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CAPTURES NEWS MONITORING

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01 AUGUST 2011 ISSUE

FOR US,

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ASEAN MINISTERIAL

MEETINGS LEAD TO PROGRESS ON REGIONAL SECURITY ISSUES ASEAN, China, US

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US COMPANIES FIND ASEAN MOST COMPELLING INVESTMENT

DESTINATION ASEAN, US Alexander Feldman (President, USASEAN Business Council) said American companies find ASEAN to be the most compelling investment destination in Asia, especially with the formation of the ASEAN Economic Community in 2015. The recent 2011 US mission to Malaysia represents the largest delegation of American companies brought to Malaysia by the USASEAN Business Council General Electric, Abbott Labs, Coca Cola, Google, Guardian Industries, Kohlberg, Kravis &

Roberts, MasterCard and Raytheon Corp were among the participating US companies Feldman expects US FDI to ASEAN to accelerate after the AEC “China and India may be large but because of the free trade agreement and comfort level of American companies, ASEAN provides the best of both worlds” (Feldman) Joseph Alhadeff (Chairman, USMalaysia Business Committee) said ASEAN economies are pushing for reforms and policies to help businesses flourish in the region Business Times, Malaysia (25 July 2011)

ASEAN ended the biggest security talks in the region in Bali on 23 July 2011. Thailand and Cambodia asked Indonesia to continue mediating the countries’ border dispute beyond its term of ASEAN chairmanship ASEAN ministers support Indonesia’s continued efforts to work with Thailand and Cambodia, including on the assignment of an Indonesian Observer Team After eight years, ASEAN and China have agreed on guidelines on a code of conduct in the South China Sea Marty Natalegawa (Foreign Minister, Indonesia) said Indonesia now has a set of action plans to be completed by the next ASEAN summit in November 2011 ASEAN will decide on Myanmar’s proposal to chair ASEAN in 2014, at the ASEAN summit in November The Jakarta Post (25 July 2011)


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ASEAN’S NEWEST MEMBERS TAKE STEPS TO FACE CHALLENGES O F

ECONOMIC INTEGRATION Cambodia, Laos, Myanmar, Vietnam

A cooperation between the Vietnamese Ministry of Foreign Affairs and Germany’s Hanns Seidel Foundation aims to help ASEAN’s newest members face the challenges of regional integration. A seminar was held in Hanoi among senior officials from Cambodia, Laos, Myanmar and Vietnam to share experiences in implementing economic integration policies Hang Chhuon Narong (Secretary of State, Ministry of Finance, Cambodia) said Cambodia’s inflation of 6.5% is curbing economic growth Chan Sophal (President, Cambodian Economic Association) said despite ASEAN’s efforts to narrow

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MALAYSIA SHARES

KNOWLEDGE WITH CAMBODIA Cambodia, Malaysia

Cambodian Deputy Prime Minister Dr Sok An said Cambodia is keen to learn from Malaysia in the fields of cyberlaw, cyber-security, e-commerce and e-government. Dr Sok An said this when he met Malaysia’s Science, Technology and Innovation Minister, Datuk Seri Dr Maximus Ongkili in Phnom Penh on 23 July, at a specialised ICT trade mission to Indochina According to a statement issued by Dr Ongkili’s office, Cambodia, which joined ASEAN in 1999, is new to ICT development, and holds high regards for Malaysia in this area The ICT trade mission also covers Hanoi (Vietnam) and Vientiane (Laos) Malaysia was Cambodia’s top investor and trade partner in the early 1990s before the economic crisis hit the region In 2010, the bilateral trade between Cambodia and Malaysia was worth US$ 185.46 million

the development gap, years of war and strife puts Cambodia well behind its neighbours Doan Xuan Hung (Vietnamese Deputy Foreign Minister) suggested that the four countries coordinate closely to maximise opportunities, minimise challenges from integration, and contribute to building the ASEAN community Tomoyumi Kimura (Country Director, Asian Development Bank) said there are strong prospects for cooperation in the Greater Mekong Sub-region ADB will cooperate with the four countries and assist existing sub-regional cooperation mechanisms to support their integration and maintain sustainable development

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Xin Hua (25 July 2011)

VIETNAM STRUGGLING

TO KEEP INFLATION BELOW 17% IN 2011 Vietnam Increasing food prices forced the Vietnamese government to admit the increasing challenge of meeting its annual inflation target. Nguyen Tien Thoa (Head, Price Management Department, Vietnamese Finance Ministry) said Vietnam will struggle to achieve its 17% inflation target after consumer prices increased in recent months Increasing farm produce & food prices are major contributors to the CPI rise in July Supply & demand imbalances of food & produce, augmented by a sudden rise in exports, contributed to increased prices of local goods Many factors for commodity price hikes have yet to be identified which hinders the Vietnamese government’s ability to fight inflation The Saigon Times Daily (28 July 2011)

The Star, Malaysia (24 July 2011)

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. As such, CIMB ASEAN Research Institute (CARI) does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this report. Should any information be doubtful, readers are advised to make their own independent evaluation of such information.

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MANDIRI SEEKS BANK-STAKE LIMITS Indonesia

PT Bank Mandiri, Indonesia’s biggest bank by assets, welcomes the limit on commercial bank stakes, and called for a reciprocal policy to level the playing field with regional rivals from markets that cap ownership. Muliaman Hadad (Deputy Governor, Bank Indonesia) said Bank Indonesia’s plan to cap investor ownership in commercial banks at less

than 50% will probably be enacted this year The proposed cap is an effort to increase efficiency and reduce risk among the nation’s lenders Mandiri faces obstacles opening new branches or accepting retail deposits in other ASEAN countries, and hopes to capitalise on increased access, particularly in Malaysia, before investment restrictions fall by 2015 Zeti Akhtar Aziz (Governor, Bank Negara

Malaysia) said Malaysia may allow ASEAN banks to open more branches as it liberalises its finance industry – it currently restricts the number of branches licensed foreign lenders can open, particularly in urban areas Bank Indonesia oversees 121 foreign and local commercial banks in the country, with total assets of 3,069.1 trillion rupiah (US$360 billion) Bloomberg (24 July 2011)

REGULATION ON FOREIGN OWNERSHIP OF BANKS IN SELECTED ASEAN COUNTRIES

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ASEAN MUST FIX ITS OWN VISA EXEMPTIONS FIRST ASEAN

ASEAN’s senior officials will accelerate the implementation of the 14 day ASEAN free visa framework for ASEAN nationals, and explore the possibility of an ASEAN common visa for non-ASEAN nationals. Surin Pitsuwan (Secretary General, ASEAN) said ASEAN should first completely implement its own cooperation on a visa-free framework for ASEAN nationals Visa exemptions among ASEAN members are left to bilateral arrangements Currently Myanmar has not joined the ASEAN free visa framework Brunei, Cambodia and Myanmar have not completely implemented the ASEAN free visa framework Hikmahanto Juwana (international law expert, University of Indonesia) said Myanmar may not want to apply an ASEAN single visa because they will lose control over determining who enters their country Hikmahanto said ASEAN has to ensure that each member has commonality concerning the

nationalities that are granted free visa on arrival - Singapore grants visas to Israeli citizens, but Indonesia does not

“The Indonesian government has to consider the loss of non-tax income from visa fees The Jakarta Post (24 July 2011)

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. As such, CIMB ASEAN Research Institute (CARI) does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this report. Should any information be doubtful, readers are advised to make their own independent evaluation of such information.


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THAI EXPORTERS PLAN TO TAP SUPPLIES FROM NEIGHBOURS

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EXPORTS LED ASIA-PACIFIC

OUT OF CRISIS: UN

Thailand, Vietnam, Cambodia

ASEAN The Thai Rice Exporters Association (TREA) predicts exports revenue losses of BHT60-70 billion (US$2-2.4 billion) if the government has no measures to assist exporters. Thai exporters they may opt for cheaper rice from Vietnam, Cambodia or Myanmar, to maintain their market base and customers The ASEAN free-trade agreement makes such alternatives possible Thai rice prices, the benchmark for Asia, have been steadily increasing based on optimism that the new government will buy the grain at abovemarket rates (Source: TREA) TREA said competition from Vietnam resulted in Thai Hom Mali’s share of traditional markets

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such as Hong Kong dropping from 85% to 50% Thailand is disadvantaged in terms of logistics as the cost for shipping containers to the US and China is more expensive compared to Vietnam TREA suggests government measures to support exporters such as offering the government’s stockpile at special prices or open bidding for the stocks The appreciation of the baht also makes Thai rice more expensive India’s plan to export at least one million tonnes of rice from next month - its price beats Thailand’s by US$100 a tonne. Bangkok Post (28 July 2011)

Exports led Asia Pacific out of the global economic crisis, but with the European Union, Japan and the United States facing an economic slowdown, it must rely more on intra-regional trade to sustain growth (Source: Report by the UN Economic and Social Commission for Asia and the Pacific [ESCAP]) Trade in the region has returned to pre-crisis levels while FDI flows to selected parts of the region have fully recovered The report recommends Asia-Pacific countries to lead exports of climate-smart goods and technologies as the region comes to terms with climate change ESCAP estimates show that the export growth recovery in Asia-Pacific’s developing economies in 2010, estimated at 17.3% after negative growth of nearly 8% a year earlier, will stabilize to 9% in 2011 India Blooms (26 July 2011)

CIMB FIRST ASEAN CORPORATE TO BE RATED BY DAGONG Malaysia

The CEO of CIMB Bank, Dato’ Seri Nazir Razak, has long advocated the need for an Asian rating agency to offer an alternative perspective to western rating agencies. CIMB has become the first ASEAN corporate to be rated by a Chinese private rating house, Dagong “Despite being the custodian of most of the world’s savings and holding the most attractive investment opportunities, Asia remains dependent on Western financial intermediation. I

don’t understand that” (Nazir Razak) Dagong assigned a long-term local currency issuer rating of AA and a long-term foreign currency rating of AA-, with a positive outlook to CIMB The rating is higher than those assigned to CIMB by the Big 3’ of Moody’s, Fitch Ratings and Standard & Poor’s (S&P) “If the world’s best banks can be rated at AAA class, it is not unusual for CIMB to be rated at AA or AA-, given the bank’s systemic importance to Malaysia” (Guang

Jianzhong, Chariman & President, Dagong) Compared to other international agencies, Dagong placed relatively more weight on CIMB’s growth prospects backed by the healthy regional and domestic environment it operates in, taking into account its governance and development strategy Dagong is the largest credit rating agency in China, and in July 2010, became the world’s first non-Western credit rating agency to issue credit ratings for 50 countries The Star, Malaysia (23 July 2011)

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. As such, CIMB ASEAN Research Institute (CARI) does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this report. Should any information be doubtful, readers are advised to make their own independent evaluation of such information.


CARI Captures Issue 40 (1 Aug 2011)