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Author: Tan KW   |   Latest post: Fri, 24 Sep 2021, 3:41 PM


Japan's ruling party race puts legacy of Abenomics in focus

Author: Tan KW   |  Publish date: Fri, 24 Sep 2021, 3:41 PM

TOKYO, Sept 24  Japan's widening wealth gap has emerged as a key issue in a ruling party leadership contest that will decide who becomes the next prime minister, with candidates forced to reassess the legacy of former premier Shinzo Abe's “Abenomics” policies.

Under Abenomics, a mix of expansionary fiscal and monetary policies and a growth strategy deployed by Abe in 2013, share prices and corporate profits boomed, but a government survey published earlier this year showed households hardly benefited.

Mindful of the flaws of Abenomics, frontrunners in the Liberal Democratic Party's leadership race ― vaccination minister Taro Kono and former foreign minister Fumio Kishida ― have pledged to focus more on boosting household wealth.

“What's important is to deliver the benefits of economic growth to a wider population,” Kishida said yesterday. “We must create a virtual cycle of growth and distribution.”

But the candidates are thin on details over how to do this with Japan's economic policy tool-kit depleted by years of massive monetary and fiscal stimulus.

Kono calls for rewarding companies that boost wages with a cut in corporate tax, while Kishida wants to expand Japan's middle class with targeted payouts to low-income households.

The winner of the LDP leadership vote on September 29 is assured of becoming Japan's next prime minister because of the party's parliamentary majority. Two women - Sanae Takaichi, 60, a former internal affairs minister, and Seiko Noda, 61, a former minister for gender equality - are the other candidates in a four-way race.

Parliament is expected to convene on October 4 to vote in a successor to Prime Minister Yoshihide Suga, who announced his decision to quit less than a year after taking over from Abe.

A government survey, conducted once every five years and released in February, has drawn increasing attention to trends in inequality during Abe's time.

Shigeto Nagai, head of Japan economics at Oxford Economics, said the survey revealed “the stark failure of Abenomics to boost household wealth through asset price growth.”

Average wealth among households fell by 3.5 per cent from 2014 to 2019 with only the top 10 per cent wealthiest enjoying an increase, according to survey conducted once every five years.

Japanese households' traditional aversion to risk meant they did not benefit from the stock market rally, with the balance of their financial assets down 8.1 per cent in the five years from 2014, the survey showed.

“We think the new premier will need to consider the failures of Abenomics and recognise the myth that reflation policies relying on aggressive monetary easing will not solve all Japan's problems without tackling endemic structural issues,” Nagai said.

Bank of Japan Governor Haruhiko Kuroda defended Abenomics and said the pandemic, not slow wage growth, was mainly to blame for sluggish consumption.

“Unlike in the United States and Europe, Japanese firms protected jobs even when the pandemic hit,” Kuroda said when asked why the trickle-down to households has been weak.

“Wage growth has been fairly modest, but that's not the main reason consumption is weak,” he told a briefing on Wednesday. “As the pandemic subsides, consumption will likely strengthen.” 


 - Reuters

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Vietnam delays reopening resort island over low vaccination rate

Author: Tan KW   |  Publish date: Fri, 24 Sep 2021, 3:41 PM

HANOI, Sept 24 — Vietnam has pushed back a plan to re-open the resort island of Phu Quoc to foreign tourists until November, after failing to meet targets for inoculating residents due to insufficient vaccine supplies, state media reported.

The South-east Asian nation, which is currently shut to all visitors apart from returning citizens and investors, has been struggling to speed up inoculations to help contain a spike in Covid-19 cases driven by the Delta variant in recent months.

Authorities had initially planned to allow vaccinated foreign tourists to start returning to Phu Quoc in October to revive the tourism sector and prop up the economy.

“We have to inoculate residents here for herd immunity but vaccine supplies are falling short,” the state-run VTC newspaper quoted Huynh Quang Hung, the chairman of Phu Quoc City’s People’s Committee, as saying.

Last week, the island’s authorities said an additional 250,000-300,000 doses were needed to achieve herd immunity.

So far only 2.9 per cent of residents in Kien Giang, the province that hosts Phu Quoc, had received two doses, official data showed.

Overall, 7.3 per cent of Vietnam’s 98 million people are fully vaccinated — one of the lowest rates in the region.

Phu Quoc on Monday detected a new Covid-19 cluster after months with no local cases, though provincial authorities said it was under control and would not affect the reopening plan. Authorities said Phu Quoc would have a phased reopening over six months starting on Nov. 20, with up to three chartered flights touching down per week.

Under the plan, the island expects to welcome 3,000-5,000 visitors over the trial period, with compulsory Covid-19 tests conducted by authorities, VTC said in Thursday’s report.

It remained unclear if visitors will have to undergo a seven-day quarantine period as requested by Vietnam’s health ministry.

Foreign arrivals to Vietnam slumped from 18 million in 2019, when tourism revenue was US$31 billion (RM129.6 billion), or nearly 12 per cent of gross domestic product, to 3.8 million last year.

The plans to welcome back tourists come as Malaysia last week reopened its Langkawi island to domestic visitors, while Thailand has opened Phuket and Samui islands to vaccinated foreign tourists. 

 -  Reuters

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Japan welcomes Taiwan bid to join trade pact, citing shared values

Author: Tan KW   |  Publish date: Fri, 24 Sep 2021, 3:40 PM

TOKYO, Sept 24 — Japan on Friday welcomed Taiwan’s application to join a trans-Pacific trade pact, citing shared democratic values with the island, which China claims as its own.

Japanese officials’ appreciation of Taiwan’s values with regard to democracy and rule of law contrasted with Japan’s cautious reaction to China’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

“We consider Taiwan a very important partner with which we share fundamental values such as freedom, democracy, basic human rights and rule of law,” Economy Minister Yasutoshi Nishimura told a news conference. Japan is chairing the pact this year.

Taiwan made the application on Wednesday, angering China, which views the island as one of its provinces with no right to the trappings of a state.

While Japan said Taiwan’s application would need to be scrutinised against the trade pact’s strict standards, the positive reaction stood in contrast to a cautious response to China’s application last week.

Japan’s Deputy Prime Minister Taro Aso expressed scepticism about China’s chances, citing strict rules related to state-owned enterprises.

Japan’s Chief Cabinet Secretary Katsunobu Kato sidestepped a reporter’s question on Friday about the different reactions to the applications, declining to go into specifics on Japan’s position on China but referring to values shared with Taiwan.

The chief government spokesman added that under the trade pact’s rules, membership was open to Taiwan, noting that it was already an independent member of the World Trade Organization and Asia-Pacific Economic Cooperation forum.

The original 12-member trade agreement, known as the Trans-Pacific Partnership (TPP), was seen as an important economic counterweight to China’s growing influence.

But the TPP was thrown into limbo in 2017 when then-US President Donald Trump pulled the United States out of the pact.

Britain has also applied to join the 11-member CPTPP and Nishimura said the first meeting to discuss its bid would take place on Sept. 28. 


 - Reuters

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IMF warns Australia on surging home prices

Author: Tan KW   |  Publish date: Fri, 24 Sep 2021, 3:38 PM

The International Monetary Fund warned on Friday that Australia must act to curb runaway home prices, which have surged more than 20 percent in major cities over the past year.
With the pandemic doing little to cool Australia's turbocharged real estate market, the Washington-based institution urged policymakers to step up.
"Surging housing prices raise concerns about affordability and financial stability," the IMF warned in a periodic review of Australia's economy.
It urged "structural reforms" to boost the housing supply and support for those with low incomes who have been priced out of the market. 
Financial oversight "should be tightened and lending standards closely monitored", the fund added.
Property speculation is virtually a national sport in Australia, where newspapers are filled with stories about the latest high-end auctions and sales.
Nationwide, home prices have risen more than 18 percent in the past year, according to data from CoreLogic, despite major cities being locked down or under pandemic restrictions for most of that period.
Prices in Hobart, Tasmania rose 25 percent in a year and, according to data from real estate website Domain, Sydney home prices rose about Aus$1,200 (US$875) a day over the three months to June.
The average house price in Australia's largest city is now just over US$1 million.
The IMF said the boom had been fuelled by buyers "taking advantage of low mortgage rates and fiscal support programmes."
The Reserve Bank of Australia's benchmark rate is currently at 0.1 percent and is forecast to remain low into 2024.
But there are growing concerns about debt levels and a potential housing bubble.
"High debt-to-income mortgages are on the rise amid elevated household debt, and investor demand has begun to increase from low levels," the IMF warned. 
 - AFP
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Spain says Catalan separatist leader detained in Italy must face Spanish courts

Author: Tan KW   |  Publish date: Fri, 24 Sep 2021, 3:36 PM

MADRID/ROME - Catalan separatist leader Carles Puigdemont, who was detained by Italian police in Sardinia, must face justice in Spain, the Spanish government said on Friday ahead of an extradition hearing.

"Mr. Puigdemont must submit to the action of the courts, exactly like any other citizen," Spanish Prime Minister Pedro Sanchez's office said in a statement.

Spain has accused Puigdemont, the former Catalan regional head, with sedition, claiming he helped organise a 2017 independence referendum deemed illegal by Spanish courts.

The Catalan leader was detained by Italian border police at Alghero airport as he arrived on the island of Sardinia on Thursday evening.

He is due to attend an Italian court on Friday morning, though it is unclear whether the judge will decide whether he should be extradited, Italian news wire ANSA reported.

"We believe that the judicial authorities will release Puigdemont. This is the fourth time this has happened," his lawyer Gonzalo Boyer told on Friday Cadena Ser radio.

In March, the European Parliament stripped Puigdemont of the immunity he enjoyed as a member since 2019. Puigdemont was living in self-imposed exile in Belgium.

Puigdemont had travelled to Alghero from Brussels to attend the Adifolk International Exhibition and to meet with the regional head of Sardinia and its ombudsman, according to his office.

Puigdemont was subject to a European arrest warrant issued by Spain, which is seeking his extradition over his role in the independence bid.

The referendum brought on Spain's biggest political crisis in decades and was followed by a unilateral declaration of independence by the Catalan parliament in October 2017, which prompted the central government to impose direct rule from Madrid and authorities to arrest separatist leaders.

Separatists groups in Barcelona said they would demonstrate on Friday morning to protest against Puigdemont's arrest.


  - Reuters


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Apple iPhone 13 tests whether deals, cameras will spur upgrades

Author: Tan KW   |  Publish date: Fri, 24 Sep 2021, 3:36 PM

Apple Inc. is releasing its iPhone 13 lineup on Friday, testing whether new camera technology and aggressive carrier deals will get shoppers to snap up a modest update of last year’s model.

After the company began to take orders for the device on Sept 17, the new products - the iPhone 13, 13 mini, 13 Pro and 13 Pro Max - are now reaching stores and consumers.

This year’s biggest changes include a narrower notch at the top of the screen, camera features like Cinematic mode and up to a few hours of additional battery life. The product also has a somewhat faster processor.

What the iPhone 13 doesn’t have is a dramatic redesign, and that may lead some consumers to put off a purchase until next year. But Apple does have some tailwinds, including a broader transition to 5G networks that may entice shoppers.

US carriers also are competing fiercely with discounts and promotions.

After years of dialling back their subsidies, Verizon Communications Inc., AT&T Inc. and T-Mobile US Inc. are offering incentives that in some cases could make the iPhone 13 Pro available for free depending on which device users trade in and what plan they have. That model normally starts at US$999 .

There are already signs that the discounts may be working. While some Apple retail stores still had new phones in stock that could be purchased Friday, the company’s online store already has a backlog into October for all iPhone 13 models.

The iPhone 12, released a year ago, was considered a bigger step-up. It was the first 5G iPhone and came with a new look that had flatter sides. The 13’s changes are more behind-the-scenes.

Cinematic mode, for instance, offers a video version of Portrait mode. And a feature called Macro Photography allows for sharper closeup photos.

The new models kick-start a busy holiday season for the Cupertino, California-based technology giant. The company has rolled out a redesigned iPad mini and new entry-level iPad, and it’s planning to announce revamped MacBook Pros and AirPods in the coming months.

It also unveiled an Apple Watch Series 7 upgrade that features a larger screen, but the new smartwatch won’t go on sale until later this fall.

 - Bloomberg

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