Business

BEIJING — Executives of two Chinese companies included on a new US sanctions list targeting Iran said on Sunday they had only exported "normal" goods to the Middle Eastern country and did not consider they had done anything wrong.

The sanctions on 25 individuals and entities imposed on Friday were the opening salvo by President Donald Trump who has vowed a more aggressive policy against Tehran and came two days after the administration had put Iran “on notice” following a ballistic missile test.

Those affected under the sanctions cannot access the US financial system or deal with US companies and are subject to secondary sanctions, meaning foreign companies and individuals are prohibited from dealing with them or risk being blacklisted by the United States.

The list includes two Chinese companies and three Chinese people, only one of whom the US Treasury Department explicitly said was a Chinese citizen, a person called Qin Xianhua.

Richard Yue, who is on the list, told Reuters he was also Chinese and that he thought the decision was unfair. His bank account had been frozen, meaning he could not work, he said.

"I export to lots of countries, and Iran is a customer too. That's totally normal," Yue said.

"How is this fair? Why should others pay attention to what Americans say? What's wrong with my daily use goods?"

Yue added he did not know what he would do, or whether he would try and seek help from the Chinese government.

He did not elaborate on what products his company, Cosailing Business Trading Co. Ltd., based in the northern port city of Qingdao and also on the sanctions list, exported to Iran.

The company's website shows it is involved in trading everything from furnaces to treadmills and false eyelashes. Yue is listed on the site as Cosailing's sales manager.

The other Chinese company on the list is Ningbo New Century Import and Export Co., based in the eastern port city of Ningbo, which business-to-business websites show advertises exports and imports of fire hydrants and inner tubes for motorcycle tyres.

An export manager at Ningbo New Century who gave his family name as Tang told Reuters they made "normal" exports to Iran, though he would not say of what.

"There's nothing we can do. Let them put us on the sanctions list," Tang added, declining further comment.

Reuters was not able to locate contacts for the two other Chinese people on the list.

China's foreign ministry has not commented on the new sanctions.

The official Xinhua news agency, in a commentary on Sunday, said while the new sanctions would have a limited effect on Iran, they opened a new chapter in the stand-off between Washington and Tehran.

"Now Trump has taken office, uncertainly in the US-Iran relationship has risen, and this may become a ticking time bomb for peace and stability in the Middle East," Xinhua said.

China has in the past been angered by what it calls unilateral sanctions placed on Chinese firms by the United States and others in relation to Iran or North Korea's nuclear ambitions.

China has close economic and diplomatic ties with Tehran, but was also instrumental in pushing through a landmark 2015 deal to curb Iran's nuclear programme.

AMMAN — The Jordan Investor Confidence Index continued to recover in November 2016, reaching 91.75 points in comparison with 89.45 points in October. 

The monthly-issued index, published by the Jordan Strategy Forum, measures the confidence of investors operating in the Jordanian market, according to a statement of the forum.

The index measures confidence in the Jordanian currency and monetary system, the real economy, and the Amman Stock Exchange (ASE).

According to the forum, confidence in the monetary system sub-index decreased to 87.90 points for November. 

Despite an increase in the Central Bank of Jordan’s gross foreign reserves, the monetary system sub-index remained below its expected point for this month, reaching its lowest since the beginning of the year.   

However; confidence in the real economy sub-index reached its highest since the beginning of 2016 with 109.61 points, an increase of 1.95 points from October. 

The number of registered companies went down to 670 companies in November from 828 in the previous month. However, the capital of these registered companies increased to reach JD8.7 million compared to JD7.8 million in October.

Furthermore, the number of construction permits rose significantly in November to 3,442 from 2,904 — the highest number reached this year.

This was coupled with an increase in the tax on the monthly real estate volume to reach JD10.6 million from JD10.2 million in October. 

The manufacturing quantity production index, however, decreased to reach 96.5 points from 101.9 in October.

Moreover, the confidence in the ASE continued to recover from the decrease it witnessed in September to reach 94.23 points, according to the forum. The ratio of inflow to outflow of foreign investment in the ASE remained at a high level despite the slight decrease it had witnessed from 156 per cent to 151 per cent.

The ASE index went up by 63.4 points to 2170.98 in November.

NEW DELHI — Apple is to start making iPhones in India this year, a local government official said Friday, as the company seeks to tap into a booming middle class while sales in China are slowing down.

Karnataka's IT minister said Apple had agreed to assemble its hugely popular phones in the southern state, whose capital Bangalore is India's technology hub.

Apple, which has not commented on the minister's statement, remains a relatively small player in India, where sales of its smartphones lag those of rival Samsung.

But Chief Executive Tim Cook said this week it would "invest significantly" in the country of 1.25 billion people.

"We have an understanding with Apple and we expect them to start manufacturing in Karnataka by the end of April," State Minister of Information Technology and Biotechnology Priyank Kharge told AFP.

He said the new operation would likely assemble iPhones for the domestic market.

Apple has only a 2 per cent share of the Indian market, well behind rival Samsung on 23 per cent, according to research firm Canalys.

By pricing itself exclusively at the luxury end, Apple has distinguished its brand from Samsung which has both low-cost and high-end phones. 

Last year Apple had 48 per cent of the premium sector in which phones sell for $450 and above.

It applied to open Apple Stores in India last year, but was reportedly rebuffed because of a diktat that states foreign retailers must source 30 per cent of their products locally. 

New Delhi has since relaxed the rules, giving companies up to eight years to meet the sourcing requirements, as part of a push to attract foreign investment and create jobs.

It is not clear whether the Karnataka plans would help it clear that hurdle but experts said manufacturing locally would reduce the company's costs and enable it to lower prices.

"They're eager to be here because they've identified India as a strategic focus market," said Jaideep Mehta of research firm IDC.

"They had a fantastic 2016 in India and shipped more, 2 million devices to India, and now they're looking to ultimately manufacture here as that gives them more flexibility to respond to market changes."

Apple currently sells through third-party retailers in India, which accounts for only around 1 per cent of global iPhone sales.

Experts say India's giant population and low number of smartphone owners relative to its size mean it is a huge potential market.

Last year Cook visited India on a charm offensive and was pictured using Prime Minister Narendra Modi's gold iPhone to launch the premier's new app. 

Analysts said that if confirmed the move would be a coup for India's government, which has been trying to persuade foreign companies to manufacture in the country.

Reports in Indian media said Wistron Corp., a Taiwanese electronics manufacturer, was lined up to assemble iPhones at a plant on the outskirts of tech hub Bangalore.

Apple outsources all its manufacturing globally.

BEIJING — Chinese factory activity expanded last month, data showed Wednesday, the latest indication that the world's second largest economy is stabilising, but analysts warned of headwinds caused by emerging US protectionism.

The crucial manufacturing sector has for years been struggling in the face of sagging world demand for Chinese products and excess industrial capacity left over from the country's recent infrastructure boom.

But an upturn in the housing and construction markets thanks to cheap credit — following a series of monetary easing measures — has contributed to a rebound in manufacturing activity.

The official purchasing managers' index (PMI), which gauges conditions at factories and mines, came in at 51.3 in January, down from 51.4 the previous month.

A figure above 50 marks an expansion of manufacturing activity, and below 50 a contraction. Analysts surveyed by Bloomberg had expected an average of 51.2 for January.

The marginal dip came as many businesses closed for Chinese New Year at the end of the month, with workers heading home to celebrate.

But Raymond Yeung, chief greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong, told Bloomberg News the numbers suggest the manufacturing sector was continuing to consolidate.

"Looking ahead, the government will continue to juggle growth and capacity reduction. This headline PMI will still stay above the threshold of 50, but it's hardly impressive," he said.

While Beijing has said it wants to re-orient the economy away from a reliance on exports and debt-fuelled investment, and towards a consumer-driven model, the transition has proven challenging.

China is a vital driver of global growth, but its economy expanded just 6.7 per cent in 2016 — its weakest rate in a quarter of a century, though a slight uptick in the last three months fuelled hope the slowing trend could be coming to an end.

However, China, along with most other economies, faces an uncertain future with US President Donald Trump threatening to review global trade deals and tariffs as part of a seemingly protectionist agenda.

BMI Research, Fitch Group's research arm, said in a note that manufacturing will continue to "underperform" sectors like services.

"Weaker domestic demand and an uncertain external environment due to rising US protectionism will weigh on the former, while services will benefit from continued investment by the government and the private sector," it said, according to Bloomberg News.

AMMAN — Royal Jordanian (RJ) and Alitalia signed a codeshare agreement to offer more travel choices and enhanced network connectivity between Jordan, Italy and beyond, according to a RJ statement. 

On sale as of Wednesday, for travels starting February 6, the agreement will allow Royal Jordanian to expand its offer to Italy by placing its “RJ” flight code on Alitalia’s daily Amman-Rome service, which will resume on March 26, 2017, and on the Italian airline’s connections from Rome to the following 16 domestic destinations: Ancona, Brindisi, Bologna, Bari, Catania, Florence, Genoa, Naples, Palermo, Pisa, Reggio Calabria, LameziaTerme, Turin, Trieste, Verona and Venice. 

Similarly, the agreement will allow Alitalia to widen its Middle East network by placing its “AZ” flight code on Royal Jordanian’s five weekly flights between Rome and Amman and beyond to Aqaba and Larnaca, Cyprus (codeshare on Amman-Larnaca route on sale from February 2 for travels starting February 8). 

The code share agreement should boost travel and tourism between Jordan and Italy, giving tourists, businessmen and students more travel options with 12 weekly flights between Rome and Amman. 

Furthermore, travellers from Italy and Jordan will also benefit from a wider range of new destinations to fly to with a single ticket, such as Aqaba for Alitalia’s travellers or Florence, Venice, Naples and Turin for those flying with Royal Jordanian.

NEW DELHI — Limits on ATM withdrawals will be partially lifted from February 1, India's central bank said Monday, as a cash crunch sparked by the ban on high-value rupee notes eases. 

The Reserve Bank of India (RBI) capped cash withdrawals after Prime Minister Narendra Modi's shock decision in November to take all 500 and 1,000 rupee notes out of circulation — 86 per cent of the currency in the cash-reliant nation.

The move triggered long queues outside banks and ATMs which ran dry within hours as hundreds of thousands of people thronged to them every day to withdraw the initial daily limit of 2,000 rupees ($29).

The RBI later increased the amount to 4,500 rupees, and then to 10,000 rupees earlier this month as long lines and crowds at banks eased.

Limits placed on customers who have current accounts or overdraft accounts "stand withdrawn from February 01, 2017", the central bank said in a statement.

However; restrictions on customers who have the more widely used savings accounts would "continue for the present" but could be scrapped "in the near future", the statement added.

Customers with saving accounts are currently allowed to withdraw a maximum 24,000 rupees a week, either through ATMs or over the counter.

The RBI also said that banks could use "their discretion" to place their own daily cash withdrawal limits at ATMs — as was the case before the November 8 announcement.

The sweeping abolition was meant to bring billions in so-called "black", or undeclared, money back into the formal system.

Many, especially in rural India, were left without enough cash to buy food or daily essentials but Modi repeatedly defended the scheme and urged all Indians to switch to non-cash payment methods.

SAN FRANCISCO — As US President Donald Trump pushes hard for goods to be "made in America”, how realistic is it to expect Apple to stop manufacturing its iconic devices in China?

The freshly installed president vowed while campaigning that he would force Apple to bring production to US soil.

Yet, as other big companies have sought to appease the new administration with promises of jobs or investments in the United States, Apple has stayed low-profile.

Major Apple contractor Foxconn this month confirmed that it is considering a $7 billion investment to make flat panels in the US in a joint project with Japan's SoftBank.

"I have discussed with my major clients about going to [the US] and they are also willing to invest, including Apple," Foxconn founder Terry Gou told reporters in Taipei. 

Taiwan-based Foxconn has given no details, and Apple declined to comment.

Global Equities Research analyst Trip Chowdhry believed that moving manufacturing to the US, where many customers are, was more of a commonsense move than a political one.

"You need to manufacture local products in local markets," Chowdhry reasoned.

Making things locally gives better control of distribution networks and lets manufacturers customise goods for local markets, the analyst noted.

Logistics puzzle

Whether politically motivated or not, Apple is not in the same position as automakers which relocated US factories overseas to cut costs, according to IHS manufacturing processes chief analyst Dan Panzica. Apple never moved jobs offshore, it created them there.

"The Apple jobs were never here," Panzica said.

"The entire supply chain grew in China."

Apple benefits in Asia from a network that goes beyond subcontractors assembling smartphones, tablets or laptops. The California-based firm relies on a dense ecosystem of companies that make components and spare parts for its devices as well.

China also offers sources of important raw materials, along with cheap, flexible and abundant labour to keep iPhone assembly lines cranking along.

It would be "very hard to replicate" that situation with US workers without using "more robotics and less workforce”, undermining the political aim of creating jobs here, according to Endpoint Technologies analyst Roger Kay.

Exacerbating the challenge, "it makes no sense to make phones here if you have to ship all the components from China”, said technology analyst Jack Gold of J. Gold Associates.

Sacrifice profit or price

The MIT Technology Review in June considered several scenarios, from simply bringing assembly to the US to simultaneously shifting the manufacture of parts here.

The Review estimated the extra manufacturing cost of an iPhone 6S Plus at $30 to $100 as a result of those moves.

It is difficult to imagine that Apple would risk its status as the world's most profitable company to absorb such a hike in manufacturing costs.

"Apple will never lower its margins on its flagship product, the iPhone," said Ovum consumer technologies analyst Ronan de Renesse.

Apple is under pressure from investors to keep its high margins, and already faces slowing growth of iPhone sales.

So, would US consumers put their money where the political talk is and pay more for iPhones stamped "Made in the USA?"

Not all analysts were convinced.

It was seen as more likely that Apple would make a symbolic move to appease Washington, such as investing more in making Mac Pro computers here, or in a facility for higher-priced, limited-edition devices such as an "anniversary edition iPhone" to mark the handset's 10th birthday this year.

"I would be very surprised to see a major production shift to the US," Gold said while discussing Apple.

Carrots or sticks 

Breaking the US technology star's successful business model should be out of the question for the Trump administration, and there is likely to be a compromise such as "financial incentives”, according to Ovum analyst de Renesse.

Foxconn is already trying to get US states to woo it with grants of land, cheap energy, or tax breaks.

Apple could seek tax amnesty for the $200 billion or so in profits it keeps overseas in exchange for increasing local manufacturing.

The economic equation would change if Trump went on the offensive by imposing heavy customs duties on Chinese imports.

Given Apple's dependencies on partners in China, and its keen desire to gain traction in that market, Apple could find itself an early casualty in a US trade battle with Beijing.

AMMAN — Royal Jordanian (RJ) announced that it will be increasing the frequency of its flights to 14 Arab and international destinations on its route network as of summer 2017.

RJ has also rescheduled arrival and departure times providing passengers, particularly transit travellers, with the convenience of selecting from a broader array of flight options, according to an RJ statement received by The Jordan Times on Saturday. 

The network enhancement comes as part of RJ’s efforts to strengthen its presence and boost its connectivity in those cities, all while incorporating network consolidation throughout the high-demand summer season.

 This will ultimately increase RJ’s network connectivity by an additional 8 per cent, according to the statement. 

The 2017 summer operating plan will add an additional weekly flight to the already scheduled services to Munich, Berlin, Frankfurt, Barcelona, Madrid, Moscow, Riyadh, Tunis and Algiers, and two additional weekly flights to New York, Kuwait and Dammam. 

Furthermore, RJ will add three additional weekly flights to Medina, bringing the total number of weekly flights into the city to 16. 

RJ will be operating a total of 15 weekly flights to Baghdad, by adding six additional weekly trips to the existing schedule.

The commercial strategy implemented by RJ seeks to increase revenue for the airline through various means. 

Continuously meeting seasons’ demands, RJ periodically revises its route network in order to offer further flexibility, while matching aircraft capacity and flight frequency to destinations.

AMMAN — The Arab Bank Group on Saturday disclosed its 2016 results, reporting a growth of 20 per cent in net profit. 

Net operating income before provisions and taxes exceeded $1.1 billion, while its post tax net profit reached $533 million for 2016 compared to $442 million for 2015, according to a bank statement.

Excluding the effect of foreign currency devaluations, the bank has shown a consistent solid growth during 2016 as loans and advances grew by 6 per cent to reach $23.7 billion, and customer deposits grew by 3 per cent to reach $33.6 billion, according to the statement.

Sabih Masri, chairman of the board of directors said the strong performance of the Arab Bank Group confirms its success in dealing with the challenging and changing operating environment and reflects the group’s prudent operating policies.

Nemeh Sabbagh, chief executive officer, said the Arab Bank Group enjoys strong liquidity and robust capitalisation. As of 31 December 2016, the group’s loan-to-deposit ratio stood at around 70 per cent, while its capital adequacy ratio calculated in accordance with the new Basel III regulations has improved further to reach 15.7 per cent.

He added that the asset quality of the group continues to be high, and that credit provisions held against non-performing loans continue to exceed 100 per cent, excluding the value of collaterals held.

Masri said the encouraging results will continue to support the continuous improvement in the financial performance of the group and its position in the markets.

 In view of the results, the board of directors has recommended the distribution of 30 per cent in cash dividends for the financial year. 

The 2016 financial statements are subject to the approval of the Central Bank of Jordan.

AMMAN — Moody's Investors Service said on Wednesday that although credit risks remain high for banks in Jordan, their sound capital and liquidity provide a buffer to downside risks.

Profitability will remain stable in 2017, despite higher provisioning expenses, owing to improving margins, it added in its  report, entitled "Banks — Jordan: Solid Capital Buffers, Regulatory Reforms and Higher Interest Margins Provide Support Amid Regional Turbulence”.

The closure of the Iraqi and Syrian borders with Jordan coupled with weak financial conditions in Gulf countries weigh on trade, tourism and investor sentiment in the country and on growth, as a result. Accordingly, as published previously, Moody's said it expects only a moderate uptick in real gross domestic product (GDP) growth in Jordan to
3.2 per cent for 2017.

Furthermore, rising interest rates, driven by recent and future Fed rate increases and the Jordanian dinar's peg to the US dollar, will moderate the demand for credit, especially from households, according to Moody’s report. 

Under these challenging operating conditions, Moody's expected domestic credit growth of 6 -7 per cent in 2017, down from 8 per cent in 2016.

Moreover, it added that asset risks would remain high for Jordanian banks due to credit concentration, including high exposure to the government, and rising household indebtedness. 

The Jordanian banking system's large size relative to the GDP and substantial cross-border operations would increase systemic and contagion risk. Banks' consolidated total assets stood at 278 per cent of the GDP as of the end of 2015.

However, "we expect a broadly stable return on assets for Jordanian banks of around 1.4-1.5 per cent for 2017," Alexios Philippides, assistant vice president at Moody's said. 

"Higher provisions against new non-performing loans will be largely offset by improving net interest margins as interest rates rise, as well as further operating efficiency gains."

Moreover, new regulation in Jordan will support the resilience of the banking sector. Basel III capital requirements were implemented last year and a planned 2017 amendment of the Deposit Insurance Corporation law will create a more robust bank recovery and resolution framework, bringing it in line with the Financial Stability Board's “Key Attributes”, according to Moody’s.

Sound capital and liquidity would provide a buffer to downside risks, it reiterated.