Japan exports boom, but inflation not following BoJ script
The Asian Infrastructure Investment Bank (AIIB) has committed $239.2 million in funding for the development of Oman’s national fibre optical broadband network — an ambitious initiative that has important implications for the growth of the Information and Communications Technology sector, while also enhancing the nation’s appeal as a destination for manufacturing, business and strategic logistics services.
The amount, which will be made available in the form of senior debt, has been pledged to the Oman Broadband Company (OBC), which is rolling out a national broadband network in support of the country’s National Broadband Strategy.
The pledge, approved recently by the Beijingbased multilateral development bank’s Board of Directors, is the third such funding commitment made by AIIB in support of Oman’s strategic economic diversification goals.
Last December, the lender approved a pair of loans totalling $301 million, which included $265 million towards maritime infrastructure development at Duqm Port, and a $36 million commitment towards the development of a Mineral Line Railway Project being overseen by the ASYAD’s Group Oman Rail subsidiary. All three funding commitments, the lender said, are in support of Oman’s strategic goal to progressively diversify the economy away from its current dependence on export of hydrocarbon products.
Significantly, the latest loan commitment is AIIB’s first stand-alone non-sovereignbacked limited recourse financing that involves mobilisation of private capital through syndication, according to a high-level executive.
“This non-sovereign debt investment is a great example of AIIB’s increasing capacity to independently structure financing in innovative ways,” said AIIB Vice President and Chief Investment Officer D J Pandian.
“In addition, the loan will be partially syndicated and will demonstrate AIIB’s ability to introduce private investors to new markets and new project types to support the development of vital national infrastructure. Not only will the new broadband infrastructure support local families and businesses, we’re confident it will increase Oman’s attractiveness as a designation for manufacturing businesses and strategic logistics services,” he added in a statement.
Importantly, the loan will finance the construction and operation of the first phase of Oman Broadband’s nationwide fibre broadband infrastructure project, which aims to build the nation’s communications infrastructure, thereby providing equal and open access to telecommunication service providers, on a wholesale basis, and owners and operators of private networks, on a retail basis.
The funds will be utilised to finance Phase 1 of the project envisioning the rollout of fibre optical broadband cable to approximately 406,000 homes and businesses by the end of 2021. Upon completion of phase one, 80 per cent of Muscat will be fibre-ready for connection with gigabitcapable optical networks, according to AIIB.
As part of project scope under Phase 1, Oman Broadband will oversee the laying of more than 4,000 kilometres of cabling, in addition of drop cables of around 9,500 km, besides installing fibre distribution hubs and other support infrastructure. Phase 1 of the groundbreaking project began in 2014, kicking off a roughly 8-year implementation programme estimated to cost $467 million. This investment is proposed to be funded by equity, debt and operating cash flow from Oman Broadband’s ongoing operations. TOKYO: Japanese exports accelerated sharply in November, yet again pointing to growing momentum in the world’s third-biggest economy. There was just one catch: inflation remained stubbornly low and well off the central bank’s 2 per cent target.
The combination of steady growth and benign consumer prices mean the Bank of Japan will lag other major central banks in exiting crisis-era monetary stimulus, with analysts widely expecting BoJ Governor Haruhiko Kuroda to keep the liquidity tap wide open at a meeting later this week.”Inflation expectation is in a gradual recovery trend, but a gap between firm economic indicators and weak price indexes remains wide open,” said Yuichiro Nagai, economist at Barclays Securities.
Indeed, a BoJ survey on Monday showed companies’ inflation expectations heightened only a touch in December from three months ago, despite a tight labour market and business confidence at over a decade high.
The persistently low inflation — with core prices running at an annual pace of 0.8 per cent — was also hard to square off with the robust performance of Japan Inc., which has benefited from booming exports thanks to upbeat global demand.
Separate data from the Ministry of Finance showed exports grew 16.2 per cent in the year to November, beating a 14.6 per cent gain expected by economists in a Reuters poll and accelerating from the prior month’s 14.0 per cent increase, led by a stellar sales to China and Asia.