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28 NOVEMBER 2011

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CAPTURES

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ISSUE 53

CLINTON’S MYANMAR VISIT TO PUSH FOR REFORMS US, Myanmar

Hillary Clinton’s visit to Myanmar on 1-2 December, the first by a US secretary of state in 50 years, is adding momentum to Myanmar’s reforms, but will not result in the immediate lifting of US sanctions on the country. Lifting sanctions on Myanmar requires approval from the US Congress, where the sanctions enjoy popular support The US strategy of engagement with Myanmar has not been fruitful due to

Myanmar’s evasion of issues raised and continued Chinese backing Critics have said Myanmar’s reforms are superficial, as Myanmar’s government is still controlled by the military and about 2,100 political prisoners are still held in prisons and labour camps Experts believe the reasons behind Myanmar’s reforms include the desire to chair ASEAN in 2014 and increased pressure from ethnic militias in northern Myanmar Bloomberg Businessweek (23 November 2011)

CHANGES AND REFORMS MADE BY MYANMAR GOVERNMENT

Freed Aung San Suu Kyi in November 2010 Released 230 political prisoners in October 2011 Transferred some political prisoners from remote jails to facilities closer to their families Began talks with Nobel Peace Prize laureate Aung San Suu Kyi and her prodemocracy movement Eased censorship of international media, and newspapers bearing the portrait of opposition leader Aung San Suu Kyi are openly sold

Suspended construction of a controversial China-backed hydroelectric Myitsone dam project due to public pressures Adopted pro-consumer changes in certain industries: (a) The price of SIM cards reduced from the regime-specified rate of US$1,500 to US$625 (b) Restrictions on automobiles were relaxed. Owners can donate their old cars to government for materials in exchange for getting a newer used car worth US$3,500 or less, which would otherwise cost them 6-7 times higher click to view source

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CHINA PLAYS DOWN SEA

DISPUTES TO WOO ASIAN NATIONS FROM U.S. ‘SIREN SONG’ ASEAN, China, US

China played down US reactions to the South China Sea dispute and chose not to criticize the US-Australia agreement to establish a military base in Darwin, but instead proposed funding to enhance maritime cooperation in the region. Chinese assertions of its sovereignty in response to disputes with ASEAN nations gave the US the opportunity to expand strategic ties in South East Asia China seeks to reassure ASEAN countries with a commitment to keep sea lanes secure and negotiate a legally binding conduct of code in the South China Sea The US believes China’s moderate stance is due to its fear of a backlash from ASEAN if it takes a heavy handed approach to the dispute Bloomberg (21 November 2011)

IF WE ARE SERIOUS IN ACHIEVING THE ASEAN ECONOMIC COMMUNITY, NON-TARIFF BARRIERS WILL HAVE TO COME DOWN... THIS WILL HAVE A POSITIVE EFFECT ON BUILDING THE ECONOMIC RESILIENCE OF ASEAN INDUSTRIES WITHIN THE REGION AS WELL AS TO PREPARE THEM TO BE GLOBALLY COMPETITIVE. –International Trade And Industry Minister Datuk Seri Mustapa Mohamed, 21 November 2011


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FEARS FOR ASEAN BACKSLIDE AS SMALL MEMBERS STEP UP

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BANK INDONESIA

TO IMPROVE

ASEAN

BANKING ACCESS

Analysts are predicting a decline in ASEAN’s influence as Cambodia, Brunei, and Myanmar take on ASEAN’s rotating chairmanship over the next three years and will potentially not live up to the high standard set by Indonesia’s and Vietnam’s chairmanships in the past two years. Surin Pitsuwan (Secretary General, ASEAN) believes ASEAN’s image as a relevant stage for international diplomacy is due to Indonesia’s efforts acting

as a regional powerbroker during its chairmanship in 2011 ASEAN’s irrelevance on the international stage, mainly due to its policy of noninterference, was rebuked when the bloc brought forward the South China Sea disputes at the East Asia Summit The future chairs of ASEAN face the diplomatic task of, amongst other things, hosting summits and delegations with unprepared and understaffed foreign ministries, and in capitals with poor infrastructure Channel News Asia (21 November 2011)

NEXT CHAIRS OF ASEAN

Indonesia Bank Indonesia is launching programs to improve access to banking services to disadvantaged and low income groups in an effort to reduce Indonesian poverty levels and increase the country’s savings to gross domestic product (GDP) ratio, which is currently among the lowest in the world at 36.9%. Only 50 million of Indonesia’s 245 million population have access to financial services Poverty levels in Indonesia is prevalent at 12.5% of the overall population Indonesians face difficulties in financial access due to poor technology and infrastructure, as well as high risks associated with nonbankable people Indonesia’s efforts which include tackling technological and infrastructural barriers, and improving the risk profile of its priority groups are supported by the G20, APEC, and ASEAN Bank Indonesia is also working with the National Education and Culture Ministry to inculcate financial education into the national curriculum The Jakarta Post (24 November 2011)

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US FOREIGN POLICY EMPHASIS ON ASEAN US, ASEAN

The US is pivoting towards Asia and ASEAN by supporting regional commerce and development, and

focusing on multilateral diplomacy to counter China’s influence.

ASEAN as its foreign policy places more weight on building influence in Asia, and moves towards convergence of diplomatic policies Hillary Clinton (Secretary of State, US) emphasised American commercial diplomacy at the ASEAN Business and Investment Summit on 18 November in Bali, Indonesia, by advocating for SMEs in capital resources, regulatory support, and market access Asia Times (23 November 2011)

US is attempting to rebuild its standing in

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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MALAYSIA: ASEAN CAPITAL MARKETS NEED TO COLLABORATE

WHAT IS THE CAPITAL MARKET MASTERPLAN 2 (CMP2)?

Malaysia To achieve economies of scale and remain globally competitive, ASEAN countries must collaborate and leverage on the various value propositions that exist within each ASEAN member, according to Malaysia’s Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah in his keynote address at the 16th Malaysian Capital Market Summit. ASEAN-5’s average growth rates, 5.6%, between 2000 and 2010 is higher than the world’s average of

4.1% during the period and it resulted in the expansion of ASEAN-5’s capital markets Husni said the increase in the region’s capital market is only useful if ASEAN integrates its capital market Bank Negara is expected to introduce its Capital Markets Masterplan later this year – the policy direction is to internationalise Malaysia’s financial services industry Husni said with the impending integration of ASEAN’s capital markets, ASEAN economies need to collaborate so financial institutions can build its capacities in talent, technology, management and branding The Star (25 November 2011)

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CMP2 was introduced in April 2011 as an extension to CMP1 that ran from 2001 to 2010. To strengthen the positioning of the capital market to meet challenges from changing global landscape To support the national economic transformation To ensure effective regulation

1. GR OW TH Promote capital formation Expand intermediation efficiency and scope Deepen capacity and strengthen information infrastructure 2. GOVER N A N CE Enhance product regulation to manage risks Expand accountabilities as intermediation scope widens Robust regulatory framework for a changing market landscape

ASIA CAN WEATHER THE GLOBAL STORM

shocks from Europe and the US, based on the flexibility of their fiscal and monetary policy, and trade balances.

ASEAN

A report by Fitch Ratings titled Emerging Asian Sovereign Pressure Points has emphasised the ability of ASEAN nations to weather a contagion of economic

Fitch rates a country’s ability to weather economic shocks through its fiscal health in times of global economic fluctuations, and whether it is vulnerable to supply shock FinanceAsia (23 November 2011)

Source: Emerging Asian Sovereign Pressure Points Report, Fitch Ratings

Indonesia’s low debt-to-GDP ratio gives it room to launch fiscal stimuli although its dependence on external financing and commodities is detrimental as it exposes Indonesia to global downturns

Thailand’s negative real interest rates limit its monetary policy flexibility. High exposure to international demand, because of its trade openness could mean larger shocks for the Thai economy in a downturn

Malaysia’s dependence on external credit will cause a slowdown in its economy if global liquidity dries up, and its dependence on oil and palm oil exports leaves the economy vulnerable to falls in global demand

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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NUCLEAR NATIONS TO MULL ASEAN NUKE-FREE ZONE

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ASEAN CERTIFICATION

SOUGHT FOR

ASEAN

COUNTRY’S The P5 group of nuclear nations agreed to consider ASEAN’s invitation to join its Southeast Asian Nuclear Weapon-Free Zone (SEANWFZ), a treaty initially signed by all 10 ASEAN leaders in Bangkok, Thailand in 1995. This is a reflection of ASEAN’s efforts to prove its principles of non-interference and ensure that future conflicts are resolved peacefully and nuclear weapon-free The P5 nations are expected to sign the

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legally binding SEANWFZ protocols to ensure that the five nuclear states respect and recognise ASEAN’s nuclear weaponfree zone The nuclear weapon-free zone could be used by ASEAN to build stronger ties with developed countries within the P5 The challenge for ASEAN is to convince countries outside the P5 which have nuclear weapons to respect SEANWFZ, such as India and Pakistan The Jakarta Post (24 November 2011)

ASEAN LEADERS COMMIT TO “GETTING TO ZERO” ASEAN

The leaders of ASEAN member states have committed to making Zero New HIV Infections, Zero Discrimination and Zero HIV Related Deaths a reality, in a declaration adopted at the 19th ASEAN Summit in Bali, Indonesia. The leaders pledge to halve HIV transmission through sexual and drugs transmission while ensuring accelerated efforts to achieve the goal of universal access to antiretroviral treatment by 2015 coupled with a push to eliminated new HIV infections among children in the next five years

The 2011 Declaration states specific commitments such as ensuring adequate financial resources are provided for scaling up HIV prevention programmes for key populations which are at higher risk Through the declaration, ASEAN member states are committed to ensure mobilization of a greater proportion of domestic resources for the AIDS response to echo the importance of ensuring financial sustainability, national ownership and leadership to respond to HIV regionally

EXPORTERS Philippines, ASEAN Ramon Vicente Kabigting (Assistant Secretary, Department of Trade and Industry’s, Philippines) said the Philippine’s government is negotiating with ASEAN to secure pilot coverage of the ASEAN self-certification process to help its exporters. Ramon made the disclosure at the recent “Doing Business in Free Trade Areas” forum The certification makes it easier for exporters as it declares that their products satisfy the ASEAN origin criteria The pilot coverage in Singapore, Malaysia and Brunei will be extended for another year due to favourable results from these countries The objectives of the self certification scheme include: facilitating intraASEAN trade, reducing the cost of doing business and maximising the efficiency of the government resources Currently 45% of Philippine’s trade is from the free-trade markets and with the self-certification, Philippines hope to increase trade and achieve its target of US$ 120 billion by 2016 Despite the low tariffs imposed, the Philippines lags behind Indonesia, Malaysia, Thailand and Vietnam in the World Trading Ranking Kabigting said that reforms in the Philippine’s domestic policies are required to increase the ease of trading with the country Philippine Daily Inquirer (24 November 2011)

UN AIDS (23 November 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 53 (28 Nov 2011)  

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

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