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Weekly Summary July 12-17 These are the main news stories emanating from Asean countries during the last week.

By David Swartzentruber
AseanAffairs   17 July 2010

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Interest rate hikes in Asia

Recent moves by Asian central banks to raise interest rates are a strong vote of confidence that the region will weather risks stemming from the European debt crisis, analysts say. Since June 24, the central banks of Taiwan, India, Malaysia, Thailand and South Korea have lifted interest rates by between 12.5 and 25 basis points, citing the need to tame inflation as their economies rebound from the global downturn.



Brunei bank plans to go regional

Baiduri Bank plans to go regional, banking on stronger equity as it continues to churn out innovative products for customers, the Brunei Times reports. Baiduri General Manager Pierre Imhof said the bank's plan to grow regional is for the medium term, World Finance reported after the bank won the "Best Banking Group in Brunei" from the publication for the second year running. When asked how Baiduri would grow given Brunei is a "relatively small but wealthy nation," Imhof told the magazine that domestically, the bank has grown fast in the last 15 years and it is always difficult to grow at the same pace. "


Opening of Cambodian bourse delayed

CAMBODIA’S stock exchange should open next year, Finance Minister Keat Chhon said this week, despite a previous goal of opening by the end of 2010. The stock market “should be next year, but saying that we will discuss more with our partner”, Keat Chhon said Monday when asked whether the bourse would meet its planned 2010 launch date.



Protectionism - biggest threat to recovery

Weighing in on Asia’s responsibility in leading the global economic recovery, speakers representing the region’ at a forum hosted by the International Monetary Fund in Jakarta on Monday say the resurgence of protectionism is the single biggest threat to sustainable global economic growth.

The speakers argued the current pace of economic recovery, which largely relies on the robust economic growth of emerging economies in Asia, would not be enough to establish the foundation for more sustainable growth and rebalance the global economy.


Asia-Pacific maintains growth in energy use

Amid last year’s decline in global primary energy consumption, Asia-Pacific countries, led by China and India, recorded a 4.4 percent increase in consumption as a result of energy-intensive stimulus packages, BP told the Jakarta Post.According to data from BP, the Asia-Pacific region’s energy consumption reached 4,147.2 million tons of oil equivalent (mtoe) in 2009, up from 3,985 mtoe in 2008.
In late 2008, the governments of China and India, as well as several other industrializing countries in the region, initiated major domestic infrastructure projects to avert impacts of the global financial crisis.


Malaysia has low birth rate

Malaysia is concerned about its declining population growth rate and whether there will be enough young adults after it becomes a developed country. Statistics show that the population growth rate has dropped to 2.2 percent in 2008 from 2.6 percent in 2000. The declining trend has been in evidence since the country's first census in 1970.

“If we do not take appropriate steps, we will have an aging population in the next 20 to 30 years,” said National Population and Family Development Board director-general Datuk Aminah Abdul Rahman to the Malaysia Star.

Malaysia cuts fuel, sugar subsidies

Malaysia cut fuel and sugar subsidies Friday, the first in a series of "difficult" reforms aimed at saving the government more than 750 million ringgit ($230 million) this year to curb its swollen budget deficit, the Associated Press reports. However, analysts warned the move was politically risky for Prime Minister Najib Razak, who has struggled to shore up support for his National Front coalition ahead of general elections due by 2013.
In a statement late Thursday, Najib's office said cutting subsidies was part of "difficult but long-needed economic reforms" to shrink its fiscal deficit and help Malaysia become a developed nation, without overburdening the people


Philippine exports rebound to pre-crisis level

Sales of Philippine exports soared in May due to strong shipments of electronic products—the country’s key export—but the industry warned of a softer market in the second half of the year. In a statement, the National Statistics Office on Tuesday reported that export earnings in May went up by 37.3 percent to US$4.239 billion from $3.088 billion a year ago, when shipments contracted by 26.9 percent

World bank lifts growth rate

The World Bank has raised its economic growth forecast for the Philippines starting this year until 2012, citing strong private and public spending as well as the recovery of global trade. In the latest issue of the Philippines Quarterly Update, the Washington-based lender revised upwards its gross domestic product (GDP) growth forecast to 4.4 percent this year from an earlier projection of 3.5 percent, according to the Manila Times.


Power to link three main Philippines islands

The National Grid Corporation of the Philippines (NGCP) may push through with a power transmission project that would link the country’s three major islands. Guillermo Redoblado, NGCP senior technical adviser, said the company has already formed a technical working group to establish the financial and technical viability of the Leyte-Mindanao Interconnection Project (LMIP).

“We formed a technical team for that who will present it to the [NGCP] board for approval,” he said to the Manila Times.

Once approved, the company would then seek approval from the Department of Energy and the Energy Regulatory Commission.



Foreign businessmen push reforms

Short-term reforms of the financial and telecom sectors and harmonising government economic policies are keys to maintaining the country's attractiveness to foreign investors, says the Joint Foreign Chamber of Commerce in Thailand.

‘‘‘Thailand has been very successful in opening up its manufacturing sector, but the service sector underperforms,’’ Nandor von der Luehe Chairman, Joint Foreign Chamber of Commerce, told the Bangkok Post.

Chairman Nandor von der Luehe said both local and foreign investors experienced difficulties doing business in the country.

Thailand's economy “needs second engine”

Thailand needs to develop a second engine of growth and reduce the economy's dependence on exports, Finance Minister Korn Chatikavanij says, as reported by the Bangkok Post. Exports, which account for as much as 70 percent of the economy, do not actually benefit many in the labour force and may actually contribute to a wider income gap, Mr. Korn yesterday told the Asia 21 conference organised by the South Korean government and the International Monetary Fund.

Thai chamber pushes end to enviro-deadlock

The government needs to end the environmental deadlock in Rayong’s Map Ta Phut industrial estate within the next month, to support private sector investment, Dusit Nonthanakorn, chairman of Thai Chamber of Commerce (TCC), said on Thursday.

In addition, the government must speed up its plan to reform the tax structure to get ready for membership of the Asean Economic Community in the next five years, according to the Bangkok Post.


Thai recovery discussed, education stressed

Accelerating the growth of the service sector and improving the quality of education should be the priorities for Thailand in driving its economic expansion and retaining its investment attractiveness, business leaders say, according to the Bangkok Post.

Prime Minister Abhisit Vejjajiva opened the event with an address stressing the importance of full participation from all sectors in the reforms to narrow social and income disparities.

“If the state fails to adjust the tax structure to attract more investment, there is a possibility the private sector will turn to investing in other countries in Asean,” he said.


EU trade protections snag products

Many Vietnamese products, including garments, have found it hard to enter the EU because of trade protection and quality control policies. The issue is exacerbated by the debt crisis in several EU countries.

According to the Viet Nam Garments and Apparel Association (Vitas), in the first six months of this year, turnover of Viet Nam's garments exported to the EU – one of Viet Nam's biggest export markets for garments – increased by only 1 percent to US$680 million. However, export turnover for April and May dropped by nearly 3 per- cent over the same period last year.


Viet dairy sector attracts investors

An increased demand for dairy products in Viet Nam is providing businesses with an opportunity to invest in the industry, said head of Information Centre for Agriculture and Rural Development (AGROINFO)'s Research and Development Department Trinh Van Tien. Experts forecast that the yearly average growth rate of milk consumption in Viet Nam would be 12 to 15 percent by 2015.

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