ASEAN+3 Forum Discusses Harmonizing Asia's Bond Markets

MANILA, PHILIPPINES - The ASEAN+3 Bond Market Forum (ABMF) met for the first time today in Tokyo, Japan to discuss how best to harmonize regulations and market practices in Asia’s local currency bond transactions.

The ABMF is largely made up of financial experts from the 10 countries of the Association of Southeast Asian Nations (ASEAN), plus the People’s Republic of China, Japan and the Republic of Korea. It aims to establish regional market standards and common practices to make cross-border bond investment and settlement both smoother and cheaper.

The local currency bond markets in emerging East Asia have grown steadily in recent years, with $4.8 trillion in bonds outstanding at the end of June 2010. However, cross-border transaction costs in the region are high at an estimated three times more than in developed markets.

Common trading standards would make it faster and cheaper for investors from across the region to dip in and out of their neighboring markets. A wider variety and larger number of investors in Asia’s bonds would also make the markets more efficient and thus a better place for borrowers to raise funds.

“The forum is a big step towards institutionalizing regional cooperation and should help integrate Asia’s bond markets,” said Noritaka Akamatsu, Deputy Head of the Asian Development Bank’s (ADB) Office of Regional Economic Integration. “Ultimately, an integrated Asian bond market would benefit issuers and investors not only in Asia but also in the rest of the world.”

As a first step, the ABMF will create two sub-forums. One will collate and compare regulations and market practices in the region, while the second will look to harmonize transaction procedures and bond messaging formats with a view to cutting the cost of cross-border deals.

The forum was set up on the recommendation of a Group of Experts consisting of leading public and private sector institutions, including national central securities depositories from ASEAN+3 countries, international central securities depositories, global and regional custodians, and the ADB. It was endorsed by finance ministers of ASEAN+3 when they met in Tashkent, Uzbekistan in May.

The Group of Experts and the ABMF are part of ASEAN+3’s Asian Bond Markets Initiative (ABMI) aimed at fostering cross-border bond transactions. The ABMI was set up by the ASEAN+3 Finance Ministers in 2003 to develop local currency bond markets and to channel Asian savings into the region.

Update on Price band

As at yesterday, a 10% price band is presently applicable for two listed securities, Vallibel Finance (From Sep 23 to Oct 13) and Lake House Printers and Publishers PLC (from Sep 24 to Oct 14), a CSE filing made yesterday  stated.

Govt. aims to conclude Shell Gas takeover soon

By Santhush Fernando

Sri Lankan government is to conclude the re-acquisition deal of Shell Gas Lanka (Pvt) Ltd. (SGLL), the country’s largest Liquid Petroleum Gas (LPG) player in the very near future.
“The due diligence was earlier conducted and the Shell deal will be concluded in the very near future,” Sirisena Amarasekera, chairman of the Cabinet appointed Negotiating Committee overseeing the Shell deal and Prime Minister’s Secretary, told The Bottom Line.
Another senior official close to the deal confirmed that it was ‘unofficially finalised’ that the government will buy Shell’s 51 percent holding.
Last June, SGLL’s parent company- Royal Dutch Shell (RDS) offered to sell Shell Gas Lanka Ltd. and its wholly-owned subsidiary, Shell Lanka Terminal Ltd., as a part of its worldwide strategy to review its business units in Europe, Asia and Latin America. While the government already owns 49 percent stake of Shell Gas Lanka Ltd., Shell Lanka Terminal Ltd. is fully owned by the RDS. On June 17, the government expressed its willingness to take-over Shell Gas Lanka.
Earlier, W K H Wegapitiya, Chairman, Laugfs Holdings Ltd., Shell Gas Lanka’s rival and also a prospective bidder, announced that Laugfs too was interested in purchasing Shell Gas Lanka after his visit to London for negotiations with Royal Dutch Shell.
SGLL has been engaged in importing, storing, filling, marketing and selling LPG in Sri Lanka since 1995, after 51 percent of the then Colombo Gas Company was sold to Shell for US $ 37 million during the then Chandrika Bandaranaike Kumaratunga regime.
Shell virtually ran a monopoly till the second player, Laughs Gas, entered the local LP Gas market. Third players - Mundo Gas and Power Gas never succeeded to take off the ground due to undercutting by an existing player.

Sunway to make foray into Sri Lanka with RM250m project

Malaysian based Sunway Holdings Bhd. is making its foray into Sri Lanka to undertake a mixed development project with a gross development value of RM250 million, Malaysian news reports said.


Sunway said on Friday, Sept 24 it was teaming up with Dasa Tourist Complex Pte Ltd to build residential and commercial units in Colombo.

Its unit, SunwayMas Sdn Bhd will have a 65% stake in the JV company and Dasa Tourist 35%.
The mixed development will comprise of at least 318,000 sq ft of net saleable areas of residential units and 60,000 sq ft of net saleable areas of commercial units in Colombo city.

Sunway managing director Yau Kok Seng said the project would consist of a 34-storey building comprising 70 commercial units and 180 residential units on prime freehold land in the premium mixed-use zone of Bambalapitiya in District Colombo 4.

He said the project was expected to be launched in the second quarter of next year and to be completed by mid-2014. He added it would contribute “very positively” to the bottom line of the group.

“We are targeting Sri Lankans in the high-medium income and the high-end income groups. Even foreigners and those who are part of the Sri Lankan diaspora are expected to be interested,” he told a press conference.
On the pricing, Yau said the group was anticipated to launch the upmarket property with the residential units priced at about US$200 (RM618) per sq ft while that of commercial units at US$350 per sq ft.

"We are anticipating more than 20% net margin from this project," he said adding that the project enjoyed a five-year "tax holiday" from the Sri Lankan government from the time of completion.

Yau said the project would increase Sunway's landbank to more than 430 acres with potential GDV of RM2.6 billion which would be developed over the next three years.

Dasa Group chairman and founder S D Gunadasa said the JV marked an important milestone for the company's first venture in mixed development in Sri Lanka, stressing that it looked forward to more collaborations with Sunway Holdings in its future expansions.

"While the Sri Lankan property market gears itself for robust growth in the next five years, international collaborations with premier property players such as Sunway Holdings will contribute immensely to raise the standards in the industry as well as to create new benchmarks," he added.

Chinese investments in Lanka to rise - Economist

Authorities in Sri Lanka are currently mulling on providing additional space for Chinese investments to take place in Sri Lanka with areas like Godagama, Matara and the Eastern Province under the microscope, a top economist said.
According to him, the present existence of strong trading relationship between the two countries could now pave way for an increased flow of Foreign Direct Investment (FDI) from China, which is one of the fastest growing economies in the world.
“Entrepreneurs from China have been provided with an exclusive Export Processing Zone at Mirigama, and depending on the progress, additional space will be provided at Godagama, Matara and the Eastern Province,” Institute of Policy Studies executive director Dr Saman Kelegama said at a recent public lecture.
He said that of late, China has become a major investor in Sri Lanka with bilateral cooperation in tourism, mining, power generation, education, infrastructure, construction projects booming between the two countries.
“The telecommunications, power and energy industries attracted most of FDI inflows from China and presently 16 Chinese businesses have invested in garment, leather, telecom and electronics manufacturing facilities in the island,” Dr Kelegama said addressing on the topic ‘SL-China Economic Relations’ and held at the Bandaranaike Centre for International Studies in Colombo last week.
According to local immigration rules, all Chinese entrepreneurs who invest a minimum of US$ 25 million are provided with a Sri Lankan passport on the basis of a “second home” passport.