cari captures issue 46 (19th sept 2011)
DESCRIPTION
Captures is CARI’s weekly news monitoring report, each time presenting the top 10 stories affecting ASEAN.TRANSCRIPT
19 SEPTEM BER 20 1 1 I SSUE 46
CARICAPTURES
1
4
8
25
9
3
7
6
10
BETA
01
Datuk Sri Nazir Tun Razak, Chief
Executive of CIMB Group highlighted
the need for Asian integration
through intra-Asian trade and
investments to foster economic
NAZIR CALLS FOR GREATER
ECONOMIC INTEGRATION
AMONG ASIAN COUNTRIES
ASEAN
growth, citing the example of the
ASEAN Economic Community in
his speech at the Malaysia-China
Trade and Investment International
Conference 2011 in Kuching, Malaysia.
Efforts to promote Asian integration
highlighted by Nazir included an ASEAN
exchange to list the region’s largest companies
and a strengthened financial architecture
through a pan-Asian ratings agency
Integration plans, such as in the ASEAN
equity markets, must be supported by
stakeholders to have an impact
Lower credit ratings in China and India,
compared to default-risky Spain and
Ireland, are increasing the cost of raising
capital for Asian banks and eroding their
competitiveness
The Borneo Post (13 September 2011)
02
ASEAN
SINGLE
MARKET “MAY
DESTROY”
TRADITIONAL
FISHING
Indonesia’s local communities are
contesting the plan to build an
ASEAN Economic Community (AEC)
due to concerns that the free trade
area will threaten the livelihoods of
traditional fishermen, a vulnerable
group with poor access to technology
and capital.
Indonesia
An alliance of NGOs, under the heading
Coalition for Global Justice, filed a judicial
review of the 2008 Law on ASEAN Charter
Ratification, which they claim is the first step
to realising a regional free market
Abdul Halim, a community rights activist
from the Fisheries Justice Coalition said
the AEC will marginalise traditional fishing
communities and protection efforts are
needed such as establishing a strong
upstream-downstream fishing industry,
improving fishing equipment and offering
wider access to much-needed financing for
diversification
Fish harvests are declining as fishing
grounds become shallow from coastal
reclamation, a lack of equipment for deep
water fishing, and rising operational costs
The Jakarta Post (14 September 2011)
13 1909 09‘11 ‘11
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.
04
03
Thailand, China
BANK OF
THAILAND
PLANS TO BUY
YUAN DESPITE
RISKINESS
The Bank of Thailand was approved
by China to invest RMB 7 billion
in China’s onshore interbank bond
market but will not include these
investments in its reserves because
the yuan is not fully convertible. Investment in the yuan has become easier
as more yuan-denominated bonds, totalling
RMB115 billion (US$18 billion) in 2011, are
being issued and institutions being granted
quotas to invest onshore
Holding the yuan is considered risky
because China limits the conversion of
the yuan for investment purposes, but it is
expected to achieve full convertibility by 2015
“One of the steps to internationalise
renminbi is to allow more central banks to
hold renminbi as part of their reserves” (Brian
Baker, Chief Executive Officer, Pimco Asia)
Yim Fung (Chief Executive Officer, Guotai
Junan International Holdings) says using the
yuan as a reserve currency is not realistic
because of a lack of investment channels for
the yuan
Bloomberg (9 September 2011)
EXPORTERS TO BE AFFECTED
BY NEW BANK INDONESIA RULE
Indonesia
Indonesian businesses may be required
by Bank Indonesia to repatriate foreign
earnings into domestic bank accounts,
adding US$31.5 billion worth of foreign
liquidity into the Indonesian economy.
The regulation is likely to be finalised within
September 2011
Economists believe the regulation is a
preemptive move by Bank Indonesia to allow
the economy to weather economic shocks
and maintain liquidity
The rule will result in foreign exchanges
to the rupiah, strengthening the currency
and undermining the competitiveness of
Indonesia’s exports in palm oil, tin, and coal
Ambar Tjahyono (Chairman, Indonesian
Furniture Entrepreneurs Association) said
exporters prefer to denominate earnings in
foreign currencies because of the rupiah’s
volatile exchange rates and difficulty in
converting foreign earnings into rupiah
Ade Sudrajat (Chairman, Indonesian
Textile Association) said the inflow of export
earnings due to the new regulation will result
in a more stable rupiah
The Jakarta Post (12 September 2011)
Cooperation agreements between
Indonesia and Vietnam in rice and
fisheries, and between Indonesia and
Thailand in agricultural research and
development is set to improve food
security throughout ASEAN. Cooperation areas identified by Vietnam
and Indonesia include a framework on rice
INDONESIA-THAILAND-VIETNAM COOPERATION TO
ENHANCE ASEAN FOOD SECURITY
trading, boosting of rice production and
identifying joint fishing areas for Indonesia
and Vietnam, with the aim of becoming
ASEAN’s leading provider of rice and fish
Susilo Bambang Yudhoyono (President,
Indonesia) said Indonesia is also looking to
leverage on Thailand’s advanced agricultural
technologies by enhancing investment
cooperation in research and development
Suswono (Minister of Agriculture, Indonesia)
said ASEAN will establish a charter on emergency
food reserve procurement in October 2011 to
improve ASEAN food security
ASEAN+3 food reserves stand at 780,000
tonnes, with 12,000 tonnes provided by Indonesia,
to be used for members’ emergency needs
The Jakarta Post (15 September 2011)
05Indonesia, Thailand, Vietnam
13 1909 09‘11 ‘11
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.
07
06
ELECTRICITY CONSUMPTION IN ASEAN (GWh)
The Filipino Department of Energy
expects savings of 191,000 megawatt-
DOE SEES US$ 46.2 MILLION IN
SAVINGS FROM ASEAN INITIATIVE
Philippines, ASEAN
hours of electricity, equivalent to PHP2
billion (US$46.2 million) when the
The Philippines’ participation in
ASEAN’s regional stock trading
system has been boosted after the
Securities and Exchange Commission
settled regulatory issues that could
hinder the scheme. Four bourses – the Philippine Stock
Exchange, Singapore Stock Exchange, Stock
Exchange of Thailand and Bursa Malaysia – will
be the initial participants in the ASEAN Trading
Link, which will be launched in Q1 of 2012
Electronic interconnections will allow
cross-border stock trading, one of the steps
in the wider plan to set up the ASEAN
Economic Community
It was decided that as the link is merely an
electronic connection and not an exchange,
it will not be subject to licensing rules
The issue of whether foreign stocks also
need to be registered with the SEC was also
clarified, with the regulator adopting the
recommendation that securities to be traded by
local brokers under the ASEAN Link be exempted
The issue of whether foreign brokers need
to apply for special licenses, meanwhile,
will be rendered moot if they tie up with a
Philippine partner
The same will apply with regard to the
distribution of research materials: foreign
investment advisors will not be subject to
licensing requirements if they distribute
through a local broker
Still to be settled is the issue of dispute
resolution and enforcement
Business World Online (19 September 2011)
REGULATOR
PAVES
WAY FOR ASEAN
TRADING LINK
Malaysia’s palm oil exports for the
rest of 2011 will be flat at best with
a negative outlook for next year as
refiners are at a price disadvantage
after No.1 producer Indonesia
slashed refined palm oil export taxes,
a top industry official said. Indonesian palm oil refiners will enjoy
a price advantage of between US$72 to
US$129 per tonne against Malaysian refiners
when the change becomes effective on 15
September 2011
While Malaysia does not tax its processed
palm oil exports, its costs have risen due to
tight crude palm oil supplies that it usually
supplements with imports from Indonesia
With Indonesia more than halving its
refined palm oil export taxes and keeping
crude palm oil taxes virtually unchanged,
Malaysia, Indonesia
MALAYSIAN PALM EXPORTS TO
SUFFER AS INDONESIA TAKES
TAX CUT ADVANTAGE
more of the edible oil will get channelled to
its plants, limiting supply for Malaysia and
raising feedstock costs
More Indonesian crude palm oil will be refined
locally, rather than exported to countries like
Malaysia for refining as Indonesia’s crude
palm oil export taxes remain unchanged
Mohammad Jaaffar Ahmad (Chief Executive
Officer, Palm Oil Refiners Association of
Malaysia) predicts no short-term shutdown
in Malaysia’s palm oil refining capacity of
22.9 million tons in 2010, but smaller refiners,
unable to operate profitably, may close in
the longer term
Mohammad says that with almost 70% of
the Malaysian palm oil market at stake, the
government will have to react fast to save
MYR60 billion (US$20 billion) worth of industry
The Jakarta Post (14 September 2011)
08
Philippines
measures in the ASEAN Energy
Management Scheme (AEMAS) are
implemented. The Philippines launched AEMAS in July 2011,
spearheaded by the participation of San Miguel
Yamamura Packaging, Texas Instruments, and
Toshiba Information Equipment
The Philippines expects to train 500 energy
managers to implement the AEMAS over the
next four years
Philippine Daily Inquirer (13 September 2011)
13 1909 09‘11 ‘11
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.
1009The Ministry of Transport should accord
MASWings the rights to operate within
the Brunei-Indonesia-Malaysia-
Philippines East Asean Growth Area
(BIMP-EAGA) , including Brunei, to
fill the existing vacuum, said Sarawak
Tourism and Heritage Minister Datuk
Amar Abang Johari Tun Abang Openg. MASWings is yet to gain approval from
Malaysia’s Transport Ministry for its proposed
Kuching-Bandar Seri Begawan route, despite
gaining approval from Brunei’s government
Brunei and Sarawak have no air
connections, following Royal Brunei Airlines’
cancellation of the Kuching-Bandar Seri
Begawan route in mid 2011
POLITICS STILL IN THE WAY OF
INCREASED MOBILITY IN ASEAN?
Malaysia, Brunei
GLOBAL
INVESTMENT
BANKS EXPAND
IN INDONESIA
Indonesia
Major financial institutions such as
Goldman Sachs, Morgan Stanley,
Bank of China, Credit Suisse, and
ICBC are increasing their Indonesian
presence because of the country’s
stellar economic performance, despite
the uncertainty surrounding Indonesia’s
ownership limit for foreign banks. Goldman Sachs and Bank of China are looking
to expand into Indonesia via local acquisitions,
while Morgan Stanley, Credit Suisse and ICBC
continue to expand its already present
Indonesian operations
Foreign firms must compete with state
owned security firms such as Mandiri Securities
and Danareksa which are able to win business
from locally-dominant state enterprises and
have close links with regulators
Financial Times (13 September 2011)
Datuk Wee Hong Seng (Chairman, BIMP-
EAGA Malaysia Tourism Council) said the
slow decision from Malaysia’s Transport
Ministry is unrelated to the policies of the
other three BIMP-EAGA members
Abang Johari said Malaysia’s Transport
Ministry must look into the requirements of
Sarawak and Brunei within the BIMP-EAGA
context in their decision
In another development, a bridge across
the Pandaruan River on the Malaysia-Brunei
border will finally be built to complete the
1,800km-long Pan Borneo Highway
The bridge is an important crossing as it
facilitates daily travel between Sarawak,
Brunei, and Sabah
The Star, Malaysia (12 September 2011)