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19 SEPTEMBER 2011

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CAPTURES

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CARI

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ISSUE 46

ASEAN SINGLE

MARKET “MAY DESTROY” TRADITIONAL FISHING Indonesia

Indonesia’s local communities are contesting the plan to build an ASEAN Economic Community (AEC) due to concerns that the free trade area will threaten the livelihoods of traditional fishermen, a vulnerable group with poor access to technology and capital.

An alliance of NGOs, under the heading Coalition for Global Justice, filed a judicial review of the 2008 Law on ASEAN Charter Ratification, which they claim is the first step to realising a regional free market Abdul Halim, a community rights activist from the Fisheries Justice Coalition said the AEC will marginalise traditional fishing communities and protection efforts are

needed such as establishing a strong upstream-downstream fishing industry, improving fishing equipment and offering wider access to much-needed financing for diversification Fish harvests are declining as fishing grounds become shallow from coastal reclamation, a lack of equipment for deep water fishing, and rising operational costs The Jakarta Post (14 September 2011)

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NAZIR CALLS FOR GREATER ECONOMIC INTEGRATION

AMONG ASIAN COUNTRIES ASEAN

Datuk Sri Nazir Tun Razak, Chief Executive of CIMB Group highlighted the need for Asian integration through intra-Asian trade and investments to foster economic

growth, citing the example of the ASEAN Economic Community in his speech at the Malaysia-China Trade and Investment International Conference 2011 in Kuching, Malaysia.

Efforts to promote Asian integration highlighted by Nazir included an ASEAN exchange to list the region’s largest companies and a strengthened financial architecture through a pan-Asian ratings agency Integration plans, such as in the ASEAN equity markets, must be supported by stakeholders to have an impact Lower credit ratings in China and India, compared to default-risky Spain and Ireland, are increasing the cost of raising capital for Asian banks and eroding their competitiveness The Borneo Post (13 September 2011)


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19 09 ‘11

BANK OF THAILAND

PLANS TO BUY YUAN DESPITE RISKINESS Thailand, China

The Bank of Thailand was approved by China to invest RMB 7 billion in China’s onshore interbank bond market but will not include these investments in its reserves because the yuan is not fully convertible. Investment in the yuan has become easier as more yuan-denominated bonds, totalling RMB115 billion (US$18 billion) in 2011, are being issued and institutions being granted quotas to invest onshore Holding the yuan is considered risky because China limits the conversion of the yuan for investment purposes, but it is expected to achieve full convertibility by 2015

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“One of the steps to internationalise renminbi is to allow more central banks to hold renminbi as part of their reserves” (Brian Baker, Chief Executive Officer, Pimco Asia) Yim Fung (Chief Executive Officer, Guotai

EXPORTERS TO BE AFFECTED BY NEW BANK INDONESIA RULE Indonesia

Indonesian businesses may be required by Bank Indonesia to repatriate foreign earnings into domestic bank accounts, adding US$31.5 billion worth of foreign liquidity into the Indonesian economy.

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The regulation is likely to be finalised within September 2011 Economists believe the regulation is a preemptive move by Bank Indonesia to allow the economy to weather economic shocks and maintain liquidity

Junan International Holdings) says using the yuan as a reserve currency is not realistic because of a lack of investment channels for the yuan Bloomberg (9 September 2011)

The rule will result in foreign exchanges to the rupiah, strengthening the currency and undermining the competitiveness of Indonesia’s exports in palm oil, tin, and coal Ambar Tjahyono (Chairman, Indonesian Furniture Entrepreneurs Association) said exporters prefer to denominate earnings in foreign currencies because of the rupiah’s volatile exchange rates and difficulty in converting foreign earnings into rupiah Ade Sudrajat (Chairman, Indonesian Textile Association) said the inflow of export earnings due to the new regulation will result in a more stable rupiah The Jakarta Post (12 September 2011)

INDONESIA-THAILAND-VIETNAM COOPERATION TO ENHANCE ASEAN FOOD SECURITY Indonesia, Thailand, Vietnam

Cooperation agreements between Indonesia and Vietnam in rice and fisheries, and between Indonesia and Thailand in agricultural research and development is set to improve food security throughout ASEAN. Cooperation areas identified by Vietnam and Indonesia include a framework on rice

trading, boosting of rice production and identifying joint fishing areas for Indonesia and Vietnam, with the aim of becoming ASEAN’s leading provider of rice and fish Susilo Bambang Yudhoyono (President, Indonesia) said Indonesia is also looking to leverage on Thailand’s advanced agricultural technologies by enhancing investment cooperation in research and development

Suswono (Minister of Agriculture, Indonesia) said ASEAN will establish a charter on emergency food reserve procurement in October 2011 to improve ASEAN food security ASEAN+3 food reserves stand at 780,000 tonnes, with 12,000 tonnes provided by Indonesia, to be used for members’ emergency needs The Jakarta Post (15 September 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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DOE SEES US$ 46.2 MILLION IN SAVINGS FROM ASEAN INITIATIVE Philippines, ASEAN

The Filipino Department of Energy expects savings of 191,000 megawatt-

hours of electricity, equivalent to PHP2 billion (US$46.2 million) when the

ELECTRICITY CONSUMPTION IN ASEAN (GWh)

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measures in the ASEAN Energy Management Scheme (AEMAS) are implemented. The Philippines launched AEMAS in July 2011, spearheaded by the participation of San Miguel Yamamura Packaging, Texas Instruments, and Toshiba Information Equipment The Philippines expects to train 500 energy managers to implement the AEMAS over the next four years Philippine Daily Inquirer (13 September 2011)

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REGULATOR PAVES

WAY FOR ASEAN TRADING LINK Philippines

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MALAYSIAN PALM EXPORTS TO SUFFER AS INDONESIA TAKES

TAX CUT ADVANTAGE Malaysia, Indonesia

Malaysia’s palm oil exports for the rest of 2011 will be flat at best with a negative outlook for next year as refiners are at a price disadvantage after No.1 producer Indonesia slashed refined palm oil export taxes, a top industry official said. Indonesian palm oil refiners will enjoy a price advantage of between US$72 to US$129 per tonne against Malaysian refiners when the change becomes effective on 15 September 2011 While Malaysia does not tax its processed palm oil exports, its costs have risen due to tight crude palm oil supplies that it usually supplements with imports from Indonesia With Indonesia more than halving its refined palm oil export taxes and keeping crude palm oil taxes virtually unchanged,

more of the edible oil will get channelled to its plants, limiting supply for Malaysia and raising feedstock costs More Indonesian crude palm oil will be refined locally, rather than exported to countries like Malaysia for refining as Indonesia’s crude palm oil export taxes remain unchanged Mohammad Jaaffar Ahmad (Chief Executive Officer, Palm Oil Refiners Association of Malaysia) predicts no short-term shutdown in Malaysia’s palm oil refining capacity of 22.9 million tons in 2010, but smaller refiners, unable to operate profitably, may close in the longer term Mohammad says that with almost 70% of the Malaysian palm oil market at stake, the government will have to react fast to save MYR60 billion (US$20 billion) worth of industry The Jakarta Post (14 September 2011)

The Philippines’ participation in ASEAN’s regional stock trading system has been boosted after the Securities and Exchange Commission settled regulatory issues that could hinder the scheme. Four bourses – the Philippine Stock Exchange, Singapore Stock Exchange, Stock Exchange of Thailand and Bursa Malaysia – will be the initial participants in the ASEAN Trading Link, which will be launched in Q1 of 2012 Electronic interconnections will allow cross-border stock trading, one of the steps in the wider plan to set up the ASEAN Economic Community It was decided that as the link is merely an electronic connection and not an exchange, it will not be subject to licensing rules The issue of whether foreign stocks also need to be registered with the SEC was also clarified, with the regulator adopting the recommendation that securities to be traded by local brokers under the ASEAN Link be exempted The issue of whether foreign brokers need to apply for special licenses, meanwhile, will be rendered moot if they tie up with a Philippine partner The same will apply with regard to the distribution of research materials: foreign investment advisors will not be subject to licensing requirements if they distribute through a local broker Still to be settled is the issue of dispute resolution and enforcement Business World Online (19 September 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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GLOBAL INVESTMENT

BANKS EXPAND IN INDONESIA Indonesia

Major financial institutions such as Goldman Sachs, Morgan Stanley, Bank of China, Credit Suisse, and ICBC are increasing their Indonesian presence because of the country’s stellar economic performance, despite the uncertainty surrounding Indonesia’s ownership limit for foreign banks. Goldman Sachs and Bank of China are looking to expand into Indonesia via local acquisitions, while Morgan Stanley, Credit Suisse and ICBC continue to expand its already present Indonesian operations Foreign firms must compete with state owned security firms such as Mandiri Securities and Danareksa which are able to win business from locally-dominant state enterprises and have close links with regulators

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19 09 ‘11

POLITICS STILL IN THE WAY OF INCREASED MOBILITY IN ASEAN? Malaysia, Brunei

The Ministry of Transport should accord MASWings the rights to operate within the Brunei-Indonesia-MalaysiaPhilippines East Asean Growth Area (BIMP-EAGA) , including Brunei, to fill the existing vacuum, said Sarawak Tourism and Heritage Minister Datuk Amar Abang Johari Tun Abang Openg. MASWings is yet to gain approval from Malaysia’s Transport Ministry for its proposed Kuching-Bandar Seri Begawan route, despite gaining approval from Brunei’s government Brunei and Sarawak have no air connections, following Royal Brunei Airlines’ cancellation of the Kuching-Bandar Seri Begawan route in mid 2011

Datuk Wee Hong Seng (Chairman, BIMPEAGA Malaysia Tourism Council) said the slow decision from Malaysia’s Transport Ministry is unrelated to the policies of the other three BIMP-EAGA members Abang Johari said Malaysia’s Transport Ministry must look into the requirements of Sarawak and Brunei within the BIMP-EAGA context in their decision In another development, a bridge across the Pandaruan River on the Malaysia-Brunei border will finally be built to complete the 1,800km-long Pan Borneo Highway The bridge is an important crossing as it facilitates daily travel between Sarawak, Brunei, and Sabah The Star, Malaysia (12 September 2011)

Financial Times (13 September 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 46 (19th Sept 2011)  

Captures is CARI’s weekly news monitoring report, each time presenting the top 10 stories affecting ASEAN.

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