ASEANREGIONAL

CARI CAPTURES • ISSUE 135

CARICAPTURES

With the government caving in

to pressure from farmers, the

highly controversial Thai rice

subsidies are here to stay after

costing the government US$4.4

billion in 2012.

Thailand currently has enough

ricestockstosatisfytheglobal

demand for rice for 6 months;

howeverthestaplegrainisbeing

smuggledintothecountryfrom

neighbouringcountriessuchas

CambodiaandMyanmar

Th is i s because the Tha i

government is paying r ice

producersinthecountrydouble

thepriceelsewhereintheregion

as a part of its rice subsidy

scheme and traders are trying

to takeadvantage.Asa result,

01

over750,000tonsofmilledrice

issmuggledintoThailandeach

year

TheThaigovernmenthasbeen

buyingriceathighpricestohelp

farmersanditstoresittorestrict

the supply of rice. The plan

was to use Thailand’s position

as the leading exporter of the

grain to push up global prices

andrecoverthelossesfromthe

higherpricepaid

Theplanbackfiredand instead

othercountriesmovedtofillthe

void left by Thailand and the

countryhassincelostitsnumber

one position, dropping below

IndiaandVietnam

22 JULY 2013

The Star (15 July 2013)Bloomberg (11 July 2013)

THAI RICE UPDATE

TheThaigovernmentsubsidyartificiallyincreasesdemandfor

riceinThailand,whicheffectivelyreducestheamountofrice

inneighbouringmarketsdue,restrictingsupply.Thisleadsto

higherricepricesintheneighbouringcounties.

Arise in thepriceof ricegreatlydiminishesthepurchasing

powerofhouseholdsintheregion.Thisalsocreatesgreater

inequalitysincelesswell-offhouseholdsarelikelytospenda

greaterpercentageoftheirincomeonnecessitiessuchasrice,

sothepriceriseaffectsthemmorethanwell-to-dohouseholds.

Thedecisiontomaintainthepolicy,duetopressurefromspecial

interestgroups(farmers)alsohasimplicationsfortheASEAN

EconomicCommunity (AEC).TheAEC ismeant topromote

free trade and competitive markets but with governments

cavingtopressuretomaintainthesepoliciescouldsetback

AECimplementationorreducetheultimateeffectivenessof

thecommunity.

THAILAND

$$

THE JOURNEY OF SMUGGLED RICE INTO THAILAND

FARMERS AND TRADERS IN NEIGHBOURING COUNTRIES GROW/ PURCHASE RICE

SEEING THE PRICE THEY WILL RECEIVE THEY EXPORT IT INTO THAILAND

$$1 2 3

CAMBODIAN AUTHORITIESTURN A BLIND EYE TO THE SMUGGLING

THE BORDERS WITH THAILAND HAVE MULTIPLE POORLY EQUIPPED ENTRY POINTS

4

5

NICERICE

THAI RICE100%

AT THE FARMING VILLAGES, IT IS

PASSED OFF AS THAI GRAIN

6

THE THAI GOVERNMENT PURCHASES THE GRAIN AND STORES IT IN WAREHOUSES

THE RICE IS SMUGGLED ACROSS THE BORDER

USING VILLAGE CARTS THEN LATER WITH

TRUCKS TO THAI FARMING VILLAGES

CARI CAPTURES • ISSUE 135 22 JULY 2013

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. 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.

291370918 123456789 010110

SINGAPORE & MALAYSIA’S HOUSEHOLD DEBT TO THE PERCENTAGE OF THEIR GDP

02003 2004 2005 2006 2007 2008 2009 2010

2

4

6

8

10

12

% O

F G

DP

SINGAPORE

MALAYSIA

New York Times (July 16 2013)Capital Press (July 16 2013)

US FIRMS MOVE INTO ASEAN MARKETS04

US government attempts to

increase their influence in the

region echoed by US private

sector players such as McDonalds.

The Obama administration has

playeda significant role in the

Malaysia and Singapore have

recorded high levels of consumer

debt wh ich cou ld threaten

stable growth in the two ASEAN

countries.

Singapore’s household debt

ratio has increased to 77.2%

of the gross domestic product

of Singapore which is second

only to Malaysia’s 82.9% ratio,

growing at 11.5% per year. The

rise was due to asset inflation

in the real estate markets and

strong credit growth in the

countries

A u t h o r i t i e s f r o m b o t h

countries are takingactions to

reduce the debt. Singapore’s

monetary authority increased

new frameworks restr ict ing

banksfrommakings loanswith

payments greater than 60% of

income in a time period. It is

recentSouthChinaSeadispute,

lookingtocementtheirinfluence

and relationships within the

region

This move into the region has

occurred concurrently with

several US based firms also

02 CREDIT ECONOMIES, PILES OF DEBT

DEFENDING THE DONG: VIETNAM VOWS INTERVENTION03

Bloomberg (11 July 2013)Bloomberg (14 July 2013)

Vietnam’s currency has been

under pressure from capital

outflows and weakening exports

as the country tries to turns its

economy around.

TheVietnameseDonghasafixed

exchangerate,allowedtofloat

within1%oftherate,whichthe

central bank lowered in June

peopleawayfromholdinggold

including making the central

bank the only legal importer

of gold and banning interest

paymentsongolddeposits

forthefirsttimesince2011.The

Vietnamcentralbankdismissed

thepossibilityofdevaluingthe

Dongandpledgedtodefendthe

currency

DeputyGovernorLeMinhHung

also noted that the bank has

significant foreign reserves in

whichitcantapintoinorderto

defendtheDong

Asparttheplantostabilisethe

Dong thegovernment is trying

toweanVietnameseoffstoring

theirwealthingold.Thedemand

forgoldencouragesimportersto

sell Dong in order to purchase

goldfromabroadwhichplaces

downward pressure on the

currency

Vietnamismakingmovestosteer

CNBC (14 July 2013)Bloomberg (7 July 2013)

Singapore Business Review (17 July 2013)

VIETNAM

VIETNAM

shifting their focus into the

ASEANmarketwithMcDonalds

enteringtheVietnammarket

ThePhilippineshasalsoopened

its borders to US fresh table

stock potato imports. This is

in recognition of Philippines

as the fastest growing ASEAN

market and steady growth of

US chipping imports by the

Phil ippines reaching almost

US$38million

MALAYSIA SINGAPORE

An economist from Credit

Suisse said that if interest

rates rose then households

wil l have less disposable

incomeanddomesticdemand

could take a hit as a result.

This could cause a major

slowdownsinceconsumption

represents 40% of the

Singaporeaneconomy

Thehigh levelsofsovereign

or government debt is seen

as harmful to the economy

due to the costly interest

payments however most

governments can maintain

debtswithoutsignificantrisk

(seeissue132)

Householdsdon’thavecontrol

over their incomeormoney

supply l ike governments,

makingthemmorevulnerable

toeconomicshocks sohigh

householddebt(evenifitis

much lower than sovereign

debt levels) could be much

more det r imenta l to a

country’seconomy

also forcing banks to consider

alloutstandingdebtcarriedby

the individual before issuing a

newloan

Malaysia’scentralbankcut the

maximumdurationuntilmaturity

ofloansbyupto15yearsinorder

tohelpcurbexcessivelendingin

thecountry

USA

Source: CIMB Research 2009

CARI CAPTURES • ISSUE 135 22 JULY 2013

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. 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.

Bursahasbeenoversubscribed

by12.98times

MALAYSIA AND INDONESIA RIDE OUT THE STORM05

A CHINK IN THE ARMOUR06

Singapore’s Positive Economic

f igures undermined by poor

exports.

Despite Singapore exceeding

Indonesia and Malaysia Palm Oil

industries buoyant as increased

demand runs down inventories.

Despitetherecentdipinpalmoil

prices,demandandtheoutlookBloomberg (July 15 2013)

The Star (July 17 2013)

INDONESIA

SINGAPORE

downgraded the outlook of

Singapore’s three main banks

from“stable”to“negative”

forthiscommodityisontherise

Nationalinventoriesintheregion,

particularly in Malaysia and

Indonesia, are being depleted

as demand in those countries

pick up due to the increased

Channel News Asia (17 July 2013)Channel News Asia (17 July 2013)

recent growth forecasts, poor

exportnumbershavesuggested

adeeper,underlyingissue

Domesticexportsfell8.8percent

inJunemorethantheexpected

6percentcontraction

According toanalysts, thiswill

have a crippling effect on the

growthintheregion

Credit rating agency Moody’s

ASEAN TRANSPORT DEVELOPMENT07

ASEAN calls for multi-country

tourism strategy.

ASEAN has urged the tourism

industry to create a more

regionalfocus,developingmulti

countrypackagestoencourage

intra-ASEANtravel

Aninitiallistof20touroperators

have begun offering mult i-

country itineraries covering

severalASEANcountriespertripBusiness Inquirer (14 July 2013)

The Nation (17 July 2013)

TheThailandTourismandSport

Ministry has also projected

strongtourismrevenuegrowth

for2015

These revenue numbers, also

reflected across other ASEAN

consumptionbroughtonbythe

MuslimmonthofRamadhan

This positive pick up has been

genera l ly ref lected across

regionalsecuritiesmarkets.The

recentRanhillEnergyIPOonthe

ASEAN

countries, show the resilience

ofthisindustryinatimeofpoor

globaleconomicperformance

MALAYSIA

MONTHLY TOURIST ARRIVALS TO ASEAN

Malaysia

Thailand

Indonesia

Vietnam

Cambodia

Singapore

Myanmar

Laos

Brunei

2,376,295

2,259,237

725,316

 587,366

385,760

133,900

88,250

n/a

n/a

2013

2013

2013

2013

2013

2013

2012

-

-

COUNTRY YEAR ARRIVALS

Sources: STB, MTPB, TAT, VNAT, IMCT, MTPB, PDT

CARI CAPTURES • ISSUE 135 22 JULY 2013

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. 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.

Cambodian showdown looms after Sam Rainsy pardon.

SamRainsyhasbeenpardonedofcrimesthatheinsistswerepoliticallymotivated

Scheduled to return to Cambodia on Friday to spearhead the opposition party’s election

campaignagainstcurrentPrimeMinisterHunSen

PrimeMinisterHunSenwasinitiallyopposedtothepardonbuteventuallychangedhismind,

allowingRainsytoreturntoactivepolitics

INDONESIA, REDUCING THE GENDER GAP10

Indonesia penalises parties in fight for women.

Indonesiahas takenefforts topenalisepoliticalparties that fail tomeeta requirement for

femalestomakeupatleast30percentofcandidatesintheelection

Measurestoimprovegenderequalityandwomen’sempowerment

Indonesia has slipped in the World’s Economic Forum’s rankings due to a decline in the

numbersofwomeninministerialpositions.

Females currently hold roughly 19 percent of the 560 seats in Indonesia’s lower house of

parliament

Editorial Team: Sóley Ómarsdóttir, Aaron Tan, Gokul Radhakrishnan Designer: Hizzad Dinno Consultant Editor: Tunku ‘Abidin Muhriz

MYANMARMONITOR08

Bloomberg (17 July 2013)

INDONESIA

ECONOMY

Myanmar has been busy this weekpushing through laws in order toimprove and create key financialinstitutions. President Thein Sienapproved a bill which increases theautonomyoftheMyanmarcentralbank.Themoveisexpectedtohelpgrowthebanking sector in theeconomymorequickly. The country is also close topassinganew lawwhichwill set thegroundworkforanewstockexchange.Theexchangewillbethefirststepinthecreationofaliquidequitiesmarketinthecountry.

Irrawaddy(12July2013)International Business Times (17 July 2013)

POLITICS

On 15 July, President Thein Sienannouncedthatallpoliticalprisonerswill be released by the end of theyear.TheannouncementcameduringameetingwithBritishPrimeMinisterDavidCameroninLondonasPresidentSientravels inordertobuildsupportfor reforms in Myanmar. However,Amnesty International reported thatthesamedayoftheannouncementaRohingyahumanrightsdefenderwasarrestedarbitrarilybecomingthelatestprisonerofconscienceinthecountry.This highlights the huge amount ofworkthatisstillneededtobringlastingreformtothecountry.

Amnesty International (17 July 2013)

New York Times (15 July 2013)

Myanmar disbanded a controversialborder protection force known asthe Nasaka. The force was notoriousfor human rights offences againstthe Rohingya Muslims which it wassupposed to be serving. In addition,allegationsofcorruptionhavemarredthe force with the former head ofthe Nasaka being sentenced oncorruption charges last year. UnitedNationsSpecialRappourteurforHumanRightsTomásOjeaQuintanasaidthathewelcomedthedecisiontodisbandthe force. However, he added thatthereshouldalsobeaprobeintotheabuseofpowerandthoseresponsibleshouldbeheldaccountableinordertoreestablishconfidencetheruleoflawinthecountry.

Reuters (15 July 2013)United Nations News Centre (16 July 2013)

Morethan20Buddhistsweresentencedfor murder and other crimes in thewakeofawaveofanti-Muslimviolencesweeping through Myanmar. Thosesentencedfacedupto15yearinprison.Theviolencehasclaimedcasualtiesonboth sides, however themajority areMuslimandthereisasenseof‘unequaljustice’asthemajorityofthesentencedhave been Muslim. The governmenthascomeunderheavycriticismbothinternallyandexternallyabouthowithandledthereligiousviolenceanditsseemingunwillingnesstoputastoptotheclashes.ManyhavelosthomesandlivelihoodsintheworsteffectivestatesandmanyMuslimsreporthavingtoberelocatedtogovernmentapartments.Also,curfewsandmovementrestrictionsonRohingyaMuslims,whicharemeanttokeepthemsafe,arepreventingmanyfrom accessing healthcare and otherservices.

New York Times (12 July 2013)Irrawaddy (13 July 2013)

Mizzima (16 July 2013)

CAMBODIA’S POLITICAL RACE INTENSIFIES09

The Diplomat (14 July 2013)

CAMBODIA

ASEAN

R E P R E S E N T A T I O N O F W O M E N I N P O L I T I C S

LOWER OR SINGLE HOUSE

UPPER HOUSE OR SENATE

56.3

25.4

25.0

24.4

22.9

22.2

20.3

18.2

15.8

10.4

3.5

0.3

0.0

Rwanda

Bolivia

Laos

Vietnam

Philippines

Singapore

Cambodia

Indonesia

Thailand

Malaysia

Myanmar

Yemen

Saudi Arabia

1

37

39

43

50

54

62

73

81

109

134

142

143

45 / 80

33 / 130

33 / 132

122 / 500

65 / 284

20 / 90

25 / 123

102 / 560

79 / 500

23 / 221

14 / 395

1 / 301

0 / 150

38.5

47.2

n/a

n/a

13.0

n/a

14.8

n/a

15.4

21.5

1.8

1.8

n/a

5/13

17/36

n/a

n/a

3/23

n/a

9/61

n/a

23/149

14/65

2/109

2/111

n/a

% OF SEATS HELD

COUNTRYRANK NUMBER OF SEATS

HELD

% OF SEATS HELD

NUMBER OF SEATS

HELD

Source: www.guardian.co.uk