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CARI CAPTURES 7 JANUARY 2013

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ISSUE 107

ASEAN WELCOMES NEW SECRETARY-GENERAL AND CHAIRMAN ASEAN The first ASEAN Secretary-General from Vietnam assumed the position on 1 January 2013, while Brunei Darussalam has taken over the Chairmanship of ASEAN. ASEAN’s new Secretary-General, Le Luong Minh, is a seasoned diplomat from Vietnam During his time at the Foreign Ministry, he served as Vietnam’s ambassador to the United Nations Analysts suggest Vietnamese style of diplomacy is less public and transparent, which may be a better way to deal with China This is the second time Brunei has been the Chair of ASEAN, the first time being in 2001 Brunei has chosen “Our People, Our Future Together” as this year’s theme to emphasise the importance of community building As Chairman, it will be able to set the agenda and has the responsibility to host the various meetings and two Summits; the 22nd ASEAN Summit on 24-25 of April, and the 23rd ASEAN Summit on 9-10 October, where the 8th East Asia Summit will be held on the sidelines These changes come at an important time as tensions continue to simmer between ASEAN and China on the maritime claims in the West Philippine Sea Both Brunei and Vietnam are claimants and will be more active in pushing for ASEAN consensus on this issue CARI analyst, Chayut Setboonsarng, considers what to expect from the new chairman here VOA News (1 January 2013) The Borneo Post (3 January 2013) Source: ASEAN Secretariat


CHAROEN

ASEAN CLIMBS LIVABILITY

GETS MORE TIME TO BID FOR F&N

RANKINGS ASEAN Singapore and Malaysia went up in the rankings of the best place to be born in the world, to 6th and 36th place respectively. The index which is provided by the Economist Intelligence Unit (EIU) aims to quantify how happy people say they are based on a list of 11 economic and sociopolitical indicators such as a country’s income per capita, cost of living, human rights, life expectancy, literacy, and education levels Thailand came in at 50, while the Philippines dropped to 63rd place, tying with Sri Lanka

Vietnam and Indonesia took 68th and 71st positions respectively Switzerland beat out all other nations, including the US (16), as the best place for babies to be born Australia was the runner-up, followed by Scandinavian countries Norway (3), Sweden (4) and Denmark (5) while New Zealand, the Netherlands, Canada and Hong Kong rounded up the rest of the top 10 The Economist (21 November 2012)

Thailand, Singapore, Indonesia Thailand’s TCC Assets was granted another chance to improve its original bid of SG$8.88 for each of F&N’s shares, in the face of the Indonesian consortium’s bid of SG$9.08 a share. The new deadline for TCC Assets, which is controlled by Thai tycoon Charoen Sirivadhanabhakdi, is end of day on January 10 The Indonesia consortium is led by property firm Overseas Union Enterprise (OUE), and is backed by the Japanese brewer Kirin Holdings Kirin Holdings owns 14.8% of F&N’s shares, and is interested in F&N’s food and beverage business, while F&N’s property interests are to pass to OUE if their bid is successful Bangkok Post (3 January 2013)

Best A

SEAN

countr

y to be

born in

THE PHILIPPINES THE BIGGEST SURPRISE Philippines 2012 is claimed to be one of the best years ever for the Philippines economy, with GDP growth expected to surpass the targeted 5% to 6% and the stock market ending the year on its 38th record high. Good economic fundamentals, benign inflation, high foreign exchange reserves and low interest rates, provide a good springboard for a rosy 2013 outlook It is hoped that this translates into another credit rating improvement that would put the country to investment grade, something they haven’t seen in at least the last three decades The Philippines economy in 2012 showed resilience and strength amid the economic crisis in Europe and territorial disputes in the region, said Philippine Chamber of Commerce and Industry president Miguel Varela The Philippine Stock Exchange (PSE) welcomed the New Year with a bang after the benchmark stock market index recorded a new all-time high As of the end of 2012, the PSE Index set 38 new records during the year 2012 Malaya Business Insight (3 January 2013) Business Inquirer (30 December 2012)

Source: Economist Intelligence Unit 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.


ASEAN’s AVIATION INDUSTRY IS ON

NEW MINIMUM

THE ASCENT

WAGE SWEEPS ASEAN Indonesia, Thailand, Malaysia, Vietnam The governments of Malaysia, Thailand, Vietnam, and Indonesia are implementing their new minimum wage policies in an attempt to curb income inequality; however, businesses are concerned with the rise of labour costs. Businesses in Thailand are concerned with the new US$10 per day minimum wage that will come into effect nationwide as it will increase production costs at a time of declining demand from the US and EU The chairman of the Textile Industry Club of the Federation of Thai Industries (FTI), Somsak Srisupornwanit, said he does not expect to see many factory shutdowns as manufacturers will try to find new cost saving measures in supply chain management and logistics to lower costs In Vietnam the minimum wage is expected to be up to US$14 with varying increases throughout different designated zones According to a specialist from the International Labour Organisation, Yoon Youngmo, the Government used minimum wage policy to gradually raise the wage floor over the last few years, by more than 20% yearly In Malaysia, new wage levels go up to US$10 per day depending on region; however, 600 firms gained a 3 to 6-month exemption from the wage hikes because they have been performing poorly for two to three consecutive years The extension is to give them time to restructure their operations Following massive strikes last year, Indonesia will increase minimum wage by 50% this year to US$228 per month Malaysian plantation firms face problems as domestic labour markets are already at a deficit of 60,000 workers and Indonesian workers may return home

Malaysia, Singapore, Philippines

Growth in the Philippines’, Malaysia’s and Singapore’s aviation industry looks promising although in the Philippines it is being hindered by infrastructure bottlenecks. Foreign airlines are forgoing operations in the Philippines due to the lack of space at its airports; the latest victim being Mumbaibased Jet Airways Carmello Archilla, executive director of the civil aeronautics board of the Philippines says airports can’t meet the many orders they have for slots, which is a major deterrent for growth in an otherwise burgeoning market Ninoy Aquino International Airport (Naia) in Metro Manila is the main culprit, however areas like Cebu and Clark are being developed to offset Naia’s congestion Meanwhile Changi Airport celebrated a

07

new milestone – 50 million passengers were handled in 2012, a 10% increase from 2011 The success at Changi is credited to strong business partnerships with airlines like Garuda, and focused efforts with them to grow air links and increase flight frequencies, according to Lee Seow Hiang, CEO of Changi Airport Group Malaysia’s aviation industry on the other hand is seeing increased competition spurred by the new entrant, Malindo Air, and a new lost-cost airport opening in May 2013, KLIA2 MAS and Air Asia are confident they can face their new competitor, on the back on their clear network expansion roadmap, new fuel-saving and efficient aircrafts, and established brand network Asia One (28 December 2012) The Star (31 December 2012) ANN (1 January 2013)

INDONESIA’S BAJA STEEL TO EXPORT ASEAN

Indonesia Indonesian steel manufacturer PT Saranacentral Bajatama (BAJA) plans to export its products to Malaysia, Myanmar and Thailand, taking advantage of the ASEAN Free Trade Agreement (AFTA). BAJA has already identified potential buyers from the numerous on-going construction

projects in these countries, according to BAJA’s president and director, Handaja Susanto BAJA projects its exports will account for 20% of their global sales Susanto predicts the increased income from exports in 2013 to range from US$1 million to US$2 million in 2013 The Star (2 January 2013)

The Nation (2 January 2013) The Star (21 December 2012) Wall Street Journal (28 December 2012) VNA (8 December 2012)

Impact of AFTA on steel prices - Allows for greater profit margin for regional firms - Promotes intra-Asean trade as it is much cheaper to source for steel regionally Source: Aseansec.org Source: Aseansec.org

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.


08 MYANMAR MONITOR

POLITICS Myanmar’s military admitted that it carried out air-strikes against ethnic Kachin rebels in the northern part of the country. The attack highlights the rift between the government and the military which has ignored orders by President Thein Sein to halt offensives against the Kachin minority. The New York Times (2 January 2013)

Myanmar held its first public countdown to the New Year, a celebration featuring fireworks and performances by local entertainers that gathered about 90,000 people. The President then made his first New Year’s address to the nation on 1 January. In the five minute speech broadcasted by radio, Thein Sein acknowledged that he needs to do more to earn the people’s trust and will make a point to speak to the people more often. Abc News (1 January 2013)

The Information Ministry announced last week that privately owned daily newspapers will be allowed, but from April, for the first time since 1964. This is the second major step towards media freedom: but in August last year the government abolished direct censorship of the media allowing only weekly publications of private newspapers. Bangkok Post (30 December 2012)

ECON OMY Myanmar will install its first ever 500 kilovolt power grid early this year in a bid to reduce power loss in the country. According to the Ministry of Electric Power, demand has hit 1890MW against supply of only 1500MW.

December. The bank has provided financial support to large Thai companies and SMEs investing in Myanmar, mostly in border trade and supply chain businesses. Bangkok Post (25 December 2012)

F OREIGN AFFAIRS Japan’s finance minister and deputy prime minister, Taro Aso, met with President Thein Sein on January 3 and confirmed Japan’s intention to cancel debt and help develop the Thilawa Special Economic Zone, in the first high-profile overseas visit by a member of Tokyo’s new cabinet since it took office last month. The Star (3 January 2013)

Xinhua (30 December 2012)

The Thai state-owned Krung Thai Bank (KTB) is looking to form a joint venture in Myanmar following the successful launch of its representative office in Yangon in

Myanmar has established diplomatic ties with Iceland, according to official media last week. Iceland is the sixth country that Myanmar forged links with in 2012. Xinhua (26 December 2012)

TRADE DEALS SET TO OPEN

CAMBODIA

NEW ERA FOR ASEAN, INDIA

EXPANDS RAILWAY

ASEAN, India The ASEAN-India Summit on 21 December saw the conclusion of negotiations for an ASEAN-India FTA framework which boasts a combined market of almost 1.8 billion people, and GDP of US$3.8 trillion. All ASEAN leaders, with the exception of the

INFRASTRUCTURE ratified at each member country’s parliament The cooperation between ASEAN and developments such as the Greater Mekong Sub Region and the BIMP-EAGA Salman Khurshid, Indian Foreign Minister,

Philippines president, attended the summit in

expects connectivity projects between India and

New Delhi

ASEAN to take off, citing the highway project

The FTA agreement which covers goods, services and investments will be signed by ASEAN countries in August 2013, before being

Cambodia

India also includes support for sub-regional

between India’s border, Myanmar, and Thailand, which is scheduled for completion in 2016 The Nation (30 December 2012)

Source: ASEAN India

Editorial Team: Manissa van Geyzel, Chayut Setboonsarng, Sóley Ómarsdóttir, Paul Leong

Two Chinese firms signed a memorandum of understanding, overseen by the Cambodian Minister of Transport, to start work later this year on a massive project to build an entirely new 400-km railway line. The first cargo train between Phnom Penh and Sihanoukville’s port set off, marking the beginning of a route that it is hoped will decrease reliance on the road network to transport goods to the coast The expansion project, valued at US$9.6 billion, will be carried out by Cambodia Iron and Steel Mining Industry Group, a consortium of Chinese metal firms China Railway conducted a feasibility study on the rail project in 2011, but results have not been made public Peou Maly, deputy director of the transportation department within the Ministry of Public Works and Transport, said that he believed the project will impact people’s homes because it is more than 400 km long The Cambodia Daily (31 December 2012) The Cambodia Daily (1 January 2013) The Cambodia Daily (2 January 2013)

Consultant Editor: Tunku ‘Abidin Muhriz

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 107 (7Jan 2013)  

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

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