Business

NEW YORK — Lackluster earnings reports from retailers have raised questions about whether the 2015 holiday shopping season will bring as much of a boost to the US economy as hoped.

Apparel giant Gap and kitchen and home furnishings chain Williams-Sonoma late last week became the latest big US retailers to slash their profit forecast for the critical December quarter.

The grim forecasts raised doubts about whether an improving US jobs market and lower gasoline prices will translate into a holiday boon for retailers. Consumer spending accounts for about 70 per cent of US economic activity.

Earlier in November, Macy's also gave a dim outlook, citing a drop in sales to foreign tourists because of the strong dollar and the need to sharply discount a glut of cold-weather merchandise that has not moved due to unseasonably warm weather.

"I wish I could say it's going to get ice cold across the country," Macy's Chief Executive Terry Lundgren said in a November 11 conference call with Wall Street analysts. "But you can see in our forecast for the fourth quarter we are not expecting that."

"We're not selling lumber, so I can't carry the lumber over to 2016 and sell it at the same price next year. We're selling fashion apparel, so we're going to mark that inventory down. That will be good for consumers but it will obviously put pressure on our own margins," he added.

Inventory levels at auto dealers, furniture stores, home improvement centres and department stores all rose in September, lifting the inventory-to-sales ratio in that month to the highest level since May 2009, according to a report by consultancy IHS.

IHS projects a 3.5 per cent rise in holiday retail sales in 2015 compared with last year.

Growth of 3.5 per cent is "a pretty strong forecast", said economist Chris Christopher, noting that the economic effects are mixed.

"Consumers are benefitting, but retailers are having a hard time," he said.

Black Friday changes

Chris Morran, deputy editor at the Consumerist, an independent consumer advocacy site, predicted no major changes to overall sales in 2015.

"There hasn't been a drastic change in the jobs picture. There hasn't been a huge increase in wages," he said.

Much bigger than any change in overall sales will be the role of online commerce this holiday shopping season, which kicks off in force the day after Thanksgiving, known as "Black Friday".

The focus on e-commerce means stores are no longer emphasising opening up on Thanksgiving night and are stretching out the season of holiday promotions. Amazon has had "Black Friday" specials since November 1.

"People have become a lot more savvy and realise that a lot more of these Black Friday doorbusters are just junk," Morran said.

Online has been embraced much heartily than before by retail giants like Wal-Mart stores, which this year for the first time will make the more than 90 per cent of its "Black Friday" discounts available online.

Fewer in-store specials reduces the chance of dangerous crowds that have sometimes led to serious injury, including the 2008 fatality of one Walmart worker stampeded to death.

Walmart will also offer online-only specials on Thanksgiving Day of high-definition television, Star Wars gaming headsets and other goodies "so customers can shop while the turkey is in the oven", the company said in a November 12 announcement of its Black Friday plans.

Morran sees the current moves by retailers as part of a transition period that will see most of the Black Friday focus online within five years. That will be more convenient for consumers and enables retailers to keep fewer stores at maximum staffing level.

"Consumers aren't doing badly and stores are learning," Morran said.

Walmart's smaller big-box rival Target is also playing up online shopping, as well as a "clicks and mortar" approach to shopping that, for example, lets customers pick up online orders curbside "without ever leaving the car", the company said.

Target is also offering free shipping at for online orders between November 1 and
December 25.

But these efforts are also adding to the pressure on retail industry profits, said Efraim Levy, an analyst at S&P Capital IQ who follows retailers.

Companies must develop apps and other technologies, build warehousing centers for online deliveries and manage a new trove of electronic data. In Target's case, offering unlimited free shipping on orders as low as $5 means "you're losing money", Levy said.

AMMAN — Jordan's total exports during the first nine months of 2015 amounted to JD4.16 billion, a 7.2 per cent drop from the level recorded during the same period of 2014, the Department of Statistics (DoS) announced Monday. 

National exports were 7.3 per cent lower at JD3.6 billion of the total, whereas re-exports came at JD0.6 billion, a 6.5 per cent decline. 

The statistics also showed a 13.1 per cent fall in imports during the first nine months of 2015 to JD10.58 billion.

Consequently, the trade balance registered a JD6.42 billion deficit, bringing in the gap down by 16.5 per cent during the first nine months of 2015, compared to the same period of 2014.

Export of clothes, potash and phosphate went up by 10.1, 0.2 and 10.2 per cent respectively, while the export value of fruit and vegetables, pharmaceuticals and fertilisers dropped by 3.9, 7.4 and 26.4 per cent in the first three quarters of 2015.

Imports that registered an increase in their values during the January-September period of 2015, compared to the same period of 2014, included machinery (13.7 per cent); vehicles, motorbikes and their spare parts (14.2 per cent); electric devices (22.9 per cent); and jewellery and precious minerals (53 per cent), DoS data revealed.

Imports of raw oil and its derivatives declined by 48.7 per cent, and imports of iron and its products also dropped by 9.3 per cent, during the first nine months of 2015, compared to the same period of 2014.

KUALA LUMPUR — Southeast Asian leaders on Sunday symbolically declared the establishment by year-end of a European Union (EU)-style regional economic bloc, but diplomats admitted it will be years before the vision of a single market can be realised.

At the group's annual summit, held this year in Kuala Lumpur, the heads of the Association of Southeast Asian Nations (ASEAN) signed a declaration that the bloc hailed as "a milestone in the integration process".

The 10 leaders then put an aural exclamation mark on the agreement by banging once in unison on a traditional drum from each of their nations.

However, diplomats have admitted Sunday's declaration has no practical effect, and was largely meant to avoid having ASEAN, regularly criticised for its lack of concrete achievements, miss its own deadline of 2015.

Several years ago, ASEAN set a 2015 target for launching the ASEAN Economic Community (AEC), a single market with a free flow of goods, capital and skilled labour across borders.

The summit's host, Malaysian Prime Minister Najib Razak, urged his counterparts to step up efforts to realise a vision that many experts view as difficult, if not impossible, to achieve.

"We now have to ensure that we truly create a single market and production base with freer movement of goods and services with common standards, far greater connectivity and removal of barriers," Najib said.

Achievement of that vision will cause foreign investment in the region to "expand exponentially".

The AEC is aimed at marshalling the combined economic force of a resource-rich and growing market of more than 600 million people to enhance its trading clout and help it compete with the likes of China for foreign investment.

Changing the 'mental map'

Great progress has been made on lower-hanging fruit like slashing tariffs and removing other hurdles such as clashing customs systems.

But significant non-tariff and other barriers remain in a region marked by extremes in development levels, democratisation, and institutional capability.

A Southeast Asian diplomat conceded the single market vision is many years away but argued the declaration will help change ASEAN's "mental map" and provide momentum.

"We hope this will help the people and governments to think more and more on the basis of regional interests rather than purely national interests," the diplomat said.

ASEAN includes wealthy Singapore, one of the world's most developed countries, oil-rich Brunei, developing states like Malaysia, Indonesia, Thailand, the Philippines and Vietnam, and poorer nations like Cambodia, Laos and Myanmar.

Its members range from free-wheeling to controlled democracies, communist-ruled states and an absolute Islamic monarchy.

Najib on Saturday acknowledged much work remained, saying "non-tariff barriers, which affect daily life and employment across our nations, are too extensive".

Although ASEAN's plans were inspired by Europe, officials insist they want to pursue integration in a way suitable to the region's circumstances, and have ruled out a common currency.

US President Barack Obama praised the AEC and pledged American support.

Speaking Saturday, he called the declaration a "major step toward integrating economies and greater regional stability".

AEC will bolster income and employment, and provide the region with stronger economic muscle in facing the other giants, indicated Michael G. Plummer, a professor of international economics at the Europe Centre of Johns Hopkins University, based in Bologna, Italy.

"ASEAN integration will help balance the economic power of China and India," Plummer said. "Individually, ASEAN countries are, perhaps, too small to be important players in the economic and security game, but as an integrated group of more than half-a-billion people, they would be in the major league."

"The AEC is arguably the most ambitious economic integration programme in the developing world," Plummer added. "But implementation of the AEC is increasingly uphill. Much remains to be done and the region faces many challenges in finishing. The AEC is a process."

It falls short in more politically sensitive areas such as opening up agriculture, steel, auto production and other protected sectors. 

ASEAN citizens will be allowed to work in other countries in the region, but will be limited to jobs in eight sectors, including engineering, accountancy and tourism. This accounts for only 1.5 per cent of the total jobs in the region, and host countries still can put up constitutional and regulatory hurdles restricting the inflow of talent.

Intra-regional trade has remained at around 24 per cent of ASEAN's total global trade for the last decade, far lower than 60 per cent in the EU.

According to Plummer, progress has been slow in services liberalisation. Cross-border flow of investment is also restricted by large exclusion lists and caps on foreign ownership. 

Government procurement and curbing monopolies by state-owned enterprises are highly sensitive and untouched, he indicated.

Although the four poorer economies — Cambodia, Laos, Myanmar and Vietnam — have until 2018 to bring down tariffs, economic integration could further reinforce income equalities in the region, he said.

AEC "is not the finished article. Neither is it officially claimed to be. There is much work to be done", said Mohamad Munir Abdul Majid, chairman of a council that advises ASEAN on business matters. 

"There is a disparity between what is officially recorded as having been achieved... and what the private sector reports as their experience," he added.

There are also other hurdles, such as corruption, uneven infrastructure and unequal costs of transportation and shipping. 

A wide economic gulf divides Southeast Asia's rich and middle income economies — Malaysia, Indonesia, Singapore, Brunei, Thailand and the Philippines — and its four less developed members, communist Vietnam and Laos, Myanmar and Cambodia.

The AEC was envisaged in 2002 — and a blueprint created in 2007 — to face competition from China and India for market share and investments. 

While China's economic growth is expected to slow to an average of 6 per cent annually over the next five years, India's expansion is likely to pick up to 7.3 per cent in the same period, according to the Organisation of Economic Cooperation and Development.

The AEC is one of the three pillars of the ASEAN community, which was created by the signing of the declaration Sunday. The other two pillars are political-security and socio-cultural.

MUMBAI — Hundreds of layoffs at several Indian start-ups have sparked fears the bubble is starting to burst for the country's e-commerce companies, amid claims by analysts that many of them are overvalued.

Restaurant search website Zomato, food delivery app TinyOwl and property portal Housing.com are all letting staff go, and experts are warning of echoes of the dot-com boom which crashed spectacularly in 2000.

"The valuation bubble is bursting. The valuations had reached levels where they were ridiculous and could not be justified at any level," said Arvind Singhal, chairman of management consulting firm Technopak.

Wealthy investors boosted by low interest rates have been lining up to lavishly back India's booming start-ups, with the government hailing the sector as proof of the country's entrepreneurial spirit.

Prime Minister Narendra Modi views online start-ups as key to providing jobs to aspirational young Indians, seeking to fuel the sector through a government campaign, "Start up India, Stand up India".

In September, he visited Silicon Valley calling on deep-pocketed investors to turn their attention to India's thriving start-up ecosystem, with large tech hubs in the cities of Bangalore, Hyderabad and Mumbai.

Yet despite the billions of dollars invested in recent years, most of India's online start-ups are yet to turn profits and investments are largely based on speculative future earnings.

"Investors are not looking objectively at the sector. They are just seeing a few success stories and ignoring the failures, just like they did in the dot-com era," indicated Paras Adenwala, investment consultant at Capital Portfolio Advisors in Mumbai.

Adenwala is concerned that once the United States' central bank starts moving on interest rates, as it has long been tipped to do, investors will be less generous with their cash, making the situation worse.

"You will see a lot of these start-ups falling by the wayside once the US Federal Reserve starts raising rates and funding dries up," he said.

Dramatic scenes 

Recent events at TinyOwl, Zomato and Housing.com suggest that not all is well.

There were dramatic scenes at TinyOwl's offices in Pune, in the western Indian state of Maharashtra, earlier this month when disgruntled staff refused to leave the building after losing their jobs.

They also held hostage a member of top management, who laid off 300 employees, preventing him from leaving for two days as they demanded the immediate payment of their severance deals.

TinyOwl co-founder and Chief Executive Harshvardhan Mandad said the redundancies had been necessary to get the start-up on a more sustainable footing.

"This has involved some difficult decisions for us as well, but we believe it's an integral step for the sustainability and growth of the business," Mandad added.

Housing.com recently fired 600 employees, according to widespread reports, and on Thursday announced there would be a "reorganising of the company", although it declined to confirm the layoffs.

Zomato, a so-called "unicorn" startup because it is valued at more than $1 billion, is laying off 10 per cent of its 3,000-strong staff worldwide, mostly in the United States.

An official for the New Delhi-headquartered company, which operates in 22 countries, said "the restructuring that led to the redundancies was based on a business call".

"I do not think that the pace of growth has suddenly slowed. Is the market correcting? Perhaps it is, and I guess it's about time that happened as well," added the official, who asked not to be named.

Some signs of consolidation are already evident in the highly competitive market.

Grofers, a "hyperlocal" grocery app that allows customers to order goods from corner shops online, last month made two acquisitions in a week, taking over its shuttered competitor Townrush and meal delivery service SpoonJoy.

And earlier this month Mumbai-based CarTrade, a portal for selling used autos, acquired its rival CarWale for an undisclosed sum.

Singhal, the Technopak chairman, sees the job cuts as part of an inevitable "evolution" of startups, where the early movers lacked well thought-out business models but successors will learn from their mistakes.

"It will encourage new start-ups with clearer plans," he said.

PARIS – France can withstand the financial shock of the Paris attacks, analysts say, despite people deserting big stores, shunning concert halls and cancelling hotel bookings.

Beyond the incalculable human cost, the experience of attacks in New York in 2001, Madrid in 2004, London in 2005 and Mumbai in 2008 shows the economic impact may be fleeting.

The November 13 jihadist shooting and bombings in the French capital, which killed 130 people and wounded hundreds more, led to an immediate 80 per cent plunge in concert ticket sales, an association of promoters said.

Shoppers also fled Paris’ iconic department stores Printemps and Galeries Lafayette, which reported customer numbers tumbling by between 30 and 50 per cent. 

Hotels, too, reported a slump in bookings.

Such reactions are likely to be transitory, however, analysts said.

After the March 11, 2004 Madrid train bombings, which killed 191 people and wounded nearly 2,000, the capital’s Complutense University estimated the cost to the city’s economy at 0.16 per cent of annual economic output and the cost to the country at 0.03 per cent of output.

In Britain, consumer confidence took a hit when four coordinated suicide attacks on three London underground trains and a bus killed 56 people. But a budding economic recovery continued, said analysts at BNP Paribas.

“In the similar attacks in Madrid and London, the impact on country-wide statistics and overall consumer confidence was relatively small,” said a report by Goldman Sachs.

‘Massive human cost’       

The Paris attacks differed, however, because they came only 10 months after gunmen attacked satirical weekly Charlie Hebdo, killing some of France’s most beloved cartoonists in a rampage that left 17 dead there and elsewhere in the city.

“While the terrorist attacks on Paris came at a massive human cost to the city and to France more widely, the sanguine reaction of the financial markets to the atrocities and past experience of similarly tragic events suggest the economic impact is likely to be limited,” BNP Paribas analysts Dominic Bryant and Gizem Kara said in a report.

“As this is the second attack on Paris in less than 12 months, however, there is some risk of a greater reaction than elsewhere, particularly as the French economic recovery has been relatively tepid,” they said.

In Mumbai, India, where gunmen stormed luxury hotels, the main railway station and other sites in November 2008, killing 166 people, businesses reported a plunge in profits and a wave of cancellations by tourists.

“The business climate was affected for several months,” said Ashutosh Data, economist at IIFL Institutional Equities.

“But the situation returned to normal after three to six months because, as terrible as the attacks may be, there was not a feeling that the country was becoming unstable,” he said. 

‘A major risk’       

Investors, too, are unlikely to shun France, said Muriel Penicaud, managing director of Business France, which promotes French business

“An investment is always a long-term decision linked to corporate strategy,” Penicaud said.

“The risk of an attack is a big concern in Europe and beyond Europe,” she added. “The need to invest in countries with talent, infrastructure, markets, remains very important to companies’ strategies.”

Consumption is recovering after the Paris attacks but the impact on tourism may last longer, said Philippe Gudin, analyst at Barclays.

“Attacks against civilians in a European country are likely to weigh on consumer confidence, a major risk in a situation where the main driver of growth in Europe is consumer demand, with other components of demand still very subdued,” Gudin said in a report.

“Tourism could be hurt more durably,” he said, with a likely impact on economic activity in the final quarter of 2015. “Longer term impacts are more uncertain,” he added.

It is still too early to draw conclusions about the longer term impact, the analyst cautioned, citing an apparently growing international threat of attacks by Daesh jihadists.

Gudin noted in particular the twin bombings in Beirut this month that killed 44 people and the bomb attack on a Russian passenger jet over Sinai last month that claimed the lives of all 224 people aboard, both claimed by the Daesh jihadist network.

“In addition to the Paris attacks, other recent terrorist attacks including the attacks in Beirut and its suspected downing of a Russian passenger airliner in Egypt show that the threat from Daesh is intensifying and spreading and that geopolitical risk is a growing downside risk to global growth,” Gudin said.

“Therefore, any comparison with previous terrorist attacks such as in Madrid in 2004 and London in 2005 is not necessarily relevant.”

AMMAN – The Jordan Phosphate Mines Company (JPMC) announced Saturday plans to set up a fertiliser plant in Indonesia as part of its expansion and marketing strategy. 

The Jordan News Agency, Petra, said that JPMC and the Indonesian government have registered a joint venture company, Petro Kaltim Abadi, to establish a factory in Pantang. 

The new project is the company’s second investment in Indonesia as last year it inaugurated a fertiliser factory, Petro Jordan Abadi, in Gersik city, East Java province. The project was JPMC’s first strategic venture abroad.  

JPMC Chairman Amer Majali said establishing a new firm in Indonesia is part of the company’s new expansion strategy for production and marketing to new destinations, according to Petra.

Majali said the two sides also reached a preliminary agreement to set up a third company in the field of fertilisers production to cover the market needs of Indonesia, adding that the phosphate company will contribute to 40 per cent of the $10 million capital of the recently-registered Petro Kaltim Abadi, while the contribution of the Indonesian government will be 60 per cent. 

The initial cost of the project, Majali said, is estimated at $300 million, 30 per cent of which will be covered by the two partners while remaining funding will be secured by soft loans from development banks owned by the Indonesian government. 

The entire phosphoric acid and fertilisers production of the factory will be purchased by the Indonesian government, Majali said. 

AMMAN — The Jordan Investment Commission (JIC), under the investment window, has added new services related to registration and inquiries on lands that can be invested across the Kingdom, JIC President Montaser Oklah said Saturday.

JIC and the Department of Lands and Survey (DLS) have recently signed an agreement stipulating the authorisation of DLS commissioner at the investment window to issue real estate documents, Oklah told the Jordan News Agency, Petra. He added the agreement would save investors from visiting DLS branches across the Kingdom to inquire about lands.  

AMMAN — India's embassy in Jordan on Wednesday organised an interactive session to promote Indo-Jordanian business cooperation.

At the session, titled "Make in India and Make in Jordan"-Harnessing the Synergies, which hosted Jordanian leading industrial figures and businessmen, speakers from Jordanian side highlighted investment opportunities available in Jordan. 

In order to reach trade target of $5 billion in 2025,  Chairman of Jordanian Business Association Hamdi Tabbaa proposed  broadening the commodity base and of utilising comparative advantage of each country in the service sector such as information technology, construction, tourism, education and health. 

"There are great opportunities to set up joint investment projects in pharmaceutical, automotive, textile, clothing, medicine and Dead Sea products, renewable energy and fertiliser industry, and of establishment of small- and medium-sized projects as well as support such as finance, training and technology transfer," Tabbaa said.

He called on Indian investors to take advantage of Jordan's geostrategic location, security, stability and attractive business environment as well as its free trade agreements with Arab countries, the US, Europe, Canada and Singapore.

In his address, Indian Ambassador Anil Trigunayat briefed the gathering about business opportunities available in India under various initiatives by the new government in India. 

Trigunayat highlighted opportunities available under "Make in India", “Digital India”, “Clean India”, “Skill India” and “Start-up India” initiatives.

He said there are large opportunities to increase economic exchange between India and Jordan, following a state visit of President of India to Jordan last month and the signing of six inter-governmental agreements and 12 agreements between universities.

To realise the potential, the government of India recently announced a line of credit worth $100 million for enhancement of trade and investment in Jordan, the ambassador noted.

 He referred to the first Indo-Jordan Business Forum to be held in India in January 2016, urging businesspeople to participate with specific projects. 

Indicating that India is Jordan’s 4th largest trading partner with $2.2 billion in trade and probably the biggest investor in phosphate and textile sector, the ambassador said Jordan can play an important role in India’s food and energy security.

AMMAN — The total value of goods and vehicles exported from the Jordanian free zones during the first 10 months of 2015 reached JD2.364 billion.

The amount of goods exported from the zones during the January-October period stood at JD1.086 billion, JD685 million of which to the external market and JD401 million to the domestic market, the Jordan News Agency, Petra, reported.

Exported vehicles from the zones amounted to JD1.278 billion, with the external market share of the total reaching JD531 million, leaving JD747 million to the local market. The zones exported 48,353 vehicles outside the Kingdom and 68,277 others for the domestic use, Petra added.

BEIRUT – A new international bond and grant scheme to help countries dealing with the fallout of war and instability in the Middle East and North Africa should be in place by spring, a senior World Bank official said.

In a Reuters interview, Hafez Ghanem, the World Bank's vice president for the Middle East and North Africa, said the type of investment targeted by the plan — education, infrastructure and jobs — was vital to addressing the region's refugee crises.

He said that humanitarian aid alone was not enough and the alternative was "one or two lost generations" in a region with 15 million refugees or internally displaced people.

Ghanem spoke during a visit to Lebanon, which is struggling to cope with more than 1 million registered Syrian refugees who account for a quarter of the population.

He said he could not remember a time in his nearly three-decade career of such high demand from middle-income countries for assistance.

"The demand on our support is very high right now and it is going to increase, because as you bring peace through political or security measures, to make the peace hold, you need to give people opportunities and hope," he said.

"We are trying to raise more resources, that is why we have proposed this financing mechanism."

The World Bank, United Nations and Islamic Development Bank last month announced the initiative that would ask donor countries to provide guarantees for bonds raising money for certain projects ranging from support for refugees to rebuilding to allow displaced people to return home.

Some would be Islamic bonds, or sukuk, targeting investors in the region, where conflicts are raging in Syria, Iraq, Yemen and Libya. The proposal also includes asking donors for grants to cut the interest rate for states hosting refugees.

"If we agree and succeed in putting this together, it's not a one-shot deal. It's something that will have to be done over several years, and the amount of work that is needed, the projects that will need to be implemented, none of us can implement them very quickly," Ghanem said.

Rebuilding Libya, Yemen, Syria     

"We are talking development projects, investments in education, health, infrastructure. So the way I see it is we will start gradually," he said. "We are not envisioning an amount right now."

"The big amounts will be required when you do the reconstruction say in Syria, or in Yemen, or Libya, but right now you cannot do that."

The aim is to have the financing mechanism in place by spring, he said. Governments that had expressed interest in the plan included the Group of Seven nations, Nordic states, the Netherlands, Saudi Arabia, the United Arab Emirates, Kuwait and Qatar.

He said a forthcoming meeting would include beneficiary states including Jordan, Egypt, Tunisia, Morocco and Lebanon.

Lebanon's response to the refugee crisis and other problems has been hampered by its own internal political conflict.

Lebanon's parliament convened for the first time in a year last week to approve laws including one allowing implementation of a $600 million dam to be built with World Bank financing. The project has been held up for more than a year.

"I hope that by the time we put this financing mechanism in place — and our objective is to move very fast — like in the next two or three months — Lebanon will also have found a way to make sure we don't have to wait years before our projects get approved by parliament," Ghanem said.

He also said World Bank expects to make a $1 billion loan available to Egypt in December after completing negotiations in Cairo last weekend and that it was in talks with Iraq to lend more money after agreeing a $350 million loan in July.