Indonesia might raise tariffs on EU dairy products
<p>Indonesian palm oil producers have called for higher import tariffs on EU dairy products in retaliation for the bloc’s palm oil policies. The country’s government considers applying such duties. </p>
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EU palm oil ban is Indonesia’s concern for Axiata-Telenor merger
KUALA LUMPUR: Indonesia Minister of Communication and Information Technology Rudiantara told the media that his ministry will conduct a review on the proposed merger between Axiata Group Bhd and Norwegian telecommunication giant Telenor Group.The minister was quoted by Indonesian online business...
EU palm oil ban is Indonesia’s concern for Axiata-Telenor merger
Chester Tay
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The Edge Financial Daily
August 06, 2019 08:31 am +08
KUALA LUMPUR: Indonesia Minister of Communication and Information Technology Rudiantara told the media that his ministry will conduct a review on the proposed merger between Axiata Group Bhd and Norwegian telecommunication giant Telenor Group.
The minister was quoted by Indonesian online business news portal Bisnis.com last week saying that a review is necessary because Telenor originated from the European Union (EU), which parliament has on June 10 passed laws to restrict and ban palm oil usage in biofuel by 2030.
“I cannot ignore the issue [on palm oil ban],” Rudiantara was reportedly said, adding that the Indonesian government’s attitude towards the merger is not known yet.
The ministry has yet to look at the post-merger business plan in Indonesia of Telenor and Axiata, according to Bisnis.com, hence it is too early for Rudiantara to comment on the merits of the merger.
Telenor currently does not have operation in Indonesia. The merger with Axiata will enable the Norwegian telco to gain an exposure to the archipelago.
Rudiantara revealed that his ministry will conduct discussions with stakeholders regarding Telenor’s entry into Indonesia, in order to come up with a collective decision on investment from EU countries, noting that all strategic transactions in the telecommunications sector requires consultation with stakeholders.
Should Axiata-Telenor merger materialise, it would result in Telenor owning a stake in PT XL Axiata Tbk, which is 66.4% owned by Axiata.
Axiata told Bisnis.com that the merger will not affect XL Axiata’s business in Indonesia, and that the corporate exercise would open opportunities for Axiata to invest more in Indonesia.
“There is no impact [on Indonesia], in fact we will be able to invest even more in Indonesia,” Axiata reportedly said.
Axiata is still in discussions with Telenor on the proposed merger, and intend to form a binding agreement by the end of third quarter this year, following due diligence exercises.
If the merger materialises, both parties will form an enlarged holding company, which Telenor is expected to own 56.5% while Axiata owns the remaining 43.5%.
EU struggles to strike trade pacts with major ASEAN countries
Sticking points could hinder other deals, as Vietnam gains from recent agreement
asia.nikkei.com
EU struggles to strike trade pacts with major ASEAN countries
Sticking points could hinder other deals, as Vietnam gains from recent agreement
DAVID HUTT, Contributing writerAUGUST 04, 2019 20:59 JST
A port in Singapore. The European Union’s trade pacts with Singapore and Vietnam could hurt other ASEAN members if the EU increases its investment in those two countries at the expense of the others. (Photo by Kosaku Mimura)
PARIS -- After the European Union secured free trade agreements this year with Singapore and Vietnam, there is even greater incentive for other large Southeast Asian economies to speed up the pace of clinching their own trade pacts, but negotiations with the EU are certain to prove difficult.
Separate talks with Indonesia and the Philippines are ongoing, but are hindered by Jakarta's objections over an EU plan to ban imports of palm oil, and Europe's concerns with Philippine President Rodrigo Duterte's controversial war against drugs and alleged human rights abuses. Meanwhile, trade talks with Malaysia -- where the palm oil ban also is a contentious issue -- and Thailand have been stalled for years.
Still, the EU is pressing ahead. The body's trade commissioner, Cecilia Malmstrom, noted in June that the deal with Vietnam was "an important milestone" that could augur faster negotiations for the four other countries.
Last year, the EU was the 10-member Association of Southeast Asian Nations' second-largest trading partner, after China, with bilateral trade worth roughly $263 billion. The EU also is the largest investor in ASEAN, having pumped a cumulative $374 billion of foreign direct investment into the region by the end of 2017.
The trade deals with Vietnam and Singapore were important given that the two countries accounted for more than 45% of total EU-ASEAN trade last year. But Indonesia, the Philippines, Malaysia and Thailand combined accounted for 50% of EU-ASEAN trade, according to Nikkei Asian Review's analysis of EU trade data. The other four ASEAN countries -- Brunei, Cambodia, Laos and Myanmar -- accounted for the rest.
European Commissioner for Trade Cecilia Malmstrom, left, and Vietnamese Industry and Trade Minister Tran Tuan Anh, right, and other officials attending the signing ceremony of the EU-Vietnam Free Trade Agreement in Hanoi in June. © Reuters
Analysts say that because the pacts with Singapore and Vietnam will slash tariffs on most exports from those countries to the EU, the other four -- Indonesia, the Philippines, Malaysia and Thailand -- risk being left behind without their own agreements.
"The key is that with a [free trade agreement] this brings in investment to the country concerned and pulls potential funds away from countries that do not have agreements due to the legal recourse" provided by the trade deals, said Bridget Welsh, associate professor of political science at John Cabot University in Rome.
Thailand's Trade Policy and Strategy Office last month warned that automotive suppliers and tech-component assemblers in the country could move their operations to Vietnam in order to take advantage of tariff-free exports to European markets.
Vietnam estimates that its deal could boost exports to the EU, worth $42.5 billion last year, by up to 20%, and could bump its gross domestic product by as much as 3% by 2023.
EU-Thai trade was valued at just $13.4 billion in the first four months of this year, down from $15.1 billion from the same period last year. Some Thai economists put that down to investors moving their capital to Vietnam in anticipation of its free trade agreement, which is expected to become effective later this year.
"If Thailand and the EU cannot reach an agreement on an FTA deal with a clear time frame, Thailand could lose an opportunity to upgrade its manufacturing industry towards the technologies of the future," the Bangkok-based Kasikorn Research Center said in a May report.
Thailand began negotiations with the EU in 2013, but talks stalled the following year after the Thai military coup.
However, Federica Mogherini, the EU's high representative for Foreign Affairs and Security Policy, told the Nikkei Asian Review this past week: "It's clear the March election and the swearing in of a cross-party coalition cabinet are important steps towards restoring pluralism and democratic governance in Thailand."
Mogherini noted that those were the two conditions laid out in 2017 by the EU for restarting trade talks, which suggests that the EU's stance on Thailand is softening.
Auramon Supthaweethum, director-general of Thailand's Trade Negotiations Department, told the news media this past week that the new Thai government has given the greenlight to "revive FTA negotiations with the EU."
Unlike Vietnam, the EU-Singapore trade agreement poses less of a problem for other countries in the region. That pact includes a rather liberal understanding of rules of origin -- the national source of goods -- and incorporates some aspects of the so-called ASEAN Cumulation plan, which allows Singaporean manufacturers to classify raw materials and parts sourced from other ASEAN countries as originating from Singapore, a potential benefit for those countries.
A palm plantation in Malaysia. The country’s stalled EU trade talks are unlikely to restart soon, particularly because Malaysia is threatening to take the EU to the World Trade Organization over its plan to phase out imports of palm oil. © Getty Images
However, the EU's trade pacts with Vietnam and Singapore could inflict wounds on other ASEAN members if the EU increases its investment in those two countries at the expense of the others.
"It is important for other ASEAN countries to catch up with the EU for [free trade agreements] in order to bridge the gap of [the] playing field," said Suthiphand Chirathivat, the executive director at the ASEAN Studies Center at Chulalongkorn University in Thailand.
Trade discussions with Malaysia are especially troublesome. Talks have been stalled since 2012, just two years after they began. Negotiations are unlikely to restart soon, particularly because Malaysia is threatening to take the EU to the World Trade Organization over Brussels' plan to phase out imports of palm oil from Indonesia and Malaysia by 2030 over environmental concerns. Indonesia is the world's largest producer of palm oil, followed by Malaysia.
"At this stage, we have no indication of when negotiations over the EU-Malaysia FTA might resume," said Maria Castillo Fernandez, the EU's ambassador to Malaysia, adding that "Malaysia and the EU are assessing the opportunity to resume negotiations."
But Welsh of John Cabot University reckons that a trade agreement with Malaysia "is out given the situation with palm oil and biofuel."
The issue also remains a sticking point with Indonesia, but talks on a trade deal that began in 2016 with the EU have continued this year, with more set for December.
Meanwhile, the Philippines is "way behind" in talks, mainly because of Malmstrom's "reluctance to engage" Duterte's government, said Fraser Cameron, director of the EU-Asia Centre, a Brussels-based think tank.
