The Star Online: Business
The Star Online: Business |
- Tough road ahead for India carmakers Fall in sales worst since 2001
- Indonesia’s oil drying up
- Franchise sector targeting to contribute RM24bil to M'sian GDP this year
| Tough road ahead for India carmakers Fall in sales worst since 2001 Posted: 10 Apr 2013 06:40 PM PDT MUMBAI: India's annual car sales fell for the first time in a decade in the financial year just ended and are expected to post subdued growth this year, calling into question bullish expectations that fuelled billion-dollar bets from global manufacturers. Carmakers in India, two years ago the world's hottest growth market after China, have seen high interest rates, rising fuel prices and prolonged economic gloom turn an industry recently growing at 30% a year into one plagued by huge discounts, showrooms full of unsold cars, and chronic overcapacity. Quitting India is not an option for global majors such as Ford Motor Co and Volkswagen AG, given its huge population, rising incomes and long-term potential. But manufacturers that have sunk huge amounts of cash into the country are likely to pare back expansion plans as economic troubles persist, and the industry braces for another year of disappointing sales. "The industry, like the rest of the economy, has slowed down very substantially," R.C. Bhargava, chairman of market leader Maruti Suzuki, told Reuters. While surging sales of sport utility vehicles (SUVs) have been a bright spot for some manufacturers, sales of the smaller cars that account for most of the passenger vehicle market have crashed this year. "Everything has slowed down by two to three years," Bhargava said. "Everybody has to consolidate their operations, look how to manage with less, do more with less ... This recessionary period will force people to be more efficient." Car sales in the financial year that ended March 31 fell an annual 6.7%, according to data from the Society of Indian Automobile Manufacturers (SIAM) released yesterday, after sales in March fell an annual 22.5%. The drop is the worst since the financial year that ended in 2001, when sales fell 7.7%, according to SIAM. Last year, India's car sales grew 2.2%. The immediate future looks mostly gloomy for an industry that experts had expected to ring up annual car sales of 9 million by 2020 from a current 1.9 million, but looks set to significantly undershoot that target. "I don't think those goals are going to happen in that timeframe," said Bhargava. "Conditions have changed a lot" Car sales were likely to grow by 3%-5% in the financial year that began on April 1, SIAM said. SIAM initially estimated 10%-12% growth for the last financial year, but was forced to slash that forecast three times in the face of actual sales figures. - Reuters
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| Posted: 10 Apr 2013 06:35 PM PDT SINGAPORE: Indonesia's oil export revenue is falling far below government expectations as output drops to a more than 40-year low, piling pressure on authorities to confront a widening trade deficit fuelled by energy subsidies that encourage consumption. Aging fields and years of scant new discoveries mean Indonesia is exporting less crude, bringing home to the former Opec member the US$22bil cost 4% of economic output last year of its generous subsidy programme. Crude and oil products export revenue for the first two months of the year have fallen 23% to US$2.2bil compared with the same period last year, while oil imports by value are up 16%, according to the statistics bureau. That has translated into an oil trade deficit of US$4.9bil so far this year, widening from US$3.2bil a year ago. "Fuel consumption and imports are surging on cheap fuel, with subsidised prices some 60% below international prices, and buoyant domestic demand," said Chua Hak Bin, head of emerging Asia economics global research at Bank of America Merrill Lynch. "We expect the government to introduce some rationing scheme or hike subsidised fuel prices in the coming months to contain the escalating fiscal costs and widening oil trade deficit." President Susilo Bambang Yudhoyono could announce next week new measures to restrict the use of energy subsidies, which have provided Indonesians with the cheapest fuel in Asia. But with elections looming next year, and memories of violent protests over fuel-price rises in 2005 and 2008, he is expected to bow to populist wishes and not scrap subsidies. Instead, the president is considering a ban on the use of subsidised fuel by the nation's 11 million private cars, a move that could save the government US$8.6bil this year and erase a fiscal deficit, a presidential adviser said. Indonesia's overall trade deficit widened to US$330mil in February, up from US$70mil the previous month. Indonesia's state budget for 2013 has set an oil output target of 900,000 barrels per day, but the country's energy regulator SKKMigas said production was more likely to average around 830,000 bpd. That would be the lowest since 1969. The government's take of total oil and gas revenues is expected to be about US$30bil or about 20% of the budget for this year, according to SKKMigas, sharply lower than the one-third that oil and gas sales contributed to state coffers each year back when Indonesia was a net exporter and a member of Opec. Unless price increases can offset falling production or Indonesia can reverse the output decline, the contribution oil and gas makes to state will likely continue to fall. Indonesia has often fallen short of production targets, with crude and condensate output declining at an annual rate of 3.8% between 1998 and 2011. The production decline has mainly impacted exports as Indonesia now keeps the bulk of its output for domestic use, but it has also had to increase its imports of refined products as subsidies push up the use of cheap fuel. Indonesia's crude export revenue will likely drop further this year as ample oil supplies weigh on prices while its top buyer Japan aims to reduce expensive oil imports for power use. "This is definitely not great news for the trade deficit, but we have to remember that crude oil exports have not been a key driver of overall exports," said Lim Su Sian, an economist with HSBC. Reuters
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| Franchise sector targeting to contribute RM24bil to M'sian GDP this year Posted: 10 Apr 2013 06:32 PM PDT KUALA LUMPUR: Malaysia is positive on the growth of the franchise industry, targeting it to contribute some RM24bil to the country's gross domestic product (GDP) this year, said Minister of Domestic Trade, Cooperatives and Consumerism Datuk Seri Ismail Sabri Yaakob. Last year, the franchise industry made up about 2.5% of total GDP, amounting to some RM24.3bil, surpassing the RM22.5bil target for the year. It had been previously reported that the Government was targeting a 9.4% contribution from the industry to the country's GDP by 2020. Speaking to reporters after the Franchise International Malaysia (FIM) 2013 soft launch yesterday, Ismail said: "The expected increase of RM1.5bil from last year's target is considered reasonable, given that we are including the micro-franchisors' contribution to the industry." Last year, the Government had introduced the micro franchise scheme with an allocation of RM8mil under the National Franchise Blueprint. "To date, RM6mil in loans have been disbursed from the RM8mil allocation. "There is a possibility of us allocating more to the scheme if it's fully utilised," Ismail said. He said FIM 2013 had entered into its 20th edition and would be organised together with the hosting of the World Franchise Council (WFC) and the Asia Pacific Franchise Confederation Annual Meeting by Malaysia this year. WFC is the master franchise organisation' represented by 45 countries worldwide, including the United States, Australia, Canada, China, Egypt, France, Japan and India. "I hope that all entrepreneurs, investors, players and those who are interested to venture into the franchise industry would attend this programme, which would be held at the Putra World Trade Centre from Sept 20 to 22," he noted. Also present at the soft launch was Malaysia Franchise Association (MFA) chairman Abdul Malik Abdullah, who said: "This year, FIM is expected to achieve RM370mil in sales transaction. We are confident of attracting 11,000 visitors and would have about 130 exhibitors." Last year, FIM chalked up RM356mil in sales as opposed to the RM352mil in 2011. Said Abdul Malik, among the 130 exhibitors, local exhibitors would account for 75% of the total number of exhibitors, with the rest being foreign exhibitors. "We are targeting at least 15 countries to participate in this event, and at the moment, we have secured about seven coutries," he added. He said the main objective of FIM was to promote franchise products to the public and potential entrepreneurs through the involvement of franchisors in the exhibition as well as to increase the awareness of the public and new entrepreneurs. FIM is jointly organised by the Ministry of Domestic Trade, Cooperatives and Consumerism and MFA and was introduced in 1994.
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