CARI Captures Issue 88 (06 Aug 2012)

06 AUGUST 20 12 I SSUE 88

CARICAPTURES

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Indonesia’s trade deficit hit an all-

time high in June as exports from

the country fell sharply, a sign that

weaker demand from China and

As the western world slowly recovers

from credit woes, consumers in

ASEAN are enjoying a wave of easy

credit from economic growth and

positive credit ratings. ASEAN’s middle class is bombarded with

credit card marketing campaigns as the

region’s trend shifts towards spending on

credit

The young population is especially

targeted by banks; Malaysians, still

burdened with college loans, are purchasing

Indonesia

ASEAN

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IndonesIa’s Trade Gap sIGnals

TouGher TImes

asean credIT flowInG despITe

Global crunch

the West is affecting some of the

few countries still growing at a

considerable clip. A third straight month of trade deficits

in one of the world’s biggest commodity

producers bodes ill for Indonesia

“We’ve never recorded a deficit this huge,

even during crises”, Satwiko Darmesto,

director of Indonesia’s Central Statistics

Agency, told reporters following the release

of June data showing a US$1.3 billion

trade deficit, nearly three times as large as

expected

Overall, Indonesia is still running a trade

surplus of US$459 million through the first

half of the year

Longer term, the concern among some

economists is that Indonesia could face

more protracted periods of deficits, as

rising incomes and robust domestic demand

keeps imports high

Wall Street Journal (1 August 2012)

luxury items such as smart phones, while

Indonesians turn to debt financing for new

motorcycles

Aekapol Chongvilaivan, an economics

fellow at the Institute of Southeast Asian

Studies expressed concerns of over

exuberance

However, regional banking analyst at

Nomura, Anand Pathmakanthan, weighs in

saying ASEAN banks were still sensitive to

credit bubbles

Reuters (2 August 2012)

BETAHAPPY 45th

ASEAN

8 AUGUST 2012

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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.

Philippines, China

Indonesia, Thailand

Thailand

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phIlIppIne mall expansIon In

chIna

aIr asIa

draws

VerdIcT sTIll ouT on ThaI

readIness for aec

Philippine billionaire Henry Sy’s

shopping mall developer is planning

to spend US$1.5 billion in the next

three years to add as many as 18

shopping malls at home and in China

as consumer spending rises. SM Prime Holdings, the biggest Philippine

retail developer, plans to build four to five

malls a year in the country

It’s also targeting a shopping centre

Indonesia’s authorities want to make

sure Air Asia’s US$80 million bid

to buy Batavia Air will not create a

company with too much control over

the Indonesian market. Indonesia’s Business Competition

Supervisory Commission has asked to see

the ownership structure before deciding

whether it is in line with the anti-monopoly

law

Foreign companies are allowed to own up

to 49% of an Indonesian airline – Air Asia’s

bid is to purchase 49% of Batavia, while its

local partner PT Fersindo Nusaperkasa will

purchase the remainder 51%

Meanwhile, Thai Airways International

has scrapped plans to launch its low cost

carrier airline, ensuring the dominance of

Air Asia in Thailand as the country’s only

low-cost carrier option, according to CIMB

Securities Thailand

The Nation, Wall Street Journal (31 July 2012)

Healthy skepticism pervades the

readiness of Thai companies for the

ASEAN Economic Community 2015. Speaking at a seminar, Finance Minister

Kittiratt Na-Ranong, stated that Thailand

stands to lose up to 70% of its firms due to

unpreparedness at an AEC forum

in China every year, said Hans Sy, the

Manila-based company’s president and the

billionaire’s son

SM Prime may face the risk of

declining funds sent home by Filipinos

working abroad, while a sharp economic

slowdown in China may make it longer

for the company’s expansion to bear fruit,

according to Astro del Castillo, managing

director at First Grade Finance

Bloomberg (2 August 2012)

Firms may prefer other countries such

as Indonesia for its large domestic market,

Vietnam for its growth potential, and

Singapore for its high purchasing power

Kasikorn Bank chief executive officer,

Banthoon Lamsam, said that the prevalence

of AEC seminars is a sign of anxiety

asean retail developers on The move

However, Banthoon added that only

generalities of the AEC are discussed at

these forums and that Thai companies are

reluctant to go abroad

Government measures to reduce

corporate tax rates may help from 23% to

20% may induce more competitiveness for

Thai firms

Why it matters: Fear of looming market

competition is increasing awareness of

the AEC and inducing action from the

Thai corporate sector. This is a positive

development, but should be occurring

across ASEAN. The region’s private sector

needs to become more involved in learning

and giving input into the process of

integration.

Straits Times, The Nation (2 August 2012)

scruTIny In

IndonesIa, wIns

In ThaIland

CapitaLand (Singapore) -developed 58 malls in China

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

Genting (Malaysia)-to develop leisure and

entertainment complex in the UK

Source: The Star, Bloomberg, Bangkok Post

06 10 0808 ‘12 ‘12

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.

myanmar

monITor06Economy

The World Bank will help Myanmar by

clearing interest rates and restructuring

the rest of a US$397 million loan in arrears.

The World Bank has opened an office in the

country and will also resume aid after 25

years of absence.

Reuters (1 August 2012)

The Asian Development Bank (ADB) has

opened an office and dispatched staff in

Myanmar. ADB has not had operations in

the country since 1988 but Myanmar has

participated in ADB’s regional activities.

ADB (1 August 2012)

Politics

According a recent Human Rights

Watch (HRW) report, Myanmar security

forces raped and opened fire on Rohingya

Muslims in a recent wave of violence

in Rakhine state. HRW also claims the

official death toll of 80 people is “grossly

underestimated”, and criticises the

international community for lack of reaction

AFP (1 August 2012)

The Myanmar government has suspended

the publication of two news journals

for alleged violations of government

regulations, only a few weeks after

announcing it was relaxing censorship as

part of reforms.

The Irrawaddy (31 July 2012)

Foreign Affairs

The US Congress has extended a ban on

imports from Myanmar, seeking to maintain

pressure on Myanmar to continue the

reform process.

The Star (3 August 2012)

The new Myanmar Ambassador to the

United States Than Swe presented his

credentials to the US government on 30

July. He is the first person to assume the

post since 2004.

The Irrawaddy (30 July 2012)

Iran’s Foreign Minister Ali Akbar Salehi

said on 29 July that Iran plans to establish

an embassy in Myanmar to help resolve the

problems facing Muslims in this country.

Tehran Times (30 July 2012)

Thailand

ASEAN

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ThaIland losInG compeTITIVeness

In rIce markeTs

asean paTh To economIc unIon

muddIed by souTh chIna sea

Thai rice exports halved to 4.7 million

tonnes and export value dropped from

US$5 billion to US$3.1 billion this year,

according to the Thailand Development

Research Institute (TDRI).

TDRI and other leading Thai economists

have pointed out that the government’s

The South China Sea row may not directly

affect plans by ASEAN for the economic

integration, political leaders and officials

say but analysts are less optimistic.

“It’s not going to hold progress (on

integration) hostage”, ASEAN Secretary-

General Surin Pitsuwan told diplomats

in Jakarta, referring to a recent meeting

in Cambodia, where rifts over the South

China Sea prevented the group’s foreign

ministers from issuing a communique for

the first time in its history

At the Phnom Penh meeting of foreign

ministers, some diplomats said Cambodia,

ASEAN’s chair and China’s ally, blocked the

South China Sea dispute being put on the

agenda at China’s behest

“The difference is that China is giving

something that Cambodia needs, while

ASEAN is promising something that is

abstract”, said Aleksius Jemadu, dean of

rice-pledging policy is destroying the

nation’s competitiveness in rice production

TDRI president Nipon Poapongsakorn

said if the government releases the 10.2

million tonnes of rice it has in stock,

producers would immediately suffer US$

2.7 billion to US$3.1 billion

Thai rice costs more than its Vietnamese

counterpart, but the supply shock would

induce a loss of US$75 per ton, not

inclusive of the US$8.2 billion cost of

pledging

Srirat Rastapana, director general of

the Thai Trade Negotiations Department,

expects to begin negotiations with the

Philippines

Under WTO rules, Thailand can export

98,000 tonnes of rice to the Philippines

before incurring a 40% duty

Why it Matters: The rice pledging scheme

needs to be revisited so it does not only

serve rich farmers and landlords. A direct

income transfer to farmers has been

proposed. Trade negotiation with the

Philippines is not a long term solution

The Bangkok Post,

Philippine Daily Inquirer

(2 August 2012)

the school of political and social sciences at

Pelita Harapan University in Jakarta, adding

that “ASEAN countries will act based more

on their domestic needs”

“They are behind schedule (on the

economic community) and clearly not

going to make it ... they are not going to

see much action on services”, said Hal Hill,

professor of Southeast Asian economies at

the Australian National University

Why it matters: ASEAN will face further

challenges as it tries to standardise

customs procedures and open up

protected industries such as financial

services to competition from within. It has

implemented free transfer of profits and

dividends but needs to remove further

barriers to intra-regional investment flows.

Reuters (31 July 2012)

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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.

cITIes wITh mosT TweeTs

RANK NUMBER OF TWEETS*Jakarta 1 265 million

Bandung 6 133 million

Singapore 11 120 million

counTrIes wITh mosT TwITTer accounTs

RANK NUMBER OF ACCOUNTS*Indonesia 5 30 million

Philippines 10 10 million

(*based on June 2012 only)

Source: Semiocast

ASEAN

Indonesia

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faIled sTaTe IndIcaTors

challenGes To asean

JakarTa: world’s mosT acTIVe

TwITTer cITy

The Failed States Index 2012

published by The Fund for Peace,

could be important for ASEAN

members to address internal matters

and accelerate the realisation of

‘ASEAN Community 2015’. It ranks 177 countries in the world

based on its socioeconomic performance

with Somalia ranked first as the worst

performing country, while Finland is the

best

Four countries are in danger of plunging

to the ‘failed state’ category: Cambodia,

Laos, the Philippines and Indonesia

The Philippines is facing a critical issue

with security while Indonesia is considered

very weak in social indicators especially the

mounting demographic pressures related

to natural disasters, disease, environmental

degradation, pollution, food scarcity,

Indonesia has earned the title of fifth

most active nation on Twitter, while

Jakarta has emerged as the most

active city. Semiocast, a Paris-based research

company, found that Jakarta managed to

outdo major cities like Tokyo, London and

New York

Bandung, Jakarta’s neighbouring city,

ranked 6th most active city which helped

catapult Indonesia to its 5th place status

By June this year, there was a 50%

increase in Indonesian users which

accounts to 29.4 million account profiles

Although the United States still

dominates the top user base position,

the highest growth is coming from other

countries

Jakarta (1 August 2012)

malnutrition, water scarcity, population

growth, youth bulge and mortality rate

According to the report, Thailand has

to address the long-standing issue of

factionalised elites, while Vietnam has to

address critical issues concerning state

legitimacy and human rights, which include

press freedom and civil liberties

Malaysia is very weak on human rights,

lack of press and political freedom, while

Brunei has a dominant issue on uneven

economic development related to ethnic,

religious, or regional disparities, a yawning

gap between the rich and the poor, slum

populations

The only ASEAN country to have reached

the level of “a very stable state”: Singapore

and the only issue it faces is human rights,

particularly press and political freedom

Jakarta Post (1 August 2012)

failed states Index 2012: how asean ranks

mosT acTIVe on TwITTer In asean

RankMyanmar 21

Cambodia 37

Laos 48

Philippines 56

Indonesia 63

Thailand 84

Vietnam 96

Malaysia 110

Brunei 123

Singapore 157

Source: Fund for Peace

Editorial Team: Angela Goh, Manissa van Geyzel, Chayut Setboonsarng

Consultant Editor: Tunku ‘Abidin Muhriz Designer: Iqbal Hakim