Asia Pacific

Don't expect the Bank of Japan to come to the rescue if the sales-tax tussle triggers financial-market turmoil, people familiar with the bank's thinking say, The Wall Street Journal reported. Debate over the plan to double the sales tax in two stages starting in April has heated up over the past six weeks. Some advisers to Prime Minister Shinzo Abe have called for him to postpone or moderate the increase, arguing that a higher tax burden would damp consumer spending and threaten economic recovery.

For most of its past 30 years of growth averaging 10.5 per cent, China did not rely on credit. But it has become ever more reliant on debt since the global financial crisis, drawing on banks, bonds and an array of lightly regulated institutions to keep its economy roaring. This debt dependency has put China at a dangerous crossroads. If the government is serious about containing financial risks, growth may slow sharply as it weans the country off debt, burdening the global economy. Yet that prospect is less frightening than the alternative.

Petroliam Nasional Bhd., Malaysia’s state oil company, said its purchase of share in a field owned by OGX Petroleo e Gas Participacoes SA will hinge on the Brazilian oil producer’s debt restructuring plan, Bloomberg Businessweek reported. The company, known as Petronas, has yet to complete the transaction after agreeing in May to pay $850 million for a 40 percent stake in two blocks of the Tubarao Martelo field off Brazil to Eike Batista’s OGX, Chief Executive Officer Shamsul Azhar Abbas said today. Petronas isn’t involved in OGX’s debt restructuring, he said.

Central banks in the developing world have lost $81bn of emergency reserves through capital outflows and currency market interventions since early May, even before renewed turmoil in emerging markets, the Financial Times reported. The figure, which excludes China, is equal to roughly 2 per cent of all developing country central bank reserves, according to Morgan Stanley analysts, who compiled the data from central bank filings for May, June and July. However, some countries have suffered more precipitous drops.

Companies as diverse as retailers and gadget makers are reporting weakened results from China, as the economic slowdown there blunts Beijing's drive to make the nation's consumers a bigger driver of growth, The Wall Street Journal reported. Last month, Canon Inc. cut the Japanese company's year-end profit forecast to ¥380 billion ($3.89 billion), off 16% from forecasts three months earlier, citing in part the slowdown in China. Nike Inc.

When European leaders engineered a harsh bailout deal for this tiny Mediterranean nation in March, they cheered the end of an economic model fueled by a flood of cash from Russia. Wealthy Russians with money in Cyprus’s sickly banks lost billions. But the Russians, though badly bruised, are now in a position to get something that has previously eluded even Moscow’s most audacious oligarchs: control of a so-called systemic financial institution in the European Union, the International Herald Tribune reported.

The future of online retailer Ruslan Kogan’s budding mobile business, Kogan Mobile, hangs in the balance after its wholesaler ispONE entered into voluntary administration and cancelled all services from its telco provider, Telstra, Business Spectator reported. In a statement, Telstra Wholesale confirmed that it would continue to support one of the two major telco brands serviced by ispONE. Up to 280,000 customers from both brands are set to be affected by the move.

Chinese regulators have tried for months to rein in lending by the country's banks, most recently by instigating a cash squeeze that left some scrambling for funds. But the banks have stayed one step ahead, keeping the lending spigots open largely through increasingly complicated transactions, The Wall Street Journal reported. The banks' latest effort in their cat-and-mouse game with regulators involves making corporate loans appear on their balance sheets as less risky loans to banks.

Fresh evidence of rapidly rising house prices underlined the role a resurgent property sector has played in supporting China's fragile growth, but also raised fears that a sharper correction would be required to bring prices into line with income. Prices rose an average 6.7% year-over-year in July, up from 6.1% in June, calculations by The Wall Street Journal based on official data released Sunday showed. On a month-to-month basis, the increase in prices moderated slightly.

Vietnam is the world's biggest producer of the strong-flavoured robusta beans, used for instant coffee, and has experienced a decade of solid growth which has seen coffee exports reach $3 billion a year, Reuters reported. But its coffee industry is now in crisis, plagued by tax evasion, mismanagement, insolvency, high interest rates and a credit squeeze. Many coffee operators are trapped with crippling debt and banks are reluctant to lend them more money.