Author: Vo Tri Thanh
For Vietnam, and other East Asian economies, inflation is not a real issue in 2009. Instead, East Asian economies will have to pay more attention to the inflationary issue in 2010, and the governments of South Korea, China, and Indonesia will likely apply tightened monetary policies in the first or second quarter of 2010.
Vietnam shares similarities with these other East Asian countries; however, our macroeconomic situation in the past year was less stable than other East Asian economies. These past instabilities, relating to inflation, the financial system, the balance of payments, and the exchange rate, may place Vietnam in a more vulnerable position than other countries. So far, the inflation rate over the first seven months of 2009 has been rather low, at 3.2 to 3.3 per cent. However, the rate on a monthly basis is higher than that of the previous year. In addition, credit growth is also high, at 16 to 17 per cent during the first half of 2009. All these issues have raised fears over the possibility of inflation.
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Author: Ashima Goyal, IGIDR
India’s pragmatic muddling through in financial reforms has served it well, protecting its financial sector from the extreme collapse seen in the western system. That collapse does not mean we should stop deepening our markets, but it does offer some lessons for the way forward. The focus must be on financial inclusion, development of domestic markets, and their contribution to the real sector.
The cautious stance on capital account convertibility must continue. Our strategy of liberalising equity flows while restricting debt flows has worked well since equity shares in the risk, but debt repayments are heavier in bad times. Emerging markets with a heavy dependence on foreign loans have suffered badly in this and in past financial crises. But there are pressures to further liberalise debt inflows to help develop debt markets and meet government and corporate financing requirements. So the question is, can domestic debt markets be developed without more active participation from foreign investors?
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Author: Mohamed Ariff
The global economic crisis has brought East Asia to a crossroads. It now has three options: one, continue as before with no change; two, take a U-turn and look inward; and three, stay outward-looking but with a distinct difference.
One must, however, acknowledge that the export-led growth strategy has paid handsome dividends for the East Asian economies, enabling them to fly high. No wonder, Japan and South Korea were able to climb the development ladder rapidly through exports, especially to the United States.
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Author: Rajiv Kumar
Security hawks, the media’s foreign policy experts and the political class had a field day after July’s Indo-Pakistani joint statement. Particularly for the Bharatiya Janata Party (BJP), whose astute leader Atal Bihari Vajpayee once took the boldest of steps to liberate India from its Pakistan obsession, nationalism seems confined to overtly displaying our superiority over a smaller neighbour, one fighting with its back to the wall against destabilising forces. Good foreign policy, however, has to be more nuanced so that our long-term national interests are served.
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Author: Pravakar Sahoo
Given the backdrop of a prolonged Doha round with no consensus being reached on several issues in the WTO, both developed and developing countries are left with no option but to pursue regionalism in a rigorous way to cater to their developmental needs. India is no exception to the idea and has signed several agreements in the last five years, the Comprehensive Economic Partnership Agreement (CEPA) with Korea being the most recent. The signing of India-Korea CEPA on 7th August 2009 though delayed, has been welcomed and rightly so, by both the business community and policy makers from both the countries. This agreement which has provisions for substantial reduction of both tariffs and non-tariff barriers in a phased manner is expected to take India-Korea relations to a higher level and enhance India’s presence in East Asia.
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Author: Yoichi Funabashi
All summer long, the nation was abuzz with excitement. And at the end, just about everybody was overwhelmed at the result.
But I don’t think it was frenzy that moved them. In 2005, with a Lower House election that focused on the single issue of postal privatization, voters cheered for Prime Minister Junichiro Koizumi, yelling his nickname ‘Jun-chan!’ But nothing of the sort happened this time around. Behind the seemingly feverish excitement was the public’s deep frustration at, and yearning to break, the nation’s status quo.
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Author: Peter Drysdale
The election of the Hatoyama government in Japan promises a new look Japanese diplomacy on a number of fronts – among them a bold approach to climate change and the Copenhagen negotiations and more active engagement in East Asia, including with China. These are among the matters on which the Australian government should be able to work closely with the new administration in Tokyo. In this week’s lead, I suggest that this is also the time for a paradigm shift in Australia’s economic relationship with Japan in Asia. Read more…
Author: Peter Drysdale
The election of the Hatoyama administration is not the only reason why it’s time for Australia to re-think its economic relationship with Japan. But it is a good reason to bring new ideas to the dialogues between Canberra and Tokyo on core economic interests in the region, as well as a whole range of other things.
Japan is the second largest economy in the world, measured in terms of current dollar purchasing power. It is Australia’s largest export market and, while it is a mature market with a slow rate of growth, the absolute size of the Japanese market is huge. These are common refrains in discussion of the Australia-Japan partnership over the last two decades or so. They make an important point. But they miss the main point about what has happened to Japan’s place in the world and its role in our region, and what those changes mean for effective Australian engagement with the Japanese economy.
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Author: Luke Nottage
Mainstream Australian media provided distressingly meagre coverage of Japan’s exciting general election for the more powerful lower House of Representatives, which saw a remarkable about-face. The centrist Democratic Party of Japan (DPJ) went from 115 to 308 seats, with allies Social Democratic Party (SDP) (the small leftover of the once-powerful Japanese Socialist Party) and the New Party Nippon taking another 7 and 3 seats respectively. Overall, these and other former Opposition parties took 340 seats, whereas the conservative ruling coalition suffered a massive defeat. The Liberal Democratic Party (LDP) dropped to 119 seats, from 300 before the election (and 296 in 2005, the previous election called by Junichiro Kozumi who then retired as Prime Minister). The Komeito dropped from 31 to 21 seats, meaning that the former ruling coalition now only has 140 seats. In short, the tables have turned almost completely since 2005, in a country famous for its aversion to abrupt political changes.
This piece is a reflection on this result and the potential implications it has for policy and law reform in Japan.
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Guest Author: J. Bruce Jacobs, Monash
During August 7-9, Typhoon Morakot slowly meandered over Taiwan dropping as much as three metres of rain in two days. The huge rains produced giant mudslides that buried whole villages. The death toll remains unclear, but several hundred people have died.
The government of President Ma Ying-jeou and Premier Liu Chao-shiuan took too long to react. In addition, the government stated that it did not require foreign aid. By the time the government finally started relief work, it was much too late to save lives or property.
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Author: Arvind Subramanian, Peterson Institute for International Economics
In the run-up to the G-20 Summit in London in April, China created a frisson of excitement by pushing for the use of Special Drawing Rights (SDRs) as an alternative to the dollar as a global economic currency. To be sure, China’s demarche was self-serving. It is also true that when China now talks, the world must listen. But the Chinese proposal was taken seriously because it had enough objective appeal and systemic relevance.
In all the discussions about the reform of the international economic architecture and the G-20 process, India’s predominant concern has been with getting a seat at the table. This desire for influence is appropriate and attaining it is long overdue particularly since existing international arrangements, especially at the IMF and World Bank, are outdated and inequitable. But acquiring influence cannot become an end in itself. ‘Influence for what’ is a question that India must continually ask.
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Author: Sherry Tao Kong, ANU & Palmira Bachtiar, SMERU
Since its first stored opened in central Jakarta in 1998, Carrefour has quickly expanded to 37 stores across Indonesia, reaching annual sales of 627 million Euros by 2006. However, the rise of Carrefour has not been seamless. In 2005, Carrefour paid a Rp1.5 billion (US$148,515) fine due to its behavior deemed as abuse of its dominant market position which damaged wholesalers through ‘minus margin’. The French-owned retail giant is now once again in troubled waters.
This time, the problem started with a recent acquisition in January by Carrefour of a local supermarket operator, PT Alfa Retailindo (Alfa). Thanks to this Rp 674 billion (US$58.6 million) transaction, Carrefour acquired a 75 per cent share of Alfa, which has 29 supermarkets in Indonesia, with annual sales reaching Rp 3.6 trillion (US$310 million) in 2006.
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Author: Nicholas Farrelly
In the past fortnight Burma’s State Peace and Development Council (SPDC) decided to stop pulling its punches with some of the ‘ceasefire groups’ that share its territory.
The first of these ceasefires was agreed as the Communist Party of Burma fractured in the late 1980s. Since then, these agreements have become a consistent part of any analysis of Burma’s politics but, ultimately, they remain a wildcard in national affairs.
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Author: Geethanjali Nataraj
Japan and India are two of the largest democracies in Asia, sharing a commitment to the rule of law and respect for human rights. They are also leading economies in Asia.
In recent years, the two countries have strengthened bilateral ties through new initiatives and programmes ranging from economic and cultural linkages to defence and security. Japan gives 30 per cent of its overseas development assistance to India and is, even in this period of global economic downturn, committing more than $4 billion to the Delhi-Mumbai Industrial Corridor. But our economic relationship is still far below its potential. Two-way trade ($10.18 billion for 2007-08) has risen in the last five years, but still remains considerably low when compared with the China-Japan trade or even the India-China trade (respectively, $237.193 and $37.931 billion in 2007-08). Similarly, Japan’s foreign direct investment in India for March-April 2008 ($0.82 billion) ill compares to its investment in smaller Asian countries such as Vietnam ($0.41 billion), not to mention China ($1.9 billion).
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Author: Amin Saikal
It is time for President Hamid Karzai to bow out gracefully, even if he is declared as the winner of last month’s election. His regime is tainted by allegations of corruption, maladministration and electoral fraud to the extent that he is no longer capable of leading Afghanistan for another term with an acceptable degree of legitimacy.
Karzai assumed power nearly eight years ago, with more national and international support than any previous Afghan ruler had enjoyed. The Afghan people had suffered from 24 years of warfare, bloodshed and devastation: the Soviet occupation in the 1980s, followed by internecine conflict among various Afghan warring groups and the Pakistan-backed medievalist Islamic rule of the Taliban in the 1990s. A majority of them desperately yearned for a constructive and effective national leader. The US-led intervention in response to the 11 September 2001 al-Qaida attacks on the US, resulting in the toppling of the Taliban regime and the instalment of an internationally backed administration under Karzai, provided a unique opportunity. The US and its allies invested very heavily in the new Afghan leader with an expectation that he would prove instrumental in working with them to generate the necessary conditions for democracy, stability and security – enabling the Afghans to rebuild their lives and their country.
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