News Briefing - November 18, 2008

ASEAN

Political News

• The UN FAO urged ASEAN governments to ensure poor have access to staple crops in 2009.

Business News

• The Singapore Exchange proposed the creation of an integrated Asian stock market.
• Leaders at the ASEAN summit are expected to institutionalize the proposed $80 billion regional fund agreed to at the ASEM summit in October.

Indonesia

THEMES

Effects of the Financial Crisis

• Sri Mulyani believes Indonesia’s economic growth may fall to 5% next year due to the global economic slowdown.
• SBY attended the G-20 meeting in DC to settle an emergency plan to counter the global financial crisis. He indicated that he thought it would take another meeting or two to fully iron out the plan.
• SBY has sought to hold accountable countries responsible for the financial crisis by calling for new funds for disbursement to less developed nations adversely affected by the crisis.
• The central bank plans to limit the purchase of foreign currencies above $100,000 only to those who can provide underlying transactions, to balance demand and supply in the foreign exchange market, reduce extreme pressure to the rupiah and minimize foreign exchange purchase for speculative means.

Coal News

• Bakrie may change the terms of its sale in Bumi to Northstar after Bumi’s share price plunged 50%. Bumi also plans to raise $600 million by issuing medium-term notes to help fund a share buyback plan.
• BP Migas signed contracts with four consortiums to develop coal bed methane in Kalimantan, with investment totaling $20.3 million.
• PLN is experiencing a coal supply shortage affecting its power plants. The government plans to issue a new regulation next month requiring coal producers to set aside part of their production to meet domestic consumption of up to 60 million tons a year.

ExxonMobil News

• BP Migas confirmed that floating storage offshore project in Cepu Block will proceed, saying the fall in oil prices make the project more economical.
• An official from the information and communication office of Bojonegoro said there is an initiative among Team 9 members to return the money to Exxon to help clear Cepu Block land. He provided no further details.
• The mediation process failed between ExxonMobil and the company’s former employees over a compensation dispute. The case will go to court.

The 2009 Election

• Elections supervising bodies have begun probing a number of political parties running lavish ad campaigns after being unable to trace back money deposited into their accounts. According to the elections law, a political party must submit a financial report and list its bank accounts and giving explanations of sources.
• The Indonesia military has pledged to remain neutral during the 2009 elections and plans to punish any personnel who do not comply.
• The United Development Party will support SBY and Jusuf Kalla in next year's presidential election.

ADDITIONAL NEWS

Political News

• East Java gubernatorial candidate Soekarwo and his running mate Saifullah Yusuf won by a narrow margin over pre-election favorites Khofifah Indar Parawansa and her running mate Mudjiono. Khofifah complained to the Constitutional Court for alleged vote rigging. The hearing process began on Monday.
• The Corruption Court sentenced former BI legal bureau chief Oey Hoey Tiong and former BI governor bureau chief Rusli Simanjuntak to four years in prison each and fined them $16,810 each for embezzlement of $8.8 million from BI funds in 2003.
• House of Representatives legislators admitted Wednesday they accepted money from fellow politicians on trial for graft, such as Hamka Yandu, but said they did not know why they received it or whether it was related to the BLBI scandal.
• Former justice and human rights minister Yusril Ihza Mahendra has announced his willingness to be questioned by the AGO over his alleged involvement in a $33.9 million graft scandal at the ministry.
• Family members of senior officials implicated in a $33.6 million corruption scandal at the Justice and Human Rights Ministry received part of the stolen money. The family members had no relation to the project at the root of the scandal.
• The National Police announced the detention of a stock market broker for allegedly spreading rumors by email about a deposit run on certain banks, which led to brief panic and put the country’s banking health into question.
• The Supreme Court upheld the Corruption Court's sentencing of former Judicial Commission member Irawady Junus to eight years in jail for accepting bribes to facilitate a land acquisition deal with a recently convicted landowner totalling $78,889.
• Legislator Yusuf Erwin Faishal admitted to receiving a total of $56,561 in alleged bribes to push for approval from the House of Representatives for the conversion of a protected forest in South Sumatra.

Business News

• Pertamina plans to divest 60% of its participating interest in Natuna Block-D Alpha oil field to several other companies. The company will maintain a 40% stake and remain the major holder of interest in the block.
• The recent publicity over a graft allegation involving Pertamina, concerning the import of Zatapi crude oil, may stem from a dispute within the company's top officials over procurement contracts. It is unlikely the situation would be investigated if it had not conflicted with the interests of top company officials.
• The Indonesian government has signed 33 cooperation contracts to develop oil and gas blocks worth $91.8 million.
• Rumor has it that Energi Mega Persada expects to get $550 million from the divestment of its 50% shares in Kangean Block, EMP’s largest asset.
• Local steel manufacturers may have to soon shut down their operations indefinitely unless government limits steel imports and forces state companies to purchase locally made products. Steel imports have taken a heavy toll on the domestic industry because some products can cheaply imported.
• Tren Mobile TV Consortium and Telkom Consortium Group have been selected to test mobile TV after they successfully won the tender. It is expected the consortium will submit their frequency allocation proposal by November 24.
• Several network operators qualifying for the tender for the USO project are reviewing their service sustainability strategies in these blocks.
• It was announced that all network providers, not only cellular providers, are allowed to enter the USO tender.
• The AGO expects to encounter difficulties while probing alleged graft in Indover, and believes issues over jurisdiction and witness will be the main obstacles.
• The Indonesian Bond Pricing Agency is collaborating with an unnamed Malaysian company to make IBPA the first bond-pricing agency in Indonesia.
• Jambi’s provincial and municipal administrations signed a carbon trade agreement with an Australian investor in an attempt to preserve the area’s forests and increase regional revenue.

Malaysia

THEMES

Effect of the Financial Crisis

• Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz and Malaysian economist Jomo Kwame Sundaram have been appointed members of the United Nations’ high-level task force to examine possible reforms of the global financial system.
• The government plans to attract greater foreign investment to cushion against the economic slowdown by relaxing rules in the manufacturing and construction sectors, which account for more than 30% of the domestic economy.

UMNO News

• The ACA plans to begin charging more people over money politics in UMNO, and are already compiling evidence in some of the 900 reports from the recent UMNO divisional and branch meetings.
• Following allegations made by Mahathir that money politics were involved in the UMNO deputy president race, several UMNO members have asked for evidence because otherwise it is only speculation.
• The Wanita UMNO transition plan was thrown into doubt after Kamilia Ibrahim announced she would contest the deputy head post, though the plan is for there to be no contest for the top two posts. Shahrizat Abdul Jalil said she would decide soon whether to defend her post or move up by contesting against Tan Sri Rafidah Aziz.

Internal Security Act

• Theresa Kok had her statement on the azan issue recorded for the first time since her ISA detention. She has denied allegations that she told mosque officials in Kota Damansara, Sri Serdang and Puchong Jaya to tone down the call to prayer, as have the mosque officials.
• One week after a protest against the ISA took place at Padang Timur, opponents of the act organized another demonstration at the Petaling Jaya Civic Centre. Approximately 100 hundred protestors were involved.

ADDITIONAL NEWS

Political News

• Ong Tee Keat has appointed Wong Foon Meng as MCA’s new secretary-general, Tee Hock Seng as the treasurer-general, and Wyman Yoo Wei How as the national organizing secretary.
• Samy Vellu intends to defend his post as MIC president in the next election. Former MIC VP M. Muthupalaniappan also plans to contest.
• Home Ministry secretary-general Abdul Aziz Mohd Yusof has been appointed chairman of the Election Commission starting December 31.
• The House of Representatives’ Committee on Justice has set a four-day hearing next week on the fourth impeachment complaint filed against GMA, beginning November 18.
• The Transport Ministry's refusal to terminate Puspakom's contract despite a spate of corruption cases involving the company's employees has drawn severe criticism. The ministry says extending Puspakom’s contract will help the company recoup its investment.
• Karpal Singh has lodged a police report against Chief Justice Tan Sri Zaki Tun Azmi based on statements Zaki made that he knew two retired judges suspected to be corrupt, and for allegedly admitting to corrupt practices while in private practice.
• Selangor executive councilor Ronnie Liu was arrested at the State Secretariat building in Shah Alam, for allegedly obstructing Subang Jaya Municipal Council enforcement officers from carrying out their duties during an anti-vice raid at a hotel in Puchong last year.
• Nearly all of the state government agencies and departments have received "clean audit certificates" from the Auditor-General's Department this year, as opposed to previous years where performance has been poor.

Business News

• Telekom Malaysia’s share price tumbled 15% after the company announced it would still pay out excess cash in future but could not guarantee it would be a minimum of $193.4 million. Without the minimum dividend payout, investors can no longer assess the amount of dividends they can expect to receive from TM going forward.
• The government does not plan to float Petronas because it is the biggest contributor to the country’s revenue and thus should remain fully owned by the government.
• The government is working on a plan to allow the creation of Islamic hedge funds, which sits uneasily with some Islamic finance experts who say hedge funds amount to gambling, which is forbidden by the sharia.
• Malaysia and Iran have outlined new areas of cooperation that promise to boost bilateral and trade ties, such as trade and industries as well as culture, diplomacy, politics and youth-related issues.

Philippines

THEMES

Effects of the Financial Crisis

• All key indicators in the investments picture were positive in the first nine months of this year, with combined investments posting a growth of 96% to $7.45 billion versus $3.8 billion in the same January-September period last year. Future figures are not expected to be as positive.
• Malacañang urged members of Congress to prioritize the passage of eight measures to protect the economy, including the 2009 national budget, rationalization of fiscal incentives, consumer rights protection, national tourism policy, and amendments to the Customs Brokerage Act.
• The PDIC is seeking $88 million from Congress for the increase in the amount of insured bank deposits from $5,000 to $10,000.
• BSP is renewing its $500 million short-term loan from the Bank for International Settlements as temporary fund to prop up the country’s dollar reserves, which lost $1 billion in October alone.
• The National Economic and Development Authority is urging businessmen to invest in local banks, which are now regarded as the safest places to put their funds since foreign banks are seen to be risky.
• Worldwide spending on IT is expected to slow significantly in 2009 as a direct result of the global financial crisis. Philippine companies are worried, though some are hopeful that companies will outsource to the Philippines as a way of cutting costs.

Dissatisfaction with GMA

• Members of the House Committee on Justice will debate on the issue of whether there is legal basis to reject or accept the amendment to the impeachment complaint against GMA filed last week.
• GMA will have the opportunity to appoint seven new SC justices next year, which has raised concerns about the independence of the court. Six of fourteen candidates are known to have personal and political ties with GMA.
• GMA continues to struggle with low public satisfaction and trust ratings over the last 12 months, according to a poll by Pulse Asia. 46% of respondents disapproved of her while 51% were distrustful.

ADDITIONAL NEWS

Political News

• Manuel Villar was ousted from his Senate president position and replaced by Juan Ponce Enrile due to the C-5 road project controversy. Jose Estrada will remain Senate President Pro Tempore and Juan Miguel Zubiri will be the new majority leader.
• Eduardo Cojuangco Jr. has expressed he would like the Nationalist People’s Coalition to begin preparing for elections in 2010. It is rumored he is looking at either Senator Loren Legarda or Francis Escudero to run for office.
• Malacañang is not ruling out the possibility that the unauthorized release of $139,000 from Philippine National Police intelligence fund by Eliseo de la Paz is part of a bigger conspiracy. De la Paz took the blame, possibly wanting to protect higher officials.
• Congressmen are threatening to subpoena and arrest Jocelyn Bolante even if he is under Senate custody in order to testify regarding the fertilizer fund scam.
• Department of National Defense expects no changes in the Philippines’ defense and military relations with the US following the change in presidential administration.
• MILF has announced it does not trust the government to reopen stalled peace talks and is seeking international intervention to resolve the issue, though there were no specifics.
• The government has asked Malaysia, Brunei, Libya and Japan to extend their stay as ceasefire monitors in Mindanao.
• Members of the House of Representatives' Committee on Constitutional Amendments reported the results of their district consultation on charter change, which showed that the majority are in favor of the change after the 2010 elections.

Business News

• Ashmore Group is still looking for potential local partners in its bid to buy the government’s stake in Petron. San Miguel is being considered as a potential partner. They expect to finalize the deal by the end of the year.
• PNOC-EC has postponed the planned sale of the majority interest in the company, pointing to the current weak investor sentiment resulting from the global financial crisis.
• The TransCo franchise bill is expected to be signed soon, since it is now up for a third reading. It is expected to go through by early January at the latest.
• Waterfront Philippines and its two subsidiaries are working for an amicable settlement with major creditor Philippine National Bank, after a lower court ordered the postponement of the auction of two Waterfront hotels.
• Metro Pacific Investments may go slow on acquisitions next year due to tight credit, but will remain on the lookout for opportunities that may come due to falling share prices and expects recent acquisitions to bring in more revenue.
• The consortium of the Metro Pacific Investment and Harbour Centre of the Romero family is in talks with the Philippine Ports Authority to resume the bid process for the Manila North Harbor, one of the country’s oldest ports.
• Comelec is doubtful that biometrics will be sued as a security precaution for voter registration due to cost considerations, but poll automation for the 2010 elections is expected to proceed as planned.
• Six banks have made the short list of potential bidders for Philam Savings Bank: Asia United Bank, Banco de Oro Unibank, China Banking Corp., Chinatrust (Philippines) Commercial Bank, East West Bank and Robinsons Savings Bank. The sale could go through very soon.
• It is estimated that 10% of medicines in the Philippines are counterfeit. The government is trying to raise awareness of the problem because the drugs can be ineffective or toxic.
• Ayala Corp.’s profits dipped by a quarter to $30 million in the third quarter because of higher consumer prices and the global financial slowdown.
• Ayala-owned Globe Telecom is reducing its capital expenditure budget next year from this year’s $420 million budget in a move to take fewer risks until the market improves.
• The SM Group is teaming up with Generali Pilipinas and the Kuok Group to bid for Philamlife.
• The Asian Development Bank is planning to extend $974 million in loans to the Philippines over the next two years to fund infrastructure and policy support programs.
• Apex Mining has projected further losses next year as more capital and operational expenditures are expected before its processing plant can be operational in 2010.
• SPC Power gave the highest bid of $5.86 million for the 146.5 MW Panay and 22-MW Bohol diesel power plants in a public auction held by PSALM, putting the power asset privatization level above the 70% target.
• The Japanese and Philippine governments have set December 11 as the date JPEPA will take effect.

Singapore

Business News

• The government expects to unveil help measures for business and workers within the week, including a loan access scheme for businesses, and a new training program for workers.

Thailand

THEMES

PAD Versus Government

• Three Senate panels investigating the October 7 clashes ruled there were irregularities in the handling of protests and urged the government to take responsibility or face a motion for general debate.
• Academics filed a letter to impeach Somchai over the October 7 clashes.
• Two additional people believed to be PAD Guards were arrested last week for illegal possession of weapons – handguns, knives, and batons.
• Police added drug charges against two PAD guards caught with explosives last Sunday.
• A bomb was hurled into Government House on Wednesday injuring two protesters, the 5th explosion since October 30.
• Somchai urged protestors to leave Government House and reiterated willingness to hold talks.
• The PAD (Chaiwat) called on the First Army to ‘subdue’ the government for its abuses of power.
• Anupong launched an investigation into statements made by Kattiya warning the PAD of violence after the royal cremation. The PAD warned their would be more violence if Thaksin phoned-in.
• Retired general Panlop met with TS in China and opposed the PAD, despite former statements and being class 7 with Chamlong.

Ever-Active Courts

• The NACC indicted Apirak and others in the fire engine case. Apirak announced he would resign to set a responsible standard for political office holders faced with solid charges.
• The NCCC indicted former deputy interior minister Sombat for alleged asset concealment.
• The NCCC will charge 28 Samak cabinet members for violation of Article 190 over the Preah Vihear joint communiqué.
• Senators filed motions to impeach several Constitution Court judges on the grounds they were ‘employed’ by private businesses.
• Loxley threatened a $57.1 million lawsuit against if the government fails to launch the new online lottery in the next month.

Thaksin News

• Thaksin and wife Potjaman divorced over the weekend in HK; former ASC lawyers say this will not free $2.2 billion in frozen assets rumored in her name.
• The UK said it revoked the visas because of TS’s sentencing.
• Thaksin will not appeal the land case.
• Malaysia announced it would refuse asylum for TS; Bermuda refuted media reports that it had offered refuge to TS.
• Thaksin is rumored to be in Dubai, seeking a home.
• Apichart urged TS not to make another phone-in address to supporters; the phone-in has been scheduled for December 14.

Economic Indicators Update

• The Thai Chamber of Commerce predicted a worst-case scenario of 0%-0.2% export growth in 2009, coupled with GDP growth of 2.9%-3.1%.
• Government tax revenue in October fell 18.4% against 2007 to $2.61 billion. 17 economic advisors were appointed to help Olarn weather the downturn.
• The SET is down 49% in 2008, though up 15% from an October 29 low, closing at 442.31 points last week. The SET fell to 419.97 on news of Japanese recession Tuesday.
• The CCI hit a year low in October at 75.8 over flagging economic outlook.
• The BoI adopted the single-zone system for all of Thailand, except Bangkok, giving maximum privileges to six industries most at risk in the downturn – energy efficiency, high-tech innovation and agriculture, green products, megaprojects, tourism and real estate.
• Preuksa Real Estate said the market could shrink 10% in 2009.

ADDITIONAL NEWS

Political News

• Thousands of Thais dressed in black to pay respects at the royal cremation.
• The Thai-Cambodia JBC agreed to prioritize surveying and demarcating the disputed areas around Preah Vihear, promising progress ASAP.
• Somchai said the impending cabinet reshuffle will not see any changes to ministers or quotas.
• The Ministry of Education is asking for $858 million to finance mega projects – increasing teacher efficiency, fixing schools, and developing IT.
• Somchai suggested building a new Government House in Bangkok.

Business News

• The US ambassador said trade policies to Thailand will not change under Obama.
• Chalerm announced the MoH would seek CL on more drugs.
• ExIm bank is seeking $363 million in government funds for a new soft loan program for SME exporters.
• The ICT Ministry says WiMax and 3G licenses should be allocated by mid-2009.
• The BoT is likely to revise policy-rate call after easing inflation.
• Ratchaburi Electricity is being more aggressive about acquiring stakes abroad, looking at Indonesia and Vietnam in particular.
• True Move signed a non-exclusive deal to sell the 3G iPhone in Thailand and develop the Smartphone.
• Jasmine aims to tap its fixed-line network to provide broadband services.
• Thaicom will shift strategy to focus on corporate and government segments in response to the global recession.

Vietnam

THEMES

Managing Growth While Containing Inflation

• Dung emphasized the dire need to boost exports and narrow the trade deficit to halt GDP growth slowdown and said the government will continue to implement a flexible monetary policy and stimulus measures – cutting loan interest rates, curbing inflation, regulating mergers and acquisitions and auditing credit capacity while continuing social welfare projects.
• The MoIT said inflation will not rise in November thanks to continued drops in global prices of raw materials.
• The MoF said it will monitor the prices of 15 essential goods and intervene to stabilize the market if necessary.
• MOIT has predicted Vietnam’s export turnover in November and December may be $9.4 billion, down 1.3% against the same period last year.
• Importers fear that the dollar exchange rate is too high.
• The NA passed the State budget allocation resolution, eyeing spending of $21.6 billion and revenues of $24.2 billion in 2009.
• S&P said Vietnam was one of three Asian countries most at risk for a credit-rating downgrade in the global recession despite recent good moves.
• The MoF decided to increase the gas import tariff from 0% to 5%, effective in the next 15 days.
• The MoF cut retail petrol prices by another VND1,000 per liter on November 15 and adjusted petrol product import taxes, effective November 18.
• The Vietnam Railway decided to abolish the 3% fuel surcharge on goods transport from November 15 after diesel price reductions.
• The MPI has completed a mid-term review of socio-economic development from 2006-2010, saying the economy will stabilize in 2009 and regain growth impetus in 2010, highlighting inflation as the biggest ongoing concern.

Building Infrastructure, Influx of FDI

• The ADB suggested Vietnam raise the annual level of infrastructure investment to 11-12% from the current 9-10% to aid development, while modernizing the PPP legal framework to encourage more partnerships.
• The government is seeking investment for the $1.2 billion Hanoi urban railway number 5 project, the first large-scale project up for state-private partnership.
• Dung approved a plan to spend $941.9 million on modernizing Phu Quoc International Airport by 2020.
• ABB began construction on a $30 million electrical equipment plant in Bac Ninh.
• EVN said it will complete projects with a capacity of 2064MW this year.
• Taiwan’s Formosa Plastics Group is looking into building a $15 billion petrochemical complex in Ha Tinh province from 2010.
• The UK’s Premier Oil announced plans to invest $515 million in Vietnam in 2009, up from $225 million in 2008.
• An ABC Survey shows Vietnam edging out the US to take third place in a ranking of the attractiveness of countries to Asian investors.
• Cambodia and Vietnam signed a deal to link their railways; China will help fund the $500 million rail link.
• Logistics companies are stepping up investment in Northern Vietnam, although the sector still meets only 25% of domestic demand.
• Dung rejected a $5.38 billion steel project proposed by ROK’s Posco Group.
• Representatives of each government signed an MOU on the third phase of the VJJI, 2009-2010.
• Dung said bilateral trade between Vietnam and China could reach $15 billion in 2008, rising to $20 billion by 2010.
• The Lao Bao Special Trade Economic Zone has attracted 52 projects worth $135.5 million over the past decade.
• Minister of Transport and Communications announced the opening of a floating port to export crude from Su Tu Vang.
• PetroVietnam may join a trans-Asia gas pipeline.

Capital Market Development

• A wave of new shares hit the market last week, causing the VN-Index to drop 3.9% on November 11, closing at 351.71. The Index closed at 340.69 on Tuesday.
• All banks have lowered deposit interest rates after SBV rate cuts, slowing capital mobilization.
• Brokers were optimistic that continued retail gas price cuts would reverse market falls.
• Vinamilk delayed its Singapore listing due to unpredictable market fluctuations
• The dollar rose to VND 17,400/$1 last week.

Education Developments

• DPM Nhan said the politburo would make a decision on tuition increases in December, to come into effect for the 2009-2010 school year; the suggested level is 4-6% of household income.
• The MOET said it is prioritizing cooperating with local branches to analyze drop outs and limit their numbers.
• The HCMC Education and Training Department said that 10.09% of its teachers are informatics illiterate.
• Viettel will provide broadband internet services to HCMC schools.
• More and more students are studying social work despite difficulties in training and in finding jobs after graduation.

ADDITIONAL NEWS

Political News

• The NA passed five bills on road traffic, bio-diversity, technology, cadres and civil servants and judicial records.
• The NA held a three-day Q&A session about the environment, agricultural exports, and the economy.
• A Chinese warship will call at Danang this week after both PMs pledged closer military cooperation.
• The Ministry of Health will vaccine 9,200 11 year old girls against HPV for free by 2010.

Business News

• The MOIT and MoH signed an MOU to promote pharmaceutical chemistry, pharmaceutical industries and cooperation on measures to stabilize the market. They will also cooperate on the trading rights of foreign enterprises and regulating foreign investment in the pharma sector, while fighting counterfeits.
• The MOIT has proposed a conservation and energy efficiency plan to save 5% of total energy needs by 2010 and 8% by 2015 if it is approved.
• EVN said the government should replace power price subsidies with a price ceiling.
• The MOF accepted a plan to increase coal prices for cement, paper and fertilizer producers from Q2 2009.
• The ADB will provide $72 million in loans for a project to improve health care services on the southern central coast over 32 years.
• Vinamotor and Venezuela’s Milco finalized the creation of a joint venture for the construction of light duty trucks, motorcycles and a cement plant from May 2009.