly hard to add extra oomph to local spending.

“So, for the time being, dont expect much of a positive growth delta here,” it added.

The second camp, however, looks a little more promising, it said.

“Here leverage is still low and exports do not play as large a role in driving growth. India, Indonesia as well as the Philippines fall into this group,” it said, adding that Indonesia probably had the lowest total debt-to-gross domestic product ratio among major economies anywhere, with the Philippines not far behind.

“While high debt is suffocating growth in much of the world economy nowadays, that can’t be said of these two,” it said.

HSBC said it was not predicting that economies in the second camp are about to deliver stunning growth.

“Potential, after all, does not automatically equate to future performance but they already deliver robust growth, at least in the global context,” it said.

M’sian companies score RM207mil at Indonesia expo

MALAYSIAN companies recorded potential sales amounted to RM207.25mil at the Indobuildtech Expo 2016, a 3.4% increase from RM200.22mil last year.

Twelve Malaysian companies took part in Indonesia’s biggest trade exhibition from May 25-27, the Malaysia External Trade Development Corporation (Matrade) said, marking the 11th time Malaysia’s took part.

Matrade said the Malaysian companies showcased waterproof products, pile-testing equipment, solid surface materials, wood-plastic composites and solar water heaters.

Other products featured included construction and decorative products, interior design materials, cements, lighting and accessories, roofing materials, electrical accessories, sanitary fittings, and floor and wall tiles.

In 2015, Malaysia’s exports of building materials to Indonesia rose to RM1.17bil which accounted for 3.6% of Malaysia’s total exports of building materials globally, Matrade said.

Indonesia is Malaysia’s third largest export destination for building materials in ASEAN after Singapore and Thailand.

Fintech, higher savings boost Asian economies

THE new wave of financial technology (Fintech), coupled with high saving rates in Asia, could help boost the region’s economy, Khazanah Research Institute trustee Tan Sri Andrew Sheng said.

He said fintech gave faster access to funds, and the technology was revolutionising the approach to financial services.

“The whole idea of fintech is to raise the equity-based capital for young people to start new businesses, as well as create jobs and services, which could eventually drive economic growth,” he said.

Sheng said finTech developments such as blockchain, artificial intelligence and biometric applications were expanding the frontiers of banking.

“Malaysia can benefit much from fintech as the country has one of the highest saving rates (in the region) at 40%.

“With the higher savings not only in Malaysia but also in most Asian countries, business models can shift from debt-based models such as borrowing from banks to an equity-based model like crowdfunding.

“When we save a lot, where does the money go? Some people might invest in the US dollar, but if we give our young people a chance and invest in their startups, maybe this is where the new transformation will come from,” he said.

Sheng said the increasing risks and uncertainties in the 21st century from geopolitics, technology, climate change and social inequities required higher equity-based business models, which is radically different from the debt-driven models of the 20th century.

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