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30 JULY 2012

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CAPTURES

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CARI

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ISSUE 87

CARI ON THE GO

Asean well placed to gain from return of THE Silk Road seminar on ‘Rethinking ASEAN in the New Global Economy’ organised by CIMB Bank in Bangkok, Thailand.

The restoration of the 500-yearold Silk Route is already underway with ASEAN resuming its ancient role of linking China, India and the rest of Asia to the rest of the world, CARI CEO John Pang told a

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Myanmar provides the geographical link between the Indian Ocean and Andaman Sea, while Thailand stands at the crossroads of “continental Asia”, he said ASEAN could take some global production share away from China and become a new global production hub for some industries including automobiles, provided it has the right strategy, Bunluasak Pussarungsri, executive vice president of CIMB Thai said Based on ASEAN’s “sloppy” track record in implementing the ASEAN Free Trade Agreement and other regional initiatives, the arrival of the ASEAN Economic Community in 2015 is not expected to lead

Thailand

to a major change in trade and business during the early years, Bunluasak said “We should not forget that apart from the official process, there is real integration going on ... people to people, at neighbouring districts, towns”, he added Meanwhile, tensions over competing claims in the South China Sea could escalate into conflict, with an arms build-up among rival nations raising the temperature, the International Crisis Group (ICG) said on 24 July “Without a consensus on a resolution mechanism, tensions in the South China Sea can easily spill over into armed conflict,” warned Paul Quinn-Judge, the ICG’s program director for Asia The Nation, AFP (24 July 2012)

Thai companies going strong IN ASEAN

Thailand Companies in Thailand are going regional and using the ASEAN Economic Community (AEC) 2015 as catalyst for their growth and expansion strategies. Central Retail Cooperation will be building its first 21,000 sq-metre department store in Jakarta in 2014 Tos Chirativat, CRC’s chief executive,

plans for five more stores to open in Jakarta and Surabaya by 2017 Event organiser, Reed Tradex, which brands itself as the leading ASEAN event organiser has expanded operations in Vietnam Its managing director, Chainarong Limpkittisin, said growth especially in manufacturing and electronics will be accompanied by demand of trade shows,

exhibitions, and conferences Siam Cement Group, Thailand’s industrial conglomerate, plans to reduce its exposure to the domestic economic after a 43% decline in quarterly profits The CEO, Kan Trakulhoon plans to invest US$11.9 billion over the next five years in ASEAN countries, beginning with US$315 million in three projects in Myanmar Bangkok Post, Reuters (26 July 2012)


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Yuan on way to become Asia’s ‘anchor’ currency

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Philippines

its reserves, the Asian Development Bank (ADB) says.

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More Expats

heading to the Philippines

Indonesia, Singapore, China

The yuan is on its way to becoming an anchor currency, as London and Singapore make clear their ambitions to become an offshore yuan hub after Hong Kong, and Indonesia’s central bank started buying bonds on China’s interbank market to diversify

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The ADB statement was issued in Singapore at the launch of its latest report, the Asian Economic Integration Monitor Iwan Aziz, head of ADB’s office of regional economic integration said Beijing’s policymakers were persuading ASEAN countries to use yuan for bilateral settlement with China Singapore plays a major role of providing yuan services to ASEAN countries, and its banks will soon be able to access onshore yuan instead of routing transactions via Hong Kong or commercial banks on the mainland Why it matters: Being an anchor currency does not automatically mean the yuan will become part of the forex reserves of Asian countries, but regional countries which use yuan to settle their trade with China will manage their currencies depending on the yuan’s movements

Many opportunities are arising for expats in the Philippines, due to the rapid growth being witnessed there. The Philippines had enviable economic growth for the first quarter of this year of 6.4% while its stock market rocketed 20% Western companies have been flocking to the Philippines to take advantage of its cheap labour force Celebrities such as Donald Trump have been frequent visitors by building a 56-storey Trump Tower, as well as Paris Hilton who has designed and promoted an upmarket residential project in Manila The success can be credited to President Benigno Aquino who has been clearing corruption, bringing down budget deficits and boosting spending on infrastructure The Telegraph (25 July 2012)

Wall Street Journal, Business Times, Asia One (23 July 2012)

Palm Oil import tax raise by India will affect Asean producers ASEAN, India

India’s move to raise taxes on its imports of refined palm oil products is likely to put a dent in the earnings of Malaysian and Indonesian refiners of the commodity but will not affect crude palm oil (CPO) producers as India’s CPO imports remain dutyfree.

India doubled import taxes on 19 July when it ended a six-year freeze on the base import price of processed palm olein, increasing the cost of imports from Malaysia and Indonesia The new tax policy, which lifts the base price of refined palm oil imports to market

prices from US$484 per tonne, is aimed at placating disgruntled refiners in India, who were doubly hit by both the low tariff and cheaper processed palm oil products from Indonesia Since Indonesia slashed its export taxes on refined palm oil last October, India’s imports have doubled to 1.2 million tonnes for the first eight months of this year over 2011 Meanwhile, Malaysia’s palm oil exports fell 14% between 1 and 25 July compared with the same period in June, according to independent market surveyor Intertek Why it matters: Refiners like Mewah and Wilmar’s refineries in Malaysia and Indonesia could face stiffer competition from India’s refiners and this could crimp their refining margins, according to CIMB Research while upstream producers will benefit from higher demand for CPO ASEAN Affairs, The Star (24 July 2012)

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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MYANMAR MONITOR

Economy Thailand and Myanmar on 23 July announced their backing of the US$50 billion Dawei project that has been struggling to find private investors. The leaders did not say what level of support they would give the 250 sq km Dawei complex.

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Rise of FDI in Indonesia

Indonesia Foreign direct investment (FDI) in Indonesia rose 30% in the second quarter from a year earlier to a record US$5.9 billion. The increase suggests that some investors are shrugging off concerns about tough new regulations affecting miners, banks, and other companies in the nation A steep slide in the Indonesian rupiah had signalled investors were worried the good times in Southeast Asia’s largest economy could be short-lived (see also Captures issue 86 story 2) Latest data suggest FDI this year could exceed US$19.3 billion set in 2011, analysts say In addition to FDI, local companies spent US$2.2 billion in the second quarter, up 10% from a year earlier

Financial Times (23 July 2012)

Myanmar’s businesspeople are preparing for the AEC in 2015 by setting up public limited companies in the belief that the country’s stock exchange will drive economic development. According to local economists many of the SMEs will not survive in the changing economy but public companies are essential as the main engine of growth because of their capability to access credit without borrowing from banks. The Irrawaddy (20 July 2012)

Myanmar banks are preparing to offer credit card transactions in time for the 2013 Southeast Asian Games. “Foreigners will not need to bring money in a bag. They just need to bring their cards—Visa or MasterCard” said managing director of local Kanbawza Bank.

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The Wall Street Journal (25 July 2012)

ASEAN and Japan Businesses to Maximise Cooperation ASEAN, Japan

The Irrawaddy (21 July 2012)

Politics Myanmar opposition leader Aung San Suu Kyi called for laws protecting the rights of the country’s impoverished ethnic minorities in her first speech in parliament on Wednesday 25 July. However, Suu Kyi did not mention the communal violence in western Rakhine state in her speech. AP (25 July 2012)

Foreign Affairs During a meeting between Thai Prime Minister Yingluck Shinawatra and Myanmar President Thein Sein in Bangkok on 23 July, Yingluck named four areas of bilateral co-operation: personnel development, Myanmar’s role as the chair of ASEAN in 2014, economic and social development, and the construction of infrastructure.

Exchanges between Japanese and ASEAN businesses took place at the 5th Business Dialogue between ASEAN and the Federation of Japanese Chamber of Commerce and Industry in ASEAN (FJCCIA) in Bangkok on 21 July 2012. The forum is a part of a larger effort to increase cooperation between ASEAN and Japanese businesses ahead of the ASEAN Economic Community in 2015 Members of the Federation are primarily

firms from automotive and auto-parts, electronic and electrical appliance, chemicals, consumer products, and financial services industries The Dialogue concluded that improvements in custom clearance and procedures in ASEAN states, regulatory harmonisation and the elimination of invoices for origin certificates would improve trade between partners Japan is ASEAN’s largest export market at US$147.41 billion Zambo Times (25 July 2012)

What is FJCCIA?

The Malaysian Insider (24 July 2012)

The United Nations expert on human rights in Myanmar Tomas Ojea Quintana arrived there on 29 July, days after the UN voiced fears that efforts to end unrest in Rakhine state had turned into a crackdown on Muslims. He will visit Rakhine state, as well as meet with President Thein Sein and civil society. AFP (30 July 2012)

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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Ho Chi Minh CITY to get underground terminal

Vietnam An underground metro terminal and trade centre is to be built in Ho Chi Minh City and will start operations in 2017. The 20,000 sq metre terminal, built 40 metres underground from Ben Thanh market square, will consist of three storeys for four metro systems and surrounded by retail outlets

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A trade centre covering around 25,500 square metres will be located underground along Le Loi Street The cluster will be built under a project jointly set up by the city Urban Railway Management Board and the Japan International Cooperation Agency Vietnam News (25 July 2012)

No Olympic Gold for ASEAN? ASEAN

Despite some promising potential gold medallists in the region, Southeast Asia will not take home a gold during the London Games, predicts the Wall Street Journal. Singapore is predicted to take home the most medals from London this summer, with two in total

Teams from Thailand, Malaysia, Vietnam and Indonesia will walk away with a medal each The region will be watching closely to learn the fates of some of its most-prized athletes, including Malaysian badminton player Lee Chong Wei, who returned home with a silver medal from the 2008 Beijing games

Thai athletes hold promise particularly in taekwondo, boxing and weightlifting The Philippines, the smallest ever to participate in the Games, is expected to return empty-handed Wall Street Journal (25 July 2012)

Predicted Olympics medal tally

Editorial Team: Angela Goh, Manissa van Geyzel, Chayut Setboonsarng Consultant Editor: Tunku ‘Abidin Muhriz Designer: Iqbal Hakim 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 87 (30 July 2012)