Bhutan Should Come Clean on Hydropower Megaplan

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The tiny nation of Bhutan might enjoy world renown for its environmental record, but it is overlooking concerns being raised by environmentalists over the country’s plans to construct large hydropower plants to generate 10,000 megawatts of surplus electricity for export to India.

Climate Action Tracker, an independent group, rated Bhutan’s pledged contribution to the 2015 UN Climate Change Conference in Paris as “sufficient,” a rating accorded to just five countries. Soon thereafter, the carbon comparator tool of the Energy and Climate Intelligence Unit praised Bhutan for being an unparalleled carbon sink, absorbing three times more carbon dioxide emissions than it produces.

A nation of about 750,000 people perched between India and China, Bhutan deserves the accolades. It measures national progress in terms of Gross National Happiness, a policy that seeks to balance economic growth and environmental conservation, and not Gross Domestic Product. Bhutan’s constitution mandates that its territory be at least 60 percent covered by forest.

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The world’s only Mahayana Buddhist country, Bhutan also has huge tourism potential, but it restricts the number of tourist arrivals by imposing a mandatory tariff of $200 per person per day, a measure to protect its rich culture.

Meanwhile, Bhutan aspires to become a world leader in the use of electric vehicles and thereby reduce fossil fuel imports by 70 percent, as well as to make its agricultural system 100 percent organic by 2020.

However, 2020 is also the deadline for Bhutan to increase the generation of electricity from its current installed capacity of 1,400 MW to more than 10,000 MW. According to a 2009 protocol to a 2006 Bhutan-India agreement, New Delhi will provide grants and soft loans to Thimphu to produce 10,000 MW by 2020 and import all the surplus electricity.

Bhutan, a landlocked country with rugged mountainous terrain that is heavily dependent on India’s financial assistance, views its hydropower potential as the backbone of its economy. With its four major river systems, Bhutan has hydropower potential of about 30,000 MW, of which 24,000 MW is techno-economically feasible. Hydropower exports and infrastructure construction already constitute about 50 percent of Bhutan’s GDP, according to the Asian Development Bank.

Bhutan claims that all its hydropower plants are clean.

All projects in Bhutan are run-of-river and “good for [the] environment,” Economic Affairs Minister Norbu Wangchuk said. Bhutan’s export of electricity to India will make a “big contribution” towards mitigating global warming, he said, suggesting that India would otherwise have to burn fossil fuels.

“Presently, Bhutan offsets 4.4 million tons of CO2e through exports of hydroelectricity. In addition, Bhutan can offset up to 22.4 million tons of CO2e per year by 2025 in the region through the export of electricity from our clean hydropower projects,” said Bhutan in its pledge to UN Framework Convention on Climate Change.

“Our rivers are in deep valleys, where minimal human settlements are found. Our hydropower projects are subject to stringent environmental standards,” Wangchuk said, claiming that the social and environmental cost of hydropower projects will be low.

The construction of a project involves temporary damage, Wangchuk argued, comparing it with “an eyesore.” He claimed “the nature returns to a status better than the original” after the construction, as the projects look after the sites on a regular basis. He called hydropower “the flagship project that balances ecology and economy.”

Environmentalists disagree.

“Hydropower projects certainly harm the environment … both during and post construction,” Yeshey Dorji, an environmentalist and wildlife photographer in Bhutan, said.

Shripad Dharmadhikari, a graduate from the Indian Institute of Technology and formerly a full-time environment activist, agreed with Dorji. “Calling hydropower ‘clean’ is a misnomer,” he said. “We need to evaluate its entire impact on the ecosystem and communities.”

“Hydropower has huge impacts on the riverine ecology, both upstream and downstream, and on local communities,” added Dharmadhikari, who is a coordinator of India-based non-profit group Manthan Adhyayan Kendra, citing the Punatsangchhu project site in Bhutan as an example.

The site for two Punatsangchhu projects in Bhutan was one of the habitats of the endangered White Bellied Heron. Only about 200 birds remain globally, Dharmadhikari noted in a recent article. “The construction of the Punatsangchhu projects has further destroyed the habitat of the Heron, and pushed it – and its predators – into a much smaller area, endangering it further.”

If there are several hydropower projects in a cascade on a river, they can cause lasting damage to the river ecology and communities, he said, pointing out that excessive releases from the Kurichhu project severely impacted the Manas Wildlife Sanctuary, a World Heritage Site, downstream in India in 2004.

And hydropower is not clean, Dharmadhikari added, explaining that several studies have shown that hydropower can emit greenhouse gases, mainly in the form of methane, which is a much more potent GHG than carbon dioxide, from decaying organic matter. It is also important to recognize the impact of climate change and melting glaciers on hydropower projects, and the safety risks created due to events like glacial lake outburst floods, particularly in the Himalayan region, he said.

Even so-called run-of-river projects generate power using dams and tunnels, which divert the flow of the river and impact the biodiversity of the river downstream, Himanshu Thakkar, the coordinator of the South Asia Network on Dams, Rivers and People (SANDRP), said.

International financial institutions now accept hydropower as “clean” as a result of efforts being made by the hydropower lobby, added Thakkar.

The Indian government is also considering categorizing hydropower as renewable energy. In fact, the recent Paris Agreement seems to have accepted all sources of energy that do not require burning or fossil fuels as “clean,” overlooking safety concerns.

Hydropower can be a viable option, but only if certain conditions are met, activists say. And that’s a big “if.”

According to Thakkar, governments and industry players need to take decisions concerning hydropower in a democratic fashion with the involvement of local inhabitants, in terms of discussing compensations for displacement and other impacts. Transparency is equally important so that projects’ compliance with environmental and safety norms remain verifiable, he added.

But norms are generally not followed, Dharmadhikari said, pointing out that only one of the existing projects in Bhutan – the Kurichhu plant in Mongar – has a fish ladder, which allows migratory fish to travel to their breeding grounds. Reports of the ladder in operation are also not encouraging.

Local populations in Bhutan have already raised concerns, as Indian Prime Minister Narendra Modi admitted in a speech in February 2015 in the Northeast Indian state of Arunachal Pradesh. “I know the people of Arunachal Pradesh have certain reservations about some hydel projects. There were similar issues in Bhutan and Nepal, which have as much water resources. We negotiated with them. We are trying to set up power companies there. Through electricity alone, Nepal and Bhutan’s economic condition will improve,” Modi was quoted as saying.

Bhutan’s media has also reported that the planned 540 MW Amochhu Reservoir Hydro Electric Project would displace the oldest indigenous community of Lhop or Doya people.

In Bhutan, “hydropower projects are implemented in complete secrecy and with the greatest of opacity,” Dorji said. “If there is nothing to hide, there is no need for such clandestine conduct. There are no proper EIA (environmental impact assessments) done, there are no environment management plans drawn up, there are no basin studies carried out to determine the carrying capacity of the basins and there are no cumulative impact assessments carried out,” he added. “In fact, people believe that even environmental clearances are not obtained for the projects.”

The parliament of Bhutan, which became a democratic constitutional monarchy in 2008, is yet to approve a right to information bill, and journalists complain they can’t investigate government’s claims about hydropower. While Bhutan is known to be among the least corrupt nations in South Asia, the reason for secrecy, some suspect, could be due to the involvement of India and Indian companies in the hydropower projects.

Officials in Bhutan do not dare upset their counterparts in India, Bhutan’s largest trading partner. About 98 percent of Bhutan’s exports and 90 percent of its imports are with India. New Delhi reportedly insists that EIAs be done by WAPCOS, a consulting company under India’s Ministry of Water Resources, which has been accused of shoddy work and overcharging Bhutan, according to SANDRP.

Bhutan’s opposition leader, Dr. Pema Gyamtsho, agreed that “there should have been better rationalization in terms of numbers (of hydropower projects) so that an acceptable compromise could be reached between economic needs and environmental concerns.” He called hydropower “a necessary evil” for a “resource-strapped country like Bhutan” to attain self-reliance.

However, Bhutan’s hydropower projects do not make much sense even economically, as they lead to heavy debt due to the loans that Thimphu needs to take out for their construction. Moreover, they result in mere quantitative growth without producing substantial number of jobs for Bhutanese people. Furthermore, since the electricity is sold exclusively to India, the resultant economic “self-reliance” wouldn’t mean much in terms of Bhutan’s sense of sovereignty. India’s dominance will remain, if not increase.

It would perhaps be better for Bhutan to continue developing its soft power by remaining a beacon in efforts to check global warming and in responsible business practices, and instead explore diversification as a way to boost its economy. If Thimphu does choose to go ahead with its hydropower plans, it should do so in a transparent manner, or risk its green reputation.

Source:https://thediplomat.com/2016/02/bhutan-should-come-clean-on-hydropower-megaplan/

Myanmar textile industry incurs losses following dollar appreciation

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The Myanmar textile industry has incurred losses due to dollar appreciation, as reported by Myanmar Textile Entrepreneurs Association.
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The month of September saw a significant variation in the value of US dollar. Notably, the dollar value jumped from Ks 1,500 in early September to Ks 1,650 on 20 September.

Yin Yin Moe, Secretary, Myanmar Textile Entrepreneurs Association averred that the dollar appreciation has significantly affected the local apparel industry in Myanmar as they have to import all materials from foreign countries.

She also further added that some of the textile firms have suspended sales due to the losses and will resume only after normalcy is restored.

While remarking on the losses, Moe said that the local market may have incurred losses ranging from 50 to 80 per cent, though it will be difficult to measure the extent of losses accurately.

It is also imperative to note that some garment firms have temporarily suspended their workers owing to losses, while many have stopped recruiting new workers.

Source:https://apparelresources.com/business-news/trade/myanmar-textile-industry-incurs-losses-following-dollar-appreciation/

Hyundai Motor Myanmar to Hold Grand Opening Ceremony of Shwe Daehan Motors Factory

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Hyundai Motor Myanmar, official sole distributor of Hyundai Motor in Myanmar, will hold the Grand Opening of Shwe Daehan Motors a new car parts installation factory of Hyundai Motor Myanmar. The new Accent launching ceremony at Hyundai Showroom on 08th February 2019. Shwe Daehan Motors Factory is located in Thar Du Kan Industrial Zone, Shwe Pyi Tar Township, Yangon Region. They will manufacture Hyundai cars by using the semi-knocked-down kit (SKD) system.

The new model of the Accent is available as a small Sedan and is powered by a 6-speed automatic transmission 1.4-liter four-cylinder engine providing 100 Horse Power, many options are available such as 16-inch alloy rims, rear disc brakes, 6 airbags, Electrochromic Mirror, steering-wheel with audio controls, a console storage bin, Bluetooth phone and audio streaming. Power windows and locks, remote keyless entry, speed sensing automatic door locks and full auto air conditioning are standard on all trims, as is Hyundai’s excellent warranty.

Attractive exterior style, luxury interior with leather seats and multi infotainment system such as Navigation system, Touchscreen, Bluetooth system, wifi and smart technology are also exceptionally equipped. Moreover, car provides not only improved engine power and lower operational cost, but also lower emission and better dynamic performance.

New Accent, manufactured by Shwe Daehan Motors Factory, is given 3 years or 100,000-kilometer warranty. There will be pre-booking event from 28th January to 8th February and will be given a present SK Lubricants ZIC engine oil for pre-booked customers.

Source:https://www.mmbiztoday.com/articles/hyundai-motor-myanmar-hold-grand-opening-ceremony-shwe-daehan-motors-factory

Hyundai Motor Myanmar to Hold Grand Opening Ceremony of Shwe Daehan Motors Factory

Scion

Hyundai Motor Myanmar, official sole distributor of Hyundai Motor in Myanmar, will hold the Grand Opening of Shwe Daehan Motors a new car parts installation factory of Hyundai Motor Myanmar. The new Accent launching ceremony at Hyundai Showroom on 08th February 2019. Shwe Daehan Motors Factory is located in Thar Du Kan Industrial Zone, Shwe Pyi Tar Township, Yangon Region. They will manufacture Hyundai cars by using the semi-knocked-down kit (SKD) system.

The new model of the Accent is available as a small Sedan and is powered by a 6-speed automatic transmission 1.4-liter four-cylinder engine providing 100 Horse Power, many options are available such as 16-inch alloy rims, rear disc brakes, 6 airbags, Electrochromic Mirror, steering-wheel with audio controls, a console storage bin, Bluetooth phone and audio streaming. Power windows and locks, remote keyless entry, speed sensing automatic door locks and full auto air conditioning are standard on all trims, as is Hyundai’s excellent warranty.

Attractive exterior style, luxury interior with leather seats and multi infotainment system such as Navigation system, Touchscreen, Bluetooth system, wifi and smart technology are also exceptionally equipped. Moreover, car provides not only improved engine power and lower operational cost, but also lower emission and better dynamic performance.

New Accent, manufactured by Shwe Daehan Motors Factory, is given 3 years or 100,000-kilometer warranty. There will be pre-booking event from 28th January to 8th February and will be given a present SK Lubricants ZIC engine oil for pre-booked customers.

Source:https://www.mmbiztoday.com/articles/hyundai-motor-myanmar-hold-grand-opening-ceremony-shwe-daehan-motors-factory

Myanmar Expects to Attract $200 Billion Over the Next Twenty Years

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The 2019 Invest Myanmar Summit was held on January 28 and 29 in Naypyidaw, and jointly organized by the newly founded Ministry of Investment and Foreign Economic Relations and the Union of Myanmar Federation Chamber.

The two-day summit exhibited over 200 government and private investment projects worth $20 billion, and included discussion on sustainable and balanced development projects and investment banks.

At the summit, Daw Aung San Suu Kyi, State Counsellor of Myanmar, talked about the investment opportunities and visions for Myanmar in her speech.

Citing the newly adopted Myanmar Investment Promotion Plan, she said that Myanmar expects to attract up to $200 billion in foreign investments over the next 20 years, and can be a country with a middle income bracket.

One sector in particular that she pointed out was agricultural. This is a promising area for investors due to the fact that Myanmar owns the largest area of land in South East Asia.

“Every region and state has their own advantages, but some sectors need government support for investment in order to attract investors. We want Myanmar to become investment hub in the region by creating a good investment environment for local and foreign investors,” said U Pyo Min Thien, Chief Minister of Yangon.

ASEAN + 3 Macroeconomic Research Office estimates Myanmar’s economic development would increase to 7.4 percent this fiscal year, and estimates that the inflation rate in the country will be stable at 5 percent in fiscal year 2019.

This is the right time, she said, for Myanmar and the region at large to act boldly by adopting high ambitions based on these positive estimations.

Given the fact that 10 ASEAN countries, along with China and India have the combined consumer market of 3.5 billion people worth $15 billion, accounting 20 percent of global GDP. Daw Aung San Suu Kyi said that she hopes the region rise to become a significant market.

She also acknowledged that there are challenges in Myanmar and encouraged investors to turn the challenges into opportunities.

Dr. Zaw Myint Maung, Chief Minister of Mandalay Region, remarked that this time is an important turning point for Myanmar economy and showcasing investment projects can strengthen trust of the investors.

Invest Myanmar Summit 2019 received around 1,600 attendances including twelve union ministers, ten chief ministers and 150 representatives from regions and states.

Source:https://www.mmbiztoday.com/articles/myanmar-expects-attract-200-billion-over-next-twenty-years

Ministry of Industry’s achievements in the past two years

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With the aim of strengthening effective managements of the country, Ministry of Industry has set up four polices and two visions in accordance with 12 economic objectives of the country.

Ministry of Industry has aimed at utilizing modernized and advanced techniques of agriculture to develop Agro-base industries, Agri-Business, Agro-Products, and continue the task for the establishment of Heavy Industries.
In order to strengthen increased exports, efforts are being made to drive the implementation of small and medium enterprises can stimulate substitution of imports with domestic products and also strengthen increased exports.

Moreover cooperation between private sectors and inviting participation has made to invite technical know-how and investments. The Ministry also tries to increase Production of Value-Added Commodities by effective utilization of natural resources and raw materials. It is of great importance to ensure sustainable development without environmental impact and to utilize energy efficiently and renewable energy.

Quality of products
To assess the quality of products of micro, small and medium enterprises nationwide, region and state governments are urged to exhibit local products of micro, small and medium enterprises-MSMEs products in respective regions. In order to gain balanced growth, MSMEs are required to cooperate more with each other at regional and national level.

In accordance with the ASEAN Strategic Action Plan for SME Development ASEAN SAP SMED 2016-2025 plan, Myanmar is also working for growth of the country’s SMEs. Therefore a holistic way of viewing is needed to address the challenges and obstacles facing in the country.

Early stages of industrialization
Myanmar is still in the early stages of industrialization, around 57% of the total population is employed in the agricultural sector and there can be seen a stagnation of growth. Myanmar is highly dependent on exports of natural resources like natural gas, agricultural products, a few primary commodities and labour-intensive manufacturing products with low value-added. The Ministry of Industry has focused on how to promote the private sector based on industrial modernization.

The majority of the manufacturing industries are labour-intensive products like textiles and garments. That’s why it is needed to produce higher-value commodities which can achieve long-term economic growth in the long run. In this regard, the ministry has put priorities on the betterment of Human Resource Development (HRD), along with Small and Medium Enterprises Development and Restructuring of State-owned enterprises. It is needed to invest in the education sector towards the development of high-skilled human resources.

Advantage of labour market
Myanmar is rich in natural resources and has the comparative advantage of low-cost labour which can contribute the economic growth.

Moreover, Myanmar has great growth potential due to its advantageous geographical location at the juncture of the Association of Southeast Asian Nations (ASEAN) and borders of the world’s most dynamic and fast-growing countries such as China and India. It is of great importance for the rural communities to benefit from the economic growth and industrial development.

Small and Medium-sized Enterprises (SMEs)
SMEs are the main driving force of the country’s economy and the government is striving to obtain cash investments, main infrastructure requirements of electrical power and obtaining loans without collateral.
According to a research conducted by Central Statistics Organization, 98 per cent of the more than 120,000 businesses registered in Myanmar are SMEs. In the employment sector, of the 21.9 million workers, 83 per cent are working in un-registered SMEs.

As for the entrepreneurs, they should take advantage of the Myanmar Companies Law, which guarantees to consider a company with a 35 per cent share of foreign investment as a citizen-owned company.

Human resource development
Ministry of Industry sends government staff to foreign countries where they can attend workshops and seminars with the aim of empowering human resource development and raising living standards as well as socio-economic status of the country.

While the demand for skilled labour is high in Myanmar, there are not enough trained workers to meet the needs of the job market. And yet youths and young adults want skill training and employment opportunities. The Ministry of Industry has opened many vocational training schools with the aim of creating job opportunities for the youths in Myanmar.

During the training period, the trainees have to visit the industrial zones and learn practical experiences. The one who got the certificate of successful completion of the course can join any of the factories or mills in any country. The school (SITE) admission has increased up to the some 240 students. The school has taught auto industrial production system and its technology, computer-controlled metal cutting and designing, management and technology on water and sewage, technology on renewable energy such as solar and wind power and training for skill on wood finished products and furniture.

Source: http://www.industry.gov.mm/en/article/news/904

The Signing ceremony for the manufacturing of electric buses

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“We need to use alternative fuels, as the fossil fuels we are burning today will be exhausted soon”, said Union Minister for Industry U Khin Maung Cho at the signing of an agreement to manufacture electric buses and erect charging stations in Myanmar.

At the signing ceremony, held at the Research and Development Bureau in Yedhashe, the Union Minister said the country is promoting the use of renewable energy, while reducing the consumption of fossil fuels. Electricity may be the best tool in alleviating the consequences of burning fossil fuels. So, the global production and use of electric cars is on the rise, as fossil fuel-burning cars are being replaced by hybrid and electric cars. Myanmar also needs the assembling of electric cars to protect the natural environment and reduce carbon emissions.

Accordingly, the ministry will manufacture electric buses and charging stations, in cooperation with Green Power Myanmar Co Ltd, by adapting the technology of Csepel Holding Limited of Hungary. He also said the ultimate aim is to turn Myanmar into an electric bus and parts exporter, as well as the Southeast Asian hub for electric vehicles. The Hungarian cooperation will provide Myanmar with new manufacturing, repair and maintenance technologies. Moreover, the country can earn income from exports and generate job opportunities.

Honorary Consul of Hungary for Myanmar Daw Tint Tint Lwin spoke words of greetings and Executive Director of Green Power Myanmar Co Ltd, U Tin Maung Kyin, and Director of Csepel Holding Limited Kalaichelvan explained the electric car production and charging station erection program through the use of video clips.
Managing Director No 1 Heavy Industry U Kan Chun and Managing Director of Green Power Myanmar Co Ltd Daw Nilar Kyin signed the agreement in the presence of the permanent secretary of the Ministry of Industry and Director Kalaichelvan.
Following this, Green Power Myanmar Co Ltd and Oriental Transportation Enterprise Co Ltd signed an agreement to manufacture 300 electric buses for Myanmar.

Green Power Myanmar Co Ltd, which is working with Csepel Holding Limited of Hungary has already taken orders for 7,000 electric buses for Sri Lanka, India and Singapore, and another 300 for Myanmar. Because of the lower fuel costs, the business expects to see profits within three to five years.

As electric buses are smokeless vehicles that do not need lubricants, their maintenance costs are low. Using ten-year batteries, they are light vehicles which can travel up to 300 kilometers. There are charging stations and modern services tied into an e-ticket system. Because of such advantages, a new transport sector is expected to emerge in Myanmar.

The Union Minister, MPS, the Honorary Consul, Hungarian engineers and officials toured the electric car and hybrid car assembly lines of No 12 Heavy Industry, No 15 Heavy Industry and the No 26 Heavy Industry. —MNA (Translated by TMT)

Source:
http://www.industry.gov.mm/en/article/news/1033

BTMA urges Bangladesh govt to import gas at the soonest

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Bangladesh Textile Mills Association (BTMA) acting president Mohammad Ali Khokon urged the government at the ongoing 15th Dhaka International Textile and Garments Machinery Exhibition to accelerate the process of liquefied natural gas (LNG) import as per plans to overcome the current power crisis that has slowed down investment in the textile sector.

The improvements in the power sector are inadequate for the heavy textile industry, which is also concerned about the huge deficit in the gas sector, Bangladesh media quoted him as saying.

Jointly organized by the BTMA and Yorkers Trade and Marketing Company, the February 8-11 exhibition is hosting 1,100 exhibitors from 36 countries, including Austria, Belgium, Brazil, China, Denmark, France and Germany.

The government and readymade garments manufacturers are jointly working to attain $50 billion export target by 2021, said state minister for finance MA Mannan, who was the chief guest at the inaugural ceremony.

The minister assured the industry representatives about the government’s commitment to do everything possible to boost the textile industry. (DS)

Source:https://www.fibre2fashion.com/news/textile-news/btma-urges-bangladesh-govt-to-import-gas-at-the-soonest-240547-newsdetails.htm

No slowing for commercial, industrial property development

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While residential and retail property took a huge knock, Stats SA revealed in September that the star performer during the second quarter of this year has been construction, and this is good news for the commercial and industrial property sector, says John Whall, CEO of Heartwood Properties.

Despite South Africa slipping into a technical recession, activity in the construction sector has increased by 2.3%, mainly due to the rise of non-residential buildings.

“Property prices for commercial and industrial zoned and serviced land seems to be maintaining their value with no notable reduction in prices. Especially zoned and serviced land that is commanding extremely high prices in Cape Town and in the prime areas of Joburg. We noticed that commercial and industrial investment properties with good leases in place are also holding their value in this market,” says Whall.

Delayed impact of land reform

With land reform looming, the country has been unsure about the outcome of the decision and Whall believes that even if certain parts of agricultural land should be converted to zoned serviced land, it will still take up to 10 years to materialise. What might eventually happen is that the risk of holding large portions of agricultural land may even push up the price of zoned land in the future.

As for commercial, the rentals of B and C grade offices have reduced due to higher vacancies but the vacancy levels of A and P grade space remains relatively low. Whall predicts that the ongoing lower vacancies of good warehouse space especially in Cape Town could result in increased rentals for the better properties, even as the economy slows down. This is partly due to the limited supply of new space onto the market.

“We’ve seen a bit of a lag in the Cape Town rental rates when compared to prime warehouse space in Gauteng and KZN and we could expect these rentals to increase above inflation over the next 18 months,” concludes Whall.

This means that things are looking up for this sector and shareholders shouldn’t rush to offload their shares or even their properties just yet. The overall market will react to any increases in interest rate hikes and that could have an impact on the sale prices of investment properties.

Source:https://www.bizcommunity.com/Article/196/698/182772.html

Industrial, logistics accommodation growing in strength

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According to JLL’s latest report, Trade trends – the impact of trade imports on logistics and warehousing, the inflow of imports, mostly consumer goods, is contributing to increasing demand for storage, logistics and warehousing services in South Africa. A short update on the original research conducted in 2016, the report indicates a clear correlation visible in the trend of wholesale and retail trade sales in comparison to imports

Zandile Makhoba, head of research for Sub-Saharan Africa, JLL, comments: “As the technology economy advances, tertiary sectors – which provide products and services to all other industries in the economy – will continue to dominate. It is this context in which industrial and logistics accommodation is growing in strength.”

Changing development specifications

The report highlights the shifting demand for warehousing and logistics accommodation, and along with it the changing development specifications. For example, historically, industrial buildings required larger office components and needed to host higher employee numbers. In more modern industrial buildings, the office component has reduced significantly, and buildings are made to accommodate increased machinery and technology use as opposed to labour.

Four key factors are on the must-have list for modern industrial occupiers: Location is a big motivator with accessibility and visibility very important. Popularity of buildings in areas such as Jet Park, or Waterfall Estate with its highway frontage and opportunities for outdoor marketing, is evidence of this. Then the development of aerotropolis cities in KwaZulu-Natal (Dube Aerotropolis) and Gauteng (Aerotropolis Ekurhuleni) has also contributed to higher demand for accommodation near the King Shaka and OR Tambo international airports.

Other needs include larger yard space (to accommodate larger trucks and cargo vehicles), high volume maxi-units (occupiers are looking for big boxes, particularly for distribution and logistics use) and security (making access-controlled business parks popular).

No real threat of sharp oversupply

The report confirms that most developments to date have been non-speculative in nature, so there is no real threat of a sharp oversupply in the market. However, developer confidence has seen the rise of speculative developments which cater for more flexible lease terms. These adjusting lease terms are an indication of the increased presence of international occupiers and retailers, and the local market is beginning to align with international norms in the industrial leasing market.

Makhoba concludes, “The expansion of light industrial accommodation is also an indication of the increased pressure on transport infrastructure in South Africa, which is already showing signs of deterioration. The good news is that the public sector is making the necessary investments to improve infrastructure capacity to cope with this growth.”

Source:https://www.bizcommunity.com/Article/196/711/183731.html