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The Biweekly Update
Mahendra Siregar tapped as new investment chief. President Susilo Bambang Yudhoyono appointed Deputy Finance Minister Mahendra Siregar the new chief of Indonesia’s Investment Coordinating Board on September 15. Siregar replaces Chatib Basri, who was appointed the new minister of finance in May, and will be responsible for promoting investment in Indonesia. Siregar enters the position during an economic slowdown and is expected to take a bold approach toward countering the falling rupiah and a widening current account deficit.
Indonesia, Philippines make significant jumps in Global Competitiveness Rankings. Indonesia and the Philippines saw significant improvements in their rankings in the World Economic Forum’s Global Competitiveness Report for 2013–2014, released on September 3. Indonesia jumped from 50th out of 148 countries in 2012–2013 to 38th in the latest report, while the Philippines moved from 65th to 59th. The report measures competitiveness based on 12 pillars, including institutions, financial market development, technological readiness, and innovation.
Protests force Miss World pageant to move from Jakarta to Bali. Coordinating Minister for People’s Welfare Agung Laksono announced on September 7 that the finale of the Miss World pageant, which was set to be held near Jakarta on September 28, will be moved to the Hindu-majority resort island of Bali following protests by thousands of hardline Muslims. Protestors labeled Miss World participants “infidels” and burned effigies of contestants in the streets. The protests have further damaged Jakarta’s image as a cosmopolitan city open to outsiders.
President creates national agency aimed at combating greenhouse gas emissions. President Susilo Bambang Yudhoyono announced on September 10 the creation of the agency for Reducing Emissions through Deforestation and Forest Degradation (REDD+), in accordance with Indonesia’s 2010 climate change partnership with Norway. The agency will coordinate government efforts to reduce greenhouse gas emissions and will report directly to Yudhoyono. The creation of an REDD+ agency is one of several steps Indonesia agreed to take in order to help combat the negative effects of global warming.
Tens of thousands rally to demand wage increase. Nearly 50,000 workers rallied in Jakarta on September 5 demanding a 50 percent minimum wage increase. Inflation has risen to a four-year high in recent months, driving up the cost of living for Indonesian workers. President Susilo Bambang Yudhoyono on September 1 limited annual minimum wage increases to inflation plus 5 percent for labor-intensive industries and inflation plus 10 percent for other industries.
Central bank raises benchmark interest rate again. Bank Indonesia raised its benchmark interest rate a quarter point to 7.25 percent on September 12, just two weeks after a half-point rate hike. The increase signals that the government remains committed to shoring up the falling rupiah, which reached a four-year low in August. The rate hike should also serve to calm international investors who have become wary of Indonesia’s economic stability in recent months. The central bank also lowered its growth forecast for 2013 to between 5.5 and 5.9 percent, down from an earlier projection of between 5.8 and 6.2 percent.
Religious leaders take steps to lessen anti-Muslim violence. Radical Buddhist monk Wirathu, considered the spiritual leader of Myanmar’s anti-Muslim 969 movement, signed an agreement with Muslim activist Shwe Kyi on September 10 to reduce religious tensions. The two leaders also agreed to establish security posts in places of worship in order to prevent conflict. The agreement came a week after the State Sangha Maha Nayaka Committee, a group of monks responsible for regulating Myanmar’s Buddhist clergy, issued a prohibition on September 2 against monks’ involvement in 969-related organizations.
New company act to be passed by 2014. The director general of Myanmar’s Directorate of Investment and Company Administration, Aung Niang Oo, revealed on September 10 that the government plans to pass a new company act by the end of 2014. He was speaking at the Myanmar Global Investment Forum in Naypyidaw. The proposed act will help develop Myanmar-based companies, notably small and medium-sized enterprises, according to Aung Niang Oo. The existing company act has not been revised in 99 years.
Myanmar appoints new ambassador to the United States. President Thein Sein on September 12 appointed Kyaw Myo Htut as Myanmar’s new ambassador to the United States. Kyaw Myo Htut previously served as ambassador to Great Britain and Northern Ireland. He replaces outgoing ambassador Than Swe, who was appointed to a position on a presidential advisory committee on September 9.
UN delivers aid to Kachin state amid violence, peace talks. Twenty-six representatives from several UN agencies distributed aid to 3,000 refugees in Laiza, the headquarters of the Kachin Independence Organization (KIO) in northern Kachin state, on September 7–9. It was the first UN convoy to enter rebel-held territory in Kachin state in nearly two years. Kachin and government forces have engaged in a series of clashes in recent months despite an agreement in May to reduce violence. However, KIO and government representatives met on September 16 and agreed to hold high-level peace talks in early October.
Aung San Suu Kyi visits Eastern Europe for democracy tour. Opposition leader Aung San Suu Kyi left Myanmar on September 10 for a five-day visit to Poland, Hungary, and the Czech Republic. Aung San Suu Kyi made the trip to study democratic systems in the former communist states. She delivered the opening remarks at the annual Forum 2000 Conference in Prague, where she praised former Czech president and democracy icon Václav Havel and met with the Dalai Lama. It was her second visit to Europe since being released from house arrest in 2010.
Moro splinter group clashes with government troops, hold hostages. About 200 members of a breakaway group of the Moro National Liberation Front (MNLF) clashed with local security forces in Zamboanga City in Mindanao on September 9 and then fled to coastal neighborhoods, holding about 180 people hostage in an ongoing standoff. The fighters are loyal to MNLF founder Nur Misuari, who believes that a peace deal the government is negotiating with another group, the Moro Islamic Liberation Front, is a betrayal of a 1996 peace with the MNLF. As of September 17, security forces had rescued 118 hostages and killed or captured about half of the MNLF fighters. At least six security forces and four civilians have been killed.
Supreme Court temporarily suspends pork barrel fund. The Philippine Supreme Court on September 10 issued a temporary restraining order on the controversial Priority Development Assistance Fund (PDAF), more commonly known as the “pork barrel” fund. The court ordered the Department of Budget and Management to refrain from releasing any PDAF funds to legislators until the end of 2013. Associate Justice Diosdado Peralta said that the fund appears to be unconstitutional based on preliminary findings. Several Philippine lawmakers are currently embroiled in a scandal involving the pilfering of PDAF funds.
Unemployment worsens despite upward economic growth. The National Economic and Development Authority (NEDA) reported on September 10 that the Philippines’ unemployment rate rose to 7.3 percent in July, up from 7 percent a year earlier. NEDA explained that the increase is due to the high number of new entrants into the labor force. More people are looking for employment opportunities because of optimism about the country’s economy, according to NEDA director-general Arsenio Balisacan.
ADB official urges Aquino administration to relax foreign ownership rule. The lead economist from the Office of Regional Economic Integration at the Asian Development Bank (ADB), Jayant Menon, urged the Benigno Aquino administration on September 10 to relax foreign ownership rules in order to attract more foreign direct investment to the Philippines. A provision in the 1987 constitution limits foreign ownership of businesses to 40 percent. The Philippines had $2 billion of foreign investment in 2012, considerably less than its neighbor, Indonesia, which drew more than $20 billion in foreign investment.
Najib announces measures to help ethnic Malays. Prime Minister Najib Razak announced new policies on September 14 aimed at boosting the economic standing of ethnic Malays and other indigenous groups, collectively known as bumiputeras, a reversal of his administration’s previous promises to curb race-based policies in Malaysia. Najib is expected to face a tough leadership challenge at the ruling United Malays National Organization party elections on October 19, and many observers see the new policies as an attempt to burnish his credentials with conservative party members.
Bersih-led coalition releases final report on May elections. Malaysia’s May general elections were neither clean nor fair, according to a September 10 report called Clean and Fair? that cites eyewitness accounts of political violence, illegal campaigning, and harassment of election observers. The report was released by Pemantau, a citizen monitoring group led by Bersih, a coalition of nongovernmental organizations that have campaigned for electoral reform. The group has observed proceedings for 87 of the 135 parliamentary elections, choosing close races with spikes in voter turnout.
Malaysia to spend $49 billion on rail projects. The government of Malaysia is expected to spend $49 billion on rail projects through 2020, according to a September 11 article in the Star Online. This spending includes an expanded mass rapid transit system that will cover 97 miles and run two million trips daily, compared to 500,000 daily on the current system. A Kuala Lumpur-Singapore high-speed rail link is also in the works and is estimated to be completed by 2020. The route would cut land-based travel time between the two capitals to just 90 minutes.
Government to assist Myanmar workers amid criticism of immigration crackdown. The Malaysian government is working with the Myanmar Embassy in Kuala Lumpur to properly register migrants who qualify to work in the country, according to a September 11 Star Online article. The government launched a three-month special operation on September 1 to arrest and deport illegal immigrants. The sweep primarily targets Indonesian migrants, but many Myanmar asylum seekers have been caught up in the operation, sparking criticism from human rights groups. Up to 700,000 Myanmar workers are estimated to be living in Malaysia.
Most rubber farmers call off protests as government doubles subsidy. Rubber farmers in Thailand called off protests scheduled for September 14 after the government announced on September 10 that it would double rubber subsidies to $195 per acre. The farmers had protested for an increase in subsidies since August 23. The protests included road and train line blockages and have cost the government an estimated $109 million. Thailand, the world’s largest rubber producer, has suffered from a steady decline in prices due to low demand in China and other emerging countries. A few thousand rubber farmers continue to protest, calling the government offer insufficient, but the vast majority appeared to have accepted the offer.
Abhisit criticized for insulting remarks about prime minister. Opposition Democrat Party leader Abhisit Vejjajiva has come under scrutiny for calling Prime Minister Yingluck Shinawatra an obscene name, most politely translated as “stupid lady,” in September 7 remarks. Abhisit made the remark following Yingluck’s appearance on a reality television show called “Smart Lady Thailand.” Abhisit’s remarks come amid increasingly bitter opposition to the government by the Democrat Party, which has resorted to violence in the parliament and taken to the streets to protest in recent weeks.
House passes bills on filling parliamentary seats. Thailand’s parliament passed two sections of a proposed charter amendment bill on September 10. The first section stipulates that an election must be held to fill a Senate seat within 45 days of vacancy, unless a Senate majority picks a replacement for a lawmaker with less than 180 days left in his or her term. The second states that members of the Election Commission cannot be arrested, incarcerated, or summoned for inquiry during elections unless the commission itself grants permission. The ruling Pheu Thai Party is engaged in a contentious effort to amend the constitution, and these sections are its first successes.
Splinter groups continue attacks to stall peace process in southern Thailand. At least five police were killed in southern Thailand’s Pattani province on September 11, in a continuation of violence ahead of the scheduled resumption of peace negotiations between the government and the separatist Barisan Revolusi Nasional (BRN) in mid-October. Officials blame the attacks on BRN splinter groups that wish to derail the peace process. Meanwhile, the government approved two budgets worth $38 million for infrastructure development and improved security operations in the southern provinces.
United States drops anti-dumping tax on shrimp imports. The U.S. Department of Commerce announced on September 9 that it had dropped its 4.7 percent anti-dumping tax on Vietnamese shrimp after a review of imports from 2011 to 2012. All 33 of Vietnam’s shrimp exporters now have a zero tax rate on their exports to the United States. Vietnam exported $338 million worth of shrimp to the United States in the first seven months of 2013, accounting for about a quarter of its total shrimp exports.
Vietnam, South Korea to speed up free trade deal. President Park Geun Hye of South Korea and President Truong Tan Sang of Vietnam pledged on September 9 to accelerate current negotiations for a free trade agreement (FTA) between Vietnam and South Korea. The two leaders agreed to complete the FTA by 2014 and pledged to triple bilateral trade, from $21.6 billion in 2012 to $70 billion by 2020. Trade negotiations for the Vietnam-South Korea FTA began in 2012. Two rounds of negotiations have been held, and the third is scheduled to take place in Hanoi in October.
Court sentences woman to capital punishment for drug smuggling. A court in Ho Chi Minh City sentenced Nguyen Thi Thanh to death on September 11 for attempting to smuggle heroin from Vietnam to Cambodia. Thanh, along with her accomplice, Dinh Thi Mai Thuy, planned to transport more than six pounds of heroin. Those convicted of smuggling 3.5 ounces of heroin or cocaine or 10.6 ounces of other narcotics can be sentenced to death in Vietnam. Thuy, who has a two-month-old baby, received a life sentence instead of the death penalty.
LG to build high-tech plant in Haiphong. South Korea’s LG Electronics announced on September 10 that it plans to build a $1.5 billion high-tech complex in Haiphong, Vietnam’s third-largest city. The plant, which will manufacture a variety of products such as air conditioners, vacuum cleaners, and smart phones, is expected to create about 20,000 jobs. LG expects to construct the plant in two phases, taking four and six years respectively. South Korea is currently Vietnam’s fourth-largest investor, with a total investment of $25.73 billion over the last 25 years.
Opposition stages three-day rally to protest election results. Tens of thousands of Cambodia National Rescue Party (CNRP) supporters staged a rally in Phnom Penh on September 15–17 to protest the National Election Committee’s September 8 declaration that the ruling Cambodian People’s Party won the national elections in July. One protester was killed as police attempted to disperse protestors. The CNRP, which won 55 out of 123 parliamentary seats, says it was cheated out of millions of votes due to fraud.
Hun Sen agrees to consider electoral commission reforms. Prime Minister Hun Sen agreed to explore reforms to Cambodia’s National Election Committee following a five-hour meeting with opposition leader Sam Rainsy. The meeting came two days after King Norodom Sihamoni brought the two men face to face for the first time in years to plead that they end their political standoff in order to preserve national stability. Rainsy rejected Hun Sen’s concession, demanding a United Nations-led investigation into the July national elections. He reiterated that the opposition will not take its seats in Parliament when it opens on September 23.
South China Sea
China, ASEAN officials discuss code of conduct. Officials from China and the 10 ASEAN countries discussed a potential binding code of conduct in the South China Sea during a meeting in Suzhou, China, on September 14–15. China’s vice foreign minister, Liu Zhenmin, said the officials agreed to pursue a code of conduct using a “gradual approach based on consensus.” The outcome was seen by many observers as a means to stall completion of a binding agreement. The officials were meeting to discuss implementation of the nonbinding 2002 Declaration on the Conduct of Parties in the South China Sea.
Philippines accuses China of construction at Scarborough Shoal. Philippine defense secretary Voltaire Gazmin on September 3 accused China of preparing to build structures at Scarborough Shoal, which Chinese vessels seized in 2012. Gazmin revealed aerial photos taken by the Philippine Navy that show 75 objects, which the secretary identified as concrete blocks, scattered around the shoal. Gazmin called them a “prelude to construction” and drew parallels to the 1995 Chinese seizure and subsequent construction at Mischief Reef. Beijing has denied Gazmin’s claim.
Vietnam revamps maritime police agency, boosts defense capabilities. Vietnam’s General Department for Defensive Industry, in an effort to boost defense capabilities in the South China Sea, on August 26 handed over three patrol boats to the marine police department and renamed the agency the Vietnam Coast Guard. The patrol boats are equipped with advanced technological systems, such as data transfer and satellite imagery, and are designed to withstand rough weather conditions at sea, including severe waves. The government has also boosted funding and training for the agency.
Report shows tourism sector hurt by falling currencies. Fewer tourists from Southeast Asia are able to afford to visit Singapore for holiday travel as regional currencies, including the Indonesian rupiah and the Malaysian ringgit, have fallen significantly against the Singapore dollar over the past two months, according to a September 10 CNBC report. Tourism provides nearly 160,000 jobs in Singapore and is responsible for 4 percent of the city-state’s gross domestic product, suggesting that continued declines by neighboring currencies could have a serious impact on Singapore.
Government clamps down on credit card loans to limit debt. The Monetary Authority of Singapore (MAS) announced on September 11 that beginning December 1, banks will be allowed to extend unsecured loans worth only 12 times an individual’s income in an effort to keep people from falling into debt. MAS also noted that the changes would help banks improve lending practices and aid individuals in avoiding high interest costs.
Singapore, Vietnam upgrade relations to strategic partnership. Prime Minister Lee Hsien Loong and his Vietnamese counterpart, Nguyen Tan Dung, announced at a press conference on September 11 that the two countries had upgraded their relations to a strategic partnership. They emphasized the need for cooperation and coordination in areas like the South China Sea, where Beijing has grown more assertive. Lee and Dung noted that the partnership would include an exchange of expertise and experience in banking, finance, security, defense, and education.
India pledges $66 million loan for Laos. India’s Export Import Bank has committed to loan Laos $66 million to finance irrigation and hydropower projects. The agreement was made during the September 10 India-Lao Joint Commission Meeting on Bilateral Cooperation in Vientiane, attended by Lao foreign minister Thongloun Sisoulith and Indian external affairs minister Salman Khurshid. The ministers also identified agriculture, defense, information and communication technologies, and mining as potential areas of further cooperation.
Laos struggles to meet revenue target for 2012–2013. Laos could face rising debt if it fails to reach its revenue target for fiscal year 2012–13, which ends in September, according to a Ministry of Finance report cited by the Vientiane Times on September 10. Laos set a target of increasing revenue by 27 percent over fiscal year 2011–2012, but has raised only 78 percent of that goal. The government’s main source of income is from taxes on natural resource exports, but that has been hampered by dropping gold and copper prices in recent months.
China remains committed to high-speed rail project despite setbacks. Deputy Prime Minister Somsavat Lengsavad said September 9 that Beijing remains committed to a China-funded high-speed rail project in Laos but needs more time to conduct feasibility studies and alter plans if necessary. Somsavat said Laos is considering a switch from a high-speed system to semi-high speed because of the high investment costs and difficult terrain. The plan would have higher speeds for passenger trains and slower speeds for cargo trains.
Philippines hosts ASEAN Navy Chiefs Meeting. The Philippine navy hosted the seventh ASEAN Navy Chiefs Meeting, aimed at promoting regional maritime security, on September 9–11 in Makati City. Philippines president Benigno Aquino gave the opening address, in which he stressed the importance of freedom of navigation for the ASEAN Economic Community and urged ASEAN navies to protect their “common seas.” Thailand hosted the first ASEAN Navy Chiefs Meeting in 2001.
Indonesia hosts ADMM+ counterterrorism exercises. Indonesia hosted the first-ever ASEAN Defense Ministers Meeting-Plus (ADMM+) counterterrorism exercise on September 9. More than 500 military personnel from the 10 ASEAN countries along with Australia, China, India, Japan, New Zealand, Russia, South Korea, and the United States participated in five days of drills. Indonesian military chief Moeldoko opened the ceremonies and said the exercise is a good way to gain common understanding and share experiences. Indonesia and the United States jointly lead the ADMM+ working group on counterterrorism that planned the exercises.
Chamber of Commerce joins coalition urging Trade Promotion Authority. The U.S. Chamber of Commerce on September 9 joined with seven other business and agriculture associations in the Trade Benefits America coalition to send a letter to the leaders of the U.S. House Ways and Means and Senate Finance committees urging them to pass Trade Promotion Authority (TPA) by the end of 2013. Chamber staff and members have been meeting with members of Congress since January to discuss TPA and the Trans-Pacific Partnership (TPP). TPA, also known as “fast-track” authority, makes it easier to pass trade agreements and is considered essential for U.S. ratification of the TPP.
Bali ready to host APEC, says governor. Bali governor Made Mangku Pastika said on September 10 that Bali is ready to host the Asia Pacific Economic Cooperation Summit in October. All venues, transportation, and security systems have been well prepared, according to the governor. Most of the meetings will be held at the Sofitel Hotel, which was designed specifically for the summit. As many as 21 heads of states, including President Barack Obama, 46 ministers, 5,250 economic leaders, and around 3,000 journalists are expected attend, according to the Jakarta Post.
APEC aims at empowering women economically. Officials from Asia Pacific Economic Cooperation economies agreed to cooperate in establishing programs and policies that promote women’s economic empowerment. The pledges came during the three-day APEC Women and the Economy Forum that concluded on September 8. Ministers and delegates welcomed the recommendations and said that greater inclusion of women in the economy is critical for business performance and economic prosperity. The forum was the first joint ministerial meeting for small and medium-size enterprises and women’s empowerment hosted under the auspices of APEC.
Bruneians face unemployment despite numerous vacancies. Home Affairs Minister Badaruddin Othman said on September 10 that Bruneians continue to suffer from unemployment troubles despite plentiful vacancies in the private sector. The minister said that only 138 of 608 applicants gained employment at Brunei’s first Mini Job Fair in May, despite there being around 1,500 private sector jobs open. Many factors contribute to the dismal employment figures, including large numbers of unqualified candidates and qualified candidates turning down offers due to unsatisfactory wages and work conditions.
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