Corporate payment terms in Taiwan and other Asian economies last year showed initial signs of a recovery, but the blow from the COVID-19 pandemic this year is expected to wipe out any improvement, French credit insurer Coface SA said yesterday.
Average payment terms last year improved, shortening to 67 days from 69 days a year earlier, Coface said.
Although 65 percent of companies reported experiencing payment delays, slightly up from 63 percent, the average payment duration dropped from 88 to 85 days, it added.
Coface attributed the improvement to supply chain realignment and an additional liquidity injection from the US Federal Reserve.
Japan has the longest payment terms at 91 days, followed by China at 86 days and Taiwan at 72 days, while all other Asian economies had payment terms below the average, Coface said.
Payment delays were longest in China at 96 days, followed by Malaysia at 84 days and Singapore at 71 days, it said, adding that payment delays in Thailand gained seven days to 69, and picked up two days to 67 in both Taiwan and Malaysia.
The majority of respondents, 48 percent, linked the increase in payment delays to customers’ financial difficulties, which were mainly due to a lack of financial resources and to fierce competition that is squeezing margins, it said.
Average payment terms were longest in the energy, information and communications technology (ICT), and construction sectors, where more than 20 percent of companies offered payment terms of 120 days or longer, it said.
The three sectors also recorded the longest payment delays, with 24 percent of respondents in energy, 28 percent in ICT and 26 percent in construction, reporting payment delays of 120 days or longer.
Ultra-long payments delays (ULPDs) — longer than 180 days — highlight a risk of cash flow deterioration in certain regions and sectors, Coface said.
“In Coface’s experience, 80 percent of ultra-long payment delays across the world are never paid,” it said.
Asian companies that were experiencing ULPDs in excess of 2 percent of their annual turnover last year dropped to 31 percent from 38 percent in 2018, it said.
However, the number of companies reporting ULPDs in excess of 10 percent of their annual turnover remained unchanged at 13 percent.
The credit improvement might not be sustained this year as the virus outbreak has darkened the landscape and many Asian economies might experience the worst contractions since the Asian financial crisis of 1997 and 1998, Coface said.
The credit company expects economic growth in Asia, excluding China, to slow to 0.3 percent this year, compared with a 4.6 percent increase last year, it said, adding that a recovery might not happen until next year.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last