CARI Captures Issue 40 (1 Aug 2011)

US COMPANIES FIND ASEAN

MOST COMPELLING INVESTMENT

DESTINATION

ASEAN, US

NEWS MONITORING 01 AUGUST 2011 ISSUE

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BETA

Alexander Feldman (President, US-

ASEAN Business Council) said American

companies find ASEAN to be the most

compelling investment destination in

Asia, especially with the formation of the

ASEAN Economic Community in 2015. The recent 2011 US

mission to Malaysia

represents the largest

delegation of American

companies brought to

Malaysia by the US-

ASEAN Business Council

General Electric, Abbott Labs, Coca Cola,

Google, Guardian Industries, Kohlberg, Kravis &

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Roberts, MasterCard and Raytheon Corp were

among the participating US companies

Feldman expects US FDI to ASEAN to

accelerate after the AEC

“China and India may be large but because of

the free trade agreement and comfort level of

American companies, ASEAN provides the best

of both worlds”

(Feldman)

Joseph Alhadeff

(Chairman, US-

Malaysia Business

Committee) said

ASEAN economies

are pushing for reforms and policies to help

businesses flourish in the region

Business Times, Malaysia (25 July 2011)

ASEAN

MINISTERIAL

MEETINGS LEAD

TO PROGRESS

ON REGIONAL

SECURITY ISSUES

ASEAN, China, US

ASEAN ended the biggest security

talks in the region in Bali on 23

July 2011. Thailand and Cambodia asked

Indonesia to continue mediating the

countries’ border dispute beyond its

term of ASEAN chairmanship

ASEAN ministers support Indonesia’s

continued efforts to work with Thailand

and Cambodia, including on the

assignment of an Indonesian Observer

Team

After eight years, ASEAN and China

have agreed on guidelines on a code of

conduct in the South China Sea

Marty Natalegawa (Foreign Minister,

Indonesia) said Indonesia now has a set

of action plans to be completed by the

next ASEAN summit in November 2011

ASEAN will decide on Myanmar’s

proposal to chair ASEAN in 2014, at the

ASEAN summit in November

The Jakarta Post (25 July 2011)

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25 0107 08‘11 ‘11

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. As such, CIMB ASEAN Research Institute (CARI) does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this report. Should any information be doubtful, readers are advised to make their own independent evaluation of such information.

ASEAN’S NEWEST MEMBERS TAKE

STEPS TO FACE CHALLENGES OF

ECONOMIC INTEGRATION

Cambodia, Laos, Myanmar, Vietnam

A cooperation between the Vietnamese

Ministry of Foreign Affairs and Germany’s

Hanns Seidel Foundation aims to help

ASEAN’s newest members face the

challenges of regional integration. A seminar was held in Hanoi among senior officials

from Cambodia, Laos, Myanmar and Vietnam

to share experiences in implementing economic

integration policies

Hang Chhuon Narong (Secretary of State, Ministry

of Finance, Cambodia) said Cambodia’s inflation of

6.5% is curbing economic growth

Chan Sophal (President, Cambodian Economic

Association) said despite ASEAN’s efforts to narrow

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the development gap, years of war and strife

puts Cambodia well behind its neighbours

Doan Xuan Hung (Vietnamese Deputy Foreign

Minister) suggested that the four countries

coordinate closely to maximise opportunities,

minimise challenges from integration, and

contribute to building the ASEAN community

Tomoyumi Kimura (Country Director, Asian

Development Bank) said there are strong prospects

for cooperation in the Greater Mekong Sub-region

ADB will cooperate with the four countries

and assist existing sub-regional cooperation

mechanisms to support their integration and

maintain sustainable development

Xin Hua (25 July 2011)

MALAYSIA

SHARES

KNOWLEDGE

WITH CAMBODIA

Cambodia, Malaysia

Cambodian Deputy Prime

Minister Dr Sok An said

Cambodia is keen to learn

from Malaysia in the fields

of cyberlaw, cyber-security,

e-commerce and e-government. Dr Sok An said this when he met

Malaysia’s Science, Technology and

Innovation Minister, Datuk Seri Dr

Maximus Ongkili in Phnom Penh on 23

July, at a specialised ICT trade mission

to Indochina

According to a statement issued by

Dr Ongkili’s office, Cambodia, which

joined ASEAN in 1999, is new to ICT

development, and holds high regards

for Malaysia in this area

The ICT trade mission also covers

Hanoi (Vietnam) and Vientiane (Laos)

Malaysia was Cambodia’s top investor

and trade partner in the early 1990s

before the economic crisis hit the

region

In 2010, the bilateral trade between

Cambodia and Malaysia was worth US$

185.46 million

The Star, Malaysia (24 July 2011)

04 VIETNAM

STRUGGLING

TO KEEP INFLATION

BELOW 17% IN 2011

Vietnam

Increasing food prices forced the

Vietnamese government to admit the

increasing challenge of meeting its

annual inflation target. Nguyen Tien Thoa (Head, Price Management

Department, Vietnamese Finance Ministry)

said Vietnam will struggle to achieve its 17%

inflation target after consumer prices increased

in recent months

Increasing farm produce & food prices are

major contributors to the CPI rise in July

Supply & demand imbalances of food &

produce, augmented by a sudden rise in exports,

contributed to increased prices of local goods

Many factors for commodity price hikes have

yet to be identified which hinders the Vietnamese

government’s ability to fight inflation

The Saigon Times Daily (28 July 2011)

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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.

MANDIRI SEEKS

BANK-STAKE LIMITS

Indonesia

PT Bank Mandiri, Indonesia’s biggest

bank by assets, welcomes the limit on

commercial bank stakes, and called for a

reciprocal policy to level the playing field

with regional rivals from markets that cap

ownership. Muliaman Hadad (Deputy Governor, Bank

Indonesia) said Bank Indonesia’s plan to cap

investor ownership in commercial banks at less

06than 50% will probably be enacted this year

The proposed cap is an effort to increase efficiency

and reduce risk among the nation’s lenders

Mandiri faces obstacles opening new branches or

accepting retail deposits in other ASEAN countries,

and

hopes to capitalise on increased access,

particularly in Malaysia, before investment

restrictions fall by 2015

Zeti Akhtar Aziz (Governor, Bank Negara

Malaysia) said Malaysia may allow ASEAN banks

to open more branches as it liberalises its finance

industry – it currently restricts the number of

branches licensed foreign lenders can open,

particularly in urban areas

Bank Indonesia oversees 121 foreign and local

commercial banks in the country, with total assets

of 3,069.1 trillion rupiah (US$360 billion)

Bloomberg (24 July 2011)

REGULATION

ON FOREIGN

OWNERSHIP

OF BANKS IN

SELECTED ASEAN

COUNTRIES

ASEAN MUST FIX ITS OWN VISA

EXEMPTIONS FIRST

ASEAN

ASEAN’s senior officials will accelerate

the implementation of the 14 day ASEAN

free visa framework for ASEAN nationals,

and explore the possibility of an ASEAN

common visa for non-ASEAN nationals. Surin Pitsuwan (Secretary General, ASEAN) said

ASEAN should first completely implement its

own cooperation on a visa-free framework for

ASEAN nationals

Visa exemptions among ASEAN members are left

to bilateral arrangements

Currently Myanmar has not joined the ASEAN

free visa framework

Brunei, Cambodia and Myanmar have not

completely implemented the ASEAN free visa

framework

Hikmahanto Juwana (international law expert,

University of Indonesia) said Myanmar may not want

to apply an ASEAN single visa because they will lose

control over determining who enters their country

Hikmahanto said ASEAN has to ensure that

each member has commonality concerning the

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nationalities that are granted free visa on arrival

- Singapore grants visas to Israeli citizens, but

Indonesia does not

“The Indonesian government has to consider

the loss of non-tax income from visa fees

The Jakarta Post (24 July 2011)

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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.

CIMB FIRST ASEAN CORPORATE

TO BE RATED BY DAGONG

Malaysia

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THAI EXPORTERS PLAN TO TAP

SUPPLIES FROM NEIGHBOURS

Thailand, Vietnam, Cambodia

The Thai Rice Exporters Association

(TREA) predicts exports revenue losses

of BHT60-70 billion (US$2-2.4 billion)

if the government has no measures to

assist exporters. Thai exporters they may

opt for cheaper rice from

Vietnam, Cambodia or

Myanmar, to maintain their

market base and customers

The ASEAN free-trade

agreement makes such

alternatives possible

Thai rice prices, the

benchmark for Asia, have

been steadily increasing

based on optimism that the

new government will buy the grain at above-

market rates (Source: TREA)

TREA said competition from Vietnam resulted

in Thai Hom Mali’s share of traditional markets

08such as Hong Kong dropping from 85%

to 50%

Thailand is disadvantaged in terms of

logistics as the cost for shipping containers

to the US and China is more expensive

compared to Vietnam

TREA suggests

government measures

to support exporters

such as offering the

government’s stockpile

at special prices or open

bidding for the stocks

The appreciation of the

baht also makes Thai rice

more expensive

India’s plan to export at

least one million tonnes

of rice from next month - its price beats

Thailand’s by US$100 a tonne.

Bangkok Post (28 July 2011)

The CEO of CIMB Bank, Dato’ Seri Nazir

Razak, has long advocated the need for an

Asian rating agency to offer an alternative

perspective to western rating agencies.

CIMB has become the first ASEAN corporate

to be rated by a Chinese private rating house,

Dagong

“Despite being the custodian of most of the

world’s savings and holding the most attractive

investment opportunities, Asia remains

dependent on Western financial intermediation. I

don’t understand that” (Nazir Razak)

Dagong assigned a long-term local

currency issuer rating of AA and a long-term

foreign currency rating of AA-, with a positive

outlook to CIMB

The rating is higher than those assigned to

CIMB by the Big 3’ of Moody’s, Fitch Ratings

and Standard & Poor’s (S&P)

“If the world’s best banks can be rated

at AAA class, it is not unusual for CIMB to

be rated at AA or AA-, given the bank’s

systemic importance to Malaysia” (Guang

Jianzhong, Chariman & President, Dagong)

Compared to other international agencies,

Dagong placed relatively more weight on

CIMB’s growth prospects backed by the

healthy regional and domestic environment it

operates in, taking into account its governance

and development strategy

Dagong is the largest credit rating agency in

China, and in July 2010, became the world’s first

non-Western credit rating agency to issue credit

ratings for 50 countries

The Star, Malaysia (23 July 2011)

EXPORTS LED

ASIA-PACIFIC

OUT OF CRISIS: UN

ASEAN

Exports led Asia Pacific out of the global

economic crisis, but with the European

Union, Japan and the United States

facing an economic slowdown, it must

rely more on intra-regional trade to

sustain growth (Source: Report by the

UN Economic and Social Commission for

Asia and the Pacific [ESCAP]) Trade in the region has returned to pre-crisis levels

while FDI flows to selected parts of the region have

fully recovered

The report recommends Asia-Pacific countries

to lead exports of climate-smart goods and

technologies as the region comes to terms with

climate change

ESCAP estimates show that the export growth

recovery in Asia-Pacific’s developing economies in

2010, estimated at 17.3% after negative growth of

nearly 8% a year earlier, will stabilize to 9% in 2011

India Blooms (26 July 2011)

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