CAPTURES ASEANREGIONAL

CARICARI CAPTURES • ISSUE 166

Following years of turmoil and scandals, the Bakrie family has cut all

ties with Nat Rothschild’s Bumi Plc in a US$500 million restructuring

deal; said deal is expected to yield cash repayments amounting to

US$40 million to shareholders.

Now known as Asia Resource Minearals (ARMS) instead of Bumi plc,

the restructuring deal left Rothschild with a 17% stake in the company,

whilst Samin Tan, the company’s chairman, now holds 47.6% of the

firm after purchasing the Bakrie’s stake

While the restructuring deal has been in the works since October 2012,

efforts by the Bakries to cut ties with Rothschild were hampered by

01

31 MARCH 2014

Bloomberg (25 Mar 2014)

BUmI ePISode ComeS to A CloSe

declining share values caused by slumping coal prices as the family

sought the required funds to exit

The transaction involves the Bakries buying ARMS’ 29.2% stake in

PT Bumi Resources, whilst Samin Tan purchases the Bakrie family’s

23.8% stake in ARMS for $223 millio; said transaction has resulted in

a 1.3% fall in ARMS stock on the LSE over the course of the following

day, reducing company value to US$903 million

The deal will, however, will allow for ARMS to move forward

unhampered by a divided board of directors, a board whose first

order of business will be to complete a US$1.3 billion debt swap with

China Investment Corp

INDONESIA

Source: eFinancial News

ASEAN

CARI CAPTURES • ISSUE 166 31 MARCH 2014

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. 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.

Phil Star (26 March 2014)

StRoNg ImPoRt NUmBeRS SUPPoRt FIlIPINo ReCoveRy

04

Filipino Imports rose by 22% in January from a year ago to US$4.7

billion; the increase can largely be attributed to an increase in a

growth in electronic products which the Philippines economy exports.

Filipino imports surged to three year highs as recovery efforts continue;

according to Rosemarie Edillon, director general of the government’s

socio-economic planning agency recently declared that this was a clear

indication that economic growth is to be spurred by said increase as

“a huge chunk of these exports are for production: capital goods and

investments for the manufacture of other goods”

Imported raw materials drove the bulk of the 22% increase in imports

as demand for Filipino electronics and garments fuelled the need for

resources; this resulted in a trade deficit of US$1.3 billion in January,

which is also a 92% increase in the trade balance from the same period

in 2013

It is expected that ASEAN’s fastest growing economy is tied to that

of the region’s largest market, with China being the biggest source of

imports to Filipino exports, accounting for almost 14.7% of all traded

goods

Bad weather suspended the search for any remains of a malaysian

jetliner as China demanded information a day after malaysia’s leader

said the heartbreaking conclusion was that Flight 370 had crashed

in the southern Indian ocean with no survivors.

A number of planes and ships which have been crisscrossing a remote

area of ocean 2,500 kilometers (1,550 miles) southwest of Australia

have been called off late last week due to unsafe weather conditions.

The area, one of the most dangerous in the Indian Ocean had waves

up to a height of 4 meters (12 feet), high winds and heavy rain

It also unleashed a storm of sorrow and anger among the families of

the jet’s 239 passengers and crew, 153 of them Chinese nationals

Family members of the missing passengers have continuously complained

at the lack of clear cut information from the Malaysian authorities

about a lack of reliable information and a presumed assumption of the

circumstances of the flight ‘ending’ in the Indian Ocean

The Chinese government have demanded Malaysia provide them with

the exact data findings that led to the conclusion that the flight and

all its passengers had perished

Some family members of passengers have marched on the Malaysian

embassy in Beijing demanding answers, after authorities said they had

concluded the missing plane crashed in the remote Indian Ocean with

the loss of all 239 people on board

Family members have said that they cannot accept the conclusion until

they see physical evidence of a crash

However, due to the unpredictable and unsafe weather conditions, search

efforts by numerous nations have been staggered and an investigation

is ongoing into the circumstances of flight MH 370

02 INteRmItteNt SeARCh FoR mh 370

The Guardian (25 Mar 2014)NST (25 Mar 2014)

MALAYSIA

03 SINgAPoRe’S FeBRUARy 2014 InflATIon REACHES A FoUR-yeAR low

Singapore’s Consumer Price Index (CPI) rose by 0.4 percent in

February as compared to previous years which was mainly caused

by a drop in private road transport costs.

The 0.4 percent rise in February’s CPI was the slowest since January

2010 when price levels increased by 0.2 percent every year and

economists had attributed the slow pace to the high base for private

road transport costs and food prices last year; but they have expected

that the CPI will increase in the following months as rising wage

pressure comes into effect

The February’s inflation appeared slower-than-expected as Bloomberg

had expected February’s inflation to be around 0.8 percent; the

slow pace of inflation largely caused by private road transport costs

plunging 7.1 percent in February after dropping 3.5 percent in January

2014

Meanwhile, accommodation costs in February rose gradually by 2.0

percent as compared to 2.4 percent in January and service fees also

increased gradually by 8 percent in February as compared to the

previous months.

By taking everything into account, core inflation for this year is

expected to be approximately 2 to 3 percent and the central bank,

Monetary Authority of Singapore has retained its monetary policy of

a gradual appreciation of the Singapore dollar

Channel News Asia (24 March 2014)

PHILIPPINES

Source: tradingeconomics

SINGAPORE

CARI CAPTURES • ISSUE 166 31 MARCH 2014

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. 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.

THAILAND

MALAYSIA

moody’s Investors service has declared malaysia’s economy to be

safe from external price shocks in today’s volatile economic climate;

giving the nation a A3+ credit rating, which translates to an “upper

medium grade” status according to moody’s rating system.

In its most recent revision in ratings, Moody’s declared that Malaysia’s

improved prospects for fiscal consolidation and reform, and continued

macroeconomic stability in the face of external headwinds, are the

two fundamental reasons for its recent rating hike

According to Moody’s, Malaysia’s strong external position and large

pool of domestic savings has limited the country’s vulnerability

05 mAlAySIA to RemAIN ReSIlIeNt AgAINSt exteRNAl ShoCkS

Moodys (25 March 2014)

06 oPPoNeNtS ReSUme PRoteStS AS thAI Pm RISkS ImPeAChmeNt

Anti-government demonstrators in thailand resumed street protests

on monday after lying low for weeks, piling pressure on increasingly

beleaguered Prime minister yingluck Shinawatra, who is expected

to face impeachment within days.

A Constitutional Court in Thailand approved an application by the

Prime Minister’s opponents to nullify last month’s election which

has now delayed the formation of a new administration and leaves

Prime Minister Shinawatra in charge of a caretaker government with

limited powers

This ongoing crisis which has forced her opponents to take to the

streets from late November. Since then, twenty three people were

killed and hundreds wounded in the political violence which only

began to subside earlier this month

This Court ruling provides substantial legal force for the opponents

of the Prime Minister to resort to legal processes to make their point.

The protests are the latest instalment of an eight-year political battle

broadly pitting the Bangkok middle class and royalist establishment

against the mostly rural supporters of Yingluck and her billionaire

brother, former premier Thaksin Shinawatra, who was ousted in a

2006 coup

The Constitutional Court annulment of the election could offer a way

out of the political stalemate if the main opposition Democrat Party,

which boycotted the February 2 poll, decides to run in a fresh vote;

so far however, the Democrat Party has given no clear indication on

what it plans to do Reuters (24 Mar 2014)

07 New lABoUR UNIoN lAw to Be INtRodUCed IN CAmBodIA

labour minister, mr. Sam heng said the government was working

with officials from the Ilo to ensure that the country’s new union

law is fully compliant with the existing state of industrial relations

in the country.

Thirty international clothing brands had recently written to the

government expressing their concerns over a draft union law which

could allow for the arbitrary breakup of unions

In their 14 March letter, the brands said they were concerned the

law may not comply with International Labour Organization (ILO)

conventions that protect rights to unionize and bargain collectively

“We are now preparing to establish the union law with technical

sponsorship from the ILO and our policy for this law is to do it

in accordance with conventions” that Cambodia has signed, the

government said

The Minister explained that they need to do this according to the

context of Cambodia and the various valid regulations. “The union

laws will provide guarantees to improve the rights and freedoms of

unions as well as to prevent violations of the law when they use their

rights in their capacities as unions to do illegal activities”, he said

The Minister added that his letter to the brand ambassadors address a

long running demand that the government ensure there is a functioning

minimum wage setting mechanism in the country

Cambodia Daily (26 Mar 2014)

CAMBODIA

towards external financial shocks, going as far as to state that the

“net portfolio inflows into Malaysia during 2010 -12 surpassed the

accumulated total of the previous decade, representing potential

vulnerability to a sudden stop or reversal of these flows,”

In a breakdown of ratings, Moody’s also attached a A1 rating to

Malaysia’s long term foreign currency bond ceiling, and an A3 rating

to its long term foreign currency ceiling; furthermore, Moody’s has

also affirmed that the local currency country risk ceiling will remain

at A1

Source: imf.org

CARI CAPTURES • ISSUE 166 31 MARCH 2014

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. 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: Sóley Ómarsdóttir, Gokul Radhakrishnan, Yee Ken Li and Tan Lay Yan Designer: Christina Chin and in collaboration with Tan Zheng Joo Consultant Editor: Tunku ‘Abidin Muhriz

myANmARmoNItoR08

INDONESIA

ASEAN

INSURANCe FIRmS told to ImPRove AheAd oF SINgle mARket09

NUCleAR SeCURIty SUmmIt yIeldS ReSUltS

though unable to address the mounting

tension regarding nuclear security and

Ukraine, the recent Nuclear Security Summit

allowed for positive developments in Asia;

Japan agreed to transfer part of its nuclear

stockpile to the US, whilst Singapore and

malaysia cal l for further international

involvement in the summit.

Deputy Prime minister of Malaysia Tan Sri

Muhyiddin Yassin declared that “certain

nuclear powered countries” needed to be

included in the summit’s discussions in order

to address global nuclear armament issues

in a efficient and cohesive fashion

10

The Edge Malaysia (19 Mar 2014)

PolItICS

Myanmar is currently conducting the first national census in 30 years. The government has announced that it would not allow respondents to self-identify as Rohingya, backtracking on an earlier commitment to international donors. United Nations secretary-general Ban Ki-Moon has urged Myanmar President Thein Sein to ensure that the census is conducted in a peaceful and credible manner.

Myanmar Times (1 April 2014)

eCoNomy

Myanmar’s Ministry of Energy announced on 28 March the winners of the much-awaited tender for licences to explore gas and oil in 20 offshore blocks for 30-years. The list includes Royal Dutch Shell, US-based ConocoPhillips and France’s Total, but all the firms had to agree to joint ventures with a local partner as well as to invest at least US$3 billion after production-sharing contracts (PSC) are signed.

Myanmar Times (31 March 2014)

Experts at a KPMG business forum on 25 March said that joint ventures in Myanmar are a complex task for international investors, which are concerned about the local accounting practices, asset management and legal obligations. Expert stressed the benefits of preparing in advance for possible by joint venture deals by “zeroing out uncertainties and restructuring accounting practices” along international standards.

Myanmar Times (31 March 2014)

FoReIgN AFFAIRS

The British School Foundation announced on 27 March that it plans to open a British International School in Yangon to meet growing demand for world-class education in Myanmar. The school is scheduled to open in August.

The Irrawaddy (28 March 2014)

Myanmar will take part in a joint tourism promotion of the Mekong region organised by the Tourist Authority of Thailand (TAT). TAT said it will work with the Mekong Coordinating Office to develop and promote six land tour routes linking Thailand, Myanmar, Cambodia and Laos.

The Irrawaddy (29 March 2014)

Prime minister Lee Hsien Loong of Singapore

echoed said statement, going on to affirm a

need for share goals of nuclear disarmament,

nuclear on-proliferation, and the peaceful use

of nuclear energy; Prime minister Lee also

called for further sharing of peaceful nuclear

knowledge in order to expedite the regional

development of nuclear energy

Meanwhile, Japan pledged to transfer hundreds

of kilograms of sensitive nuclear material to

the US; following recent pressure from China

regarding Japan’s capacity to weaponise said

material, the transfer is, however, seen as an

international success in nuclear disarmament

Indonesia’s insurance companies need to

improve their competitiveness ahead of the

implementation of the ASeAN economic

Community (AEC) in 2015.

Lack of competition will make it difficult for

these companies to win a sufficient market

share, according to an Indonesian Chamber

of Commerce and Industry (Kadin) official.

Kadin’s deputy chairman for banking and

finance, Rosan P. Roeslani said that the

introduction of the AEC offered not only

a challenge but also an opportunity for the

country’s insurance industry

“This is an opportunity for Indonesian

insurance companies to expand to other

ASEAN countries, to play in the regional

field,” Rosan said during a seminar in Jakarta

on Tuesday

He also placed great importance on expansion

locally before moving to the other countries

regionallyThe Jakarta Post (26 Mar 2014)

Although, generally, Indonesia’s insurance

industry has seen growth in terms of assets

and premiums, its penetration and density

rate is still low compared to other ASEAN

countries including Malaysia, Thailand and

Singapore

The Finance Ministry’s special staff member

for finance services and capital market

policies and regulations, Isa Rachmatarwata,

said the nation’s insurance industry needed

to be able to withstand the influx of foreign

insurance workers once the AEC was launched

“In order to achieve this, there must be a

policy that can increase the capabilities

among domestic insurance workers,” Isa

said. He added that although the government

had introduced several programs, such as the

OJK’s 1,000 actuaries program, the results

had yet to be seen