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ASEAN STOCK WATCH Asean Affairs   18 June 2012

ASEAN MArket Outlook

 By Shayne Heffernan Ph.D.


Singapore's economy may grow more than previously estimated this year, spurring inflationary pressures, a Monetary Authority of Singapore (MAS) survey of economists showed.

Gross domestic product may increase 3 per cent this year, compared with last quarter's survey for a 2.5 per cent gain, according to the median estimate of 21 economists and analysts, in a survey by MAS released yesterday.

Consumer prices may rise 4.2 per cent this year, they predicted, higher than the 3.5 per cent rate forecast in March.

Singapore said in April it will allow faster gains in its currency to dampen price pressures, diverging from most other Asian central banks that had left borrowing costs unchanged or eased monetary policy.

The economy grew faster than initially estimated last quarter, and the Government said last month that momentum had picked up, even as downside risks persist.

"We continue to expect decent overall growth in Singapore" once the United States and China regain some momentum in the second half, said Mr Vincent Conti, a Singapore-based analyst at ANZ, in a report on Tuesday.

GDP may increase 2.8 per cent this quarter from a year earlier, compared with 1.6 per cent growth in the three months ended March, economists in the MAS survey predicted.

The Government forecasts GDP growth of 1 per cent to 3 per cent this year. The economy may expand 4.5 per cent next year, the economists said.

The MAS, which uses the exchange rate to manage inflation, said in April it will increase "slightly" the slope of the currency trading band, and raised its forecast for consumer-price gains to 3.5 per cent to 4.5 per cent this year.

It guides the local dollar against a basket of currencies within an undisclosed band and adjusts the pace of appreciation or depreciation by changing the slope, width and centre of the band.

The Singapore dollar may strengthen to S$1.243 against the US dollar by the end of this year, the economists surveyed said, from S$1.2824 as of 11.25am local time yesterday. In March, they predicted an exchange rate of S$1.23 by year-end.

The Singapore dollar has gained about 1 per cent this year, the second-best performer in a basket of 11 Asian currencies tracked by Bloomberg.

Non-oil domestic exports may climb 5.6 per cent this year, more than the 4.2 per cent estimate in the previous survey, the report showed. Singapore's export growth quickened last month as shipments of electronics and pharmaceuticals increased.

The jobless rate may climb to 2.2 per cent by the end of the year, from 2.1 per cent last quarter, the survey showed.

"Labour-market tightness remains a structural issue, as the authorities continue to put restrictions on foreign labour in the midst of close-to-full domestic employment," Mr Conti said.

"This is part of the Government's shift to a productivity driven rather than labour-driven growth model, but adds to inflation risks in the short run."

The Singapore dollar may strengthen to S$1.243 against the US dollar by the end of this year.


Thailand's public debt will not turn to a debt crisis, caused by impacts from the ongoing eurozone crisis currently affecting several member countries of the European Union (EU), as the current European debt woe is not expected to severely affect the global economy like the so-called hamburger crisis in the United States in 2009, according to Thai News Agency (TNA).

Deputy Prime Minister and Finance Minister Kittirat Na-Ranong indicated during a weekly broadcast of Prime Minister Yingluck Shinawatra on Saturday, while Greek voters prepare to go to the polls on Sunday to elect their new government, several EU members are facing economic problems and the rest in the world, including Thailand, are preparing to solve it.

According to the deputy premier, Thai government agencies, including the Finance Ministry, the Bank of Thailand (BOT) and the National Economic and Social Development Board (NESDB), are coordinating closely in monitoring developments in the eurozone.

The deputy premier acknowledged that Thailand's public debt now stands at around 4.2-4.3 trillion baht, or an equivalent to only 40 per cent of the country's gross domestic product (GDP), and that the Thai government has a strict financial discipline to ensure that it does not exceed 60 per cent of the country's GDP.

The deputy premier, who heads the government's economic team, said that the Thai economy mainly depends on exports, domestic investment and the service sector, especially on tourism.

He said that while the European financial crisis might affect the Thai economy it should be at the minimal level, and insisted that the Thai government has maintained the country's export growth this year at 15 per cent and national economy growth at 5.5 per cent.

Meanwhile, the Thai Finance Ministry plans to propose to the Cabinet to extend the government protection period for people's deposits amounting 50 million baht per account to an indefinite period, reasoning that any change in people's saving deposits amid the vulnerable world economy presently would erode public confidence. The move comes at a time when the protection is to gradually reduce to the maximum of only one million baht per account as of August 11, 2012.


Laos, in partnership with various UN agencies, has begun a major review of the implementation of the 17-year-old development Program of Action with a view to improving the plan in light of past challenges and achievements, Lao and UN officials said on Thursday.

The review comes as part of an international review of the Program of Action established in 1997 at the UN International Conference on Population and Development (ICPD) held in Cairo. A total of 179 countries attended that initial conference which established concrete strategies to promote human rights and dignity, support family planning, sexual and reproductive health and rights, advance gender equality, among other goals.

During a meeting held here Thursday, UN Population Fund (UNFPA) representative to Laos Esther Muia said, "The ICPD Program of Action has initiated and contributed to major achievements in all areas of population and development in Laos. Its implementation is crucial to the achievement of Millennium Development Goals."

The Millennium Development Goals (MDGs) are a series of development targets being pursued by the Lao government due by 2015. The goals are closely related to the effort to remove the country from its Least Developed Country (LDC) status by 2020.

Muia congratulated the Lao government on their implementation and substantial progress towards both the MDGs and the ICPD Program, but noted that certain areas where "..we can increase our efforts to accelerate the achievements of targets."

Of the nine MDGs a few have been identified as requiring a greater effort to be completed on schedule, in particular, eradicating extreme poverty and hunger. Several other goals are virtually completed, such as achieving universal primary education which is at 91.6 percent by the most recent estimate.

Deputy Director General of the Lao Ministry of Planning and Investment's Department of International Cooperation Saymonekham Mangnormek co-chaired the meeting.

Mangnormek thanked the international partners for their assistance and said, "The results will .. provide us with a roadmap to guide our implementation and ensure we achieve what we have committed to in the new changing economic and social environment in particular as we are approaching the ASEAN integration in 2015 and the goal of (leaving the) LDC in 2020."

The review should be completed in 2014, when the UN General Assembly will meet to discuss the ICPD goals.


he Coca-Cola Co. plans to start selling its drinks in Myanmar for the first time in 60 years, following the U.S. government's decision to suspend investment sanctions on the country for its democratic reforms.

Myanmar is one of three countries where Coca-Cola doesn't do business. The other two are Cuba and North Korea.

The world's biggest soft drink maker said Thursday it will start doing business in the country as soon as the U.S. government issues a license allowing American companies to make such investments.

The U.S. announced last month that it was suspending restrictions on American investments in the Southeast Asian country, which is still easing toward democracy. Until last year, Myanmar had been led by an oppressive military junta.

Coca-Cola said its products will initially be imported from neighboring countries as it establishes local operations in Myanmar; the company notes that it is has a history of being the among the first to enter or re-enter markets.

In 1949, for instance, Coca-Cola and other foreign companies were expelled from China by the communist government. After full diplomatic relations were established with the country in 1979, Coca-Cola had 20,000 cases of its flagship drink delivered by train into the country from Hong Kong, which was still a British territory at the time.

The Atlanta-based company also noted that Cuba was one of the first countries where it did business, opening operations in the nation in 1906. But after the Cuban Revolution, Fidel Castro's government began seizing private assets and the company liquidated and exited the country in 1960. The company has never operated in North Korea.

Any Coca-Cola products in those countries are obtained through independent third parties.

As part of its push in Myanmar, Coca-Cola said it is donating $3 million to support job creation for women in the country. The company will work with PACT, a non-governmental group that supports economic and health initiatives in developing nations.

Coca-Cola first entered Myanmar in 1927.


Vietnam is the second happiest country in the world, according to a survey by a British think tank, which, unlike usually for such surveys, has not focused on nations' economic performance.

The New Economics Foundation's Happy Planet Index (HPI) shows the extent to which 151 countries across the globe produce long, happy and sustainable lives for their people.

The three component measures of the HPI are life expectancy, experienced well-being, and ecological footprint.

Vietnam scored 60.4, behind only Costa Rica, which scored 64.

In 2009 Vietnam had ranked fifth out of 143 countries.

Except for Vietnam the nine other countries in the top 10 are South and Central American .

The countries with the lowest scores are Qatar, Chad and Botswana.

The US ranks 105th on the index.

“The Happy Planet Index measures what really matters – long and happy lives now and the potential for good lives in the future," Nic Marks, NEF fellow and creator of the HPI, said.

"For too long we have relied on incomplete measures of progress that focus only on economic activity, such as GDP.”

The NEF has released the HPI two times earlier – in 2006 and 2009.


Sagittarius Mines Inc. (SMI), the operator of the $6-billion Tampakan copper-gold project in Mindanao, may have to turn to Malaca?ang “before the end of the month,” to resolve problems involving its permit, according to a top official of the company.

SMI general manager for operations and external affairs Mark Williams told reporters that the firm had received word that its appeal had been denied last Thursday.

The Department of Environment and Natural Resources (DENR) stood by its decision to reject SMI’s environmental compliance certificate (ECC) application as the ban on open-pit mining remains in place in South Cotabato, one of the host provinces of the Tampakan project.

The ECC serves as a guarantee that a project will not lead to environmental degradation. A miner is required to secure the permit before it can operate.

“We are still following administrative process, and one of the steps that we are evaluating at the moment is to (take the) appeal to the next level, which is the Office of the President,” Williams said. Another option for SMI is to question in local courts the validity and constitutionality of the provincial ordinance cited.

Anglo-Swiss firm Xstrata PLC holds a substantial stake in SMI.

“While the decision itself is disappointing…it does state clearly that SMI’s environmental impact statement and appeal for an ECC fully complied with rules and regulations. It also said that the EMB [Environmental Management Bureau] and the independent review committee recommended that the ECC be issued,” the executive said.

According to Williams, the firm will still pursue the project and continue to discuss matters, such as the open-pit ban, with stakeholders, including the provincial board of South Cotabato.

Sagittarius Mines has said it expects to hurdle South Cotabato’s ban on open pit mining when President Aquino signs the new mining policy.

In a decision dated May 22, the DENR denied SMI’s appeal concerning its ECC application. The DENR said that while SMI challenges the constitutionality of the open-pit ban, the issue of constitutionality is outside the department’s purview.

The DENR said the issue of the open-pit mining ban in South Cotabato would have to be “resolved” first before it could reconsider SMI’s ECC application for the Tampakan project.

Agrobusiness’ Sungai Budi Group is planning to invest Rp 1.2 trillion ($ 127 million) in capital expenditures this year, which will include seeking bank loans to finance its expansion of infrastructure, a company executive said.

Sudarmo Tasmin,  the vice president of Tunas Baru Lampung Tbk, one of the two subsidiaries of the group (along with Budi Acid Jaya Tbk) said his company is planning a Rp 1 trillion capital expenditure this year, while Budi Acid’s capex will be valued at Rp 200 billion.

Tunas Baru, which operates in the palm oil and sugar sector, will get Rp 600 billion from internal cash for capex, while the rest will come from bank loans.

“The loan we have already obtained, it is only a matter of finalization now. In the near future, we will sign the MoU [Memorandum  of Understanding] with a state bank syndication,” Sudarmo said.

He said that the capex will be used to expand the palm oil plantation by 15,000 to 18,000 hectares, and for the conversion of old palm oil plantations into sugar plantations. The company also plans to construct a sugar mill in 2014. He added that Tunas Baru was in the process of preparing a Rp 750 billion bond issuance that will be used to finance the projects.
In the company’s annual general shareholders meeting last week, shareholders agreed to pay a dividend of Rp 32.08 billion, or Rp 6.5 per share. In October, it paid out  Rp 20 per share in interim dividends.

“If including the interim dividends, we have paid out 30 percent of our net profit, or Rp. 94.72 billion,” Sudarmo said. Tunas Baru last year posted a Rp 419.11 billion net profit and this year it is targeting a net profit of about Rp 500 billion, or a 19.3 percent increase.

Revenues are estimated to reach Rp 4 trillion or up 7 percent compared to the Rp 3.73 trillion of last year.

Meanwhile Budi Acid is revising its revenue target to Rp 2.5 trillion from the previous Rp 3 trillion because of the high prices of raw materials since early in 2012. The company produces tapioca flour, sweetener and citric acid and cassava, the price of which has risen steadily recently.

“The cost of purchasing cassava account for some 50 percent of production costs,” said Sudarmo, who is also vice president of Budi Acid.

In the first quarter, Budi Acid posted Rp 533 billion in revenue, of which approximately 65 percent came from tapioca flour. Sweeteners contributed 25 percent while citric acid accounted for 10 to 15 percent.

He also said that Budi Acid was facing the challenge of imported products, especially sweeteners.

Budi Acid will use its capital expenditure to pay for a Rp 18 billion glucose plant, a Rp 95 billion tapioca plant and two biogas-fueled power plants costing a total of Rp 37.8 billion. Some of the capital expenditures will also be used to replace machinery.

The new tapioca plant, with a production capacity of 30,000 tons per year will be  built in Madiun, East Java, while the glucose plant will be built in Solo, Central Java, with an annual capacity of 30,000 tons.

Yesterday in Asia

Tokyo stocks jumped 1.77 percent, or 151.70 points, to 8,721.02, Sydney was 1.96 percent higher, or 79.6 points, at 4,136.9, while Seoul climbed 1.81 percent, ending up 33.55 points at 1,891.71.

Hong Kong rose 1.01 percent, or 193.87 points, to 19,427.81 and Shanghai closed up 0.40 percent, or 9.20 points, at 2,316.05.

– Taipei rose 1.76 percent, or 125.67 points, to 7,281.50.

Taiwan Semiconductor Manufacturing Co. surged 3.46 percent to Tw$80.8 while Hon Hai Precision ended up 2.37 percent higher at Tw$86.5.

– Wellington closed 0.25 percent, or 8.60 points, higher at 3,455.68.

Telecom Corp. gained 0.86 percent to NZ$2.49, Fletcher Building was up 0.16 percent at NZ$6.30 and Chorus was down 0.32 percent at NZ$3.10.

– Manila rose 2.43 percent, or 119.78 points, to 5,050.41.

Philippine Long Distance Telephone Co. gained 0.68 percent to 2,376 pesos while Universal Robina Corp. gained 4.27 percent to 61 pesos.

– Singapore closed 0.47 percent or 13.22 points higher at 2.824.22.

Singapore Airlines fell 0.68 percent to Sg$10.22 and DBS Group Holdings eased 0.07 percent to Sg$13.51.

– Kuala Lumpur ended 3.50 points higher, or 0.22 percent, at 1,582.73.

British American Tobacco added 5.1 percent to 54.92 ringgit, while UEM Land Holdings rose 3.1 percent to 2.01.

– Jakarta rose 42.05 points, or 1.1 percent, closing at 3,860.16.

Car maker Astra rose 2.3 percent to 6,750 rupiah, consumer goods producer Unilever jumped six percent to 23,800 rupiah, while Telkom fell 5.1 percent to 7,500 rupiah.

– Bangkok edged down 0.20 percent, or 2.32 points, to 1,163.41.

PTT lost 0.60 percent to 331 baht, while Banpu fell 0.85 percent to 464 baht.

– Mumbai fell 1.44 percent, or 244.00 points, to 16,705.83.

Shayne Heffernan Ph.D.  

Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408 Fax: +65 6329 9699
Email :
Suite 53 Athenee Tower
63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330
New York 347 5th Avenue, Suite 1402-508 NY, NY 10016


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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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