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CARICAPTURES

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Malaysia

CARI ON THE GO

This year’s CARI Conversations

on 14 June, discussed ASEAN’s

role in the new global economy.

The distinguished panel, which

consisted of Ooi Sang Kuang,

Sundram Pushpanathan, Manu

Bhaskaran, and Maung Maung Lay,

emphasised the importance of

further integration for ASEAN in

the new global environment. ASEAN can punch its weight only

if it is integrated and the progress of

integration is slow because of insufficient

institutional push, said former deputy

governor of Bank Negara Malaysia, Ooi

Sang Kuang

The panel agreed that ASEAN needs a

framework and mechanism that is tailor-

made for its developing members

Pushpanathan, Senior Fellow at the

Singapore Institute of International Affairs

said ASEAN had been successful in three

areas, trade liberalisation, trade facilitation,

and cultivating an attractive investment

climate and should continue those efforts

Dr. Muang Muang Lay, vice president

of Union of Myanmar Federation of

Chambers of Commerce and Industry

indicated that Myanmar had been

hibernating, but was on the verge of

take-off and there would be no reversal

Manu Bhaskaran, CEO of Centennial

Asia Advisors recommended that

ASEAN should identify a sector that had

benefitted from integration and push it

forward

By Chayut Setboonsarng

18 22 0606 ‘12 ‘12

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.

03 INdONEsIA OpEN TO HEAlTHy fOREIGN bANks

Healthy banks may be allowed

to purchase more than 40% of

Indonesian banks, higher than

previously expected, and existing

healthy banks will be able to

continue operations without

divesting ownership levels, said

Deputy Governor of Bank Indonesia

(BI), Muliaman Hadad. Indonesia currently allows foreign owner-

ship stakes up to 99% but has intimated

in recent weeks that new rules would limit

stakes to a maximum of 40%

Foreign banks must have a rating of at

least BBB, non-bank financial institutions

BBB+, and non-financial institutions A,

to buy stakes in Indonesian banks, said

Mulya Siregar, Executive Director of BI for

banking research and regulation

BI would continue to pursue reciprocal

ownership terms in the banking sector with

ASEAN countries, echoing Nazir Razak’s

view that a lack of reciprocal principles in

Indonesia

CIMb AsEAN CONfERENCE : AsEAN INTEGRATION - MINd THE GAp

Malaysia

This is ASEAN’s moment as the

world’s most promising emerging

economic grouping, agreed key

speakers at the second CIMB

ASEAN Conference. Intra-ASEAN activity could develop in

three ways: growing trade through free-

trade agreements, capitalising on each

other’s demographics and strengthening

the connectivity infrastructure, said Nazir

in his opening speech on 13 June

ASEAN is in the sweet spot for

economic opportunities, geopolitics

and cultural diversity, said Kishore

Mahbubani, dean of the Lee Kuan

Yew School of Public Policy, National

University of Singapore

The business community should

encourage government leaders to

remove protectionist measures, he added

in his keynote address

For ASEAN to function as a formal

economic grouping, it needed a strong

leader, said Aberdeen Islamic Asset

Management CEO, Abdul Jalil Abdul

Rasheed during a panel discussion, adding

that rules governing business activity must

be harmonised

Regional imbalances in the form of

infrastructure, labour and implementation

of regulations can be overcome with better

cooperation and a shared vision, noted

Indonesia’s Bank Mandiri president director,

Zulkifli Zaini

ASEAN members seem to lack confidence

in moving up the value-chain, therefore

“we need to be innovative and develop

domestic demand”, stressed Danny Quah,

professor of economics at the London

School of Economics

The ASEAN Secretariat needs to be

strengthened in terms of funding and talent

in order to tackle a more challenging

environment, reiterated Rebecca Fatima

Sta Maria, secretary-general of Malaysia’s

Ministry of International Trade and

Industry

The private sector should play a bigger

role in the implementation process and

provide government with feedback on

various agreements, said Pushpanathan

Sundram, former deputy secretary-

general of ASEAN for ASEAN Economic

Community

The annual conference gathered 32

companies, of which 22 were from

Indonesia, Singapore, Thailand, the

Philippines, Vietnam and Hong Kong,

to share opinions and perspectives on

regional issues

By Angela Goh

“The main difference between AsEAN and the EU is that the latter has stopped learning while the former

knows it has to go out and learn from the world” – Kishore Mahbubani.

CARI ON THE GO

ASEAN limited movement of banks in the

region, Hadad added

Examples quoted by Nazir included

capital requirements in Vietnam and

Malaysia, which differed at US$150 million

and US$100 million respectively

Nazir called for an ASEAN Banking

Framework to stop banks from going in

different directions and hindering the

creation of ASEAN banks

Dow Jones Newswires (14 June 2012)

18 22 0606 ‘12 ‘12

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.

MyANMAR

MONITOR04Politics

Myanmar has pledged to hunt down those

responsible for the deaths of 50 people in

communal clashes in the western state of

Rakhine. More than 30,000 people have

been displaced after their homes were set

on fire during riots and revenge attacks.

After visiting the area, a senior minister

vowed the government “would bring about

justice and prosecute offenders without

bias,” according to state media.

AFP (17 June 2012)

Aung San Suu Kyi received rock star

treatment on her first trip to Europe in 24

years. The Nobel peace laureate visited

Geneva where she addressed the ILO’s

annual ministerial conference and she has

accepted her Nobel Peace Prize in Oslo, 21

year late. She also visited Britain, Ireland

and France on her 17 day tour.

The Star (18 June 2012)

Economy

Coca-Cola has announced that the fizzy

black drink will return to Myanmar after

more than six decades, leaving Cuba and

North Korea as the only countries without

the drink.

AFP (15 June 2012)

Foreign Affairs

The International Labour Organisation

(ILO) voted at its annual conference to

lift restrictions on Myanmar, paving the

way for its admission to membership and

preferential treatment for its exports to

EU markets. The decision was taken a day

before Myanmar’s opposition leader Aung

San Suu Kyi addressed the plenary session

of the ILO conference in Geneva.

Financial Times (13 June 2012)

Myanmar will receive a big increase

in aid funds, after a meeting between

President Thein Sein and the Peace Donor

Support Group (PDSG)—representing

the governments of Norway, the UK and

Australia, as well as the European Union,

the United Nations and the World Bank—

led to the PDSG offering a total of nearly

US$500 million for aid to Myanmar.

Irrawady (13 June 2012)

Vietnam banking ReformTimeline

Vietnam

05 VIETNAM bANkING REfORM IN

TROUblE

After a rigorous decade of banking

reforms, many of Vietnam’s banks

are weighed down with toxic loans

and poor governance, economists

have warned. Many of the country’s 42 banks are

overloaded with toxic debt, the majority

of which went to badly-run state-owned

enterprises and speculative property

investments

This has hit the broader economy —

credit lines have all but dried up which

has affected small and medium businesses

particularly badly with some 18,000 going

bankrupt this year alone

“The government needs to take over the

weakest banks, merge them, sell off the bad

debt and then resell the merged bank”, said

Jonathan Pincus, a Ho Chi Minh City-based

economist from the Harvard Kennedy

School’s Vietnam programme

The government’s current reform plan

relies on voluntary mergers from the

private sector to improve liquidity by

having those with healthy balance sheets

absorb those in trouble, but many banks

are hiding the true state of their balance

sheets, Pincus explained

AFP (13 June 2012)

ASEAN

06 REAl EsTATE sECTOR sEEs

sTRONG GROwTH

The growth of ASEAN’s real estate

market is quickly becoming the

interest of foreign investors from

Europe, the Middle East and America,

however the region would still need

to harmonise its tax and regulations

to improve ease of doing business. Foreign investors are interested in frontier

markets such as Myanmar, Cambodia and

Laos, said Suphin Mechuchep, Managing

Director of Jones Lang LaSalle Thailand

These markets need to develop finance

infrastructure to handle the inflow of

capital in order to optimise on expertise

and develop the real estate industry

Several factors that attribute to the

growth of the region’s market is increased

urbanisation and growing affluence, but

industry success will hinge on how the

governments invest in infrastructure,

reform land ownership laws, and the talent

pool for real estate professionals

New Straits Times, Gulf News (15 June 2012)

Sources: Federal Reserve Bank of San Francisco , ASEAN Economic Bulletin, Asia Economic Institute

18 22 0606 ‘12 ‘12

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: Angela Goh, Manissa van Geyzel, Han Fang Rong, Chayut Setboonsarng, Manoj Nair

Consultant Editor: Tunku ‘Abidin Muhriz Designer: Iqbal Hakim

ASEAN, Thailand, Indonesia

ASEAN, China

Indonesia

US, ASEAN, Cambodia, Thailand

09

1008

07 bUdGET

HOTEls TAkE

AsEAN

lANGUAGEs IN

INdONEsIA: ClAMpING dOwN ON

CONsUMpTION AT wHAT COsT?

Us ANd AsEAN

sTRENGTHEN TIEs

A growing middle class and a

booming budget airline industry are

giving a boost to budget hotels and

hospitality markets in Asia. Global hoteliers such as Accor,

InterContinental Hotels Group, and Marriot

International are expanding in Indonesia

and India’s hotel markets for first mover

advantage

Budget hotels offer basic rooms and

occupy the space between a guest house

and a boutique hotel

Pattaya, a popular Thai destination, is

experiencing double digit growth in room

occupancy as the city received seven

million visitors last year, up 66% from 2010

Indonesia’s domestic tourism jump from

seven million to 122 million tourists is also

on investors’ radars

Reuters, TTR Weekly (14 June 2012)

Universities and colleges in China’s

Yunnan province, which borders

Myanmar, Laos, and Vietnam, will

begin teaching ASEAN languages to

students. The scheme involves all of the province’s

28 universities and colleges and 100,000

students will be taught Southeast Asian

languages by 2015

The demand for graduates with Southeast

Asian languages is expected to rise, as

ambitious transport infrastructure projects

link Yunnan with the region, analysts note

Kunming, Yunnan’s capital, is expected

to be connected via a high-speed railway

network to Vientiane, Bangkok, Kuala

Lumpur and Singapore, by 2015

Why it matters: With high economic

growth in ASEAN countries, and continued

economic problems in China’s markets

in the West, preparing graduates for a

push towards Asia is considered to be

strategically important

University World News (14June 2012)

The Indonesian central bank is

putting in place new regulations

for automotive financing which

will see consumers pay higher

downpayments for vehicles while

making purchases on credit. Policymakers want to ensure that the

country’s current growth continues,

even at the risk of temporarily curtailing

consumption, one of its biggest drivers,

with the aim of mitigating the risks of a

repeat of the 1998 crisis

Buyers will also have to pay a higher

amount upfront while purchasing a house

The foreign ministers of Thailand

and Cambodia held meetings at the

US State Department with Secretary

of State Hillary Clinton where they

discussed the future of American

engagement in ASEAN. Foreign Minister Surapong

Tovichakchaikul and Clinton discussed

political, security, and economic

cooperation and the commitment the two

countries share to promote peace, security,

and prosperity throughout the Asia-Pacific

The senior delegation met on 13 June in

Washington DC where Clinton declared

the US would support Thailand assuming

a leadership role in the region, but was

concerned about Bangkok’s political

uncertainty

Not only are these measure expected to

put a strain on consumers’ finances, there

are fears that demand in these sectors may

be affected

“At the margins, you’ll definitely see some

demand affected”, said Todd Lauchlan,

country head for Jones Lang LaSalle

“We don’t want [anything] to happen

to our economy or our credit financing.

[because] that will affect the banks that we

have been safeguarding since the last crisis

in 1998”, said Difi Johansyah, spokesman

for Bank Indonesia

BBC (14 June 2012)

Clinton also met Cambodia’s foreign

minister, Hor Namhong, on the same day

and said that the US would be attending

the ASEAN Regional Forum in Phnom Penh

Meanwhile, US Ambassador to ASEAN,

David Carden, addressed a group of

lawyers and legal experts in Phnom Penh to

increase legal and judicial cooperation with

ASEAN

Why it Matters: Thailand, Vietnam,

and the Philippines emphasise security

cooperation with the United States and

as Chinese financial assistance grows

in Mekong area countries, ASEAN is

increasingly part of a geopolitical great

game

Ministry of Foreign Affairs (Thailand)

The Bangkok Post, The Phnom Penh Post

(14 June 2012)

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CHINA sCHOOls