News Briefing - November 4, 2008

APEC

Business News

• APEC is discussing liberalizing the service sector to boost regional economic growth. Trade between APEC members accounts for 50% of global trade.

ASEAN

Political News

• ASEAN governments want to learn more about Malaysia’s biometric Mobile Immigration Enforcement System (MIES) for tracking illegals.

Business News

• The ASEAN business forum opposes the plan to move the summit to Chiang Mai and will hold its parallel meeting in Bangkok.
• Olarn said plans for Asian economies to establish a regional support fund are likely to be settled at the ASEAN Summit in December. The Asian Financial Community initiative will establish three funds: 1) $150 billion to shore up short-term liquidity, 2) $200 billion to finance intra-Asian investment, especially in infrastructure projects and the stock markets, 3) 10% of foreign reserves set aside.

Indonesia

THEMES

Coal News

• Northstar Pacific plans to buy Bakrie’s 35% stake in Bumi for $1.3 billion.
• Adaro expects the coal sale price to increase to $52-$65 per ton from the current $36-$39 per ton.
• Adaro expects its coal output to rise by 10.5% next year to 42 million tons. The company expects to produce 38 million tons this year.
• Bayan has signed a $300 million mining contract with Petrosea for overburden removal.
• PLN plans to acquire five holders of coal mining licenses in order to guarantee supplies of coal to PLN’s coal-fired power plants. So far only one deal has been signed.
• Indika Energy is targeting stocks owned by Darma Henwa with an offer price of $0.01 per share in order to reinforce the company business in mining and electricity sectors.
• Tambang Batubara Bukit Asam is looking to cooperate with KA Trans to secure the coal supply for PLN through Tanjung Enim-Tarahan routes as PLN develops its 10,000 MW coal-fired power plants.

BI Scandal Continues

• The KPK began questioning Aulia Pohan and three other former BI deputy governors implicated in the bribery scandal yesterday.
• Former BI governor Syahril Sabirin is to undergo questioning by the KPK for his alleged connection to a BI graft case involving the disbursement in funds to expedite the amendment of the BI law and the settlement of a corruption scandal involving BLBI funds.
• Former BI governor Burhanuddi Abdullah was sentenced to five years in prison for his role in the BI graft case involving the disbursement of $9.1 million to expedite the amendment of the BI law and the settlement of a corruption scandal involving BLBI funds.
• State Minister of National Development Planning Paskah Suzetta denied he had ever received BI funds channeled to House financial commission members in 2003 while being questioned by the Corruption Court.
• The AGO is continuing to investigate 10 prosecutors who allegedly tried to halt earlier probes into bribery involving BLBI funds.

The Global Financial Crisis

• The Finance Ministry bought back $3.89 million worth of government bonds as part of a plan to improve the prospects for businesses threatened by the global economic crisis.
• The Finance Ministry announced that the government will provide tax incentives valued at $1.13 billion to a range of business sectors next year to help them weather the impact of the financial crisis. The incentives will be aimed at reducing the costs of business for small and medium enterprises.
• The government is limiting wage rises to help labor-intensive manufacturers prevent layoffs and lessen the impact of the economic crisis.

2009 Election

• The House of Representatives endorsed the presidential election bill, which requires a party or a coalition of parties to win at least 20% of seats in the House or 25% of the popular vote to be eligible to nominate a candidate.
• Candidates running for the 2009 presidential and VP elections will be expected to hold a total of five rounds of public debates, with 3 debates among VP candidates and two among presidential candidates.

Telecommunications News

• Bapepam has decided Qtel must buy the rest of its Indosat shares at the same price paid to Telemedia in June. Qtel is in the process of holding a tender offer for the rest of Indosat's shares, and has offered to pay less per share than previously.
• Six of ten telecom operators participating in the universal service obligation phone tender pre-qualification have passed. They will be able to compete in the tender process for seven work packages, which may be controlled by one or many operators.
• Telkom’s third-quarter net profits fell 18% to $246 million due to higher operating costs and maintenance expenses.

ADDITIONAL NEWS

Political News

• The Supreme Court officially transferred its authority to handle regional election dispute cases to the Constitutional Court.
• The House of Representatives passed the controversial anti-porn bill, which as been criticized as being too broad.
• A new anti-discrimination law went into effect last week which is being criticized by human rights groups because it only focuses on ethnic and racial discrimination and only applies to the workplace and not government officials.
• The AGO has fired six of its prosecutors, citing charges of bribery, extortion, drug abuse, negligence and disobedience.
• Legislator Bulyan Royan denied accusations that he demanded bribes for the procurement of 20 patrol boats for the Transportation Ministry's directorate of sea transportation.
• Former West Java Governor Danny Setiawan has returned $20,833 he stole from a fund to procure fire engines and heavy equipment from 2003 to KPK.

Business News

• Indonesia has awarded more oil and gas exploration rights on nine blocks to energy companies in a bid to stem its steady production decline. This included awarding the Gunting block to ExxonMobil unit Esso Exploration International.
• Bojonegro District Head Suyoto says he will not get involved in the alleged misuse of funds from the socialization budget at Cepu block.
• The Energy and Mineral Resources Ministry has proposed the price of subsidized fuels to be reduced by $0.05 to $0.07 per liter following a decline in crude oil prices.
• PLN began operation of Asia Pacific’s first crude palm oil fueled power plant in Riau, which will be able to generate 10 MW of electricity.
• BI was unable to execute a planned $693 million bailout of Indover because it had failed to secure written approval from the House. It is also said BI officials were afraid of state losses and future litigation.
• HSBC is in the process of acquiring a majority stake in Bank Ekonomi, controlled by the Katuari family.
• Bank Central Asia announced a deal to acquire United International Bank to expand its sharia business. The takeover will be worth about $24.2 million.
• Samsung Electronics is planning to build a factory to produce video cameras and cellular phones in Cikarang, Bekasi, West Java next year. The investment will be worth $50-$100 million.

Malaysia

THEMES

UMNO Elections

• Najib won the UMNO presidency uncontested after receiving 140 nominations.
• Muhyiddin has 66 nominations, and no one else has reached the minimum number of nominations to contest for the VP post.
• Khairy Jama­luddin, once the favorite for UMNO Youth chief, is lagging with 50 nominations. Mukhriz Mahathir is leading with 70, and Khir Toyo has 56.
• UMNO division head election winners: Datuk Seri Tengku Azlan Sultan Abu Bakar for Jerantut; Hanafi Mamat for Pasir Mas; Fatmi Che Salleh for Kota Baru; and Nasrun Mansur for Silam.

Global Financial Crisis

• The Malaysian central bank met with financial institutions to urge banks to continue lending and to restructure loans where necessary in order to sustain economic activity in the country.
• The government cut fuel prices by 6.5% due to falling global oil prices. This is the fourth fuel price cut since June’s 41% hike.
• The Government is negotiating with manufacturers and importers to reduce the price of goods now that fuel prices have dropped.

ADDITIONAL NEWS

Political News

• The state DAP believes Najib may call for a snap general election shortly after taking over as prime minister in March in order to put his own cabinet in place.
• Abdul Razak Baginda, a former associate of Najib, was acquitted of abetting the murder of Mongolian national Altantuya Shaariibuu.
• UMNO is facing increasing accusations of money politics, which critics say the party is not taking seriously. Mahathir has recently spoken out against money politics, saying it could be UMNO’s downfall.
• The Federal Court threw out an appeal by Munawar A Anees, Anwar’s former speech writer, that his sodomy charge be remitted to the High Court so that he can argue his case.
• The ACA completed its investigation into Anwar’s black-eye incident from his detention ten years ago. The prosecution panel will determine when the investigation’s findings will be made known.
• UMNO Youth agrees that the New Economic Policy needs a new approach, but it rejects any suggestion to abolish the bumiputra equity policy.
• Gerakan VP Datuk Dr. S. Vijayaratnam died after falling off a rooftop in what is believed to be an accident.
• The Public Accounts Committee found no procedural irregularities in the purchase of 12 Eurocopters worth $453 million.
• The country's first judicial appointment commission may be established by year's end. The present system of judicial appointments has given rise to questions about the judiciary's integrity and credibility, and it is hoped a commission will lead to a more transparent, merit-based system.
• Malaysia will host the inaugural ASEAN Infrastructure Financing Mechanism Conference in Kuala Lumpur on November 10.

Business News

• Abdullah announced that an on and off $846 million 500km Kimanis-Bintulu gas pipeline project is now on again. He gave no explanation for the change.
• Parliament is questioning Silterra Malaysia, a Khazanah Nasional-owned company, about how it lost $282 million in 2007 despite the government pumping in $1.47 billion since the company started in 1994.
• AirAsia is optimistic about the future despite the current economic situation, believing it will be able to attract customers in search of cheaper fares. The company plans to expand into Europe and India in the next few years.
• The Ipoh-Padang Besar electrified double-tracking project was awarded to MMC-Gamuda JV through direct negotiation since MMC-Gamuda JV has the expertise necessary to carry out the project and meets government standards.
• Public Bank has set up an Islamic banking subsidiary in an attempt to tap new growth markets as competition becomes increasingly stiff.
• YSP Southeast Asia Holding plans to shift the production of lower-end generic drugs to Vietnam and turn Malaysia into a high-end manufacturing hub for Southeast Asia.

Philippines

THEMES

Global Economic Crisis

• The government will likely defer the sale of the PNOC-EC stake to next year amid unfavorable market conditions brought about by the financial crisis.
• The Bankers Association of the Philippines will tap its fixed-income trading platform, Philippine Dealing & Exchange Corp., to create an interbank peso lending facility backed by government securities in order to boost liquidity.
• BSP said the enactment of the Credit Information System Act, which creates a central registry of basic credit data, has come at a good time and will give a boost to the credit market.
• The BSP warned that the financial crisis has begun to move away from Europe and the U.S., and has begun spreading to markets like the Philippines and that economic developments must be monitored closely.
• Local firms are still pushing through with their capital-raising plans to fund energy and infrastructure projects and trying to find opportunities despite the world’s economic problems.
• The national government is now in the process of determining which infrastructure projects to speed up in order to boost employment in 2009. Possible projects include the Light Rail Transit 1 extension to Cavite, Northrail, or the construction of the north Skyway road.

Scandals in the News

• 105 administration allies in the House of Representatives received $62,000 to $100,000 in fertilizer funds in 2004 from then agriculture undersecretary Jocelyn Bolante.
• The Senate blue ribbon committee plans to start its investigation into the $15 million fertilizer fund scam next week.
• Jocelyn Bolante’s son has filed a habeas corpus seeking the release of Bolante from Senate custody, saying that the arrest is illegal because the Congress that issued the warrant of arrest no longer exists.
• Sen. Manuel Roxas is asking Russian officials to provide information on the controversy surrounding retired Philippine National Police director Eliseo dela Paz, who was caught in a Moscow airport $142,000 worth of undeclared cash.
• The Supreme Court will take up the petition filed by retired Police Director Eliseo dela Paz and the motion lodged by former Agriculture Undersecretary Jocelyn Bolante challenging the arrest orders issued against them by the Senate when the court resumes its full court session on November 11.

ADDITIONAL NEWS

Political News

• Civil society groups have complained that the draft implementing rules and regulations for the Cheaper Medicines Law has some key holes in it, such as rules on "parallel importation," which would allow the government and private groups to import patented medicines from countries where they are sold at a lower cost.
• A law defining the Philippine’s archipelagic baselines that excludes the Spratly Islands and Scarborough Shoal may be passed because including the disputed territory could cause other countries to reject the measure and exclude the Philippines from international maritime law.
• Former House Speaker Jose de Venecia Jr. endorsed the impeachment complaint against GMA. It is unlikely he will be sanctioned by the leadership of Lakas-CMD
• The government is seeking up to $1 billion in foreign aid to fund the construction of one part of the planned Mindanao railway system, which is expected to drive economic development in the region.

Business News

• The sale of Philamlife is expected to be completed before the end of the year at the earliest with purchase price of roughly around $800 million, nearly half of the estimated $ 1.5 billion.
• PNOC-EC is seeking a joint venture partner to take up at least a 20% stake in the East Sabina block located in offshore Southwest Palawan.
• GSIS expects to get $260.2 million in profit from the sale of its shares in Meralco to San Miguel.
• The Ashmore Group and San Miguel are in negotiations over San Miguel’s bid to acquire the Ashmore Group’s 51% stake in Petron.
• PSALM is planning to sell two decommissioned power plants by the first quarter of 2009.
• The Philippines plans to start up its first 600 MW nuclear power plant by 2025, according to the Department of Energy.
• A House bill seeking to develop tourism and reorganize the agencies of the Department of Tourism has been approved by two House committees.

Thailand

THEMES

PAD Versus Government

• Anupong said the Somchai government bears responsibility for the police crackdown and investigating why the operation turned violent, reiterating that a coup would not solve the country’s problems.
• 10 people were injured as a grenade was thrown at PAD guards, an explosion damaged a Constitution Court judge’s house and gunfire was heard near Government House with a man found dead near police headquarters. A bomb exploded near Government House at 2am on Tuesday, there were no injuries.
• The Bangkok Pundit says the mounting violence is akin to ‘tit for tat gang warfare’ noting that the judge whose home was attacked has been a vocal anti-Thaksin presence. The PAD has declared it is under attack since a spate of violent acts last week.
• Thaksin asked supporters if they would allow him to remain in exile for 10 years to wait out the statute of limitations on his sentence in the land case. Thaksin called for peace and reconciliation while criticizing the judiciary for ‘ending justice’ and chastised the PAD for hurting democracy and the economy to get rid of one person, himself.
• The UDD rally on November 1 attracted more supporters than any PAD rally to date, a strong show of support for Thaksin. The PAD accused Thaksin of disuniting society with his telephone address to around 75,000 supporters.
• The PAD rejected an appeal for peace talks, calling the approach inappropriate. A group of PPP MPs called on Prem to mediate a solution to the political conflict. Somchai said the government was ready to hold talks with the PAD, with any effective mediator, in response to Chamlong’s comments about PAD willingness.
• The PAD said it had received more than $1 million in donations for victims of the October 7 clashes.
• Pro-Thaksin people surrounded the Chiang Mai office of the TPBS, demanding an apology from the director after reports that supporters were paid to join the Bangkok rally.

Ever-Active Courts

• Police are considering stripping Thaksin of his rank of Lieutenant-Colonel after his conviction.
• PAD protesters rallied outside the British embassy to press for Thaksin’s extradition.
• The Supreme Court said it would monitor Thaksin’s speech for any contempt of court and warned media sources from reprinting any illegal comments. Thaksin’s speech was monitored by many groups, including the armed forces, while many say his comments stoke social confrontation. One of the most controversial remarks implied Thaksin would seek royal pardon, though he denies this, saying he will appeal the decision with the Supreme Court. The armed forces called his speech ‘out of bounds’ for putting pressure on the King.
• Democrat MP Korn Chatikavanji petitioned for an investigation into whether the chief prosecutor abused his power by deciding not to prosecute Thaksin on the SC Asset Case.
• PPP assigned its defense roles in the dissolution case and will emphasize that the executive board had nothing to do with electoral fraud committed by Yongyuth. Rumors abound that Newin was in London to reconcile with Thaksin and propose a new substitute party under himself.
• The EC decided not to red card Vithoon Nambutr, Democrat Party Deputy Leader, making the party safe from dissolution.
• The Central Investigation Bureau is wrapping up 32 lese majeste cases, including Jakrapob’s case, which has been forwarded to the OAG; investigators said there was sufficient evidence to recommend his prosecution.

Economic Indicators Update

• The Thai economy grew 4.5% in Q3, boosted by export growth. The Fiscal Policy Office forecast growth of 4% for Q4, brining 2008 GDP growth to 5.7%.
• Inflation was down to 3.9% in October, a sharp drop from 6% in September; the Commerce Ministry revised 2008 inflation down from 6.5-6.9% to 5.9-6.3%, largely on the decline in oil prices.
• The cabinet endorsed a three year spending budget of $203 billion, including $46 billion for mega-project investment, considered a priority in times of crisis. The budget is designed to ensure growth of 3-4% in 2009-2010 and 5-6% in 2011. During this time, the government will run budget deficits, using government spending as a key element to drive the economy.
• Suchart said boosting the 2009 budget by $2.86 billion to $55.2 billion could add 1% to growth with extra money spent on job programs and public investment. The increase will raise the budget deficit for FY09 to 3.5% of GDP, up from 2.4%.
• The SET rose 6.29% to 408.31 points on Thursday as domestic investors bought bargain shares. The SET also jumped 7.84% on Monday to close at 449.19 on good news and avoidance of drama in Bangkok over the weekend. The SET will finalize a proposed $235.6 million matching fund to support the equity market, which has lost over 50% of its value this year. The SET closed Tuesday at 457.62.
• The cabinet approved the extension of the 100% guarantee on bank deposits until August 2011 in a bid to prevent mass withdrawals in light of the current crisis.

ADDITIONAL NEWS

Political News

• The parliament gave negotiators authority to hold border demarcation talks with Cambodia on November 10. Thailand lobbied Canada to hold a special meeting to take action against Cambodia for allegedly planting new landmines on the border.
• A draft of amendment 291 is ready for consideration amid fears it will escalate tensions.
• Kuthep said the PPP will renew a push for amnesty after the next general election.
• Somchai said he would speed implementation of the Village Fund, One Tambon One Product (OTOP) and Small and Medium-Sized Lending (SML) programs, first launched by Thaksin, to aid the grassroots economy.
• Somchai visited the southern provinces of Yala, Pattani and Naratiwat to follow up on implementation of government programs.
• Puea Pandin MPs are fighting over the Deputy Interior Minister cabinet seat after the media announced Prasong was resigning, only to have him deny it.
• The WHO and Bloomberg Foundation gave $937,223 to Thailand to support its 100% Smoke Free Environment project.
• Chalerm’s son, Wan Yoobamrung, was appointed as the Deputy PM’s Sec Gen.
• Samak will leave Wednesday for the United States to seek liver cancer treatment.

Business News

• Somchai wants construction of the purple, blue and red mass rapid transit lines, worth $6.05 billion, to be accelerated.
• DTAC has outlined a stimulus plan to focus on broadband service next year to offset shrinking voice revenue. The company plans to begin 3G mobile broadband service in Bangkok, Cho Buri and Phuket, with nationwide service available by mid-2009. DTAC will partner with Kasikornbank to introduce the second phase of its ATM SIM service to enable easy mobile banking and purchasing. Telenor will give $142.9 million in grants to DTAC to aid its 3G investment plan.
• Despite lingering disputes, Thailand gained almost $4 billion in the first year of the JTEPA.
• The State Railway of Thailand wants a private company to operate the new Airport Rail Link, due to begin transport on August 12, 2009, until a subsidiary can be formed to handle the service.
• Oil retailers cut diesel prices by 60 satang per liter. PTT expects earnings in the ytd will be even with 2007.
• The cabinet approved $63 million Casava and Corn pledging schemes to aid farmers.

Vietnam

THEMES

Managing Growth While Containing Inflation

• Vietnam will target growth above 6% in 2009 despite worsening global situation. The government expects export growth of 10-12%, limiting budget to 4.3% of GDP and continuing to focus on curbing inflation, estimated at 22% for 2008.
• The MOF approved the fourth VND 500 cut in the retail price of petrol per liter, effective October 31. The MOF proposed raising fuel import tariffs from 15% to 25% on gas and from 10% to 15% on diesel to offset state budget losses stemming from the falling price of crude.
• Vietnamese consumers are tightening the belt and reducing the market’s selling power, despite steady price drops of 5-15% in consumer products. The MOF will strengthen control of prices, such as public transport fares.
• A conference in Vietnam reviewed lessons of WTO membership, noting that despite many successes, high inflation is making growth less equal.

Building Infrastructure, Influx of FDI

• Ninh Thuan province is leading the country in FDI inflow with 16.8%, or $9.79 billion of the total FDI in the ytd, not including the capital of seven oil and gas exploration projects.
• Bac Lieu has mobilized $208.3 million from the State, foreigners and its own people for development investment in 2008.
• The World Bank will lend $60 million to Vietnam to modernize its financial sector and the financial information management system.
• Nippon Steel will invest $553 million in a 10-20% stake in a Vietnam venture with ROK’s Posco to expand a production alliance.
• Phu Yen approved the Trung Nam Group build a $115 million, 40 MW hydroelectric plant at Dong Cam Dam.
• Six foreign investors expressed willingness to become investors of the EVN power projects, and MOIT will allow them to bid for licenses.
• HCMC is calling for domestic and foreign investors to build 6,500 resettlement apartments worth $356.2 million. Investors will finance the apartment construction in exchange for cash or land in or near the Thu Thiem New Urban Area.
• The Vietnam Steel Association is raising doubts about the initiation and operation of so many new steel projects.
• Vietnam and Mongolia agreed to strengthen friendship and economic ties during Triet’s visit to Ulaan Bataar last week. The Presidents affirmed a desire to address goods transport issues and to boost bilateral trade to $10 billion in 2010. President Enkhbayar said he hopes Vietnam can be the gateway for Mongolian interactions with other ASEAN nations. The two sides also signed a Memorandum of Understanding on industrial cooperation.
• Russell 20-20 members met with representatives of 30 large groups in Vietnam to discuss the investment environment.

Capital Market Development

• The SBV announced it will cut its benchmark interest rate 1 point to 12% on Wednesday, the second cut in three weeks, aimed at warding off recession. Big banks have followed the SBV, cutting lending rates and increasing cash flow to realty developers in particular.
• The VN-Index rose for three days to close at 347.05 on October 31, despite decreases in trading volume. The VN-Index closed at 348.64 points on Tuesday, it’s highest since October 23, while PVFC lost the maximum-allowed 20% on its debut.
• The HASTC announced $26.8 million in government bonds at 14.5% a year. Vietnam Development Bank sold $35.6 million in bonds, with proceeds going to state infrastructure projects.

Education Developments

• MOET says the program to teach English from the 3rd grade onwards as of 2010 requires extensive preparation and will only be implemented in 20% of primary schools, on a voluntary basis, in a trial run from 2010, while the program is expected to reach schools in remote areas by 2018.
• MOET says Vietnam has 1.7 million illiterates, mostly over age 36 and in Hanoi.
• MOET says around 60,000 Vietnamese students are studying abroad, with China the most attractive destination, followed by Australia and the US. 4,000 students are overseas under the government’s 322 scholarship program.
• On October 29, the Fideco Group and US Stellar Management opened an Education, Training and International Conference Center (FideS) to improve management and leadership skills among Vietnamese businesspeople from 2010.
• GE’s President for SE Asia said Vietnam should boost its education efforts to upgrade its economy.

OTHER NEWS

Political News

• The NA discussed the need to upgrade forecasters to stave off costs from inaccurate forecasts as Vietnam integrates further into the global economy. The NA also discussed the need to support agricultural and rural development and to better implement farm product underwriting. NA delegates opposed a draft to scrap the use of the death penalty for certain crimes, such as corruption and counterfeit production.
• The Ministry of Home Affairs discussed a trial election for commune-level officials while also discussing reorganization of local government.
• Dung said Vietnam will create favorable conditions for US investors to foster long-term and efficient investment.
• Manh said the Chinese and Vietnamese Party Central Committees should work on exchanges and information sharing, particularly regarding theoretical work, to enhance the role of party leadership.
• The MOH announced it will destroy all eggs imported from China found to contain melamine, while also strengthening import controls, especially at border crossings. The MOH said it will not allow the sale of any products containing melamine or other harmful substances.
• The Government Inspector General said Vietnam had made progress against corruption, with cases falling this year and reporting up.
• Vietnam and China discussed experiences in disaster relief and the role of the armed forces.
• Vietnam and Cambodia will sign a visa exemption agreement during Hun Sen’s visit this week.
• USAID launched three projects in Da Nang, worth $1 million, to help locals access health services and gain job-search skills.

Business News

• Total consumer technology market turnover in 2008 could reach $3.9 billion, up 21% yoy, though lower than June forecasts of $4.07 billion due to inflation costs and global downturn, with growth especially high in cameras/camcorders (60%) and home appliances (30%).
• FPT Telecom admitted violating IPR and said it would negotiate to pay for rights to over 10,000 songs on its website.
• The retail prices of drugs imported or produced by large firms have risen significantly in the past two months.