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Asean Affairs   14 September 2012

AseanAffairs Weekly ending 14 Sep 2012

The Week That Was

Impact of cabinet reshuffle already apparent as media sector opens. President Thein Sein reshuffled his cabinet August 27 in a move that consolidated the power of pro-reform ministers. The repercussions were felt almost immediately, with the new minister of information and culture, Aung Kyi, announcing September 2 that the government would allow private daily papers to operate as early as next year. Myanmar currently allows only state-owned papers to publish daily. Aung Kyi replaced Kyaw Hsan, who was widely regarded as a hardliner and was sharply criticized for temporarily suspending two newspapers last month.

Buddhist monks protest Rohingya, echo calls for deportation. Hundreds of Buddhist monks, joined by thousands of local residents, marched through Mandalay September 1–3 in support of President Thein Sein’s suggestion in July that the Rohingya minority be deported to end the conflict in Rakhine state. The Rohingya, a Muslim minority in western Myanmar, are not recognized by the government and are denied citizenship. Since May, riots and violent clashes between Rohingya and Rakhine Buddhists have resulted in nearly 90 deaths. Human rights groups criticized the monks’ stance.

Myanmar passes long-delayed investment law. Myanmar’s parliament September 7 passed a much-anticipated law to manage foreign investment as the economy opens. The new law, which faced months of debate about how much of a role foreign companies should be allowed in the economy, lets investors own up to a 50 percent stake in joint ventures, with exemptions for certain sectors, such as advanced technology, where foreign ownership can reach 100 percent. President Thein Sein has not said whether he will sign the legislation or pass it back to the parliament when it sits in October to urge lawmakers to consider including more incentives for foreign investors. The law comes amid growing interest from major global corporations, which are considering entering Myanmar’s rapidly opening market.

Constitutional Tribunal judges resign en masse following impeachment. All nine judges on Myanmar’s Constitutional Tribunal resigned September 6 following a vote to impeach them by the lower house of the parliament. The motion was coauthored by opposition leader Aung San Suu Kyi and passed by two-thirds of the chamber, with military appointees, who occupy a quarter of the seats, abstaining or voting against impeachment. Myanmar’s upper house in August voted overwhelmingly for impeachment. The call for impeachment followed a ruling by the tribunal that parliamentary bodies do not enjoy the same standing as cabinet ministers, which would have limited the legislature’s power to call ministers for questioning and oversee the activities of the executive branch.

Central bank officials debate raising policy interest rates. The Bank of Thailand announced September 5 that it would hold the country’s key interest rate steady at 3 percent for the sixth consecutive month. The decision comes amid tense debates between the chairman of the central bank, Virabongsa Ramangkura, and the bank’s top leaders. Virabongsa favors lowering the interest rate in order to depreciate Thailand’s currency, which could boost exports. Others argue that targeting inflation is necessary to maintain stable growth. Prasarn Trairatvorakul, a governor of the Bank of Thailand, called the debate “unhelpful” and said it could weaken investor confidence.

Defense Committee finalizes military leadership reshuffle. Thailand’s Defense Committee, consisting of seven top leaders of the Ministry of Defense and branches of the military, on September 5 named Thanongsak Apirakyothin the new permanent secretary for defense and Prajin Jantong the new chief of Thailand’s air force. The decision follows a public dispute between outgoing permanent secretary for defense Sathian Permthong-in and the minister of defense, Sukumpol Suwanatat, over who would succeed Sathian. The new appointments, pending approval by King Bhumibol Adulyadej, will take effect October 1.

Finance minister says some economic forecasts were “white lies.” Finance Minister and Deputy Prime Minister Kittiratt Na-Ranong admitted August 23 that he exaggerated growth forecasts for 2012, saying the finance minister has the right to tell “white lies” to boost investor and consumer confidence. Kittiratt said the export growth forecast for the year, which the government projected at 15 percent, was actually closer to 9 percent. Former finance ministers and members of parliament sharply criticized the statement, while Prime Minister Yingluck Shinawatra defended Kittiratt, saying he had good intentions.
Abhisit testifies about 2010 protest violence. Former prime minister Abhisit Vejjajiva appeared before the Bangkok Criminal Court August 30 to testify for the first time about the political violence that wracked Bangkok in 2010 and cost 91 lives. The court’s current inquiry centers on the death of a cab driver during the protests. Abhisit, who faces possible prosecution, claims he did all he could to avoid loss of life during the demonstrations. He was previously questioned about the violence for seven hours on August 27 at the Ministry of Justice’s Department of Special Investigation.

Philippines to invest $784 million in flood control. The Philippines’ National Economic and Development Authority allocated $784 million on September 3 for flood prevention projects. These will include enhancing river-dredging systems, building and strengthening dikes, and purchasing pumps for cities such as Manila. The government hopes the projects will prevent a repeat of the massing flooding, and mudslides that claimed at least 99 lives in Manila in August during severe monsoon rains.

Philippines considering joint sea patrols with Indonesia and Malaysia. Philippine defense secretary Voltaire Gazmin said August 30 that his government is considering establishing joint patrols with neighboring Indonesia and Malaysia to guard against piracy, smuggling, and Al Qaeda-affiliated insurgent movements. Gazmin raised the proposal with his Malaysian and Indonesian counterparts during a meeting to discuss Muslim guerrilla movements operating in the southern Philippines. He said the joint naval patrols, coupled with real-time information exchange, could help to address any emergencies of cross-border crimes in the region.

Del Rosario visits Syria, expedites repatriation of Filipino workers. Philippine foreign affairs secretary Albert del Rosario visited Damascus September 4–5 to seek assistance from the Syrian government to expedite the repatriation of nearly 4,000 Filipino workers stuck in the war-torn country. These include 250 people sheltered in the Philippine Embassy, 1,300 others who have asked to return home, and another 2,400 who have not officially asked to leave Syria. The Syrian foreign minister assured del Rosario that he would facilitate the repatriation of the workers in a timely manner.

Polls show Prabowo widening lead but his party trailing in run-up to 2014 elections. Gerindra, the party of former general Prabowo Subianto, ranks a distant fourth in recent polling despite its leader’s popularity. The party received just 4.7 percent support in an August 30 poll by Charta Politika. That poll also showed PDI-P, the party of former president Megawati Sukarnoputri, tumbling to 10.8 percent support behind Golkar, at 18 percent, and the ruling Democratic Party, at 12.4 percent. A July poll by the Jakarta-based Centre for Strategic and International Studies (unaffiliated with CSIS Washington) also placed Gerindra a distant fourth despite showing a widening lead for Prabowo, at almost 18 percent, among potential 2014 presidential contenders.
Clinton praises progress of Comprehensive Partnership in Jakarta. Secretary of State Hillary Clinton praised continued progress on the U.S.-Indonesia Comprehensive Partnership during a September 3 stop in Indonesia as part of an 11-day, six-country tour. She announced that USAID will provide $83 million over five years to fund primary education projects in Indonesia. Clinton also met with her Indonesian counterpart, Marty Natalegawa, to discuss ongoing tensions in the South China Sea and raised concerns over the treatment of religious minorities in majority-Muslim Indonesia.

Government forms committee to seek permanent solution to Papua violence. Indonesia’s House of Representatives September 3 created a working committee to seek a permanent solution to recurring violence in Papua. The western province is home to a decades-long low-level insurgency seeking independence from Indonesia. House member Mahfudz Siddiq said the committee was formed in response to the government’s failure to resolve the issue. Violence broke out again in the restive province September 4, resulting in two deaths.

Bakrie Telecom stock trading suspended as company fails to pay on bonds. The Indonesia Stock Exchange (IDX) September 5 suspended trading on PT Bakrie Telecom, a telecommunications company owned by Aburizal Bakrie, the billionaire head of the Golkar Party and 2014 presidential hopeful. The IDX suspended the trading of shares after receiving a letter from the Indonesian Central Securities Depository stating that the company delayed the payment of bonds that were issued in 2007 and matured September 4. Another of Bakrie’s companies, Bumi Resources, recently saw its share prices drop after reporting a loss of $322.1 million in the first half of 2012.

Tycoon Nguyen Duc Kien arrested. Vietnamese officials arrested well-known tycoon Nguyen Duc Kien, cofounder of Asia Commercial Bank (ACB), on August 20. Kien, who has connections to high-ranking officials including Prime Minister Nguyen Tan Dung, is accused of committing fraud at his three private investment firms and faces two years in prison if convicted. Two days later authorities also arrested Ly Xuan Hai, a former ACB executive with close ties to Kien. The arrests were followed by panic in the stock market and a mass withdrawal of funds from ACB, prompting the central bank to inject $600 million into the banking system.

Vietnam, China hold strategic defense dialogue. Vietnam and China stressed their long-standing defense ties during the third Vietnam-China strategic defense dialogue held September 3 in Hanoi. Officials discussed measures to boost understanding between the two countries’ armies despite ongoing tensions in the South China Sea. Vietnamese deputy defense minister Nguyen Chi Vinh and his Chinese counterpart, Ma Xiaotian, cohosted the dialogue.

U.S. Trade Representative Kirk visits Vietnam. U.S. Trade Representative (USTR) Ron Kirk September 3 paid a visit to Hanoi where he met with Vietnamese president Truong Tan Sang. Kirk stressed the importance of trade in the United States’ Asia-Pacific policy and reaffirmed the U.S. commitment to deepening trade relations with Vietnam. Sang lauded U.S. efforts to promote bilateral economic ties, but urged the United States to recognize Vietnam as a market economy so the country can avoid certain trade restrictions, including large tariffs in trade disputes with the United States.

Vietnam to prohibit bankers from owning other companies. Vietnam’s National Finance Supervisory Council, an advisory body in the prime minister’s office, announced new bank ownership rules September 3 that will prohibit major shareholders of commercial banks from setting up backdoor companies. The council concluded that loose bank ownership regulations have led to conflicts of interest and resulted in mounting bad debts in the economy. The new policy was announced two weeks after the arrest of banking tycoon Nguyen Duc Kien on fraud charges.

Fugitive ex-shipping executive arrested. Vietnamese authorities on September 5 extradited Duong Chi Dung, a former executive at state-owned shipping firm Vinalines, from an unspecified Southeast Asian country. Dung, who was being investigated on corruption charges at Vinalines, had been on the run since March. Under Dung’s leadership, Vinalines allegedly misused $5 billion of state funds to purchase a floating dock and racked up over $1 billion in bad debt. Dung will likely face a long prison term if convicted.

Najib calls for “political barrier” as opposition mobilizes. Prime Minister Najib Razak on September 1 called on the ruling Barisan Nasional coalition to prevent the opposition from seizing the “reins of the country” in upcoming elections, which must be held by June 27, 2013. Playing on the opposition’s “Road to Putrajaya” slogan, Najib urged his coalition of parties to erect a “political barrier” to secure the country’s administrative capital. Recent polls show that Najib enjoys high personal approval ratings, but a majority of voters are unhappy with his ruling coalition. Najib is expected to call elections either in November following the annual pilgrimage to Mecca or early next year following the parliament’s approval of the 2013 budget.

Malaysia, Brunei leaders discuss economic cooperation. Prime Minister Najib Razak and Brunei’s Sultan Hassanal Bolkiah met September 4 in Malaysia to discuss the implementation of several agreements designed to strengthen bilateral economic relations. The two discussed progress on a recently signed agreement to boost cooperation in developing regional energy infrastructure, information and communications technology, and agriculture projects. Najib encouraged Brunei to invest in projects around Kuala Lumpur that seek to propel the Malaysian city into the ranks of the world’s top 20 metropolises in terms of economic growth and livability.

Lee praises China and United States during Beijing speech. Prime Minister Lee Hsien Loong of Singapore offered both praise and advice to China in a September 6 speech at the Central Party School in Beijing during a six-day visit to the country. He urged China’s leaders to tackle their country’s economic and foreign policy problems, including an aging population, rising inequality, the need to shift away from export-driven growth, and the maintenance of regional peace, including in the South China Sea. He also warned against hubris regarding the United States’ economic troubles, saying “it is not a nation in decline.…We should never underestimate the U.S.’ capacity to reinvigorate and reinvent itself.” Lee met with both President Hu Jintao and Premier Wen Jiabao during his visit.

China offers Cambodia $2.5 billion in investments and soft loans. Chinese prime minister Wen Jiabao pledged to give Cambodia $500 million in loans for infrastructure projects following a September 1–2 visit to China by Cambodian prime minister Hun Sen. China also approved a $2 billion industrial park project that would produce 3 million tons of steel per year and employ up to 10,000 Cambodians. Chinese investment in Cambodia totaled $1.9 billion in 2011, more than double the investment by all ASEAN countries combined and 10 times that by the United States. Cambodian officials rejected speculation that the aid was a Chinese thank-you for Cambodia’s support for China on the South China Sea, parts of which are disputed between China and four of Cambodia’s Southeast Asian neighbors.

Brunei Darussalam
Clinton visits Brunei, launches English-skills training project. Secretary of State Hillary Clinton launched a new U.S.-Brunei English Language Enrichment Project for ASEAN during her first visit to the country September 6–7. The project will provide a three-month intensive training program for government officials from across ASEAN to improve their English and professional skills. Clinton met with Brunei’s Sultan Hassanal Bolkiah to discuss strengthening of bilateral relations and Brunei’s chairmanship of ASEAN in 2013.

Clinton visits Timor-Leste, announces U.S. support for ASEAN membership. Secretary of State Hillary Clinton praised Timor-Leste’s successful parliamentary and presidential elections, held earlier this year, during her September 6 visit to the country. She met with Prime Minister Xanana Gusmão and recently sworn-in president Taur Matan Ruak, and voiced U.S. support for Timor-Leste’s bid to join ASEAN.
IFC aims to strengthen private sector. The World Bank’s International Finance Corporation (IFC) has agreed to work with Timor-Leste’s Chamber of Commerce to strengthen private-sector development. The two organizations kicked off their cooperation with a meeting in Dili August 31. The IFC will also work with microfinance organizations to provide credit to entrepreneurs. The chamber currently represents 19 business associations and more than 100 companies in


Prime minister criticizes ministries and bureaucrats. Lao prime minister Thongsing Thammavong August 25 cited shortcomings of the country’s bureaucracies and state-controlled press in a meeting with officials at the Ministry of Information and Culture. Thongsing called on the Lao media to produce high-quality journalistic work and on bureaucrats in the judicial, legal, and health care sectors to act with responsibility. He is the first high-ranking Lao official to date to publicly criticize the government’s performance.

Laos upgrades border security with Myanmar. The Lao Ministry of National Defense August 20 announced the construction of a new road along the Myanmar-Lao border that will help strengthen border control in the Golden Triangle area. The 180-mile-long road, which will be financed by soft loans from China, will link Luang Namtha and Bokeo provinces in northwestern Laos. Upgrading cross-border security in the Golden Triangle area is of strategic importance to Laos, Myanmar, Thailand, and China.

ASEAN economic ministers discuss regional cooperation in Siem Reap. Economic ministers from ASEAN member countries and their dialogue partners met August 25–30 in Siem Reap for the annual ASEAN Economic Ministers’ meeting. Officials discussed cooperation on regional trade issues, innovations in key industries, and the goal of realizing a digital economy. U.S. Trade Representative Ron Kirk led the U.S. delegation to the meeting and launched the first ASEAN-U.S. Business Forum August 30–31.

South Korea to set up diplomatic mission to ASEAN. South Korea announced August 28 that it will open a diplomatic mission and name an ambassador to the ASEAN Secretariat in Jakarta. ASEAN and South Korea are looking to further bilateral ties in political, economic, and cultural cooperation. ASEAN is already South Korea’s second-largest trade partner and second-largest investment destination. The Korean mission will allow ASEAN to engage South Korea more effectively in regional affairs and foster ASEAN-South Korea relations.

Hillary Clinton visits ASEAN Secretariat. Secretary of State Hillary Clinton met September 4 with ASEAN secretary-general Surin Pitsuwan and permanent representatives from ASEAN member countries at the ASEAN Secretariat in Jakarta. Clinton discussed the South China Sea dispute with Surin and expressed the U.S. commitment to helping all sides resolve the issue. She urged the adoption of a binding code of conduct for the South China Sea ahead of the East Asia Summit in November.

ASEAN business outlook survey released. Ninety percent of senior U.S. executives surveyed expect U.S. trade and investment in Southeast Asia to increase in the next five years, according to the ASEAN Business Outlook Survey for 2012–2013 released August 29 by the U.S. Chamber of Commerce and the American Chamber of Commerce in Singapore. Twenty percent of U.S. companies surveyed said they plan to diversify their investments from China to ASEAN in the next two years.

South China Sea
Clinton urges ASEAN and China to make progress on code of conduct. Secretary of State Hillary Clinton September 4 discussed the South China Sea dispute with her Indonesian counterpart, Marty Natalegawa, during a visit to Jakarta. Clinton reiterated that the United States does not take a position on territorial claims, but said the United States encourages ASEAN and China to work collaboratively on drafting a legally binding code of conduct. On September 5 Clinton traveled to Beijing and met with her Chinese counterpart, Yang Jiechi, who promised that China would not impinge upon freedom of navigation and safety in the South China Sea.

Taiwanese legislators land on Itu Aba, observe live-fire drill. A group of Taiwanese legislators September 4 inspected the defense capabilities of Taiwan’s forces on Itu Aba Island in the disputed Spratly Islands and observed a series of live-fire exercises. The legislators’ visit, coupled with an August 30 trip to the island by Hu Wei-chen, secretary-general of Taiwan’s National Security Council, seemed aimed at asserting Taiwanese sovereignty over the island. Vietnam’s government condemned the visits as a violation of its sovereignty. Itu Aba is the largest of the Spratlys and, along with a nearby shoal, is Taiwan’s only presence in the chain of islands.

APEC Summit ends with focus on global economy. Leaders from the 21 APEC economies achieved important deliverables during the grouping’s annual summit September 2–9 in Vladivostok despite low expectations in the lead-up to the meetings. Leaders agreed to slash import duties on dozens of green products, a move widely hailed by officials and environmental groups. Officials also agreed to take steps to increase growth, trade liberalization, and regional integration to counterbalance the ongoing Eurozone crisis. Secretary of State Hillary Clinton led the U.S. delegation to the summit. APEC members account for 54 percent of the world’s economic output and 44 percent of its trade

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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