Click icon to add pictureWashington State Export Destinations 2011 Value (Millions) % Share

Top 25 Markets and % Share of State Total $56,669 87.5

1 China 11,233 17.3

2 Canada 8,547 13.2

3 Japan 6,468 10.0

4 Korea, South 3,261 5.0

5 United Arab Emirates 2,753 4.3

6 Hong Kong 2,079 3.2

7 United Kingdom 2,017 3.1

8 Turkey 1,760 2.7

9 Australia 1,718 2.7

10 Taiwan 1,715 2.6

11 Indonesia 1,587 2.5

Asian Markets as Share of Washington State Exports = 46 % Worth over $26 billion in 2011

16. Singapore, 1.5% 19. Malaysia, 1.3% 22. Philippines, 1.2% 24. India, 1% Source: US Census Bureau

CHINA – 2012 IN REVIEW

Leadership Transition Slowing economic growth Local government debt situation Falling real estate prices Debt problems, slower growth,

weak export demand Increased outbound investment Continued friction in the South

China Sea

CHINA – 2012 ECONOMIC GROWTH

NEW POLITBURO STANDING COMMITTEE

President Xi Jinping Premier Li Keqiang

Zhang Dejiang Yu Zhengsheng Liu Yunshang Wang Qishan Zhang Gaoli

CHINA – 2013 OUTLOOK

Economic growth stable

Exports remain depressed

Real estate prices declining

Debt problems slow growth

Continued emphasis on innovation

Increased outbound investment

Continued friction in the South China Sea

OVERALL SLOWING ECONOMIC GROWTH

-1

0

1

2

3

4

5

6

7

8

Optimistic Base Pessimistic Optimistic Base Pessimistic

Total Factor Productivity

Capital Contribution

Labor Composition

Labor Quantity

Percent growth, y-o-y

Sources: The Conference Board Global Economic Outlook 2013, https://www.conference-board.org/data/globaloutlook.cfm?

2013-2018 2019-2025

CHINA – GROWTH AREAS IN 2013

Planning for Demographic changes Renewable energy Online retailing Infrastructure Construction / real estate Pollution mitigation and control Clean and green food products +

investment in overseas agriculture Expanded acquisition of overseas

resources

CHINA – 2013 RISK FACTORS Diaoyutai / Senkaku Conflict

Pollution

Corruption & Anti-corruption efforts

Rising costs

Economic inequality

Bankruptcy of some smaller cities

Growth of unregulated lending sector

INDONESIA’S PERFORMANCE: 2012 IN REVIEW

Source: Bank of Indonesia

2012 HIGHLIGHTS

Indonesia Financial Services Authority

(OJK) formed

Moody’s upgrades sovereign

credit rating to investment

grade: Baa3 from Ba1 (Outlook: Stable)

Central Bank

lowers BI rate to 5.75%

(from 6%)

Largest contract in

commercial & Boeing history: Lion Air order of 230 Boeing 737 airplanes worth $22.4

billion

Garuda named “Best International

Airline”

Foreign exchange

reserves hits highest level

(2012) of $114.93 billion

S&P affirms sovereign

credit rating at BB+

(Outlook: Positive)

Jakarta elects new Governor Joko (Jokowi) Widodo (snubs

political establishment)

McKinsey releases

“Unleashing Indonesia’s

Potential Report”: Now 16th. 2030,

could be world’s 7th

largest economy,

surpassing Germany &

UK)

Indonesia tops Nielson

Global Consumer Confidence Survey (Q3 2012) with

score of 119, (alongside

India).

Fitch affirmed

sovereign credit

rating at BBB-

(Outlook: Stable)

Indonesia, as next APEC

Chair, announces 2013 logo &

theme: Resilient Asia-Pacific –

Engine of Global Growth

January

January 18

January

February

February

April

April 23

September

September

November

November 21

December

GOOD BUT LOWER PERFORMANCE: WHY?

•Crisis in Europe & recession in US

•Instability in Middle East & Africa

•Slower economic growth in emerging countries esp. China & India

•Trade imbalance with declining exports (& burgeoning imports)

Global economic uncertainty

•Overburdened airports: Jakarta’s CGK at beyond capacity past 6 years

•Poor condition of ports: Unable to keep up with economic growth

•Bad roadways, bad traffic; floods

•Poor connectivity between towns/cities/regions

•Policies & regulations deemed as hindrance to businesses

Weak infrastructure &

high logistics costs

Government initiatives

Strong domestic consumption driven by emerging middle

class

Influx of investments

• Master Plan MP3EI (2011- 2025): Economic development• Master Plan MP3KI (2011- 2025): Poverty reduction• Tax incentives

• Highest contributor to economy: ≅ 2/3 of GDP • 240 million (World’s 4th most populous nation)• 45 million consuming class (to to 135 million in 2030)• Robust consumer confidence with surge in government & private sector

projects

• Second biggest contributor: ≅ 30% of GDP• Regaining of investment grade: Fitch in Dec. 2011 & Moody’s in Jan. 2012 • AT Kearney FDICI: Ranked #9 in the world (from 19 in 2010) • 2012 realization may top $31 billion (Rp. 300 trillion), a record

OUTLOOK FOR 2013 POSITIVE

Annual GDP growth target set at 6.8 % (BI forecast: 6.3% - 6.8%)

Domestic consumer demand 65% of GDP = less vulnerable to Europe & US drag

Fitch: Affirmed RI’s investment grade at BBB- (stable outlook); boost joining BRICS

Investment realization targeted to increase to Rp. 390.3 trillion (FDI $29 billion)

Household consumption (to 5.8 – 6.3%) & investment (to 10%) will continue to drive growth

Govt set inflation rate assumption at 3.5% - 5.5%

Government to hold BI rate steady at 5.75% (since March 2012)

Per capita income rising & middle class growing (to expand to > ½ total population)

Oil & gas investment to increase: $26.2 billion: 274 work plans & budgets approved

Exploding gas demand = efforts to reduce exports + expand downstream capacity

Sales of capital goods, including machine tools, will rise 8% to $27 billion

RISKS & CONCERNS

Endemic corruption/Judiciary a

problem: 118 in list of 176 countries (Transparency International)

Rising inflation from domestic fuel subsidies &

power tariff hike

Weak institutions & bureaucratic

inefficiencies: 128 out of 185 globally

(World Bank’s Doing Business)

Political uncertainty: 2014 elections

Infrastructure congested & inadequate to support

growth; respond to natural disasters

Lack of institutions with strong capital structure to finance planned projects

Crisis in developed world: Threaten exports,

foreign liquidity, investment growth

Emerging trend of trade deficits fueling current

account deficits & hurting the Rupiah

Under-developed HR: Low-skilled workforce + Minimum pay increase

not matched with increase in productivity

REASONS TO BE OPTIMISTIC + OPPORTUNITIES

Master plans to guide development & growth:

Impetus for change

Relative political & economic stability:

Conducive to business

Strong & growing domestic demand: Fuel growth, limit exposure

to external shocks

Poverty reduction means growing middle

class

Growing middle class means better qualified

workforce & bigger market

Positive investment outlook thanks to strong economic fundamentals

Abundance of fertile land & natural

resources

Financial markets poised for volatility:

Stock market to maintain good performance

Financial stability: Investor confidence evident in influx of capital investment

PUBLIC DEBT BURDENS (% OF GDP)

AT KEARNEY 2012 FDICI