Asian Tigers 2010 Jan-Feb

8/14/2019 Asian Tigers 2010 Jan-Feb

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FEBRUARY 2010 | ASIAN TIGERSINVESTORS REPORT

Asian TigersWelcome to our rst edit ion o 2010. The Year o the Tiger.

The Tiger is one o the 12-year cycle o animals that appear in the Chinese zodiac related to the Chinese

Calendar. Another name or the Chinese calendar is the Yin Calendar. Since the time o Emperor Wu o Han,

starting the new year on the second new moon ater the winter solstice has been the norm or more than

two thousand years.

Asian Tigers magazine is true to the Tiger tradition o being bold and ambitious. We bring you regular

monthly articles that are expertly written, sometimes bold in their nature, and innovative in their approach

to our readers throughout Asia.

This month in our cover story, Noynoy, The Third Benigno Aquino, writer Marisse Reyes asks; whats in a

name? In the case o Senator Benigno Simeon Aquino III, more popularly known as Noynoy, his surname

does not only hint at his pedigree or bloodline, but also the story o both a amily and a nation. Will he be

the Philippines next President? Many think so.

Our regular columnist Jack Dixon asks the question Can China ride out the Tigers tempest? Is China poised

or even greater economics this year?

Read on to nd out, and as always, please let us know your views.

Also, check out our new 2010 look website at asiantir.org

Happy reading and investing

Charlie Greene

2010

Marisse Reyes

Jack Dixon

www.asiantir.org

Charlie Greene

Editor in ChiefCharles Greene

Managing EditorMark Wayne

ContributorsChris ChampionDavid BowdenSteven LuntJack DixonDr. Bernardo VillegasEmilio Antonio Jr.Ricardo BarcelonaWang YuanchangMichelle FoongChethan KambiMarisse ReyesIvan Fernandez

Circulation ManagerBonnie Tsang

Production ManagerFerdie Ng

Design & LayoutRommel Domondon

Design AssistantsGian Carlo Bernal, Chris Wood, Ma. Christina Roxas,Arnel Mojica

Marketing & AdvertisingJanina [email protected]

Editorial & CommentsEric [email protected]

Asian Tigers Investor Report, Co.Suite 8156, 3905 Two Exchange Square8 Connaught PlaceCentral Hong Kong

No part o this magazine may be reproduced without thewritten permission o the publishers. Opinions in Asian Tigersmagazine are the writers and not necessarily endorsed by thepublishers. No responsibility will be accepted or unsolicitedmanuscripts or other materials. Editorial content containedherein is provided or inormation only.

All rights reserved. Copyright2009 applied or by AsianTigers Investor Report, Co.

Asian Tigers magazine is published bi-weekly by Asian TigersInvestor Report, Co. and is produced or them by GlobalIntegrated Media Ltd.

From the Editors Desk

TheAsian Tiger Investor Report Website(www.asiantir.com), provides awealth o services to both the Asian investor as well as investors globally who are interested in theAsian market. In addition to the latest nancial news, stock quotes, nancial calendars and orexrates, you can also nd these additional eatures:

Featured Company News - The place to look or news on companies that are making news.Expert Columns- Asian Tiger Investor Report eatures exclusive commentary rom globallyrecognized columnists who are experts in their elds.

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ASIAN TIGERSINVESTOR REPORT | FEBRUARY 2010

Contents

Asian Private CapitalIncentives and bureaucraticburdens conundrum!

/by Ricardo Barcelona

Noynoy, The Third BenignoAquino

/by Marisse Reyes

Year o Dealing Dangerously Can China ride out theTigers tempest?

.../by Jack Dixon

Security is Hong KongsPriority: Opportunities inSecurity and Smart CardsMarkets

/by by Michelle Foong

Indias Commercial MROMarket Ready to Take-Of MRO

/by Chethan Kambi

Malaysia Begins a NewDecade/by David Bowden

AFTA ater 18 years:Assessing the Pace,Directions, Gains and Losses

18/by Emilio Antonio Jr.

Hometown o the Tiger /by Wang Yuanchang

Wind power in Australia:Gathering momentum/by Ivan Fernandez

Some harsh lessons orAustralia

The Greatest Show on Earth Shanghai in the SpotlightASEAN Exchange

Asia to Lead Global Growth/by Bernardo Villegas

Features

Asia

7

13

18

23

29

32

36 59

Departments

4

67

The Numbers Game/by Chris Champion

Technical Overviewof Markets

ATIR Market Report

38

41

48

55

65

To lead Global Growth45

On the Cover:

41 South Korea Polishes

up its Investor Image

29

56

Malaysia Begins aNew Decade

Some harsh

lessons forAustralia

50 The Greatest Show onEarth


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FEBRUARY 2010

4 Opinion

ASIAN TIGERSINVESTOR REPORT |

Game

NumbersThe

/by Chris Champion

Neither a borrower ......

The US Federal reServe SUrpriSed

a ew people in mid-January with a newset o rules on credit cards which werermly skewed in avour o the consumer.

Te Feds 1,155 pages o rules werewelcomed by consumer groups whichhave long been pointing at the modernphenomenon o mountainous personal

debt.

1

1,155

We thought it would be interestingto collect a ew acts and quotes on thesubject.

More than 175 million new credit cardswere approved in China in the rst 11months o 2009, up 33 per cent year-on-

year.2009111.75

33%

US credit card deaults (dened ascredit card debt more than 60 daysbehind on payments) rose steadilythroughout 2009, nally reaching recordlevels in September. At that point,

deaults were more than double theaverage levels o the previous decade.2009

60

99

In Britain, about one million amiliesused credit cards to make mortgage orrent payments in 2009.

2009

Australian mortgage, credit card andpersonal loan debts stood at A$1.2trillion in December 2009, up 71 percent

rom ve years ago and, or the rst time,exceeding the countrys GDP. Its aterrible, terrible sign, said University oNew South Wales economics proessorSteve Keen.,

2009121.2

71%GDP

Steve Keen,

While 2008 brought us the worldwidecredit crisis, 2009... turned into a creditcard crisis, as cardholders around theglobe careened rom credit binge to creditbust. (US commentator Eva Norlyk


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FEBRUARY 2010 | ASIAN TIGERSINVESTOR REPORT

Opinion 5

We are still waiting for a response from Beijing to the threatby Google to walk out of China, a threat which comes as aconsequence of the hacking of its Gmail infrastructure.

Smith, creditcardguide.com)20082009

Eva Norlyk

Smithcreditcardguide.com

When you get a credit card,technically youre borrowing moneyrom a bank. In reality, though, youreborrowing money rom yoursel. (Website creditcardoers.com)

creditcardoffers.

com

He looks the whole world in theace or he owes not any man. (Henry

Wadsworth Longellow)

Henry WadsworthLongfellow

Te only man who sticks closer to youin adversity than a riend is a creditor.(Anonymous)

Who goeth a-borrowing, goetha-sorrowing. (Tomas usser)Thomas

Tusser

Beore borrowing money rom ariend, decide which you need most.

(American proverb)

Google versus Goliath

Google

We are still waiting or a response romBeijing to the threat by Google to walkout o China, a threat which comes as aconsequence o the hacking o its Gmailinrastructure.Gmail

Google

Google did not name the Chinesegovernment well, not exactly. It saidthe inltration o its inrastructure washighly sophisticated, that the hackedaccounts were those o human rightsactivists, and that the hacking came rom

within China.Google

Google

Beijing may not be in a hurry torespond, but one eels that it will have toacknowledge the situation at some point,and sooner rather than later. Tis is not achallenge it can ignore. Google is clearlyplaying hardball on this one, and since itsurious accusation it has received supportrom all points political in the US. Tereis too much ace involved here or Chinato remain silent.

Google

Google

A response will be eagerly awaited byGoogle, by the White House, and byabout a billion growingly auent andcosmopolitan Chinese citizens.Google,

Wrong again

Rarely have so many been so wrongor so long. Australia has just announcedanother all in its unemployment rate by 10 basis points to 5.5 per cent. Tegure, or November, refects the creation


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FEBRUARY 2010ASIAN TIGERSINVESTOR REPORT |

Opinion6

A MOMENTIN HISTORY

Many banking regulations have been

tightened and changed in the past yearas a result o the global economic crisis,but one rule which has escaped scrutinyin Britain is the one which states that allbanks are required to accept any legiblecheque, irrespective o the documentsmaterial content. Te reason may be thelegacy o humorous innovations the rulehas spawned.

Perhaps the most renowned antics on the

theme came rom the novelist and humorist

AP Herbert, who wrote cheques at various

times on napkins, a brandy bottle and an

egg. Herbert himsel then became a target

in 1970 when he received a fve-pound

cheque rom Punch magazine written on

Family, religion, riends... these are the three demonsyou must slay i you wish to succeed in business.

Monty Burns (ctional owner o the nuclear power plant in Te Simpsons)

,,

Theysaid...

a cow. Herbert had to lead the cow into a

bank to be cashed.

AP Herbert

AP Herbert

,

1970HerbertPunch

Herbert

o 27,900 part-time jobs and 7,300 ull-time jobs.

105.5%11

27,9007,300

Month ater month since the start othe nancial crisis pundits have beenpretty much agreed that Australia waslooking at 8 per cent unemployment.

Te Federal government warned that 8.5per cent was possible. Te economistsand analysts said these were reasonablepredictions not good but better thanmost rst-world economies.

8%

8.5%

Te bad news is that nobody got this

right. Not even close. Te good newsis that the error was on the side o theangels. Australias unemployment peakedat 5.8 per cent in mid-2009. Ater thelatest gures, even the government isadmitting 8 per cent looks unlikely.

20095.8%

8% |AT|


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What is in a name? in the case

o Senator Benigno Simeon AquinoIII, more popularly known as Noynoy,his surname does not only hint at hispedigree or bloodline, but also the story

o both a amily and a nation.

Benigno Simeon

Aquino III

Noynoy Aquino

Te only valuable asset I can bequeathto you now is the name you carry, wroteNinoy to Noynoy, then 13 on August

25, 1973, the night beore he aced amilitary kangaroo court or alleged anti-subversion during martial law. I havetried my best during my years o publicservice to keep that name untarnished

and respected, unmarked by sorrycompromises or expediency. I now passit on to you, as good, I pray, as when myather, your grandather passed it on tome.Ninoy Aquino

1973825

13

"

"

Your great-grandather, General

Servillano Aquino was twice condemnedto death by both the Spaniards and the

American colonizers. Fortunately, hesurvived both by a twist o ate. Yourgrandather, my ather was also imprisonedby the Americans because he loved hispeople more than the Americans whocolonized us. He was nally vindicated.Our ancestors have shared the pains,the sorrows and the anguish o MotherFilipinas when she was in bondage.


Economy 7

/By Marisse Reyes


10/76

"

Servillano Aquino

"

Forgive me or passing unto youryoung shoulders the great responsibilitiesor our amily. I trust you will love yourmother and your sisters and lavish them

with the care and protection I would havegiven them."

"

When Ninoy was assassinated onAugust 21, 1983, a Prince Charming hadawakened a nation, which had slept inlethargy or 11 years, with the kiss o his

ultimate sacrice. He said he regrettedhaving only one lie to give, because eveni he had a hundred lives, he would havegiven them all to his country.1983821

11

I the Aquinos were political kingpinso the second district o arlac, theCojuangcos were o the rst district. Teybelonged to the same political party, were

good riends and got together socially.Te marriage o Ninoy Aquino andCory Cojuangco was a match made inheaven, as they say. Just a year ater wegot married, we both agreed that sinceNinoy would be in public lie, I wouldbe primarily a mother, she said. Hediscouraged me rom having a career, andI did not ght him, since staying at home

was commonly accepted once you had aamily. Cory, who was always supportive

o her husband and proud o his publicaccomplishments, had always remained inthe background.Tarlac

Cojuangco

Cory Cojuangco

"

"

Fever or Freedom and Independence

But the world would soon takenotice o Cory, rail o shoulder, butstrong o spirit and o courage. Her

ather Jose Cojuangco, Sr. was born inMalolos, Bulacan on July 3, 1896, two

years beore Philippine Independence.Five months beore he was born, theKataastaasang, Kagalang-galangangKatipunan ng mga Anak ng Bayan,or Katipunan, had established its rstissue o the revolutionary Kalayaan.On August 23, 1896, nearly twomonths ater her athers birth, AndresBoniacio and his men pledged at

Pugadlawin that they would ght orreedom and complete separation romthe Spanish crown. Four months later,on December 30, 1896, Jose Rizal, aChinese mestizo, was executed by theSpaniards or creating in his novels aportrait o the Filipinos as a countryree to think and act on its own. Couldher ather have possibly absorbedthrough osmosis, the ever or reedomand independence running through the

veins o her oreathers?

Jose Cojuangco,


Economy8

When Ninoy was assassinated on August 21,1983, a Prince Charming had awakened a nation, whichhad slept in lethargy or 11 years with the kiss o his

ultimate sacrice.


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Sr. 189673

Bulacan Malolos

5

Kataastaasang Kagalang-

galangang Katipunan ng mga Anak

ng Bayan

Katipunan Kalayaan1896823

Andres Bonifacio

Pugadlawin

18961230

His own grandather, Ingkong Joserom Hongjian village in Fujian, PeoplesRepublic o China, was going throughhis own personal struggle as a naturalized

Filipino. His son Melecio, the Cojuangcosrst politician, a teacher by proession, wonby a majority vote under the ProgresistaParty campaigning on a platormultimate or eventual independencerom the Americans.Ingkong

Jose

Melecio

Progresista Party

Born on February 8, 1960, Noynoyis a ourth generation member o theCojuangcos, who have been runningor public oce a century back. He isan economist by training and a publicocial by proession. He served threeterms as Congressman o the SecondDistrict o arlac beore placing sixthin the May 2007 senatorial electionsthat earned him a six-year mandateas Senator. Congressman Peping

Cojuangcos ather, Jose Cojuangco,Sr. was a congressional representative.Pepings mother Demetria Sumulong

who hailed rom Antipolo is the seconddaughter o Senator Juan Sumulong, thesister o Senator Lorenzo Sumulong andCongressman Francisco Sumulong.196028

20075

Peping Cojuangco

Demetria Sumulong

Antipolo

Juan Sumulong

Lorenzo SumulongFrancisco

Sumulong

As or Cory, how can we say in aparagraph, a book, or several books whatCory Aquino has contributed in the nameo reedom and democracy? I Ninoy haddied or his country, Cory devoted her liein serving the nation. o quote Cory1, weFilipinos were privileged to experiencea peaceul revolution. We got rid o thedictator, spared o the terrible traumaand bitterness o civil war and bloodshed

that other less ortunate countries havegone through. Surely, such a precious gitcalls or reciprocation. What is it that theprivilege o EDSA expects o us?

1"

1 Corazon Aquino. Buklod

Atenista Congress in Ateneo de

Manila University Congress. Ate-

neo de Manila University. January

19, 1996.


Economy 9

Born on February 8,1960, Noynoy is a ourthgeneration member o the

Cojuangcos, who havebeen running or public

oce a century back.


12/76

"

Cory said she was committed topursue the mission I assumed ater I letthe presidency in 1992 Nothing morethan that our work is meaningul, thatit nourishes not only the body but alsothe soul. Tat we render service that istruly ullling, which were necessary,goes beyond the call o ocial duty, theboundaries o our homes and workplace,the limits o ability to give. Tat we grownot just materially but spiritually, that we

value not only ourselves and our amiliesbut the community and the country as

well.1992

"

"

Te Spirit o EDSA means nothingmore than being men and women orothers. Tis is the spirit that I wish allFilipinos could imbibe. It is the spirit,

which promotes personal excellence and

service to others. It is what will sustainour hard-earned reedoms, and make theFilipino people truly deserve the generousblessing o peaceul change that wasshowered on us in EDSA."

"

Beyond the Call o Ofcial Duty

When Cory passed on to the next lieon August 1, 2009, millions displayed

their grateul and emotional sentimentsor a leader who gave her seless love orcountry and people. Was it merely herpopularity, which catapulted the publicclamor or Noynoy to run either as vice-president, then as president? I Cory hadbeen there, she would have given herdiscernment. Pinky Aquino-Abellada

suggested Noynoy consult a Carmelite nunin Zamboanga. I Ninoy had Fr. Horaciode la Costa, and Cory Fr. Catalino

Arevalo, Noynoy should have his spiritualadviser as well. Ballsy Aquino Cruz, theoldest daughter, was overheard to haveasked Noynoy over the phone, Are you

willing to give up six years o your lie?200981

Pinky Aquino-

Abellada

ZamboangaCarmelite

Fr. Horacio de la Costa

Cory Fr. Catalino

Arevalo

Ballsy Aquino Cruz

"

"

It was a modest question, comingrom someone who had served as her

1 Corazon Aquino. Buklod Atenista Congress in Ateneode Manila University Congress. Ateneo de ManilaUniversity. January 19, 1996.

1 Corazon AquinoAteneo de Manila UniversityBuklod Atenista1996119


Economy10

When Cory passedon to the next lie on

August 1, 2009,millions displayed their

grateul and emotional

sentiments or a leader

who gave her selfess love

or country and people.


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mothers private secretary during herpresidency. In her humility she hadorgotten to acknowledge that their liveshad already been intertwined with thato our nation... sufering through theirathers imprisonment and assassination,their mothers reluctant presidencyand seless dedication in service to thenation.

On September 9, 2009, the 40th dayater the death o his mother Corazon

Aquino, Noynoy Aquino announcedhis presidential bid. A text message that

day suggested that i you multiplied the9-9-9 by 3, you would get 27. His atherNinoy Aquino was born on November27. Noynoy would run in 2010, 27 yearsater Ninoys assassination. Also, 9-9-9

was also the 252nd day o the year. I youadd the three digits, it also yielded a 9. Isit his destiny?200999

Corazon Aquino40

3927

1127201027

200999

2529

In 1996, ten years ater the historicEDSA Revolution, Cory Aquino mayhave been prophetic in her warning that:1996

Challenges to our reedoms continueto lurk in dark corners, some o themdisguised as anti-crime legislation oras proposed constitutional reorms to

streamline government. Tey also comein the shape o recycled but unrepentantpoliticians, and discredited ideologues that

would take advantage o the democraticspace, which the EDSA Revolution hadcreated in our society. But mostly, thesechallenges take the orm o a generalapathy among our people, a tendencyto leave everything in the hands o theleaders, and just heap the blame on them isomething goes wrong."

"

I believe that such apathy, which hasallowed the return o discarded ideasand personalities in the highest levelso governance, goes against the spirit o

EDSA. Our national situation demandsnothing less than a return to, the revivalo the Spirit that brought us all to thedeense o the Republic, our people andthe democratic way o lie in the darkdays o martial law, and into the dawningo a new day at EDSA. I do not speakonly o providing our warm bodies whenneeded to make a national statement, buta generosity o spirit, a sharing o our

time, eforts, resources, and our very livesi needed, to see to it that others mightimprove their lives. I speak o living theSpirit o EDSA in all o our endeavors,

whatever is our state and calling in lie."

"

Beyond his athers request to take careo his mother and sisters, imbued withthe spirit o his ancestors, and armed

with the courage o his parents, NoynoysSOCIAL CONRAC WIH HEFILIPINO PEOPLE is a call to action.His platorm is a commitment to change


Economy 11

For the economy,he sees arms and rural

enterprise as vital to

achieving ood security.

His is a leadershipthat will execute allthe laws o the landwith impartialityand decisiveness.


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that Filipinos can depend on. With trustin their leaders, everyone can work andbuild a greater uture together.

He is committed to become thenations rst and most determined ghtero corruption. Education is his centralstrategy, prioritizing jobs, protection opublic health and equal justice to rich andpoor.

For the economy, he sees arms andrural enterprise as vital to achievingood security. His is a leadership that

will execute all the laws o the landwith impartiality and decisiveness. Hewill create conditions conducive to thegrowth and competitiveness o privatebusinesses, big, medium and small. He

wants to create more jobs at home, butwill prioritize the welare and protectiono overseas workers.

He wants proessional, motivated andenergized bureaucracies with adequatemeans to perorm their public servicemissions in government service. Selectionshould be based on integrity, competenceand perormance in serving the public good.

His Mindanao policy will seek abroadly supported just peace and willredress decades o neglect o the Moroand other peoples o Mindanao.Mindanao

Moro

His is a government that will encourage

the sustainable use o natural resources tobenet present and uture generations.

In his VISION FOR HEPHILIPPINES, Noynoy sees:

A re-awakening sense o right andwrong, through the living examples oour highest leaders.

An organized and widely-shared rapidexpansion o our economy througha government dedicated to honingand mobilizing our peoples skills and

energies as well as the responsibleharnessing o our natural resources.

A collective belie that doing the rightthing does not only make sense morally,but translates into economic value as

well.

Public institutions rebuilt on thestrong solidarity o our society and itscommunities.

Te MISSION which he has chosen toaccept is that:

We will start to make these changesrst in ourselves by doing the rightthings, by giving value to excellence andintegrity and rejecting mediocrity anddishonesty, and by giving priority toothers over ourselves.

When Noynoy announced his decision

to run, Father Manny Domingo, ormerparish priest o Don Bosco, Makati,expressed what many Filipinos now eel:I HAVE BEEN GIVEN HOPE.

MakatiDon Bosco

Manny

Domingo

""|AT|


Economy12


15/76

ThaT indefaTigable busi ness

locomotive, China, seems set this yearto resume its ront-running ways inthe worldwide eort to gain a stronger,longer-term oothold on economicrecovery. Home-grown analysts have

already voiced their expectations o thePeoples Republic asserting itsel as aneconomic superpower, the Worldwide

iger, in 2010. Teir optimism is aptlyanchored on the countrys superlativegrowth perormance, better than thato any nation on earth its economygrowing by 8.5 percent last year and islikely to expand another 9.5 percent this

year, with its share o global trade orecastto extend even much beyond last years 9

percent. Te Peoples Daily contends that,given Chinas recovery staying strong,the country is set to surpass Japan asthe worlds second-biggest economy, asit cites its leading role in internationaldiscussions to wean the world away

rom using US dollars or reserves andinstead adopt a basket o currencies astance, however, that only pays diplomaticlip service towards reorms in theinternational nancial system, wantingonly gradual change but not so ast that

we damage our own assets.

2010

8.5%9.5%

9%

It will be a year or challenges, to saythe least. For its the Year o the iger,

what Chinese astrology traditionally

/by Jack Dixo


Economy 13


16/76

associates with extremely volatileconditions or, as it says, massive changesand social upheavals. Much like the way

Western culture regards the lion as thelegendary Jungle Lord, Chinese cultureadmires the tigers vivid stripes whichsymbolise the balanced orces o yinand yang a true orce o nature and anaction-packed zodiac gure. In general,the tiger as a person is described asearless, stout-hearted and dependable

yet unpredictable most o the times. Butit can be tender and loving quietlycontent to be a homebody, at times. Teimpulsive tiger can leap out suddenly,though, and take on a dierent tack,quickly packing up or some remote,exotic realm. Because o this nature, anobserver may erroneously accuse the tiger

o being irresponsible. But, ar rom it, itsimpulse derives rom an innateability to think on its eet or aprimal desire or adventure andrst-hand experience in lie.

,,

,

The Tiger Businessman

Firms yearning or stability ater thedicult past ew years may have to seeout the Year o the iger altogether as2010 may yet prove tumultuous on boththe world scene as well as the businessdomain. For this year also marks the yearo the Metal iger, which last occurred 60

years ago in 1950. It is this metal elementthat endows the tiger with its acutenessin action and speed o thought. A Metal

iger is thought to revel being a crowd

standout, with a motivating assertivenessand competitive stance that enable it toset its objectives and prosecute them at allcosts. It is a natural leader who drives itsbusiness with impeccable precision andis thus likely to prosper in 2010. It is onethat has kept the lessons o the past hard

years and remains ocused on keepingan edge over competitors. Tus, as globaleconomic recovery sets in, it is the Metal

iger o industry that will relentlessly

propel business orward while keepinghandy the lessons o the past ew years.

2010

1950

But there is a downside to the tiger.Its characteristic caring or loved ones hopelessly protective to unhesitatinglypounce at the slightest threat to amily or

children, wie or lover surrounds it withan aura o charismatic authority, alwayscommanding respect. But it is this regalattitude which accounts or its rm beliethat it knows whats best or everyoneand probably the reason or its occasionaldescent into stormy temperaments, evendepressive moods, in times o ailure.It is during moments like these when,standing up to a disgruntled tiger, one

earns its admiration in the quickest waypossible, but only ater a uriousBattle Royale. For the tiger isdevoid o a long, sustained uryand, i one nds the means toride out the storm, peace andharmony will certainly reignagain.

,

The Tiger Predictions

In an extremely volatile businessenvironment, the tiger will thrive on

chance and unpredictability because it isbest-equipped to conront and deal with,no matter how dangerously, the manyupheavals in the year ahead. Similarly,compatible gures such as the dragonand the horse, in particular, will also beequally inspired to bolder action andeventual success by the years uncertaincircumstances. Other zodiac characters

will suer in varying degrees, dependingon their resilience to change, and those


Economy14

For this year also marks the year o the Metal Tiger,which last occurred 60 years ago in 1950. It isthis metal element that endows the tiger its acuteness in

action and speed o thought.


17/76

who can steadily navigate the typicallystormy events oreseen may at worst beshaken but remain unhampered.

,

As the Worldwide iger, Chinais poised or even greater economictriumphs this year ater a momentous2009. With its Peoples Republicturning 60 last year, it has set the stageto become the economic orce to bereckoned with on Beijings successes

in prevailing over the worlds worstrecession since the last World War,eluding economic disaster with amammoth $585-billion stimuluspackage. It has surpassed any othereconomy in ghting o the globalnancial meltdown and is now in anexcellent position to become the worldssecond largest. Tis is reason enough orany Business iger who is seeking successin 2010 to keep handy the lessons romChinas recent past and consider leapingonto business opportunities and growth

prospects with the Worldwide iger.2009

5,850

2010

The Tigers Tempest

During the Year o the iger on thelunar calendar, three broad challenges orChina appear on its economic horizon protectionism, infation and socialinequality.

,,

Rising Protectionism

Still resh in the mind is theproblem o rising protectionism,rstly. Remember that last year waspunctuated by serious trade spats mostly

with the United States, which slappedanti-dumping duties on a number o

Chinese exports including tyres, steelpipes, grating and tubular goods. Chinasretaliation was swit, doing the sameon American steel and threateningprobes into US meat exports. Te USactions were ignited by strong business

lobbyists who view the low exchangerate or Chinas currency as posing anunair export subsidy which entraps

American consumers into preerringChinese products over locally producedones, thereby tending to overspendat the expense o domestically madeequivalents. Washington politicians couldecho some economists analysis that theChinese intention to keep its currencyat a substantially lower value against thedollar already provides air justicationto the imposition o taris or the sake o


Economy 15

As the WorldwideTiger, China ispoised or evengreater economictriumphs this yearater a momentous 2009.

With its Peoples Republic

turning 60 last year, it has

set the stage to become

the economic orce to be

reckoned with


18/76

balancing trade, especially in the ace othe American unemployment rates up-trending to even higher than 10 percent.

Tere is also that chance that Washingtoncould label the ever-expanding Chinesemanuacturing activities as contributoryto global warming. But whether that is

well-ounded or baseless, protectionismcan only lead to trade disruptions that

would adversely aect Chinas export-driven economy.

,,,

10%

Infation

Infation is a second problem, onetype o which has already arrived asan oshoot o the governments $1.5-trillion bank-lending measures last year.

Along with speculative overseas capitalinfows, it resulted in a price explosionin nancial assets such as stocks andproperty, with Beijing registering recordland prices and Hong Kong recordapartment prices. And with the successulopening o Shenzhens new bourse, the

initial group o stocks doubled on therst trading day, and the second batchtripled a month later. Ten theres thisconusing situation wherein retail pricesare remaining almost stagnant while theprices o assets and o basic commoditieslike oil and iron ore are soaring. Teres

just too much money in circulation. Aninterest rates rise could drain out this

extra cash rom the markets, but it couldalso slow down growth considerably.Chinese monetary authorities haveresorted to lending restrictions to ease upinfationary pressure. But this may not begood enough because strong links prevailbetween banks and local governments,meaning new loans are not necessarilychanneled to the most productive. It is

wise to reduce lending targets this yearbut extra steps have to be taken to ensurethat a major piece o the pie goes towardsnishing up inrastructure projects and

the rest or new business investment.Political and economic risks are alwaysborne by monetary instability.

1.5

,

,

Social Inequality

Te third challenge is social inequality,said to be the least discernible but themost perilous. Simply stated, the gapbetween the rich and the poor must be

widening, what with asset prices risingast, wage levels increasing marginally,

an unemployment rate o 4 percentdiscounting the 150 million migrant

workers, and less than 70 percent ograduates getting employed. Te Ginicoecient, a measure o economicinequality, suggests an alarming trend:China is becoming more unequal ata rightening rate. In 2007, the AsianDevelopment Bank pegged ChinasGini at 0.47, approaching Argentinasand Mexicos, as compared with 24 yearsearlier in 1983 when Chinas 0.28 wasin the category o Sweden, Japan and


Economy16

Chinas retaliationwas swit, doing thesame on American

steel and threateningprobes into US meatexports.

Along with speculative overseas capital inows, itresulted in a price explosion in fnancial assets such as stocks

and property, with Beijing registering record land pricesand Hong Kong record apartment prices.


19/76

Germany. Observers say such a pace oacceleration is virtually unheard o .Couple this with the truism that thebiggest worry or policy-makers is thatan idle and unequal populace will createunrest and an explosive accident waitsto happen. In act, a recent survey by theZhejiang Academy o Social Sciences

reported that a staggering 96 percento respondents resent the rich. It is nocoincidence that Xinjiang province, whereriots occurred last year, has one o Chinasbiggest wealth imbalances.

4%1.5

2007

0.47

1983

0.28,

96%

Historically, China always nds

a way to overcome adversities and itcould probably address these problemsthrough such measures as tact ordiplomacy, a controlled bank systemand the prudent use o state orce, oneater another. But i the challengescome rampaging in an apocalypticbunch, then the Worldwide iger willhave to contend with the Year o the

Metal iger as ercely as ever beore.

Breaking News: China with itspopulation o 1.3 billion has overtakenGermany, population 82 million, as the

worlds top exporter From Januaryto November, Chinese exports were

worth $1.07 trillion, while Germandata showed that exports rom Europesbiggest economy amounted to $1.05trillion13

8,200

111

1.071.05

Breaking News: US authoritiesslapped taris on Chinese wire decking

ater a preliminary nding that theproducts were dumped at below market

value taris o between 42.61 to 289

percent will be imposed and collecteduntil a nal determination is made inthe case

42.61%289%

Te igers tempest has made alandall. Can China ride it out?|AT|


Economy 17

the gap between therich and the poormust be widening,

what with asset prices

rising ast, wage levels

increasing marginally, an

unemployment rate o4percent discounting the150 million migrantworkers, and lessthan 70 percento graduates getting

employed.


20/76

SucceSSful Smart card

footprintS

Hong Kong iS undoubtedly amongthe key adopters o smart card, auto-idand security technology in Asia Pacic.In the smart cards arena, key applicationsin this country include government ID,

mass transit, SIM and banking.,

,,SIM

Hong Kong has one o the highestmobile penetration rates in theregion, with over 100% subscriberpenetration rate in a competitive mobilecommunication market. 3G services

were introduced in the country in 2004.

Te prole o mobile subscribers inthe country is considered to be airlysophisticated when compared to the resto the region. However, due to the size othe country, Hong Kongs SIM market isstill considered relatively small, althoughit is well established.

20043G

SIM

One o the highest prole applicationsin Asia Pacic is Hong Kongscontactless smart card mass transitproject, the Octopus Card, used or arecollection on various mode o publictransport in the country. Tis project

was launched in 1997, one o the earliestin the world. As a result the card is

widely used in the country today, witha circulation rate o approximately 16million in 2008 and over 50,000 readersat mass transit points and merchantoutlets. Te card is also used or paymentat selected merchant outlets, makingit both a travel card and a contactless

e-purse card.

1997

20081,600

FEBRUARY 2010

18 Economy


/by by Michelle Foong


21/76

Another signicant implementationin Hong Kong is the governmentID application, SMARICS (SmartIdentity Card System). Tis is a citizencard that began issuance in 2003 and

was completed within a ew years.Te card is used or identication,

government services and e-banking.SMARICS is known to be wellexecuted and implemented in theregion, lending it several regional andinternational awards in the governmentID eld. Based on the same MULOSplatorm used or the citizen card, thecountry also implemented and issuedtheir e-passport documents, anothergovernment issued document usingsmart card technology, to their citizensbeginning 2007.

SMARTICS2003

,

SMARTICS

MULTOS2007

Following the ootsteps o othercountries in the region like aiwanand Malaysia, Hong Kong has alsobegun to migrate bank cards rom

magnetic stripe to chip based bankcards. Tis migration, better known asthe EMV migration, began in 2006 andis intended to reduce raud throughutilizing more secure and tamper-proobank cards.,

EMV2006

,

Te above mentioned projects illustrateHong Kongs wide adoption o bothcontact and contactless technology orover a decade. Te country is expected tocontinue experiencing demand or smartcards in all key applications through newprojects, upgrades and replacement cards

in the various sectors.

,

Security is Countrys Priority

RFID

(RFID)

Hong Kong can be considered asone o the key promising ollowers orRFID echnology in Asia Pacic. Tecountry has strong support rom itsgovernment especially in supply chainmanagement, similar to China. Teapproved UHF bands in Hong Kong

are 865-868 MHz (2W erp) and 920-925 MHz (4W erp).RFID

UHF865-868

MHz (2W erp)920-925 MHz(4W erp)

Hong Kong RFID development isstrongly supported by the government.It is one o the top research areasor the Hong Kong Research andDevelopment (R&D) Centre

0.0

2000.0

4000.0

6000.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Year

Revenues($'000)

0.0%

2.0%

4.0%

6.0%

8.0%

RevenueGrowthRate(%)

Hong Kong Contactless Smart Cards: Physical Access

Control Market, 2008

2008

%

CAGR: 5.5%: 5.5%


Economy 19

Following the ootsteps o other countries in the region

like Taiwan and Malaysia, Hong Kong has also

begun migrating their bank cards rommagnetic stripe to chip based bank cards.


22/76

or Logistics and Supply ChainManagement Enabling echnologies.It receives unding support romthe Innovation and echnologyCommission o the Hong KongGovernment.

RFID

SCM R&D Centre works togetherwith three leading universities inHong Kong: Te University o HongKong, Chinese University and Hong

Kong University o Science andechnology.

,

TeGovernmentsInnovation and

echnology Fundhas provided nancial

support or many RFID-relatedprojects amounting to US$13.84million (HK$108 million). Te HongKong Special Administrative RegionGovernment also provides nancialsupport through the Innovation and

echnology Fund.

RFID1,384

1.08

Tese unds are given not only toencourage more involvement in RFIDtechnology but also to improve RFIDtagging and embedding technology,application o RFID technology inood saety, enhancement o privacy

protection and communicationsecurity, and development o areal-time manuacturing shop-oorinormation inrastructure.

RFID

RFID

RFID

Te Guangdong-Hong Kongechnology Co-operation FundingScheme is a joint und betweenthe Hong Kong and Shenzhengovernments, which includes undingor RFID projects.

RFID

Some o the key applicationscreating demand in the market arebaggage handling, ood security, eetmanagement, transportation, and supplychain amongst others.,,

,,

Some major events are also helpingto increase visibility or Hong Kongsgrowing market.

Te Hong Kong RFID Centre,co-hosted by the Innovation and

echnology Commission o theHong Kong SAR Government, HongKong Science and echnology ParksCorporation (HKSP) and GS1Hong Kong (GS1), was establishedto promote the development o RFIDin Hong Kong, encourage applicationamong industries and enhance publicawareness o this technology and its

signicance or the economic and socialdevelopment o Hong Kong.

RFID

,

Te Hong Kong RFID Awards wereestablished since 2007 to recognizeRFID industry pioneers, encourage


Economy20

The Hong Kong Security Market is matureand has always been an early adopter o the latesttechnologies in security applications.


23/76

including physical access control, inHong Kong. Te increase in awarenessollowing the 9/11 terrorist attackin 2001 and the SARS outbreak in2003 has ueled demand or security,especially or the Hong Kong

International Airport.

2001911

2003SARS

Te travel industry is keenly lookingat biometrics and has already installedacial biometrics scanners at selectrailway stations. Facial biometricshas been employed at stations wherethe train travels to and rom China.Facial biometrics scanners scan the

individuals ace during departure andmatch the same when the individualreturns rom his/her destination. Teacial biometrics employed here is notor access control but is being used as asecurity measure to identiy terrorists orother marked individuals.

Certain mobile phones are alsoemploying biometrics today or logicalaccess control applications.

It is quite evident that biometricsis being tested and employed in everysector o society and has ound to be

RFID development and to nurture thedevelopment o new RFID products inHong Kong.

RFID2007

RFIDRFID

RFID

Security

Te Hong Kong Security Market ismature and has always been an earlyadopter o the latest technologies insecurity applications. Te total Electronic

Access Control Systems (EACS) andsurveillance market has been showingpositive growth year on year, especiallycontactless smart cards and biometrics.End users in Hong Kong are concernedabout new technology trends in EACS

and hence preer integration with othersystems such as time attendance.

EACS

EACS

Access control nds major applicationin prominent Governmentdepartments like the Customs &

Excise Department, the Police Force,the Airport Authority, the FireServices Department, and the maintransportation controllers KowloonCanton Railway and Mass ransitRailway.

,,,

,

Tere is high demand or various typeso property protection equipment,

useul, especially or largely populatedcities like Hong Kong. Hong Kong isollowing new technologies in usingaccess control systems. A majority ousers preer readers that support multi-application unctions, ofer high security,

and are reasonably priced. Integrationo technology is increasingly becomingpopular in Hong Kong because o theirease o use and installation.

,

Te market or IP surveillance is

mature in Hong Kong in terms otechnology penetration and inrastructurealthough traditional analog equipmentsuppliers are still reluctant to commit theR&D investment to push the video serverline. Certain suppliers that have venturedinto the IP video surveillance markethave chosen to ocus on IP/networkcameras instead.IP


Economy 21

The travel industry is keenly looking atbiometrics and has already installed acial biometricsscanners at select railway stations. Facial biometrics has

been employed at stations where the train travels to and

rom China.


24/76

IP

IP

Outlook in Hong Kong

No country has been immune tothe global nancial crisis; Hong Kongand every industry out there have beenafected by this crisis, with varyingdegrees o severity. Te short-term utureor the industry looks challenging.

2009,

2010

Te ailing economy could, however,provide a boon or companies thatare involved in security. As economicpressures lter down to the middle andlower income classes, crime will increase.In the light o this, large growth canbe expected in electronic access controlsystems and video surveillance to monitor

customer and employee behaviors inretail outlets, shopping malls, hotels,parking lots, and so on. It is also expectedthat the companies will benet romany government investment that willhelp compensate or the decline in theeconomy.

,

,,


Economy22

Te same applies to the smart cardindustry. On the whole, the smartcard industry participants shouldconcentrate on their core competenciesor their respective applicationsthrough utilizing all the benetsrom government subsidies, tax cuts,and so on. Te next stage should bein investing, or at least laying theoundation, or the next year rom

when an economic upswing is likelyto be witnessed. New applications

should be tapped now. Strategicalliances should also not be ruledout. A strategic alliance would helpthe industry participant to expandto new markets, as well as allow it toconcentrate on its core competency.

,

|AT|

Tis article was authored by MichelleFoong, Industry Analyst, Asia PacifcSmart Cards Practice and Parul Oswal,

Industry Analyst, Asia Pacifc RFID &Security Practice, Frost & Sullivan.Michelle FoongFrost

& Sullivan

,Parul OswalFrost & Sullivan

RFID

The current economicrecession indicatesthat participants that

were looking at a short-term gain were the worst

afected, while those

looking at long-terms

gains still have their

investments inplace.

In addition, during these hard timeswhere companies are reducing theirworkorce, physical security becomesincreasingly important to overcomeissues regarding both external andinternal workplace thet.

Falling prices o security productsare likely to increase adoption duringthis slump in the economy. Althoughcompanies might not realize the ROI

with the all in prices, these lower pricesmight help them to remain in business;alling prices will make the securitysystems and their applications muchmore economical to install.

Te current economic recessionindicates that participants that werelooking at a short-term gain were the

worst afected, while those lookingat long-terms gains still have theirinvestments in place. However, thisdoes not mean that the long-termparticipants are not afected bythe recession. Tey need not be asconcerned about the current recession,but will still have to reinorce theirprojects to make sure that they do notgo of track.


25/76

The airli nes in i ndia, like mosT

other airlines around the world sueredlosses during the recession, but notto an extent that drove any o themto shut down. Te recession was one

o the actors airlines had to weatheralong with many more such as taxes,uel charges, maintenance costs, leasingcharges, etc. Te situation howeversaw a shit in the market dynamics othe airline industry as low cost airlinesbecame the preerred airlines ormany corporate, business and requenttravellers. In act, some o the low costairlines increased their market sharein the downturn. Te airlines in India

realize that the long-term potentialo the industry is lucrative and thedemand scenario will be positive even

with the slightest positive change in theeconomy.

,,,

,

During the recession, most airlines inIndia only had to ground a very ractionalsize o their entire eet, but the positive

sign o growth in the Indian market isreected in the resumption o operationsby almost the majority o eets ownedby the airlines in India (both legacyand low cost). Te Director Generalo Civil Aviation India (DCGA) hasreported that there has been a growtho 26% in domestic passenger trac in2009 compared to that o the previous

year. Also, the airlines in India realizethe long term business potential and


Economy 23

/by Chethan Kambi


26/76

dierent or each o these activities andalso depends on actors such as OEMs(Original Equipment Manuacturers)and authorized MRO centres. Currently,in India there is a lack o these MROacilities and the huge needy market

waiting to be ulflled poses tremendouspotential investment opportunity or

many international MRO players andinvestors. Te opportunity exists due toseveral reasons such as the current eetdynamics, the scope o MRO activitiesthat are required, the market potentialand other potential revenue generatingstreams.

1822

MRO

Maintenance,Repair

Overhaul,,

,

,

the importance o staying put in thebusiness. However, in order or theairlines to sustain and operate underavourable limits, all the additional costshave to be curtailed. One o the areas

where major cost savings may be realizedor the airlines in India is in aircratmaintenance. Aircrat maintenance is

a major cost actor or airlines in Indiasince the maintenance industry is notat a level that meets the requirementsand needs o the industry. Tere is a veryprominent gap between the demand andsupply scenario in the maintenance needs.

2009

26

An aircrat is a million dollarinvestment that, with propermaintenance, can continue to operateor long terms o anywhere between 18

and 22 years. Te entire maintenanceactivity o aircrat, termed MRO Maintenance, Repair and Overhaul, isclassifed into Engine, Airrame, Lineand Other (Systems, Components andReurbishments) maintenance. All theseactivities are based on certain operatingcycles or the aircrat and are dependenton the aircrat type and aircrat brand.

Te level o personnel skill, expertiseand the certifcations required are

OEM MRO

MRO

MRO

, MRO

,

Aircraft Scenario

MRO establishments require a certainnumber o aircrats to visit their hangarsannually, or dierent activities. In acountry like India where there is a lacko ecient and highly capable MROacilities, the scope or setting up MROsis high. Te cost required to set up, againis dependent on the aircrat type (Narrow

body or Wide body) and the location(SEZs or Airports or Aeroparks).MRO

MRO MRO

MRO

SEZ,

Te average age o the current Indianaircrat eet is airly young and this is a

very critical actor in terms o setting upan MRO business in the country. Close

to 60% o the existing eet all below 5years o age; which is an eye opening actor many o the investors as this means


Economy24

An aircrat is a million dollar investmentthat, with proper maintenance, can continue tooperate or long terms o anywhere between 18 and22 years.


27/76

that a majority o the aircrat will comeo the warranty period soon and that is

when they will start hitting the MROs.

MRO

605

MRO

Despite the act that there is/will be ahuge market or MROs in the country,many airlines currently send their aircratout o the country, due to the lack oexisting local sophisticated acilities. Aso 2009, a total o 391 aircrat are ownedby airlines in India and this number isexpected to reach a fgure o 612 by the

year ending 2015. So rom the pointo view o the aircrat number, which

happens to be very important or theMRO activities, it also poses a good signor investment in the country. MRO

2009

3912015

612 MRO

Scope for MRO Activities

MRO Assets owned by commercial airlines

have long operational lie cycles andare worth multi-million dollars. Temajority o airline operating costs can beattributed to labour, uel/oil, ownership,and maintenance. Maintenance, repair,and overhaul (MRO) is a key activitythat ensures sustained operation oboth aircrat and engines and also hasan impact on the saety o the aircrat.Maintenance costs or airlines are aconstant expenditure. Once procured, the

engine or aircrat has to be maintainedregularly with adherence to qualityand time lines. Perorming optimalmaintenance is the key toward reducingthe overall costs.

,,

,

MRO

Te airlines in India spend close to

13.0% to 15.0% o their revenues onmaintenance. Currently, the airlines arelooking orward to MRO acilities inthe country that comply with standards(FAA, EASA, and DGCA) so thatcosts can be reduced with better turnaround. Te key aspects or MROs willbe maintenance processes, practices,and eciency that are to be brought incorrespondence with inrastructure andresponse time. Currently, the majority o

the Indian eet o aircrat y out o thecountry or heavy maintenance activities.

Tis trend is expected to increase oncethe average age starts increasing andthis is the main reason that the countryrequires MROs to be set up. Also,labour rates that are charged in India

will eectively be 15 to 20 dollars lessper man hour. Many airlines in India

who are will ing to send their aircratto domestic MROs view the credibility

o the MRO as a major actor, and inorder or this credibility actor to beestablished, it would be imperative toincorporate internationally renowned

MROs in JVs and collaborations. Temake or break o JVs or collaborationsin India depends heavily on the proftsharing models. Several oreign MROcompanies have had or are havingdiscussions with Indian entities to orm

JVs, but the bottom line is that thegestation period and the return co-ecient will determine the nature o setup and holding structure.13.0

15.0

FAA,EASA

DGCA MRO ,

MRO

MRO

1520

MRO


Economy 25

Despite the act that there is/will be a huge market or

MROs in the country, many airlines currently sendtheir aircrat out o the country, due to the lack o existing

local sophisticated acilities


28/76

MRO

MRO

MRO

MROs in India: MRO

Currently, the MRO market in Indiaremains unattended and the scope or athird-party MRO is quite high.

MRO MRO

Market addressability is expected to begood with regards to the Indian eetand is bound to improve over the next

years.

Te entire MRO market is tracked in

terms o revenues and eet. MRO

Engine:

In terms o cost, engine maintenanceconstitutes a major portion o theMRO chain in the Indian scenario.

MRO

Te nature o work involved is very skillintensive and cost is also high.

Engine maintenance is an activitythat requires accreditation andauthorization rom the OEMs to carryout the tasks.

OEM

Airframe:

Airrame maintenance orms the nextimportant link in the MRO chain.

MRO

Te aircrat ollows certain cycles and

this cycle incorporates the variouschecks at dierent stages.

Airrame maintenance is labour-intensive and the time period orcarrying out checks depends on thenature o the check.

Line:

Line maintenance is done on a constant

basis.

All the airlines carr y out this task onthe tarmac. Tis day to day activityinvolves basic checks that help tomaintain good health o the aircrat.

Qualifed engineers and technicianscarry out the line maintenance checks

as stipulated and required.

Other:

Te others section broadly includes thecomponents repair and overhaul andsystems and modifcations.

,,


Economy26

2008

2.1%

4.4%

5.9%

8.3%

9.8%

4.8%

2010 2011 2012 2013 2014 2015

0 0%

2%

4%

6%

8%

10%

12%

14%

16%

100

200

300

400

500

600

700

NumberofAircraft

FleetGrowthRate

(%)

Commercial Aviation MRO Market: Overall Fleet Forecasts(India), 2009-2015 MRO 20092015

2009

0

100

Revenues($Million)

200

300

400

500

600

700

800

900

1000

1100

2010 2011 2012 2013 2014 2015

498.8

1,067.8

Engine Maintenance

Component Maintenance

Airframe Heavy Maintenance

Line Maintenance

Commercial Aviation MRO Market: Total MRO Revenue Forecasts(India), 2009-2015 MRO MRO 20092015


29/76

Tese activities complete the MROchain and various actors such astime, need, and cycles determine therequency o their occurrence.

MRO

,

OEM specifcs and guidelines play acrucial role.

OEM

Market Value

In terms o the addressability in theIndian landscape, the market is valued atclose to USD 500 million and this fgureis expected to reach a value o USD 1068million by the year 2015. Tis fgure is thetotal addressable revenue opportunity that

is pertinent to the Indian eet. Countriesthat currently service the Indian eet arethe United Arab Emirates, the UnitedKingdom, Singapore, Malaysia, Finland,and others when it comes to the heavier/higher checks. Recently, even Sri Lankahas been tapping the opportunity and someIndian aircrat y to the island nation. Temajor reasons or the Indian eet to youtside bearing the additional costs are:5

201510.68

,,

,,

Lack o third-party MROs/airlines thathave all the capabilities to satisy the one-stop-shop visit. MRO

Lack o necessary approvals andcertifcates that mandate the aircrat

maintenance -- FAA, EASA, andDGCA. FAA,EASA DGCA Absence o inrastructure set-ups andhangar acilities meeting world-classstandards.

Te opportunity to delve into theIndian MRO market poses challenges

in terms o the investment, geographic

identifcation and adequate manpowertraining. Te manpower exists but what isneeded is the skill impartation or ratherthe transormation. Working on aircratmaintenance needs not only the necessaryskills but an appreciation o the depthinvolved in the demands o quality andstandards. MRO

,

Conclusion

As the Indian MRO market unurls,there is a need or the existence o 2-3 verygood players to service the Indian eet.

Te eet dynamics will pose good businessopportunities in the next 4-5 years andthis can be tapped i companies were to

establish themselves in India in the nearuture. Te Indian MRO value chain canbe addressed under engine, airrame andother sections, with the exception o linemaintenance which is predominantlycarried out by the airlines. Te existingavailability o manpower will aid thedevelopment process and i the policiesand bureaucracy structure are addressed,then we can expect India to be a bubblingmarket not just or MROs but also orMRO related manuacturing. India has thepotential to address the entire value chaino the MRO and in turn generate close to6,000,000 jobs over a period o 10 years. MRO 2

3

45

MRO ,

MRO

MRO

MRO

MRO 10

6,000,000

Te airlines are involved in runningtheir businesses eciently and every costsaving opportunity will be appreciated

by them. Te setting up o MROs willbe more than a boon to the airlines inIndia and also or some o the regionalcarriers slated to kick start operations

very soon. In the wake o the economicdevelopment, the country has all the morereason to encourage and support MROsand encourage the internal growth oindustries related to MRO.

MRO

MRO MRO

|AT|

Tis article was authored by: ChethanKambi, Senior Research Analyst, South

Asia and Middle East Aerospace & DefensePractice, Frost & Sullivan.Chethan KambiFrost &

Sullivan


Economy 27

In terms o the

addressability in the

Indian landscape,the market is valued at

close to USD 500 million

and this fgure is expected

to reach a value oUSD1068 million by theyear 2015


30/76


Economy28

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Automatic Identification & Security Access Control Alarm Monitoring Analysis on Key Vertical Markets Biometric

IP Based Security Solutions Man Guarding RFID Video Surveillance Technologies

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31/76

For Asian Tigers 01100110

As the lAst smoke from the

New Years Eve reworks display overKuala Lumpurs Petronas win owers

vaporizes, Malaysia prepares to ace thenew decade. It passed the rst decade o

the millennium in a reasonably soundposition having escaped most o theimpacts o the 2008 global economicmeltdown.

2008

Many economic issues made theheadlines in 2009 and no doubt, willstill be discussed in 2010. Tese range

rom liberalization o the economy, thetransormation o the country to a high-income nation, to a possible Goods andServices ax (GS), the possibility o athird economic stimulus package, and thepotential growth in GDP in 2010.20092010

,

,GST,2010

Many see 2010 as a transition yearin which the Malaysian economyrecovers while the government lays theoundations to acilitate the countrystransormation into a high-incomeeconomy.2010

Third Time Lucky,

Te Malaysian Institute o EconomicResearch (MIER) Executive DirectorPro Emeritus Datuk Dr Mohamed Ariclaims that Malaysian businesses mayneed to keep a close eye on the healtho the US economy during 2010. He

suggests that, should the US economyexperience a double dip recession, theMalaysian Government may need topump prime the economy.MIER

2010

Like all good arguments, there ishowever another side. HSBC Singapore


Economy 29

Malaysia Begins aNew Decade /byDavid Bowden


32/76

senior Asian economist or globalresearch, Robert Prior-Wandesorde wasquoted in early December as saying thatMalaysia did not need a third stimuluspackage even i the US economy relapsed

into recession. He claimed that the ulleects o the previous two stimuluspackages have not yet come into eect.

Wandesorde also predicted the economyto grow by 6.8% in 2010.

12

2010

6.8%

Growing Pains

Meanwhile, the government ispredicting the economy to grow by 5%in 2010 although some independentresearchers think this is a little toooptimistic. Much o this will be romdomestic demand and this is conrmedby the recent release o the HSBC

Afuent Asian racker, a surveyconducted by Nielsen or the HSBC

Group. Released in early January, thereport indicated that more afuentMalaysians say they are wealthiercompared to six months ago. Anotherindicator is the sale o cars by the nationalcarmaker Proton almost doubled inthe second quarter o 2009. Tey alsoreport that they expect these sales tobe sustainable when the gures or thesecond hal are released.20105%

1

2009

However, the MIER expects the

economy to only grow by 3.7% in 2010(coming rom what it suggests was -3%in 2009) but would grow to 5% in 2011.

Tey have suggested or the governmentto attain 5% in 2010 there will be a costas it will mean a bigger budget decit anda larger national debt.2010

3.7%20093%

20115%

20105%

Meanwhile, the Asian DevelopmentBank (ADB) predicted in midDecember a growth rate o 4.5% or2010. Te Manila-based nancialorganization reported -5.1% contractionin the rst hal o 2009 and -1.2% inthe third quarter. Tis resulted roma decrease in external demand or itsexports which aected the whole regionbut most signicantly in Malaysia and

Tailand. Malaysias 4.5% or 2010compares to the ADBs predictionso Vietnam (6.5%), Indonesia (5.4%),

Singapore (4.5%), Philippines (3.3%),and Brunei (2.3%) in 2010. Tese arealso to be considered with the bankspredictions o 8.9% or China andIndia o 7%. Te ADB claimed that thesituation was changing rapidly and thatprospects or greater growth were betternow than they were in September 2009

when the last study was conducted.12

20104.5%

2009

5.1%

1.2%

4.5%

20106.5%,

5.4%,4.5%,3.3%,2.3%

8.9%7%

20099

A senior economist with the WorldBank, Philip Schellenkens was reported


Economy30

As the last smoke rom the New Years Eve freworks display

over Kuala Lumpurs Petronas Twin Towers vaporizes,Malaysia prepares to ace the new decade.

Pro Emeritus Datuk Dr Mohamed Arif


33/76

the global economic crisis started in2008.

2009

2008

Te government s 2009/2010Economic Report estimates that privateinvestment contracted by some 20% in2009, one o the largest drops in recenttime. Te decline started with the Asianeconomic meltdown in 1997/98 and

in mid December as suggesting theMalaysian economy could return to 6%annual growth by 2012. Te bank predictsthe economy to grow by 4.1% in 2010.

122012

6%

20104.1%

To Tax or Not to Tax

With a suggestion that not manyMalaysians actually pay tax, there is talko a GS being introduced in 2011.Second Finance Minister Datuk Seri

Ahmad Husni Hanadzlah has enteredthe debate by reminding Malaysians thatsome 143 other countries have a GSand that Malaysia, along with Brunei

and Myanmar are the only countriesin the region that dont have a GS. Iintroduced it would possibly be at therate o 4% and would replace the currentsales and service tax o 5-10% and wouldincrease the eectiveness o Malaysiasrevenue collection. Te tax would covermore items than the current tax and it

would thereore be harder or consumersto avoid and thus orce more to make ahigher contribution to the tax coers.

2011

143

,

4%5-10%

Market Liberalization

Another important economic event in2009 was the liberalization o Malaysiaseconomic playing eld but it will takesome time or these measures to takeeect. Important issues identied by the

World Bank include the need to easeinvestment rules to attract more oreigninvestment. Private investment intoMalaysia has dropped probably becausethe market saw more opportunitieselsewhere in the turbulent times ater

really hasnt gained much momentumsince. By its own admission, the

government only sees a 3.4% growth inprivate investment in 2010.2009/20102009

20%

1997-1998

20103.4%

Te World Banks Philip Schellenkenalso claims that in order to boost uturedevelopment, there needs to be a growthin skilled domestic workers. Coupled

with this, according to Schellenken is the

need or more Malaysian companies toharness technological innovation.

No one admits the road to recoveryis going to be easy, but many expresscautious optimism.

|AT|


Economy 31

The governments 2009/2010 EconomicReport estimates that private investment contracted bysome 20% in 2009; one o the largest drops in recent time.


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The year 2010 serves as anoTher

milestone or the ASEAN in the light othe ollowing developments:

1992

2010

a. January 2010 marks another steptowards a ull-edged ree trade zoneor the ASEAN as taris are broughtdown to zero among the six oundingmembers o the region.

a.2010 1

b. ASEAN has likewise emerged as ahub through which regional agreementsare being orged between ASEAN asa group and a number o neighboring

economies. Tis is clear rom theollowing agreements: ASEAN+Korea(rade in Goods in 2006, 2007 orservices, and 2009 or Investments1),

AFA+New Zealand and Australia(AANZFA signed in 2009), the

ASEAN Japan Comprehensive EconPartnership (2008), AFA+China(signed in 2004 and 2009 orinvestments), and ASEAN+India(agreement in Goods signed in 2009).

Most o these will come into orce by2010 or the ASEAN-6.b.

+ 2006

20072009

, + 2009 AANZFTA ,

2008 ,

+2004 2009

+ 2009

2010

rue, a long period has passed sincethe ASEAN FA or AFA was insti-tuted in 1992. Nevertheless, while theprocess has been slow, it is clear that

FEBRUARY 2010

32 Economy


/by Emilio T. Antonio, Jr., Ph. D.


35/76

concrete steps have been taken towardsits goal o eliminating tari barriersamong member countries. In the morerecent years, the group has hammeredout Protocol Amendments in 2000 and2003, and the ASEAN rade in Goods

Agreement (AIGA) in 2009. By 2010the AFA is virtually in place, at leastor the ASEAN-6. 1992

2000 2003

2009

2010

Tese milestones, thereore, serve asreminders that although the process

towards achieving its goal o dismantlingtrade barriers has been slow, the ASE-AN is denitely getting closer towardsgreater regional cooperation and com-mon prosperity. Te ultimate objectiveis to create a single production base andmarket, which is indeed sizable. It has acombined GDP o $1.5 trillion and4.4 percent growth in 20082. It islikewise gaining an important placein the global economy as a regionalplatorm or production. With therapid growth o its biggest neighbor,

China, it is expected that it wouldeventually rely on the ASEAN orsome o its needs, most notably inood production.

2008 GDP

1.5 4.4

Benefts and Costs

Will these eorts yield the expectedbenets to member-countries?

Denitely, yes. Will these outweigh thecosts? It depends. For sure, with moreo these regional trade agreements inplace more barriers to trade have beendismantled and the magnitudes o boththe benets and the costs have expanded.

Whether the gains will more than

oset the losses will now depend onhow these are managed -- a matter on

which a lot o ink has been spilled andwhich rightly deserves more in-depthand subsequently lengthier discussions.

While the debate on this issue stillcontinues, some lessons and reminders

may already be distilled.

Economists consider trade barri-ers, in general, to reduce efciency andthereby result in welare losses or the

trading parties concerned wheremarkets work (i.e. where there are nomarket ailures). o them, the ideal

world will largely be made up by aworld ree o tari barriers. Bringingdown barriers selectively (e.g. within

regions as most FAs o today do),however, brings about some con-cerns. Foremost, and probably themost notorious is the concern thatthese second-best arrangements oregional trade liberalization may betaken as a step back or away romthe ultimate goal o global ree trade.

Tis has been given the name spa-ghetti bowl eect.

One example which serves to high-light this issue is the complication inthe mechanism needed to make regional

1 Also marks inclusion of Thailand which has previouslyopted out of the agreement.

1

2 GDP in current prices, (IMF World Economic OutlookDatabase 2009 and the ASEAN Secretariat)

2 GDP 2009


Economy 33

the ASEAN is defnitely getting closer towards greaterregional cooperation and common prosperity.The ultimate objective is to create a single

production base and market, which is indeedsizable.


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FAs operational.3 Tis is usually donethrough the enorcement o Rules oOrigin (ROO) guidelines which serve toidentiy which items should be charged atcertain tari rates. Obviously, this imposestime and transactions costs. Certainly, theproblem would not exist in a more global(or multilateral) liberalization. In regionalFAs, however, there would be a need or

harmonization o standards and proceduresand the use o a system in order to reducetransaction costs and processing time.

3

ROO

Numerous studies have sought toquantiy these costs and benets. Tegeneral conclusions: there are welaregains (where some contend that more-developed and bigger economies take agreater share o the gains) and these arenot necessarily a step away rom multi-lateral liberalization. Furthermore, big-ger (more partners) and more (greater

scope o liberalization i.e. including orpartially liberalizing agriculture) tendsto be better.

Some thoughts

Given these, what does this trendo more and more regional (as againstmultilateral or global) trade agreementshold or member-countries? Certainlyour negotiators and trade ofcials havelearned much over the years. Expect,thereore, uture negotiations to gosmoother and yield more advantages

or the region. In particular, succeedingagreements have been increasinglypatterned ater previous ones in termso classications and procedures whichacilitate processing and classicationsand puts more structure into thespaghetti bowl.

Do we have more to bargain with oreach succeeding agreement we comeinto? We dont really know but the oddsare in our avour given that we would bea larger trading bloc (and hoping that

we do realize some immediate economicgains as well).

Are we coming closer to the rst-besto a multilateral/unilateral ree tradescenario? Tis is even harder to answer.Some economists would argue that weare and would suggest that indeed the

AFA is a building bloc or multilateralree trade or the region. Nevertheless,

we can go back to our answer in the rstquestion that is we have learned a lot

3 More can be found in: Medalla, E. and J. Balboa, 2009.ASEAN Rules of Origin: Lessons and Recommendationsfor Best Practice. ERIA Discussion Paper Series 2009-17.Philippine Institute for Development Studies.

3 Medalla, E. J. Balboa2009ASEAN Rules of Origin:Lessons and Recommendations for Best PracticeERIA 2009-17Philippine Institute for DevelopmentStudies


Economy34

The generalconclusions: thereare welare gains (where

some contend that more-

developed and biggereconomies take a greater

share o the gains) and

these are not necessarily

a step away rom

multilateral liberalization.


37/76

rom previous negotiation and imple-mentation eorts.

How does this aect our other goals?For one, it has led to greater cooperationin other areas within the ASEAN. Tisin turn should lead to better and morepolicy coordination in response to globaland domestic shocks.

Where are we and where are we going?

We must sit through what theseFAs should or can be expected to de-liver against what we can and do expectrom them. It is important to keep inmind that these F As are sought whilecontinually working with a stalled multi-lateral process and continuing individualtrade liberalization schemes by member-countries. Should we be worried about

low utilization rates? Not really, i thereason is because multilateral (MFN)rates are quite close or the same as

ASEAN ones.

Ater almost two decades o the AFA,what have we gained? Clearly, a lot oexperience. Te economic gains are hardto measure especially in light o theunending series o crises besetting theregion (whether man-made, economic

or political, or natural). Nevertheless thegures tell us that Intra-ASEAN tradehas grown since the mid-1990s1 at atime when member-countries continue topursue their individual trade liberalizationschemes.

, ,

20904

Where do we go rom here? We shouldcontinue to push or multilateral tradetalks but given the slowness this is ex-pected to entail we can continue to worktowards regional FAs which are 1) more

inclusive 2) more comprehensive and 3)

in sync with other FAs in orce.

1)

2) 3)

On a related note we can also take ina ew lessons about regional cooperationrom the EU response to the crisis.

Te impact o the nancial crisis is ex-

pectedly dierent when comparing theEU and the ASEAN. Te regions doplay dierent roles in the global econo-my. A decline in trade would be the is-sue or the ASEAN member-countriesand to a lesser extent, currency thisimplies though that though the initialimpact may be behind us, the ASEANhas more to worry about the long termeect o the crisis on global trends oconsumption and trade growth.

ASEAN economies have also provento be more resilient and exible thandeveloped economies.

|AT|

4 ASEAN Secretariat Statistics

4


Economy 35

Nevertheless the fgures

tell us that Intra-ASEAN trade has

grown since themid-1990s at a timewhen member-countries

continue to pursue

their individual trade

liberalization schemes.


38/76

Tiger, The king of The beasTs;

Te Siberian tiger is king o the kings,and known or its strong build and

erocity.

At the oot o Mt. Hueng o ChinaMt. Wan Dashan, the birth hometowno Siberian tigers, you will nd the

worlds biggest Siberian tiger BreedingCenter. Tere are over 800 wild anderce Siberian tigers living there, bythe mountain and cold running waters.

Hometownof the


36 In this year 2010 The year of the Tiger in the Chinese Lunar Calendar, Asian Tigers

magazine sent one of its Chinese photojournalists to the home of the Siberian Tiger

to produce this special New Year photographic spectacular for our readers.

Text & Photos: Wang Yuancha

/


39/76

During the summer there is an expanseo green, at winter time it becomes snow-

white and very cold. A great surprise tome was that in the past 23 years, romonly 8 tiger cubs, grew a population o800, whats more, in the daytime and atnight, deep in the mountain and orest,a group o emale tiger raisers stay withthese erce giant cats. Tey are tenderbut brave to be with these tigers and lovethem like their own babies.

800,

,

238

On the eve o the Year o the iger,with a set o photographic equipment, Iwent there yet again. Each year, rom Decto Feb is the mating peak time, in the

wild snow-covered orest, tiger coupleskeep skin to skin can always seen. Everysecond season is the time to give birth.One time a record breaking 6 new-borntiger cubs came in one arrow.

122

6,

,

Striving to take a close shot o these

tigers, a huge hunting cat is inevitable.Our car had to travel ast, or it will betackled or stopped of by the tigers.

With no ood let, we took our shotsand let

When leaving, we shook the handso those brave ladies; I elt thattheir hands were rough. Had I not Iexperienced this mysel, I would never

have believed that thesegentle beauties could besuch erce beasts.

2

,

As we departed you could here agreat roar rom the tigers. Maybe they

were saying goodbye,

|AT|


37

They are tender but brave to be with these tigers andlove them like their own babies


40/76

In 1998, AustrAlIA hAd A mere 6

mega-watt (MW) installed capacity owind power. en years later (by the endo 2008), that gure had climbed to1.3 giga-watt (GW). Te pace o new

wind arm developments continues to

gather momentum. In the six monthsto October 2009, three out o the sevennew electricity generation projectscompleted in Australia were wind-powered.

19986

(MW)20081.3

(GW)2009

10

Moving orward, o the nine renewableelectricity generation projects, listed by

the Australian Bureau o Agriculturaland Resource Economics (ABARE) inOctober 2009, at an advanced stage odevelopment, eight were wind-powered.

Tese eight projects are expected to beoperational in 2011 and will accountor 84 percent o new renewable energycapacity addition in the country.200910

(ABARE)

2011

84%

Looking even urther ahead, othe total number o projects inOctober 2009 at a less advancedstage (undergoing easibility or pre-

easibility studies, or without a denitedevelopment decision), 71 o the 80renewable energy projects are wind-powered. Admittedly, not all o these

will eventually become operationalprojects, but the momentum is clearly

with the wind sector.200910

80

71

Underpinning most renewable energyproject investments is the AustralianGovernments expanded RenewableEnergy arget (RE) scheme o

August 2009 that has a renewableenergy target o 45,000 gigawatt-hours (Gwh) or 20 percent o totalrequirement by 2020. Trough thisramework, wholesale purchaserso electricity are legally obliged tocontribute toward the generation o

additional renewable electricity throughthe purchase o Renewable EnergyCertic

Asian Tigers 2010 Jan-Feb

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