What's new in business news: August 2, 2013

Asian manufacturing grows weaker, AIA insurance shifts investment overseas to avoid risk & govt help for SMEs hurt by min wage rise.


Asian manufacturing grows weaker  

By Kelly Olsen (AFP)

Asia's manufacturing sector weakened in July, private surveys showed Thursday, with China's showing a deepening contraction amid nagging worries over the growth outlook for the world's second-largest economy.

Closely-watched monthly assessments on Asian manufacturing released by British banking giant HSBC showed that contractions also worsened in key exporters South Korea and Taiwan, while ongoing expansions in India and Indonesia weakened.

In China, HSBC's final reading of its purchasing managers' index (PMI) for July came in at 47.7, down from 48.2 in June and the lowest since August last year.

The PMI surveys track manufacturing activity in factories and workshops and are closely watched gauges of economic health. A reading below 50 indicates contraction, while anything above signals expansion.

Worries over China's economy have intensified this year after an expected rebound failed to materialise. China's economy, a key engine of global growth, grew 7.8 percent in 2012, its worst performance in 13 years.

The economy has since weakened further, with growth in the April-June period dipping to 7.5 percent, from 7.7 percent in the first quarter and 7.9 percent in October-December.

With weak demand from both domestic and external markets, the cooling manufacturing sector continued to weigh on employment...

Copyright © 2013 AFP. All rights reserved. 

INSURANCE

AIA shifts investment portfolio abroad to cut risk

Somruedi Banchongduang

AIA Thailand, the country's largest life insurer by premiums, plans to diversify its investment portfolio to foreign bonds and equities this year amid rising political and economic risks at home.

The company allocates 85% of its portfolio to local fixed-income funds and the rest to local stocks.

AIA expects return on investment this year to reach 7%, the same level as last year. Its investment assets total 600 billion baht.

Like other emerging markets, the Thai stock and bond markets are highly volatile as a result of uncertainties over the US Federal Reserve's stimulus tapering.

However, domestic risks are rising due to the sluggish economy and the Pheu Thai Party-led coalition government's intention to put the amnesty bill on parliament's agenda.

Only 36.7% of Thailand's population have life insurance policies, so the market has room to grow. AIA has 10 million policyholders.

AIA now has 70,000 sales agents, up by 20% from last year. Agents represent the company's key sales channel.

http://www.bangkokpost.com/business/news/362648/aia-looks-abroad-to-cut-risk

LABOUR

B19bn SME plan wins backing

Chatrudee Theparat

The government on Thursday approved an 18.9-billion-baht plan to ease the impact of the higher daily minimum wage on small and medium-sized enterprises (SMEs).

The SME Development Fund will contribute 1 billion baht, while 17.9 billion will come from the government's coffers.

The funds would go mainly to support measures covering venture capital, soft loans to buy and upgrade machinery and raise productivity, interest-rate compensation and extension of annual service fees charged by industrial estate operators.

For venture capital, the government is committed to taking a 15-35% stake in the registered capital of each participating enterprise but no higher than 10 million baht.

The joint investment period would be about five years.

Qualified SMEs should invest mainly in businesses engaged in the creative economy, innovation, exports and environmentally friendly operations.

An Industry Ministry report showed a rise in the daily minimum wage to 300 baht has resulted in the cost of labour increasing by 35.8% to 88.7% and caused the industrial sector's overall costs to surge 5.25% on average.

Most affected is the garment industry, followed by food and beverages, electronics, ceramics, cement, printing, wood and wood products, footwear and leather goods.

http://www.bangkokpost.com/business/news/362658/b19bn-sme-plan-wins-backing

About the author

columnist
Writer: Jon Fernquest
Position: Online Writer