Kyocera employees to use JAL to aid revival

Asian Defense News: TOKYO -- Kyocera Corp., an electronics maker whose founder will lead Japan Airlines Corp.'s reorganization, asked the company's domestic employees to fly on the bankrupt carrier for both business and pleasure.

Chairman Makoto Kawamura in a memo Thursday, encouraged Kyocera's 12,000 Japanese workers in a memo to choose Japan Airlines to help revive the carrier, spokeswoman Chikako Morioka said Friday by telephone, confirming a Nikkei newspaper report.
Japan Airlines, Asia's biggest carrier, filed for protection from creditors this week with 2.32 trillion yen (US$26 billion) of debt. JAL, which traded at about 200 yen a year ago, was unchanged at 2 yen on the Tokyo Stock Exchange.

China Airlines, Eva Air play down tax reports

Asian Defense News: China Airlines and EVA Air yesterday played down reports that they have been asked to pay taxes to China for earnings made on the other side of the strait.
Airlines from both sides of the strait can enjoy mutual tax preferential treatments, a consensus reached at the second and third meetings of P. K. Chiang, chairman of the Taipei-based Straits Exchange Foundation, and Chen Yunlin, chairman of the Beijing-based Association for Relations Across the Taiwan Strait.
Based on that consensus, China has given Taiwan airlines tax preferential treatment, under which a three percent business tax and a 1.25 percent income tax are waived, as of December 2008.
However, Taiwan hasn't been able to reciprocate China's gesture, as a draft amendment to the Cross-Strait Relations Act, which gives legal ground to the preferential treatment, has not passed the Legislative Yuan. As such, Chinese air and sea operators are subject to a tax for earnings they make in Taiwan.
Dissatisfied, China has asked Taiwanese airlines, including China Airlines and EVA Air, to pay back taxes that accumulated starting in December 2008, the United Daily News reported, yesterday.
China Airlines has already applied for a deferment of the tax with Chinese authorities, it said, adding the company's financial operations have not been affected at this stage.
The company has also filed grievances with supervisory agencies on both sides of the strait to resolve the issue.
EVA Air, meanwhile, said it has not been asked to pay taxes to China. However, the airline said it has not received official documents on a waiving of the tax. Without those documents, EVA Air cannot wire earnings it has made in China back to Taiwan, it said, adding this will create inconveniences at its China operations.

Taiwan dollar declines on China curbs

Asian Defense News: Taiwan's dollar fell, posting its biggest weekly loss in six months, on speculation China will increase borrowing costs to slow lending, threatening a recovery in regional trade. Bonds were little changed.
Speculation Taiwan's central bank will intervene to cap gains after the currency reached its highest level since September 2008 last week also sent the island's dollar lower. The monetary authority said Thursday a strengthening currency is a “double-edged sword” because it will hurt exporters and benefit importers.
“China might raise interest rates,” said Janet Lin, a currency trader in Taipei at Taiwan Business Bank. “The global market is worried about that. The central bank has also been very aggressive in making sure the Taiwan dollar doesn't strengthen too much.”
The local dollar dropped 0.2 percent to NT$31.980 against its United States (U.S.) counterpart as of the 4 p.m. close local time, according to Taipei Forex Inc. It reached NT$32.04 Thursday, the lowest level since Jan. 4 and was down 0.5 percent for the week, the biggest loss since July 10.
Taiwan's central bank highlighted the benefits of capital controls in a statement sent to media Jan. 12, sparking speculation it will seek to limit stock investments from overseas that helped drive up the Taiex index 78 percent in 2009, the biggest annual gain since 1993. The gauge dropped 2.5 percent yesterday, extending its decline to 5.1 percent this week.
Central banks intervene in foreign-exchange markets by arranging purchases or sales of currencies.
Taiwan's exports started to recover in November following a 14-month slump, with concern measures by China to tighten policy will crimp a pickup in trade.
The island's export orders, an indication of shipments in the next one to three months, climbed 52.6 percent in December from a year earlier, after a 37.1 percent increase in November, the Ministry of Economic Affairs reported on Jan. 20.
China reported Thursday that gross domestic product rose 10.7 percent in the fourth quarter from a year earlier, the fastest pace since 2007. It has also guided bill yields higher this year and increased the amount of reserves banks are required to set aside to drain funds from the financial system.
Five-year government bonds were little changed this week. The yield on the 0.875 percent note due January 2015 was 0.90 percent compared with 0.905 percent at the end of last week, according to Gretai Securities Market, Taiwan's biggest exchange for bonds. The price rose 0.0313 or NT$31.3 per NT$100,000 face amount, to 99.8863. A basis point is 0.01 percentage point.

Taiwan civic groups protest sale of shark-fin soup

Asian Defense News: Taipei - Taiwan environmentalist groups on Saturday protested against chain stores selling shark-fin soup because killing sharks for their fins can lead to their extinction. The protest was made by 23 civic groups against four chains which are accepting orders for pre-cooked and ready-to-cook meals for the Chinese New Year holidays, which begins on February 14.
The targeted firms are 7-11, Family Mart, OK Mart and Hi-Life, which together operate nearly 10,000 24-hour convenience stores on the island.
"Lured by high profits, fishermen kill sharks only for their fins. They cut off shark's fins and dump the sharks into the sea and let them bleed to death," said Wang Yu-min, director of the Environment & Animal Society of Taiwan.
"Each year, some 4,000 to 7,000 sharks are killed for their fins. The International Union for Conservation of Nature warned that 111 species of shark are being threatened, of which 20 species are seriously threatened and 25 species face extinction," she said.
"Sharks are the biggest predators in the sea and are at the top of the marine food chain. Killing sharks will disrupt the food chain and ecosystem of the sea," she said.
The statement demanded the franchises remove shark-fin soup from their Chinese New Year menu, and urged restaurants, hotels and families to refrain from selling and consuming it as well. Shark-fin soup is one of the traditional Chinese New Year dishes and an important dish at wedding banquets. Many Chinese believe the soup is nutritious and being able to afford it reflects one's wealth and social status

10 year ADB bonds issued in Chinese renminbi

Asian Defense News: Saturday 23rd January, 2010 The Asian Development Bank ADB has issued its second renminbi-denominated bonds (Panda) in the domestic capital market of the China.
The issue has a principal amount of RMB 1 billion and a bullet maturity of 10 years.
"ADB is extremely pleased to have come back to the PRC bond market after the successful issuance of our landmark Panda Bonds in 2005. We are honoured to have been one of the first multilateral institutions to have issued RMB bonds in China and contribute to the further development of the PRC bond market,” ADB Vice-President Bindu Lohani said Friday.
Priced at par, the Panda bonds carry an annual coupon of 4.2% per annum and have a maturity date of 8 December 2019. Prior to pricing, ADB and the sole lead manager, China International Capital Corporation Limited (CICC), conducted roadshows in Beijing and Shanghai to present the deal to institutional investors.
Offered through a book-building process, the issue achieved a broad distribution with up to 50% of the bonds placed with domestic banks, 15% with foreign banks, and 35% with insurance companies. The bonds will be traded in the interbank market with clearing and settlement through The China Government Securities Depository Trust & Clearing Co., Ltd.
ADB will use the proceeds of the Panda bonds to fund private sector clean energy and energy efficiency projects in China. The objective is to help reduce currency mismatches for borrowers that have no foreign exchange earnings. Since 2004, ADB has completed five other market-opening transactions in the region’s local currency bond markets. In addition to local currency bond issuances, ADB also undertakes cross-currency swaps to meet local currency funding requirements of its development projects.
ADB aims to pursue its local currency bond issuances in other Asian markets particularly in those developing member countries where bond proceeds can either be swapped into one of ADB’s operating currencies or be retained to finance ADB projects that require local currency financing.

Al-Qaeda Seeks to Heighten South Asian Tensions, Gates Warns

Asian Defense News: An al-Qaeda-linked terrorist strike in South Asia could lead to another military conflict between nuclear-armed rivals India and Pakistan, U.S. Defense Secretary Robert Gates warned today (see GSN, Dec. 17, 2009).

A handful of organizations within a regional al-Qaeda "syndicate" aim "to destabilize not just Afghanistan, not just Pakistan, but potentially the whole region by provoking a conflict perhaps between India and Pakistan through some provocative act," Gates told reporters in New Delhi, according to Agence France-Presse.
"It's important to recognize the magnitude of the threat that the entire region faces," he added, saying the al-Qaeda "umbrella" included the Taliban groups in Pakistan and Afghanistan was well as the Pakistani-based extremist organization Lashkar-e-Taiba, which is believed to have masterminded the 2008 terror attack on the Indian city of Mumbai (Agence France-Presse/Sydney Morning Herald, Jan. 20).
"It's dangerous to single out any one of these groups and say, 'If we can beat that group, that will solve the problem,' because they are in effect a syndicate of terrorist operators intended to destabilize this entire region," Gates said. He argued that "a victory for one" of the organizations "is a victory for all," the Associated Press reported.
New Delhi and Islamabad have already gone to war three times. While they successfully avoided additional violence following the Mumbai strike, another such incident could stretch New Delhi's tolerance over militant groups based in Pakistan, Gates cautioned: "It is not unreasonable to assume that Indian patience would be limited were there another attack."
Gates' stop in New Delhi included talks with Prime Minister Manmohan Singh and other senior leaders (see GSN, Dec. 10, 2009; Anne Gearan, Associated Press/Yahoo!News, Jan. 20).
Washington is "pretty confident of our intelligence-sharing relationship," one high-level U.S. official told the Washington Post, adding it was going to take a collective effort to dismantle and defeat" the terrorist groups (Craig Whitlock, Washington Post, Jan. 19).

Taiwan Needs F-16s

Asian Defense News: (By Michael Mazza) The recent announcement that the United States will sell PAC-3s to Taiwan was good news for Taipei. Taiwan continues to face an ever-growing ballistic missile threat from the mainland and the PAC-3 anti-ballistic missile system is an important component of Taiwan’s air defenses. Though the Obama administration should be applauded for including PAC-3 batteries in upcoming arms sales to the island, the arms sales package is not as robust as it should be.
In particular, F-16s, which Taiwan has requested, are missing from the mix. It is not only with missiles that China poses a threat to Taiwan, but with fighter aircraft as well. According to DOD’s 2009 report to Congress on China’s military power, Taiwan no longer enjoys the ability to achieve air dominance over the Taiwan Strait, as it did at the beginning of this century.
Faced with the dual threat of growing numbers of SRBMs and increasingly sophisticated fighter aircraft, Taiwan risks becoming more susceptible to coercion by force even as it tightens ties to the mainland. The Taiwan Relations Act requires the United States to provide Taiwan with the means to defend itself; in order to fulfill that legal obligation, the administration should authorize the sale of F-16s to Taiwan.
China would of course react unfavorably, but we cannot let fears of Chinese temper tantrums drive U.S. policy. Indeed, history shows that such arms sales would not do irreparable or lasting damage to Sino-U.S. relations. The sale of F-16s to Taiwan would, however, help to ensure the island’s continued de facto independence and would demonstrate American resolve and dependability to allies in the region. Some Chinese blustering would be a small price to pay in the pursuit of these important U.S. interests.
Michael Mazza is a research assistant at the American Enterprise Institute.