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Dispatch (Asia edition)
| by Peta Tomlinson, Nazatul Izma Abdullah, Sonia Kolesnikov-Jessop
22 Dec 2006 Topic: News |
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Hong Kong accounting and finance professionals have become hot property in the job market this year. Eighty percent of respondents to an annual survey by ACCA and Michael Page International said they had had a salary increase in 2006, while 46% reported one or more job offers in the past 12 months. For one in 10, their pay packets swelled by at least 30%. The survey reflects an optimistic outlook, with 84% of respondents expecting an even higher pay increase next year. Employers surveyed said the promising job market was due to the revitalised economy and business environment, and increased economic ties between Hong Kong and the Chinese mainland. A high demand for professionals with international exposure and expertise in China is also one of the top three drivers for the prosperous recruitment market. To meet the increasing demand, one-third of employers surveyed were actively recruiting more accounting and finance professionals. Dilys Chau, President of ACCA Hong Kong, predicts the trend will continue. ‘We are glad to see the economy continues to grow in a promising way and, in general, both employers and employees are optimistic about the future. With higher and higher demand in quantity as well as quality, employers should focus more on how to retain the best talents, while employees should continue to equip themselves to remain competitive and marketable.’ Dan Chavasse, Michael Page International’s managing director, Greater China and south east Asia, agrees there are higher expectations on both sides. ‘The survey gives clear and unequivocal evidence of the buoyant market for accounting and finance professionals. However, it also provides an insight into the divergent demands of employee and employer expectations, where the former is seeking increased remuneration, the latter increased skills and knowledge.’ Other findings of the survey include: of among 74% of employers who received resignation letters from their accounting and finance staff this year, only 65% could successfully retain a maximum 10% of the resigned staff. Major retention strategies included the offer of a better remuneration package, guaranteed job promotion and a clear career progression pathway. While employers said a salary package above market average was their most successful retention strategy, the importance of work and family life balance also came into the picture. Loss of its competitive edge caused foreign direct investment (FDI) in Malaysia to plunge to US$3.97bn (RM14.69bn) last year from US$4.62bn (RM17.09bn) in 2004, according to figures released by the United Nations Conference on Trade and Development in its World Investment Report 2006. Malaysia ranked only sixth out of the 10 south east Asia countries in attracting FDIs last year, compared to a few years ago when it was the second most popular south east Asian destination for FDIs. Malaysian FDIs bucked a generally rising trend. Overall, FDIs to south, east and south east Asia reached a new high of US$165bn (RM610.5bn) last year, up 19% from 2004. China, Hong Kong and Singapore were the biggest recipients of FDIs in 2005. Significantly, Indonesia overtook Malaysia in the FDI stakes for the first time since 1990. Inflows to Indonesia rose 177% to US$5.26bn (RM19.46bn) last year. Economist Datuk Dr Zainal Aznam Yusof, a member of the working group of the National Economic Action Council under the Prime Minister’s Department, attributed sinking FDIs to an erosion of competitiveness. He said Malaysia had been losing its competitiveness over the last eight to 10 years due to a raft of factors, including shortage of human capital, upward pressure on wages and increased competition from China and India. To regain competitiveness and lure FDIs, Zainal said Malaysia needed to liberalise new growth areas, such as the heavily-protected services sector and to examine critically the existing policy framework, institutions, procedures and processes that deter FDIs. more changes to Competition Act planned The Competition Commission of Singapore has called for feedback on proposals to amend the Competition Act, which in its current form allows corporates involved in a merger to apply for the Commission’s view on whether a merger is anti-competitive only after the merger has been completed. Lawyers and financial advisers handling mergers would like the rules to be modified to allow firms considering a potential merger to check with the Commission whether it would fall foul of the rules before the merger is completed. This would enable firms ‘to avoid the significant costs’ of unravelling a completed merger which might be deemed anti-competitive, said S Iswaran, Minister of State for Trade and Industry. The Commission is also looking to speed up the merger clearance process, provided the parties involved undertake specific actions to address competition issues. These include amending the Act to allow for the possibility of binding agreements between merger parties and regulators that would permit a contested merger to proceed, but only if the parties agree to address the regulators’ competition concerns. Singapore’s Competition Act, passed by Parliament in October 2004, prohibits anti-competitive activities that have ‘the object or effect of preventing, restricting or distorting competition’. Two of the three prohibitions under the Act came into force last January and bar ‘anti-competitive agreements, decisions, and practices’, as well as ‘abuse of a dominant position’. The third prohibition, which focuses on ‘mergers and acquisitions that substantially lessen competition’, will now only come into force next July, later than previously expected because of the continuing public consultation. According to financial data provider Thomson Financial, mergers and acquisitions volume in Singapore jumped 44% year-on-year to US$1.8 trillion in the first half of 2006.
Troubled Bank Islam Malaysia Berhad (BIMB), Malaysia’s pioneer shariah-compliant bank, has received a combined capital injection of RM1.014bn from Dubai Financial Limited Liability Company (LLC), as well as from Lembaga Tabung Haji, the Malaysian hajj pilgrimage agency. Dubai Financial LLC, part of the Dubai Investment Group (DIG), now has a 40% stake in the bank, while Lembaga Tabung Haji holds 9% as a result of BIMB’s restricted share sale of 845m new shares. This investment ranks as Dubai Financial’s largest in the financial services sector in the Asia Pacific. Both Dubai Financial and BIMB anticipate benefits from this strategic alliance. DIG sees Bank Islam as the natural vehicle for its expansion into the Asia Pacific economies with dominant Muslim populations, while DIG will provide Bank Islam with a bridge into the coveted markets of the Middle East. The recapitalisation exercise is a positive development for the ailing bank, which is saddled by gross non-performing loans (NPLs) of RM2.2bn. These NPLs are attributed mostly to bad debts originating primarily from its offshore Labuan branch because of lax credit controls and poor risk management. As at 31 March 2006, Bank Islam’s NPL ratio stood at 17.1%. Its performance is an anomaly in a Malaysian Islamic banking industry that remained well-capitalised with a risk-weighted capital ratio of 14.8% as at the end of August, and boasted a net non-performing financing ratio (for the whole Islamic banking system) that had declined to 4.2%, according to Bank Negara Malaysia figures. BIMB incurred losses of about RM480m for the financial year ended 30 June 2005, largely due to its NPLs. The release of the results for its financial year 2006 (FY06) has been delayed, and the bank has said it would report NPL provisions not exceeding RM1.5bn for FY06. Operational risk management is a growing concern for treasurers across Australia and New Zealand, a survey has found. The Corporate Treasury Survey released by Ernst & Young (E&Y) and the Finance and Treasury Association (FTA) shows treasurers now rate risk management as their second most important function after cash management, up from fifth spot in the previous survey (2004). E&Y partner, Ivan St Clair, said respondents cited regulatory changes such as Sarbanes-Oxley, Australian Stock Exchange corporate governance principles and IFRS, along with boards and executive management, as drivers behind their shifting focus. But it comes at a cost. While concentrating on operational risk management, fewer organisations had documented treasury procedures, segregation of key duties and performance measurements in place. ‘In the past 12 months many treasurers have spent so much time and effort in getting hedge accounting right that, as a result, they may have paid less attention to updating treasury procedural manuals,’ St Clair said. The results also showed a notable increase in the responsibilities of treasuries compared to the previous survey, with the biggest increases in equity raising (which 27% of respondents listed as a responsibility, compared with 19% in 2004), dividend policy (27%, up from 17%), and insurance risk (33%, up from 25%). ‘The increasing responsibilities of treasury managers highlight the need to retain and recruit multi-skilled staff,’ St Clair said. This may prove a challenge, as only 7% of treasurers who had recently recruited staff found it easy to find appropriately qualified candidates. ‘I think the reason for this is that treasury is a specialised field and it has never been easy to recruit good people. The fact that treasuries are becoming broader in their activities isn’t helping either,’ he said. ‘The survey demonstrates that in nearly every treasury activity, there are more treasuries undertaking those activities than there were two years ago. The general increase in treasury staffing is increasing demand and it would appear few treasuries are able to develop staff internally – in short, increasing demand and insufficient supply.’ He added: ‘It is a worrying trend. When treasuries are well run they are nearly invisible to the organisation. However, when things start to go wrong in a treasury it can negatively impact the cost of financing the business significantly and for extended periods of time. It is so important to get good people into the treasury function to protect the organisation’s current and future financing and financial risk management activities.’ The high rollers have moved in to Macau, with the opening in September of Las Vegas billionaire gaming tycoon Steve Wynn’s 600-room casino resort. It is the latest in a hand of casinos either being constructed or under planning since the Macau Government ended the 40-year monopoly on casinos held by Hong Kong tycoon Stanley Ho. The resultant building boom is bringing to Macau – the only territory of China that allows casino gambling – an estimated 2,200 new hotel rooms by end of this year, and another 15,000 by 2008. While the reinvented Macau is diversifying its tourism base – notably with the Fisherman’s Wharf project, a themed entertainment, retail, marina and convention precinct – there is no doubt that inward investors are banking on the gambling dollar. Globalysis Ltd, a Las Vegas-based boutique research and advisory firm covering the airline, casino gaming, and hotel lodging sectors in Asia, believes supply will drive demand. ‘We believe that Macau will experience year-on-year gross gaming revenue growth of 17.6% in 2007, reaching the key milestone of US$8bn,’ said partner Jonathan V Galavizm, citing a record 2006, the booming Asian economies (in particular China and India) and the opening of two Las Vegas-style casinos – Wynn’s casino in 2006 and the Venetian in mid-2007. Morgan Stanley research projects that by the end of 2006, Macau’s annual gaming revenue will have overtaken Las Vegas to reach US$7bn, a 22% year-on-year increase. ‘We believe the rise in gaming revenue this year is attributable not only to new casinos but also new quality casinos proving a new perspective to gamblers, which would ultimately trigger a higher drop rate,’ it says. Morgan Stanley also expects that the new casinos and hotels will generate 37,000 jobs within the next two years, driving up consumption and supporting the overall economy. However, JP Morgan, while forecasting a rise in both gaming revenue and visitor arrivals over the next five years, also warns that the market for big-spending VIP gamblers, who accounted for over 62% of Macau’s casino gaming revenues in 2005, will remain flat. With most VIP business coming from the Chinese mainland, this sector could be under pressure if the Chinese Government imposes tighter controls on citizens gaming overseas, or if there are changes in the role of the junket operators, it says. JP Morgan also flags a possible oversupply of hotel rooms. ‘It remains to be seen whether mainland tourists will be willing to pay more for Las Vegas-type luxury hotels, as they traditionally allocate a relatively small portion of their travel budget to accommodation. In general, we think the risk of oversupply of hotel rooms is higher than gaming tables, as Macau is still a day trip market.’ in brief...
Relief from IFRS headache
IBM moves close to the source
Hedge fund probe
Top two a formidable team
China off the boil
Partnership structure changes in offing
Regulated short-selling deferred
NZ business confidence falters | |