Download - CARI Captures Issue 116 (11 Mar 2013)
CARICAPTURES
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EU-ASEAN DISCUSS TRADE AND INVESTMENT
EU, ASEAN
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EU Trade Commissioner Karel De Gucht met with trade ministers from ASEAN to discuss strengthening trade relations between the regions at the ASEAN-EU Summit 2013. The EU has concluded a free trade deal with
Singapore, is currently negotiating one with
Despite its mineral resources potential, a survey from the Fraser Institute found that Indonesia placed last out of 96 jurisdictions surveyed, dropping 11 places from 2012. The loss in confidence was driven by
political instability and uncertainty concerning
environmental regulations, administration,
and interpretation or enforcement of existing
regulations
Indonesia fared the worst in terms of policy
potential in the industry
Given current regulations and land use restrictions
in place, Indonesia ranked 81st in terms of mineral
potential, dropping 8 spots from 2012
In the best case scenario where Indonesia adopts
industry “best practices”, the country would be
the third most attractive place to set up a mining
business
The survey found that recent policy changes
have resulted in the marginalisation of foreign
investors despite foreign capital accounting for
70% of investment in the sector
The survey was done to assess the attractiveness
of doing business in certain jurisdictions,
considering mineral potential and institutional
constraintsThe Jakarta Globe (2 March 2013)
Fraser Institute (28 February 2013)
Malaysia, and hopes to start negotiations with
other partners from the region
Meanwhile ASEAN and Germany agreed to
stronger cooperation in projects at an ASEAN-
Germany cooperation review last week
ASEAN-Germany cooperation projects
cover environment and climate change,
regional economic integration, and capacity
development
To date, Germany has contributed
approximately US$91.6 million to ASEAN
projects and activities
Philippine Information Agency (5 March 2013) New Europe (6 March 2013)
Indonesia
INDONESIA: THE WORLD’S LEAST ATTRACTIVE PLACE
TO DO BUSINESS IN THE MINING SECTOR02
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.
FROM LAOS TO BRUNEI WITH LOVE
Laos, Brunei
A Philippine clan leader’s attempt to revive the territorial claims of a defunct Islamic sultanate in Sabah appears to be falling apart. After launching airstrikes and mortar shells
in a remote part of the island of Borneo amid
failed negotiations, Malaysian security forces
combed the conflict zone in attempts to
flush out the gunmen who call themselves
the Royal Army of the Sultanate of Sulu
With his followers engaged in a deadly
game of cat and mouse with Malaysian
Malaysia, Philippines
MALAYSIA UPS ANTE ON SABAH STANDOFF04
03Laos is optimistic on more trade
with Brunei and concluding the
Code of Conduct (CoC). Laos is looking into setting up a barter
trade agreement with Brunei where both
countries exchange their locally produced
goods, particularly oil and gas (from Brunei)
and agricultural products (from Laos)
The Brunei monarch recently said the
firm friendship between Brunei and Laos
is hallmarked by practical cooperation in
education and defence
The Brunei-Laos Business Forum was held
earlier this month to encourage business
exchanges and strengthen economic ties
between the two countries through their
respective Chambers of Commerce and
Industry
Laos Vice-Minister for Foreign Affairs
Bounkeut Songsamsak said as chair of the
10-nation bloc, Brunei has a responsibility
of maintaining regional peace and stability,
TIMELINE OFSABAH STORY
Source: Compiled from various sources
and expressed confidence that Brunei can
conclude a CoC on the South China Sea
Brunei’s Second Minister of Foreign Affairs
and Trade said Brunei is keen to have
“something concrete to sign” by the main
ASEAN summit in October; a feat which
could prove a diplomatic coup for ASEAN’s
smallest member
The Brunei Times (2 March 2013)The Brunei Times (3 March 2013) The Brunei Times (3 March 2013)
security forces in the villages and palm oil
plantations of Sabah, the self-proclaimed
Sultan of Sulu called for a cease-fire after the
UN urged for an end to the violence
Malaysia promptly rejected the proposal
and instead called for an unconditional
surrender
The situation intensified following reports
that other Filipino fighters, sympathetic to
the sultanate’s cause, are joining the group
in Sabah despite efforts by Malaysia and the
Philippines to tighten sea patrols in the area
Manila asked Malaysia to ensure humane
treatment of the Filipinos while instructing
the National Bureau of Investigation (NBI)
to prepare “airtight” cases against the royal
family
Opposition leaders criticised the Najib
administration for its weak response to the
crisis and called for the convening of an
emergency Parliament sitting
The Malaysian Insider (5 March 2013)The Malaysian Insider (6 Mavrch 2013)
CNN (8 March 2013)
Industry experts call for greater
competitiveness as crude palm oil
(CPO) prices dip. CPO prices have been decreasing since
the third quarter of last year following global
economic slowdown, including lower demand
from China
Palm Oil Refiners Association of Malaysia
(Poram) CEO Mohammad Jaaffar Ahmad said
Indonesia’s move to lower export duties on
refined oils and fats in 2011 had further eroded
Malaysia’s export competitiveness in palm oil
The industry as a whole is also facing strong
competition from the world’s other 16 edible
oils and fats
While government initiatives to enhance
the competitiveness of the palm oil industry
were done – including a restructuring of the
export duty on CPO and providing replanting
The rise of Indonesia’s middle class can turn the archipelagic state into
Asia’s next big opportunity. Boston Consulting Group (BCG) said
Indonesia’s middle class may reach 141 million
people in 2020, almost double its current
amount of 74 million
The increase would be the biggest boom
anywhere in the world outside of China and
India, with more than 8 million Indonesians
entering the consumer class each year
Purchasing power is expected to rise
rapidly to IDR 2 million (US$ 206) for monthly
household needs as consumption trends shift
from essentials to products that offer facilities
and comforts, such as longer lasting household
appliances, electronics, cars and financial
services
BCG estimates that 52 cities or regions will
be home to more than 500,000 middle and
affluent middle class by 2020, up from the
current amount of 25
Eddy Tamboto, BCG Jakarta partner
and managing director, said that the rising
Indonesian middle class needs to be balanced
with a more equitable spread of enterprises in
the region
Indonesia’s middle class is also one of the world’s
most optimistic, with just over 90% of Indonesians
surveyed saying they felt financially secure – well
above those surveyed in India and the US
Nomura was even more bullish on the rise of
Indonesia’s middle class
The Jakarta Globe (6 March 2013) Wall Street Journal (5 March 2013)
Malaysia
Indonesia
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07incentives earlier this year – downstream
palm oil players have called for greater reform
measures, including a call to abolish the duty
free quota on crude palm kernel oil (CPKO)
and waive the 5% duty on refined, bleached
and deodorised palm kernel oil (RBD PKO)
Jaafar said the move would benefit
downstream oleochemical and specialty fats
manufacturers who will be able to procure
CPKO from the market at 10% cheaper pricing
With tracts of palm oil plantation land in
Sabah cordoned off in the stand-off between
Malaysian armed forces and armed insurgents,
concerns have surfaced that planters could
suffer a disruption in earnings if the month-
long siege continues
Live Trading News (28 February 2013)Business Times (4 March 2013)Business Times (5 March 2013)Business Times (6 March 2013)
SIZE OF MIDDLECLASS BY US$3,000 CRITERIA
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: CEIC
Stock
Production
Tonnes (millions)
Source: Nomura Global Economics, CEIC, World Bank
INDONESIA
BULLISH ON
MALAYSIAN INVESTMENT SOARS
BUT FDI FALLS
MALAYSIA TO GET OUT OF PALM
OIL BLUES
MIDDLE CLASS
Of Malaysia’s RM162.4 billion in investment in 2012, the split between foreign and domestic investment was 22:78, prompting concern about the sharp drop of FDI in the country, said Alliance Research Economist, Manokaran Mottain Of the 22%, Japan led at RM2.8 billion,
followed by Saudi Arabia at RM2.6 billion,
Singapore at RM2.2 billion, China at RM2 billion
and Korea at RM1.6 billion
Investment approved was in 6,442 projects,
expected to generate 365,682 jobs in the
Malaysia
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primary (1.7%) sectors
Mottain said most of the investments were in
new technologies, particularly within aerospace,
semiconductors, solar, machinery and
equipment, petroleum products and medical
devices
Many believe that Malaysia’s growth, which
Mottain expects to remain at 5% in 2013, will
continue to be driven by domestic demand as
global uncertainties from the US and EU persist
Borneo Post (4 March 2013)
PALM OIL PRODUCTIONIN MALAYSIA
integration and regional solutions for global resilience.
Irrwaddy (2 March 2013)
Parliamentarians have given support to the government’s plan to apply for membership of the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards that could help settle international business disputes arising in the country. They said joining the agreement would boost foreign investment in Myanmar. Until now, Myanmar’s courts do not recognise or enforce decisions reached through international arbitration.
Irrwaddy (6 March 2013)
The Ministry of Defence’s budget provision of more than US$2.6 billion for the fiscal year of 2013-14, or almost 21% of the national budget, was approved at Parliament on 1 March. The military received around 25% of the national budget last fiscal year.
Mizzima (4 March 2013)
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
Thailand’s Mae Sot authorities met a Chinese delegation last week to discuss plans for the proposed special economic zone on the Thai-Myanmar border. The visit followed the government’s recent decision to develop the district into a special economic zone ahead of the ASEAN Economic Community (AEC) in 2015.
Mizzima (4 March 2013)
Trade between Malaysia and Myanmar in 2013 is forecast to top US$1 billion for the first time. This follows a 27% jump in exports to Myanmar by Malaysian firms in 2012, which totalled US$700 million. Overall trade between the two countries last year totalled US$884 million. Malaysian firms invested over US$1 billion in Myanmar in 2012.
Irrwaddy (2 March 2013)
The World Economic Forum (WEF) on East Asia will centre on Myanmar’s reforms. The main theme of the forum is “Courageous Transformation for Inclusion and Integration” and its sub-themes are inclusive transformation, regional
Myanmar’s inflation rate is 1.95%, while the country has some US$77 billion in circulation, according to official data announced by Minister of Finance in parliament on 4 March. Budget deficit for the 2012-2013 fiscal year was about US$3 billion. Total revenue was around US$14 billion but total expenditure was around US$17 billion. GDP in Myanmar is currently US$59 billion.
Mizzima (7 March 2013)
The nearly century-old Burma Companies Act will be revamped and an online system for registering companies will be installed with assistance from the Asian Development Bank, the director-general of the Investment and Companies Registration Department said. The ADB will contribute US$150,000 to the online system.
Eleven Myanmar (5 March 2013)
08 MYANMAR MONITOR
ECONOMY
POL I T I CS
Source: World Bank
CAMBODIA EXPECTED TO
BECOME LOWER-MIDDLE-INCOME
Cambodia
Cambodia expects its GDP per capita to increase to US$1,080 from US$1,000 by December 2013, moving it to the lower-middle-income bracket, according to Prime Minister Hun Sen. Cambodia is currently classed as a low-
income nation
09 THAILAND
BRACES FOR
The world bank’s lower-middle-income
bracket is between US$1,006 to US$3,975
President of the National Assembly,
Heng Samrin, pointed out that Cambodia’s
economy is projected to grow 7% while
poverty rates should decline by 1%, in 2013
Global Times (4 March 2013)
NATURAL GAS
DISRUPTION
Three Thai utilities managed to boost electricity reserves by 68% to 1,291 megawatts, easing concerns over possible electricity outages during a scheduled disruption to natural gas
supplies from Myanmar next month. The increase is attributed to private sector
efforts to lower electricity use
For example, The Siam Cement Group said
it plans to cut power consumption by 100
megawatts by rescheduling production at its
factories
If shortages do occur, Energy Minister Pongsak
Raktapongpaisal said all sectors will be able
to cut power usage more drastically, boosting
reserves by a further 45% to 1874 megawatts
Authorities have also reached an agreement
to buy 200 megawatts from Malaysia’s Tenaga
Nasional Bhd. (TNB)
Piyasvasti Amranand, a former energy
minister, said gas accounts for 45% of total
energy consumption and 70% of power
generation, and its share is expected to increase
in the transport and industrial sectors
He added that Thailand needs to diversify its
sources of fuel in power generation to avoid
the impact of higher cost of natural gas and
strengthen energy security
Bangkok Post (6 March 2013) Bangkok Post (5 March 2013)Bangkok Post (5 March 2013)
Thailand
NATION BY END OF 2013
ECONOMIC MILESTONES OF ASEAN COUNTRIES