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Laos (Asia Monitor - South East Asia Vol 1)

Mon, 28 Nov 2011 00:00 GMT

Japan and Germany are the latest foreign countries to strengthen bilateral ties with Vientiane. The Japan International Cooperation Agency is looking to aid Laos in adopting a low-emission public transport system in order to tackle the surge in demand for transport and the problems such as congestion and pollution that have come alongside rapid economic growth. Meanwhile, Germany has gifted Laos with EUR6mn with the aim of bolstering the sustainability of the forestry industry and is fast becoming one of Laos's major aid donors. We believe that the warming of political ties is a precursor towards greater private investment into

Pakistan (Asia Monitor - South Asia)

Fri, 03 Feb 2012 00:00 GMT

According to a report by the Free and Fair Election Network, the 38th or second to last sitting of the National Assembly in its fourth parliamentary year only lasted six days, from December 15 to December 22, with the house remaining in session for a total of only ten hours. The report also stated that Pakistan's legislative body left 44% of its agenda unaddressed. To be sure, the inefficiency of the country's legislative process does not come as a complete surprise to us. Indeed, according to our short-term political risk ratings, Pakistan scores a low 43.3 (out of 100) in the policy-making process subcomponent.

Macroeconomic Forecast India (Asia Monitor - South Asia)

Fri, 03 Feb 2012 00:00 GMT

Purchasing managers indices (PMI) for the month of January came in much stronger than expected, posing upside risk on our end-FY2011/12 (April-March) real GDP growth forecast of 6.8%. Manufacturing PMI came in at 57.5, up from 54.2 in December, marking the second straight month of increase. Meanwhile, services PMI ticked up for the third consecutive month, with the figure coming in at 58.0; also up from 54.2 in the previous month. While the recent spate of positive data has undoubtedly been encouraging, we highlight that export growth figures, credit growth trends, and various leading indicators still paint a gloomy picture of the economy.

Sri Lanka (Asia Monitor - South Asia)

Fri, 03 Feb 2012 00:00 GMT

Citing problems of credibility, the country's minority Tamil political party - Tamil National Alliance (TNA) - rejected the government's investigation into the civil war. Furthermore, the TNA stated that the government failed to implement its interim recommendations made over a year ago. Overall, the TNA charged that the government-appointed Lessons Learnt and Reconciliation Commission (LLRC), which was established to look into accusations of human rights violations and recommend reconciliatory measures, fell short of international standards. In our view, the TNA's rejection will unlikely shake the foundation of the ruling government, which remains highly popular in the public's eyes.

Hong Kong (Asia Monitor - China & North East Asia)

Thu, 03 Feb 2011 00:00 GMT

Hong Kong's Financial Secretary unveiled a HKD80bn budget for 2012/13 intended to soften the adverse impact of a global slowdown on the city's economy. Among the measures are a whole suit of tax cuts, coupled with public housing rent relief and a pledge to increase land supply. While we acknowledge that the measure may help to attenuate the downward pressure on the economy from the global slowdown, we note that these measures are mainly for short-term relief and are unlikely to provide any boost to economy's growth prospects beyond the budgeted period.

India (Asia Monitor - South Asia)

Fri, 03 Feb 2012 00:00 GMT

While the government's decision to allow full foreign ownership in the country's single-brand retail sector is a positive step towards economic liberalisation, we highlight that the presence of restrictive conditions will continue to cause problems for firms planning to enter the sector. In particular, we highlight Ikea's decision to withhold its entry, as the company cited the requirement to source 30% of goods from local businesses as a cause for concern. Although the government may find it politically difficult to ease restrictions even further, we highlight that the recent downturn in investment activity could force the government's hand.

Indonesia (Asia Monitor - South East Asia Vol 2)

Fri, 27 Jan 2012 00:00 GMT

The House of Representatives may debate until March a new law on elections, and one point of contention in particular will be the minimum vote percentage that a political party must receive in order to join Parliament. While smaller parties will have a vested interest in calling for the lowest threshold possible, currently 2.5%, larger parties claim that a threshold of 5.0% would help to streamline the law-making process and provide for a more efficient government. There are currently nine different political parties in the Indonesian House, but based on the 2009 election results there would only be six if the threshold were doubled from 2.5% to 5.0%.

Rebound Set For An About-Turn In H112 (Asia Monitor - China & North East Asia)

Thu, 02 Feb 2012 00:00 GMT

The recent uptick in Hong Kong's Q411 real GDP growth is likely to reverse in the first half of 2012. Weakening external demand conditions should see Hong Kong's exports take a hit. Meanwhile, the correction in the domestic real estate market is likely to gather pace through 2012, having ramifications on consumption and investment spending. Consequently, we have revised our 2012 forecasts and now see real GDP growth slowing to 2.2% from a previous estimate of 3.0%

Macroeconomic Forecast Pakistan (Asia Monitor - South Asia)

Fri, 03 Feb 2012 00:00 GMT

Headline consumer price inflation (CPI) came in at 10.1% y-o-y in January, up slightly from 9.7% in the previous month. Similarly, wholesale price inflation edged higher to 8.7% y-o-y, from 8.3% previously. The uptick in the headline rate was mainly due to an increase in the cost of utilities, with utilities inflation rising from 6.4% y-o-y to 7.7% in January. While the latest data poses upside risk on our end-FY2011/12 (July-June) CPI forecast of 9.0%, we maintain that recent money supply trends still point towards further disinflation. Broad money (M2) growth came in at 12.4% y-o-y in November, well below the 18.2% high in August.

South Korea (Asia Monitor - China & North East Asia)

Fri, 03 Feb 2012 00:00 GMT

The ruling Grand National Party (GNP) has renamed itself the Saenuri Party in a bid to improve its election fortunes ahead of legislative elections in April. Following the emergence of a number of scandals, the party's recent defeat in Seoul's mayoral elections and a widening wealth disparity in the country, public confidence in the Saenuri Party has been waning. While the party has introduced a number of reforms, we still believe that being pro-chaebol and pro-business are likely to remain the party's guiding principles and we are unlikely to see any changes in this respect over the longer

POLITICAL RISK - New Framework For Working Seniors (Asia Monitor - South East Asia Vol 2)

Fri, 27 Jan 2012 00:00 GMT

Singapore implemented a new Retirement and Re-employment Act on January 1. The Act is expected to be implemented smoothly following four years of work by the government, unions and employers. The Act will help workers who are able and willing to work beyond the retirement age. A 2011 labour force survey revealed that 61.2% of workers between the age of 55 and 64 are still working, compared with 59% in 2010. The changes to the Act came following a 2009 report of higher average life expectancy of Singaporeans at 81 years.

Macroeconomic Forecast Bangladesh (Asia Monitor - South Asia)

Thu, 02 Feb 2012 00:00 GMT

Remittance growth jumped from -9.0% y-o-y in November to 18.4% in December, with the monthly inflow hitting a record high of US$1,147.2mn in the last month of 2011. The total amount of remittances in the first half of the current fiscal year (FY2011/12, July-June) stands at US$6.1bn, marking a 9.3% increase from the US$5.6bn recorded in the first half of FY2010/11. The latest figure poses downside risk on our forecast for net transfers to increase by 10.6% this fiscal year to US$13.4bn. That said, we note that the ongoing strength of manpower exports should keep remittance inflows well supported.

Bangladesh (Asia Monitor - South Asia)

Thu, 02 Feb 2012 00:00 GMT

Businesses across the country have expressed concern over the deteriorating law and order situation in the capital city of Bangladesh - Dhaka - as 18 cases of murder, five jewellery heists, and several incidents of mugging were recorded in January. However, the Dhaka Metropolitan Police (DMP) has dismissed these concerns, stating that Dhaka's situation only 'fluctuated' during the month. DMP Additional Police Commissioner Abdul Jalil Mandol told The Financial Express that criminal activity normally increases during the winter season and that the police have stepped up their efforts accordingly. Should the situation deteriorate even further, it would certainly put added pressure on the Awami League-led government.

Macroeconomic Forecast Sri Lanka (Asia Monitor - South Asia)

Thu, 02 Feb 2012 00:00 GMT

Headline inflation hit a 26-month low of 3.8% y-o-y in January, falling sharply from 4.9% in the previous month. Meanwhile, core inflation remained unchanged at 4.7% y-o-y. The current spate of disinflation continues to be on the back of falling food inflation, which hit -0.2% y-o-y in January, down from its peak in April 2011 of 14.3%. Indeed, non-food inflation saw an increase in the beginning of the year, with the figure rising from 7.0% y-o-y in December to 7.4%. The latest data poses downside risk on our 2012 year end consumer price inflation forecast of 4.1%.

India Eyes Expanded Involvement, Post-2014 (Asia Monitor - South Asia)

Tue, 31 Jan 2012 00:00 GMT

BMI View: India is increasing its involvement in Afghanistan in preparation for the departure of most foreign combat troops at the end of 2014. New Delhi's main interest is to undermine the influence of its arch-rival Pakistan, but it will also seek to counterbalance the role of China. Nonetheless, India will struggle to achieve its objectives, especially since it does not plan to deploy ground troops.