A A S S E E A A N N & & I I n n d d i i a a A A S S E E A A N N / / I I N N D D I I A A I I N N D D U U S S T T R R Y Y M M O O N N I I T T O O R R 2012 Second Half Issue 25 September 2012 [Overview: Solid growth continues overall, but at slower pace] The business conditions of major industries in ASEAN countries and India maintained a solid growth, bolstered by domestic demand although the pace continued to decline due to the slowdown in export to USA and Europe. The export of many products destined to USA and Europe continued to stagnate. On the other hand, domestic demand grew steadily as compared to that in developed countries. By country, domestic demand-oriented countries such as Indonesia, Malaysia, and Philippines witnessed relatively high growth thanks to rising private consumption and higher investment in plant and machinery. In particular, Thailand posted an outstanding growth driven by high demand for reconstruction from the flood. By industry, the performance of the manufacturing industry has been fluctuating. As for the manufacturing and assembly industry, the electronics industry recovered as a whole thanks to inventory adjustment of end-products in developed countries, and the automobile industry turned upward as the effects of the Thai flood dissipated. On the other hand, as for the material industry, the petrochemical industry stagnated because of sluggishness in production of consumer durables and fierce international competition. In addition, the textile industry was also sluggish caused by a downturn in demand from developed countries. The non-manufacturing industries (retail, travel, construction, and real estate) maintained a solid growth overall. However, the construction industry in Singapore declined from the previous year which had seen robust demand, and some countries also saw a decline in the real estate market with the lower rentals because of over-supply. Going forward, the business conditions of major industries in ASEAN countries and India will continue to slow down for the meantime. However, they are likely to make a gradual recovery in late 2012 onwards, as a downward pressure from external demand will weaken. First of all, domestic demand will be bolstered by strong buying inclination under the favourable employment and income environment. Meanwhile, as for external demand, US economy is likely to bottom out from late 2012 albeit at a slow pace. As a result, it is likely that the downward pressure on the economy will be gradually relieved.
[Overview: Solid growth continues overall, but at slower pace] The business conditions of major industries in ASEAN countries and India maintained a solid
growth, bolstered by domestic demand although the pace continued to decline due to the slowdown in export to USA and Europe. The export of many products destined to USA and Europe continued to stagnate. On the other hand, domestic demand grew steadily as compared to that in developed countries. By country, domestic demand-oriented countries such as Indonesia, Malaysia, and Philippines witnessed relatively high growth thanks to rising private consumption and higher investment in plant and machinery. In particular, Thailand posted an outstanding growth driven by high demand for reconstruction from the flood.
By industry, the performance of the manufacturing industry has been fluctuating. As for the manufacturing and assembly industry, the electronics industry recovered as a whole thanks to inventory adjustment of end-products in developed countries, and the automobile industry turned upward as the effects of the Thai flood dissipated. On the other hand, as for the material industry, the petrochemical industry stagnated because of sluggishness in production of consumer durables and fierce international competition. In addition, the textile industry was also sluggish caused by a downturn in demand from developed countries.
The non-manufacturing industries (retail, travel, construction, and real estate) maintained a solid growth overall. However, the construction industry in Singapore declined from the previous year which had seen robust demand, and some countries also saw a decline in the real estate market with the lower rentals because of over-supply.
Going forward, the business conditions of major industries in ASEAN countries and India will continue to slow down for the meantime. However, they are likely to make a gradual recovery in late 2012 onwards, as a downward pressure from external demand will weaken. First of all, domestic demand will be bolstered by strong buying inclination under the favourable employment and income environment. Meanwhile, as for external demand, US economy is likely to bottom out from late 2012 albeit at a slow pace. As a result, it is likely that the downward pressure on the economy will be gradually relieved.
1
Table of Contents
Country Industry Indicator Latest Data Page
Electronics 1. Electronics Exports Jul 2012
Petrochemicals 2. Production Index of Petrochemical Products Jun 2012
2
Retail 3. Department Store Retail Sales Index Jun 2012
Travel 4. Standard Room Average Occupancy Rate & Visitor Arrivals Jun 2012
3
Office Property 5. Singapore Office Vacancy Rate & Rental Index Jun 2012
Singapore
Construction 6. Construction Contracts Awarded Jun 2012 4
Electronics 7. Electronics Exports Jun 2012
Automobile 8. Automobile Sales Jun 2012 5
Petrochemicals 9. Production Index of Petrochemical Products Jun 2012
Malaysia
Office Property 10. KL Office Vacancy Rate & Rental Index Jun 2012 6
Electronics 11. Electronics Exports Jul 2012
Automobile 12. Automobile Sales Jul 2012 7
Petrochemicals 13. Shipment Index of Synthetic Resin Jun 2012
Textile 14. Shipment Index of Textile Products Jun 2012 8
Office Property 25. Manila Office Vacancy Rate & Rental Index Jun 2012 14
Electronics 26. Computer & Electrical Components Exports Jun 2012
Automobile 27. Automobile Sales Jul 2012 15
Vietnam
Textile 28. Textile Exports Jun 2012 16
Electronics 29. Air-conditioner & Refrigerator & Washing Machine Production Jun 2012 17
Automobile 30. Automobile Sales Jul 2012
Motorcycle 31. Motorcycle Sales Jul 2012 18
Petrochemicals 32. Production Index of Petrochemical Products Jun 2012
India
Textile 33. Textile Production Index Jun 2012 19
Appendix Major Economics & Industrial Index (Real GDP Growth, etc) 20
Note: The “FORECAST” period added in this edition is a short-term outlook (about 6 months to 1 year). This bulletin is issued semi-annually.
2
1. Singapore / Electronics Exports Forecast: Expected to Recover Gradually
(Source: International Enterprise)
Singapore’s electronics export value reverted to
increase by 2.8% YoY in H1 2012, due to the following reasons; (1) inventory adjustments of key end-products such as PCs and LCD TVs, progressed in developed countries with a focus on the USA, and (2) penetration of home appliances and mobile phones increased in emerging countries. Under these conditions, the export value of key electronic parts such as semiconductors and HDDs took a slight upturn.
Singapore’s electronics export value is expected to recover gradually over the next year. It is unlikely that consumer demand will increase rapidly in developed countries, especially in European regions. However, launch of new PC and mobile phone models will boost replacement demand. Thanks to this, export value of electronics products, which mainly consisted from semiconductors and electronic parts, is likely to grow.
2. Singapore / Production Index of Petrochemical Products Forecast: Momentum Likely to Regain
0
25
50
75
100
125
150
175
200
225
250
275
300
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-200%
-175%
-150%
-125%
-100%
-75%
-50%
-25%
0%
25%
50%
75%
100%
Production Index of Petrochemical Products
(LHS)
YoY (RHS)
(2011=100)
(Source: Department of Statistics)
Singapore’s petrochemical market has been
declining. The production index of petrochemical products fell by 3.4% YoY in H1 2012. Although large-scale facilities which had been completed in 2010 in Singapore operated stably, such negative growth can be attributed to three factors: (1) a series of construction of new large facilities in the Middle East and Asia continued to intensity competition, (2) demand for end-products destined to European region continued to be sluggish and (3) a cut-down of production in consumer durables such as automobiles and consumer electronics products continued in H1 2012 because of the Thai flood which had taken place in the latter half of 2011.
The petrochemical production in Singapore is likely to regain its momentum over the next year. Indeed, there are some concerns such as continued intense competition from manufacturers in the Middle East and a cut down of production of home appliance products in the region driven by the economic downturn in developed countries. However, petrochemical production is likely to grow for the following reasons; (1) automobile production within the region is expected to recover as the effects of the Thai flood have subsided and (2) the operation of another new large-scale production facility is planned to commence by late 2012, boosting production if the facility starts to operate as planned.
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12 Jul/12-120%
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
Electronics Export (LHS)
(SGD Billion)
YoY (RHS)
3
3. Singapore / Department Store Retail Sales Index Forecast: Solid Growth Expected to Continue
0
50
100
150
200
250
300
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-80%
-60%
-40%
-20%
0%
20%
40%(2010=100)
YoY (RHS)
Department Store Sales Index
(LHS)
(Source: Department of Statistics)
Singapore’s retail sales market has been increasing
steadily. Department store sales index rose by 2.0% YoY in H1 2012. The increase is mainly caused by the following reasons; (1) consumer confidence in Singapore grew solidly under the favorable income and employment environment and (2) the number of foreign visitor arrival continued to increase triggered by the opening of two integrated resorts with casino facilities in 2010. Under these circumstances, various retails from foods to garments continued to enjoy robust sales.
Singapore’s retail sales market is anticipated to maintain a solid growth over the next year. Indeed, economic uncertainty of developed countries especially in Europe is a source of concern for Singapore which is heavily dependent on external demand. However, consumer confidence is not likely to cool down as the employment environment is still favorable with the low unemployment rate (2.0%) in Q2/12. Furthermore, the retail market will grow steadily as the number of foreign visitors from the surrounding countries is expected to increase steadily as they are drawn by the opening of the two said integrated resorts in 2010 as well as multiple tourist facilities that are to be opened newly.
4. Singapore / Standard Room Average Occupancy Rate & Visitor Arrivals
Forecast: Solid Performance in Occupancy Rate and Average Room Rate Expected
(Source: Singapore Tourism Board)
Singapore’s hotel industry continued to grow solidly. The standard room occupancy rate stood at an average rate of 86.2%, and the average room rate was maintained at a high level of SGD261 between January and May, 2012. This is due to the following reasons; (1) there was an increase in the number of business travelers backed by the strong economic growth in Asia and (2) the number of tourists to Singapore increased after the opening of two integrated resorts with casino facilities in 2010. In fact, the number of foreign visitor arrival grew by 16.8% YoY and reached 5.92 million between January and May in 2012. On the other hand, although the number of hotel rooms increased after the opening of the integrated resorts, a tight supply-demand environment continued with an increasing number of tourists.
The standard room occupancy rate and average room rate are expected to show a solid performance over the next year. Although the future outlook for the economy in developed countries especially in European region remains uncertain, basically the number of overseas business travellers is likely to increase with the Asian economy growing steadily. As the said integrated resorts and the opening of the multiple tourist facilities will attract a larger number of tourists, a favourable supply and demand environment will continue as a whole.
0
20
40
60
80
100
120
140
160
180
200
Jan/10 Jul/10 Jan/11 Jul/11 Jan/120%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Visitor Arrival(LHS)
Standard Room Occupancy Rate
(RHS)
(10,000 people)
4
5. Singapore / Office Vacancy Rate & Rental Index Forecast: Office Rentals will Decline Gradually
50
100
150
200
250
1Q/10 3Q/10 1Q/11 3Q/11 1Q/120%
5%
10%
15%
20%
Rental (LHS)
Vacancy Rate (RHS)
(1990=100)
(Source: Urban Redevelopment Authority)
It became clear that the office rental in Singapore has
peaked. Rental for office spaces in the Central Business District (CBD) continued a slight decline of 0.6% QoQ in Q2/12 following a fall of 0.7% QoQ in Q1/12. While the demand for office space grew steadily thanks to a strong economic growth within the region, construction of multiple new offices such as Marina Bay Financial Centre (MBFC) was completed. As a result, although the office vacancy rate in the CBD dropped by 0.7%, and it maintained at 12.6% (the same level as Q4/11), rentals were forced to experience a mild adjustment.
Office rentals will continue to follow a slow decline over the next year. Indeed, the demand for office space will expand steadily in Singapore as the economy within the region is expected to continue its growth in the future. However, as a new supply of about 2.8 million square feet of office space will be injected mainly into the CBD in 2013, (which will be about double the supply of 2012), the tight supply-demand balance of the office rental market in the CBD will be worsened in the near future.
6. Singapore / Construction Contracts Awarded Forecast: Gradual Expansion Expected
(Source: Urban Redevelopment Authority)
The construction industry in Singapore has declined
as compared to the previous year. Contracts awarded plunged by 21.7% YoY in H1 2012. A breakdown of the figure shows that demand from the public sector, which accounts for nearly 40% of the total construction market, suffered a huge drop of 34.0% YoY from the previous year when successive large scale infrastructure projects such as construction of a new Mass Rapid Transit (MRT) subway were dished out. Demand from the private sector, which accounts for over 60%, were forced to fall by 12.0% YoY because of (1) concerns over an over-supply of office buildings and residential properties in the future and (2) the introduction of several measures to control real estate speculation since 2011.
Construction demand is likely to grow gradually over the next year. Indeed, private demand will not increase substantially because of concerns over an over-supply in the future and the effects due to implemented measures to control real estate speculation. However, as there are numerous plans such as expansion projects of expressway / MRT and new construction of Housing Development Board (HDB) and government related facilities, orders will resume an upward trend, and demand from the public sector is expected to exceed that of the previous year as a whole.
0
5
10
15
20
25
30
35
40
45
50
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-500%
-400%
-300%
-200%
-100%
0%
100%
200%
300%
400%
500%(SGD Hundred Millions)
Private Sector Demand, YoY
(6 month Ave, RHS)
Public Sector Demand, YoY
(6 month Ave, RHS)
Public Sector Demand (6 month Ave, LHS)
Private Sector Demand(6 month Ave, LHS)
5
7. Malaysia / Electronics Exports Forecast: Gradual Recovery to Continue
0
5
10
15
20
25
30
35
40
45
50
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-140%
-120%
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%(RM Billion)
Electronics Export Value(LHS)
YoY (RHS)
(Source: Department of Statistics)
The electronics export value in Malaysia recovered,
albeit at a slow pace. In H1 2012, it rose by 2.1% YoY. This growth is mainly because (1) consumer electronics retailers completed inventory adjustments of the end-products, and (2) demand for PCs and mobile phones recovered especially in China and Japan, which are the major export destinations from Malaysia. By product type, semiconductors and electronic products, which account for approximately 70% of the export value, took an upward turn to 2.0% YoY. While consumer electronics appliances, which hold approximately 30%, increased by 2.5% YoY, supported by home appliance demand in Asia.
Malaysia’s electronics export value is expected to experience an expansion trend over the next year. The economic recession in European region is likely to put downward pressure on the global demand for end-products. However, demand in other regions will regain momentum thanks to successive launch of new products such as PCs and mobile phones. In addition, the demand for home appliances is also likely to grow, with a penetration increase in Asia.
8. Malaysia / Automobile Sales Forecast: Expected to Increase slowly
(Source: Malaysian Automotive Association)
The automobile sales volume in Malaysia reached
301,000 units up by 0.6% YoY in H1 2012. At the beginning of 2012, the automobile sales decreased partly because automakers had cut down production due to a lack of parts caused by Thai flooding, and partly because screening criteria for automobile loans had become stricter. However, the market saw a positive turnaround as the production of automakers back to normal since April, with the low base effect due to the 2011 Tohoku Earthquake and Tsunami.
The automobile market in Malaysia is highly expected to witness a slow expansion over the next year, because strong employment and income environment, driven by domestic robust economic growth, are likely to boost consumer confidence. In addition, the effect of stricter loan screening will fade gradually. Furthermore, demand will increase through automakers’ new models, with a focus on small vehicles and medium sedans. As for full-year 2012, the Malaysian Automotive Association (MAA) announced that domestic sales will reach 615,000 units, increasing by 2.5% YoY.
0
20
40
60
80
100
120
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-80%
-60%
-40%
-20%
0%
20%
40%
New Car Sales(LHS)
YoY(RHS)
(1,000 units)
6
9. Malaysia / Production Index of Petrochemical Products Forecast: Stagnation Likely to Continue
(Source: Department of Statistics)
Petrochemical production volume in Malaysia has
been sluggish as a whole. The production index of basic petrochemical products (ethylene, propylene and etc.) rose by 8.0% YoY in H1 2012 with the low base effect due to the periodic maintenance of major facilities in Malaysia carried out during the same period of last year. The overall market continued to stagnate (1) as shipment of products for consumer durables to Asian region had declined due to the economic slowdown in Europe and USA and (2) as operation of new production plants with high cost competitiveness in the Middle East, Singapore and Thailand had intensified competition within the region.
Petrochemical production volume in Malaysia is likely to show sings of stagnation over the next year. Indeed, the effects of the 2011 Thai flood subsided in H1 2012. However, on supply wise, as the operating rate of new large facilities will increase in the future in the Middle East and Asia, Malaysian petrochemical companies will face fierce competition from manufacturers in the Middle East and surrounding countries in both the Malaysian market and overseas market.
10. Malaysia / KL Office Vacancy Rate & Rental Index Forecast: Office Rentals Expected to Weaken
200
300
400
500
600
700
800
1Q/10 3Q/10 1Q/11 3Q/11 1Q/120%
5%
10%
15%
20%
25%
30%
Rental(LHS)
Vacancy Rate(RHS)
(RM / square metre ・ year)
(Source: Jones Lang LaSalle)
The office rental in Kuala Lumpur declined slowly
although it still maintained at a high level. Rentals for office spaces in the Central Business District (CBD) for Q2/12 stayed at the same level as that of the previous quarter, and it declined by 1.5% YoY. While demand for office spaces increased, driven by the expansion of office space of oil and gas companies, new supply also continued to increase from the previous year. As a result, although the vacancy rate for Q2/12 recovered slightly by 0.7% QoQ, it actually worsened by 6.4% YoY, continuing to ease the supply-demand balance.
Office rentals are likely to weaken over the next year. Indeed, demand is expected to grow gradually in the future in line with the economic growth in Malaysia. However, on supply-wise, as a series of large-scale office buildings are expected to be completed by late 2012, and a massive new supply is anticipated in 2013 onwards, the supply-demand gap in the CBD will be widened.
0
40
80
120
160
200
240
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-80%
-60%
-40%
-20%
0%
20%
40%YoY
(RHS)
Production Index of Petrochemical Products
(LHS)
(2005=100)
7
11. Thailand / Electronics Exports Forecast: Stagnation Likely to Continue
0
50
100
150
200
250
300
350
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12 Jul/12-80%
-60%
-40%
-20%
0%
20%
40%
60%
YoY (RHS)
(THB Billion)
Electronics Export Value(LHS)
(Source: Bank of Thailand)
Thailand’s electronics export took a downward turn, although it had once showed a sing of recovery. The export value remained unchanged in H1 2012 (-0.05% YoY). Though it had increased in early 2012 after the recovery from domestic flooding, it declined again in June onwards because demand for home appliances such as washing machines and air conditioners reduced especially in European regions, which are Thailand’s major export destination.
Thailand’s export value of electronic products is expected to stagnate over the next year. It is likely that demand for end-products will increase because of (1) successive release of new models in PCs and mobile phones products and (2) penetration increase in home appliance products, with a focus on air conditioners and refrigerators. However, the export value is likely to slow down due to the following reasons; (1) it would take some time to recover from the economic recession in European regions, and (2) domestic electronics industry has shown a sign of manufacturers’ production shift from Thailand to the other countries, influenced by the risks such as domestic flooding and rising labour costs.
The sales volume of automobiles grew by 39.1% YoY to 608,000 units in H1 2012. This strong demand growth is mainly because of the following reasons; (1) low base effect due to automakers’ difficulties in procuring parts affected by the 2011 Tohoku Earthquake and Tsunami, (2) high production pace by automakers after the huge domestic flooding in late 2011, (3) automakers’ successive launch of new models especially in well-selling segments (i.e., small passenger vehicles and 1-ton pickup trucks), and (4) “first-time car buyer tax rebate scheme” which had been implemented from September 2011.
The automobile sales in Thailand are likely to grow over the next year for the following reasons; (1) strong consumer confidence is expected, led by improvement of the employment and income level, (2) automakers’ launch of new models, with a focus on small passenger cars, will continue to stimulate demand, and (3) the effect of first-time car buyer tax rebate scheme will last until December 2012. As for full-year 2012 sales volume, major automakers estimated that it will reach around 1.2 million units, increasing approximately by 50% YoY.
0
20
40
60
80
100
120
140
160
180
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12 Jul/12-240%
-200%
-160%
-120%
-80%
-40%
0%
40%
80%
120%
New Car Sales(LHS)
(1,000 units)
YoY(RHS)
8
13. Thailand / Shipment Index of Synthetic Resin Forecast: Recovery Expected
0
40
80
120
160
200
240
280
320
360
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-120%
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%(2000=100)
YoY (RHS)
Shipment Index of Synthetic Resin
(LHS)
(Source: Bank of Thailand)
Thailand’s petrochemical industry turned upward
gradually. The shipment index of synthetic resin which is the major product grew by 5.5% YoY in H1 2012. Full-scale operation of large new facilities which had been constructed in the Middle East and Asia intensified international competition, and production of consumer electronics appliances in the region slowed down due to the economic downturn in Europe. Nevertheless, shipment of petrochemical products increased because of the following factors; (1) the operating rate of automakers (which are the major user of petrochemical products) recovered rapidly as the effects of the 2011 Thai flood had subsided and (2) the demand for restoration after the Thai flood increased.
Shipment of petrochemical products is likely to recover gradually over the next year. Indeed, there is concern that international competition especially with the Middle East will become more intense. In addition, a full recovery in the production of consumer electronics products is not anticipated within the region amid the strong economic uncertainties in Europe. However, the demand for petrochemical production will be boosted since the effects of the flood have subsided, and full development of infrastructure for restoration after the flood is on the way.
14. Thailand / Shipment Index of Textile Products Forecast: Stagnation Likely to Continue
0
20
40
60
80
100
120
140
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-120%
-100%
-80%
-60%
-40%
-20%
0%
20%(2000=100)
YoY (RHS)
Shipment Index of Textile Products
(LHS)
(Source: Bank of Thailand)
Thailand’s textile industry declined substantially following H2 2011. The shipment index of textile fell by 19.4% YoY in H1 2012. The decline in shipment is caused by the following reasons: (1) the export of garments destined to Europe (which is one of the major export destinations) slowed down due to the economic recession and (2) product cost increased after minimum wages had been raised substantially in Bangkok and 6 surrounding provinces in April, 2012.
Although Thailand’s textile industry is likely to recover gradually, a sluggish pace will continue over the next year. Indeed, the demand for textile products is likely to make a recovery in the future driven by a pick-up in demand for industrial usage mainly for automobiles, which accounts for 10 to 20% of the overall demand, and a recovery from the flooding in the apparel industry which is the driving force in the textile industry. However, a huge increase in its shipment value is not anticipated in the future as the export of garments will not recover greatly because of the high level of uncertainty of the economic outlook in developed countries especially in Europe. In addition, as production bases will be shifted to emerging countries with low labor cost in the downstream textile industry given the fact that the minimum wages will be raised substantially in the whole of Thailand next year, shipment value is likely to stagnate.
9
15. Thailand / Cement Production Forecast: Expansion Likely to Continue
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%(Million tons)
Cement Production(LHS)
YoY (RHS)
(Source: Bank of Thailand)
Thailand’s cement production has been expanding. Cement production grew by 7.4% YoY in H1 2012 because of the following factors; (1) domestic demand, which accounts for some 80% of the overall production, increased by 5.5% YoY driven by the demand for cement for recovering from the flooding and higher demand for properties especially in rural areas and (2) its export, which accounts for 20% of the total production, rose by 16.4% YoY due to an expansion in the demand for construction in neighbouring counties such as Indonesia and Vietnam although other Asian countries expanded their production capacity and intensified the competition.
Cement production in Thailand will continue its firm growth over the next year. As for export, although the demand for construction in surrounding countries is likely to grow steadily, a huge growth is not anticipated due to the fierce competition. However, domestic demand which is the major contributor to production volume is likely to gain its momentum. The demand for public sector will grow as Thai government has come up with an infrastructure development plan in an effort to recover from the flooding (350 billion baht). Meanwhile, demand from the private sector will also grow solidly with a higher demand for reconstruction for recovery from the flood and for properties especially in rural areas.
16. Thailand / Retail Sales Index Forecast: Recovery Trend Expected
(Source: Bank of Thailand)
The retail market in Thailand turned upward. The
retail sales index for January to May in 2012 grew significantly by 12.1% YoY as compared to the previous term (remained at the same level). This increase is mainly attributed to the following factors; (1) concerns over future employment were cleared with the recovery from the flooding which had occurred in late 2011, (2) consumer confidence improved due to the government policies such as a hike in minimum wages which had been implemented in April, and (3) major distributors sped up the openings of large-scale commercial facilities and convenience stores. The consumer confidence index which is a reference indicator recovered to 77.1 points in May 2012 from 71.0 points in November 2011 when a huge flood had struck Thailand.
The retail market in Thailand is likely to witness a recovery trend over the next year. Indeed, there are concerns that the uncertainty of the global economy will put downward pressure on consumer confidence. However, consumer confidence will not cool down based on the fact that the Thai government and the Central Bank have carried out various policies such as a hike in minimum wages, bail-out plans of flood-affected businesses and people, and reduction in interest rates. Furthermore, the openings of new outlets by major distribution companies will contribute to an expansion in the market.
100
120
140
160
180
200
220
240
260
280
300
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%(2002=100)
YoY (RHS)
Retail Sales Index (LHS)
10
17. Thailand / Bangkok Office Vacancy Rate & Rental Index Forecast: Rentals Likely to Recover
(Source: Jones Lang LaSalle)
Supply and demand trends for office spaces in
Bangkok have been improving. The vacancy rate of office buildings in the Central Business District (CBD) reached 18.8% in Q2/12, and it declined for three consecutive quarters in a row. Then, office rentals increased by 2.9% QoQ and 4.0% YoY respectively. The demand for office spaces in the CBD rose because of the willingness of companies to expand their businesses in anticipation of a medium or long term economic growth in Thailand, amid a recovery from last year’s flooding. On the other hand, office rentals recovered as new supplies of office buildings had been kept low since 2011.
Office rentals are likely to recover gradually over the next year. On demand wise, although there is possibility of a slowdown in external demand, it is likely to expand gradually because of a rising willingness of companies to expand their businesses in line with the current solid economic growth. On supply-wise, as no major large-scale office complexes are expected to be completed by 2013, this will cause a tight supply-demand balance in the CBD under the current circumstances as a whole.
3000
4000
5000
6000
7000
8000
9000
1Q/10 3Q/10 1Q/11 3Q/11 1Q/120%
5%
10%
15%
20%
25%
30%
Rental(LHS)
Vacancy Rate (RHS)
(THB / ㎡・year)
11
18. Indonesia / Automobile Sales Forecast: Steady Growth Anticipated
(Source: Astra International)
The sales of automobile in Indonesia have been
booming. The sales volume rose by 28.2% YoY to 535,000 units in H1 2012. The main factors behind the growth include (1) vigorous consumer confidence supported by strong domestic economic growth, (2) a rush of new model launches by automakers, and (3) low base effect due to automakers’ production decrease caused by the 2011 Tohoku Earthquake and Tsunami. By model type, passenger vehicles rose by 31.2% YoY to 372,000 units benefitting from a rising popularity of MPVs and small passenger cars. On the other hand, commercial vehicles grew by 21.6% YoY reaching 163,000 units, led by demand for small trucks.
The sales of automobile in Indonesia are likely to grow steadily over the next year. There is a concern that demand will decline because of a down payment regulation for automobile loans, which started from June 2012. However, the sales market is likely to keep expanding, since the higher consumer confidence level will continue, with an improvement of employment as well as income level, driven by domestic strong economic growth. In addition, automakers’ launch of new models focusing on low-cost and small passenger cars will give impetus to the sales market.
19. Indonesia / Motorcycle Sales Forecast: Decline Likely To Continue
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12 Jul/12-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%YoY
(RHS)
(1,000 units)
New Car Sales(LHS)
(Source: Astra International)
Motorcycle sales in Indonesia have been declining
because of a new loan regulation. The sales in H1 2012 decreased by 8.7% YoY to 3.7 million units. This is because the buying power among the lower-income class fell significantly, as sales financing companies had gradually tightened a loan screening standard since early 2012.
Indonesia’s motorcycle sales are likely to continue to fall over the next year. It is true that a strong consumer confidence level is expected as employment and income environment will improve, with domestic economic growth. However, considering Indonesia’s income level, it will take some time for the lower-income class, which consists a certain extent of motorcycle consumers, are able to afford the amount of down payment. In this connection, Indonesia’s motorcycle association expected that the sales in full-year 2012 will decline by 21.4% YoY to 630,000 units.
Indonesia’s textile export took a downward turn. The
export value of textile products including garments and thread/woven textile plunged by 5.9% YoY in H1 2012 as compared to that of H1 2011 (+26.1% YoY) and H2 2011 (+8.9% YoY). This is mainly due to the fact that the unit price of the export of materials fell sharply according to the sudden drop in the raw material (cotton) market in late 2011 onwards. On the other hand, the export volume remained basically unchanged by absorbing an increase in export volume destined to USA and Asia, although the export volume to Europe slowed down, benefitting from the shift of production bases for garments (major force of export volume) from China.
The export for textile products is expected to be sluggish over the next year. It is unlikely that the unit price of export will significantly increase in the future as the raw material (cotton) market has slowly declined at present. In addition, although Indonesia may benefit from the shift of production bases from Thailand as well as China, basically the export volume is not likely to increase dramatically because of the uncertain economic outlook in Europe and USA which are the major export destinations.
21. Indonesia / Paper & Pulp Export Volume & Value Forecast: Stagnation Expected
decline. The export value of paper decreased by 3.6% YoY in H1 2012, while the export value of pulp posted a growth of 0.2% YoY. Thus, the overall market declined by 2.6% YoY. As for pulp, although the unit price of export fell because of the adjustment of inventory in China, the export volume increased steadily bolstered by a higher demand for pulp in South East Asia, offsetting a decline in the unit price of export. On the other hand, the unit price of paper export declined mainly due to the fierce competition from cheap imported goods, and its export volume also declined driven by anti-dumping measures taken by USA and Asian countries, the major export destinations.
As a whole, the paper and pulp industry is likely to stagnate over the next year. Indeed, the pulp industry is likely to grow steadily as a tight supply and demand balance will continue driven by a higher demand for pulp within the region in the future. On the other hand, the paper industry will continue to witness a stagnation amid economic uncertainties in developed countries.
0
200
400
600
800
1,000
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12
Garments
Thread & Textile
(USD Millions)
13
22. Indonesia / Jakarta Office Vacancy Rate & Rental Index Forecast: Office Rentals Expected to Rise
(Source: Jones Lang LaSalle)
Rentals for office spaces in Jakarta has been surging.
The vacancy rate of offices in the Central Business District (CBD) in Q2/12 reached 1.9%, declining by 1.9% QoQ, while office rent also grew by 8.7% QoQ. This is because the overall demand expanded due to the efforts by industries such as finance, insurance, steel and forestry to expand their office spaces along with the current solid economic growth.
Office rentals are likely to rise over the next year. The demand for office spaces will expand as companies will continue to expand their office spaces in line with the current firm economic growth in Indonesia. Even though a substantial volume of new office spaces is expected to be injected into the market in 2012, most of which are already committed by tenants. Therefore, rentals will continue to rise as a result of the low vacancy rate.
The electronics export value of the Philippines has
been fluctuating. It declined by 2.5% YoY in H1 2012. Although the export had recovered in early 2012, it turned to decline after the February peak. This is because the volume of semiconductor export, which accounts for over 70%, reduced as demand for end-products in major export destinations decreased influenced by the economic recession in Europe.
The export of electronic products in the Philippines is likely to recover over the next year. The market in Europe, which is one of the major export destinations, will stagnate due to the recession. However, in the other destinations such as Japan, China, and the USA, demand for end-products is highly likely to experience a recovery, supported by the successive launch of new PC and mobile phone models. As such, the demand for semiconductors, mainly shipped for PCs and mobile phones, is likely to pick up, and the export of electronic products in the Philippines will also head for recovery.
0
50
100
150
200
250
1Q/10 3Q/10 1Q/11 3Q/11 1Q/120%
10%
20%
30%
40%
50%
Rental (LHS)
Vacancy Rate (RHS)
(USD / ㎡・year)
14
24. Philippines / Automobile Sales Forecast: Likely to Recover
0
4
8
12
16
20
24
28
32
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12 Jul/12-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
New Car Sales(LHS)
YoY(RHS)
(1,000 units)
(Source: CAMPI)
The sales of automobiles in the Philippines turned to
recover. New car sales climbed by 6.6% YoY to reach 85,000 units in H1 2012. At the beginning of 2012, the sales declined as major automakers had been forced to cut down production level influenced by Thai flooding. However, the sales experienced an upward trend mainly because of the following reasons; (1) recovery in production level after supply -chains going back to normal since April, (2) launch of new models by automakers, and (3) low base effect that automakers reduced production volume due to Tohoku Earthquake and Tsunami in 2011.
The automobile industry in the Philippines is likely to witness a strong growth over the next year. This is because (1) domestic economy will continue to expand bolstered by a robust Overseas Filipino Workers (OFWs) remittance which supports consumer confidence, and (2) major automakers’ launch of new models is likely to stimulate the demand. As for full-year 2012, domestic automobile association expected that the sales will expand by 14.9% YoY to 185,000 units.
25. Philippines / Manila Office Vacancy Rate & Rental Index Forecast: Office Rentals Likely to Remain High
(Source: Jones Lang LaSalle)
Rentals for office spaces in Manila have been
surging. While the vacancy rate of offices in Makati district (Philippines’ metropolitan area) remained low at 3.6% in Q2/12, office rentals actually rose by 0.7% QoQ as compared to the previous quarter. This is because a tight supply-demand balance continued as a result of a low supply of new office spaces since last year, even though Business Process Outsourcing (BPO) related companies and financial institutions were willing to expand their office spaces.
Office rentals are expected to remain high over the next year. Even though supply of new office spaces will increase from late 2012 to 2013, demand is also expected to increase driven by BPO related companies and financial institutions which are the main force in the industry, absorbing up the increase in supply. Therefore, the supply-demand balance will not be eased significantly.
2,000
4,000
6,000
8,000
10,000
1Q/10 3Q/10 1Q/11 3Q/11 1Q/120%
5%
10%
15%
20%Rental (LHS)
Vacancy Rate (RHS)
（PHP／㎡・year）
15
26. Vietnam / Computer & Electrical Components Exports Forecast: Trend of Growth Expected to Continue
(Source: CEIC)
The export of electronic products in Vietnam posted a
positive growth. The export value of PCs and electronic components doubled by 100.0% YoY in H1 2012. This tremendous increase is mainly because major electronic manufacturers and their suppliers, especially whose business focus on mobile phones manufacturing, had made investment in Vietnam, through building new factories and expanding existing production capacity. Those manufacturers expanded their Vietnam business in order to receive benefit from low labour cost, and to disperse the risks of excessive concentration on business operations in China.
The export value of electronic products in Vietnam is expected to maintain its positive momentum over the next year due to the following reasons: (1) global demand is likely to recover driven by successive launch of new PC and mobile phone models, and (2) major foreign electronic manufacturers as well as their suppliers have planned to increase their investments, to seek low production costs.
27. Vietnam / Automobile Sales Forecast: Decline Likely to Continue
0
25
50
75
100
125
150
175
200
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12 Jul/12-240%
-200%
-160%
-120%
-80%
-40%
0%
40%
80%YoY
(RHS)
New Car Sales(LHS)
(100 units)
(Source: VAMA)
Vietnam’s automobile market has been shrinking
rapidly. New car sales fell by 32.4% YoY to 35,000 units in H1 2012. This decline was mainly caused by a huge drop in consumer confidence because of rising automobile taxes such as car registration fee and number plate issuance charges, which had been introduced in major cities since January 2012. In addition, high interest rate for auto loans and high cost of owning a car due to rising fuel prices also decreased domestic demand.
Vietnam’s automobile market is likely to stagnate over the next year. As inflation is likely to calm down and policy rate to get lower, the market sentiment is expected to improve. However, the pace will still be slow since the consumer confidence level is likely to stay sluggish, because (1) auto-related taxes especially in major cities are expected to increase further, and (2) fuel prices are highly likely to rise. Hence, it will take some time for the domestic automobile market to recover from this stagnation.
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
140%
160%YoY
(RHS)
Electronics Export Value(LHS)
(USD Millions)
16
28. Vietnam / Textile Exports Forecast: Growth Expected to Continue
＜Textile & Garment Export Value＞
(Source: General Statistics Office)
Vietnam’s textile export kept an upward trend, albeit
at a slow pace compared with the previous term. The export value of its textile maintained a high growth of 9.2% YoY in H1 2012 although the pace was slower than the previous year (+25.3% YoY). Indeed, the global demand for garments saw a stagnation due to an economic recession in Europe. However, the shift of production bases from China to Vietnam boosted the overall export value because of a rising labor cost in China – the world’s largest textile producer country as well as a slowdown in its capacity to export due to an expansion in its domestic demand for garments.
Vietnam’s textile export is expected to gain momentum over the next year. Indeed, there is a fear that the economic uncertainties in Europe and USA, the two major export destinations will prevail in the future. However, as Vietnam continues to have a high level of export competitiveness in the textile industry because of its cheap labor cost, the country will benefit from the shift of production bases from China and Thailand which see a rapid increase in labor cost currently. Thus, Vietnam is expected to overtake other textile producer countries in the growth of textile export.
0
5
10
15
20
25
30
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-200%
-150%
-100%
-50%
0%
50%
100%YoY
(RHS)
Textile Export Value(LHS)
(USD Hundred Millions)
17
29. India / Air-conditioner & Refrigerator & Washing Machine Production
Forecast: Expansion Expected
＜Air-Conditioner Production＞
0
100
200
300
400
500
600
700
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-200%
-150%
-100%
-50%
0%
50%
100%
150%YoY
(RHS)
Air Conditioner Production (LHS)
(1,000 units)
＜Refrigerator Production＞
0
500
1,000
1,500
2,000
2,500
3,000
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-80%
-60%
-40%
-20%
0%
20%
40%
YoY (RHS)
Refrigerator Production (LHS)
(1,000 units)
＜Washing Machine Production＞
0
100
200
300
400
500
600
700
800
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%YoY
(RHS)
Washing Machine Production (LHS)
(1,000 units)
(Source: Reserve Bank of India)
India’s home appliances production regained its
upward trend. Air conditioners fell by 25.8% YoY in H1 2012. Meanwhile, both refrigerators and washing machines turned upward by 4.1% YoY (-14.5% YoY in H2 2011) and 15.6% YoY (-1.6% YoY in H2 2011) respectively. This is mainly because consumer confidence improved slowly because of the positive factors, such as improvement of income level, inflation rate decrease, and lower interest policy rate. Although domestic market faced negative factors such as rising products prices and a raise in electricity charges, it turned to recovery trend.
India’s home appliance production will continue to expand slowly over the next year. It cannot be denied that there are concerns over further raise of products prices, influenced by raw material prices hike, weakening rupee, and excise duty raise. However, under the robust potential demand with the low penetration rate, consumer electronics production is likely to grow due to the following reasons; (1) the sales of white goods are likely to increase steadily especially among the middle-class that is expected to play a great role in domestic consumption growth, and (2) major electronics manufacturers intend to expand their line-ups, by launching new products, and to increase domestic production capacity at high-speed.
18
30. India / Automobile Sales Forecast: Expansion Likely to Continue
＜Passenger & Commercial Car Sales＞
0
100
200
300
400
500
600
700
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12 Jul/12-80%
-60%
-40%
-20%
0%
20%
40%
60%(1,000 units)
Passenger Car Sales(LHS)
Commercial Car Sales
(LHS)
YoY(RHS)
(Source: Monthly Review of the Indian Economy)
India’s automobile industry has been expanding. New
car sales in H1 2012 rose by 11.8% YoY to 1.89 million units. This growth is caused by the following reasons; (1) under the conditions that gasoline prices and excise duty had been raised, diesel models gained popularity as these types are superior to gasoline models in terms of fuel cost as well as fuel efficiency, and (2) automakers’ launch of new models, with a focus on utility vehicles such as MPVs and SUVs, stimulated demand significantly.
The automobile industry in India is expected to expand over the next year, albeit at a slow pace. There are several concerns that may lead negative impact on domestic market, such as rising fuel prices, sluggish sales of commercial vehicles influenced by the recession, and labor unrest at a leading automaker Maruti Suzuki. However, the market is likely to expand as the demand especially among the middle- class will increase, stimulated by launch of new models focusing mainly on diesel-powered small passenger cars and utility vehicles. As for FY 2012 (from March 2011 to April 2012), India’s auto industry association expected that sales of passenger vehicle and commercial vehicle will expand by 11% and 6% respectively, compared to FY 2011.
31. India / Motorcycle Sales Forecast: Solid Expansion Expected
(Source: Monthly Review of the Indian Economy)
India’s motorcycle industry has been growing, albeit
at a slow pace. New motorcycle sales rose by 10.7% YoY to 6.96 million units in H1 2012. This is because demand increased through motorcycle makers’ new models, and expansion of their sales networks focusing on rural areas.
The motorcycle sales are expected to increase solidly over the next year. It would be inevitable for the motorcycle market to experience several negative factors such as rising gasoline prices, high interest rates, and shortage of rain during the monsoon season. However, under the condition that employment environment and income level are expected to improve, the motorcycle market will continue to grow for the following reasons; (1) increase in the number of the middle-class that are supposed to play a great role in domestic consumption, and (2) successive launch of new models and expansion of sales networks by motorcycle makers. In addition, motorcycles will still be used as a “daily means of transportation” in India, in view of the current income level, domestic infrastructure, and better fuel efficiency compared to automobiles.
0
400
800
1,200
1,600
2,000
2,400
2,800
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12 Jul/12-80%
-60%
-40%
-20%
0%
20%
40%
60%YoY
(RHS)
Motorcycle Sales(LHS)
(1,000 units)
19
32. India / Production Index of Petrochemical Products Forecast: Sluggish Trend to Continue
(Source: MOSPI)
India’s petrochemicals industry turned upward. The
production index of petrochemical products (including synthetic resin) rose by 3.0% YoY in H1 2012. The increase is mainly attributed to the following reasons; (1) domestic demand which is the major force of the industry increased due to lower interest rate for monetary policy and lower inflation rate despite an influx of imported goods from the Middle East and Asia (which constructed large new facilities with high cost competitiveness after 2010) and (2) a full-scale operation of the new large facility which had been constructed in 2010 in India increased the production capacity.
However, production of petrochemical products in India is likely to slow down over the next year. It is true that domestic demand which is the major force of the industry will continue to grow. But, the market will be sluggish as a whole because of the following factors; (1) the pace of the growth will remain slow as additional reduction in interest rates is limited, and inflation pressure will remain strong and (2) pressure from an influx of imported goods especially from the Middle East will continue to intensify in the future.
33. India / Textile Production Index Forecast: Stagnation Expected to Continue
＜Textile Production Index＞
0
50
100
150
200
250
300
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-40%
-30%
-20%
-10%
0%
10%
20%YoY
(RHS)
Textile Production Index(LHS)
(2004-05=100)
(Source: MOSPI)
India’s textile production continued to decline. The
production index of textile fell by 2.1% YoY in H1 2012 for three consecutive quarters although the decrease ratio became smaller than that of the previous quarter. This is because the export of garments declined due to an economic recession in Europe which is India’s major export destination although domestic demand for garments recovered due to a reduction in interest rates for monetary policy and a decline in inflation rate.
The textile production in India is likely to stagnate over the next year. Although domestic demand will recover because of a decline in inflation rate, the pace of recovery will not be so high given the limited space for further reduction in interest rates. In addition, there is a worry that major multiple apparel companies are considering a hike in their products because of the historical depreciation of rupee. Furthermore, the textile export will continue to stagnate due to the future economic uncertainties in Europe which is India’s major export destination. As a whole, the growth of textile production is likely to be sluggish.
0
100
200
300
400
500
600
700
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12-50%
-40%
-30%
-20%
-10%
0%
10%
20%
(2004-05=100)
YoY(RHS)
Production Index of Petrochemical Products
(LHS)
20
Appendix
Real GDP Growth Consumer Price Index (CPI)
-12-8-4048
121620242832
1Q/10 3Q/10 1Q/11 3Q/11 1Q/12
Singapore Malaysia Thailand IndonesiaPhilippine Vietnam
(%)
(Source) CEIC
-8
-4
0
4
8
12
16
20
24
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12
Singapore Malaysia Thailand IndonesiaPhilippine India
(%)
(Source) CEIC
Export Growth Rate Exchange Rates to USD (indexation)
-50-40-30-20-10
010203040506070
1Q/10 3Q/10 1Q/11 3Q/11 1Q/12
Singapore Malaysia ThailandIndonesia Philippine VietnamIndia
(%)
(Source) CEIC
70
80
90
100
110
120
130
140
150
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12
Singapore Malaysia Thailand IndonesiaPhilippine India
(1/04=100)
(Source) CEIC
Unemployment Rate Crude Oil Prices (WTI)
0
2
4
6
8
10
12
14
1Q/10 3Q/10 1Q/11 3Q/11 1Q/12
Singapore Malaysia Thailand IndonesiaPhilippine Vietnam
(%)
(Note) The figures of Vietnam show annual data. (Source) CEIC
0
20
40
60
80
100
120
140
Jan/10 Jul/10 Jan/11 Jul/11 Jan/12
(USD/barrel)
(Source) Bloomberg
21
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