CARI Captures Issue 115 (Mar 2013)
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Transcript of CARI Captures Issue 115 (Mar 2013)
CARICAPTURES
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ON THE ROAD TO RESTRUCTURING
Singapore
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4 M A R C H 2 0 1 3 I S S U E 1 1 5
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Singapore engages in economic restructuring, more social inclusiveness; some tough love and lots of heart; some pleasant surprises for companies, heart-landers and the elderly; less pleasant surprises for multiple property-owners and luxury car enthusiasts.
Finance Minister and Deputy Prime
Minister Tharman Shanmugaratnam
reinforced the government’s push to
restructure the economy through tighter
policies on foreign workers that will
introduce a new “permanent reality of a
tight labour market”
Economists said the Budget will be
structural instead of counter-cyclical and
ultimately attempt to change how the
city-state grows
The Budget also attempts to manage
economic inequality with generous
provisions for the vulnerable and higher
taxes for the wealthy
The policy will be combined with
business offsets and reliefs in attempts to
ease some of the pain of the transition
In the short term, economists expect
higher inflation as businesses pass on the
cost of higher worker levies and wage
increases to consumers
The Monetary Authority of Singapore
(MAS) is expected to keep to its current
inflation–fighting stance and will likely
respond by increasing interest rates —
ultimately leaving the central bank with
little room to ease the presently strong
Singapore dollar
Business Times (26 February 2013) Business Times (25 February 2013) Business Times (28 February 2013)Business Times (25 February 2013)Business Times (25 February 2013)Business Times (25 February 2013)Business Times (25 February 2013)
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.
VIETNAM PROVIDES LITTLE
OPPORTUNITY FOR PUBLIC
Vietnam, Cambodia
Clive Cook, a senior consultant at
law firm Baker & McKenzie said the
region’s diversity and uncertain legal
environment remain major challenges
for many multinationals. According to a report based on a survey
of 147 companies, governments change
their minds about important legislation with
little warning, and even when laws remain
unchanged, court decisions and interpretations
of the laws can be highly arbitrary
The survey said multinationals also have to
contend with protectionism in Myanmar and
Indonesia as the two most protected markets,
despite ongoing efforts at integration and
opening up ASEAN’s internal market
Indonesia recently told oil and gas contractors
they will have to stop shipments if they do not
follow central bank rules to channel export
revenues through local banks, despite earlier
protests from Chevron and Total
Jakarta has also been delaying the
implementation of the regional open skies
policy citing the large number of airports as a
constraining factor
Why it matters: The survey highlights the
challenge of translating regional commitments
into reforms on the ground. More interestingly,
Jakarta’s recent stance highlights a trend
almost unique to the country: that the
economy trends to adopt a more protectionist
position when the economy is doing well
Wall Street Journal (19 February)Business Mirror (28 February 2013)
Philippines
Indonesia, ASEAN
LEGAL
ISSUES IN
BSP BRACES FOR LIKELY IMPACT
ASEAN WORRY
INVESTORS
0403
02
Vietnam scored only 19 points on
a 100 point scale in the 2012 Open
Budget Index (OBI). The report highlighted the lack of
transparency in Vietnam’s budget system,
encapsulated in its inability (or resistance)
to reveal the draft State budget to the
public before being passed by the National
Assembly (NA)
Ta Thanh Thuy from the Center for
Development and Integration (CDI)
said Vietnam would further advance
commitments on transparency by strictly
observing the regulations on budget
transparency
A recently held conference attempted to
seek solutions to boost budget transparency,
management efficiency and citizens’
accessibility to the issues regarding the
government budget
International Budget (23 February 2013)
The Bangko Sentral ng Pilipinas (BSP) prepares for reversal of funds. The recent increase in foreign portfolio
investments in major Asian economies have
prompted central banks to implement several
measures to either temper or avoid macro-
wide adverse effects such as the appreciation
of local currencies, accelerated inflation and
asset bubbles
The BSP said it was prepared to implement
measures that will help keep stability in the
country’s financial sector in the event full
recovery of the US and EU leads to capital flight
away from Asia
BSP Governor Amando Tetangco Jr. said
that while the central bank is currently
preoccupied with managing growing
liquidity brought by rising foreign portfolio
investments, it also has in mind the possibility
of a reversal of the on-going trend
Safety measures include prohibiting foreign
funds from investing in special deposit
accounts (SDAs) with the central bank, and
imposing limits and a higher capital charge on
banks’ holdings of non-deliverable forwards
(NDFs)
In the event of capital outflow, he said the
BSP could adjust existing limits on certain
financial transactions involving the outflow
of foreign exchange while being mindful of
timing and market volatility effects
Inquirer Business (26 February 2013)
OPEN BUDGETINDEX 2012 SCORE
Source: Open Budget Survey (2012)
(0 - 100, 100 - best score)
PARTICIPATION IN BUDGET PROCESS
Vietnam has approved a broad plan
to boost its economy by focusing
on restructuring public investment,
banks and state-owned enterprises
while controlling inflation and
maintaining growth. In response to lower consumer demand and
higher non-performing loans, Prime Minister
Nguyen Tan Dung announced a master plan
which focuses on prudent monetary policy
to tame inflation while ensuring “reasonable
growth”
However, implementation of the plan remains
a concern, given entrenched interests and
opaque decision-making
The Prime Minister has also asked the
Observers are concerned that despite
Indonesia’s economic progress, the
country is losing ground in tackling
problems of poverty and a widening
income gap. H.S. Dillon, the presidential special envoy
for poverty alleviation said poverty and
widening inequality have surfaced as issues
at elections and addressing them should be
top priority for local leaders
Currently, 28.6 million Indonesians live on
less than 260,000 Rupiah (US$27) a month,
with many more vulnerable to slipping below
the poverty line
There are also concerns that efforts to
improve the lot of the poor seem increasingly
elusive
President Yudhoyono recently said job
creation was the most effective way to
reduce poverty, but admitted this was
difficult for the extremely poor and hence
the state committed to helping them through
free schooling and health care, subsidised
rice and handouts
Vivi Alatas, senior economist at the World
Bank, said the pace of job creation has not
kept up with the growing workforce looking
for better jobs in the formal and non-
agricultural sectors
Why it matters: The challenge of
translating economic growth into tangible
improvements in quality of life suggests that
growth is a significant but insufficient factor
in addressing poverty and inequality. Arsenio
Balisacan, director-general of the Philippine
National Economic and Development
Authority, argues that the type of growth
and better targeted policies matter more in
alleviating poverty and disparity
Jakarta Globe (19 February 2013)
Vietnam
Indonesia, Philippines
05
07State Bank of Vietnam (SBV) to establish a
national asset management company to assist
burdened credit organisations by purchasing
their bad debts
Moody’s downgraded Vietnam to a B2 rating
in September last year, its lowest yet, citing a
weak banking sector in need of “extraordinary
support”, dealing another blow to a country
once tipped as Southeast Asia’s next emerging
market star even as many of its neighbours
prospered
Analysts said the downgrade does not
signal a full-blown banking crisis, and that the
slowing economy should return to form if the
government takes action
Business Times (14 September 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.
TRANSLATING
ECONOMIC
DOHA NEGOTIATIONS ARE ON THE
RADAR AGAIN AS WTO PREPARES
VIETNAM STEPS UP BANKING
SECTOR REFORMS
WEALTH INTO
SOCIAL PROGRESSIndonesia nominated former trade minister Mari Pangestu for the leadership position of the World Trade Organization (WTO) Her nomination came on the heels of
Indonesia’s successful bid to host the WTO
biennial ministerial conference at the end of this
year
Last Thursday, she met with Nigerian ministers
in attempts to assure Nigeria that she was the
ideal candidate to lead the WTO
Why it matters: If elected, Pangestu faces the
Indonesia
06challenge of completing the much-stalled Doha
negotiations. However, she remains optimistic
that the Doha talks so far have resulted in a
balanced package, and that the challenge
of completing the ‘last mile’ can be met by
adopting an inclusive multilateral trading system
that addresses the interests of both developing
and developed countries; a tall order that is
easier said than done. If successful however, she
will change how countries and regional blocs like
ASEAN operate, trade and interact
Jakarta Post (20 February 2013) Jakarta Globe (21 February 2013)
FOR CHANGE IN LEADERSHIP
PILLARS OF THE VIETNAM PLAN
Act) has been slammed for retaining a series of restrictive provisions. The new draft legislation prohibits the publication of various topics, including material that could “disturb the rule of law”, “incite unrest”, or “violates the constitution and other existing laws”. It also requires all publications to register with the government or risk spending six months in jail and paying a 10 million kyat (US$11,621) fine.
DVB (3 March 2013)
Myanmar President Thein Sein met with members of Norway’s Myanmar community, urging them to return to their native country, while also expressing gratitude to his hosts for supporting his reform efforts. He thanked the Norwegian government for clearing Myanmar of the 3 billion Norwegian krone (US$527 million) debt that it owes the oil-rich Scandinavian country. Sein also invited Norwegian companies to invest in the energy, information and technology sector in Myanmar.
Irrwaddy (26 February 2013)
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.
Editorial Team: Manissa van Geyzel, Sóley Ómarsdóttir, Radin Faizal Consultant Editor: Tunku ‘Abidin Muhriz
The United States authorised US entities to do business with four major Myanmar banks, extending the easing of economic sanctions in Myanmar. The new banking permission supports the July 2012 easing of US economic sanctions on Myanmar that allows for new investment into Myanmar and encourages additional US economic involvement though the financial system.
Mizzima (23 February 2013)
Opposition leader Aung San Suu Kyi has said that Myanmar “must decide for itself” whether or not to grant citizenship to the Muslim minority Rohingya, but added that the government “should listen” to foreign experts and uphold international standards in its citizenship laws. The government of President Thein Sein has given conflicting signals on how it seeks to resolve the Rohingya citizenship issue.
Irrwaddy (23 February 2013)
A new draft law intended to replace one of Myanmar’s most draconian publishing acts (1962 Printers and Publishers Registration
Myanmar emerges as new promised land for oil and gas giants. Major firms have been eyeing the potentially oil-and-gas-rich Myanmar, unperturbed by a lack of data on its proven energy reserves. The CIA estimates that Myanmar is sitting on some 50 million barrels of oil and some 283.2 billion cubic metres of natural gas. The sector currently represents 34% of the country’s exports and is expected to grow.
Mizzima (25February 2013)
The Myanmar government is currently drafting a 30-year master plan to develop the city of Yangon to an international standard with the help of the Japan International Cooperation Agency (JICA). The plan is centred on making Yangon an international level city, and efforts will be made for better supply of electricity, water and transport.
Mizzima (27 February 2013)
08 MYANMAR MONITOR
FORE IGN AFFA IRS
ECONOMY
POL I T I CS
OVERPRICED BEEF WITH
CORRUPTION ON THE SIDE, PLEASE?
Indonesia
Illicit tobacco trade in Vietnam and Cambodia is costing producers millions. Two cigarette brands distributed by two of
Cambodia’s most prominent and connected
tycoons are being smuggled from Cambodia
to Vietnam at an estimated rate of more
than 300 million packs a year, causing losses
of nearly US$ 200 million annually for local
tobacco manufacturers
The Vietnam Tobacco Association (VTA)
said the two brands, Hero and Jet, comprise
a significant portion of the illicit tobacco
trade
Smuggled cigarettes make up between
18% to 22% of the 3.5 billion packs consumed
in Vietnam each year, with Hero and Jet
controlling at least 40% of the market since
2007
In April 2011, the Cambodian Department
of General Customs and Excise signed a
memorandum of understanding with Vietnam
vowing to put in place stronger border
checks
The VTA – fearing that the legitimate
industry cannot compete on a level playing
field with transit bands - has lobbied for
tougher anti-smuggling reforms with the
Vietnamese government including a call
for higher taxes particularly on imported
cigarettes
Bangkok Post (26 February)
Jakarta scrambles to stabilise the price of beef following slashed quotas and all the problems that came with it. In 2011, Indonesia slashed quotas on beef
imports as part of its national meat-sufficiency
target of domestic supplies meeting 90% of
total meat consumption in the country
Since then, the industry has been plagued by
problems of skyrocketing prices, degradation in
meat quality and endemic corruption
Franky Sibarani, deputy secretary-general of
the Indonesian employers association Apindo,
said the big problem is that there are no good
numbers on demand and supply and therefore,
a lack of enforcement of the quota
Critics said the quotas should be reconsidered
as local production remains a long way off from
09 PROFITS UP
IN SMOKE
Cambodia, Vietnam
meeting rising local demand
Coordinating Economic Minister Hatta Rajasa
said that the supply of beef would be sped up to
stabilise skyrocketing prices by taking out beef
cattle and frozen beef stocks available at local
slaughterhouses, transporting beef from areas in
eastern parts of Indonesia via rail and ship, and
developing a cattle husbandry program
Hatta added that public auction was the
mechanism the government would use to carry
out beef importation
West Nusa Tenggara Governor Zainul Majdi
said a balanced distribution of beef can
be achieved by setting up zones for meat
distribution supplies
The Jakarta Globe (19 February 2013) Jakarta Post (25 February 2013)