trends in the global trade environment · 2019-12-05 · and vietnam minimum wage rates across...
TRANSCRIPT
Trends in the Global Trade Environment:
What It Looks Like for Business and
Where the Opportunities Abound
Sunny Tan, EVP , LTH Accessories Group
PAGE 2
Trends in the Global Trade Environment
China Migration to
non-China Production
US-China Trade War Competition among
ASEAN
PAGE 3
RMC Currency Strengthening Rising Labor Cost
China Migration to Non-China Production
in (CNY)
Source: https://www.tradingview.com/symbols/USDCNY/
PAGE 4
China Migration to Non-China Production
Shortage of migrant workers
Less younger people from rural areas moving to cities/manufacturing hubs
Rise in migrant workers returning home
Shrinking workforce
Aging and declining fertility
Inability to hire workers
PAGE 5
US-CHINA TRADE WAR
What is this all about?
US and China have imposed tariffs on billions of dollars worth of one another's goods.
Issues:
Trade imbalance, unfair trading practices and IP theft.
It is NOT about trade
China rising
Industry sectors development
PAGE 6
US-CHINA TRADE WAR
How about Consumers and Brands?
Uncertainty is hurting businesses
Price pressure to consumer
Diversify from China production
Cost
Tariff
ASEAN opportunities (Philippines?!)
COMPETITION AMONG
ASEAN
What are the Considerations?
Who are our Competitors?
PAGE 8
BUSINESS ENVIRONMENT: COMPETITIVENESS INDICATORS
Source: World Bank, Transparency International
124
94
138 137
69
131
15
72
27
59
73
112
171
126
28
55
84
154 157
EASE OF DOING BUSINESS INDEX EASE OF PAYING TAXES INDEX
2019 World Rankings (out of 190)
Philippines
Cambodia
Vietnam
Malaysia
Thailand
Indonesia
Myanmar
Singapore
Brunei
Laos
PAGE 9
TARIFF/DUTY CONSIDERATION
Free Trade Agreements (FTA)
GSP / GSP+
Brands make decisions based on
“likely” future outcome
• Vietnam (TPP)
• US Travel Goods
PAGE 10Source: U.S. Department of Commerce, Office of Textiles and Apparel.
PH EXPORTS vs other ASEAN
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
1,100,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
US Imports ($'000): Travel Goods, Handbags*
Philippines Vietnam Cambodia Indonesia Myanmar
*Travel Goods, Handbags: HTS 4202
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
11,000,000
12,000,000
13,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
US Imports ($'000): Apparel
Philippines Vietnam Indonesia Cambodia Thailand
PAGE 11
PH with highest GST/VAT in ASEAN
The ave. rate of CIT in ASEAN declined considerably over the last 10 years.
The lowering of CIT rates is used by govts. to improve their country’s attractiveness to foreign investors. Govts. also use tax (as well as non-tax) incentives to attract FDI in forms such as tax holidays, accelerated depreciation or investment credits, which further lowers effective rate of tax for certain industries.
Highest CIT is imposed by PH at 30%
BUSINESS ENVIRONMENT: TAX RATES
PAGE 12
BUSINESS ENVIRONMENT: INCENTIVES
Incentives Philippines Vietnam Cambodia
Corporate tax rate 30% 20% 20%
Import Duties Exempt Exempt Exempt
VAT on importations Exempt
Exempt (excl machines but
can be reimbursed less than
1 mo)
Exempt
VAT on domestic purchases 0% VAT/Exempt10% VAT subject to refund (1
month)10% VAT subject to refund
Local/municipal tax Exempt N/A N/A
PAGE 13
SPEED TO MARKET (LOGISTICS)
Strength/competitive lead taken by Vietnam, Indonesia and Cambodia in terms of delivery - speed to market.
Philippines: Lack of intra-port that can accommodate a Mother Vessel for exportations;
shall need to feed shipment to countries with Mother Vessels such as Taiwan, China and
Hong Kong.
PAGE 14
INFRASTRUCTURE
Highway/roads, Internet/mobile phone coverage, ports, airports, shipping schedules
Philippines, with an average speed of 25.99 mbps, ranked 89 out of 175 countries in terms of internet speed based on Global Index as of September 2019.
Source: https://www.speedtest.net/global-index
PAGE 15
BUSINESS ENVIRONMENT: ELECTRICITY RATES
ELECTRICITY RATES (USD cents/kWh)
Philippines Indonesia Thailand Singapore Malaysia Cambodia Vietnam
Household $ 0.1867 $ 0.1100 $ 0.1241 $ 0.1997 $ 0.1000 $ 0.1260 $ 0.1059
Medium size business
$ 0.1223 $ 0.1100 $ 0.1100 $ 0.1430 $ 0.1358 $ 0.1850 $ 0.1344
Large size business $ 0.1198 $ 0.0836 $ 0.1100 $ 0.1402 $ 0.0960 $ 0.1200 $ 0.1236
Middle size Industrial
$ 0.1169 $ 0.0836 $ 0.0836 $ 0.1305 $ 0.0829 $ 0.1590 $ 0.0781
Large Industrial $ 0.1163 $ 0.0747 $ 0.0836 $ 0.1272 $ 0.0776 $ 0.1470 $ 0.0741
Source: https://digitalenergyasia.com/competitive-indonesian-electricity-rates-in-the-asean-region/
Vietnam, Indonesia and Malaysia with the lowest electricity rates
PAGE 16
BUSINESS ENVIRONMENT:
LABOR MANAGEMENT
LABOR RATES
Lower labor costs in Cambodia, Myanmar and Vietnam
Minimum wage rates across ASEAN are rising gradually to match the region’s increased cost of living and boost domestic demand.• Cambodia min. wage for garment
workers increased over 150% in the last 5 yrs.
• Myanmar raised the daily min. wage by 33% in 2018.
• Vietnam increased min. wage in 2018 by 30%. This increase follows a 7.3% hike in 2017.
PAGE 17
BUSINESS ENVIRONMENT: LABOR MANAGEMENT
PUBLIC HOLIDAYS
Country No. of Holidays
Vietnam 11 days
Laos 13 days
Singapore 14 days
Brunei 19 days
Indonesia 20 days
Philippines 21 days
Myanmar 25 days
Thailand 26 days
Cambodia 31 days
Malaysia 50 days
LABOR RELATIONS
PAGE 18
BUSINESS ENVIRONMENT: COMPETITIVENESS INDICATORS
Source: World Bank, Transparency International
124
94
138 137
69
131
15
72
27
59
73
112
171
126
28
55
84
154 157
EASE OF DOING BUSINESS INDEX EASE OF PAYING TAXES INDEX
2019 World Rankings (out of 190)
Philippines
Cambodia
Vietnam
Malaysia
Thailand
Indonesia
Myanmar
Singapore
Brunei
Laos
PAGE 19
CHINA STRATEGY
China domestic market
E-commerce
Middle class
Belt and Road initiatives
Thank
you!
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