Author: Hal Hill and Chris Manning, ANU

President Susilo Bambang Yudhoyono (universally known as SBY) announced the cabinet for his second five-year term shortly after his inauguration on October 20. Its composition and quality provide one of the best indications of the president’s policy priorities, as well as his political strategy.

SBY’s Democrat Party emerged as the major, though minority, party at the April parliamentary polls, while he had a resounding victory in the July presidential election. He is therefore in a much stronger position than in 2004. In May, he made a surprising choice of Dr Boediono as his vice presidential running mate, a ‘non-politician’, a respected economic policy maker (and also an Australian graduate). Read more…

Author: Geremie Barme

Why does China still conduct military parades?

On Thursday, October 1st, Beijing hosted the sixtieth-anniversary celebration of the founding of the People’s Republic. The Communist Party leadership has elevated the event into a state-religious holiday, of sorts, centered on a massive military parade –including five thousand soldiers arranged partly by height – followed by a civilians’ parade involving a hundred thousand citizens. Read more…

Author: Joel Rathus

Last week the Mainichi reported on results of public polling. It found that the Japanese public still overwhelming support (72 per cent) Hatoyama’s government. While dipping somewhat from his highest approval rating (77 per cent) immediately after forming government one month ago, this is still surprisingly good. The previous three prime ministers each lost 10 per cent in their first month, as did the more historically similar Hosokawa Administration of the mid-nineties.

The honeymoon is clearly still on, but there are some reasons to think that it will last awhile yet. Firstly, Japanese expectations are not very high. Secondly, Hatoyama is proving himself more media savvy than expected. Thirdly, the administration is actually pushing ahead with policy. Read more…

Author: Amitav Acharya, American University

The just concluded Fourth East Asia Summit (EAS) in Thailand will long be remembered as the venue for seemingly competing ideas from Australia and Japan for reorganizing regional cooperation in Asia. But will it also be known for having altered the course of Asian multilateralism?

At one level, the two proposals, Australia’s Asia-Pacific Community, and Japan’s East Asian Community, are timely. Read more…

Author: Andrew Sheng, China Banking Regulatory Commission and Qatar Financial Centre Regulatory Authority

The Global Financial Crisis (GFC) has shattered conventional wisdom about global governance.

Governor of the Bank of England Meryvn King’s dictum that global banking is global in life, but national in death, characterizes complex financial institutions that are larger than sovereign nations, are ineffectively regulated at national levels, and lack global laws. Their demise means that national governments have to pay for the global banks’ mistakes, but ultimately the whole world pays in the form of higher inflation, taxation and lost jobs. Read more…

Author: Joel Rathus, Adelaide

Just three days after coming to power, Hatoyama and Kan Naoto (Vice-PM) opened the National Strategy Office (NSO). One of the DPJ’s policy pledges had been the creation of such an Office, to provide an overarching ‘vision for Japan’ and policy coordination across departments.

Although the terms of reference have since changed, and will likely change again, the NSO is potentially a major innovation in how Japanese politics is conducted. Read more…

Author: William Tow, ANU & ASI

The newly elected government of Japan has already released its vision of how a regional community-building process could be pursued.

Yet Australian Prime Minister Kevin Rudd has been vigorously promoting his own vision of a regional architecture for the past eighteen months. The Australian leader could caution the Hatoyama government on the dangers of going too far, too fast in promoting any one grand vision for regional order-building. Read more…

Author: Larry Diamond, Stanford

Since the mid 1990s, the proportion of countries in the world that are democracies – countries that meet the standard of at least electoral democracies in the sense that they can choose their leaders and replace them in free and fair elections – has stagnated, at around 60 and 62.5 per cent.

The world is experiencing a democratic recession. There are three dimensions of this. Read more…

Author: S. M. Naseem

The challenges facing the Pakistani state, both domestic and external, continue to mount and periodically bring it to the brink of disaster. Whether by some miraculous intervention of Providence or through the rather delicate balance of forces that keep propping it back to a tenuous equilibrium, the ‘existentialist threat’ to the state, gets averted. However, each new equilibrium is not only more fragile but takes place at a lower level of existence and of the welfare of the people inhabiting it.

The last two years have been especially traumatic and have taken the nation on a roller-coaster ride of hope and dismay. Democracy by itself may not bring tangible rewards for the population in the short run, but it does rekindle the hope of future advancement of well-being for many. Read more…

Author: Andrei Lankov

When it comes to dealing with North Korea, the United States and its allies have no efficient methods of coercion at their disposal; the regime is remarkably immune to outside pressure. Its leaders cannot afford change, so they make sure their state continues to be an international threat, using nuclear blackmail as a survival tactic while their unlucky subjects endure more poverty and terror.

Since outside pressure is ineffective, change will have to come from the North Koreans themselves. The United States and its allies can best help them by exposing them to the very attractive alternatives to their current way of life. Read more…

Author: Long S. Le, University of Houston

Vietnam’s economy is showing resiliency. The country’s GDP has rebounded to 5.76 per cent in the third quarter, whereas the economy grew 3.9 per cent in the first half of this year. Opportunely, the Vietnamese government forecasts that the economic growth in the fourth quarter will be more than 6.5 per cent, meaning that an annualized GDP growth of 5.2 per cent is attainable for 2009.

Although the Asian Development Bank (ADB) has recently adjusted its annual growth forecast for Vietnam from 4.7 to 4.5 per cent, the ABD forewarns that the Vietnamese government needs ‘to strike a balance between stimulating growth through demand-side measures and safeguarding macroeconomic stability.’ Read more…

Author: Richard Woolcott, PM’s special envoy to develop the APC

Why did Kevin Rudd put the proposal for an Asia Pacific Community forward in the first place, on behalf of Australia?

What is Rudd’s actual proposal, given that although the broad objective is clear, he is still developing his ideas on the detail of the arrangements he would want to pursue?

Read more…

Guest Author: Warwick Smith, Chairman ANZ (NSW/ACT)

In 10 years time, China will have 15 cities each with more people than the entire population of Australia and a further 22 cities with more than 10 million people. This unprecedented urbanisation drive in human history represents a tremendous challenge and opportunity for our resources sector.

China’s significance is not only limited to its insatiable appetite for our red dirt but also its newly cemented status as a significant player in the international credit market. China is by far the largest holder of US Treasury bonds and this gives China a rare degree of leverage over the United States. Read more…

Author: Peter A. Petri

Last week, the IMF raised its semi-annual forecast of world economic growth for next year, from 2.5 per cent to 3.1 per cent. The projections confirm that Asia is leading the global recovery. This is good news: the last three such revisions were downward, and at the time of the last report in the spring many Asian economies were still in freefall.

But for policy makers, the beginning of the recovery means new, difficult choices. The challenge is not just to exit interventions adopted in the crisis—which dominates the policy debate—but to replace these with structural policies that promote growth through the recovery and beyond. Read more…

Author: Ashima Goyal, IGIDR

The Direct Tax Code proposes to cut through the maze of tax laws, starting on a new slate towards overall objectives of growth and equity. The core idea is to expand the tax base to increase the tax to GDP ratio, even while keeping per capita tax liability low. The tax base should rise as compliance costs, exemptions, and resulting arbitrage-induced inefficiencies fall. Clear simple writing should reduce ambiguity and litigation.

A sharp shifting up of tax slabs is the carrot provided to swallow the stick of vanishing exemptions. The Code which will be applied as of 2011, has been put out for comments. It has a chance if discussions succeed in hammering a new social contract. Low rates and minimum exemptions would work if everyone pays, and the State also delivers.

Read more…