Asia’s Food Woes

In Thailand, supermarkets have placed large “warning” signs limiting the amount of rice that shoppers are allowed to purchase. This, in a country which produces 10 million more tons of rice than it consumes and is the world’s largest rice exporter. But this is just the tip of the iceberg of the Asian food crisis.

A hungry man is an angry man, indeed. In Asia, the food crisis has incurred the wrath of commonfolk, putting pressure on respective Asian governments to relook their budgets. Their people have an increasing need for food subsidies and a higher likelihood of civil unrest.

H.S. Dillon, former adviser to the Indonesian Ministry of Agriculture, has previously said that a major concern in Indonesia is food riots. In January, a spike in soybean prices created ripples of protests throughout Indonesia, albeit controlled. “I don’t see an immediate danger right now, but it has happened in the past and can happen again,” Dillon said.

In Indonesia, the government recently revised its 2008 budget, increasing the amount it will spend on food subsidies by 2.7 trillion rupiah, or about $290 million. Total government spending on fuel, electricity and food subsidies this year will total $20 billion.

A large majority of Malaysian voters, in the country’s March elections, cited skyrocketing prices of fuel and food as “the most important problem in the country” in a postelection survey carried out by the Merdeka Centre, an independent polling agency.

If Prime Minister Abdullah Ahmad Badawi steps down, which many members of his party are pressuring him to do amid postelection turmoil, he will be the region’s first high-profile political casualty of fuel and food price inflation.

Grain prices including rice, the staple food for half the world, have surged this year on concern there’s a shortage in the international market, prompting some growers to impose export curbs. The price of rice has been closely monitored by think tanks as a gauge of potential political unrest.

“Rice is a political commodity,” said Kwanchai Gomez, the executive director of the Thai Rice Foundation, a research center. “It’s not only an economic one.”

In the Philippines, the government has mobilized police officers and soldiers to supply the poorest Filipinos with subsidized rice in recent weeks. The rice, much of which was imported from Vietnam, sells for 18.25 pesos a kilogram, or 20 cents a pound, half the price of the cheapest commercially sold rice in the Philippines.

The surge in prices has prompted governments in Asia to adopt measures to raise output. China, the world’s biggest rice producer, will boost the subsidy on the grain, according to a report today from the China National Grain and Oils Information Center.

The Philippines plans to spend more than 39.5 billion pesos ($948 million) through 2010 to help boost rice output, its Agriculture Secretary Yap said April 4. The funds will be devoted to improving irrigation and farm-to-market roads.

Malaysia will spend at least an additional 6 billion ringgit ($1.9 billion) to increase production, Bernama reported April 11, citing Agriculture Minister Mustapa Mohamed.

The rise in prices affects consumers differently across Asia. For the wealthiest in Singapore, Hong Kong or Kuala Lumpur, food inflation can engender a political backlash, but it is not a life-or-death problem. But for the poorest across Asia, rising prices mean the prospect of increasing rates of malnutrition.

“Food price increases are especially regressive,” said Paul Risley, the spokesman in Asia for the World Food Program, the UN agency that feeds the world’s destitute.

Singaporeans on average spend only 8 percent of their income on food, compared with 15 percent in Malaysia, 26 percent in Indonesia and Thailand, 28 percent in China, 33 percent in India and around 40 percent in Pakistan and Vietnam, according to the U.S. Department of Agriculture.

Those likely to be hurt the most by the sharp increase in food prices are the urban poor, the residents of Asia’s sprawling megacities, Risley said. People in rural areas may have less cash, but they can resort to hunting and gathering.

Slum dwellers in the Philippines, the world’s largest rice importer, are among the worst off in the region. Even before the spike in food prices this year, poverty and food insecurity were on the rise. According to a government report released in March, the number of people who do not have enough income to meet basic food needs in the Philippines rose to 12.2 million in 2006 from 10.8 million three years earlier, an increase of about 13 percent.

Waiting in line outside a warehouse last weekend to buy government-supplied rice was Julieta Casanova, 60, who lives with her two children and eight grandchildren in Tandang Sora, a slum outside of Manila.

“We can’t survive without rice,” Casanova said. The government rations the rice to five kilograms per person, which Casanova said would last two days.

Arroyo, the Philippines’ president, and many other leaders across the region have blamed hoarding by traders and millers for the price increases. Thai Grade B rice, a widely traded variety, reached $854 per ton last week from $322 a year ago, a rise that appears speculative as much as driven by market fundamentals.

Bad weather and increased consumption have caused rice supplies to shrink, experts say, but the world is not in immediate danger of running out. Indonesia is in the midst of a record harvest this year and after years of importing rice will have a surplus of 1.2 million tons, according to Bayu Krisnamurti, deputy for agriculture for the Coordinating Ministry of Economic Affairs. The Food and Agriculture Organization, a United Nations agency, predicts that an overall good harvest this year will increase rice production by 12 million tons, or about 1.8 percent globally.

Yet this news has been overshadowed in a generalized atmosphere of soaring prices for gasoline and economic uncertainty stemming from the U.S. subprime mortgage crisis. In Hong Kong and other Asian cities, some shoppers have panicked, emptying shelves of rice as news of rice prices became a front-page story.

The Downside of Growth & Globalization

What could you do with $1– buy half a bar of chocolate, or one-fifth of a Starbucks latte? Consider yourself incredibly fortunate. More than 600 million people in Asia-Pacific struggle to make ends meet with less than a dollar a day.

So much has been said about rapid Asian economic growth and the stark difference in GDP growth between Asian countries and First World countries. The Asia-Pacific region has seen an average of 6 percent year-on-year growth in the past few years, making it easy to overlook the widespread poverty present in the region.

China and India in particular, are at the forefront of Asian economic growth. Funds expound the massive potential returns from investing in their industries. Little do we know the alarming facts: 452 million people in China and 868 million people in India earn below $2 per day.

Low-income Asians have a common fear of globalization, the same vehicle of progress which might have boosted their income in recent years. Their outputs have since grown more closely correlated with foreign demand, and in turn provided them with higher living standards. However, as an impending U.S. recession looms, they are fearful that their economic gains would be undermined by a worldwide fall in demand for their produce.

Till date, Asia has remained relatively unscathed from the U.S.’s subprime crisis. As the U.S. and Europe revise their economic growth forecasts downward, analysts aren’t too sure the situation will continue for long. Even the most optimistic of economists believe that Asian figures will get shaken sooner or later.

This will exacerbate the conditions of low-income Asians who are vulnerable due to exports to Western countries. When effects of the global downturn are eventually felt by them, it could possibly result in more poverty in the region.

Trade and development units are closely watching the effects of international trade on emerging economies’ exports, and hence, the poverty situation. While global demand has fallen on the whole, the trade surplus in heavily-exporting Asian economies might not suffer, given their shift from exporting to the U.S. or Europe to the Asian region.

Further, big infrastructure plans in India, the Philippines and other Asian countries are providing fiscal help to uphold the economies.

“I don’t think they will escape completely, even China will be affected, but Asian growth has been so strong in 2007 they have a lot of leeway

A related concern is the income divide, which has become more apparent with time. Economic growth has reduced overall poverty in the region, but it has also contributed to a widening gap between rich and poor.

President of the Asian Development Bank, Haruhiko Kuroda, said growth on its own was not enough to solve the Asia’s problems.

“Rapidly growing economies like China and India have shown that although absolute poverty has been reduced substantially, the income gap between the poor and the rich has widened,” he said.

“That means that in coming years many Asian economies must be mindful of this big problem.”

Mr Kuroda called on governments to spend more on health and education and improve conditions in rural areas to address the gaps between rich and poor.

Indeed, the spotlight on Asian economic growth has to be shared with its derivatives.

Vietnam’s Financial Scorecard

The stockmarket is down and ratings agency Fitch has cut the country’s sovereign rating from stable to negative – are we through with the bad news yet? Vietnam has been ducking punches of bad news lately. So it’s no surprise that ratings agency Fitch cut the country’s BB-minus sovereign rating from stable to negative, yesterday. The cut in the rating – which is three levels below investment grade – followed one by Standard & Poor’s earlier this month.

The reason for the poor scorecard: skyrocketing inflation, an increasing trade deficit, and a nose-diving stockmarket – the Ho Chi Minh City Stock Exchange’s (HOSE) index has fallen 55% this year. The stock exchange has been closed since May 27 because of what the exchange says is a technical problem but it will reopen today (May 30).

Vietnam’s annual inflation accelerated to 25.2% in May from 21.4% in April. And that’s up from March, when inflation hit 19.3%, which at the time was the highest level in more than 12 years.

The stockmarket, which has been on a meteoric rise for the past few years, had its worst first quarter in six years. The HOSE fell more than 44% during the first quarter. In February alone it slipped 21%, marking the largest drop since the August 2001 when it fell 34% in one month.

Gone are the heady days when retail investors would rock up on their motorcycles to make a quick trade before scooting over to the fastfood chain Pho 24 for a bowl of noodles.

But most analysts (if not retail investors on the street in Ho Chi Minh City) would say that the market was in need of a correction. For one, the IPO party wasn’t all that much fun. For example, when Vietcombank launched its IPO last December, it was narrowly oversubscribed. The starting price in the auction was Vnd100,000 ($6.33) per share but the average final price was only Vnd107,000. Only 90% of the deposited shares were actually paid for in the end. Similarly, when the largest beer producer in the country Saigon Beer-Alcohol-Beverage Corp (Sabeco) went to the market in February, the average winning bid was a mere Vnd70,003, a squeak above the Vnd70,000 minimum level. The registration rate was only 68%. The paid-up rate was less than 50%.

While companies began to struggle with their IPOs, the market was still deemed hot by outsiders. The IMF told regulators that they needed to slow things down, and regulators took the guidance to heart. They instructed banks to stop lending to speculators. Now, securities lending cannot exceed 3% of a bank’s total lending, nor can it exceed 20% of the bank’s chartered capital.

Meanwhile, inflation is exacerbating the stockmarket problem. The days of low-cost fuel, rent and noodles (which no longer cost Vnd24,000 a bowl at Pho 24) are gone.

Fitch points out that the policy response to inflation has been both too slow, as official pronouncements have not been followed up by immediate action, and too small, as real policy interest rates remain deeply negative even following their recent increase. The agency noted that accelerating inflation could pose risks to the stability of the banking system, which is highly dollarised by regional standards. Aggressive policy interest rate increases, however, could also threaten the banks, especially if there is a sharp deterioration in economic growth, with consequent negative effects on the quality of banks’ assets. Fitch indicated that the future path of inflation and the agency’s assessment of respondent policy initiatives to lower it, while avoiding a sharp economic correction, will be decisive factors in any further rating actions.

High hopes
But this doesn’t need to spell long-term gloom and doom for Vietnam. “The developmental challenges we have seen lately are not unexpected considering recent high rates of growth,” says Tom Nguyen, head of global markets at Deutsche Bank in Vietnam. “The government’s recent reduction of GDP growth to 7% is a step in the right direction as they attempt to strike a balance between growth and inflation. It will take some time but over the long term the compelling fundamentals that attracted investors – at even much higher valuations – will play out.”

Indeed, valuations need to come into line. Analysts and stockbrokers have long been saying that the easy money provided by the stockmarkets for state-owned companies wanting to list, has been unrealistic. Rather than forcing companies to improve corporate governance, train upper management and become more efficient, companies could slide by. Now belt-tightening has to happen.

But, as always, traders in Vietnam are focusing on the sunny side of things. As one analyst said in a note to investors yesterday: it’s “not quite as bad as usual here in Vietnam although it’s tough to tell given that the HCMC market is still closed with little clear idea of when it will re-open. We are looking for clarity on HOSE and positive steps from the government to alleviate the current macro concerns. Let’s hope they come!”

Challenges loom for Southeast Asian Climate Change

Southeast Asia is possibly one of the most vulnerable areas in the global-climate-change scenarios now being put forward by scientists. Many of the region’s estimated 500 million people live in either low-lying river deltas or far-flung islands that will be inundated if waters rise significantly.

Some idea of the damage that climate change could cause over time was witnessed in the tsunami that inundated and destroyed coastal settlements on Indonesia’s Sumatra island in December 2004. While the tsunami was a sudden shock that came without warning, it gave a geographic perspective to what could be anticipated under model scenarios of a more gradual increase in sea and river-delta water levels caused by climate change.

The international climate-change spotlight has not yet fallen on Southeast Asia. With the key question now being addressed - what will succeed the present Kyoto Accord when it expires in 2012 - attention is focused more on the industrializing giants - China, India and Brazil - and how they should be incorporated under a successor framework. But Southeast Asia’s 500 million people arguably should not be overlooked.

To date, concern and debate over greenhouse-gas emission and climate change remain muted in Southeast Asia. Eight countries in the region, namely Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, have ratified the 1997 Kyoto Accord to the 1992 United Nations Framework Convention on Climate Change.

Landlocked Laos has not, nor has the tiny petroleum-rich Islamic sultanate of Brunei. As developing countries - including Singapore, which retains this status formally in international organizations despite its developed-world per capita income - none face any mandatory obligations to reduce gases that contribute to the so-called greenhouse effect, the trapping of the sun’s heat within the atmosphere.

The region can take advantage of the Kyoto Accord’s Clean Development Mechanism (CDM), whereby developed countries having to meet targets under Kyoto can gain credits by funding projects in non-compliance countries that reduce greenhouse emissions. But as of mid-November 2006, of the 173 CDM projects established or seeking registration in East Asia, 70% were in India, 14% in China and only 12% in Southeast Asia.

Despite Kyoto and the climate-change debate elsewhere, energy production and consumption in Southeast Asia remain business as usual. Individual governments and the regional Association of Southeast Asian Nations often make assertions about the desirability of greater energy efficiency, cleaner energy technologies and greater reliance on renewables. But at the moment there is no major departure from the region’s 1990s trends in energy use.

The Singaporean government appears to be positioning itself for what it must see as the need for greater regional efforts over climate change. After ratifying Kyoto late last year, Singapore recently announced a new program to promote research and development, test-bedding and undertaking pilot projects in clean energy on the island.

Public concern in the region is not especially strong compared with the situation in, say, Western Europe, the United States and Australia (even though the latter two countries are not signatories to the Kyoto Accord). The public focus on the issues varies from country to country. In Thailand, for example, community and non-governmental opposition to plans to build coal-fired power plants have historically been strong, forcing the government to postpone projects indefinitely in 2002.

The smog ahead
Yet projections by the Asia-Pacific Energy Research Center (APERC) in Tokyo, a body operating under the auspices of the Asia-Pacific Economic Cooperation (APEC) forum, show a fourfold increase in total carbon-dioxide emissions - the major greenhouse gas - from 2002 to 2030 produced by energy production and consumption in Southeast Asia.

The total will be twice that of Japan in 2030, nearly a third of the US total, and a quarter that of China (China and the US will be the world’s largest and second-largest emitters of greenhouse gases in 2030). Note, though, that these projections in APERC’s 2006 APEC Energy Demand and Supply Outlook, Projections to 2030, assume no major departure from existing energy production and consumption patterns as a result of policies on greenhouse gases and climate change.

One major Southeast Asia-related negative impact on international greenhouse-gas reduction efforts comes from the ongoing destruction of the region’s forests and jungles, especially in Indonesia’s Kalimantan and Sumatra, in the Malaysian states of Sarawak and Sabah on Borneo island, and in the Mekong region in the mountains in Vietnam, Cambodia and Laos, as well as in Myanmar and Thailand. Southeast Asia’s extensive wet rice agriculture also results in the release of another greenhouse gas, methane.

There are also increasing efforts both commercially and promoted by government to develop and expand biofuel production - bio-diesel from palm oil is especially favored. This drive has been sparked by both high global petroleum prices and the region’s increasing reliance on petroleum imports, particularly from the Middle East.

Although biofuel is often pitched as a sustainable energy source, there is concern that the rush to develop it results or will result in more destruction of old forests to clear the way for oil-palm plantations. The large-scale expansion of palm-oil production in Indonesia’s Sumatra and in Kalimantan on Borneo, which has been ongoing for the past decade, is already responsible for another major environmental problem - the haze that affects Singapore, Malaysia and Indonesia when land is burned to prepare for clearing.

There is a regional shift under way toward more natural gas, which is desirable in terms of its lower carbon-dioxide emissions, though it is sometimes forgotten that upstream production often releases carbon dioxide unless engineering measures are taken to re-inject the gas. And natural gas continues to face obstacles due to delays in constructing pipelines.

Moreover, gas will no time soon replace cheap but greenhouse-gas-emitting coal in the region. Coal-fired generation is planned to grow fast in Indonesia, Malaysia and Vietnam. More hydropower is likely to be used, especially in the Mekong region, but again there are environmental concerns as to the impact of damming rivers on downstream river life and communities vulnerable to drought.

Vietnam in particular is finding this a major problem, with exceptionally dry seasons in the past two or three years leading to low water levels in reservoirs behind hydro dams in the north. There has been competition between supply for farmers downriver for rice irrigation and for power generation. This in turn has made Vietnam’s power planners look to coal-fired generation as well as natural gas as means of reducing reliance on hydropower.

Nuclear power has also emerged in the past 18 months or so as a serious possibility in several countries. Vietnam and Indonesia propose large-capacity generation plants, possibly coming into operation at the end of the next decade. And most recently, the governments of Thailand and Myanmar have put forward the idea. Again, there are many issues here, ranging from whether the plants would really be economic to safety and weapons-proliferation concerns.

Motor vehicles - another major source of carbon-dioxide emissions - are set to keep filling Southeast Asia’s roads. In per capita terms, car ownership is still low. But at the same time, in large urban areas, growing car ownership continues to congest cities and harm the atmosphere and community health through vehicle exhaust. Better public-transport systems - from buses to rail overhead and underground systems - are clearly critical but are generally only planned for the region’s more affluent countries.

Emission analysis
Not all the news is bad, however. For instance, Singapore has for decades been exemplary in its attention to urban planning and mass transport, including extensive use of greenbelts and tree-lined gardens. Bangkok, notorious in the past for traffic jams and exhaust pollution, is also now benefiting from its light rail and more recent underground rail system, as well as stricter standards and controls on gasoline quality. In Vietnam, the fastest-growing economy in the region, there are plans for mass-transit systems for the large and fast-growing cities of Hanoi and Ho Chi Minh. Whether they can be put in place ahead of the expected huge growth in vehicle numbers remains to be seen, however.

Southeast Asia, which justifiably prides itself on the great progress the region has made in terms of both political stability and economic development since the late 1970s, still faces many pressing socioeconomic challenges. As such, concerns over greenhouse-gas emission and climate change do not yet seem as pressing as they are now in the developed world.

Southeast Asia’s defenders will point - and rightly so - to the region’s low per capita emissions of carbon dioxide. And over the medium term, these will still be low compared with the developed world. By 2030, APERC projects 4.2 tons per capita in Southeast Asia, compared with 6.7 in China, 10.8 in Japan, 21.9 in Australia and 23.0 in the United States. These low per capita figures are consistent with still low per capita income levels compared with more developed countries, apart from China.

The popular argument is - and will continue to be - that Southeast Asia’s economic development should not be penalized through a disproportionate burden of greenhouse-gas reduction measures. Further strengthening this perspective is the fact that much of the atmosphere’s existing carbon-dioxide content has been produced by the West and Japan over the past century. This also points to another problem with carbon-dioxide mitigation: it can take a century or more for carbon dioxide to break down naturally.

However, the comparison of per capita output on a national basis is arguably not sufficiently focused. Looking at national averages does not give a sharp enough picture of energy-use patterns and how they might be improved. When comparing major urban areas, say Bangkok or Jakarta, with comparable cities in the developed world, the per capita emission figures in many cases are not that different. Singapore is a case and point. Its per capita carbon-dioxide output was a high 12.2 tons in 2002 and is projected by APERC to reach 18.8 tons by 2030.

Future analysis would be better based on scientific and economic geography rather than nation-states - although national governments clearly remain critical and indispensable as far as policy development and implementation are concerned. This in turn points to Southeast Asia’s particular greenhouse-gas challenges.

Energy use by the region’s cities is often extravagant and wasteful, which could be improved through better building design, electrical-product standards, and transport systems. Set against this are rural areas where millions of people live in virtual energy poverty with little or no access to electricity. Hence Southeast Asia faces the unique global-warming challenge of both the modern urbanized and industrialized world and the agriculture-based developing world. And it is increasingly important that it is addressed as such.

A common Asian currency: Stronger financial resilience?

Asia is hit badly by the current recession in the United States. Investors are shying away, stock markets are down, thousands are losing jobs.

In this scenario, there is once again talk of evolving a common currency for Asia for safeguarding its financial stability. But there are many hurdles on its way.

One is the `hegemony’ of stronger states. Smaller Southeast Asian states feel threatened by China’s growing economic power and Japan’s isolationist economic policy. They also question whether the currencies of Australia and New Zealand should be included with India. Japan is not too comfortable with China’s emergence and the fact that the yen may be overshadowed by the yuan. India too has been so far cool to the proposal for a common ASEAN currency, holding that it would require more coordinated efforts on the parts of all the participants and removal of many political and technical obstacles.

Some argue that it is impossible to replicate the euro experience because Europe had sorted out the question of hegemony long before the question of a single currency was mooted. The ideal preconditions that existed in Europe prior to the introduction of the euro either don’t exist in Asia or are only emerging. There were several factors that bound the European nations together. They included high trade interdependencies, Common acceptance of basic political and social values, fairly even economic development and comparable living standards. Even with common objectives, it took half a century for Europe to achieve a single currency.

There are a few such binding factors among Asian countries.However, conditions for a common Asian currency are improving. The past few years have witnessed higher trade interdependencies in East Asia than ever before. Trade volume among the ASEAN countries has swelled. Trade between India and China increased manifold over the past few years. foreign remittances from Japan and Singapore are on the rise.

But efforts towards a common currency have to be preceded by a common single market. ASEAN has already initiated steps toward evolving a mechanism for exchange-rate stability for promoting financial stability in Asia. More steps remain to be taken toward creation of a unified currency structure in Asia.

The benefits of an eventual single currency are numerous. It will increase market transparency by making prices more easily comparable. Cross-border transactions will also become more attractive as market operators will no longer be exposed to exchange-rate risks, and costs associated with currency conversion will be eliminated.

Moreover, single currency will go a long way in promoting political union in Asia. But it will be a long-drawn-out process. Europe has worked towards political and economic integration for over 50 years before the birth of a single European currency in 2001.

Myanmar’s delay on aid ‘cost tens of thousands of lives’

The Myanmar government’s delay in allowing international aid into the cyclone-hit country cost “tens of thousands of lives,” US Defence Secretary Robert Gates said Saturday.

Speaking at a top-level security conference here, Gates said US ships could have quickly delivered much needed aid to Myanmar in the aftermath of the May 2-3 storm that left 133,000 people dead or missing. “Our ships and aircraft awaited country approval so they could act promptly to save thousands of lives — approval of the kind granted by Indonesia immediately after the 2004 tsunami and by Bangladesh after a fierce cyclone just last November,” Gates told the regional forum. “With Burma (Myanmar), the situation has been very different — at a cost of tens of thousands of lives.”

Gates added that many other countries besides the United States have also felt hindered in their efforts to help Myanmar recover from Cyclone Nargis.

“Despite these obstructions, we continue to get help into Burma and remain poised to provide more,” he said, reiterating that the US does not support the use of force to deliver assistance.

“My own view is that (force) will be a serious mistake and it clearly has been a policy of our government and we don’t expect it to change.”

He said many governments including the US have tried to reach out to the leadership of Myanmar after the cyclone.

“We have reached out. They have kept their hands in their pockets,” Gates said.

Nearly four weeks after the cyclone pummelled large swathes of Myanmar, foreign aid has still only reached 40 percent of the 2.4 million needy survivors, the United Nations said.

Inciting international outrage, Myanmar’s isolated military had largely barred foreign aid workers from gaining access to the southwest Irrawaddy Delta, which bore the brunt of the cyclone.

Relief workers slowly moved into the delta on Thursday after the government started to ease restrictions on access.

The United Nations said Friday it has received all the visas it had requested from Myanmar for its disaster aid workers but called for unhindered access for other humanitarian workers and groups.

US war ships carrying relief supplies have been off the coast of Myanmar for two weeks waiting for Myanmar’s permission to move in. US military planes, however, have been allowed to land in the main city Yangon to deliver aid.

Gates also told the seventh Shangri-La Dialogue that the US welcomed ASEAN’s leadership, and looked forward to the quick emergence of a mechanism that can help international assistance reach those who need it.

Singapore holds the current chair of the 10-member Association of Southeast Asian Nations (ASEAN), of which Myanmar is a member.

An assessment team from ASEAN was set to arrive in Yangon on Friday to determine how best to help the survivors in desperate need of food, shelter and medicine.

In a keynote opening address to the Shangri-La Dialogue on Friday night, Singapore’s prime minister said Myanmar’s response to foreign offers of help for cyclone victims is regrettable.

“It’s regrettable that the Myanmar government has responded in this way. Myanmar’s partners in ASEAN have all been deeply concerned by the massive suffering of the victims, which a more rapid international relief operation could have minimised,” Prime Minister Lee Hsien Loong said.

Criticism also came from White House spokeswoman Dana Perino in Washington on Friday. She said Myanmar military’s response to the crisis “continues to frustrate not just the United States, but other countries, and certainly the non-governmental organisations that are trying to get in there”.

In an apparent reference to the United States, the New Light of Myanmar newspaper, a government mouthpiece, on Friday criticised countries for maintaining sanctions on Myanmar despite the cyclone devastation.

The US renewed sanctions two weeks after the storm, accusing Myanmar’s rulers of suppressing the pro-democracy movement, while insisting the sanctions will not affect humanitarian aid.

Also known as the Asia Security Summit, the Singapore meeting of defence and national security officials and analysts is organised by the London-based International Institute for Strategic Studies, an independent think-tank. - AFP/ir

The Diamond In The Rough

Most people associate Bangladesh with catastrophic floods and chronic instability, as Ernst Herb notes in Switzerland’s Finanz und Wirtschaft. But it’s come a long way. According to the IMF, growth is set to reach 7% this year, a 30-year high. A military-backed government has pushed through a series of reforms, with 26 state-owned enterprises set to be sold off.”It’s a quantum leap in the mind-set of the government…that they’re embracing privatisation,” says Yawer Sayeed, CEO of the first and only private fund manager in the country. New-found political stability has encouraged foreign investment and consumption is also on the rise.

The Dhaka Stock Exchange Index has risen by about 80% this year amid these improved conditions. The market’s total value is a tiny $8bn, says Pooja Thakur on Bloomberg.com, but is expected to double to more than $15bn as privatisations provide further impetus and the market begins to appear on foreign investors’ radar screens. JP Morgan, Merrill Lynch and Citigroup - which last month became the first foreign lender to acquire a license to offer investment banking services - all reckon Bangladesh may be the “next Asian success story”, says Thakur.

Key data show Japanese economy slowing

Japanese unemployment hit a seven-month high last month while industrial production and household spending fell, adding to evidence that the world’s second-largest economy is slowing down.

Industrial production declined 0.3 per cent in April, the government said, while unemployment rose 0.2 percentage points to 4 per cent and overall household spending fell 2.7 per cent.

“The data suggests the Japanese economy is moderating gradually but certainly isn’t falling off a cliff as it has done when other external slowdowns occurred,” said Glenn Maguire, chief Asia economist at Société Générale in Hong Kong.

Japan’s exports, which have held up well thanks to demand from emerging economies, are also showing signs of slowing down. Such a slowdown will take its toll on production and capital spending, and eat into overall growth.

The economy expanded at the slowest pace in three years in the first quarter (year-on-year) due to sluggish capital spending. However, consumer spending was surprisingly resilient, albeit dull, even in the face of higher energy and food prices.

The restrained consumer expansion offers a glimmer of hope that Japan will be able to weather an external slowdown better than it did in the late 1990s and 2001. But with higher prices, spending is unlikely to show any exuberance.

A few months of positive wage data suggest that demand for certain skilled labour is helping drive up salaries even though other recent figures suggest that employment demand is slowing.

“One of the key features of the Japanese economy at the moment is this strengthening in wages in the context of a weaker labour market,” said Mr Maguire.

“If that continues, which I think it will, then you won’t necessarily see the typical response, which is consumption weakening in line with the labour market.”

Japan’s April consumer price index, excluding fresh food, rose 0.9 per cent in April, slower than March’s pace, but that was due to the brief lapse in the fuel tax, which has since been reinstated.

Core consumer prices, excluding fresh food and energy, fell 0.1 per cent, confirming that rising prices were due to external factors. Tokyo’s May consumer price data showed core inflation of 0.1 per cent, government data showed.

Fuel Restrictions in Malaysia

Malaysia is to restrict fuel sales to foreign motorists on its borders in an attempt to curb the spiralling cost of government subsidies.Hundreds of Thai and Singaporean motorists cross the border every day to fill up on cheap petrol and diesel. The ban, due to take effect on Friday, will be lifted as soon as prices can be set at market level, officials said.

Malaysia has some of Asia’s lowest fuel prices due to high government subsidies.

“Taxpayers’ money is being used to subsidise petrol for those who are not entitled to receive the subsidy,” Malaysia’s Deputy Prime Minister Najib Razik said.

“[Foreigners] should not take advantage of our subsidy scheme,” he added.

Subsidies are expected to cost the Malaysian government 45bn ringgit (US$ 14bn; £7bn) this year as oil prices rise worldwide. The government is considering a series of measures to address the problem of rising subsidies, including selling petrol and diesel at market prices.

Malaysia’s trade minister Shahrir Samad said other proposals included cash remunerations for Malaysian motorists and a distribution system involving identity cards.

Until the ban is lifted, those who break the new ruling could be fined or face a jail term.

“It’s a very harsh decision,” Alang Zari Ishak, president of a local petroleum dealers’ association, told the Associated Press News Agency. He added that the ban may affect tourism and relations with Malaysia’s neighbours.

The Indonesian government last week raised fuel prices by nearly 30%, prompting fears of widespread unrest.

Anti-US beef protest draws 100,000 South Koreans

A decision to resume importing U.S. beef by the South Korean government sparked a massive demonstration that shut down a 16 lane thoroughfare in the capital city of Seoul.South Korea had stopped all imports of beef from the U.S. after their 2003 outbreak of mad cow disease.

The protest, a candle-lit vigil of 100,000, was preceded by more than a week of other protests against President Lee Myung-bak, who has seen a drastic decline in his popularity.

College student Ju Ha-na, 24, who took part in a head-shaving ceremony in protest with 19 others said that it was not just the beef deal, but that the government is anti-working people.

President Lee last week apologized for ignoring public health concerns and promised to restore the ban if there was a fresh outbreak of mad cow disease.

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