TANGERANG, Indonesia — On a recent Saturday morning at Ikea’s new outlet in Tangerang to the west of Jakarta, there was scant sign that the company was facing the kind of pressure that might follow the potential loss of the right to use its world-famous brand name in a country as big as Indonesia. Families strolled around, some trying out couches and chairs for size and comfort, while others wheeled trolleys and loaded up the Ikea signature flatpack boxes of assemble-it-yourself furniture. Upstairs, dozens more lined up in the Ikea canteen as staff ladled out plates of Swedish meatballs and creamy mashed potato. In early February, Indonesia’s Supreme Court published a ruling suggesting that Ratania Khatulistiwa, a Surabaya-based furniture company, had successfully challenged Ikea’s right to use its brand name in Indonesia, which is home to around 250 million people and a vast market for Ikea’s wares. Shoppers were mystified by the decision against Ikea. Santoso, a 50-year-old businessman from east Jakarta, was loading up “6 or 7 million rupiah” worth of furniture on a trolley as he made his way between the towering shelves on the shop floor. “Everybody knows this company, it was founded a long time ago. I don’t think they will be stopped from using their name in Indonesia.”
HANOI/YANGON — Asian garment manufacturers are signaling concern about disproportionate benefits for Vietnam over regional rivals in the textile sector as a result of major trade deals including the new, U.S.-led Trans-Pacific Partnership and a free trade agreement with the European Union. Vietnam is already the world’s fourth biggest garment exporter, but will gain new preferential access to markets among the 11 other countries that have signed up to the TPP as well as the 28 EU member countries under the EU-Vietnam FTA. These are lucrative markets for Asia’s garment exporters and apparel makers of leading Western brands. “Vietnam’s trade deals will be a concern — not just for us, but the whole region,” said Khine Khine Nwe, secretary general of the Myanmar Garment Manufacturers Association, told the Nikkei Asian Review.
YANGON – Reducing transport overheads will make doing business easier for Ruf Hou, owner of the Aung Min Thu Furniture Mart in Yangon’s Tamwe township, which depends on teak and other timber being trucked across Myanmar’s far flung road system to Yangon. Since 2011, the year the army ceded power to a military-supported civilian government, Aung Min Thu has more than doubled its staff roster to “around 100 people,” according to Ruf Hou. “Many companies come to us and offer to pay extra to have the tables, chairs done more quickly,” he said, discussing the impact of Myanmar’s recent economic growth, which he thinks will continue under a Suu Kyi-run government. “I think that a lot of investor, a lot of company will come to build factories in Myanmar,” he said.
HO CHI MINH CITY – Local and foreign businesses here are closely watching how the newly anointed Communist Party of Vietnam leadership handles recently agreed trade deals with the United States and the European Union. In December 2015, Vietnam became the second member of the Association of Southeast Asian Nations after Singapore to sign a free trade agreement with the EU. The announcement came a month after Vietnam was named as one of 12 countries accepted in the U.S.-led Trans-Pacific Partnership Agreement, which member countries will formally sign in New Zealand on Feb. 4. Prime Minister Nguyen Tan Dung, seen as a non-ideological pro-business type of communist, made a strong challenge for the party leadership during the Jan. 20-28 CPV congress in Hanoi, losing out to incumbent leader Nguyen Phu Trong. But Dung’s tenure saw Vietnam make a start on a needed transition, from an economy centered on low-cost manufacturing to high-tech and services industries, particularly in and around the country’s biggest city and commercial hub, Ho Chi Minh City. Tran Nhan, a client solutions manager at Glandore Systems Vietnam Co., a technology company that provides online human resources services in Ho Chi Minh City’s outskirts, said there were lots of jobs in Vietnam for skilled graduates in information technology. “Young Vietnamese generally feel optimistic about our country and about our chances of finding a good job,” she said.
KUALA LUMPUR — Malaysian Prime Minister Najib Razak last week tried to draw a line under persistent accusations of large-scale corruption — but Swiss prosecutors had other ideas. In an unusually blunt announcement, the Swiss attorney general said on Jan. 29 that up to $4 billion could have been stolen from 1Malaysia Development Bhd (1MDB), a heavily-indebted state fund whose advisory board is chaired by the prime minister. This undermined Malaysia’s attorney general, who earlier the same week had cleared Najib of corruption allegations. The attorney general, Mohamed Apandi Ali, M said on Jan. 26 that $681million paid into Najib’s bank account was a donation by the Saudi royal family. He found that there was no link between that largesse and long-running allegations of fraud and mismanagement at 1MDB.
HANOI — Nguyen Phu Trong, general secretary of the long-ruling Communist Party of Vietnam kept his post during a week-long party congress in Hanoi that ended Jan. 28 as he easily fended off a challenge by Prime Minister Nguyen Tan Dung, who has championed economic reforms. The CPV holds a congress every five years to make leadership changes and set policy guidelines. Although the congress was held behind closed doors, the preceding weeks saw an unprecedented tussle among party apparatchiks as contending factions “played out via the Internet through blogs, leaks, rumors and innuendos,” according to Hung Nguyen, a former Vietnam government advisor who now lectures at George Mason University in the U.S. Despite Vietnam’s closed political system and censored media, internet access is growing, with social media widely used and a proliferation of activist blogs and online comments — often penned anonymously — showing that many Vietnamese are keenly interested in politics and want to have a say in how the country is run.
HO CHI MINH CITY/SINGAPORE — The 10 member countries of the Association of Southeast Asian Nations collectively do more business with China than with any other country, with bilateral trade between the two sides growing by an annual 8.3% in 2014 to $480 billion, according to Chinese government figures. But since mid-2015, slowing Chinese growth and a weaker yuan have fueled fears in Southeast Asia that the region has become too dependent on China’s vast markets. China has allowed the yuan to fall by 5% against the dollar, signaling that it may opt for a devaluation to make its exports more competitive. Manu Bhaskaran, chief executive of Centennial Asia Advisors, an economic advisory company, believes that a further weakening of the yuan could trigger competitive devaluations across Asia. “What is the knock-on effect on other currencies? Probably down,” Bhaskaran told the Nikkei Asian Review.
SINGAPORE — It was no more than a glance, but Aye Aye Win’s respectful mid-sentence nod toward her 83-year-old father said as much as anything else about why she wants to remain in Singapore after three decades in the city-state, away from her family in Myanmar. The old man, Maung Htay, had been in Singapore “for a few weeks” to get medical treatment that Aye Aye Win said was out of his reach at home — a legacy of decades of meager health spending by Myanmar’s long-ruling military junta She runs a small shop in Peninsula Plaza, a vibrant commercial complex that is the center of Myanmar life in Singapore. Women, their cheeks painted with cream-colored thanaka — a Myanmar cosmetic made from tree bark — perch on high stools behind shop counters selling cellphones. Other shops selling longyi — a Myanmar version of the sarong — sit alongside restaurants dishing up Myanmar staples such as tea-leaf salad and mohinga, a popular curried fish and noodle soup. “I plan to stay here, though I know a lot of people who are going back,” said Aye Aye Win
SINGAPORE — While China’s economy continues to grow much faster than those of Japan and most Western countries, according to official figures, the country’s mix of slowing imports, wobbly stock markets and a weakening currency is a growing concern for Southeast Asian countries that have grown increasingly dependent on trade with Asia’s largest economy. China’s official 7% annual rate of growth in gross domestic product in 2015 is the lowest in a quarter century, down from the 7.4% posted in 2014. It leaves Southeast Asian countries vulnerable to slowing Chinese growth, six years after Beijing signed a landmark trade agreement with the 10-country Association of Southeast Asian Nations. As China’s economy expanded to become the world’s second biggest, trade between Southeast Asia and China grew, as the latter sought raw materials for massive infrastructure and city building. However, since riding out the 2008 financial crisis that brought several Western economies close to ruin, China has slowly tried to shift the basis of economic growth from investment to domestic consumption. As a result, China’s demand for commodities has declined. Jia Qingguo, Dean of International Studies at Peking University, said that “the Chinese economy and the Southeast Asian economies are integrated, and the slowdown in the Chinese economy will affect Southeast Asia in a negative way.”