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Agarwood Planting Popular in HK
2013-05-01 20:08:48 CRIENGLISH.com Web Editor: Wang Wei A boom in demand for incense has encouraged some farmers near Hong Kong to plant the trees in hopes that one day they may be rewarded with valuable agarwood. A bracelet made of valuable agarwood. [Photo: findart.com.cn] A boom in demand for incense has encouraged some farmers near Hong Kong to plant the trees in hopes that one day they may be rewarded with valuable agarwood. But it is an occupation only for the patient, as the trees take 13 years to produce wood suitable for incense. Incense is popular across much of Asia and is burned in private homes and temples. The unique aroma is created when a fungus infects aquilaria trees, resulting in a darkening of the wood, which is called agarwood. Joey Yuen is manager of Wing Lee Sandalwood, which makes incense in Hong Kong. “Agarwood is formed when the tree is hurt. For example, it is attacked by insects, lightning or it is infected with bacteria. The tree will produce some substance to heal the wound. Some oil will then appear in the wound, and that is the agarwood.” Agarwood is rare and expensive because only 10 percent of the naturally growing incense trees are attacked by the right kind of fungus, and it can take 20 years for the agarwood to develop. Joey Yuen says increasing demand for incense in East Asia has driven up the price of Agarwood to an all-time high. “As agarwood became popular, many people in Mainland China would come over to log the trees and sell them.” The stocks in this shop were harvested a number of decades ago, mostly in Vietnam, which is said to produce the best agarwood. Agarwood is measured using the traditional Chinese unit of weight, the catty. A high quality catty, that’s about 600 grams of incense sticks, may fetch thousands of dollars. A piece of wood with high agarwood content is heavier. The price of incense sticks made of agarwood range from 260 to 10,000 U.S. dollars per catty. Hong Kong has long been famous for producing incense. Villagers would plant fruit and aquilaria trees, from which agarwood is extracted, around their communities, and these became known as fung shui woodland. Professor Jim Chi Yung from the University of Hong Kong says that originally around 60 to 80 percent of fung shui woodland consisted of incense trees. “Only about 10 percent of the trees have this fungal invasion; hence, the development of high prices for agarwood. So when these so-called agarwood hunters went into the forest, they would indiscriminately chop down the trees.” Chan Koon Wing has been growing and harvesting incense trees along with his grandfather since childhood. Four years ago, Chan opened an incense tree farm, and has now planted around 10,000 incense trees. Collectors around the world are seeing this as an investment opportunity, some have even started their own incense trees farms. Although his trees cannot be harvested yet, Chan says prices will depend on the quality of the agarwood and normally range from six to 260 U.S. dollars per gram. He says the best type can cost as much as 1,000 U.S. dollars. But it is a slow process. “It’s like planting a normal tree. When it gets to eight years you have to hurt the tree to force it to produce oil. Then you have to wait another five years for the oil to become good quality, so it can be harvested.” Despite the growth in tree farms such as Chan’s, they are unlikely to satisfy the growing demand for agarwood. In 2007, the Vietnam Chemical Technology Institute published a study suggesting that the supply of agarwood oil could only satisfy 40 percent of demand. With natural supplies diminishing and farmed products requiring many years before they are ready to harvest demand will continue to outstrip supply. For CRI, I am Li Dong. Continue reading
Business Says End Carbon Tax, Bring In ETS
By Nick Perry From:AAP April 18, 2013 A GROWING chorus of business and industry groups is calling for Australia’s carbon tax to be scrapped now and replaced with an emissions trading scheme (ETS) and a floating price. Opposition to the fixed-price regime – currently $23 per tonne of CO2 emissions – has grown since a failed bid to improve Europe’s ETS saw market-based prices there plummet to below $4 per tonne. Market analysis released on Thursday forecasts Australia’s carbon price could plunge to $2.70 when Labor’s carbon pricing mechanism links with Europe’s ETS in July 2015. The fixed price is due to rise to $24.15 in July this year and $25.40 in 2014, before the price is set by the market in 2015. Industry is calling for an earlier transition to a floating price, arguing it would help drive down power costs for businesses and households. Wesfarmers chief Richard Goyder said companies didn’t want to pay significantly more for emissions than the rest of the world. “I think business would welcome a more market-based price, considering the cost pressures we’ve got at the moment,” he said on Thursday. The Australian Industry Group said by abolishing the fixed-price period and linking with Europe, Australia’s emissions targets would still be met but at a lower cost to business. “We should make the most of the opportunity to meet our own targets at least cost,” said AiGroup chief executive Innes Willox. In its latest forecast, energy and carbon advisory firm RepuTex predicted Australia’s carbon price would average just $2.70 when it’s floated until 2020. Treasury anticipated a carbon price of $29 in 2015/16, but since Europe’s price spiral Labor has confirmed the forecast would be revised in the May budget and an updated revenue outlook provided. RepuTex executive director Hugh Grossman said the price plunge would see companies meet their emissions targets at a much lower cost and spur a revival in coal-fired power generation. The total impact would be an immediate reduction in wholesale electricity prices. “They’ll basically drop to levels pretty close to what we would have seen before the introduction of the carbon pricing mechanism,” Mr Grossman told AAP. Meanwhile, opposition climate action spokesman Greg Hunt says the coalition agrees using markets was the best way to tackle global warming – but not with a carbon tax. Using a “classic market mechanism”, Mr Hunt said the coalition would directly fund activities that reduced CO2 emissions – known as abatement – like revegetation and improving soil carbon. Abatement would then be purchased at the lowest possible cost via a reverse auction, a process where prices are driven down by competing sellers. In a speech to the Australian National University on Thursday evening, Mr Hunt will argue this carbon buyback approach would reward innovation and initiative while meeting Australia’s climate targets. “Whereas the carbon tax tries to drive up the price of basic services in order to force down use … we will not provide a dollar unless there is an actual reduction of emissions,” he will say. “Our Direct Action Plan is a simple, low-touch market mechanism.” Continue reading
Islamic Investors Chase Yield, Assets In Australia
PUBLISHED: 16 APR 2013 19:00:50 | UPDATED: 17 APR 2013 To avoid interest payments, Islamic finance structures favour physical assets that are often effectively bought by the investors. Photo: Ben Rushton SHAUN DRUMMOND The prospect of higher yield in Australia is driving Islamic investors Down Under just as it is the broader global investment community, but the focus on capital-intensive industries is adding to its appeal for this source of funds. Managers of two fledging Islamic funds set up in Australia in the past 18 months say they knew these factors presented opportunities, but they were still surprised by the level of interest from Islamic investors. Amanie Advisors’ Melbourne-based representative, Mark Darras, says he was virtually mobbed by Islamic banks and sovereign wealth funds on a trip to the Middle East in November. The Advisor has identified asset leasing as the best entry into the Australian market for Islamic investors as it is “very sharia compliant”, says Darras. The founder and chairman of Amanie, Mohd Daud Bakar, visited Australia on Tuesday to host the firm’s first Islamic investment forum in Australia which brought together Middle Eastern and Malaysian investors with Australian companies to discuss opportunities and what Australian companies would have to do to create the appropriate structures for investment. A private meeting between about 20 investors, primarily from the Gulf States, and about eight representatives of Australian companies was scheduled for Wednesday. SUKUK YIELDS NEAR RECORD LOWS Samar Madini, vice-president of fixed income and islamic finance products at Dubai-based SJS Markets, said a shortage of “safe” investment instruments and the growth in cash liquidity globally have pushed yields on Islamic bonds to near-record lows of less than 3 per cent for five years tenure. As a result, he expects more Western firms issue sukuk (Islamic bonds) to take advantage of the demand and the low rates. “We are already seeing Western institutions issuing sukuk, such as GE and Nomura and I expect more Western institutions are going to issue sukuk to attract the islamic banks, and other institutional investors.” Australian companies are also considering issuing sukuk in Malaysia . As well as prohibiting the payment of interest, sharia law doesn’t allow Islamic investors to put money into anything connected with gambling, alcohol, tobacco and pork products. To avoid interest payments, the Islamic finance structures favour physical assets that are often effectively bought by the investors, which then collect a lease off the issuers in lieu of interest payments. CLEAR GUARANTEES ON CASH FLOW WANTED Bakar says the funds being targeted in the Middle East needed to invest a minimum of $50 million and the primary areas in Australia that would be suitable would be financing asset leasing in aviation, infrastructure, mining, power plants and in the medical and pharmaceutical industries. He says they only have “soft commitments” from investors at the moment, but it is understood the first foray will be into aircraft leasing, with a possible $US107 million investment being discussed. “We help co-fund the purchase and then lease the aircraft on,” explained Darras. They are keen to invest in assets linked to companies with clear guarantees on cash flow, such as mining offtake agreements in India and China. “Investors are looking at the underlying economy, and production of this kind of assets in this country,” said Bakar. Sydney-based Crescent Wealth, meanwhile, is accelerating its push into introducing offshore Islamic institutional investors to Australian companies. Managing director Talal Yassine says both investors and issuers have shown interest, prompting the fund to accelerate plans beyond their present super fund directed at Australian Islamic investors, with their first official trip to see investors in the Middle East and Malaysia in May. SELF-MANAGED ACCOUNTS FAVOURED Bakar says his fund is “targeting a few sovereign funds and a few other dedicated funds”. Some want to put their money into a managed fund, but many favour a self-managed account because they want to show they are the direct owner of the asset, Bakar says. Bernie Ripoll, federal parliamentary secretary to the Treasurer, told the forum in Melbourne on Tuesday that the Labor government wants to reduce any barriers to Islamic finance in the country but that it was still considering the recommendations of a Board of Taxation review handed to the government last July. He said there were no “substantive” barriers at the Commonwealth level. One of the biggest impediments is state-based stamp duty on property transfers, which affects Islamic investments as they involve a transfer of assets into and out of special purpose vehicles in order to avoid interest payments. Continue reading
