ISSUES CHALLENGING ASEAN
Fuel subsidies in Indonesia, Economy and election in Thailand, Rare earth in Malaysia, New trade agreement in Singapore, Philippines economy reacts to Japan disaster, Vietnam wrestles with Chinese trade, Lakeside families displaced in Cambodia, Laos gets German aid, Myanmar has new order and new envoy, Brunei deals with wildlife poaching.
Bambang Brodjonegoro, acting chief of the Fiscal Policy Office at the Finance Ministry, said that shelving plans to limit use of subsidized Premium fuel would increase fuel-subsidy spending by Rp 6 trillion ($690 million) this year. The government set aside Rp 95.8 trillion for fuel subsidies in its 2011 state budget and assumed crude oil prices of $80 per barrel.
Oil prices have topped $100 per barrel, though. According to Finance Ministry data, every $1 per barrel increase over oil price assumptions swells the budget deficit by Rp 800 billion.
Juniman, an economist from Bank
International Indonesia, doubts the government
can maintain a deficit of Rp 124.7
trillion, equal to 1.8 percent of the nation’s
gross domestic product. He also worries
the bond market, in which the government
does most of its deficit financing, may not
absorb enough bonds.
The economic data coming out of Thailand is most interesting.
On April 1, the Stock Exchange of Thailand (SET) rose 16.87 points or 1.61 percent to close at 1,064.35 points. One factor in the SET’s performance could be that many Japanese SMEs were considering moving to Thailand before Japan’s recent tsunami and nuclear disasters. These catastrophes may even reinforce this trend and see more Japanese firms relocating to Thailand, which has been notably free from natural disasters except for the Boxing Day Tsunami of 2006, which affected only the extreme southern resort areas.
Domestic inflation in Thailand rose 3.14 percent year-on-year in March and 0.49 per cent month-on-month, to 110.49 points, on rising food and oil prices, the Commerce Ministry said. The inflation rate was driven by food and beverage increases.
Also on April 1, Thailand’s National
Rice Policy Committee agreed to allocate 5
billion baht ($US 164.8 million) to help rice
farmers by buying paddy rice at the market
price. The committee chairman said the
paddy price had dropped because of the
output from Vietnam. The price went down
from 8,200 to 7,700 baht per ton in March,
to 8,400 from 9,600 baht in February...........
Malaysia is no stranger to the profitable but somewhat risky rare earth business.A rare earth plant developed by Mitsubishi Chemicals in Malaysia is still undergoing a massive cleanup after shutting down in 1992. With growing apprehension about a new rare project that was reported internationally on March 8 by the New York Times, the backer of the project, Australia-listed Lynas Corp Ltd., launched a public relations push in March to explain itself.
In recent weeks, protests over Lynas’ project in Kuantan have gained strong momentum. The project has drawn concerns over potential health and environmental risks from the radioactive waste.
The company will transport rare earth ore from raw material sourced from its mine and concentration plant in Mount Weld, Western Australia, to the facility in Pahang, Malaysia.
Lynas says the ore it is processing is quite different from that processed by Mitsubishi, which was high in thorium because the ore was obtained from tin mining tailings. The ore Lynas plans to use has naturally low amounts of thorium, “50 times lower than the tin tailings” in the Mitsubishi project. The company stated, “By all international standards, the Lynas raw material is classified as safe, non-toxic and non-hazardous.”.........
Singapore has taken a forceful role in a new free trade agreement (FTA), the Trans-Pacific Partnership (TPP), that brings together the US, Peru, Chile, New Zealand, Brunei, Malaysia, Vietnam and Australia and Singapore.
The latest round of negotiations was hosted by Singapore at the end of March with the next round slated for June in Vietnam, concluding with final negotiations in Hawaii. The free trade agreement (FTA) will facilitate more efficient business infrastructure across all participating member countries.
More than 400 negotiators drafted agreements ranging from agriculture policies to legal services.The sixth round of the TPP talks in Singapore advanced trade issues including tax competitiveness and supply chain integration.
Ng Bee Kim, chief negotiator, Singapore, said: “It is going beyond a traditional FTA, and that in itself adds to the complexity of the negotiation.” The multilateral free trade agreement intends to introduce trade standardisations that will integrate the different economic priorities of the nine countries.
Japan is the Philippines’ top export market, as well as the source of about a third of official development assistance going Manila’s way, and of five percent of overseas Filipino worker remittances.
Despite Japan’s difficulties following this
month’s record earthquake and tsunami,
the Philippines will draw strength from
demand in other Asian emerging markets
as well as in the US, according to analyst-
Katrina Ell of Moody’s
Ell said the Aquino administration’s
public-private partnership (PPP) program,
which is meant to boost private investment
in the Philippines, is gaining support
in Europe and the Middle East..........
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