cari captures issue 117 (18 mar 2013)
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CARICAPTURES
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AIRASIA TO START A NEW AIRLINE IN INDIA
ASEAN, India
45
1 8 M A R C H 2 0 1 3 I S S U E 1 1 7
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AirAsia’s bid to launch a new airline in India, in a joint venture with local companies, was approved by India’s Foreign Investment Promotion Board (FIPB) on 6 March but is now being questioned by the Indian Civil Aviation Ministry. AirAsia announced it was planning a new
With less than two years to go, a survey found that more than half of Thai small and medium-sized enterprises (SMEs) lack sufficient understanding on the effects of the ASEAN Economic Community (AEC) and is unprepared for the challenges of market liberalisation. The survey – conducted by the University of
the Thai Chamber of Commerce’s Centre for
International Trade Studies (CITS) – found
that 56% of SMEs across 13 sectors do not
understand the benefits and challenges of
regional integration, down from 80% in 2010
This is in sharp contrast to large-sized Thai
enterprises, of which 98% of those surveyed
have an understanding of AEC principles, up
from 25% in 2010
CITS director Ath Pisalvanich said over 80%
of farming respondents know nothing about
the coming integration
The majority said they were concerned
about duty-free imports of cheaper goods
from other countries , and nearly all Thai
manufacturers agreed with the decision to
delay the launch of the AEC to the end of 2015
Bangkok Post (18 March 2013)
airline with a 49:30:21 joint venture with the
Indian multinational conglomerate Tatas and
Telstra Tradeplace of Indian investor Arun
Bhatia
The Civil Aviation Ministry sought further
clarification on the FDI policy in aviation and
whether a foreign company could invest in a
new venture
Officials said the FIPB clearance was
granted in accordance with the policy which
allowed up to a 49% FDI contribution by a
foreign carrier in an Indian airline company
The joint venture now has to approach the
aviation regulator, the Directorate General of
Civil Aviation (DGCA) for further clearances
and a scheduled air operator’s permit
The Borneo Post (13 March 2013)
Thailand, ASEAN
THAI SMES STILL NOT READY FOR AEC02
DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. As such, CIMB ASEAN Research Institute (CARI) does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this report. Should any information be doubtful, readers are advised to make their own independent evaluation of such information.
PHILIPPINES PUSHES FOR MORE REFORMS
Philippines
The Norwegian Government Pension Fund Global (GPFG) pulled out of 23 Asian palm oil companies citing concerns about unsustainable palm oil production. Of these, the biggest holding had been in
Singapore-listed Wilmar worth US$ 67.29
million
The companies were quick to deny that
they are a threat to deforestation, with
Wilmar and KL Kepong saying that they
support best practices and standards to
Indonesia, Malaysia, Singapore
NORWAY DROPS ASIAN PALM OIL FIRMS IN SHOW OF
GREEN CREDENTIALS04
03Asian Development Bank (ADB) representatives said the Philippines needs to achieve more reforms in trade to better participate in the
upcoming AEC. Jayant Menon of the ADB said
dismantling non-tariff barriers within the
AEC are critical for the region to function
as one market with seamless cross-border
movements
Proposed reforms include customs
reform, infrastructure development,
reducing red tape and associated rent-
seeking behaviour
Menon said the country should also
reconsider constitutionally enforced
limits on foreign ownership if it wants to
join multilateral trade agreements like
the Trans-Pacific Partnership Agreement
(TPP)
The Aquino administration is conducting a
preliminary study on the possible operations
of a sovereign wealth fund to utilise the
country’s foreign exchange holdings which
hit a record high of US$ 84.248 billion last
year
Source: Compiled from various sources
A recent survey by the Japan External
Trade Organization (Jetro) revealed that
the Philippines surpassed Malaysia and
Singapore in terms of most profitable firms
in ASEAN
President Aquino said the economy
performed “outstandingly” by growing 6.6%
last year, besting expectations including that
of local analysts
Business Mirror (17 March 2013)Business World (18 March 2013)
GMA News (7 March 2013)
protect the environment
However, the fund more than quadrupled
its holdings in Malaysia’s Sime Darby to a
value of US$ 119 million at the end of last year
The Agriculture Ministry of Indonesia
recently said palm oil companies have
until 2014 to obtain a Sustainable Palm Oil
Certificate, or risk being sanctioned
The standard was established in 2011 to
manage deforestation and destruction of
carbon-rich peat lands
JP Morgan Research said the divestment
was played up by EU environmentalist
groups, describing it as a victory against
destructive practices on rainforests
However, Nils Hermann Ranum of The
Rainforest Foundation said Norway should
do more to pull out of other sectors that
cause deforestation, such as logging
companies, oil and gas firms, soya and meat
producers
The Jakarta Globe (11 March 2013)The Star (11 Mavrch 2013)
Redd Monitor (13 March 2013)
Source: Rainforest Foundation Norway
LIST OF MAJOR COMPANIES COMPLETELY DIVESTED FROM GPFG
The Fitch Rating agency restored
Thailand’s credit rating, bringing
the rating back in line with other
rating agencies after being lowered
four years ago due to political
turmoil. Fitch recently upgraded Thailand’s long-
term foreign-currency issuer default ratings
to BBB+ from BBB, Short-Term foreign-
currency issuer default ratings to F2 from F3
and Country Ceiling to A- from BBB+
The improved credit rating signals
confidence in Prime Minister Yingluck
The Energy Market Authority (EMA) will lower the contestability threshold for non-residential consumers from the current 10,000 kWh to 8,000 kWh in April 2014, and then to 4,000 kWh
in October 2013. The lower threshold will allow more
non-residential consumers to be eligible
for retail contestability where electricity
is purchased at market rates from a
licensed retailer of their choice
Non-residential consumers will also
be allowed to combine demand across
multiple electricity accounts at different
locations in Singapore, making it easier
for them to meet the threshold
The government argues that such a
move will better help companies manage
their energy costs and is expected to
benefit 20,000 consumers with 70,000
accounts
As for households, Second Minister for
Trade and Industry S. Iswaran said the
goal is to offer them contestable status
too and several studies are being done to
identify the technologies needed for the
change
He said Singapore is on track to meeting
its unconditional pledge of reducing
greenhouse gas emissions by 7 to 11%
below 2020 levels
Why it matters: The Singapore electricity
model represents a unique departure from
the neoclassical argument of the need to
have a monopoly in the energy sector, a
model that other ASEAN states should at
least consider
Strait Times (18 March 2013) Business Times (18 March 2013)
Channel News Asia (18 March 2013)
Thailand
Singapore
05
07Shinawatra’s government and its ability to
maintain social stability
Fitch said the country had been resilient
to repeated shocks, with average growth of
2.9% during the period 2008-2012, higher
than the 2.5% average growth for A-rated
economies
Fitch also upgraded the long-term foreign-
currency issuer default ratings of three
Thai banks, Export-Import Bank of Thailand
(EXIM), Standard Chartered Bank (Thai) and
United Overseas Bank
Reuters (11 March 2012)Bloomberg (11 March 2012)
DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. As such, CIMB ASEAN Research Institute (CARI) does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this report. Should any information be doubtful, readers are advised to make their own independent evaluation of such information.
Source: Standard and Poors, Fitch
S&P foreign currency rating
Fitch long term currency rating (IDR)
SINGAPORE
FURTHER
LACK OF INFRASTRUCTURE
LIMITS GROWTH IN INDONESIA
FITCH UPGRADES THAILAND’S
CREDIT RATING
LIBERALISING
RETAIL ELECTRICITY
MARKETIndonesia’s economy has been growing by more than 6% for the last three years with domestic consumption accounting for more than half of the US$850 billion GDP, but lack of infrastructure is limiting growth in many sectors such as aviation. Lack of infrastructure remains a major
obstacle to Indonesia’s aviation sector as
airports are too small to accommodate
demand and several airports are operating at
around 200-300% beyond capacity
Growth in the aviation sector is nearly
doubles that of the national average,
according to national flag carrier Garuda,
causing increased flight delays and waiting
times
Garuda expects its flight traffic to increase
Indonesia
06from the current 400 flights a day to 1200
flights a day in 2015, but the airline needs
adequate infrastructure to ensure smooth
services
Indonesia’s president outlined in 2011 an
economic development master plan that
calls for US$413 billion in infrastructure
investments in roads, ports, bridges, airports,
and manufacturing centres
Infrastructure improvements are believed
to spark an increase in the demand for
medium and heavy duty trucks and would
allow vehicles with larger load capacities
to provide more efficient modes of
transportation for businesses
The Jakarta Globe (11 March 2013)The Jakarta Post (11 March 2013)
SOVEREIGN RATINGS
US$255 million, despite decreasing export of jade. Last year, the Chinese government raised the tax to 34% from 3.3% on Myanmar jade, leading to a decrease in demand. Myanmar rice and rice related exports were the largest in 46 years. The country exported 1.3 million tons of rice, of which 80% were destined for China.
Eleven Myanmar (12 March 2012)Eleven Myanmar (10 March 2012)
Beijing has appointed its first Special Envoy for Asian Affairs, and his top priority will be Myanmar, the Chinese Foreign Ministry announced on 11 March. Chinese experts said that the Ministry established Myanmar as the envoy’s priority because of recent issues such as the Kachin conflict.
Mizzima (12 March 2012)
DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. As such, CIMB ASEAN Research Institute (CARI) does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this report. Should any information be doubtful, readers are advised to make their own independent evaluation of such information.
Editorial Team: Manissa van Geyzel, Sóley Ómarsdóttir, Radin Faizal Consultant Editor: Tunku ‘Abidin Muhriz
Solidarity and Development Party (USDP), to its current vice chairman and Lower House Speaker Shwe Mann, because the constitution states that the president shall not take part in party activities. “Since the chairman has to engage in party activities, the president will give up the chair at an appropriate time,” a member of the central committee of USDP said.
The Myanmar Times (11 March 2012)
Myanmar’s Central Bank has decided to remove restrictions on bank withdrawals for foreigners, who were previously limited to two withdrawals per week for a maximum of US$10,000. Banks only accept deposits in foreign currencies and foreigners still can’t open savings accounts.
The Irrawaddy (13 March 2013)
Trade volume of this fiscal year was US$17 billion, which is an increase by
Aung San Suu Kyi was re-elected as Myanmar opposition leader in Yangon on 10 March at the party’s first congress, as the party eyes victory in general elections due in 2015. The usually popular opposition leader was met with public anger when she told villagers living near the Latpadaung copper mine that they would need to resettle due to the mine. Suu Kyi led a report on the issue, which was released on 12 March. The report supported honouring the contract with the Chinese mining company and only mildly criticised the police’s use of force during a violent crackdown of protests in November last year.
Bangkok Post (10 March 2012)The Washington Post (13 March 2012)
President Thein Sein has to hand over chairmanship of the Union
08 MYANMAR MONITOR
FORE IGN AFFA IRSECONOMY
POL I T I CS
MALAYSIA TO REAP SIGNIFICANT
BENEFITS FROM TPP
Malaysia
US Ambassador to Malaysia, Paul Jones, said Malaysia will reap among the highest economic benefits in light of a successful Trans-Pacific Partnership (TPP) agreement. Jones said Malaysia’s export gains will
exceed US$ 31 billion annually
Aside from providing relief duties on a
range of Malaysian exports, the TPP will
provide Malaysia with preferential access to
US government procurement market worth
US$50 billion annually
Research from the Peterson Institute for
International Economics found that the
TPP will open a pathway towards broader
economic integration between regional
09 WHERE THE
HECK IS ASEAN?
countries
Jones cautioned that significant policy
shifts are needed to commit to the TPP’s
high standards but remained optimistic that
Malaysia is in the right direction
A statement on the recent negotiations in
Singapore noted “solid progress” to bridge
gaps in a number of areas, particularly in
regulatory issues, telecommunications,
customs and development
Negotiator J. Jayasiri said Malaysia is
concerned about market access and wants
“sufficient flexibilities to accommodate the
kind of difficulties that we face” — especially
for textiles and intellectual property
Business Times (18 March 2013) Bernama (13 March 2013)
Filipinos want ASEAN to intervene in the Sabah crisis which to date has claimed the lives of at least 62 people, including Filipinos, locals and
Malaysian police. As more Filipinos leave Sabah to escape
the violence, many have asked ASEAN to
encourage all parties to avoid further bloodshed,
assist displaced Filipino families, and ensure all
state-enforced measures in Sabah conform to
international human rights standards
However, sceptics opined that it may be wise
to temper expectations about ASEAN’s ability
to intervene in the process, citing ASEAN’s
silence to human rights violations committed
against Rohingya muslims in Myanmar and the
2011 conflict between Thai and Khmer soldiers
along the Thai-Cambodian border
Some observers are instead calling for
intervention by international institutions like
the UN seeing how some of the region’s
border disputes were largely resolved by the
International Court of Justice
Why it matters: ASEAN’s lack of response to
the Sabah crisis – not only has there been no
statement from the ASEAN secretariat on the
matter, there has not been a word on it in its
official website – has inevitably created doubt
on its effectiveness as an institution that aims
to promote regional peace and stability. More
importantly, the crisis has called into question
the “ASEAN Way” of non-interference in the
internal affairs of member states and lowest-
common-denominator decision making
The Malaysian Insider (18 March 2013)
ASEAN
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