Country Garden’s cash crunch worries homebuyers

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The cash crunch at Country Garden, once the largest property developer in China by sales, has worried many homebuyers who have paid for but not yet received their apartments.

Some commentators called on the Chinese government to look into the matter and ensure that the property developers will deliver apartments to buyers.

The calls came after Country Garden failed to pay interest, due Sunday, on two bonds worth a total of US$22.5 million.

Although the company can pay within a 30-day grace period to avoid a default, it still has to repay US$2.9 billion of bonds by the end of this year, according to data compiled by Bloomberg.

Over the past two years, most Chinese property developers have cut their property prices by more than 50% to boost revenue and lower gearing, but many homebuyers remain reluctant to enter the markets as they are suffering from unemployment or otherwise unstable income. They have become very cautious in home purchases since Evergrande Group faced liquidity problems in 2021.

“Don’t let Country Garden collapse!” Wang Xinxi, a Guangdong-based business writer, says in an article published on Wednesday. “For the moment, it’s very important to avoid the default of Country Garden, which will hit the property sector and create a systemic risk to the banking sector.”

“The company has built many properties in the third- and fourth-tier cities but residents there have low incomes,” Wang says. “Many people used savings from parents and relatives to buy their homes. They won’t be able to receive their properties if Country Garden goes bankrupt.”

He says such a crisis will affect other property developers and homebuyers while home owners also cannot sell their properties in the secondary markets.

He criticizes Country Garden and other property giants for having used a high leveraging strategy to boost their sales over many years. He says the only thing that these developers can do now is to sell their apartments at huge discounts to repay debts.

A Shanghai-based commentator using a pen name “Huoyi” published an article with the title “Country Garden is a much bigger crisis than Evergrande” on Wednesday.

“Country Garden said its total assets amounted to 1.54 trillion yuan (US$214 billion) at the end of 2022 while its total liabilities were 1.23 trillion yuan. It seems that it had net current assets of more than 300 billion yuan but it’s hard to know whether the company has any hidden debts,” Huoyi says. “Evergrande had once said its liabilities were about 1.8 trillion yuan but it turned out that they reached 2.44 trillion yuan.”

He says Country Garden recorded 668 billion yuan of contract liabilities at the end of last year, meaning that it still owes one million flats to homebuyers.

The writer says there’s no doubt that Evergrande’s founder, Hui Ka-yan, was very extravagant but he spent and invested most of his money domestically and could trace it. He says it is worrying that Country Garden has invested in many overseas property projects, including those in Malaysia, Singapore, Vietnam and Thailand.

First net loss in 15 years

On March 30, Country Garden said its revenue dropped 17.7% to 430.4 billion yuan for the year ended December 30, 2022 from a year earlier. Gross margin fell from 17.74% to 7.64%.

The Fosan-based firm recorded a net loss of 6 billion yuan in 2022, compared with a net profit of 26.8 billion in 2021. It has been the company’s first net loss in 15 years since it was listed in Hong Kong in 2007.

The company had 69,932 full-time employees at the end of last year, down from 100,705 a year earlier.

On Sunday, it failed to pay two dollar-bond coupons. Both bonds, US$500 million each, are listed in Singapore and will mature in 2026 and 2030.

The company said its usable cash has been steadily shrinking, showing “periodic liquidity stress” due to the deteriorating selling and refinancing environment, and the impact of various fund regulations.

CreditSights, a research unit of Fitch Group, says in a research report published on Tuesday that Country Garden’s struggle to address even a modest coupon payment underscores the extent of its cash crunch.

“Country Garden’s ability to remain above water has become increasingly challenging amid poor contracted sales generation, high exposure to lower-tier cities, limited funding avenues and a stretched liquidity position,” it says.

With falling home prices month-on-month across the past few months and faltering economic growth in China, another large developer’s default is the last thing the Chinese authorities need right now, CreditSights says.

It says Country Garden’s woes have spilled over to affect sentiment regarding other property developers and will hurt overall homebuyer sentiment.

A property columnist writes in an article published in May that Country Garden has significantly cut prices for its apartments over the past few years.

He says the company is now selling its apartments at about 6,000 yuan per square meter in a rural area in Guangzhou, down from the peak of 12,000 yuan per square meter in 2018. He says its apartments in a prime site in Dongguan are now priced at 25,000 yuan per square meter, compared with 35,000 yuan per square meter in the past.

He says nearby homeowners were upset by these sales promotions as their property values were dragged down. 

Evergrande’s case

In the second half of 2021, Evergrande, the largest Chinese property developer by land bank at that time, had a serious liquidity crunch. Clients of Its wealth management units also complained that they could not get their money back after the products they bought matured.

Evergrande started restructuring its debts early last year in response to the Guangzhou government’s intervention. Hui was ordered by officials to sell his personal assets to repay debt and ensure that his company would continue to deliver apartments to homebuyers.

The company did not announce its 2021 results until July 17, 2023. It lost a combined 803 billion yuan in 2021 and 2022. At the end of last year, it had net current liabilities of 687.7 billion yuan and total liabilities of 2.44 trillion yuan (US$339 billion), which almost hits Hong Kong’s 2022 nominal gross domestic product (US$360 billion).

The company has not yet gone bankrupt and is still negotiating with foreign creditors for a haircut in its debts.

Read: China to boost consumption, private investments

Follow Jeff Pao on Twitter at @jeffpao3

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Prayut issues alert for rain, flash floods

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Agencies told to prepare measures

PUBLISHED : 10 Aug 2023 at 05:25

Prayut issues alert for rain, flash floods
Filled to the brim: The Mekong River is seen nearly overflowing its banks in Nakhon Phanom on Wednesday, as heavy rain in China sends water levels surging past critical levels, causing floods in Sakon Nakhon and Nakhon Phanom. (Photo: Pattanapong Sripiachai)

Prime Minister Prayut Chan-o-cha has ordered authorities to prepare measures to handle the heavy rain and flash floods that are forecast across the country from Aug 10-15.

The order comes on the back of a National Water Command Centre (NWCC) alert warning of a rising Mekong River until Tuesday.

Gen Prayut expressed concern about the expected heavy downpours across the country. He ordered officials to provide the latest weather updates to residents in flood-prone areas, deputy government spokeswoman Rachada Dhnadirek said on Wednesday.

According to the NWCC, the lower part of the Mekong River has been hit by days of rain, sending water surging in Bolikhamxay province in Laos.

Also, a low-pressure trough is covering northern Vietnam and southern China, which is expected to dump heavy rain in the North and the Northeast of Thailand from today until Tuesday.

“Gen Prayut has assigned state agencies in eight provinces along the Mekong River to be prepared for potential floods in Chiang Rai, Loei, Nong Khai, Bueng Kan, Nakhon Phanom, Mukdahan, Amnat Charoen and Ubon Ratchathani,” Ms Rachada said.

Residents along the Mekong River are warned to closely monitor its water levels and prepare for possible flash floods, she added.

The Thai Meteorological Department warned residents in the North, the Northeast and the South to brace for heavy rainfall while 60% of Bangkok and its adjacent provinces will see thunderstorms in the afternoon and into the evening over the next several days.

Southwesterly winds will prevail across the Andaman Sea and the Gulf of Thailand. Waves of about 1-2 metres are expected in the Gulf of Thailand or over 2 metres in the Andaman Sea during storms, it said.

Meanwhile, roads recently closed by landslides and subsidence have reopened to traffic after local authorities installed prefabricated Bailey bridges.

On Monday, flash floods and landslides damaged stretches of road along Highway 1256 and Highway 1081 in Bo Kluea district of Nan.

Even though the Bailey bridges can help traffic, motorists are advised to drive carefully as the edges of mountainsides may be prone to landslides.

More than 100 residents from 27 households in flood-hit Bo Kluea Tai and Bo Kluea Nuea sub-districts have been evacuated to a shelter for their safety.

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Actor Mario Maurer grilled on plates

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PUBLISHED : 10 Aug 2023 at 05:24

Actor Mario Maurer grilled on plates
Mario: Admitted buying car

Well-known actor Mario Maurer on Wednesday reported to the Cyber Crime Investigation Bureau (CCIB) to answer questions over his alleged links to a fake car registration plate gang.

His appearance follows the arrest of two alleged ringleaders of the gang last week after the Land Transport Department claimed the pair managed to acquire the passwords of officials within the department on June 28 to gain unauthorised access to the system and create fake registration plates.

Police raided 35 locations suspected of storing cars with fake plates, mostly in Bangkok, Samut Prakan and Chon Buri. They seized 65 cars worth 77.3 million baht, one of which was reportedly about to be delivered to the 34-year-old actor.

Mario admitted to the media that he bought the car. He presented purchase documents and other evidence to the CCIB during questioning that lasted more than two hours.

Deputy CCIB chief, Pol Maj Gen Amnat Traipot, told reporters police also questioned a man — only identified as Kong — who allegedly sold the classic car to the actor and his elder brother.

Police were told the actor had also bought antique furniture from Kong, and they had known each other for about two years.

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Lorry drivers say ferrying workers in their vehicles is not ideal, but they try to drive safely

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Migrant worker rights groups called for a timeline to ban transporting workers in lorries, and business associations responded by warning of “operational complexities”.

Netizens condemned the statement and Singapore’s ambassador-at-large Professor Tommy Koh said trade groups were “resorting to scare tactics”.

SPEED MATTERS

On social media, some commenters said they have seen lorry drivers speeding on the roads and overtaking or tailgating other vehicles.

Mr Elumalai, 35, said he has seen such drivers on the road, but he does his part to reduce the risk of accidents.

“I drive slowly, because my boss said it is okay to be 10 minutes late, never mind. Slowly drive, no accident,” said Mr Elumalai, who has worked in Singapore for 13 years and driven a lorry for eight years.

He said he thinks lorries are relatively safe as long as drivers keep to slower speeds like 60 kmh or 70 kmh.

Mr Simbu said some drivers may be in a hurry, especially in the mornings.

“One driver goes to three sites, four sites. Some supply companies, they go to many sites – five sites, six sites before 8am,” he said, referring to companies that supply manpower for different construction projects.

“No choice for the driver, because (there’s) one lorry only,” he said.

His schedule is not as tight and he does not feel the need to hurry. Mr Simbu typically drives workers to one work site in the morning, then ferries them back to the dormitory at night.

“Workers can also see that I drive slowly, over the humps and when I’m turning,” he said.

The authorities have announced that speed limiters will be required on all lorries exceeding a maximum laden weight of 3,500kg. Details of the regulation will be released later in 2023, they said in July.

HOW TO IMPROVE SAFETY

Having more substitute drivers, enough space for workers at the back of the lorry and limiting driving speed are some ways to make lorries safer, drivers told CNA.

Mr Simbu said measures that have been implemented like a mandatory rest period and having a buddy to chat with the driver are helpful. But what would help more is to have more people who can drive, so they can take over if the assigned driver is tired.

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Commentary: An expanded BRICS could reset world politics but picking new members isn’t straightforward

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We are political scientists whose research interests include changes to the global order and emerging alternative centres of power. In our view, it won’t be easy to expand the bloc. That’s because the group is still focused on harmonising its vision, and the potential new members do not readily make the cut.

Some may even bring destabilising dynamics for the current composition of the formation. This matters because it tells us that the envisioned change in the global order is likely to be much slower.

Simply put, while some states are opposed to Western hegemony, they do not yet agree among themselves on what the new alternative should be.

EVOLUTION OF BRICS

BRICS’ overtly political character partially draws on a long history of non-alignment as far back as the Bandung Conference of 1955. It was attended mostly by recently decolonised states and independence movements intent on asserting themselves against Cold War superpowers – the Soviet Union and the United States.

BRICS has come to be viewed as challenging the hegemony of the US and its allies, seen as meddling in the internal affairs of other states.

Reuters estimates that more than 40 states are aspiring to join BRICS. South African diplomat Anil Sooklal says 13 had formally applied by May. Many, though not all, of the aspiring joiners have this overtly political motivation of countering US hegemony.

The other important incentive is access to funds from the BRICS’ New Development Bank. This is especially pronounced in the post-COVID climate in which many economies are yet to fully recover. Of course the two can overlap, as in the case of Iran.

The notable applicants have included Saudi Arabia, Belarus, Ethiopia, Argentina, Algeria, Iran, Mexico and Turkey.

EXPANDED BRICS

A strategically expanded BRICS would be seismic for the world order, principally in economic terms.

Key among the club’s reported priorities is reduction of reliance on the US dollar (“de-dollarisation” of the global economy). One of the hurdles to this is the lack of buy-in by much of the world. Though some states may disagree with the dollar’s dominance, they still see it as the most reliable.

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Commentary: When children abuse their parents, a veil of silence makes it hard to seek help

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Neurologist Frances Jensen in her book The Teenage Brain highlights that during the pre-teen and teenage years, the most important part of the brain in making decisions and regulating, the frontal lobe, is still developing. She stresses that during this phase, parents should actively model decision-making and, at times, even serve as the frontal lobe for their teens. 

Meanwhile, psychologist Albert Bandura’s observational theory posits that children, especially those in the pre-teen years, learn and imitate behaviors from their surrounding environment. Hence, if they see or receive violence, they will likely commit violence. Not always but likely.   

However, we must note that while upbringing might explain the violent behaviour in the adopted child mentioned earlier, it is not the only explanation why adolescents may be abusive towards their parents. 

EXPOSURE TO VIOLENT CONTENT

In today’s digital age, children and adolescents have unprecedented access to a wide range of media, including social media platforms, online gaming, and virtual networks.

Exposure to violent content on these platforms can significantly impact their behaviour, influencing their propensity to use aggression to achieve their goals or express themselves.

Research, such as that by Utrecht University’s Hanneke Polman, has highlighted the link between violent video games and aggressive behaviour in children. Data suggests that exposure to violent video games can lead to hostile attribution bias, where individuals perceive social interactions as intentionally hostile by another party.

Within the family setting, this can have adverse consequences when parents attempt to set boundaries, such as limiting screen time, enforcing ground rules, or taking away privileges. Instead of understanding this as discipline, the adolescent may interpret the parents’ actions as hostile behaviour, leading to conflicts and outbursts of aggression.

In the cases that I have encountered, conversations about screen time can escalate into the slamming of tables, brandishing of knives and children punching and kicking their parents.

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Biden announces curbs on US investments in China

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The Treasury is considering a notification requirement for US investments in Chinese entities involved in less advanced semiconductors, and activities relating to certain types of artificial intelligence. China could exploit US investments to further its ability to produce sensitive technologies critical to military modernisation, the Treasury Department said. But itContinue Reading

Prayut lauds EECi during inspection

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Evaluates progress made over past 5 yrs

PUBLISHED : 10 Aug 2023 at 06:33

Prayut lauds EECi during inspection
Behind the electric wheel: Prime Minister Prayut Chan-o-cha gets behind the steering wheel of an electric car during his tour of the Eastern Economic Corridor of Innovation (EECi), a government flagship policy he hailed as a success in terms of research and innovation, in Rayong on Wednesday. (Photo: Government House)

RAYONG: The first five years of the Eastern Economic Corridor of Innovation (EECi) are a success, with considerable levels of research and innovation accomplished, Prime Minister Prayut Chan-o-cha said.

Gen Prayut, along with Interior Minister Anupong Paojinda, Prime Minister’s Office Minister Thanakorn Wangboonkongchana and Labour Minister Suchart Chomklin, took a trip to visit the progress of the EECi on Wednesday  at Wangchan Valley in Rayong’s Wang Chan district.

The EECi is one of the projects under the EEC, with the aim of coming up with a suitable ecosystem for developing new innovations needed for 10 targeted industries nationwide.

Wangchan Valley has served as a hub for the EECi, with the area divided into a Smart Manufacturing Centre (SMC), Innovative Agriculture Smart Greenhouse, Intelligent Operation Centre (IOC), and the Vidyasirimedhi Institute of Science and Technology (Vistec).

Gen Prayut started the trip at the IOC and SMC, a development centre that targets entrepreneurs, developers, researchers and students with the aim of transforming the country into what is being called “Industry 4.0”.

He then moved on to Vistec to study its environmental goals, including its net zero carbon emissions policy.

This aligns with the government’s vow to reduce emissions by 20% while using a new national energy plan to go net zero by 2065–2070.

Gen Prayut said he appreciated the progress of the EECi in not only sustaining the country’s development but also for its ability to produce many new researchers to serve this goal, according to a Government House source.

He also understood that its systematic operations helped to keep the EECi in good shape, and he hoped to see those standards maintained.

“I am glad to see the progress made in the EECi’s first five years as well as its sense of environmental responsibility. I want everyone to look forward to what we can do for our future,” he said.

He proposed various sectors develop and globalise the centre’s innovation as well as start planting 158 species that were recently allowed for general cropping.

This was Gen Prayut’s first appearance in Rayong since parting ways with the United Thai Nation (UTN) Party in July.

When asked about this, he dodged the question by saying the trip was “not about politics.”

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Pheu Thai move splits UDD groups

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PUBLISHED : 10 Aug 2023 at 04:00

Red-shirt supporters of the Pheu Thai Party have split over the party’s decision to form a political alliance with Bhumajaithai Party and other parties after breaking away from the Move Forward Party (MFP).

A red-shirt United Front for Democracy against Dictatorship (UDD) group in the northern province of Chiang Rai yesterday announced it will hold a rally on Sunday in Muang district, in a symbolic move against Pheu Thai’s political U-turn, according to a source.

The group also plans to burn their red shirts, which they wore while attending UDD events over the past two decades, in protest against Pheu Thai’s scrapping of its initial political alliance forged with the MFP, said the source.

Chirachot Phumsitthiphong and Praphan Kaeo-mun, who are former UDD key figures in Chiang Rai, are now leading the movement against Pheu Thai.

Chiranan Chanthawong, another former UDD leader in Chiang Rai, said while she still respects former prime minister Thaksin Shinawatra, she couldn’t agree with Pheu Thai’s latest political move in forming a new coalition and abandoning the MFP.

In Bangkok, a different group of UDD supporters gathered outside Pheu Thai’s head office yesterday to offer moral support to Paetongtarn Shinawatra, Thaksin’s youngest daughter, one of the party’s three prime ministerial candidates and seen as a rising talent in the party.

During a meeting with Ms Paetongtarn, the group asked about the progress of the party’s bid to form a new coalition government.

They assured her they understood the party has a good reason to lead the new government, even though that would mean the Palang Pracharath Party and the United Thai Nation Party would have to be included in the bloc to make that possible.

Ms Paetongtarn said that since the party didn’t win a landslide victory in the May 14 election as it aimed to do, it now has to find another way to muster parliamentary support for its prime ministerial candidate.

Some UDD groups might not understand what Pheu Thai is trying to do in securing the opportunity to become the new government, she said, adding that once in power, the party will be able to push for those policies promised to voters during the last election to be implemented.

A different group of UDD supporters in Pathum Thani also expressed their support for Pheu Thai’s effort to form the new government.

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Pro-Pita MPs and senators under fire

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PUBLISHED : 10 Aug 2023 at 04:00

Pro-Pita MPs and senators under fire

Political activist Sonthiya Sawasdee yesterday asked the Office of the Ombudsman to seek a judicial review on the actions of 314 MPs and senators who last month voted for Move Forward Party (MFP) leader Pita Limjaroenrat to be the next prime minister, despite knowing his MP status was under review.

Mr Sonthiya’s petition came after the office asked the Constitutional Court to rule on the legality of parliament’s rejection of Mr Pita’s renomination on July 19. The court is scheduled to rule on Aug 16 on whether to accept the petition for consideration.

Mr Sonthiya, a former adviser to the House committee on law, justice and human rights, said that before the vote to select a new prime minister, the Election Commission (EC) had already started the process to potentially disqualify Mr Pita for his iTV share ownership.

The EC found Mr Pita held shares in iTV, a media company, at the time he registered his electoral candidacy, which is a violation of sections 101(6) and 98(3) of the constitution.

The agency sent the case to court and asked it to suspend the MFP leader as an MP.

Mr Sonthiya said that even though the court accepted the EC’s petition for deliberation and suspended Mr Pita as an MP, the lawmakers from the eight-party bloc led by the MFP and some senators proceeded to vote for him.

“Parliament knew about the EC’s case against Mr Pita, but this group of MPs and senators went ahead with his nomination on July 13.”

When Mr Pita failed to muster enough votes, they tried to renominate him on July 19.

Mr Sonthiya said the actions of these lawmakers were in violation of Section 160(6) of the charter involving the qualifications of a minister, and he wanted the Ombudsman to ask the court to make a ruling.

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