Category Archives: BUSINESS

The pitfalls of Malaysia’s palm oil defence

A worker collects palm oil fruits at a plantation in Bahau, Negeri Sembilan, Malaysia, 30 January 2019 (Photo: Reuters/Lai Seng Sin).

Author: Amalina Anuar, RSIS

As palm oil trade tensions drag on, Malaysia has slated another round of EU lobbying and a joint World Trade Organization (WTO) dispute filing with Indonesia for November 2019.

These are two of many strategies that are being deployed by Putrajaya to halt the European Commission’s Delegated Act. The Act aims to restrict and eventually phase out high indirect land-use change (ILUC) biofuels (biofuels whose production involves deforestation and high carbon emissions) from being counted in contributions towards renewable energy targets. Considering that palm oil has been identified as a prime cause of deforestation, Malaysia’s EU-bound exports that go towards fuel production are directly in the line of fire.

Malaysia has launched a 2019 ‘Love MY Palm Oil’ campaign to limit palm oil’s bad press and to establish a counter-narrative on its benefits. Meanwhile, the industry is shoring up exports to alternative markets, such as India and China. Putrajaya is also gunning for Malaysian Sustainable Palm Oil (MSPO) certification, while halting plantation expansions and focusing instead on improving palm oil yields to prove that the commodity can and does dovetail with environment-conscious frameworks.

While these strategies could bring about a resolution in Malaysia’s favour in the near-to-medium term, they may not address the sustainability issues bedevilling the palm oil debate, leaving it vulnerable to attacks in the long run.

That Putrajaya is looking for a quick fix is understandable. The industry contributed 3.8 per cent to GDP in 2017 and supports the livelihoods of around 4 million people. At 12 per cent, Europe is the second-largest importer of Malaysian palm oil. In a global economy rife with headwinds …continue reading

    

Foreign funds return with force in 2019

With ultra-low interest rates and one of the highest yield gaps in international cities, foreign funds are increasingly turning their attention towards real estate in Tokyo and the rest of Japan.

According to JLL, the yield gap on prime office buildings in Tokyo was 2.9% in 2019, exceeding London’s average of 2.5% and New York City’s average of 1 ~ 1.5%. Tokyo’s yield gap has consistently outranked London, New York, and Hong Kong, hovering around the 2.5 ~ 3.0% range for the past 10 years.

According to Daiwa Real Estate Appraisal, the average purchase price of prime office in central Tokyo in the second quarter of 2019 was 3,000,000 Yen per square meter (approx. 2,640 USD/sq.ft), the highest level seen since 2008.

2017 was a record year for foreign investment in Japanese real estate with overseas institutions spending 1.1 trillion Yen on acquisitions. This was a three-fold increase from 2016 and the first time that annual volume had exceeded 1 trillion Yen. Norges Bank Real Estate Management, part of Norway’s sovereign wealth fund, made headlines after acquiring a 70% stake in a 132.5 billion Yen purchase of five commercial and retail buildings around the Omotesando district in central Tokyo. The expected yield was in the 2% range. Acquisitions slowed in 2018 but quickly picked up again in 2019.

THE YEAR SO FAR

January:

  • Takeda Pharmaceutical Company announces the sale of 21 assets, including their Osaka headquarters to GreenOak for over 50 billion Yen (approx. 473 million USD).
  • ESR and AXA Investment Managers acquires a 100 billion Yen (approx. 946 million USD) portfolio of newly-built logistics facilities in Tokyo and Osaka.

April:

  • Hong Kong-based Gaw Capital Partners acquires the Aoyama Building in Tokyo for 84 billion Yen (approx. 795 million USD). The seller paid approximately 500 million USD for the building in 2015.

June:

Tokyo apartment prices increase for 6th month

According to REINS, a total of 3,233 second-hand apartments were reported to have sold across greater Tokyo in July, down 7.4% from the previous month but up 3.0% from last year. The average sale price was 34,420,000 Yen, up 2.4% from the previous month and up 2.4% from last year. The average price per square meter was 535,100 Yen, up 1.4% from the previous month and up 2.6% from last year. This is the 6th month in a row to see a year-on-year increase.

The average apartment size was 64.34 sqm and the average building age was 21.92 years.

In the Tokyo metropolitan area, 1,746 apartments had sold, down 3.5% from the previous month but up 5.4% from last year. This is the 6th month in a row to see a year-on-year increase in transactions. The average sale price was 42,200,000 Yen, up 1.7% from the previous month and up 2.9% from last year. The average price per square meter was 698,300 Yen, up 0.1% from the previous month and up 2.7% from last year. The average apartment size was 60.42 sqm and the average building age was 20.46 years.

Central Tokyo’s 3 wards

Central Tokyo’s 3 wards of Chiyoda, Chuo and Minato had 209 reported sales, showing no change from the previous month but up 2.0% from last year. The average sale price was 67,560,000 Yen, up 2.6% from the previous month and up 8.1% from last year. The average price per square meter was 1,164,900 Yen, up 2.1% from the previous month and up 1.7% from last year. The average apartment size was 58.00 sqm and the average building age was 15.71 years.

…continue reading

    

Pensions boss Ministry of Health, Labor & Welfare set for split?

Source: ijapicap.com

Rumours that the Ministry of Health Labor and Welfare is targetted for breakup in an upcoming policy paper from the ruling Liberal Democratic Party broke cover in the Nikkei today.

The proposal is said to be part of a wider review of the structure of central government since it was reorganised two decades ago into 13 agencies and ministries. That reform included the amalgamation of the Ministry of Labor with the Ministry of Health & Welfare, a marriage which may now be dissolved.

In the intervening years the nw Ministry’s remit has expanded significantly so that it now covers job-based pension funds of all types.

As soon as the two were departments were conjoined the assets of many zaikei (savings accumulation) schemes, which had rested with the Ministry of Labour, were passed to SERAMA (The Smaller Enterprise Retirement Allowance Mutual Aid) in whose oversight the new Ministry plays a significant role.

The MoHLW then took over from the Ministry of Finance responsibility for the regulation of approximately 65,000 so-called tax-qualified plans (TQPS), re-establishing the 13,000+ of them which met its criteria into covenant (or “contract”) schemes and folding the rest into one of SERAMA’s many arms or dissolving them.

Next it assumed responsibility for the several giant civil service schemes as their benefits structure was reorganised and they agreed to follow the same asset allocation as the Government Pension Investment Fund — the world’s largest institutional investor — which is also under the MoHLW.

Small wonder that it is now said to be overburdened but the repeated scandals in which it has been involved since 2007 — when it could not match about 50 million pension records to their owners — mean that it attracts little pubic sympathy.

The future of the Pension Fund Association may also be up for review. Despite its name, the …continue reading

    

Tax bureau busts foreign investors in Niseko

The Sapporo Regional Taxation Bureau has identified several domestic and foreign real estate companies and investors for failing to declare income made on real estate transactions in Niseko. Some say this recent bust may just be the tip of the iceberg.

The Bureau found around ten cases where land for holiday homes had been sold without the income from the sale reported in required tax filings. The total undeclared income amounts to around 3 billion Yen (approx. 28 million USD), with 600 million Yen in additional taxes.

For many years now Niseko has drawn the attention of both foreign investors and foreign tourists attracted to its idyllic skiing conditions and easy access from other Asian countries. It has also been making local headlines for seeing the highest rate of growth in land values.

With transactions heating up, some foreign investors may not be aware that even if they live overseas, transactions involving real estate in Japan may still be subject to taxation. This still applies even if the entire transaction takes place overseas between two foreigners.

A joint operation between the Sapporo and Tokyo tax bureaus found five companies registered in Hong Kong, Samoa and the British Virgin Islands that had failed to declare 1.5 billion Yen in corporate income.

Furthermore, the investigation discovered that an investment company registered in Hong Kong in 2007 had sold 10 hectares of land to a Singapore company in 2017 for 300 million Yen – the same price the seller had originally paid for it. At the same time, the two shareholders of the Hong Kong-based investment company sold their shares in the company to the Singaporean buyer for another several hundred million Yen. The Sapporo Taxation Bureau has determined that the sale of shares was to disguise the true profit from the sale of the …continue reading