ANN/THE STRAITS TIMES – Singapore saw its retail sales increase in an upward trend for the third consecutive month, spurred by the excitement of Taylor Swift’s Eras Tour in March, though future sustainability of this trend is uncertain.

March saw a 2.7-per-cent increase in retail sales compared to the same month last year, a slowdown from the revised 8.6 per cent rise observed in February, as per recent data released by the Department of Statistics.

Excluding motor vehicles, retail sales saw a two per cent increase in March, a continuation of the strong 9.5 per cent rise seen in February. Sales increased in 10 out of the 14 retail sectors.

Economist from Oxford Economics Sheana Yue pointed out that March’s data reinforced signs of a rebound in the retail sector at the beginning of the year, with a 1.3-per-cent growth in the first quarter compared to a 0.3-per-cent decline in the last quarter of 2023.

She attributed this rebound primarily to an increase in tourists from mainland China, boosted by a new visa-free travel policy starting in February, and regional visitors attracted by concert events.

However, when adjusted for seasonality and on a month-to-month basis, retail sales saw a one per cent decline from February.

Yue highlighted that the improvements in March were widespread, largely fuelled by a busy music tourism agenda.

“The food and beverage sector not only maintained but also expanded its growth into double-digit percentages, alongside significant gains in discretionary goods,” she remarked.

The most notable monthly increases were in food and beverage sales, which surged by 15.1 per cent, and were followed by gains in cosmetics, toiletries, and medical goods at 8.8 per cent, and department store sales, which increased by 7.7 per cent.

In contrast, month-to-month sales experienced the sharpest declines in sectors dealing with high-value items such as computer and telecommunications equipment, which dropped by 8.5 per cent, and furniture and household equipment, down by 7.9 per cent.

UOB senior economist Alvin Liew and associate economist Jester Koh said the March data was “slightly underwhelming”, likely due to a dip in Chinese tourist arrivals.

“In addition, we saw seasonally adjusted month-on-month declines for several components that may reflect the dip in demand after the festive season and could be temporary,” added the UOB economists.

The estimated total retail sales value in March came in at SGD4.2 billion.

Of this amount, about 11.7 per cent was from online sales, higher than the 10.8 per cent in February.

Excluding motor vehicles, total retail takings were about SGD3.5 billion, of which 13.9 per cent came from online sales.

Looking ahead, Yue warned that the lift to retail sales will fade over the coming months as the 21-per-cent quarter-on-quarter jump in tourist arrivals in the first quarter is unlikely to be repeated.

“There is smaller scope for a boost now that arrivals are back to roughly 90 per cent of their 2019 levels.

What’s more, governments are starting to pare back fiscal support to rebalance their balance sheets, and with the United States Federal Reserve policy rates set to stay higher for longer, we suspect visitors from other countries as well as locals in Singapore will start to tighten their purses,” she added.

Liu thinks the initial signs of an easing in the labour market may dampen private consumption in the months ahead.

But she is optimistic that a continued tourism recovery will support growth.

COLOMBO (AFP) – Strategically placed Sri Lanka’s economic recovery was essential for stability in the Indo-Pacific region, Japan’s foreign minister said on Saturday, urging Colombo to swiftly restructure its foreign debt.

Yoko Kamikawa said Colombo should secure agreements with bilateral lenders and international sovereign bondholders to unlock suspended foreign funding for the cash-strapped nation.

After talks with her Sri Lankan counterpart Ali Sabry, Kamikawa called on President Ranil Wickremesinghe and discussed the island’s reforms to overcome its worst economic crisis, the two sides said.

“Deliberation also encompassed discussions on the signing of the Memorandum of Understanding (MoU) pertaining to debt restructuring in Sri Lanka,” Wickremesinghe’s office said in a statement.

The Sri Lankan government which defaulted on its USD46 billion external debt in April 2022 had hoped to finalise deals with foreign creditors by April but there have been no final agreements yet. Kamikawa told reporters that she “stressed the importance of reaching a debt restructuring agreement with all the creditors”, including China – the largest bilateral lender to the island.

“I also conveyed Japan’s intention to further support Sri Lanka’s development by swiftly resuming existing yen loan projects (after debt restructuring),” she said. She said Tokyo considered Colombo’s economic recovery as crucial for the entire region. The island is located halfway along the main east-west international shipping route.

“The restoration of stability and economic development of Sri Lanka, which is at a strategic location in the Indian Ocean, is essential for the stability and prosperity of the entire Indo-Pacific region,” she added.

HONG KONG (XINHUA) – Hong Kong’s economy grew 2.7 per cent year-on-year in Q1 in the fifth consecutive quarter of economic expansion, while recent uplifts in both the stock and property markets point to warming market sentiment, Financial Secretary of the Hong Kong Special Administrative Region (HKSAR) government Paul Chan said yesterday.

Hong Kong’s benchmark Hang Seng Index had been rising for nine trading days in a row by May 3 to record an increase of 14 per cent. Property trading picked up and prices stabilised as the HKSAR government’s efforts to shore up the market paid off, Chan said in his blog.

Chan said that the Q1 economic growth was mainly driven by tourism, which remained robust. The city logged 25 per cent more tourist arrivals in the first three days of this Labour Day holiday than a year earlier, he said. Chan noted that the external environment remains complex and volatile. Cooling market expectations on US Federal Reserve rate cuts could affect Hong Kong’s export and local investment willingness.

A strong Hong Kong dollar and changes in consumption habits of local residents and tourists could pose challenges to Hong Kong’s retail and catering industries, he said.

DHAKA (XINHUA) – Bangladesh’s exports in the first 10 months of the current fiscal year (July 2023-June 2024) grew by 3.93 per cent to USD47.47 billion.

According to the latest official statistics of the Bangladesh’s Export Promotion Bureau (EPB), the country fetched USD47,471.77 million from exports in July-April period of the 2023-24 fiscal year.

Of total exports earning in the first 10 months, according to the EPB, the country fetched USD40.49 billion from exports of ready-made garments including knitwear and woven.

Bangladesh shipped goods worth USD3.92 billion in April, which was 0.99 per cent lower than the same month a year ago.

Bangladesh set its export target in the 2023-24 fiscal year at USD62 billion, including over USD52 billion from ready-made garment products.

BRUSSELS (XINHUA) – Amid lush greenery, fragrant flowers, and the gentle murmur of grazing flocks of sheep lies an endless array of photovoltaic panels, creating a mesmerizing scene of sustainable energy production at the Francisco Pizarro photovoltaic (PV) plant in southwest Spain.

The Iberdrola group, a leading Spanish multinational electric utility company, inaugurated the plant, Europe’s largest, in 2022. With around 1.5 million solar panels imported from China, the plant’s clean energy output is substantial, catering to the needs of 334,000 households and creating over 1,500 jobs.

As exemplified by the Spanish PV plant, China’s rapid progress in the renewable energy sector has played a pivotal role in advancing the European Union’s (EU) green transition.

WIN-WIN GREEN COOPERATION

The European Green Deal, launched by the European Commission in 2019, targets net-zero greenhouse gas emissions by 2050. To achieve this, the EU has pledged to increase the binding renewable energy share to at least 42.5 per cent by 2030. However, with the current renewable energy share at approximately 23 per cent, innovation is urgently needed.

Walburga Hemetsberger, chief executive officer of SolarPower Europe, an association for the European solar PV sector, has warned that Europe must ramp up its solar deployment to meet the necessary targets, while WindEurope, a major wind energy association, also stressed the need for immediate action.

China’s green energy equipment manufacturing industry is well-established and competitive. Chinese solar products and wind turbines would be indispensable for EU to achieve its 2030 emission reduction targets, said Qin Yan, a lead analyst at Refinitiv and researcher at the Oxford Institute for Energy Studies.

In fact, many European countries have reaped the benefits of green energy collaboration with China in recent years.

President of the Portuguese Renewable Energy Association Pedro Amaral Jorge, highlighted the growing cooperation between China and Portugal in the solar energy sector, as Portugal aims to install approximately eight gigawatts (GW) of solar power by 2026 or 2027 and reach 22 GW by 2030.

KUALA LUMPUR (BERNAMA) – The recent surge in global cocoa prices, caused by a supply shortage, is impacting local chocolate companies throughout the supply chain.

Smaller companies are being cautious in their contracting and planning. The situation has been dragged down by heavy rainfall and crop diseases in the top cocoa producers Ghana and Ivory Coast.

Experts believe price fluctuation and market manipulation would cause worries about the future of the chocolate industry, and other challenges could arise such as decreased affordability, cost pressure on manufacturers, impact on smallholder farmers, disruption in the supply chain as well as quality and sustainability concerns.

It was reported that the global cocoa supply will decrease by almost 11 per cent over the 2023-2024 period, based on findings of the International Cocoa Organisation.

On April 19, the commodity which used to make chocolate had jumped four times to USD12,218 per tonne from USD3,515.2 per tonne on January 2, according to tradingeconomics.com.

The market, however, melted to USD7,878.8 per tonne on May 3.

MALAYSIA: GOOD OLD DAYS

During the 1980s, Malaysia was one of the world’s top cocoa producers. However, currently, almost 98 per cent of the country depends on cocoa imports for consumption as West Africa overtook it for quite some time.

To rub salt in the wound, other nations in Southeast Asia are now producing more cocoa with Indonesia surpassing Malaysia to become a new top producer, followed by Vietnam.

Plantations and Commodities Minister Datuk Seri Johari Abdul Ghani recently said Malaysia’s cocoa sector has not yet achieved a satisfactory level of self-sustainability, with the production of cocoa beans in the country having declined significantly.

“At one point in the past, Malaysia’s cocoa bean production reached as high as 225,000 tonnes, compared to the current output of only around 500 tonnes. The decreasing production of cocoa beans in Malaysia has led to many industries which produce cocoa products having to import cocoa beans from abroad,” he added.

According to the founder of Benns Ethicoa Chocolate factory Wilfred Ng Chee Wai, for the past 40 years, cacao beans have been one of the most undervalued commodities.

“With up to 70 per cent of cacao supplied from West Africa, farmers have long endured poor compensation for their labour, leading to dismal living conditions, slavery, and child labour issues.

“Many farmers have been forced to seek alternative crops to make ends meet, resulting in a decline in cacao supply over the decades. However, the current high price levels bring joy to cacao farmers, finally allowing them to sell their beans at a fairer price and generate higher profits,” he told Bernama.

SMALLHOLDERS’, FARMERS’ BENEFIT

Ng said this newfound income will not only improve their living conditions but also enable them to invest in better farming techniques to enhance output and quality over the long term.

“It is high time that farmers are fairly compensated for their hard work and dedication to the cacao industry,” he added.

Meanwhile, economist Dr Geoffrey Williams told Bernama that smallholders may get a better price in the short term, albeit a small percentage but ultimately these higher costs will be passed on to consumers.

“It might spur extra production but only if this lasts for a long time because you cannot just plant and harvest cocoa overnight.

“So, for the short-term, there will be profit-taking at the expense of customers and smallholders,” he said.

Williams said that the current huge spike is attributed to weather conditions but there are long-term structural issues in cocoa production.

“Most growers, around 90 per cent, are smallholders and they have little market power.

They have to accept low prices forced on them by big buyers and get less than 10 per cent of the final price.

“Because of this, they have low incomes and cannot invest in better productivity or higher production rates,” he added.

This holds back supply and makes it uneconomical to produce cocoa.

Hence, it is restricted and 60 to 70 per cent is produced in West Africa, Williams explained.

“This is all due to a dysfunctional market and abusive purchasing by big companies at the expense of smallholders.

“This has to change if we want better prices,” he said.

SUPPLY CHAIN EFFECT

Elaborating on the impact on chocolate makers, Ng said that if cocoa prices continue to rise, chocolate makers will encounter challenges such as increased production costs, pressure to raise product prices, reduced consumer demand due to higher prices, and supply chain stress caused by fluctuating prices.

“To remain competitive and relevant, chocolate makers will need to adopt various strategies. Some may even consider alternative ingredients to replace cocoa, potentially impacting the quality of their products,” he said.

Ng also said the rise in cacao bean prices, the primary ingredient of cocoa and chocolate, directly impacts the cost of chocolate raw materials.

“As a result, factories require increased cash flow to secure these essential resources.

“Consequently, chocolate prices will need to rise, leading consumers to pay more for their favourite treats.

This shift may eventually slow demand, and the current price levels have placed immense strain on the entire supply chain,” he added.

Ng stressed that cost-cutting is indeed an immediate priority for chocolate companies amidst soaring cocoa prices.

“Some may opt for downsizing or diversifying to mitigate the impact. At Benns Ethicoa, we recognise the importance of cost management, but we also believe in the continual creation of product value and unique offerings to justify a higher price tag and stimulate demand.

“Simply raising prices on existing products may lead to decreased demand. Therefore, we are committed to driving research and development, enhancing consumer engagement, and enriching the overall chocolate experience,” he said.