Wednesday 30 June 2010

INDIAN EXPORTERS UNDER STRESS.

This is the map of India, where currently India is considered one of the emerging economies, together with China that will give a strong competition to the western world economies.

It has been reported that the Federation of Indian Chambers of Commerce and Industry (FICCI) conducted a survey from April to June 2010 to assess the impact of global economic recovery on Indian exporters. The survey involved 278 companies covering wide geographical and sectoral spread with their turnover ranged from US$100,000 to US$3 million.

The sectors covered by survey include automotive, food and food processing, fast moving consumer goods (FMCG), textiles, metal and metal products, heavy engineering, marine products, cement, paper, pharmaceuticals, chemicals and wood & wood products.

This is also one of the export/import activities in India, where the Giant Sealiners carrying containers of products for trade.

The survey revealed that Indian exporters have again come under stress mainly due to the following factors:

             - rising cost of raw materials;

             - large scale variation in exchange rates;

             - continued euro zone crisis; and

             - risk of slowdown in exports to EU.

Over 88 per cent of exporters participated in the survey reported a dip in margin due to appreciation of rupee of:

            - 12 per cent against US dollar in the past one year; and
            - 18 per cent against euro since December 2009.

The large-scale rupee variation against US dollar and Euro has led to lower realisation for exporters.

This is one of the State Legislative in India, where India formulate their various laws in the House of Parliament for enable them to boost their economy.

Indian exporters are being forced to hold back of consignments goods due to continued economic uncertainty in EU region such as in Greece, Spain, Italy and Portugal.

Exporters have to take temporary terminals for parking goods in the EU regions after buyers’ refusal to accept delivery.

Expectations for Export Performance in the Next Six Months
i. Export Condition: 
                                                                                 (% Respondents)
                                                         Moderately/
                                                                   Substantially Better     Same /No Change       Moderately/
                                                                                                                                  Substantially Worse

           Overall Export Conditions               56                      28                      16

           Industry level export conditions       58                     20                       22

           Firm level export conditions            51                     29                       20

Overall, about 56 per cent of the respondents expect better export conditions to prevail in the next six months, while 28 per cent feels no change and 16 per cent see worse export conditions in the coming months.

ii. Export Volumes

                                   Decline   No Change                (% of Respondents)
                                                                                        Increase
                                                                  (0-5%) (5-10%) (10-20%) (20-30%) (>30%)
              February 2010   (11)           (26)       18        18         19          7           2
              June       2010   (17)           (22)       24        19         12         4            2

iii. Export Destinations

About 60 per cent of the exporters expect that exports to European Union either to remain the same or to go down over the next six months.


This is the Taj Mahal of India, where the symbol of happiness in the growth of economy for Indian population.

      Country/Region                                                 (% Respondents)
                                                    Increase          Same/No Change           Decrease
        Africa                                       61                           39                         0
        USA                                          55                           38                         7
        South East Asia                          49                           46                         6
        Latin America                            46                           46                         8
        EU                                            40                           38                        22
        Middle East                                38                           38                        25
        SAARC                                       36                           64                         0
        United Kingdom                         36                            46                       18
        UAE                                          35                            46                       19
        China                                        22                            74                        4
        Japan                                        14                            77                        9

Hard currency of India - "Rupees", where however, trades use United States dollars for the mean or medium of exchange for import export activities.

Factors Affecting Exports

                                       
             Factors                                                   Respondents (%)


        Exchange rate                                                        88

        Rising cost of raw material                                      74
        Weak demand in international markets                     52
        Increase in oil prices                                              48
        Competitive environment                                       45
        Cost of credit                                                        32
        Government procedures                                         30
        Inadequate infrastructure                                        24
        Government promotional schemes                           24
        Credit availability                                                  14
        Tariff/Non tariff barriers                                        12
        Excess productive capacity                                     12

On Measures or Suggestions, India need to beat the effect of currency fluctuations, exporters have taken measures by:

                      - putting dedicated forex in place;
                      - evolving dynamic pricing models built in sales contracts; and
                      - not converting dollar receivables into rupees.

Due to the huge of population in India, people are queing for certain services in India.

Exporters also have suggested the government to take measures, including:


                     - bank loans at concessional rates;
                     - increase in duty drawback and duty entitlement passbook (DEPB) rates;
                     - export incentives; and
                     - early signing of FTA with EU.

Trains are tha main transportation for general population, however, currently we can see the aviation industry in India is booming due to the fact that many Indian are able to travel by air now.

Observation based on these senario:

         • India’s export in fiscal 2009-10 declined by 4.7 per cent at US$ 176.5 billion, as compared with US$185.3 billion in fiscal 2008-09.

         • Exports turned positive in November 2009 after being contracted for 13 months between (October 2008-October 2009) due to slump in demand in traditional markets of United States, Europe and Japan, as a result of global economic slowdown.

         • Export sustained positive trend for the seventh consecutive months since November 2009, with highest growth witnessed in March 2010 at 54.1 per cent.

         • The government in the three stimulus packages has given some incentives for the exporters that helped them to get rid of contraction. These incentives include:

                                       - interest subvention on export credit;
                                       - incentives for market expansion; and
                                       - easy lending rates.

This is one of the shopping complexes in one of the cities in India.

          • The government is aiming at achieving an export target of US$200 billion in the fiscal 2010-11.

           • The target, however, seems to be difficult to achieve unless India constantly look for newer markets, as traditional markets like the United States and the European Union have failed to deliver since the economic crisis.

This scenario of condition in one of the cities in India is a normal situation.


Salam..............................................................................................



Wednesday 23 June 2010

NEW LAW ON IP IN THE USA.

This is the Capitol Hill of the United States of America, where all law will be approved and enacted here by the law makers of the USA's House of Representative and House of Senate.

The White House has unveiled its first Joint Strategic Plan on intellectual property theft developed by the Office of Intellectual Property Enforcement Coordinator. The office headed by Miss Victoria Espinel, was established to develop a comprehensive IPR plan through coordination efforts with various government agencies responsible to deter intellectual property theft and inputs from the public.

This is the White House for the Office of the President of the United States and his close family official Residence. For the Executive Power will be decided within the power of the President.

The plan contains more than thirty recommendations for improvements on IPR which is divided into six main categories. The six main categories include:

i) We will lead by example and will work to ensure that the Federal government does not purchase or use infringing products;

ii) We will support transparency in the development of enforcement policy, information sharing and reporting of law enforcement activities at home and abroad;

iii) We will improve coordination and thereby increase the efficiency and effectiveness of law enforcement efforts at the Federal, state and local level, of personnel stationed overseas and of the U.S. Government’s international training efforts;

iv) We will work with our trading partners and with international organizations to better enforce American intellectual property rights in the global economy;

v) We will secure supply chains to stem the flow of infringing products at our borders and through enhanced cooperation with the private sector; and

vi) We will improve data and information collection from intellectual property-related activity and continuously assess domestic and foreign laws and enforcement activities to maintain an open, fair and balanced environment for American intellectual property right holders.

This is the location of the office for Intellectual Property Right in Washington DC.

Under the summary of literature contributions received, Malaysia was cited as one of the 17 countries connected between film piracy with organized crime rings. The summary was captured from a report published by RAND Corporation’s Safety and Justice Program and the Global Risk and Security Center. The Malaysia organized crime group identified was the Ang Bin Hoey triad which was cited to have been engaged in turf battles to maintain control over lucrative piracy markets, battles that resulted in knife and spear fights; robberies of bystanders, including families at bus stops; and assassinations of rival gang leaders.

Organized Crime:

Several organizations including the Copyright Alliance have cited the 2009 report by the RAND Corporation’s Safety and Justice Program and the Global Risk and Security Center. Through the study of 14 different cases, the report identified “a broad, geographically dispersed, and continuing connection between film piracy and organized crime” and links profits from motion picture piracy to 17 different organized crime rings in the U.S., Canada, Hong Kong, Italy, Japan, Malaysia, Mexico, Pakistan, Paraguay, Russia, Spain, Northern Ireland and the United Kingdom. The report also documented film piracy as having been used to finance terrorist group activities in three of the 14 case studies, including those of Hezbollah, a group designated as a foreign terrorist organization by DOS. The Alliance for Safe Online Pharmacies (ASOP) notes in its submissions examples of investigations, indictments or convictions linking counterfeiting of prescription drugs to terrorist organizations and organized crime networks.
 
Very nice flowers during Spring season in Washington DC, where the USA trying to enforce new law of IP.

Immediately after the unveiling of the plan, David Hirschmann, President & CEO of the U.S. Chamber’s Global Intellectual Property Center, US Chambers of Commerce and President and CEO Kevin M. Burke from the American Footwear and Textile Association released the following remarks in support for the plan:

“The United States government took a historic and very meaningful step towards fighting intellectual property theft worldwide and this is the first ever National IP Enforcement Strategy which could improve our nation’s ability to combat counterfeiting and piracy”.

President and CEO Kevin M. Burke from the American Footwear and Textile Association also provides his remark:

“The United States has long needed an aggressive, collaborative, and practical approach to combating the scourge of counterfeiting that continues to harm U.S. apparel and footwear brands competing in the global market”.

“For the last four years, the U.S. apparel and footwear industry has consistently been the largest victim of IP theft with over half of the seizures by U.S. Customs and Border Protection being footwear, fashion accessories, and apparel. Without an approach forward, the threat of IP theft in stores or through e- commerce will continue to pose significant dangers to U.S. consumers, harm the reputations of U.S. brands, and rob the U.S. government of tax revenue”.

The 2010 Joint Strategic Plan on IPR is just for information.


Salam.......................................................



Friday 18 June 2010

NEW RULE FOR FOOD AND NUTRITIONAL IN THE EUROPEAN UNION.

This is main hall of the European Parliament where EU regulate new Regulation and the buliding is located in Brusells City of Belgium.

The European Parliament (EP) has voted in favour of strengthening the European Union's draft regulation on food and nutritional labeling which was proposed by European Commission in 2008. With this, it will be mandatory to:

I. Label nutrition details:

•      Quantities of fat, saturates, sugar, salt and energy, to be accompanied by
        guideline on daily amounts (expressed with per 100g or per 100ml values).

•      Details of protein, fibres and transfats.

ii. Label country of origin for:

•     all meat, poultry, dairy  products  and  other single-ingredient products (which earlier were only compulsory for certain foods, such as beef, honey, olive oil and fresh fruit and vegetables).

•     Meat, poultry and fish when used as an ingredient in processed food (subject to an impact assessment).
•     Meat labels should indicate where the animal was born, reared and slaughtered. It should also indicate meat from slaughter without stunning (according to certain religious traditions).

The European Parliament has also agreed to exclude the labeling rules on:


        •      Non pre-packed food, such as meat from a butcher.

       
        •      Handcrafted food products made by micro-enterprises.

        
        •     Alcoholic drinks i.e. beer, wine and spirits. However, it is mandatory to label mixed alcoholic drinks.

The draft regulation is still subject to the agreement of EU head of governments (European Council), which is expected to deliberate on the proposal in February 2011.

Once adopted, food producers will have 3 years grace period to comply with the mandatory labeling requirements. However, SMEs with fewer than 100 employees and annual turnover under EUR5 million are given a longer period to comply (five years).

Relating to this draft regulation, I wish to highlight a memorandum released by the European Association of Zoos and Aquaria (EAZA), an association representing 324 zoos and aquaria institutions from 35 European countries released on 19 May 2010. In this memorandum, EAZA has singled out on palm oil and insisted that mandatory labeling be imposed on food products containing palm oil. EAZA argued that this is to inform EU consumers of the potential environmental, social and ethical impacts of their purchases given the alleged adverse impact of oil palm plantations (including endangering species such as orang-utan).

Specific proposals made by EAZA:
        
•     Clear labeling of palm oil or palm kernel oil contents in food products sold in the EU;

•    Mandatory labelling using phrases such as ‘May contain products derived from oil palm’ or ‘May contain palm oil’ for products that knowingly contain palm oil or where it cannot be guaranteed that palm oil is not included in the product;

•   additional mandatory element to indicate whether palm oil used is from certified sustainable sources or is from unsustainable sources;

•   to develop ‘Orang-utan friendly’ optional labeling scheme.

General Comments


The European Parliament has endorsed almost all the provisions in the draft regulation except for the three ‘traffic light colour coding’ for certain processed food and soft drinks (as advocated by the UK) since this will be too onerous on businesses.

Although claiming that the labeling requirement is important to address increasing health issues and obesity among EU’s citizens, this is however, questionable. The wider ruling to indicate the ‘country of origin’ to a certain extent can be seen as a protectionist stance especially when most of the members of EP strongly said that this is to provide consumers with informed choices i.e. of those products produced in third countries.

The main entrance to the main hall of the European Parliament in Brussels City of Belgium, Europe.

The requirement to indicate methods of slaughtering on meat label may impact exports of halal meat products (such as in processed food) into the EU market. There may be a linkage between this proposal and DG Trade’s insistence that animal welfare element be included in the Malaysia-EU FTA during the recent scoping discussion. We may wish to seek further clarifications from the EU side on this issue.


There is still possibility for EAZA to lobby for changes in the draft regulation as long as it is not adopted. As 95% of our palm oil is used in sectors other than bio fuel (including food), we have to be concerned of any negative proposals on palm oil. MPOB and MPOC Brussels are also aware of this memorandum.

 
Salam…………………………………………………………..

Thursday 17 June 2010

AN ARTICLE ON NEIGHBOURING COUNTRY - THAILAND.

UNCERTAINTY OVER THE ECONOMY IN THAILAND

Thailand's economy has been showing signs of recovery at the end of 2009 after facing many difficulties in the current global economic crisis. Thailand now faces new challenges as a result of internal political unrest and world views on the country.

           On 19 May 2010, Thai security forces stormed the rally site that has been occupied by red shirt protestors around the commercial area in the heart of Bangkok city. The battle had resulted in bloodshed among civilians and security forces. The main objective of the government at that time was to disable the movement of protestors and weaken their ability to continue to demonstrate. Although the government achieved its objective, but there is a possibility that the red shirt group will organise more rallies in the future, hence that would be difficult for the country’s economic recovery.

           However, government officials are optimistic to achieve 2010’s economic growth rate of 3.5% - 4.5%, a reduction from the original target of 7%. It is not easy for Thai government to achieve the target unless additional funds are injected into the economic system to generate stronger economic activity.

           The Government’s economic forecast differs from that of Bank of Thailand (BOT). BOT in a press conference held at the end of May stated that the rate of GDP should be in the range of 4.3% - 5.8%, a higher target. According to BOT, the target can be achieved through by stimulating the country’s export sector to offset the decline in the tourism sector as well as domestic spending.

          Thailand’s target is for the export sector to register year-on-year growth of as much as 14%. However, the increase in export earnings may be affected by the European debt crisis.

        As the impact on the economic crisis in Europe has yet to show clear signs of recovery, it will be difficult for Thailand to grow its market share in the continent.

        The other sector of the economy of Thailand that was severely affected is tourism. Protests organised previously regardless of hosted by pro or anti-government, including those organised by the yellow shirt group at the end of 2008, resulting in the closure of Suvarnhabumi airport, has clearly affected the country’s tourism sector.

        In April 2010, the sector suffered a month-on-month contraction of 18%. It is likely Thailand needs a lengthy period of time to restore tourists’ confidence who previously saw Thailand as a safe destination.

       Direct cost incurred as a result of the political protest by red shirt in Bangkok is estimated about 200 to 500 billion baht (RM 20 – 50 billion). This includes the cost of physical damage during the protests, loss of business, and expected loss in tourism sector and other sectors. Thailand’s Finance Minister has issued a statement that the effect of the demonstration will reduce the rate of economic growth this year of 1.1%.

       Thai Government now had to face the challenge of restoring the confidence of the international community that Thailand is still a destination for investment and tourism that are attractive and safe. Thai government also needs to win the hearts of supporters of former Prime Minister of Thailand, Thaksin Shinawatra (majority of them are farmers and the poor). This group views that Prime Minister Abhisit is not able to defend their future as Thaksin has done before.

       Many see Abhisit’s government capability is very limited. Most of the efforts by the government now are focused to the recovery of investors’ confidence i.e the situation in Thailand is back as ever, but these are only temporary or short-term efforts. Foreign investors still consider the risk of political stability in Thailand is still high and they should be more cautious in making decisions involving investment.

General View

      The path ahead remains uncertain. Damages especially in terms of lost tourism revenue would come to 0.5-1.0% of GDP. However, the strong 1Q GDP growth (12% YoY) means that the economy could expand faster than the current growth forecast for 2010 provided that global expansion is sustained. Although Thai government is optimistic that the country’s economic foundation is still strong (based on its export-generated revenue), many economists are of the view, the economic slowdown in Europe will bring adverse effects on Thailand’s economy. This will also dampen exports. Furthermore, the domestic demand is beginning to be affected as a result of internal political turmoil in the country.

        As it is growth decelerated in April, after strong performance in March. Fewer working days and political unrest adversely affected tourism and confidence. Tourist arrivals dropped to 1.1 million in April from 1.4 million in March. Consumption also fell 0.9% month-on-month. Business sentiment was down from 55.7 to 46. It is expected May numbers should worsen.

        Industrial production (IP) growth dropped from 32% YoY to 21.3% YoY and fell 2.0% month-on-month, partly from acceleration of production in March. Capacity utilisation dropped to 62.3% versus 75% in March. Crop production expanded 5.4% YoY from rice, oil palm and rubber. But the outlook should be dimmed by the drought. Investment remains strong, rising 20% YoY and 1.3% MoM from increases in automobile and electronic imports.

       Export growth was strong at 34.6% YoY. But trade and current accounts recorded small deficits of US$190 million and US$420 million respectively due to a surge in imports and lower tourism revenue. With sizable net capital inflows, the balance of payment (BoP) surplus rose to US$3.7 billion, possibly from bank inflows and repatriation of Thai investment in Korean bonds. Thus, the BoP is expected to worsen in May due to a sizable (approx $1.5 billion) outflow from the stock market.

       To-date, there is no guarantee that there would be no more political protests by parties that are not satisfied with the present government. Furthermore, the anti-Government forces have shown that they have strong influence on the Government machinery such as police and military whose members are said to are partial to the protesters and showed reluctance in taking instructions from the government in containing the situation. Feedback from un-officials report indicates that at least 70% of the police force in Thailand are supporters of the red shirt. The military is equally split. In the armed forces, there are groups that support Thailand’s tactical military expert, Major General Khatiya (who was perceived as betraying the incumbent government by supporting the red-shirt movement and was shot dead by unknown sniper). Collectively, these factors casts doubt on Thailand’s ability to contain future civil unrest engineered by anti-government forces, which indicate that Thailand’s political stability will not return anytime soon.

       Thailand's retail sector will also be affected if there is no strong guarantee that the anti-government protests will not happen again. This is because consumer confidence began to decline. According to the Thai Retailers Association, in the event of another anti-government demonstration, effect on the retail sector will be felt starting in the fall of profits of companies such as supermarkets, major retail stores and lastly the suppliers.

        President and CEO, AAPICO Hitech Plc, Mr. Yeap Swee Chuan, raised his concern over protesters’ capability in disrupting the manufacturing and logistics sectors. If this happened, it will affect the movement of manufacturing products such as automotive parts and components. The government guarantees that the manufacturing sector, including automotive will be given greater attention in terms of security protection. Information obtained from the Malaysian-Thai Chamber of Commerce (MTCC) reveals that there are more than 50% of industrial sector workers in Thailand are pro to the red shirt.


      Precedent set during Thailand’s political history since 1932 indicates that it generally takes about 5-7 years of political turmoil before the transition from one political equilibrium to another was complete. If history repeats itself, a new political equilibrium may not be established until 2011-13 (because the current political turmoil had the military coup of September 2006 as the starting point). Such a political equilibrium is reached when an arrangement is agreed upon that would allow political power to be shared amicably among those having legitimate claims to such power.

       The defeat of the red shirts gives the government the opportunity to further consolidate its power which includes aggressive prosecution of the red shirts. But this needs to be properly balanced with genuine efforts towards reconciliation. Otherwise, the “brittle divisions in Thai society” could worsen, making the current political calm temporary. We see the following as key political signposts to watch for in the coming months.

• The lifting of the emergency rule. To be able to say that normalcy has been restored, the current emergency rule over Bangkok and 25 other provinces needs to be lifted. It would be a good sign if the government could lift the emergency rule within 2-3 months. That is, the ability to lift emergency rule would be a sign that progress has been made towards reconciliation.

• Equal treatment of the red and yellow shirts. Prosecution of the red shirts is likely to proceed aggressively given their destructive actions. Meanwhile, the red shirts will surely raise questions about treatment of the yellow shirts. The yellow shirts have yet to be charged for their occupation of the airport in Nov-Dec 2008. The cry of “double standard” was an important reason that drove the red shirts onto the streets.

• Impartial investigation into civilian casualties. The government has responded to the red shirts’ demand for an impartial investigation into the more than 80 civilian deaths and over a thousand injuries from the protests. The key here would be the perception that there has been accountability for tragic loss of life. Red shirt satisfaction or otherwise of the results of the investigation would be a key factor in reducing political polarisation in Thailand.

• Political reforms. PM Abhisit promised to implement his five-point road map for political reform. Genuine reform that addresses the concerns of the disenfranchised would be an important development towards national reconciliation. Here again, the challenge is to produce tangible political reforms quickly.

• Political accidents. There are two events that could upset the stability of the Abhisit coalition government. First, the possibility of a Constitution Court ruling to dissolve the Democrat party for misuse of Election Commission funds. Second, conservative elements could still prevent amendment of the constitution sought after by coalition partners that could threaten the unity of the coalition government.

        Thailand’s economy will be restored only if all conflicting parties agreed to negotiate and compromise and then focus on economic recovery initiative. Currently, Thailand should focus on the consolidation of a society that has been badly split. As long as there is no guarantee that political protest will no longer occur in the future, economic development efforts will be difficult.


Salam....................................................................................
 
 
 
 

Monday 14 June 2010

VISIT TO NORTH PORT IV.

Visiting the Royal Malaysian Customs Automatic Containers Checking sensors at Customs Gate at North Port of Port Klang.


Amran Sameon of MITI (far left) and other member of the team visited the site for the new sensor just newly installed at the Customs Gate at North Port, Port Klang.

Still visiting the Royal Malaysian Customs Gate's for Containers sensor at North Port, of Port Klang. Amran Sameon (left) together with Customs Officers.

The Customs Officer was explaining to the visitors on the importance of installing such equipments to detect the products inside the containers.

Amran Sameon was giving his views during the discussion at the site of the Royal Customs Gate's sensor at North Port, Port Klang.

Seen in the picture were Mr Yusof (Deputy State director of Customs of Selangor); Mr Khairul (Manager, North Port); Mr Basir (senior Manager, North Port); Amran Sameon of MITI and Mr. Awang Din of Customs HQ, Putrajaya.

Lorries contains of Containers were passing through the Gate at North Port of  Port Klang.

Another area of the North Port at Port Klang, where we can see equipments to facilitates Trade during load and un-load of containers to the carriers / ships.

TOKEN OF APPRECIATION:

Amran Sameon was received the wooden-plaque as "token of appreciation" on behalf of MITI from the North Port, which was represented by Mr Kunny (Assistant General Manager of North Port).

Seen were Amran Sameon, Mr Kunny, Mr Basir, Ms Chan (Director of Malaysian Productivity Corporation - nstanding next to Amran) and Mr Yusof of Selangor's Customs.

Amran Sameon was received the wooden-plaque as "token of appreciation" on behalf of MITI from the North Port, which was represented by Mr Kunny (Assistant General Manager of North Port).


Seen were Amran Sameon, Mr Kunny, Mr Basir, Ms Chan (Director of Malaysian Productivity Corporation - nstanding next to Amran) and Mr Yusof of Selangor's Customs and Mr Abdullah of MPC.




Salam......................................................