WEDNESDAY, NOVEMBER 19, 2014
BUSINESS
Australia exports to China still face hurdles after hyped deal
Australia shifting from ‘mining boom to dining boom’
SYDNEY: A trade deal signed with great fanfare
between China and Australia has been touted as
a major step towards Australia shifting its economy from a “mining boom” to a “dining boom,” but
the reality is likely to be more sobering. Australia
is looking to replace its reliance on exports of
minerals such as coal and iron ore as mining
investment wanes and demand begins to dwindle. The government would prefer to expand its
food and agricultural exports to capitalize on a
rapidly growing Asian middle class.
It has high hopes for the proposal for a free
trade agreement (FTA) signed on Monday by
Prime Minister Tony Abbott and Chinese
President Xi, but the more likely winner from the
deal is the services sector. The deal is designed
to open up Chinese markets to Australian farm
exporters and the services sector, while easing
curbs on Chinese investment in Australia. China
is already Australia’s top trading partner, with
two-way trade of around A$150 billion ($130 billion) in 2013.
Several major agricultural foodstuffs, including sugar, rice and cotton, are currently excluded
from the FTA, and Australia’s frequent severe
droughts impose a natural production ceiling on
those sectors that are part of the pact. Experts
are waiting for the full text of the pact, which
Australia called the best ever between Beijing
and a Western country, warning the devil may
yet be in the detail. “Labor is deeply concerned
that key export sectors like sugar have been told
to expect nothing from the deal,” said opposition
Labor Party leader Penny Wong. “Mr Abbott has
talked about a two-step FTA. The fact is Australia
can’t afford a second-rate FTA with China.”
Exclusions
HSBC chief economist Paul Bloxham said the
deal would support Australia’s “great rebalancing
act”, but others warned the agricultural sector is
comparatively tiny. Of Australia’s total exports to
China of A$94.7 billion in 2013, iron ore accounted for A$52.7 billion, according to the
Department of Foreign Affairs and Trade. Wool,
the top agricultural export, made up just A$1.9
billion. Boosting agriculture also requires big
investment in isolated, dry and volatile areas
with limited water supply. Large swathes of
eastern Australia are currently in drought.
Australian farms’ return on capital has seldom
topped 2 percent in a year on average during
the past decade, excluding changes in land values, according to government research bureau
ABARES. The unpredictability of earnings is
greater than in the United States, Africa and
Brazil. Meanwhile, the sugar, rice, wheat and cotton sectors will have to wait three years for a
review of their tariffs. Even then, any changes are
likely to be contingent on Australia relaxing its
existing requirement that all investment proposals by Chinese state-owned entities be scrutinized by the Foreign Investment Review Board.
“In this day and age, sugar being excluded in
what looks like a political trade -off is an
absolutely unacceptable outcome,” said Paul
Schembri, chairman of industr y group
Canegrowers.
Faltering demand
At the other end of the deal, China faces a
supply glut as economic growth falters.
Inventories of iron ore, coal and cotton are
bulging at ports across the country and state
granaries are overflowing. The Australian dairy
industry’s hopes of a “white gold” rush have
been dashed. Businesses last week complained
about Beijing’s response, using non-tariff barriers from customs clearance to quality restrictions, which would skirt the FTA, to curb raw
material imports. The financial sector is also cautious, noting the dominance of its Asian peers in
China. That means Australian businesses will
probably dabble in niche projects, rather than
trying to compete in core banking services.
Andrew Whitford, Westpac Banking Corp’s head
of Greater China, said it was still early days, and
Westpac was “certainly not going to be opening
more branches.”
Ageing population
One sector where the road seems clearer is
healthcare. Chinese per capita health spending
is growing the fastest in Asia, having quadrupled
to $321 a year in 2012 from $80 in 2005, according to the World Bank. China wants to shift to a
community-based health system, as opposed to
hospital-based, to cut costs and ensure universal
access, leaving it with a shortage of providers in
out-of-hospital health sectors like aged care and
pharmacy. An advanced aged care industry is
“one of Australia’s great comparative advantages”, said Business Council of Australia CEO
Jennifer Westacott. Peter Hope, who runs a pharmacy in the small Australian state of Tasmania,
said the new rules would allow him to quickly
expand beyond his already planned Beijing store
in April next year to 1,000 franchises around
China.—Reuters
MALANG: Demonstrators protest against fuel price increase in Malang, in East Java province yesterday after Indonesian President Joko Widodo
unveiled a hefty increase in the price of subsidized fuel, taking a bold, first step towards fixing the tattered finances of Southeast Asia’s top
economy. — AFP
Indonesia raises its interest rates
Price of subsidized fuel increased by over 30%
JAKARTA: Indonesia’s central bank raised
interest rates yesterday for the first time in a
year in anticipation of surging inflation after
the new government increased the price of
subsidized fuel by over 30 percent. At a special
meeting called following the price increase,
Bank Indonesia raised its key rate by 25 basis
points to 7.75 percent, the first rise since
November last year.
The move was aimed at keeping inflation in
check, with economists predicting it will jump
by over two percentage points in the coming
weeks as the fuel price rise pushes up the costs
of transporting goods. Inflation edged up to
4.83 percent in October. President Joko Widodo
announced the reduction in government fuel
subsidies late Monday, his first serious move to
strengthen the economy since taking office last
month. The move was in line with an election
campaign pledge.
The government estimates the price rise
will lead to about $8 billion of savings in next
year’s budget, money that Widodo, known as
Jokowi, plans to divert to overhauling infrastructure and policies to help the poorest. The
subsidies “can now be used to build schools
for the young and hospitals for the old, rather
than being burned in engines of cars idling in
traffic jams”, said Wellian Wiranto, an economist from OCBC Bank in Singapore. The payouts, which have in the past gobbled up 20
percent of the state budget, are also blamed
for a widening current account deficit.
Reducing the subsidies was seen as an
urgently needed move to revive the economy,
which grew at 5.01 percent in the third quarter,
its slowest pace in five years. But a fuel price
increase is unpopular among the public due to
the effect on inflation, and small protests broke
out in major cities yesterday. The price of petrol
has risen by 2,000 rupiah to 8,500 (70 US cents) a
liter, an increase of just over 30 percent, while
diesel has gone up 2,000 rupiah to 7,500 a liter, a
35 percent increase. After a large fuel price
increase last year, inflation jumped several
points before slowly falling back to its current
level. However, tighter monetary policy is also
likely to weigh on growth.—AFP
EXCHANGE RATES
Al-Muzaini Exchange Co.
ASIAN COUNTRIES
2.521
4.740
2.865
2.223
2.964
226.140
37.594
3.761
6.487
8.889
59.000
116.000
GCC COUNTRIES
Saudi Riyal
77.764
Qatari Riyal
80.115
Omani Riyal
757.730
Bahraini Dinar
774.540
UAE Dirham
79.417
ARAB COUNTRIES
Egyptian Pound - Cash
40.860
Egyptian Pound - Transfer
40.684
Yemen Riyal/for 1000
1.360
Tunisian Dinar
159.550
Jordanian Dinar
411.550
Lebanese Lira/for 1000
1.956
Syrian Lira
2.078
Morocco Dirham
33.314
EUROPEAN & AMERICAN COUNTRIES
US Dollar Transfer
291.500
Euro
364.960
Sterling Pound
464.960
Canadian dollar
257.670
Turkish lira
129.110
Swiss Franc
303.330
Australian Dollar
254.190
US Dollar Buying
290.300
GOLD
20 gram
226.000
10 gram
116.000
5 gram
59.000
Japanese Yen
Indian Rupees
Pakistani Rupees
Srilankan Rupees
Nepali Rupees
Singapore Dollar
Hongkong Dollar
Bangladesh Taka
Philippine Peso
Thai Baht
Irani Riyal transfer
Irani Riyal cash
UAE Exchange Centre WLL
COUNTRY
Australian Dollar
Canadian Dollar
Swiss Franc
Euro
US Dollar
Sterling Pound
Japanese Yen
Bangladesh Taka
Indian Rupee
Sri Lankan Rupee
Nepali Rupee
Pakistani Rupee
UAE Dirhams
Bahraini Dinar
Egyptian Pound
Jordanian Dinar
Omani Riyal
Qatari Riyal
Saudi Riyal
SELL DRAFT
236.01
262.55
307.32
366.78
291.90
459.35
2.54
3.761
4.720
2.223
2.942
2.870
79.32
774.72
40.71
414.75
756.98
80.38
77.75
SELL CASH
233.01
263.55
305.32
367.78
294.90
462.35
2.56
4.031
5.020
2.658
3.477
2.790
79.78
776.79
41.31
420.40
764.28
80.93
78.15
Dollarco Exchange Co. Ltd
Rate for Transfer
US Dollar
Canadian Dollar
Sterling Pound
Euro
Swiss Frank
Bahrain Dinar
UAE Dirhams
Qatari Riyals
Saudi Riyals
Jordanian Dinar
Egyptian Pound
Sri Lankan Rupees
Indian Rupees
Pakistani Rupees
Bangladesh Taka
Philippines Pesso
Cyprus pound
Japanese Yen
Selling Rate
291.450
261.210
458.920
366.995
304.615
774.960
79.250
80.850
77.895
411.235
40.665
2.223
4.722
2.855
3.760
6.793
715.130
3.515
Syrian Pound
Nepalese Rupees
Malaysian Ringgit
Chinese Yuan Renminbi
Thai Bhat
Turkish Lira
2.725
3.945
87.980
47.930
9.850
130.860
Sierra Leone
Singapore Dollar
South African Rand
Sri Lankan Rupee
Taiwan
Thai Baht
0.000064
0.221444
0.020249
0.001912
0.009374
0.008554
Bahraini Dinar
Egyptian Pound
Iranian Riyal
Iraqi Dinar
Jordanian Dinar
Kuwaiti Dinar
Lebanese Pound
Moroccan Dirhams
Nigerian Naira
Omani Riyal
Qatar Riyal
Saudi Riyal
Syrian Pound
Tunisian Dinar
Turkish Lira
UAE Dirhams
Yemeni Riyal
0.766485
0.038348
0.000081
0.000194
0.406922
1.000000
0.000142
0.023800
0.001179
0.750859
0.079330
0.077070
0.001727
0.155608
0.129038
0.078356
0.001315
0.000070
0.227444
0.028749
0.002492
0.009554
0.009104
Arab
Bahrain Exchange Company
CURRENCY
BUY
SELL
Europe
Belgian Franc
British Pound
Czech Korune
Danish Krone
Euro
Norwegian Krone
Romanian Leu
Slovakia
Swedish Krona
Swiss Franc
Turkish Lira
0.007586
0.451155
0.005174
0.045007
0.359799
0.039156
0.083583
0.008496
0.035425
0.297571
0.129038
Australasia
Australian Dollar
0.247554
New Zealand Dollar 0.225543
America
Canadian Dollar
0.252713
US Dollars
0.287300
US Dollars Mint
0.287800
Asia
Bangladesh Taka
0.003395
Chinese Yuan
0.046039
Hong Kong Dollar 0.035486
Indian Rupee
0.004438
Indonesian Rupiah 0.000020
Japanese Yen
0.002431
Kenyan Shilling
0.003234
Korean Won
0.000256
Malaysian Ringgit 0.084255
Nepalese Rupee
0.002978
Pakistan Rupee
0.002706
Philippine Peso
0.006355
0.008586
0.460155
0.017174
0.050007
0.367799
0.044356
0.083583
0.018496
0.040425
0.307771
0.136038
0.774485
0.041448
0.000082
0.000254
0.414422
1.000000
0.000242
0.047800
0.001814
0.756539
0.080543
0.077770
0.001947
0.163608
0.136038
0.0795505
0.001395
0.259054
0.235043
Al Mulla Exchange
0.261213
0.292000
0.292000
0.003995
0.049539
0.038236
0.004839
0.000026
0.002611
0.003234
0.000271
0.090225
0.003148
0.002986
0.006635
Currency
US Dollar
Euro
Pound Sterlng
Canadian Dollar
Indian Rupee
Egyptian Pound
Sri Lankan Rupee
Bangladesh Taka
Philippines Peso
Pakistan Rupee
Bahraini Dinar
UAE Dirham
Saudi Riyal
*Rates are subject to change
Transfer Rate (Per 1000)
291.150
367.000
458.200
260.150
4.723
40.695
2.221
3.757
6.480
2.868
775.150
79.300
77.750