16 JULY 20 12 I SSUE 85

CARICAPTURES

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ASEAN, Latin America

02

01

Reaching out to Latin ameRica

aSean meeting BReaKS DoWn

ASEAN is deepening trade and

investment ties with Latin America

where economic growth remains high

despite a global slowdown. Opening the ASEAN-Latin Business

Forum in Jakarta on 9 July, Indonesian

President Susilo Bambang Yudhoyono

pointed out that the two regions shared

similar characteristics: large populations,

growing economies and major commodity

production

Susilo also urged the business community

Indonesia Pledges US$1 Billion to IMF

Indonesia confirmed a US$1 billion

loan to the International Monetary

Fund (IMF). The IMF has said it needs

US$430 billion to support countries

in financial trouble. The pledged

loan from a developing country such

as Indonesia is an indication of the

changing economic fortunes around

the world. With a troubled relationship

in the past, the Indonesian government

has moved to de-politicise the issue by

funding the loan through the central

bank. The proposed loan encountered

some resistance earlier as critics said

the IMF’s conditional loans during the

country’s financial crisis in 1998 further

crippled Indonesia.

Voice of America (10 July 2012)

ASEAN, China

ASEAN failed to reach consensus

on 13 July as splits over territorial

disputes with China prevented

the issuing of a customary joint

statement for the first time in the

bloc’s history. The Philippines and Vietnam wanted the

statement to include a reference to the

recent standoff between China and the

Philippines at a shoal in the South China

Sea claimed by both countries, ASEAN

Secretary-General Surin Pitsuwan said

The Philippine Department of Foreign

Affairs blamed host Cambodia, a close

ally of China, for “consistently opposing

any mention of the Scarborough Shoal

at all” and for announcing that a joint

communique cannot be issued

China warned nations this week to avoid

mentioning the territorial spats during the

ASEAN meetings and repeated calls for joint

development

ASEAN had hoped to solidify a code of

conduct – outlining protocols for ships’

behaviour within the area – that would then

be negotiated with China

Meanwhile, Japan plans to host a special

summit with ASEAN late next year to

strengthen maritime security cooperation at

a time when China is rapidly expanding its

naval capacity in Asia, government sources

said on 11 July

Japan and ASEAN are to issue a joint

communique to serve as a new guideline for

boosting maritime security ties and map out

a subsequent action plan

Why it matters:

The discord over the South China Sea

could adversely affect future ASEAN-

China negotiations, said analysts.

According to the Wall Street Journal,

while ASEAN has proved modestly

successful at bolstering economic ties

among its members, now it purports

to aspire to much more, including

still closer economic and security

integration. A failure to take a firm stand

on questions involving the sovereign

territory of its members undermines that

goal, discredits the organisation, and

emboldens Beijing.

It may also mark a setback for the US’

agenda in the region, which includes

Chile, efforts to bolster ASEAN so that

it can more effectively resist China’s

expanding influence in the region.

to use existing frameworks of cooperation

to boost connectivity such as the Forum for

East Asia-Latin America Cooperation and

ASEAN-MERCUSOR

The Alianza del Pacífico or the Pacific

Alliance trade bloc which includes Chile,

Colombia, Mexico, and Peru, has officially

invited Indonesia and ASEAN to join the

group as an observer

The combined economies under the

bloc amount to the world’s ninth largest

economy with total exports representing

55% of Latin America’s overall exports

Continued next page

Wall Street Journal, AFP, Bloomberg, Kyodo

(13 July 2012)

16 20 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.

Malaysia, Indonesia, Thailand

Singapore

0403 FoRecaSting

gRoWth

SingapoRe ReStRictS

FoReign pRoFeSSionaLS

ASEAN’s lucrative insurance industry

is attracting increasing attention

from regional and global players. Gross direct premiums are expected to

reach US$4.48 billion in 2012 and rise to

US$5.49 billion in 2015, according to the

Malaysia Rating Corporation, a full-service

ratings agency, which released its forecasts

in a research note in June

Matt Harris, the CEO of Chartis Malaysia,

the local branch of the international insurer,

expects the syariah-compliant Islamic

insurance segment – known as takaful – to

continue to grow strongly

Malaysia’s KSK Group plans to boost

its insurance businesses in Indonesia and

Thailand, both developing markets with

large populations and growing middle-

income groups

Insurance Australia Group plans

acquisitions worth around US$102 million in

Indonesia, one of its target markets, and to

double gross written premium contribution

from Asia to 10% by 2016.

Earlier this month, Britain’s Prudential

and Canada’s Manulife opened offices in

Cambodia

Oxford Business Group, The Star, Reuters

(11 July 2012)

Singapore is imposing stricter rules

for families of foreigners working

in the city-state and tightening its

immigration policies after public

disquiet over the influx of overseas

workers. Starting 1 September foreign workers

seeking to sponsor their spouses and

children to accompany them in Singapore

will need a minimum monthly income of

US$3,150 up from the current US$2,206

The average wage of Singapore residents,

including non-citizen permanent residents,

is US$2,560, according to government

statistics

Residents blame the relatively open

immigration policy for high living costs and

a widening income gap

The government is under pressure to

placate voters without disrupting the

arrival of talent and labour

Why it matters: The issue of foreign

workers contributed to the ruling party’s

worst performance since independence in

last year’s general election

Wall Street Journal (10 July 2012)

in inSuRance

inDuStRy

Singapore population: citizens vs Foreigners

The ASEAN-Latin Business Forum will

now be an annual event and the next one

will be held in South America

Meanwhile, Latin America has developed

a dangerous dependency on China as a

voracious consumer of commodity exports

and the region now faces a potential hit as

the huge Asian economy cools

Why it matters: With the slowdown in the

US and European markets, ASEAN has to

look for new markets outside its traditional

partners

Channel News Asia, Jakarta Post, Reuters

(11 July 2012)

16 20 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

monitoR05

ASEAN, China, India

07 aLL BetS on SoutheaSt aSia

Southeast Asia is looking more as

safe haven than a risky bet, with

foreign investors souring on China

and India. Assets managed by offshore mutual

and exchange traded funds dedicated to

Southeast Asia rose to more than US$26

billion in March, according to an analysis of

Lipper data

“Today, India and China are the places

where people are looking for beta (risk)

and Indonesia and Thailand are the places

where people are hiding”, said Rajesh

Ranganathan, a portfolio manager at Hong

Kong-based hedge fund Doric Capital,

which has invested in Southeast Asia for

over a decade

Southeast Asian companies are also

aggressively investing in energy, financial

and retail firms worldwide – for example,

Petronas’ acquisition of Canada’s Progress

Energy Resources and Thai state-owned

PTT Exploration & Production’s bid for UK-

based Cove Energy

Asian banks have been fast to acquire

businesses of European banks when they

are up for sale and experts expect more

of such deals as more European banks are

expected to divest their assets to raise

capital as the European debt crisis deepens

Why it matters: Short-term investors

in Southeast Asian stocks and bonds are

being overtaken by those with a longer-

term horizon, signalling growing confidence

in ASEAN

Reuters, Wall Street Journal, Today

(11 July 2012)

Economy

US President Barack Obama announced

on 11 July that the US is formally easing

financial sanctions, issuing two general

licenses that authorise new investment

in Myanmar and the export of financial

services to the country, but they do not

however allow any transaction with the

military or the defence ministry.

Wall Street Journal (11 July 2012)

Myanmar officials called for consultants

to help organise a telecoms bidding

process that would open the new market to

foreign businesses. The bidding is seen as

a major opportunity for international firms

to provide mobile phones to the estimated

96% of the country’s near 60 million

people.

AFP (10 July 2012)

International Data Corporation’s latest

report predicts a 15% year-on-year growth

in IT spending this year, with the market

reaching US$268.45 million by 2016.

The Irrawaddy (29 June 2012)

Myanmar’s central bank is poised to gain

independence to set monetary policy,

its deputy governor said, in the planned

second wave of reforms

IDC (9 July 2012)

At least eight foreign airlines have

planned to resume flights to Myanmar

after several years of suspension. They are

Japan’s All Nippon Airways, Qatar Airways,

Sri Lankan Airline, Bangladesh’s Biman

Airlines, Hong Kong Express Airways,

Pakistan International Airlines, Korean Air

and Taipei-based EVA Air.

Global Times (7 July 2012)

Politics

Myanmar’s military nominated the former

general U Myint Swe, who has close ties to

the country’s previous military junta, to be

the country’s new vice president. This is a

disappointment to those who had hoped to

see a known reformer replacing Tin Aung

Myint Oo who resigned last week due to

health reasons.

Wall Street Journal (10 July 2012)

Myanmar’s President Thein Sein said that

the military had no role in the government.

He however added that the country has

had to rely on the military for a very long

time and it was important to not leave

them behind entirely.

Reuters (11 July 2012)

Financial Times profiles Thein Sein, a son

of poor peasants leading his country away

from the authoritarian regime

Financial Times (11 July 2012)

Malaysia

06high conSumeR DeBtS in

maLaySia

Malaysians are among the worst

credit card re-payers in the Asia-

Pacific region, according to the

Nielsen Global Survey of Investment

Attitudes. Less than half of respondents in Malaysia

polled online said they repaid their credit

cards debts in full every month

Given this, Malaysia has one of the lowest

repayment rates among the developing

markets that were surveyed

Singapore and Indonesia fared much

better with 80% and 59% respectively,

while only Vietnam came off worse than

Malaysia at 27%

The highest repayment rate was in

Taiwan, followed by Japan and South Korea

The Star (12 July 2012)

16 20 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, Chayut Setboonsarng

Consultant Editor: Tunku ‘Abidin Muhriz Designer: Iqbal Hakim

Indonesia, Philippines

09

10

aSean connectivity gainS tRaction in

inDoneSia, phiLippineS

pRomoting eneRgy eFFiciency thRough eDucation

Pilot projects to implement ASEAN

connectivity for people and goods

are underway in Batam, Riau Islands,

while the Philippines plans to

spend a record US$9.6 billion on

infrastructure in 2013. Pilot projects in Batam include the

Roll-On Roll-Off ferry and flight routes to

ASEAN countries

There are currently five passenger ferry

terminals linking Batam with Malaysia and

Singapore, serving about 5,000 passengers

per day, according to the Batam Free Trade

Zone Management Board chief, Mustofa

Wijaya

ASEAN

ASEAN

08can aSean nationS FoRm a community By 2015?

With concerns over the eurozone and

the future of European Community,

many in the region question the

viability of the ASEAN Economic

Community (AEC). There is the challenge of compliance

(doing what we say we will do) and the

challenge of impact (getting the outcomes

we said we would), according to Rebecca

Fatima Sta Maria, secretary-general of

Malaysia’s International Trade and Industry

Ministry

The AEC is now in its third (2012-2013)

of its four phases of implementation and

to date, close to 70% of the AEC measures

under phases one and two have been

completed

Intra-regional trade continues to grow

and now amounts to 25% of ASEAN’s

global trade of US$2.1 trillion

ASEAN has been growing over 5% per

annum in recent years

More difficult tasks are still ahead as the

grouping confronts the liberalisation of

the sensitive sectors in trade, investment

and services as well as in economic sectors

such as transport, agriculture, tourism and

finance

The Star (4 July 2012)

Mustofa invites other airlines to link

Batam to ASEAN states such as the

Philippines and Thailand

In the Philippines, connectivity is also

underway as budget secretary Florencio

Abad said it plans to spend 19% more for

infrastructure in 2013

Jakarta Post, The Star (10 July 2012)

Energy and education experts from

US and ASEAN have devised a long-

term plan to address regional energy

issues through education at higher

learning institutions. The US Department of Energy along with

40 other energy and education experts met

at a workshop in Phnom Penh to share best

practices and latest developments from

the US

By 2020, the pressure on ASEAN’s energy

supply for 650 million people would be

enormous and it would be crucial to begin

addressing tomorrow’s regional energy

issues today through education, Phyllis

Yoshida the US Department of Energy said

The US-ASEAN Energy Efficiency Educa-

tion Workshop was jointly organised by the

US Department of Energy, ASEAN-US, the

ASEAN Energy Centre, and the Ministry of

Industry, Mines and Energy of Cambodia

ASEAN Secretariat (10 July 2012)