News

Samsung Heavy Industries has announced the cancellation of two major contracts with Russia’s Zvezda Shipbuilding Complex, collectively valued at 4.85 trillion won (approximately US$3.54 billion), citing what it describes as an “illegal termination” by the Russian shipowner. The South Korean shipbuilder disclosed in regulatory filings that it was formally notified by Zvezda in June 2024 of the unilateral cancellation of the agreements, with a demand for the return of advance payments already made. The contracts, awarded in 2020 and 2021, related to the supply of parts and blocks for 10 icebreaking LNG carriers and seven icebreaking shuttle tankers. In response to the termination, Samsung Heavy initiated arbitration proceedings in Singapore in July to contest the legality of the move, while simultaneously entering into discussions with Zvezda in an effort to resolve the dispute. Amid protracted geopolitical instability due to the ongoing Russia-Ukraine conflict, the outlook for contract fulfilment and broader business operations became increasingly uncertain. In light of these conditions, Samsung Heavy ultimately opted to terminate the contracts and pursue a claim for damages, a decision taken to safeguard its legal and financial interests. The company did not disclose the specific timeline or estimated financial impact of the damage claims, but emphasised its commitment to protecting shareholder value and maintaining legal integrity throughout the arbitration process. -Business Times

The Johor-Singapore Special Economic Zone (JS-SEZ) is drawing significant attention from Japanese investors, including major financial institutions, as interest in the strategically located zone continues to broaden. According to Iskandar Regional Development Authority (IRDA) chief executive Datuk Noorazam Osman, the Invest Malaysia Facilitation Centre Johor has begun receiving enquiries from Japanese firms in key growth sectors such as the digital economy, technology, and the electrical and electronics industry. “Some companies have already requested meetings with the Johor Menteri Besar, Datuk Onn Hafiz, which is a clear indicator of serious investor interest,” said Noorazam, speaking on the sidelines of the Nikkei Forum Medini Johor yesterday. He also noted that leading Japanese banks, including Mizuho Bank and Sumitomo Mitsui Banking Corporation, are actively exploring opportunities to support their clients’ expansion into the JS-SEZ. While Singaporean, Chinese and South Korean firms continue to form the core base of international interest, Noorazam added that interest from European markets is also on the rise. He believes the two-day forum, themed Driving Asia’s Innovation Hub, offers a strategic platform for foreign investors to assess JS-SEZ’s potential as a regional investment gateway into the ASEAN market. “With global uncertainties on the rise, investors are increasingly seeking stable and scalable entry points into new markets. JS-SEZ offers precisely that, as a hub linked closely with ASEAN,” he said. Noorazam also participated in a panel session titled Johor Focus: Building the Future with JS-SEZ, alongside Iskandar Investment Berhad president and chief executive officer, Datuk Idzham Mohd Hashim. The forum delved into key regional investment themes, including the energy transition, the evolving role of financial institutions in boosting foreign direct investment across ASEAN, and long-term sustainability. During a panel discussion, Affin Hwang Investment Bank’s head of research, Loong Chee Wei, outlined several concerns raised by prospective investors. These include the importance of robust government policies and the need to address talent shortages. “The government appears to be responding proactively, such as by mandating that investors provide job opportunities to locals,” he said. “There is also growing demand for modern, integrated industrial parks that offer essential infrastructure, such as workers’ dormitories. These facilities will be critical in attracting new industries.” Meanwhile, Malaysian Investment Development Authority (MIDA) deputy chief executive officer Sivasuriyamoorthy Sundra Raja indicated that environmental, social and governance (ESG) compliance is likely to become a requirement for both foreign and domestic investors. “Currently, ESG compliance is not mandatory for local companies. However, that may change. We are reviewing our incentive framework in the third quarter, and ESG will be included in the evaluation scorecard for tax incentives,” he said. He added that these measures could be applied to strategic industries such as steel manufacturing and that ESG compliance may soon be a prerequisite for obtaining manufacturing licences. The Nikkei Forum, expected to be officiated today by Prime Minister Datuk Seri Anwar Ibrahim, is set to host approximately 800 participants both on-site and online. -The Star

Beijing is facing mounting pressure as its latest consumer stimulus campaign prompts overwhelming demand for subsidies, particularly in wealthier provinces. The government’s programme to boost household spending by subsidising select goods has led to a surge in retail sales, which recently recorded the highest growth in over a year. However, the initiative is testing the limits of local authorities’ financial capacities. The subsidy scheme, designed to incentivise trade-ins for home appliances and other select products, has quickly depleted allocated funds in several regions. Provinces such as Henan and the municipality of Chongqing have suspended the disbursement of subsidies and halted new applications, according to official statements and Chinese media reports. Meanwhile, Jiangsu and Guangdong have responded by imposing daily quotas to ration access to the programme. These interruptions reflect the broader challenges Beijing faces in restoring consumer confidence. Authorities have identified domestic consumption as the core engine for economic recovery in 2025, particularly as the economy braces for escalating trade tensions, including anticipated tariffs from the United States. To support this strategic pivot, the central government has doubled its issuance of ultra-long special sovereign bonds compared to last year, raising the budget for the cash-for-clunkers initiative to 300 billion yuan. Over half of these funds have already been distributed or are in the process of being allocated to local governments. “The rapid use of the subsidies suggests the programme is effective in expanding sales of the products it targets,” said Ding Shuang, Chief Economist for Greater China and North Asia at Standard Chartered. Nonetheless, the pace of uptake has raised questions about the sustainability of the programme. With some of China’s most affluent regions already exhausting their funds, the central government may need to reassess both the scale and structure of its stimulus mechanisms to avoid undermining its long-term fiscal and economic goals. -Bloomberg

President Prabowo Subianto of Indonesia is set to meet with Russian President Vladimir Putin in St Petersburg later this week, as the two nations seek to strengthen bilateral relations, potentially advancing towards a strategic partnership. The engagement will coincide with Russia’s annual economic forum, where President Putin is expected to deliver a keynote address and host foreign dignitaries. Indonesia’s Foreign Minister, Sugiono, who goes by a single name, confirmed the upcoming dialogue and underlined Jakarta’s intention to deepen cooperation with Moscow across key sectors including trade, investment, security, energy and tourism. Speaking alongside Russian Foreign Minister Sergei Lavrov in Moscow, Sugiono noted the importance of formalising stronger ties between the two countries. “There is chemistry between both of the leaders,” Sugiono remarked, adding that both sides should explore elevating the relationship to the level of a strategic partnership. Lavrov, for his part, characterised the bilateral relationship as “trustworthy, friendly and constructive”, and welcomed the close diplomatic ties with Jakarta. The talks come at a time of growing international engagement for Indonesia, which became a full member of the BRICS grouping earlier this year. The Southeast Asian nation has been increasingly vocal about diversifying its global partnerships and reducing over-reliance on traditional Western alliances. Meanwhile, Indonesian authorities reiterated their position on regional security matters, having previously dismissed a 2023 report by defence publication Janes which suggested Russia had requested military aircraft basing rights in Papua, Indonesia’s easternmost province. The report had raised concern in neighbouring Australia, given Papua’s proximity—approximately 1,200 kilometres—to the northern Australian city of Darwin. -Reuters