Category Archives: BUSINESS

What Asia can expect from the G7

European Council President Tusk, German Chancellor Merkel, US President Trump, French President Macron and Japanese PM Abe walk after a family photo at the start of G7 Summit at Greek Theatre, Taormina, 27 May 2017 (Photo: Reuters/Jonathan Ernst).

Author: Yves Tiberghien, UBC

The G7 meeting of the seven most powerful Western democracies along with the European Union is being held on August 23–24 in France. Also present are leaders from Australia, Burkina Faso, Chile, Egypt, India, Senegal, Spain, Rwanda and South Africa. Will this be a highlight for global governance and will there be positive impact for Asia?

Don’t bet on it.

For all the best intentions of the summit, it may only finally confirm that this cross-Atlantic alliance of democracies complemented by Japan is too fragmented and inward-oriented to generate new ideas, institutions, or contributions to global public goods.

Strikingly, Italian Prime Minister Giuseppe Conte and Spanish Prime Minister Pedro Sanchez are coming as mere caretakers after the implosion of their respective governments. Canadian Prime Minister Justin Trudeau has less than two months remaining before difficult general elections. EU Commission President Jean Claude Juncker is missing due to a health emergency. German Chancellor Angela Merkel is politically and personally weakened, while UK Prime Minister Boris Johnson is joining this G7 like a torpedo with one single target: getting US President Donald Trump to lend political fracas against the European Union in his pursuit of Brexit.

Only three leaders are actually autonomous and able to deploy political capital — Trump, French President Emmanuel Macron, and Japanese Prime Minister Shinzo Abe. But Trump’s erratic behaviour cannot be checked by the other two and is sufficient to ensure that no significant outcome is possible. In fact, citing Trump’s veto positions and in light of the G7 disaster last year in Quebec, Macron this week scrapped the idea of a G7 communique all together — focussing instead on ad-hoc declarations on some issues where enough countries are willing to play.

Despite the regalia and cachet of the G7 built over 44 years, there is more positive creative …continue reading

    

Why GAD reform matters to Myanmar

Myanmar's State Counsellor Aung San Suu Kyi (L), newly elected Myanmar President Win Myint and his wife Cho Cho pose for a photo at the presidential palace at Naypyitaw, Myanmar, 30 March 2018 (Photo: Reuters/Sai Zaw).

Author: Matthew B Arnold, The Asia Foundation

With its ubiquitous presence, expansive mandate and long history within the military-led Ministry of Home Affairs, the General Administration Department (GAD) has been Myanmar’s paramount government agency, acting as the backbone of public administration. News of its removal from Home Affairs and placement into the Ministry of the Office of the Union Government last December shocked many — widespread belief prevailed that the reassignment of GAD was a red line that the military would not tolerate an elected government crossing.

Removing a key department from a military-led ministry is notable, but there is more to be done. The National League for Democracy (NLD) government should think critically about how governance can be reformed to steer the country towards its goals of peace and full democracy.

For the NLD government, the GAD’s transition represents the most important public sector reform since democratic transition began in 2011. For State Counsellor Aung San Suu Kyi, the removal of the GAD from Home Affairs demonstrates that significant structural reform can be achieved under an NLD tenure, even reform that demilitarises the state apparatus by placing key departments under full civilian control.

The GAD’s power within government derives from its role in convening, communicating and coordinating across ministries rather than through its own executive decision-making power. Essentially, it is the ‘process manager’ over a large swathe of the country’s public administration. With the GAD transfer, the Office of the Union Government now has full control of the country’s paramount agency of administration.

The ministry could potentially play a powerful role in driving change across the state apparatus. The strong support from President Win Myint and Aung San Suu Kyi, with the weight of their executive mandates, can bolster inter-ministerial coordination and catalyse state administration reform-focused policymaking.

The President’s Office stated that the GAD transition …continue reading

    

120-yr old Mitsui Besso in Karuizawa at risk of demolition

The recent sale of the original Karuizawa holiday home of Saburosuke Mitsui (1850-1912) to a buyer from an offshore tax haven has locals worried the historic house may soon be demolished.

The house was built around 1900, making it the second oldest Japanese-built home in the area. The oldest home was built in 1893 for Yujiro Hatta, a navy captain.

The two-story wooden house includes a western-style portion of 144 sqm and a traditional Japanese-style wing of 140 sqm. It was fitted with western-style flush toilets and bathrooms, while the original gas lamp fixtures remain.

Saburosuke was the brother-in-law of Asako Hirooka (1849-1919), a businesswoman, banker and Christian speaker. Asako often used the house herself. Other notable guests have included former Prime Minister Duke Kinmochi Saionji, and Indian poet Rabindranath Tagore.

The home had remained in the Mitsui family until January 2019 when the acreage was transferred to a company registered in the British Virgin Islands. Rumors began to spread that the house would be demolished to make way for new construction. A local heritage preservation group sent letters to the new owner but received no response. They started collecting signatures last month and will send the petition to the town at the end of August. The group is hoping that the town will buy the house and relocate it.

Over 10 years ago the former property owner had considered donating the house to the town but discussions did not progress further.

How you can help

Sometimes historic and culturally valuable homes similar to this are available for purchase. They usually come with a high price tag due to the relatively large and valuable land they sit on, and may require costly repairs and upgrades at the buyer’s expense. If you are interested in preserving a piece of Japan’s history, please let us know. Homes …continue reading

    

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: