Optimism on the rise in Indonesia

Indonesian President Joko Widodo (Jokowi) in control. President Jokowi inspecting a military helicopter during the Army's exhibition at the National Monument in Jakarta, Indonesia, 17 December 2014. (Photo: AAP).

Author: David Nellor, Jakarta

A greater sense of optimism prevails in Indonesia about the economy in 2015 than a year ago, even though the reality is now more challenging. Growth is slowing, business costs are on the rise, and key economic vulnerabilities persist. In simple terms, the new government of President Joko Widodo (Jokowi) has been dealt a difficult hand of cards. Read more…

The reign or reining in of Chinese monopolies

A steel worker at a mill owned by Dongbei Special Steel Group Co Ltd, 30 January 2014. DSSG was integrated by three former major state-owned enterprises in Northeast China in 2004. (Photo: AAP).

Author: Patrick Williams, ANU and PKU

Surprise raids by Chinese government officials on the offices of major multinationals in China to catch out monopolistic business activity have created perceptions of bias against foreign firms in the enforcement of the anti-monopoly law. Read more…

Asiaphoria or Asiaphobia?

Chinese workers sew clothes at a garment factory in Huaibei city, 10 September 2014. (Photo: AAP).

Author: Paul Hubbard, ANU

Those in the business of long-run GDP projections expect Asia, and particularly China, to keep growing above world trend rates for some years. The most optimistic — such as former Chief Economist at the World Bank, Justin Lin — have China growing at 8 per cent for at least the next decade. Read more…

Abe must raise taxes to save Abenomics

Japanese Prime Minister Shinzo Abe talks to voters during his election campaign tour in front of a local fishery association branch at a fishery port in Soma, Fukushima Prefecture, 2 December 2014. (Photo: AAP).

Author: Yukinobu Kitamura, Hitotsubashi University

Japan’s Prime Minister Shinzo Abe dissolved the lower house of the Diet on 21 November and called a snap general election on 14 December. At the same time, Abe announced that he would postpone the second hike of the consumption tax rate from 1 October 2015 to 1 April 2017. Read more…

Time to rethink economic policies in Indonesia

An Indonesian employee fills a car with subsidised fuel at a petrol station in Jakarta, Indonesia, 24 November 2014. Incoming President Joko Widodo has lowered fuel subsidies but, like Susilo Bambang Yudhoyono, has not removed them altogether or linked to global prices. (Photo: AAP).

Author: Ross McLeod, ANU

Economic performance in post-Suharto Indonesia has been inferior to that achieved during the previous three decades, with economic growth slower and income inequality increasing. With the recent election of a new president, now is a good time to focus on improving the quality of economic policymaking.

To begin, how should Indonesia make use of its rich natural resources? Read more…

The logistics of reform in the Philippines


Authors: Gilberto M. Llanto and Adoracion M. Navarro, PIDS

The forthcoming ASEAN Economic Community (AEC) could help drive economic reform in the Philippines. But policymakers will have to embrace what could be difficult reforms and realise that ignoring them would raise the threat of being bypassed (again) by investment and foreign capital seeking opportunities in the Philippines. In particular, there are restrictions on the logistics chain and trade facilitation that stand in the way of efficient trade in goods and services. These should be lifted or removed. Read more…

Getting the state out of economic enterprise in China

A Chinese paramilitary officer patrols Tiananmen Square after the Communist Party Central Committee's concluded its Third Plenum in Beijing on 12 November 2013. Implementation of the Third Plenum reforms that remove the shackles of the state in privileged sectors will create enormous new opportunities for private business, reduce waste of capital and lift medium term productivity and growth. (Photo: AAP).

Author: Peter Drysdale, East Asia Forum

The relationship between the state and economic enterprise is a central choice that governments have to make in all economies. The role of the state and state-backed or state-owned enterprise in Asia’s economic modernisation is a question of special interest. Read more…

Private not state firms are China’s growth engine

Workers in an assembly line at a Goodbaby factory in Kunshan, China. (Photo: AAP).

Author: Nicholas R. Lardy, PIIE. Washington

Virtually every dimension of China’s economic success over the past three-and-a-half decades can be attributed largely to the rise of markets and private businesses. Private firms account for almost all the growth in employment, most of the expansion of output and investment in manufacturing, and in recent years for over half of the growth in exports. Read more…

State-owned enterprises finding bigger role in global investment

A security guard stands next to a branch of Everbright Securities Co., Ltd. in Shanghai, China, 20 August 2013. China Everbright Ltd. rose to the highest since 2011 in Hong Kong trading after government entities signed an agreement that is part of the restructuring of the China Everbright group of state-owned companies. (Photo: AAP)

Author: Michael V. Gestrin, OECD

State-owned enterprises have played a relatively minor role in the era of investment-driven globalisation that began in the 1970s. As recently as 2007, when annual flows of foreign direct investment by multinational enterprises reached a record US$2 trillion, state-owned enterprises were sitting on the sidelines, accounting for only 3–4 per cent of international mergers and acquisitions, the main vehicles multinational enterprises use to acquire and control international operations. Read more…

Japan’s snap election won’t ease Abe’s woes


Author: Corey Wallace, ANU

When Abe dissolved the lower house on 21 November 2014 and called a snap election for December, top leaders in the Liberal Democratic Party (LDP) and New Komeito identified keeping 270 seats as the low-water mark, which would represent a loss of 56 seats. Given current economic conditions and the state of public opinion, a unified and confident opposition would probably extract such losses and would challenge the LDP–New Komeito coalition’s majority. But the opposition is still struggling to unify, so Abe and the coalition look reasonably safe. Read more…

Abbott’s awkward APEC moment


Author: James Laurenceson, ACRI

Forget shirt-fronting Russian President Vladimir Putin. Australian Prime Minister Tony Abbott’s most challenging task in the summit season was breaking an uncomfortable silence with Chinese president Xi Jinping. And he had to do it twice: first at the APEC meeting in Beijing and again at the G20 in Brisbane. Read more…

Three keys to unlocking Cambodia’s growth

Cambodian garment workers buy fish in front of a factory in Phnom Penh on 12 November 2014. The Cambodian government on 12 November raised the minimum wage for its garment workers by 28 percent, following a series of strikes and protests over pay and conditions, to the dismay of unionists. (Photo: AAP)

Author: Heng Pheakdey, Enrich Institute

After the global recession in 2009, Cambodia’s economy recovered steadily with its GDP growing at an average rate of 7 per cent per year in 2010–13. It is expected to maintain its growth rate of 7 per cent this year.

But despite these rosy short-term prospects, Cambodia’s long-term growth prospects might be hampered by its low competitiveness. Read more…

No easy task for India’s labour reforms


Author: Pravakar Sahoo, IEG

Investors find labour laws in India restrictive. Although progress has been made since reforms began in 1991, the labour market is still subjected to around 250 labour rules at the central and state level. India, a democracy, has found it harder than China — where labour laws are more flexible and business friendly — to undertake important reforms. Read more…

China’s third quarter figures beat expectations but fall short of a knockout

A Chinese customer shops for cooking oil at a supermarket in Luoyang city, Henan province, China, 4 November 2014. In the third quarter consumption’s share of Chinese GDP hit 48.5 per cent but the contribution of consumption to year-to-date growth actually fell from 4 percentage points. (Photo: AAP).

Author: James Laurenceson, ACRI

The global economy breathed a sigh of relief last month with the release of China’s third quarter growth numbers. The result of 7.3 per cent was down from 7.5 per cent in the previous quarter but came in a touch above consensus forecasts. The result was sufficiently robust for worries about a hard landing to retreat significantly.

Global growth has come to depend upon China more than ever. Read more…

Japan’s economic experiment

Bank of Japan (BOJ) Governor Haruhiko Kuroda at a press conference at the BOJ headquarters in Tokyo. The Bank of Japan sent a new shock-wave through financial markets last week when Governor Haruhiko Kuroda announced another massive round of monetary expansion. (Photo: AAP).

Author: Peter Drysdale, East Asia Forum

The Bank of Japan sent a new shock-wave through financial markets last week when Governor Haruhiko Kuroda announced another massive round of monetary expansion (Quantitative Easing or QE). The additional boost to the Japanese money supply was accompanied by a sharp lift of 4 per cent in the Nikkei stock market index and the yen falling to a seven-year low against the dollar. Some now fear that the impact of Japan’s monetary expansion will lead to the outbreak of a serious currency war. Read more…