Trump's Naughty List Drives Asia Growth

Trump's cross hairs, there's a pun but not intended. China, South Korea and India on Trump's naughty list it's not difficult to see who the beneficiaries are: For sure Indonesia but not just Indonesia, Vietnam has benefited. Asia have redoubled their efforts to increase trade and trade relationships, 28 from 44 FTAs “Free Trade Agreements” proposed are between Asian nation states. Cohesive active even pro-active dyads, trade relationships have grown significantly since the global crisis, weathered, even ignored the Trump doctrine, this is set to only improve further.

I bring you back to an earlier note of mine, one where I talk about Asia's third wave, it's worth a read, click here. The other where I cover PWC, their forecast for the World Economic growth, in a few short years PWC claim on a measure of GDP that 4 of the top 5 countries will be Asia. China, USA, Japan, India and Indonesia.

Two situations are emerging, in reality they are already upon us. One technology is no longer the domain of the USA, perhaps it's too early to write  the US off, for innovation or R&D. For several decades North Asia has maintained the industrial mantle for mass production with labour split between Japan, South Korea and China adding Taiwan and Hong Kong at a later stage.  From these five countries they account for $4.2 Trillion Asian exports, this is equivalent to North America, the European Union combined.

In the year 2000 China represented less than 10% of Asia's technology exports, today 44%. Huawei, Lenovo, Haier, and BYD Automobile Company all rank ahead of their Asian peers and Western rivals in categories such as telecom equipment, laptops, appliances, and electric cars. But of course their manufacturing links are all highly integrated as China relies on South Korea and Japan for their semi-conductors.

What Asia is aware of, their markets were once primarily the West this is no longer the case, their markets today are other Asian countries. Hence, the dawning of an age in shifting manufacturing to the south productivity grew, whilst opening new markets to export too. 

Cost of labour to the north has increased as has the cost of living. I've mention in an earlier document that average daily rate on the manufacturing shop floor is $30, Indonesia and Vietnam are still able to maintain $10 per day, with a substantial workforce, a median age below 30.

Indonesia has vast Industrial parks one of which can be seen in the image above. Companies from the west such as Siemens, ABB are already established, but, also from Asia Foxconn, JVC, Omron etc.  Pegatron will invest $300M opening a 2 hectare manufacturing plant in just one of Indonesia's industrial zones. Foxconn and Pegatron manufacture in excess of 80% of the world's iPhones. Hyundai announced in Dec 2018 plans to move electric car manufacturing to Indonesia with an investment of $800M. Hyundai anticipate 53% of their cars will head to Asia and Australia, the remainder serving the Indonesian domestic market. Not to be out done VW will build the Tiguan in Indonesia with a €50M investment.

Japan since the 1970s have invested in Southeast Asia but in recent years has increased its investment to $20billion, they are looking to manufacture Nissan electric and flexfuel (Ethanol and other biofuel) vehicles. 

I reaffirm the west should look to join their compatriots, explore the possibilities of cheaper markets for manufacture. Positioning for a burgeoning middle class able to consume at the rate that a westerner used to be able to. 

Since 2014, US, European, and even Chinese companies have outsourced to Asian nations, Japan and South Korea have led the way in moving manufacturing to this region. South East Asia has attracted more annual investment than China.  Asian’s total annual trade amounts to nearly $2.2 trillion, one-quarter of which is within Asian, 15 percent with China, and 10 percent with Japan.

Since the Asian-China Free Trade Area (ACFTA) established in 2000 this created by population (combined population of 2.5 billion people) the largest free-trade agreement in the world, South East and East Asia has become China’s third largest trading partner with $400 billion in annual trade. Don't be surprised if Asia displaces Europe and North America as the primary destination for Asia exports.

Whilst Europe squabbles over regulation and authoritarianism Asia is racing ahead. 

Can you afford to miss Indonesia in the 21C.

Trump's cross hairs, there's a pun but not intended. China, South Korea and India on Trump's naughty list it's not difficult to see who the beneficiaries are: For sure Indonesia but not just Indonesia, Vietnam has benefited. Asia have redoubled their efforts to increase trade and trade relationships, 28 from 44 FTAs “Free Trade Agreements” proposed are between Asian nation states. Cohesive active even pro-active dyads, trade relationships have grown significantly since the global crisis, weathered, even ignored the Trump doctrine, this is set to only improve further.

I bring you back to an earlier note of mine, one where I talk about Asia's third wave, it's worth a read, click here. The other where I cover PWC, their forecast for the World Economic growth, in a few short years PWC claim on a measure of GDP that 4 of the top 5 countries will be Asia. China, USA, Japan, India and Indonesia.

Two situations are emerging, in reality they are already upon us. One technology is no longer the domain of the USA, perhaps it's too early to write  the US off, for innovation or R&D. For several decades North Asia has maintained the industrial mantle for mass production with labour split between Japan, South Korea and China adding Taiwan and Hong Kong at a later stage.  From these five countries they account for $4.2 Trillion Asian exports, this is equivalent to North America, the European Union combined.

In the year 2000 China represented less than 10% of Asia's technology exports, today 44%. Huawei, Lenovo, Haier, and BYD Automobile Company all rank ahead of their Asian peers and Western rivals in categories such as telecom equipment, laptops, appliances, and electric cars. But of course their manufacturing links are all highly integrated as China relies on South Korea and Japan for their semi-conductors.

What Asia is aware of, their markets were once primarily the West this is no longer the case, their markets today are other Asian countries. Hence, the dawning of an age in shifting manufacturing to the south productivity grew, whilst opening new markets to export too. 

Cost of labour to the north has increased as has the cost of living. I've mention in an earlier document that average daily rate on the manufacturing shop floor is $30, Indonesia and Vietnam are still able to maintain $10 per day, with a substantial workforce, a median age below 30.

Indonesia has vast Industrial parks one of which can be seen in the image above. Companies from the west such as Siemens, ABB are already established, but, also from Asia Foxconn, JVC, Omron etc.  Pegatron will invest $300M opening a 2 hectare manufacturing plant in just one of Indonesia's industrial zones. Foxconn and Pegatron manufacture in excess of 80% of the world's iPhones. Hyundai announced in Dec 2018 plans to move electric car manufacturing to Indonesia with an investment of $800M. Hyundai anticipate 53% of their cars will head to Asia and Australia, the remainder serving the Indonesian domestic market. Not to be out done VW will build the Tiguan in Indonesia with a €50M investment.

Japan since the 1970s have invested in Southeast Asia but in recent years has increased its investment to $20billion, they are looking to manufacture Nissan electric and flexfuel (Ethanol and other biofuel) vehicles. 

I reaffirm the west should look to join their compatriots, explore the possibilities of cheaper markets for manufacture. Positioning for a burgeoning middle class able to consume at the rate that a westerner used to be able to. 

Since 2014, US, European, and even Chinese companies have outsourced to Asian nations, Japan and South Korea have led the way in moving manufacturing to this region. South East Asia has attracted more annual investment than China.  Asian’s total annual trade amounts to nearly $2.2 trillion, one-quarter of which is within Asian, 15 percent with China, and 10 percent with Japan.

Since the Asian-China Free Trade Area (ACFTA) established in 2000 this created by population (combined population of 2.5 billion people) the largest free-trade agreement in the world, South East and East Asia has become China’s third largest trading partner with $400 billion in annual trade. Don't be surprised if Asia displaces Europe and North America as the primary destination for Asia exports.

Whilst Europe squabbles over regulation and authoritarianism Asia is racing ahead. 

Can you afford to miss Indonesia in the 21C.

For Success First Appreciate The Past

To do business in Indonesia you first have to understand certain elements of history. Struggles, Occupation, Independence, Communist tendencies and Authoritarian regimes, which have led to this point today.

Indonesia's technically was colonized by the Dutch for a 126 years. Indonesia’s view is this period ended in 1942 as the Japanese rolled in taking control for a further 3 years. It's important to point out the vastness of the Indonesian archipelago, overlaid on Europe it would stretch from London to Tehran. The Dutch cherry picked parts of Indonesia which were important for trade and logistics, they never really took total control. In fact the Indonesian were grouped into Kingdoms with each leader taking responsibility for their individual part corralling their like-minded people into tribes, led by a sultan or King.

I say the Dutch colonial period terminated in 1942, which is not strictly true. After the war ended and the Japanese surrendered the Dutch attempted a return.  By now the Indonesian had mustered a kind of guerrilla warfare experience whilst making life difficult for the Japanese.  Needless to say colonial incursion were no longer tolerated.

The period that followed was brutal the Dutch Army were in many instances likened to the Nazi's with their behaviour and atrocities that followed prior to full independence. No story can be complete until you write about Christmas of 1946. A Battalion under the command of Captain Raymond Westerling moved on the South Celebes, now known as Sulawesi over a two-month period they wiped villages off the map killing 4,000 people.  This was a war crime which has never been atoned for.  The irony in this situation was that whilst this barbaric act took place.  Nazis were being tried at The Hague for similar atrocities. President Sokarno declared Independence upon the Japanese surrender it took a further 3 years to rid the archipelago of the murderous atrocities to finally win freedom.

The Asia struggles were far from over as the Russian army were sweeping down through Manchuria and into the Korean Peninsula. China was in a state of civil war ending in 1949 with the victor being the Communist leader Mao Zedong over the Nationalist army of Chiang Kai-shek, whose Kuomintang retreated from the mainland onto Taiwan. Taiwan was given tolerance as Mao was unwilling to pursue further allowing Chiang Kai-shek to save face in a way the Chinese only understand.

Of course Vietnam became a focus as did South Korea. Much has been documented on this point. In the 60s Indonesia fell under the control of Suharto a brutal dictator given free rein by his American backers.  Suharto ruled for a further 32 years, that is until the end of the cold war. Some would say he was kept in power for the few years following the fall of the Berlin wall by his very canny wife Siti (Tien) Hartinah m. 1947–1996. Tien Suharto was widely reported as the power behind her husband’s throne, a meddling and unscrupulous woman who gave a new meaning to financial corruption. She was called Ibu Negara, Mother of the Nation, and she never let anyone forget that she, unlike her husband, was descended from royal stock. According to local belief it was she, because of her descent, who possessed the wahyu, or gift of power. Now that she was dead, her husband can no longer lay claim to it.

After her death the Soharto dynasty was collapsing giving way in 1998 to a true democracy in transition, not glossing over this as the fall of Soharto was not a smooth affair.  The country erupted into a short civil war. Students were rioting, gangs were forming on all major arteries, I remember this well as I was in the heart of the city on the 24th floor of a major telecom operators office building putting together a 5-year plan, we abandoned the meeting recognizing the stupidity of the situation as no one could be clear as to the next day let alone look 5 years out.  The brunt of the anger was metered out to the Chinese communities many were killed others fled for their lives. My journey that day was onto London but my trip through the marauding masses was not so easy. My driver Wayan was excellent, and we made it to the airport unscathed. Many Indonesian Chinese were also there, their journey more fraught than mine. Most had travelled in the boot of their car, some wrapped in carpets.  On my arrival in London I was met by the MOD who later visited me in my hotel to strategies a military led evacuation of Brits in Jakarta. Strange times indeed.

Here we are some 20 years later with a leader, imaginative, honest and intent on breaking the elites past strangle hold, this he is doing at incredible speed.

This is just a potted history lesson, over time I may embellish in greater detail but for now the purpose of this blog is to show the future this dynamic democracy has and the opportunities it holds to those that are prepared to step a toe into this country deemed to be the 5th biggest economy.  It would be wrong to say take a risk on this market because that would be a phrase you could use some 20 years ago.  This is now a maturing market full of opportunity. As the saying goes the best time to plant a tree was 20 years ago the 2nd best time is now!

To do business in Indonesia you first have to understand certain elements of history. Struggles, Occupation, Independence, Communist tendencies and Authoritarian regimes, which have led to this point today.

Indonesia's technically was colonized by the Dutch for a 126 years. Indonesia’s view is this period ended in 1942 as the Japanese rolled in taking control for a further 3 years. It's important to point out the vastness of the Indonesian archipelago, overlaid on Europe it would stretch from London to Tehran. The Dutch cherry picked parts of Indonesia which were important for trade and logistics, they never really took total control. In fact the Indonesian were grouped into Kingdoms with each leader taking responsibility for their individual part corralling their like-minded people into tribes, led by a sultan or King.

I say the Dutch colonial period terminated in 1942, which is not strictly true. After the war ended and the Japanese surrendered the Dutch attempted a return.  By now the Indonesian had mustered a kind of guerrilla warfare experience whilst making life difficult for the Japanese.  Needless to say colonial incursion were no longer tolerated.

The period that followed was brutal the Dutch Army were in many instances likened to the Nazi's with their behaviour and atrocities that followed prior to full independence. No story can be complete until you write about Christmas of 1946. A Battalion under the command of Captain Raymond Westerling moved on the South Celebes, now known as Sulawesi over a two-month period they wiped villages off the map killing 4,000 people.  This was a war crime which has never been atoned for.  The irony in this situation was that whilst this barbaric act took place.  Nazis were being tried at The Hague for similar atrocities. President Sokarno declared Independence upon the Japanese surrender it took a further 3 years to rid the archipelago of the murderous atrocities to finally win freedom.

The Asia struggles were far from over as the Russian army were sweeping down through Manchuria and into the Korean Peninsula. China was in a state of civil war ending in 1949 with the victor being the Communist leader Mao Zedong over the Nationalist army of Chiang Kai-shek, whose Kuomintang retreated from the mainland onto Taiwan. Taiwan was given tolerance as Mao was unwilling to pursue further allowing Chiang Kai-shek to save face in a way the Chinese only understand.

Of course Vietnam became a focus as did South Korea. Much has been documented on this point. In the 60s Indonesia fell under the control of Suharto a brutal dictator given free rein by his American backers.  Suharto ruled for a further 32 years, that is until the end of the cold war. Some would say he was kept in power for the few years following the fall of the Berlin wall by his very canny wife Siti (Tien) Hartinah m. 1947–1996. Tien Suharto was widely reported as the power behind her husband’s throne, a meddling and unscrupulous woman who gave a new meaning to financial corruption. She was called Ibu Negara, Mother of the Nation, and she never let anyone forget that she, unlike her husband, was descended from royal stock. According to local belief it was she, because of her descent, who possessed the wahyu, or gift of power. Now that she was dead, her husband can no longer lay claim to it.

After her death the Soharto dynasty was collapsing giving way in 1998 to a true democracy in transition, not glossing over this as the fall of Soharto was not a smooth affair.  The country erupted into a short civil war. Students were rioting, gangs were forming on all major arteries, I remember this well as I was in the heart of the city on the 24th floor of a major telecom operators office building putting together a 5-year plan, we abandoned the meeting recognizing the stupidity of the situation as no one could be clear as to the next day let alone look 5 years out.  The brunt of the anger was metered out to the Chinese communities many were killed others fled for their lives. My journey that day was onto London but my trip through the marauding masses was not so easy. My driver Wayan was excellent, and we made it to the airport unscathed. Many Indonesian Chinese were also there, their journey more fraught than mine. Most had travelled in the boot of their car, some wrapped in carpets.  On my arrival in London I was met by the MOD who later visited me in my hotel to strategies a military led evacuation of Brits in Jakarta. Strange times indeed.

Here we are some 20 years later with a leader, imaginative, honest and intent on breaking the elites past strangle hold, this he is doing at incredible speed.

This is just a potted history lesson, over time I may embellish in greater detail but for now the purpose of this blog is to show the future this dynamic democracy has and the opportunities it holds to those that are prepared to step a toe into this country deemed to be the 5th biggest economy.  It would be wrong to say take a risk on this market because that would be a phrase you could use some 20 years ago.  This is now a maturing market full of opportunity. As the saying goes the best time to plant a tree was 20 years ago the 2nd best time is now!

Is this really what we want for our future within the EU? Hell no!

No comment needed!  Comments courtesy of the 

Three Stooges no coincidence

intended here!

Not really!

No comment needed!  Comments courtesy of the 

Three Stooges no coincidence

intended here!

Not really!

Indonesia P.5. Infrastructure Projects New Airports

Ten New Airports.

Indonesia culturally is diverse, it spreads across 13,500 islands some of which are substantial. It may be known, due to recent publicity around the disasters such as the Sulawesi earthquake and subsequent Tsunami which devastated the towns of Palu and Donggala as well as the Lombok quake, that Indonesia lies on what they call the ring of fire. It has 63 active volcanoes and straddles many tectonic plates. I bring this up because this archipelago has seen this type of activity for millions of years since time began. The human cost in this has been really quite terrible.

However, as a result of this activity Indonesia is blessed with significant mineral wealth and natural attractions. Rolling hills, distant volcanoes and ample valleys of terraced rice paddies, all making for a simply stunning tropical backdrop.

As a result more and more travellers are looking to explore the outer reaches of this stunning set of Islands. The government recognizing this has started a program to build 10 new airports. Some of these airports will be in: Lampung, Central Sulawesi, Southeast Sulawesi, East Nusa Tenggara, Central Kalimantan, Bangka Belitung and North Sumatra. These airports will bring life to the areas that surround them. Already resort cities are in construction.

Tjilik Riwut Airport Central Kalimantan

One such airport the central government is targeting the construction of a new terminal for Tjilik Riwut Kalimantan. The new terminal is expected to be completed in early 2019. This was recently stated by the Head of the Central Kalimantan Regional Development Planning, Research and Development Agency, Yuren S. Bahat. The central government are inviting investors to participate in these projects and will even consider full private ownership. Of course the management will still come under the control of the central government, for security reasons. Regardless of your companies aspirations it's important to note that these areas will indeed come to life as the facilities come on stream. Needless to say the economic activity in each of these primarily virgin grounds will increase a hundred fold. You only have to look to the tourism numbers hitting Bali. Tourists from China and India are coming to Indonesia in vast numbers. 

Indonesia has so much beauty and diversity it's difficult to quantify it in a short blog of this type. I will attempt to do that in future blogs. But, my emphasis will always be on assisting companies to be aware of the untapped potential this market holds.

Can you afford to miss Indonesia!

Ten New Airports.

Indonesia culturally is diverse, it spreads across 13,500 islands some of which are substantial. It may be known, due to recent publicity around the disasters such as the Sulawesi earthquake and subsequent Tsunami which devastated the towns of Palu and Donggala as well as the Lombok quake, that Indonesia lies on what they call the ring of fire. It has 63 active volcanoes and straddles many tectonic plates. I bring this up because this archipelago has seen this type of activity for millions of years since time began. The human cost in this has been really quite terrible.

However, as a result of this activity Indonesia is blessed with significant mineral wealth and natural attractions. Rolling hills, distant volcanoes and ample valleys of terraced rice paddies, all making for a simply stunning tropical backdrop.

As a result more and more travellers are looking to explore the outer reaches of this stunning set of Islands. The government recognizing this has started a program to build 10 new airports. Some of these airports will be in: Lampung, Central Sulawesi, Southeast Sulawesi, East Nusa Tenggara, Central Kalimantan, Bangka Belitung and North Sumatra. These airports will bring life to the areas that surround them. Already resort cities are in construction.

Tjilik Riwut Airport Central Kalimantan

One such airport the central government is targeting the construction of a new terminal for Tjilik Riwut Kalimantan. The new terminal is expected to be completed in early 2019. This was recently stated by the Head of the Central Kalimantan Regional Development Planning, Research and Development Agency, Yuren S. Bahat. The central government are inviting investors to participate in these projects and will even consider full private ownership. Of course the management will still come under the control of the central government, for security reasons. Regardless of your companies aspirations it's important to note that these areas will indeed come to life as the facilities come on stream. Needless to say the economic activity in each of these primarily virgin grounds will increase a hundred fold. You only have to look to the tourism numbers hitting Bali. Tourists from China and India are coming to Indonesia in vast numbers. 

Indonesia has so much beauty and diversity it's difficult to quantify it in a short blog of this type. I will attempt to do that in future blogs. But, my emphasis will always be on assisting companies to be aware of the untapped potential this market holds.

Can you afford to miss Indonesia!