Day: September 5, 2022

KUALA LUMPUR— The Purchasing Managers’ Index (PMI) data for August 2022 signalled an eleventh monthly improvement in business conditions across the ASEAN manufacturing sector.

In its Global ASEAN Manufacturing PMI report, S&P Global Market Intelligence said growth was supported by quicker upturns in production levels and new factory orders.

The headline PMI posted at 52.3 in August, up from 52.2 in July, marking eleven months of expansion, with the latest reading indicating a solid improvement in the health of the ASEAN manufacturing sector.

For Malaysia, while the headline PMI figure was posted above the neutral 50.0 threshold for the fifth month running at Malaysian manufacturers (50.3), the pace of increase softened from July and signalled only a marginal improvement in operating conditions.

In Singapore, six of the seven constituents recorded improvements in operating conditions in August with the country registering the quickest upturn, and for the ninth month running.

That said, the rate of increase (56.8) softened from the survey high observed in July to the weakest since March.

Mild growth was noted at Indonesian manufacturers, thereby extending the current run of increase to 11 months.

“At 51.7, the rate of increase was the quickest in four months. Similarly, at 51.2, the Philippines also reported an improvement in business conditions,” it said.

Looking ahead 12 months, manufacturing companies remain hopeful of expansions in output.

The report said sentiment improved for the third month running with the degree of confidence the highest since November 2016.

Commenting on the ASEAN Manufacturing PMI data, S&P Global Market Intelligence economist, Maryam Baluch said August data signalled yet another modest expansion across the ASEAN manufacturing sector.

She said data suggested that higher production volumes and intakes of new orders resulted in firms raising employment and inventories.

“We also saw supply-side and inflationary pressures ease during the latest survey period. Lead times lengthened at the slowest pace in 23 months, while input price inflation eased to the weakest in six months. Firms will hope these trends continue.

”Overall, client appetite across ASEAN nations remained strong. However, interest rate hikes following persistently high inflation will likely challenge and curtail demand in the coming months,” she added.

Source: NAM NEWS NETWORK

The banking industry leaders shared optimistic views regarding the country’s economic prospects based on the results of the Banking Sector Outlook Survey (BSOS)1 for the second semester of 2021. The banks’ level of optimism on the country’s economic prospects is also reflected in their overall outlook for the Philippine banking system (PBS) with expectations of double-digit growth in assets, loans, deposits and net income for the next two (2) years.

In terms of loan quality, a lower number of respondents (around 57.3 percent from 63.5 percent in the previous BSOS) estimate a non-performing loan (NPL) ratio of above 5.0 percent in the next two years. By banking group, the topmost NPL ratio projection of universal and commercial banks (UKBs) shifted to between greater than 2.0 to 3.0 percent from the greater than 3.0 to 5.0 percent tier in the first semester of 2021. Meanwhile, 42.7 percent of respondents project an NPL coverage ratio in the range of 51 percent to more than 100 percent.

Banks have mixed projections regarding restructured loans as 30.1 percent of respondents estimate restructured loan ratio of more than 5.0 percent (mostly up to 10 percent of their loan portfolio for small banks). By contrast, about 23.0 percent of respondents predict a more conservative restructured loan ratio of between 1.0 and 2.0 percent. This reflects continued efforts of banks to grant financial relief to their borrowers through modifications in their loan payment terms.

Philippine banks also intend to maintain risk-based capital, leverage, and liquidity ratios at levels higher than domestic and global standards to promote institutional stability.

Banks disclosed that digitalization of products and services will be prioritized in the next two years, as banks recognize the need to integrate technology in achieving their business objectives. Even prior to the pandemic, banks have been striving to better serve their clientele by making some of their products and services accessible through digital platforms. In line with this, majority of UKBs have already adopted programs on digitalization and implemented initiatives to improve their capabilities in this area.

Lastly, the survey results revealed increased organizational awareness towards sustainable financing, as more respondent banks viewed such mode of financing as highly important following the BSP’s issuance of Environmental, Social and Governance-related guidelines.

Amid the long tail of the COVID-19 pandemic, the Philippine banking system is projected to withstand the legacy risks and challenges of the COVID-19 pandemic within the next two years on account of its stable and sound capital and liquidity buffers, ample loan loss reserves, good earnings performance and prudent risk governance.

The BSOS provides insights of bank management on the strategic direction of the industry and emerging risks and trends. This is part of BSP’s surveillance toolkit in promoting the resilience of the banking system.

Source: Bangko Sentral ng Pilipinas (BSP)

Asia and the Pacific has already posted a marked slowdown in achieving many of its Sustainable Development Goals, delaying the point when it reaches its targets for reduced poverty, narrowed social inequality, and improved social mobility, among others. Although many economies in the region reported stronger economic growth in 2021, there were hints of divergent growth paths. The webinar will present findings from Key Indicators for the Asia and Pacific 2022 focusing on the impact of the pandemic on social mobility prospects of the most vulnerable population. A panel of experts from the government and the development community will discuss the report’s implications for fulfilling the global development agenda and explore potential policy avenues.

Source: Asian Development Bank

TASHKENT, UZBEKISTAN (5 September 2022) — The Asian Development Bank (ADB) and Shamol Zarafshan Energy Foreign Enterprise Limited Liability Company (SZE), a wholly owned subsidiary of Abu Dhabi Future Energy Company Private Joint Stock Company (Masdar), signed a $52 million loan agreement to finance Uzbekistan’s first wind power plant and the largest yet developed in Central Asia.

The 500-megawatt (MW) plant will be located to the east of Zarafshan City, in the Tamdy District of the Navoi Region in Uzbekistan. It will help the country meet rapidly rising energy demand, deliver reliable power supplies to underserved urban and rural areas, meet its climate action goals, and improve resilience against climate change impacts. The facility will comprise 111 wind turbine generators, each with a capacity of 4.5 MW.

“The Zarafshan wind power project shows how private sector investment can help countries largely dependent on fossil fuels to decarbonize their economies,” said ADB Private Sector Operations Department Director General Suzanne Gaboury. “It will support Uzbekistan’s efforts to lift clean energy’s share of total generation to more than 25% by 2030, while helping the government deliver reliable and affordable power to businesses, schools, health clinics, and households.”

The project is cofinanced with the European Bank for Reconstruction and Development, First Abu Dhabi Bank, International Finance Corporation, the Japan International Cooperation Agency, and Natixis. As part of the overall financing package, ADB mobilized a $10 million B-loan tranche from the Dutch Entrepreneurial Development Bank, FMO. ADB also signed a sovereign-backed partial credit guarantee of $19.5 million to mitigate the credit risk of the state-owned offtaker, Joint Stock Company National Electric Grid of Uzbekistan (NEGU).

Like many Central Asian economies, Uzbekistan is heavily reliant on fossil fuels with most of its electricity supplied by natural gas. The Zarafshan wind power project will generate 1,599 gigawatt-hours of clean energy annually and avoid more than 890,000 tons of carbon emissions. SZE will provide its energy output to NEGU under a 25-year power purchase agreement.

“As one of Central Asia’s fastest-growing economies Uzbekistan’s demand for energy will continue to increase, so it’s crucial to diversify its energy mix with more renewable sources of power,” said Officer-in-Charge of ADB’s Uzbekistan Resident Mission Enrico Pinali. “This is the largest wind power plant that ADB has ever financed, and we are proud that it will support the government’s efforts to transition to a sustainable, green economy.”

SZE is a special purpose vehicle owned by United Arab Emirates-based Masdar, a global leader in renewable energy. Masdar has developed utility-scale, grid-tied projects, small-scale applications providing energy access to remote communities, and carbon abatement projects globally. Masdar and ADB have previously partnered in multiple landmark renewable projects in the region.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

Source: Asian Development Bank

The Office of Public–Private Partnership (OPPP) was established in September 2014 to help deliver bankable PPP projects across developing Asia. Find out more about how the office works and why public–private partnerships are key to regional economic growth.

Transcript

A public-private partnership, or PPP, is formed when a government and a company work together to build and run a public asset such as a road, a power station, airport or railway. Not all national infrastructure needs can be met by the private sector. But where there’s a good fit, PPP projects can be offered to the private sector in a fair and transparent manner through bidding. The winning bidder gets to design, build, finance, and often operate the asset usually for a number of years under a contractual agreement with the government.

So, why the need for PPPs? Well, Asia’s overall infrastructure needs are colossal. ADB estimates that the infrastructure needs of Asia and the Pacific amount to over $1.7 trillion each year. Governments can only come up with about 40% of this from their budgets and contributions from multilateral financiers. When structured well, PPP taps into the new technology and efficiency of the private sector to deliver value for money. There are major advantages for all parties. For a start, it helps governments to get the best value and structure, as bidders will compete against each other to build the asset or run the service at the lowest possible cost.

PPPs can also improve public sector management. They encourage governments to build strong and effective legal and regulatory structures to ensure that the assets are run properly. They can improve public sector procurement as well, as governments become more adept at choosing the best company for the job. Concession agreements can be standardized, and national planning becomes easier. From the company’s perspective there needs to be a stable revenue stream, manageable risks, good support from the government, and contractually agreed comprehensive performance targets.

Putting a public-private partnership together is often challenging. With the competition amongst countries for private sector investment, as well as the returns, the financial and regulatory risks must be mitigated enough to be attractive.

The coronavirus disease (COVID-19) pandemic reinforced the role played by resilient, efficient infrastructure in creating resilient societies. PPPs can help deliver the critical infrastructure facilities needed to build back better from the pandemic.

With extensive experience in developing PPPs, ADB is uniquely placed to help developing economies in Asia and the Pacific to build the infrastructure they need for sustainable and inclusive growth.

ADB’s comprehensive support from enabling environment to sovereign and private financing as well as its longstanding commitment to development and strong reputation as an honest broker helps to build support and trust from all parties involved in a PPP project.

ADB’s PPP operations are spearheaded by its Office of Public–Private Partnership.

ADB’s expertise in PPPs encompasses a diverse range of sectors. We help our developing member countries to deliver high-quality roads and railways, as well as facilities for water, sanitation and district heating, solid waste management, renewable energy, vaccine research and development, elderly care, and information technology.

ADB’s aim is to help deliver infrastructure through PPPs that are a win for everyone. We do this by developing sustainable projects with the right balance of risks and benefits, that attract private sector interest but deliver value for money to the government.

ADB has successfully delivered many exciting PPP projects throughout the region. Its projects have reduced congestion on the bustling highways of Dhaka, provided heating solutions in Uzbekistan’s capital Tashkent, helped promote sustainable development in the green New Clark City in the Philippines, and introduced solar energy to the sun-drenched Koror and Babeldaob islands of Palau and delivered cost-efficient solar projects in Asia

ADB has been with the region since the start of its PPP journey. We’ll keep working with our member countries to develop innovative financing and solutions that provide the infrastructure our developing members need—now and for the long-term.

Source: Asian Development Bank