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NEWS UPDATES Asean Affairs        7  March 2011

Subsidy spree in Asia

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As prices of food and fuel reach historic highs, Asian nations with a wary eye on Middle East uprisings are doling out subsidies that experts warn are storing up trouble for the future.

Robust Asian economies largely escaped the global downturn, and are now in danger of overheating, stoked by low interest rates, demand from increasingly affluent citizens, and a flood of capital from depressed Western economies.

Supply shocks caused by severe weather are also fueling inflation that has seen the price of basic commodities spiral -- an irritation for Asia's growing middle class but a matter of life and death for its countless poor.

The UN's food agency said last week that world food prices have now hit record levels, and that oil price spikes triggered by the revolutions in the Middle East and North Africa could push them even higher.

From regional giants China and India to emerging tigers Indonesia and Vietnam, governments are trying to soften the blow with a raft of populist measures including subsidies, cash handouts and price controls.

The factors fuelling the "Jasmine Revolution" that has felled the leaders of Egypt and Tunisia, and threatens a civil war in Libya, are not mirrored across Asia, with its emerging democracies and rapid recent economic growth.

But regional governments are twitchy over the mayhem in the streets of Tripoli and Cairo, and anxious to head off dissent which could see them dumped at the ballot box even if not unseated in a revolution.

"Political unrest, social unrest and high food prices have gone hand in hand across the region," said Glenn Maguire, chief Asia economist at Societe Generale.

"Governments in India have lost power due to the price of onions... So I think a politically savvy leadership would definitely be attuned to what's happening with the cost of the most basic foods."

In Malaysia, the coalition government paid a heavy price for winding back heavy fuel subsidies, a decision that tore the lid off brewing discontent and helped the opposition make unprecedented gains in 2008 elections.

With new polls tipped for this year, citizens who have tasted the power of the ballot box are making it clear that inflation and the continuing undoing of price controls will again be a key issue.

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This year in Thailand-what next?

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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