Malaysia, Indonesia, Brunei strike LNG deal - Update - Statistical Data Included

Business Asia, June, 2002

Malaysia has agreed with Indonesia and Brunei to cooperate on production and shipping of liquefied natural gas (LNG), bringing together producers of half the world's LNG as prices fall. The South East Asian rivals face excess supply and slowing demand from their biggest customer, Japan, after Asia's biggest economy entered its third recession in a decade. Malaysia was forced this year to grant the first price cuts in the industry's three-decade history. Malaysia's state oil company Petroliam Nasional Bhd said it had agreed to synchronise its respective plant operations in order to maximize plant availability, to ensure continuous and secure supply to customers. Details of the agreement were not revealed. Malaysia is the world number three LNG exporter, with three plants at Bintulu in Sarawak state. Indonesia is the world's top LNG exporter from a plant on Sumatra Island and another at Bontang on Borneo Island, while Brunei's plant that began production in 1973 is the oldest in South East Asia.

* Australia

Australian companies spent less on equipment, buildings and machinery in the first quarter, but plan to increase investment in the coming year, which will bolster economic growth as a construction boom slows. Business investment on buildings, machinery and equipment fell 3.2 per cent in the three months ended March, the Australian Bureau of Statistics said. Economists expected a 1.5 per cent gain, following an 8.3 per cent surge in the fourth quarter. Companies say they will spend $39.98 billion, or 16 per cent more than they estimated a year ago, in the year to 30 June 2003. Extra business investment will help the economy grow about four per cent this year.

* Hong Kong

Hong Kong's exports rose less than expected in April, suggesting a rebound in global demand may take longer than anticipated to return the city's economy to growth. Overseas sales rose 2.5 per cent from a year earlier to HK$123.1 billion ($27.9 billion), the Census and Statistics Bureau said. That lagged economists' expectations of a 6.5 per cent gain, though it was faster than the previous month's 0.2 per cent increase. Until March, exports fell for 12 straight months. Hong Kong is counting on exports to revive its economy as record-high unemployment and falling prices damp domestic growth. The Government expects the economy to expand one per cent this year after shrinking in the fourth quarter of 2001 and growing just 0.1 per cent for all of last year.

* Indonesia

Indonesia's consumer confidence rose for a third month in April, climbing to its highest level this year, driven by expectations a stronger rupiah and lower interest rates may boost the economy and create jobs. The consumer confidence index rose to 98.8 in April from 93 in March and 89.5 in February, Danareksa Research Institute said in its monthly survey. Indonesia's ability to create new jobs is expected to improve in the next six months as economic growth accelerates, helping increase household income and consumer spending, the survey said. The Government of the world's fourth most-populous nation expects growth to accelerate to as much as four per cent this year and six per cent in 2003, from 3.3 per cent last year. The economy expanded 2.5 per cent in the first quarter, compared with 1.6 per cent in the final three months of last year.

* Japan

Japan's largest automaker, Toyota Motor Corp, has reduced production in local plants in a bid to rely on overseas plants for future growth. The change will cut component costs and bring production closer to markets. Toyota now produces about one third of its vehicles outside Japan compared with more than half by nearest rival, Honda Motor Co. Toyota said its output abroad rose 37 per cent in April from a year earlier compared with no change at its domestic factories. Exports of completed cars will also fall from Japan, and Toyota's domestic plants will be used mostly to defend its annual sales at home of about 3.5 million units. Toyota shares have risen 5.1 per cent so far this year.

* Philippines

Philippine economic growth slowed more than expected in the first quarter as its shrinking agriculture industry damped consumer spending. Gross domestic product rose 0.2 per cent from the fourth quarter, seasonally adjusted, the Government said. That lagged from a 0.4 per cent increase economists expected and the revised 0.9 per cent expansion the previous quarter. The worse-than-expected performance will make it harder for the Government to meet its 2002 growth target of as much as 4.5 per cent. That may give President Gloria Arroyo less room to pursue reforms such as asset sales and a cleanup of bad loans, crucial to reviving investor confidence, before a 2004 election.

* Singapore

Tan Chong International Ltd, Singapore's No1 car distributor, wants to focus on bigger Nissan Motor Co pars because its main Sunny model faces price competition and the number of car-ownership permits is falling. The Singapore Government in March said it will auction 24 per cent fewer ownership permits for cars with engines of 1.6 litres or smaller for the year ending April 2003. Tan Chong sold 12,251 Nissan Sunny cars, which have engines smaller than 1.6 litres, last year, making it Singapore's best-selling car. The distributor competes against Inchcape Motors Ltd, which sells Toyota cars.