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06 AUGUST 2012

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CAPTURES

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CARI

45th HAPPY N ASEA T 2012 S U G U 8A

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ISSUE 88

Asean credit flowing despite global crunch ASEAN

As the western world slowly recovers from credit woes, consumers in ASEAN are enjoying a wave of easy credit from economic growth and positive credit ratings. ASEAN’s middle class is bombarded with credit card marketing campaigns as the region’s trend shifts towards spending on credit The young population is especially targeted by banks; Malaysians, still burdened with college loans, are purchasing

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luxury items such as smart phones, while Indonesians turn to debt financing for new motorcycles Aekapol Chongvilaivan, an economics fellow at the Institute of Southeast Asian Studies expressed concerns of over exuberance However, regional banking analyst at Nomura, Anand Pathmakanthan, weighs in saying ASEAN banks were still sensitive to credit bubbles Reuters (2 August 2012)

Indonesia’s Trade Gap Signals Tougher Times

Indonesia

Indonesia’s trade deficit hit an alltime high in June as exports from the country fell sharply, a sign that weaker demand from China and

the West is affecting some of the few countries still growing at a considerable clip. A third straight month of trade deficits

in one of the world’s biggest commodity producers bodes ill for Indonesia “We’ve never recorded a deficit this huge, even during crises”, Satwiko Darmesto, director of Indonesia’s Central Statistics Agency, told reporters following the release of June data showing a US$1.3 billion trade deficit, nearly three times as large as expected Overall, Indonesia is still running a trade surplus of US$459 million through the first half of the year Longer term, the concern among some economists is that Indonesia could face more protracted periods of deficits, as rising incomes and robust domestic demand keeps imports high Wall Street Journal (1 August 2012)


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Verdict still out on Thai readiness for AEC

Thailand

Healthy skepticism pervades the readiness of Thai companies for the ASEAN Economic Community 2015. Speaking at a seminar, Finance Minister Kittiratt Na-Ranong, stated that Thailand stands to lose up to 70% of its firms due to unpreparedness at an AEC forum

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Firms may prefer other countries such as Indonesia for its large domestic market, Vietnam for its growth potential, and Singapore for its high purchasing power Kasikorn Bank chief executive officer, Banthoon Lamsam, said that the prevalence of AEC seminars is a sign of anxiety

Philippine Mall Expansion in China

SM Prime Holdings, the biggest Philippine retail developer, plans to build four to five malls a year in the country It’s also targeting a shopping centre

Straits Times, The Nation (2 August 2012)

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Air Asia Draws

Scrutiny in

Philippines, China Philippine billionaire Henry Sy’s shopping mall developer is planning to spend US$1.5 billion in the next three years to add as many as 18 shopping malls at home and in China as consumer spending rises.

However, Banthoon added that only generalities of the AEC are discussed at these forums and that Thai companies are reluctant to go abroad Government measures to reduce corporate tax rates may help from 23% to 20% may induce more competitiveness for Thai firms Why it matters: Fear of looming market competition is increasing awareness of the AEC and inducing action from the Thai corporate sector. This is a positive development, but should be occurring across ASEAN. The region’s private sector needs to become more involved in learning and giving input into the process of integration.

in China every year, said Hans Sy, the Manila-based company’s president and the billionaire’s son SM Prime may face the risk of declining funds sent home by Filipinos working abroad, while a sharp economic slowdown in China may make it longer for the company’s expansion to bear fruit, according to Astro del Castillo, managing director at First Grade Finance Bloomberg (2 August 2012)

ASEAN Retail Developers On The Move

CapitaLand (Singapore) -developed 58 malls in China

Central Retail Corporation (Thailand) -to develop first department store in Indonesia

Genting (Malaysia) -to develop leisure and entertainment complex in the UK

Indonesia, Wins In Thailand Indonesia, Thailand Indonesia’s authorities want to make sure Air Asia’s US$80 million bid to buy Batavia Air will not create a company with too much control over the Indonesian market. Indonesia’s Business Competition Supervisory Commission has asked to see the ownership structure before deciding whether it is in line with the anti-monopoly law Foreign companies are allowed to own up to 49% of an Indonesian airline – Air Asia’s bid is to purchase 49% of Batavia, while its local partner PT Fersindo Nusaperkasa will purchase the remainder 51% Meanwhile, Thai Airways International has scrapped plans to launch its low cost carrier airline, ensuring the dominance of Air Asia in Thailand as the country’s only low-cost carrier option, according to CIMB Securities Thailand The Nation, Wall Street Journal (31 July 2012)

Source: The Star, Bloomberg, Bangkok Post

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 The World Bank will help Myanmar by clearing interest rates and restructuring the rest of a US$397 million loan in arrears. The World Bank has opened an office in the country and will also resume aid after 25 years of absence.

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in rice markets

Thailand

The Asian Development Bank (ADB) has opened an office and dispatched staff in Myanmar. ADB has not had operations in the country since 1988 but Myanmar has participated in ADB’s regional activities. ADB (1 August 2012)

AFP (1 August 2012)

The Myanmar government has suspended the publication of two news journals for alleged violations of government regulations, only a few weeks after announcing it was relaxing censorship as part of reforms. The Irrawaddy (31 July 2012)

Foreign Affairs The US Congress has extended a ban on imports from Myanmar, seeking to maintain pressure on Myanmar to continue the reform process. The Star (3 August 2012)

The new Myanmar Ambassador to the United States Than Swe presented his credentials to the US government on 30 July. He is the first person to assume the post since 2004. The Irrawaddy (30 July 2012)

Iran’s Foreign Minister Ali Akbar Salehi said on 29 July that Iran plans to establish an embassy in Myanmar to help resolve the problems facing Muslims in this country. Tehran Times (30 July 2012)

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Thailand losing competitiveness

Reuters (1 August 2012)

Politics According a recent Human Rights Watch (HRW) report, Myanmar security forces raped and opened fire on Rohingya Muslims in a recent wave of violence in Rakhine state. HRW also claims the official death toll of 80 people is “grossly underestimated”, and criticises the international community for lack of reaction

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Thai rice exports halved to 4.7 million tonnes and export value dropped from US$5 billion to US$3.1 billion this year, according to the Thailand Development Research Institute (TDRI). TDRI and other leading Thai economists have pointed out that the government’s

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rice-pledging policy is destroying the nation’s competitiveness in rice production TDRI president Nipon Poapongsakorn said if the government releases the 10.2 million tonnes of rice it has in stock, producers would immediately suffer US$ 2.7 billion to US$3.1 billion Thai rice costs more than its Vietnamese counterpart, but the supply shock would induce a loss of US$75 per ton, not inclusive of the US$8.2 billion cost of pledging Srirat Rastapana, director general of the Thai Trade Negotiations Department, expects to begin negotiations with the Philippines Under WTO rules, Thailand can export 98,000 tonnes of rice to the Philippines before incurring a 40% duty Why it Matters: The rice pledging scheme needs to be revisited so it does not only serve rich farmers and landlords. A direct income transfer to farmers has been proposed. Trade negotiation with the Philippines is not a long term solution The Bangkok Post, Philippine Daily Inquirer (2 August 2012)

ASEAN path to economic union muddied by South China Sea

ASEAN The South China Sea row may not directly affect plans by ASEAN for the economic integration, political leaders and officials say but analysts are less optimistic. “It’s not going to hold progress (on integration) hostage”, ASEAN SecretaryGeneral Surin Pitsuwan told diplomats in Jakarta, referring to a recent meeting in Cambodia, where rifts over the South China Sea prevented the group’s foreign ministers from issuing a communique for the first time in its history At the Phnom Penh meeting of foreign ministers, some diplomats said Cambodia, ASEAN’s chair and China’s ally, blocked the South China Sea dispute being put on the agenda at China’s behest “The difference is that China is giving something that Cambodia needs, while ASEAN is promising something that is abstract”, said Aleksius Jemadu, dean of

the school of political and social sciences at Pelita Harapan University in Jakarta, adding that “ASEAN countries will act based more on their domestic needs” “They are behind schedule (on the economic community) and clearly not going to make it ... they are not going to see much action on services”, said Hal Hill, professor of Southeast Asian economies at the Australian National University Why it matters: ASEAN will face further challenges as it tries to standardise customs procedures and open up protected industries such as financial services to competition from within. It has implemented free transfer of profits and dividends but needs to remove further barriers to intra-regional investment flows. Reuters (31 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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Failed state indicators challenges to ASEAN Failed States Index 2012: How ASEAN ranks

ASEAN The Failed States Index 2012 published by The Fund for Peace, could be important for ASEAN members to address internal matters and accelerate the realisation of ‘ASEAN Community 2015’. It ranks 177 countries in the world based on its socioeconomic performance with Somalia ranked first as the worst performing country, while Finland is the best Four countries are in danger of plunging to the ‘failed state’ category: Cambodia, Laos, the Philippines and Indonesia The Philippines is facing a critical issue with security while Indonesia is considered very weak in social indicators especially the mounting demographic pressures related to natural disasters, disease, environmental degradation, pollution, food scarcity,

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malnutrition, water scarcity, population growth, youth bulge and mortality rate According to the report, Thailand has to address the long-standing issue of factionalised elites, while Vietnam has to address critical issues concerning state legitimacy and human rights, which include press freedom and civil liberties Malaysia is very weak on human rights, lack of press and political freedom, while Brunei has a dominant issue on uneven economic development related to ethnic, religious, or regional disparities, a yawning gap between the rich and the poor, slum populations The only ASEAN country to have reached the level of “a very stable state”: Singapore and the only issue it faces is human rights, particularly press and political freedom

Rank Myanmar 21 Cambodia 37 Laos 48 Philippines 56 Indonesia 63 Thailand 84 Vietnam 96 Malaysia 110 Brunei 123 Singapore 157

Jakarta Post (1 August 2012)

Jakarta: World’s Most Active

Source: Fund for Peace

Twitter City

Indonesia Indonesia has earned the title of fifth most active nation on Twitter, while Jakarta has emerged as the most active city. Semiocast, a Paris-based research company, found that Jakarta managed to outdo major cities like Tokyo, London and New York Bandung, Jakarta’s neighbouring city, ranked 6th most active city which helped catapult Indonesia to its 5th place status By June this year, there was a 50% increase in Indonesian users which accounts to 29.4 million account profiles Although the United States still dominates the top user base position, the highest growth is coming from other countries Jakarta (1 August 2012)

MOST ACTIVE ON TWITTER IN ASEAN

CITIES WITH MOST TWEETS RANK Jakarta Bandung Singapore

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NUMBER OF TWEETS* 265 million 133 million 120 million

COUNTRIES WITH MOST TWITTER ACCOUNTS RANK Indonesia Philippines

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NUMBER OF ACCOUNTS* 30 million 10 million

(*based on June 2012 only) Source: Semiocast

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 88 (06 Aug 2012)  

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

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