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22 JULY 2013

CARI CAPTURES • ISSUE 135

CARI

CAPTURES

ASEAN REGIONAL

RICE 01 THAI UPDATE THAILAND

$$$ $

1 FARMERS AND TRADERS IN NEIGHBOURING COUNTRIES GROW/ PURCHASE RICE

SEEING THE PRICE THEY WILL RECEIVE THEY EXPORT IT INTO THAILAND

2

3

CAMBODIAN AUTHORITIES TURN A BLIND EYE TO THE SMUGGLING

THE BORDERS WITH THAILAND HAVE MULTIPLE POORLY EQUIPPED ENTRY POINTS

5

100%

AT THE FARMING VILLAGES, IT IS PASSED OFF AS THAI GRAIN

4

THAI RICE

NICE RICE

6 THE THAI GOVERNMENT PURCHASES THE GRAIN AND STORES IT IN WAREHOUSES

THE RICE IS SMUGGLED ACROSS THE BORDER USING VILLAGE CARTS THEN LATER WITH TRUCKS TO THAI FARMING VILLAGES

THE JOURNEY OF SMUGGLED RICE INTO THAILAND With the government caving in to pressure from farmers, the highly controversial Thai rice subsidies are here to stay after costing the government US$4.4 billion in 2012. Thailand currently has enough rice stocks to satisfy the global demand for rice for 6 months; however the staple grain is being smuggled into the country from neighbouring countries such as Cambodia and Myanmar This is because the Thai g ove r n m e n t i s p a y i n g r i c e producers in the country double the price elsewhere in the region as a part of its rice subsidy scheme and traders are trying to take advantage. As a result,

over 750,000 tons of milled rice is smuggled into Thailand each year The Thai government has been buying rice at high prices to help farmers and it stores it to restrict the supply of rice. The plan was to use Thailand’s position as the leading exporter of the grain to push up global prices and recover the losses from the higher price paid The plan backfired and instead other countries moved to fill the void left by Thailand and the country has since lost its number one position, dropping below India and Vietnam The Star (15 July 2013) Bloomberg (11 July 2013)

The Thai government subsidy artificially increases demand for rice in Thailand, which effectively reduces the amount of rice in neighbouring markets due, restricting supply. This leads to higher rice prices in the neighbouring counties. A rise in the price of rice greatly diminishes the purchasing power of households in the region. This also creates greater inequality since less well-off households are likely to spend a greater percentage of their income on necessities such as rice, so the price rise affects them more than well-to-do households. The decision to maintain the policy, due to pressure from special interest groups (farmers) also has implications for the ASEAN Economic Community (AEC). The AEC is meant to promote free trade and competitive markets but with governments caving to pressure to maintain these policies could set back AEC implementation or reduce the ultimate effectiveness of the community.


22 JULY 2013

CARI CAPTURES • ISSUE 135

ECONOMIES, 02 CREDIT PILES OF DEBT MALAYSIA

SINGAPORE

SINGAPORE & MALAYSIA’S HOUSEHOLD DEBT TO THE PERCENTAGE OF THEIR GDP

SINGAPORE MALAYSIA

% OF GDP

12 10 8 6 4 2 0

2003

291370918

M a l ays i a a n d S i n g a p o re h ave recorded high levels of consumer debt which could threaten stable growth in the two ASEAN countries. Singapore’s household debt ratio has increased to 77.2% of the gross domestic product of Singapore which is second only to Malaysia’s 82.9% ratio, growing at 11.5% per year. The

2004

2005

2006

2007

2008

123456789 010110

rise was due to asset inflation in the real estate markets and strong credit growth in the countries A u t h o r i t i e s from both countries are taking actions to reduce the debt. Singapore’s monetary authority increased n ew f ra m ewo r k s re st r i c t i n g banks from makings loans with payments greater than 60% of income in a time period. It is

2009

2010

Source: CIMB Research 2009

also forcing banks to consider all outstanding debt carried by the individual before issuing a new loan Malaysia’s central bank cut the maximum duration until maturity of loans by up to 15 years in order to help curb excessive lending in the country CNBC (14 July 2013) Bloomberg (7 July 2013) Singapore Business Review (17 July 2013)

An economist from Credit Suisse said that if interest rates rose then households w i l l h ave l e ss d i s p o s a b l e income and domestic demand could take a hit as a result. This could cause a major slowdown since consumption represents 40% of the Singaporean economy The high levels of sovereign or government debt is seen as harmful to the economy due to the costly interest p ay m e n t s h oweve r m o s t governments can maintain debts without significant risk (see issue 132) Households don’t have control over their income or money s u p p l y l i ke g ove r n m e n t s , making them more vulnerable to economic shocks so high household debt (even if it is much lower than sovereign debt levels) could be much more detrimental to a country’s economy

THE DONG: 03 DEFENDING VIETNAM VOWS INTERVENTION VIETNAM Vi e t n a m ’s c u r re n c y h a s b e e n under pressure from capital outflows and weakening exports as the country tries to turns its economy around. The Vietnamese Dong has a fixed exchange rate, allowed to float within 1% of the rate, which the central bank lowered in June

04 USA

for the first time since 2011. The Vietnam central bank dismissed the possibility of devaluing the Dong and pledged to defend the currency Deputy Governor Le Minh Hung also noted that the bank has significant foreign reserves in which it can tap into in order to defend the Dong

As part the plan to stabilise the Dong the government is trying to wean Vietnamese off storing their wealth in gold. The demand for gold encourages importers to sell Dong in order to purchase gold from abroad which places d ow nwa rd p re s s u re o n t h e currency Vietnam is making moves to steer

people away from holding gold including making the central bank the only legal importer of gold and banning interest payments on gold deposits

shifting their focus into the ASEAN market with McDonalds entering the Vietnam market The Philippines has also opened its borders to US fresh table stock potato imports. This is in recognition of Philippines

as the fastest growing ASEAN market and steady growth of US chipping imports by the P h i l i p p i n e s re a c h i n g a l m o st US$38 million

Bloomberg (11 July 2013) Bloomberg (14 July 2013)

US FIRMS MOVE INTO ASEAN MARKETS VIETNAM

U S g ove r n m e n t a t t e m p t s t o increase their influence in the re g i o n e c h o e d by U S p r i va te sector players such as McDonalds. The Obama administration has played a significant role in the

recent South China Sea dispute, looking to cement their influence and relationships within the region This move into the region has o cc u r re d co n c u r re n t l y w i t h several US based firms also

New York Times (July 16 2013) Capital Press (July 16 2013)

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. 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.


22 JULY 2013

CARI CAPTURES • ISSUE 135

AND INDONESIA 05 MALAYSIA RIDE OUT THE STORM MALAYSIA

INDONESIA

Indonesia and Malaysia Palm Oil industries buoyant as increased demand runs down inventories. Despite the recent dip in palm oil prices, demand and the outlook

06

for this commodity is on the rise National inventories in the region, particularly in Malaysia and Indonesia, are being depleted as demand in those countries pick up due to the increased

consumption brought on by the Muslim month of Ramadhan This positive pick up has been generally reflected across regional securities markets. The recent Ranhill Energy IPO on the

Bursa has been oversubscribed by 12.98 times

6 percent contraction According to analysts, this will have a crippling effect on the growth in the region Credit rating agency Moody’s

d ow n g ra d e d t h e o u t l o o k o f Singapore’s three main banks from “stable” to “negative”

Bloomberg (July 15 2013) The Star (July 17 2013)

A CHINK IN THE ARMOUR

SINGAPORE Singapore’s Positive Economic f i g u r e s u n d e r m i n e d by p o o r exports. Despite Singapore exceeding

recent growth forecasts, poor export numbers have suggested a deeper, underlying issue Domestic exports fell 8.8 percent in June more than the expected

Channel News Asia (17 July 2013) Channel News Asia (17 July 2013)

TRANSPORT 07 ASEAN DEVELOPMENT ASEAN

MONTHLY TOURIST ARRIVALS TO ASEAN COUNTRY

YEAR

ARRIVALS

Malaysia

2013

2,376,295

Thailand

2013

2,259,237

Indonesia

2013

725,316

Vietnam

2013

 587,366

Cambodia

2013

385,760

Singapore

2013

133,900

Myanmar

2012

88,250

Laos

-

n/a

Brunei

-

n/a

Sources: STB, MTPB, TAT, VNAT, IMCT, MTPB, PDT

ASEAN calls for multi-country tourism strategy. ASEAN has urged the tourism i n d u s t r y t o c re a t e a m o re regional focus, developing multi

country packages to encourage intra-ASEAN travel An initial list of 20 tour operators h ave b e g u n o f fe r i n g m u l t i country itineraries covering several ASEAN countries per trip

The Thailand Tourism and Sport M i n i st r y h a s a l s o p ro j e c te d strong tourism revenue growth for 2015 These revenue numbers, also reflected across other ASEAN

countries, show the resilience of this industry in a time of poor global economic performance Business Inquirer (14 July 2013) The Nation (17 July 2013)

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. 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.


22 JULY 2013

CARI CAPTURES • ISSUE 135

08

MYANMAR MONITOR

POLITICAL 09 CAMBODIA’S RACE INTENSIFIES CAMBODIA

ECONOMY Myanmar has been busy this week pushing through laws in order to i m p rove a n d c re ate key f i n a n c i a l i n st i t u t i o n s . P re s i d e n t Th e i n S i e n approved a bill which increases the autonomy of the Myanmar central bank. The move is expected to help grow the banking sector in the economy more quickly. The country is also close to passing a new law which will set the groundwork for a new stock exchange. The exchange will be the first step in the creation of a liquid equities market in the country. Irrawaddy (12 July 2013) International Business Times (17 July 2013)

POLITICS O n 1 5 J u l y, P re s i d e n t Th e i n S i e n announced that all political prisoners will be released by the end of the year. The announcement came during a meeting with British Prime Minister David Cameron in London as President Sien travels in order to build support for reforms in Myanmar. However, Amnesty International reported that the same day of the announcement a Rohingya human rights defender was arrested arbitrarily becoming the latest prisoner of conscience in the country. This highlights the huge amount of work that is still needed to bring lasting reform to the country. Amnesty International (17 July 2013) New York Times (15 July 2013)

Myanmar disbanded a controversial border protection force known as the Nasaka. The force was notorious for human rights offences against the Rohingya Muslims which it was supposed to be serving. In addition, allegations of corruption have marred the force with the former head of the Nasaka being sentenced on corruption charges last year. United Nations Special Rappourteur for Human Rights Tomás Ojea Quintana said that he welcomed the decision to disband the force. However, he added that there should also be a probe into the abuse of power and those responsible should be held accountable in order to reestablish confidence the rule of law in the country. Reuters (15 July 2013) United Nations News Centre (16 July 2013)

More than 20 Buddhists were sentenced for murder and other crimes in the wake of a wave of anti-Muslim violence sweeping through Myanmar. Those sentenced faced up to 15 year in prison. The violence has claimed casualties on both sides, however the majority are Muslim and there is a sense of ‘unequal justice’ as the majority of the sentenced have been Muslim. The government has come under heavy criticism both internally and externally about how it handled the religious violence and its seeming unwillingness to put a stop to the clashes. Many have lost homes and livelihoods in the worst effective states and many Muslims report having to be relocated to government apartments. Also, curfews and movement restrictions on Rohingya Muslims, which are meant to keep them safe, are preventing many from accessing healthcare and other services. New York Times (12 July 2013) Irrawaddy (13 July 2013)

Cambodian showdown looms after Sam Rainsy pardon. Sam Rainsy has been pardoned of crimes that he insists were politically motivated Scheduled to return to Cambodia on Friday to spearhead the opposition party’s election campaign against current Prime Minister Hun Sen Prime Minister Hun Sen was initially opposed to the pardon but eventually changed his mind, allowing Rainsy to return to active politics The Diplomat (14 July 2013)

10

INDONESIA, REDUCING THE GENDER GAP

INDONESIA

ASEAN

R E P R E S E N T A T I O N

O F

W O M E N

I N

LOWER OR SINGLE HOUSE RANK

UPPER HOUSE OR SENATE

% OF SEATS HELD

NUMBER OF SEATS HELD

% OF SEATS HELD

NUMBER OF SEATS HELD

Rwanda

56.3

45 / 80

38.5

5/13

37

Bolivia

25.4

33 / 130

47.2

17/36

39

Laos

25.0

33 / 132

n/a

n/a

43

Vietnam

24.4

122 / 500

n/a

n/a

50

Philippines

22.9

65 / 284

13.0

3/23

54

Singapore

22.2

20 / 90

n/a

n/a

62

Cambodia

20.3

25 / 123

14.8

9/61

73

Indonesia

18.2

102 / 560

n/a

n/a

81

Thailand

15.8

79 / 500

15.4

23/149

109

Malaysia

10.4

23 / 221

21.5

14/65

134

Myanmar

3.5

14 / 395

1.8

2/109

142

Yemen

0.3

1 / 301

1.8

2/111

143

Saudi Arabia

0.0

0 / 150

n/a

n/a

1

COUNTRY

P O L I T I C S

Source: www.guardian.co.uk

Indonesia penalises parties in fight for women. Indonesia has taken efforts to penalise political parties that fail to meet a requirement for females to make up at least 30 percent of candidates in the election Measures to improve gender equality and women’s empowerment Indonesia has slipped in the World’s Economic Forum’s rankings due to a decline in the numbers of women in ministerial positions. Females currently hold roughly 19 percent of the 560 seats in Indonesia’s lower house of parliament

Mizzima (16 July 2013)

Bloomberg (17 July 2013)

Editorial Team: Sóley Ómarsdóttir, Aaron Tan, Gokul Radhakrishnan Designer: Hizzad Dinno Consultant Editor: Tunku ‘Abidin Muhriz DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. 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 135 (22th june 2013) eng