Vietnam - ADB pledges annual loan of $1bn to Vietnam over next five years

An employee counts U.S. dollar bills at a bank in Ho Chi Minh City.

The Asian Development Bank (ADB) is committed to maintaining its credit assistance of around US$1 billion per annum to support Vietnam over the next five years, the Manila-based institution announced on Tuesday.

ADB has approved the Vietnam Country Partnership Strategy (CPS) 2016-20, a new partnership for the Southeast Asian country to fund its recently launched Socio-Economic Development Plan 2016–20.

Eric Sidgwick, ADB country director for Vietnam, said at a press briefing on Tuesday that the annual grant will be around $1 billion, and will be focused on several fields.

In the education sector, for instance, secondary and high school education will be prioritized, while insurance and public health service are the major objectives in the field of healthcare. 

“Sharing our knowledge will also play a key role in the new CPS, with a particular focus on strengthening the business enabling environment, promoting fiscal transparency and public accountability, and fostering integrated and green urban infrastructure,” he added.

ADB will help leverage private sector investment through public–private partnerships, improve efficiency and service delivery to citizens and gain access to new expertise and technology.

It will also support sustainable natural resource use as well as climate change adaptation and mitigation measures to respond to the heightened risks facing the country.

Having reached lower-middle income status in 2010, Vietnam has made rapid progress against poverty reduction and in lifting the quality of health and education, according to ADB.

But the Southeast Asian country is starting to face new and more complex challenges like environmental damage, high exposure to climate change, rapid growth in the working age population, and poverty, just to name a few.

“To help the government address these challenges, the ADB will support investments to achieve three key outcomes,” the ADB country director for Vietnam said.

“These will be to promote job creation and competitiveness, to increase the inclusiveness of infrastructure and service delivery, and to improve environmental sustainability and climate change responses.”

ADB has sponsored Vietnam with $5.3 billion in support and aid grants of $240 million since 2011. The organization will continue to support Vietnam with loans of preferential interest rates lower than that of the commercial loans until 2018.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.

Established in 1966, it is owned by 67 members, 48 of which are from the Asia and the Pacific regions. In 2015, ADB assistance totaled $27.2 billion, including co-financing of $10.7 billion.

tuoitrenews

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Cambodia - Government Target for Eliminating HIV Pushed Back Five Years

Two years after Prime Minister Hun Sen vowed to eliminate new HIV infections by 2020, projections indicate the government will need another five years to reach its target.

Under pressure to increase government spending on HIV prevention and treatment initiatives in the face of donor funding cuts, Mr. Hun Sen declared the government would “not allow any successful program to go bankrupt” and allocated $3.7 million toward the efforts.

Compared to more than $224 committed by The Global Fund to Fight AIDS, Tuberculosis and Malaria since 2003, the number is small, but still significant for a government that has almost entirely relied on donors in the past.

While the country’s fight against HIV/AIDS has drawn international praise following a drop in the rate of infection among people aged 15 to 49—from 1.7 percent in 1998 to 0.6 percent last year—both the government and NGOs are grappling with a lack of funding and other challenges in meeting the goal.

In February, the Ministry of Health revised its plan for the elimination of new HIV infections—meaning fewer than 300 new cases being identified annually—pushing back the target date to 2025.

In a report, the ministry estimates that newly identified cases would be no higher than 474 per year by 2020 and gradually decline to a “virtual elimination of HIV transmission by 2025.”

In addition to external funding cuts, domestic migration, a lack of HIV awareness among young people and a poorly funded public health sector were contributing factors behind the decision to revise the target, UNAIDS country representative Marie-Odile Emond said on Thursday.

“The new target is by 2025 and we think there is a consensus that it’s probably realistic,” she said . “It is still five years before the global target so Cambodia would still be one of the first countries to achieve this.”

UNAIDS estimates that 73,000 Cambodians have HIV, or 0.6 percent of the adult population, and 15,000 of them have not been identified, she said.

“It’s a bigger challenge than we expected,” Ms. Emond said of reaching the elimination target. “You realize that it still requires big investments. You need to maintain the effort and at the same time adopt new approaches.”

Ly Penh Sun, director of the National Center for HIV/AIDS, Dermatology and STD, said on Wednes­day that donors had called for the government be more self-reliant and spend more of its own limited funds on prevention and treatment.

“That’s very challenging,” he said. “The transition is very difficult.”

Sonia Kohlbacher

cambodiadaily

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Private equity firms are suddenly buying dermatology practices — here's why

Justin Thomas sprays himself with sunscreen during the first round of the 2016 The Masters golf tournament.

Private equity firms are snapping up dermatology practices across America.

In the past two years, there have been over 200 deals involving physician practices, with about 30 of those transactions in dermatology.

Investors are attracted by profitable new cosmetic procedures offered by many dermatologists, and are placing premium values on high-performing, well-positioned practices.

Some of the recent deals have been huge.

New York-based private equity firm Harvest Partners  recently purchased Maitland, Fla.-based Advanced Dermatology & Cosmetic Surgery, the largest U.S. dermatology practice, in a deal reportedly worth more than $600 million.

Varsity Healthcare Partners sold dermatology practice Forefront Management Holdings to the private investment arm of pension fund giant Ontario Municipal Employees Retirement System in a deal worth more than $450 million.

The Wall Street Journal reported that the transaction valued Forefront, with more than $30 million in earnings before interest, taxes, depreciation and amortization (EBITDA) last year, at about 13-times EBITDA.

We can expect more deals.

That’s especially true because dermatology is a fast-growing specialization. The market is expected to increase to $13.1 billion by next year, according to a 2013 Harris Williams & Co. study.

There is a dermatologist shortage that will likely persist for years even as a growing number of medical students pick the specialization.

To private equity firms, there are several factors that make dermatology practices more attractive than other medical practices.

Demographics. By 2019, there will be 54 million Americans over the age of 65, up from 46 million-plus today, according to a report by the U.S. Department of Health and Human Services’ Administration on Aging. Skin cancer, particularly melanoma, is on the rise too, striking about 3.5 million people annually, according to the American Cancer Society.

Healthcare access. More and more Americans have access to healthcare thanks to the Affordable Care Act. About 20 million people have gained insurance coverage between the passage of the law in 2010 and early 2016, boosting demand for dermatology.

Financials. Common medical and surgical dermatology procedures are typically well reimbursed.  Additionally,  high-margin cosmetic procedures tend to be paid out of pocket by consumers and are not as reliant on discounts made to insurance providers as many other types of medical care. Notably, most dermatology work is conducted outside of hospitals and as such is not subject to the push for cost-savings underway at hospital systems.

The upsell. Many dermatology practices have a cosmetic component, offering everything from Botox, Restylane, micro-dermabrasion and laser correction, CoolSculpting (a non-surgical fat removal process), high-end skin creams and other services. Investors like the idea of training doctors to do a better job of upselling such offerings so that patients who might come to have a mole removed are likelier to sign up for more lucrative services.

Historically, physicians may have viewed the full or partial sale of their practice as the loss of independence or control.

Today, many doctors embrace the idea of being able to spend 100 percent of their time providing patient care.

The consolidation of back office functions — like billing, scheduling, and insurance contract negotiation — is a huge motivation to sell.

Some physicians with thriving practices are teaming up with investors to become consolidators, acquiring other dermatology practices and getting an equity stake in the larger entity.

Some have joined or formed multi-physician dermatology practices with several locations and additional specializations.

In the end, consolidation should be good for patients. Ultimately, it ensures that doctors spend more time with them.

Patrick Krause

businessinsider

Cambodia - Chinese Money Instrumental to Progress, Hor Namhong Says

Former Foreign Affairs Minister Hor Namhong, right, meets with Sun Guoxiang, China’s special rapporteur in charge of Asian affairs, in Phnom Penh in 2015. (Siv Channa/The Cambodia Daily)

Cambodia’s development “could not be detached” from Chinese aid, Deputy Prime Minister Hor Namhong said on Monday, joining a chorus of officials from both parties praising a relationship that appears to be deepening over similar stances on the South China Sea.

The comments came after Cambodia angered Asean neighbors and Western allies for refusing to join them in rebuking China’s vast territorial claims in the sea.

Cambodia characterizes its South China Sea position as neutral and declined to join other Asean members in a joint statement praising a July 12 ruling by a U.N.-backed tribunal that invalidated China’s claims, which are contested by the Philippines, Vietnam and others.

However, Asean diplomats have grumbled that Cambodia is merely serving as Beijing’s lackey in return for more than half a billion dollars in aid it received from China days after the verdict. The government has repeatedly downplayed Chinese influence on its foreign policy.

“It’s two different issues,” Foreign Ministry spokesman Chum Sounry said last week.

In a Monday meeting with China’s outgoing ambassador to Cambodia, Bu Jianguo, Mr. Namhong—who served for years as foreign minister before stepping down in April—emphasized the importance of Chinese aid in Cambodia’s development.

“Cambodia’s progress today could not be detached from China’s aid,” Mr. Namhong told the ambassador, according to Chinese state news service Xinhua. Cooperation between the countries had been “further strengthened and expanded” during Ms. Bu’s three- year tenure, Mr. Namhong added.

Mr. Sounry referred questions about the meeting to Mr. Namhong, who could not be reached.

Council of Ministers spokesman Phay Siphan agreed with Mr. Namhong, saying that Chinese direct investment, as well as infrastructure projects such as bridges and roads, were crucial to maintaining regional links.

“Without Chinese aid, we go nowhere,” he said.

Political analyst Ou Virak disputed the notion that China deserved so much credit for developing the country.

“I think that it would be a bit unfair to credit China with development in Cambodia,” he said. “Most of the credit should go to the people. It has nothing to do with Cambodia or China.”

China has steadily increased its aid to Cambodia. In 2014, Chinese President Xi Jinping promised Cambodia between $500 and $700 million in annual grants and loans—up from roughly $92 million in 2007. Critics say there is little oversight of how the aid is spent, but Mr. Hun Sen has praised China’s hands-off approach.

Speaking during a ceremony inaugurating a Chinese-funded road project in Kompong Speu province on Tuesday, Ambassador Bu said the deepening ties between Cambodia and China actually benefited Asean as a whole.

“Cambodia’s neutral and fair stance over the South China Sea issue has importantly contributed to protecting China-Asean good cooperation and to maintaining peace and stability in the region,” she said, according to Xinhua.

Mr. Hun Sen used the ceremony to announce that he would accept what the Ministry of Foreign Affairs described as the “very special and significant” Asean Lifetime Achievement Award at the 13th Asean Leadership Forum in Vientiane this weekend. Past recipients include the former heads of state of Malaysia and Singapore, as well as a Malaysian monarch.

In a speech, the prime minister credited his fans in Cambodia for the award.

“It’s the result of the efforts of our compatriots who voted for and supported the Cambodian People’s Party and voted for me to be prime minister,” he said.

“I thank the citizens of Kompong Speu province, people who are here, as well as citizens across the Kingdom of Cambodia who voted again and again for the CPP and for me to lead the country.”

(Additional reporting by Kuch Naren)

Ben Paviour

cambodiadaily

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Singapore - Singapore official urges Asean members to aim for economic and financial union

Senior minister believes further integration will help anchor region’s peace and stability

A senior minister in Singapore has urged Asean member states to work more closely together to deepen economic and financial ties and help anchor regional peace and stability in the wake of rising geopolitical tensions following the ruling on territorial rights in the South China Sea.

Modelled after the European Union’s single market initiative, the 11 members of the Association of Southeast Asian Nations have come up with the Asean Economic Community (AEC) – a roadmap and common regulatory framework for liberalising capital markets and manufacturing activities so each member state can trade freely and play to their own strengths.

Hong Kong is keen to conclude its own free-trade agreement with Asean this year that will see the city secure better trade terms and be able to tap into the common market benefits.

So far, the AEC has succeeded in implementing its own framework for bilateral banking and fund passport agreements that will give banks and investment management companies mutual access to sell into each other’s markets.

As a next step, Josephine Teo, Singapore Senior Minister of State, Prime Minister’s Office, Ministry of Foreign Affairs and Ministry of Transport,disclosed that the AEC was working on more ideas to achieve greater regional financial union.

“Asean member states will adopt a common international standard for their domestic retail payment systems,” said Teo, speaking at the OCBC Treasury, Economic and Business Forum in Singapore on Thursday.

The plan will link the fragmented domestic retail payment systems into one pan regional infrastructure by resolving the “interoperability” of different applications and systems in existence.

“These cross-border linkages will allow Asean retailers and consumers to make cheaper and faster payment transactions,” she said. There are broader benefits in “promoting financial inclusion by offering access to a more efficient remittance channel”.

Further, she said AEC is working towards harmonising prospectus requirements for companies wanting to raise capital through cross-border IPOs and bond issuances. This is to be done through a framework in development called the Asean Disclosure Standards.

“Capital markets will work more efficiently for businesses and investors,” Teo said. “These are modest first steps which may disappoint those who prefer more spectacular moves. But better that we make progress in a consistent direction than to have to back-track every now and then.”

Although the region’s geopolitical risk noticeably increased after the Hague’s ruling on the South China Sea this week, Teo pointed out that a more geopolitically testing time of war and ideological conflict occurred from the 1960s to early 1990s, before Asean members found solitary and regional integration.

“There was a lot happening in Asean and Singapore [at that time]. Lee Kuan Yew had said Asean’s start was unpromising [but] also said it had a promising future. That has been true for nearly half a century and remains so today.

Teo said the region’s “cohesion is challenged from time to time”, as current events prove. “This is to be expected, as we are each a sovereign state with our own national interests,” she said.

“But I think we should remember that the formation of Asean itself was anticipatory in nature. It was an attempt to forestall divisions in the region going way back to 1967 and prevent the chance of a downward spiral into chaos for the region.”

Working together over the years has helped Asean member states find peace and stability, she said. This in turn had enabled the region to thrive as “one of the most economically dynamic regions of the world” today.

“Each Asean member state also saw the benefits of economic integration for our businesses and our peoples as our trading and investment links intensified,” Teo said. “Despite the occasional ups and downs, integration within Asean is happening – slowly but surely.”

Teo cited figures to show that Asean was now the 7th largest “economy” in the world, with 650 million people and an estimated GDPsize of US$2.4 trillion dollars. As a result, “our partners are keen to deepen links”, she added.

Having joined China’s Asia Infrastructure Investment Bank and inking a deal with the US-led Trans Pacific Partnership, Asean is now looking to a 16-party Free Trade Agreement with other countries that have free-trade agreements with its members.

Known as the Regional Comprehensive Economic Partnership (RCEP), its membership comprises 45 per cent of the world’s population and accounts for about one-third of global GDP.

“When concluded, it may potentially be the largest trading bloc in the world,” Teo said.

The block is also further looking into greater air connectivity internationally, with the Asean-China Air Transport Agreement (AC-ATA), as well as the soon-to-be-negotiated EU-Asean Comprehensive Air-Transport Agreement.

“These initiatives are examples of attempts by Asean to stay ahead of the curve. They augur well for the longer-term prospects of Asean and its member states,” Teo said.

Liz Mak

scmp

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Myanmar Thailand - How Cheap Oil and Fewer Nose Jobs Hurt Thai Hospital Stocks

Oil slumps. Middle Eastern patients cancel treatments abroad. Thai hospital stocks slide.

It’s the butterfly effect in action. Weak growth outlooks in the Gulf states are prompting greater competition from local clinics, stemming the flow of visitors to the world’s top medical tourism destination.

That’s clouding the outlook for Thailand’s health-care shares, which surged more than 800 percent over the past seven years, as valuations start to look stretched amid the falling demand. Bangkok’s Bumrungrad Hospital Plc, known as the grandaddy of international clinics, has slumped 16 percent since early March after patient volumes from the United Arab Emirates, its second-biggest source of overseas visitors, fell 20 percent in the first quarter.

Thailand attracted as many as 1.8 million international patients in 2015, many of whom stayed on afterward for a beach holiday. More than one in three foreigners treated at Bumrungrad are from the Gulf states and Kasikorn Securities Co. says declining growth in the region and a rise in competition from clinics in the U.A.E., where the government is encouraging its citizens to stay home for medical care, are curbing demand.

“In the short term, the economic slowdown in the the Middle East will weaken some investors’ confidence on earnings growth for domestic hospital operators,” said Jintana Mekintharanggur, the Bangkok-based director of equity investment at Manulife Asset Management, which oversees about $325 billion globally. “We are still bullish on the sector” in the long term as it will benefit from growth in countries like Myanmar and Vietnam that have less-developed health systems, she said.

The SET Health Care Services Index has fallen 2.7 percent since closing at a record high on April 21. It’s still the best-performing industry group in the SET Index, rallying 27 percent over the past 12 months. It trades at 6.8 times its book value, compared with 3.8 for the MSCI World Health Care Index.

The health gauge closed down 0.2 percent on Monday as the SET Index rose 0.8 percent. Bangkok Dusit Medical Services Pcl, which has the biggest weighting on the measure, dropped 1.2 percent and Bangkok Chain Hospital Pcl fell 1.8 percent.

“Most hospital stocks have very stretched valuations, which has probably spurred some concern about overestimated earnings potential,” said Adithep Vanabriksha, Bangkok-based chief investment officer at Aberdeen Asset Management Plc. “We still see their growth potential, but have to be very careful with the current share prices.”

Between 1.3 million and 1.8 million medical tourists traveled to Thailand last year, according to figures from Patients Beyond Borders, a consulting firm in Chapel Hill, North Carolina. The country is well known for cosmetic and sex change procedures. Medical tourism generated 107 billion baht ($3 billion) of revenue in 2014, according to the latest Thai government estimate.

Sitting at the apex of the industry is Bumrungrad, which attracts more than half a million foreign patients a year and has a network of 32 referral offices everywhere from Mongolia to Ethiopia. Sixty-seven percent of revenue came from overseas visitors last quarter, company figures show. Myanmar residents were the biggest source, accounting for 8.4 percent of total patients, followed by 8.3 percent from the U.A.E. and 5.9 percent from Oman.

Kasikorn Securities downgraded its earning forecasts for Bumrungrad by 8 percent to 13 percent in 2016 to 2018 to reflect the weak economic outlook in the Gulf and rising competition from Abu Dhabi’s Al Noor Hospitals Group, according to a May 19 note by analyst Jitima Ratanatam in Bangkok. The U.A.E.’s economy has been hit by the plunge in oil since mid-2014 and is forecast to expand 2.5 percent this year, from more than 7 percent in 2012.

Other Thai hospitals are also under pressure. Chiang Mai Ram Medical Business Pcl reported a 41 percent slump in first-quarter profit. Bangkok Dusit was downgraded to neutral from outperform by Credit Suisse Group AG last week.

Recognizing the importance of health care to the Thai economy, Prime Minister Prayuth Chan-Ocha’s military government has drafted a 10-year plan to promote the sector. As part of the plan, the staying period for medical treatment for patients from China, Laos, Cambodia, Myanmar and Vietnam has been tripled to 90 days.

Southeast Asian Demand

Even if Middle East demand keeps declining, growth in Southeast Asia will support the industry, said Voravan Tarapoom, the Bangkok-based chief executive officer at BBL Asset Management Co., which oversees $15 billion.

Manulife has cut holdings in Bangkok Dusit because its rising share price provided an opportunity to lock in profit, said Jintana. It’s buying Bumrungrad because it’s dropped to an attractive level and the asset manager is also looking at other health companies but is wary of high valuations, she said.

“Health-care stocks were the good defensive stocks during the market downturn,” said Kasem Prunratanamala, the head of research at CIMB Securities (Thailand) Co. in Bangkok. “Now, with the high valuations, those shares have lost a little bit of allure.”

Anuchit Nguyen

bloomberg

ASEAN - Continuing Dislocation; Attention has turned to ASEAN

Equity and bond market performance at odds

Political turmoil in the UK

Second quarter was filled with risk and modest returns

It all seems a bit odd. Equities have moved back towards the top of their recent trading sessions, and yet the US ten-year government bond yield continues to languish at one of the lowest yields in 10 years. 

The bond market is still deeply sceptical about the outlook for growth, while equities hold at their highs in the hope of growth. Meanwhile, Brexit has caused mayhem in European political circles. We are waiting for new leadership in the UK and possibly Europe to guide us on how discussions over the UK’s exit may develop.

The second quarter has shown us that risk is very much at large. It was a quarter which again proved that a bias to fixed income investment worked best. Trying to time the markets was at best hazardous if not outright destructive of portfolio returns. The markets have not just had to deal with Brexit, but a Federal Reserve that has shifted from hawks to doves and are possibly on their way back again. The US 10 year government bond yield that started the month at 1.77% traded as high as 1.92% and ended the quarter at 1.47%. The global developed market equity index in dollar terms traded in an 8% band, but delivered just a 0.3% capital return for the second quarter. Global sovereign debt gave 4.3% return. Bonds still reign supreme on a risk-adjusted basis.

The market is still picking over what Brexit means for the medium-term outlook for the UK and EU. To be honest, it is very difficult for the financial market to come to any firm conclusions about the impact of the UK leaving the EU. At this stage, we don’t even know how the UK and the EU will position themselves in the negotiations. The result of the UK Conservative party leadership election will be announced on the 9th September, unless the candidates decide to stand aside and allow one candidate to run unopposed. Until we know who has one and hence what strategy they are likely to adopt in their negotiations with the EU, it is difficult to gauge just how difficult those negotiations will be. Equally from the EU side, the politics of the situation looks murky. The press is suggesting that the current President of the European Commission Jean-Claude Juncker no longer has the full support of the German government. His rather belligerent attitude post to the Brexit vote appears to have not resonated with the majority of EU heads of government.

The markets are starting to see a more dynamic situation in the UK where the conversation is moving away from just how bad it is going to be, to what we are going to do about it. Mark Carney the Governor of the Bank of England in the past week talked about “some monetary policy easing”. While George Osborne the UK Chancellor of the Exchequer talked about the possible need to accelerate cuts in corporation tax, probably down to a lower level of 15% as opposed to the 17.5% the government mentioned before.

UK sterling, while stabilising at levels of around $1.33, still looks vulnerable. Although the fall has made UK exporters immediately more competitive in global markets, it will take some time, as it always does, for a much improved competitive position to translate into a marked improvement in export volumes. Also in the background, the UK has an enormous current account deficit to fund that requires capital inflows to stabilise the currency. With such uncertainty over the UK’s access to the EU, companies that were considering expanding their businesses in the UK to gain access to the EU may at the very least hesitate.

Equity markets have made progress, but they still struggle to get support from the fundamentals such as corporate earnings. The latest set of corporate earnings revisions for June shows another round of downgrades to numbers for the developed markets. Despite the bad news flow, the equity markets have pushed to their highs in recent trading sessions. However, investor interest has centred on defensive stocks; cyclical stocks have underperformed defensive stocks in Europe since the Brexit vote.

With such challenges in Europe, investors are revisiting other parts of the world in search of safer and more predictable investment opportunities. Attention has turned to the ASEAN region where GDP growth of 5% is being maintained. Indonesia, for example, should see higher GDP growth in the second half of the year. A pick up in government spending should reinforce strong investment spending taking GDP growth to 5.0%.

The quality of the situation has been getting better with Indonesia’s short-term external debt falling to $38.1 billion, the lowest since 2012. Indonesian equities have made new highs in recent trading sessions and remain well supported by Asian institutional fund buying. Indonesia bonds still trade at reasonable spreads over treasuries and should find more support, despite the likelihood of more debt issuance in the coming months. The equity and bond markets of Thailand and Philippines have been much in demand and are probably fair value at present.

As the Holy month of Ramadan draws to a close the regional and fixed income markets are looking forward to a strong pipeline of deals. Kuwait is also aiming to tap international capital markets to raise close to $10 billion in Eurobonds to help bridge their budget deficit. We expect GCC and international investors to welcome a new issuer of benchmark size to the GCC bond markets, and we expect any bond sale to do well. We still await the Kingdom of Saudi Arabia Eurobond multi-tranche transaction, which we expect to see post-Eid. Given market appetite we expect the tenures to be skewed towards five and ten years with some proportion possibly aimed at a 30-year maturity. In a sign of the international interest in the Kingdom, Saudi Electricity secured $1.5 billion in unsecured financing from China’s ICBC.

Global bond markets will be looking to some key data this week to see if yields are going to hold at current low levels. The employment report on Friday will be chewed over by the markets to see if there are any signs that the labour market will be sufficiently vibrant to push the Fed to increase interest rates. The market is pricing a very low probability of Fed funds rate rise this year (12%). The market expects a 170,000 change in non-farm payrolls up from last month’s lowly 25,000.

Gary Dugan

wealth-monitor