Managing Asia’s Urbanization

Asian cities are growing at a rate of roughly 100,000 people each day. Due to this and other factors officials are having to re-plan city management so that they are socially, economically, and environmentally sustainable. Financing such changes is a bigger obstacle than simply recognizing where the problems lie and how to address them. The World Cities Summit, held in Singapore, is a series of conferences that addressed this and several related issues. The President of the Asian Development Bank, Haruhiko Kuroda, discussed the need for reform and financial issues in the most detail at The World Cities summit on June 25^th.Kuroda announced “I am proud to say that the Asian Development Bank (ADB) is working very successfully with Singapore in both the water and urban management sectors, with the aim of spreading best practices throughout developing Asia and the Pacific.”

Kuroda mentioned the changes needed are on a  “magnitude never before attempted by humanity” and that “cities in Asia have populations and economies the size of nation states…for most major cities in Asia, growth rates are too rapid for their infrastructure to keep up.” Karuda mentioned a $30 billion shortfall in urban infrastructure investments is recorded every year, which of course makes efforts all the more challenging.

Kuroda announced the efforts made, in his own words “our joint initiatives include the Asia Training and Research Initiative on Urban Management (ATRIUM) ; a regional network of knowledge hubs on water, under the auspices of the Asia Pacific Water Forum (APWF); and the Asian Water Development Outlook 2007, which was featured prominently at the 1st Asia-Pacific Water Summit held in Beppu City, Japan last December. We have translated the report in Chinese, Russian, Japanese, and Vietnamese to reach a wider audience.” Kuroda stated one of the most important messages in the report is that water is crucial to larger development agendas such as energy, food, environment, and industrial policy. Policies in all related areas will be influenced by the factors of demographic transitioning, advancement of technology and communication, free trade, social activism, and globalization. New approaches are also needed on energy use, the management of household rubbish and other solid waste, sewage, water supply and other urban infrastructure issues. The report outlines a new financial structuring the will allow cities to gain access to over $1.5 trillion in available savings and will encourage private sector participation as well as local capital markets.

The Asian Development Bank (ADB) also published a report entitled “Managing Asian Cities” that outlines how the cities can meet the goals to overcome their problems. According to the report the biggest obstacles are coordination, finance, and capacity as opposed to technology, money, and skills. Energy use and waste management are other issues that need to be addressed. The report states “Effective urban management is needed to counter this unparalleled growth but it is lacking, and the results are clearly evident in pollution, no drinkable water for over 50% of urban residents, half a billion slum dwellers and crippling traffic congestion.”

Kuroda outlined other efforts in his speech which lasted approximately 15 minutes during the early part of the third day of the conference. “Our urban lending, at around $1 billion per year on average, is becoming more flexible and responsive through, among others, the use of multi-tranche and local currency finance…As a partner in the Cities Development Initiative for Asia, we help city governments coordinate and integrate the many activities involved in implementing urban investments, including funding for environmental infrastructure. With Singapore, we are implementing the Asian Training and Research Initiative for Urban Management, and we have recently established the Asia Infrastructure Project Development Company, together with the Singapore Cooperation Enterprise and 3 Singaporean water companies.” His final comment on financing was ” It is our hope that the annual Singapore International Water Week and the bi-annual World Cities Summit will advance the debate on urban issues in Asia and address the financing needs for urban infrastructure.”

Thousands of delegates from all over the world attended the World Cities Summit, which went from June 23^rd to 25th, to continue discussing sustainable development and “livable and vibrant cities.”

The Asia Tomorrow newsgroup conducted an interview with another high level official on this topic. Ms. Ursula Schaefer-Preuss, Vice President of Knowledge Management and Sustainable Development of the Asian Development Bank answers key questions in the following.

The Asia Tomorrow: To start off, in your opinion, what are the few topmost pressing problems of growth and urbanization in emerging economies, in particular Asia?

Schaefer-Preuss: Well, as we have discussed here, one real problem is that the mega cities are already very big, but they are becoming more attractive, too attractive for the people in the countryside so more and more come (into the cities) at even higher speeds until the cities cannot absorb allthese people anymore and the water supply and (adequate) transportation is not available.

The energy system/supply is not really conducive, and there are many problems with the infrastructure. One other pressing problem is the stress on the environment, the climate change-related aspect.

AT: In a session which you chaired here at the World Cities Summit, you’ve highlighted issues of inadequate environmental infrastructure*. How would its development will impact resource sustainability and clean water access in poorer Asian regions?
* (such as  transport, solid waste management and sanitation)

SP: In many cities, for example Bangkok, the water level is going down because of the need of additional water supply, so you have to dig deeper and deeper into the earth to get the water needed for the growing number of people living in the city. Then water pollution is increasing because the drainage system cannot absorb all the waste water coming.

AT: In some parts of Asia, the drainage problem might not be wholly infrastructural, but due to a lack of cleanliness. For instance, people littering and cluttering the drains, sewage not disposed properly. What are your thoughts on that?

SP: Well you will have to invest more into the sewage and drainage systems… into energy systems, water pipes, and when the communities do not have the funds available, what to do?

AT: Could you cite us a recent significant example whereby the ADB  has advised an Asian developing economy on improving its environmental infrastructure, in particular one that has made major changes.

SP: We’ve got big programs, for example in China. There, we’re looking into river basins, studying the situations of water quality in these river basins, and advising how to improve water quality, how to invest in infrastructure in order to clean up the water using all that is available.

AT: China is such a huge country, wouldn’t it take a long time to complete those projects?

SP: Yes, that is true, that is true.

AT: In that case, what do you believe private companies in the Asian region could embark on to address the environmental infrastructure issues and improve the whole situation?

SP: Well, private companies first look into what they’ll get out of their investment. That means, they could partner with a public organization. For example, the Asian Development Bank could do a public-private partnership arrangement with public funds and then match them with private funds to increase investments (in environmental infrastructure), and get private companies involved in the investment. The private companies will have more interest in investing through joint ventures.

AT: Do you think private companies have done too little in this respect? Or how much do you think they have done to help?

SP: Private companies, for sure, could do more… but normally they’re not so prepared to bear increasing risks.

— The rate of growth in Asia is unparalled by other nations. London took 130 years to grow from 1 million to 8 million residents. Dhaka, the Bangladeshi Capital, is expected to grow from 12 million to 22 million in the next ten years.

The Future of Asia- Will Water be the New Oil?: Discussions at Singapore International Water Week

Singapore International Water Week, which ended June 27^th, ended with $270 million US dollars worth of deals. Governments, water companies, and utility providers were among those signing the 27 agreements.
Environment and Water Resources Minister Yaacob Ibrahim describes the focus of the meeting as an effort to develop into a platform for water solutions on a global scale. Ibrahim referred to the figures resulting from the meeting as encouraging.
New ground was broken in the meeting. Perhaps one of the most crucial is the development of a water fund which will bring $320 million US dollars worth of investment for water projects in Asia. The Asian Development Bank is predicted to raise this figure higher, as they have pledged to help regional states raise their investments in water security to $20 billion US dollars.

Singapore water companies also won significant contracts. A consortium comprising PUB and CPG Consultants as well as Pico Art International secured a contract to design the King Abdullah Water Centre in Riyadh, Saudi Arabia.
Other significant contracts were signed for Singapore. The King Abdullah Watre Centre was proposed to be built in Ridyah, Saudi Arabia, and was signed by PUB and CPG Consultants as well as Pico Art International. Yaacob further commented the interest in the meeting was better than expected. Regarding Singapore, he commented “we’re holding this for the first time. Hopefully, more will realise that there’s value in coming to Singapore. We were pleasantly surprised that more companies wanted to come on board for the exhibition… they see there is a scope for making business deals.”

Of course, solutions are still actively being saught in addition to the new projects. Yaacob states “going forward, we are looking for new technological solutions… how can we lower some of the energy costs in terms of desalination? We will mine the papers that have been presented and see whether there are new ideas of achieving some of these water solutions.”

Delegates from overseas discuss Singapore’s NeWater technology in the meeting. Singapore’s minister says “I spoke to some of the ministers from the Middle East. Recycling is now on the top of their mind. For them, water is the new oil… They all ask about recycling.  “‘How do you do it?’ they ask. We told them briefly that you need an ecosystem, you need a demand, you need a technical system to help you recycle water. They are keen. “So, for the average Singaporean, I think you have to feel proud that Singapore has been able to achieve something that we can share with the rest of the world.”
Over 8,500 delegates and other visitors attended the meeting, which spanned over five days. The Singapore International Water week will be an annual event. Next year’s meeting is scheduled to focus on the significance of infrastructure in water management, supply, and environment sustainability.

Finding Hope In Asia For Global Economic Recovery

With the economic sentiment in the usual financial Western greats at a low, the world is looking East to help boost global economic growth. Last year’s subprime crisis has hit the U.S. and is spreading to Europe, and this year’s World Economic Forum (WEF) on East Asia has brought attention to how Asia is a contrasting spark of hope in the “gloom and doom” felt in the West. This was a view echoed by the WEF Panellists such as Lord Levene, Chairman of Lloyd’s, and Jamshyd Godrej, Chairman and Managing Director of Godrej & Boyce, India. But is this view premature in these times of rapid and somewhat uncertain economic change?

Asia’s phenomenal growth has of late outstripped that of the West consistently — by large margins. And though Asia is gradually being affected by the reverberations of Wall Street’s losses, the region’s growth figures do not appear tainted at all. Its largely-emerging economies attract exponentially increasing inflows of Foreign Direct investment (FDIs) and are hotbeds for fund managers and Western investors. In today’s WEF on East Asia, Vietnam’s Deputy Prime Minister Hoang Trung Hai mentioned the FDIs his country was receiving — $20.3 billion in 2007 and $15.3 billion from January to May 2008.

Any reasonable person would look at these figures in a reflection of how investors have started to channel their funds to the East, thereby acting as a catalyst to Asia’s accelerated economic growth.

Even if we assume that Asia can keep up its growth momentum in future years, however, we must not overlook other macroeconomic measures of the Asian hotbeds such as Vietnam, China and India. Inflation, overall macroeconomic stability and social safety are concerns which the respective governments face. Inflation, for

Then there are the long-haul effects of globalization. Asian governments in previous years have actively promoted their production exports with a good degree of success. But this has led to a higher external risk exposure in the form of vulnerable price indices. The U.S. and Europe have been large consumers of Asian exports, and with the economcic downturn at home, they are not buying as much from Asia. As such, Asian countries with high net exports will tend to suffer from significantly weakened demand.

Making the situation worse are higher prices of fuel and food prices, which has resulted in protests in affected countries. Demonstrations and civil unrest have since occurred in the Philippines and Indonesia, which present a worry for their politicians.

As such, the overall ability of Asia to maintain its strong growth and resilience against falling demand from the West, exceedingly high price indices and inflationary pressures has been called into question. Despite its contentious position, the general consensus at the WEF on East Asia is that Asia will retain this much-needed ability.

This stems from a number of factors. Domestic demand in Asian countries has been consistent in and healthy in recent years. Intra-Asian trade is increasing faster than the region’s international trade with the rest of the world. Asian corporations boast healthy balance sheets. In essence, the hope placed on Asia to lift the global economy out of its gloom is not unfounded.

Asia will continue to see economic prosperity should it contain the negative macroeconomic side-effects. Given a sound balance of the two, Asia’s economic dynamism will undoubtedly lighten much of the burden on the global economy, albeit not being a cure-all.

China takes on the US - in space

Chinese military experts believe a confrontation in space, probably with the United States, is inevitable. What they haven’t said is whether they expect to win.

Two disarmament officials with the People’s Liberation Army (PLA) this week accused Washington in an assessment of the global weapons buildup of fueling an arms race aimed at controlling “the commanding heights”.

“In the not too distant future, outer space will certainly become a stage for struggle between countries,” charged Xu Nengwu, of China’s National Defense Science and Technology University.

Simialry, Lieutenant General Ma Xiaotian, deputy chief of staff of the PLA, speaking at the annual Shangri-La Dialogue in Singapore at the weekend, was less than subtle. He did not mention the US at all (other than including Hurricane Katrina in the list of recent natural disasters), but did identify “expansion of military alliance” and “development and expansion of missile defense system” among the major security challenges the region faces.

The PLA has issued similar gloomy predictions before, usually accompanied by demands for a negotiated disarmament treaty, that were seen as an admission China lacked the ability to compete - and might be using as a cover for its own lagging research efforts.

But since they successfully shot down an obsolete weather satellite with a missile in an outer orbit in January 2007, the Chinese armed forces have been operating from a position of relative strength.

So powerful was the impact from the four-stage rocket, which was traveling at nearly 29,000 kilometers an hour when it struck the satellite, that it scattered debris halfway around the globe. A definite footprint of strategic intent.

No surprise then, that the Pentagon responded in February this year by shooting down one of its own wayward satellites over the Pacific Ocean with a rocket, thus shattering a 1980s undertaking not to conduct antisatellite (ASAT) tests.

Thirty-two countries are known to have a missile capability, including Asian foes India and Pakistan, South and North Korea, Israel, Syria, Taiwan, Iran, Vietnam, Egypt and Saudi Arabia, as well as Russia, China and the US. Any could technically wage a military campaign in space, even if it were limited to ground-to-air strikes.

Most of these countries are signatories to the Outer Space Treaty, an agreement approved by the United Nations in 1967 after tortuous negotiations between the US and the Soviet Union - though China is one of the few nations to fully accede to its provisions.

The Chinese have noted, with support from some peace organizations, that the treaty is a Cold War relic fashioned in an era when the concept of futuristic Star Wars armed orbiters was the preserve of science fiction writers.

Core commitments are that signatories will not place “nuclear or any other weapons of mass destruction”, military installations or fortifications in orbit around the Earth or on any celestial body, undertake testing of weapons there or conduct military maneuvers.

Conventional weapons based in space are totally legal. And there is no prohibition on the firing of ground-based missiles into space, as both the US and Soviet Union were developing intercontinental missiles and peaceful space programs when the treaty was signed.

Similarly, there is wide scope for interpreting “weapons of mass destruction”; as US defense officials have pointed out, practically anything that could be propelled into space could be used to ram a satellite without violating the treaty.

China has been at the forefront of efforts to expand the accord; yet even its version, introduced in the UN as a draft treaty in 2002, falls far short of the moratorium being sought by disarmament groups.

Backed by an eclectic group that included Russia (which superseded the Soviet Union as a treaty signatory), Zimbabwe, Syria, Belarus and Vietnam, the draft proposed the deployment of all space-based weapons. Again, the ground missiles were overlooked.

Perhaps Beijing is only being realistic: there is a legitimate argument for developing missiles for satellite launches and wider space programs. But the powerful conservative bloc in the US sees a more sinister motivation at work.

“Even as it tries to rally multinational coalitions and public opinion to oppose ‘the weaponization of space’, Beijing quietly continues to develop its own space-based weapons and tactics to destroy American military assets,” Heritage Foundation vice president for foreign policy and defense studies, Larry M Wortzel, railed in a commentary.

“China’s strategy here is to blunt American military superiority by limiting and ultimately neutralizing its existing space-based defense assets, and to forestall deployment of new technology that many experts believe would provide the best protection from ballistic missile attack.”

Last month, Chinese President Hu Jintao sided with Russia in its long-running campaign to block the deployment of a US missile defense system covering much of East Asia that would partly operate from bases in Eastern Europe.

Some analysts believe Beijing is worried the deployment of American space-based interceptors would block missiles the PLA has been upgrading to target what it calls the renegade island of Taiwan and US Pacific bases.

Certainly, the Chinese military apparatus hasn’t been sitting on its haunches while its diplomats have been getting all worked up over the Americans. Security analysts say it has poured cash into an electronic warfare capability designed to jam satellite transmissions, developed laser-based weapons and improved its heavy-lift rockets.

The Technology Research Academy has been working on an advanced ASAT weapon called a “piggyback satellite” that would attach itself to an enemy satellite, space station or space-based laser and jam communications or blow up the target.

A generation of mini satellites is being developed that would be so small they would be difficult to detect from the ground. They are said to be defensive, but would still be capable of surveillance, reconnaissance, communications and - theoretically - the destruction of other satellites.

Three mobile space launch vehicles, the KT-1, KT-2 and KT-2A, have been designed to launch the “nano-sats”. Pentagon officials say the KT-2 and KT-2A will also be capable of targeting geosynchronous and polar orbits used by US military satellites.

American strategists seized on 2003 comments by Captain Shen Zhongchang of the Chinese Navy Research Institute that he envisioned a weaker military force - presumably China - being able to defeat a superior one by attacking its space-based communications and surveillance systems.

“The mastery of outer space will be a requisite for military victory, with outer space becoming the new commanding heights for combat,” Shen is quoted as saying in the US Defense Department’s annual report to Congress on the Chinese military capability.

China’s antisatellite test last year was probably designed more for political effect than military gain: after all, it has already sent astronauts into space and has a robust intercontinental ballistic missile program. It is likely Beijing was sending a signal to Washington that it could cripple low-level satellites if the US overstepped the mark on the issue of Taiwan’s sovereignty, for instance.

There is no doubting the technical gap that still exists between the US and all other potential space combatants, and the Americans do their best to make sure the others about know it.

A 2004 report titled “Transformation Flight Plan” pulled the curtain right back on a bewildering high-tech research strategy that left little doubt the Pentagon wanted complete superiority in space - treaty or no treaty - and was ready to turn it into a battlefield if necessary.

Crucially, the program proposes a shift from protecting satellites from hostile attack to developing an offensive capability, including the tracking and neutralizing of enemy orbiters, and weapons with the ability “to strike ground targets anywhere in the world from space”.

Like much that originates from the Pentagon’s research boffins, the report lapses into fantasy at times. There is something called a Hypervelocity Rod Bundles project, widely discredited by scientists, that would fire metal poles from space to targets on Earth. Then there is the sci-fi plan to dangle giant mirrors below airships to deflect laser beams that could be used to cripple satellites or block out communications, if they could be steered to the right location in time.

The US Air Force, which is leading the research thrust, expects to be able to disrupt space-based communications and early warning systems by 2010 and to have air-launched missiles that could intercept satellites in low orbit after 2015.

But these targets were drawn up under a strongly pro-ASAT George W Bush administration that took its inspiration from the strategic vision of defense secretary Donald Rumsfeld. It will be leaving office in November.

As he was taking up his post in 2001, Rumsfeld laid out his intentions to escalate the ASAT race while chairing a commission on space and national security, warning that to do otherwise would risk a “space Pearl Harbor”. Rumsfeld argued that the US needed to “vigorously pursue the capabilities … to ensure that the president will have the option to deploy weapons in space”.

Congressmen, sitting on both sides of the political spectrum, have been less enthusiastic. Reluctant to commit money to fantastic weapons that might never work, they have joined forces in the House Armed Services Committee to slash hundreds of millions of dollars from missile defense and ASAT research in the past two years.

Among the scuttled programs was an additional interceptor site in Europe, research into lasers that would target satellites and funding for a space-based missile defense interceptor. Allocations for the high-altitude airships were sharply reduced.

Officially at least, no American president has yet crossed the line and authorized the deployment of a space weapon, but the day is fast coming when it may be unavoidable.

Republican presidential candidate John McCain was cast from the same mold as Rumsfeld on defense issues and will probably keep the cash pot boiling; his Democratic opponent Barack Obama would need a lot more convincing.

Both may be left with little choice if the Chinese stage any more ASAT tests, which many security analysts believe simply harden US public opinion and hand the initiative back to the hawks at the Pentagon.

“Whatever their motivation, there is little doubt it [the 2007] test was a miscalculation,” said an Australian diplomat. “They miscalculated the US response and of course forfeited the moral high ground after successfully portraying themselves as the voice of the disarmament movement.

“It’s [also] a little hard to ignore China’s shipments of missile technology that impinges upon US strategic interests and might even be adapted for future ASAT deployment,” he said.

The pro-ASAT lobby contends the US cannot sit on its hands while countries like Syria, Libya, North Korea and Iran, all hostile to American geopolitical influences, are getting missiles capable of threatening US satellites from China and Russia. In Asia, feuding neighbors Pakistan and India have also benefited.

China shipped components for the Fateh-110 missile developed by Iran and also sold it the Tondar-69, which the PLA had designed as the CSS-8. Pakistan purchased parts for its Shaheen and Hatf series from the Chinese, as well as the Ghauri-3.

Beijing has also sanctioned the PLA’s defense technology arm to help Iran, Pakistan and North Korea - and reportedly Syria - establish military targeting satellites or space launch programs.

Russia supplied components for Iran’s Shahab series, shipped the SS-21s used by both Syria and North Korea, the Scud B used by Libya and the Agri series deployed by India. The Indians also bought parts for their Prithv series and Sagarika from Russia.

In addition, the Russians have their Kondor-E military satellite, designed to guide high-speed supersonic cruise missiles with space-targeting sensors, on sale on the open market.

India, North Korea, Iran and Pakistan, as well as China, have already produced or flight-tested missiles with ranges exceeding 2,600 kilometers, easily within the range of low-orbit satellites.

America satellite defenses have been tested by what Washington terms “unstable regimes”, pointing to the increased vulnerability of orbiters that are vital to military communications - not to mention the word economy.

The most extreme confirmed attack took place during the second war with Iraq, when signals transmitted from that country’s embassy in Cuba jammed American commercial communications satellite traffic.

According to defense officials, there have also been sporadic attacks on US military satellites from ground-based laser systems. Several versions of these lasers are being exported by both China and Russia.

Citing the incidents, ASAT supporters said these had shifted the space war debate from the futuristic to the present. The issue had now become one of vital national security for the Americans.

“The US cannot allow our space assets to be threatened,” the commander of the US Strategic Command, Admiral James O Ellis, warned after the Iraqi attacks.

“We must continue to develop and field space control assets that provide us the ability to use our space systems when and where we need, while denying that capability - when necessary - to our adversaries. To avoid significant 21st century consequences, we must act now to protect and defend America’s interests in space.”

Japan’s battery shares jump on electric car hopes

Shares of Japanese car battery makers shot up this week as investors expected growing concerns over global warming and persistently high oil prices to boost demand for electric cars.

Japan’s largest car battery maker GS Yuasa Corp (6674.T: Quote, Profile, Research) rose 6.9 percent on Wednesday, adding to a 16 percent gain in the previous two sessions. Furukawa Battery (6937.T: Quote, Profile, Research) soared more than 40 percent this week.

The rally started on Monday on news that Japan’s postal services system is looking to switch its entire fleet of about 21,000 short-distance delivery vehicles to zero-emission electric cars starting this business year. [ID: nT252637]

GS Yuasa has set up a joint venture with Mitsubishi Corp (8058.T: Quote, Profile, Research) and Mitsubishi Motors Corp (7211.T: Quote, Profile, Research) to produce lithium-ion batteries, a type of batteries used for electric cars. The joint venture plans to start selling them in the year starting April 2009.

“We plan to sell (the batteries) to other carmakers, and automakers both in Japan and overseas have shown interest in them,” said Masanori Kitamura, GS Yuasa spokesman.

Market participants said battery makers have joined the growing list of environment-related stocks, an increasingly popular category that includes makers of non-fossile burning power plants such as nuclear reactors. “Battery (shares) are quite strong, basically because hybrids and electric cars are going to be big from now,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

“Oil prices may fall, but they’ll still stay at a pretty high level, and people are feeling the need to reduce carbon.”

Oil has retreated from record highs, but stayed far above $100 a barrel.

But some battery makers were puzzled by the steep rise in their share price, saying there were no fundamental factors to back up the move.

Officials of FDK Corp (6955.T: Quote, Profile, Research) said they were surprised to see their firm’s share price double in just three days.

“We are not working on lithium-ion batteries for electric cars. We don’t have any car battery business,” said Shigeaki Niida, spokesman of FDA, a maker of dry cell batteries.

“We were happy on the first day (of the rise) since our shares had been moving in a low range. But we are confounded to see it keeps rising on day two and three.”

— Reuters

Japan PM faces likely censure

Unpopular Japanese Prime Minister Yasuo Fukuda could well suffer an embarrassing if non-binding censure in parliament’s upper house next week, but for now the betting is he can keep his job at least for the rest of the year.

Japan’s main opposition Democratic Party is likely to submit the rare censure motion against Fukuda in the opposition-controlled upper house, where it would almost certainly pass, party sources said on Thursday.”At least in the view of party executives, this is definite,” Kyodo news agency quoted a top party official as saying. “After that, it’s a question of timing.”

Fukuda’s ratings have slipped below 20 percent in some polls as he has struggled to cope with a divided parliament, where the opposition has taken every opportunity to delay key legislation.

That has prompted talk that the ruling party may replace its leader after he hosts a Group of Eight summit in July.

But Fukuda has brushed off talk of a censure motion, telling reporters on Wednesday in Rome, where he attended a world food summit, that it might be a frivolous step by the opposition.

Democratic Party leader Ichiro Ozawa has made clear he wants to force Fukuda to step down or call a snap lower house poll by fanning public dissatisfaction with the leader and frustration over the political stalemate that is stymieing government policy.

Democratic Party officials said a censure motion would take aim at Fukuda’s introduction of a confusing national health insurance scheme that has outraged many elderly — long supporters of the ruling party — by forcing some aged 75 and over to pay more. The Democrats want to abolish the new system.

“Once this system took effect in April, the overwhelming view of the people has been that it is just too cruel,” Democratic Party executive Naoto Kan told a news conference.

The insurance row came close on the heels of the ruling bloc’s revival of a hefty and unpopular petrol tax used to fund roading projects that critics decried as wasteful.

But political analysts said the fall in Fukuda’s ratings may have bottomed out, helped by his performance on the diplomatic front after hosting a conference of African leaders and traveling to Europe this week to meet his G8 counterparts.

“We will see the end of the Diet session, and Democrats beating up on him will be off the front page,” said Gerry Curtis, a political science professor at Columbia University.

“We’ll have the run-up to the summit and lots of foreign policy, where he’s strong, and reassuring to the public,” he added. “My guess is that you can’t write off Fukuda.”

Kyodo quoted a top Democratic Party official as saying party executives had signed off on the decision to submit the censure motion, but that the timing and wording had yet to be decided.

An upper house resolution would have no legal clout, but it now appears more like an opposition maneuver to remind the public of what critics consider Fukuda’s faults.

“The political meaning of a censure motion is not only a matter for each party’s interpretation, but ultimately is a question of how the public views it,” the Democrats’ Kan said, noting Fukuda has never received a mandate from voters since no nationwide election has been held since he took office last year.

“We want to stress that the time has come for a snap election by taking advantage of the censure motion,” he said.

No general election need be held until September 2009 and the ruling bloc is wary of an early poll given the risk of losing its two-thirds majority that now enables it to override upper house vetoes in most matters.

“Probably there will be no election this year, and it is hard to change prime ministers,” said Keio University professor Yasunori Sone. “Of course, if his popularity sinks again, that’s a different story.”

— Reuters

Asia on a Shoestring Budget

First Destination: Singapore

We finally arrived in Singapore after a long day for us. Up at 4.30am for a two-hour flight from Cairns to Brisbane, then a five hour wait at Brisbane airport. Then finally on our eight hour flight to Singapore. Poor Josh! But he was great and we had pretty good food and movies on the flight, and the scenery was really interesting. Flying along the coast of Australia, through the red centre, over Kakadu, Darwin and then the large Indonesian volcanoes before landing in Singapore.

Landing at 8pm gave us a fair indication that Singapore does not ever get colder than extremely hot! We were wearing our flight clothes (to minimize weight in bags we wore tramping boots, tramping pants, fleeces, etc) which was pretty intense! Josh loved the guards with guns at the airport and kept smiling and staring at them, so of course they started watching us pretty suspiciously. A first impression of Singapore is that it wasn’t as sterile and fancy as we expected, maybe because our hostel was in the outskirts of town. Although there sure are great efforts by the government to ensure a clean attractive city such as fulltime litter collectors,

sweepers, boatmen who fish out leaves from the river after rain, and roadworkers who only work late at night to avoid inconveniencing people. Another thing we realized quickly is that we needed regular food, water, sitting and air-con breaks (malls have all four). This is also a convenient place to stop in the very regular downpours which are intense and quite short. We look like pretty dumb tourists running around trying to get out of the rain, but it’s the one time of the day when you can actually breathe air that isn’t absolutely thick with moisture and heat (and body odour).

Our hostel was pretty great, spanning two blocks of open air building right by Little India. Singapore is an expensive city to stay in, we found that the cheapest hotel is $100 a night, and so our hostel seemed a bargain at $45. We have free wireless, breakfast, aircon (whew) and great staff. On our first day we got up at 7am and decided to go for a ‘stroll’ to look around. Bad decision! We started at Little India, through the central city until we finally met Chinatown. Getting back at 5pm after spending all day walking in the heat was extreme! Little India was full of Indians, curries, incense, Hindu temples, saris and men who wouldn’t stop staring even with Josh there the whole time. Chinatown is a large, busy place with markets, hawker stalls, huge Buddhist temples and lots of foot traffic. Arab St is a smaller ethnic precinct but with the large Sultan Mosque probably one of the best for photo opportunities.

We definitely think the highlight of Singapore is the food, most of it being Chinese, Malay or Indian. It’s pretty awesome to not have to cook anymore (or eat microwave dinners and noodles). We started with noodles for 80c for breakfast and then found my favourite food of all time (steamed pork buns) comes in 6 different flavours (including honey chicken and coffee!), and they are available in 7-11’s similar in popularity to our mince pies. Another great find is Yong Tau Foo, which is a Chinese soup where you choose at least 7 ingredients for 40c each (like fishballs, tomatoes, tofu, dumplings,etc) and they put them in a large soup with noodles. It’s a great cheap way of getting full. Food can be very expensive here as well, and fast food is similar in price to New Zealand, although KFC and McDonald’s have far less variety (but they do have McSpicy). Chinatown has great variety and they love fried chicken (of course, Josh is happy) and Little India has great Prata (naan served with gravy for 80c). The desserts here are very random, including Malay deserts such as coconut gelatins and many mango and papaya fruit dishes.

But the signature Singaporean desert is Ice Kachang which is shaved ice, syrup, …red beans and corn on top! (we didn’t know about the corn and beans til too late!) (The whole country is obsessed with corn; McDonald’s even sell it in cups!) Josh was almost sick after eating this but tried to keep going so we didn’t waste it! The amount of sugar in that thing must have been intense because we were so hyperactive after that and had a laughing fit for about an hour…

We tried not to spend much money in Singapore, seeing as it seems to be one of the most expensive Asian cities and we want to save our money for the rest of South East Asia, so we didn’t do any paid activities and walked most places. It was exciting going on our first ‘subway’ (or MRT here) between destinations, so fast and cheap. We went to the Botanical Gardens on one of our afternoons, which was a great refuge from this ‘country that’s a city’ place. Great variety of flowers, trees, and even turtles in ponds and we saw our first squirrel (cute). We went to Suntec Mall where there are four large towers surrounding the world’s largest fountain (only runs for one hour a day). This Mall/business centre also houses Singapore’s megachurch where Joseph Prince pastors (he is guest speaker at Hillsong conference this year) and we missed Hillsong United playing the day before we arrived. We spent our last night having a look at Singapore by night; the cbd lights, the merlion (crazy mermaid/lion cross waterfall statue), the river, the Singapore ‘eye’ and various amazing hotels along the waterfront.

So goodbye Singapore you crazy city/country/island/whatever and onto our next destination: Kuala Lumpur.

Financial Blueprint for Korea

Korea must overcome the language barrier in order to become a financial powerhouse like Luxembourg or Hong Kong, Lee Young-tak, president of the Institute for Global Economics, said.

Lee, who served as a vice minister at the Ministry of Education, emphasized the importance of foreign languages for the financial industry. He said a friendly atmosphere should be created for foreign nationals. “It’s something that should be accomplished on a long-term perspective,” he said in an interview with The Korea Times. Lee gave some tips regarding how Korea could rise to become a financial powerhouse.

“Korea must resolve the problems of an unfriendly atmosphere for foreigners and the language barrier. People’s foreign language skills are essential for the country to become a financial powerhouse,” he said, pointing out that people from Luxemburg are multilingual and those in Hong Kong speak good English.

Financial Hub Plan Viable

Lee said the government’s plan to develop the country into the Asian financial hub hasn’t made much of a notable achievement so far. “Indeed, there is a pessimistic outlook on the financial hub plan,” Lee said, citing a Korea Development Institute (KDI) survey in which only 44 percent of experts in the financial industry had a positive outlook on the plan.

Nevertheless, Lee was positive. He said Korea could have a competitive edge in the financial industry, and achieve the goal sooner than expected.

The biggest hurdle lies in manpower, according to Lee. Korea lacks financial experts both in terms of quantity and quality. He pointed out that Korea ranked 45th in terms of competitiveness of financial professionals, far behind Hong Kong at 11th and Singapore at 15th. It ranked even lower than China at 39th. “Despite continuous deregulation by the government, it doesn’t seem to have had that much of a positive effect on market players yet,” Lee said.

The former KRX CEO, however, saw potential in the capital market and manpower.

“Following the Capital Market Consolidation Act, financial firms will now be able to develop new financial products more aggressively.”

Lee also cited the IT infrastructure as one of the best in the world. Combined with this, Koreans’ adventurous characteristics made the KOSPI200 option transaction see remarkable growth, and the KOSPI200 futures transaction, become the world’s fifth largest. According to Lee, such new financial products will add to Korea’s growth potential.

Lee cited abundant capital on the buy side as a boosting factor of the capital market. “The National Pension, for example, amounts to 257 trillion won as of March 2008, almost doubling from 117 trillion won in 2003. The foreign exchange reserves also topped $260 billion, a huge increase from $155.4 billion in 2003,” Lee said. He added that investment funds also expanded to 291 trillion won from a mere 145 trillion won five years ago.

He expected manpower to improve, as many high-qualified people who have been educated overseas are returning to Korea. “The people’s dedication to education have definitely helped the country,” Lee said.

Deregulation Is Key to Success

Lee said deregulation should be at the center of the financial hub plan. “Korea needs thorough financial deregulation that is comparable to the Big Bang of the United Kingdom.”

He acknowledged a series of deregulation measures implemented by the government, but pointed out that regulations, either official or unofficial, are still increasing costs for the market.

Lee said the President Lee Myung-bak administration should focus on tax cuts and deregulation.
“The new administration took the right direction when it chose the financial industry as the core of its economic growth strategy,” Lee said. “To enhance the competitiveness of the industry, it should focus on tax strategy and deregulation.” He pointed out that global financial powerhouses are cutting taxes and deregulating in a bid to lure global capital.

Find Niche Market

Lee said Korea has reached a stage in economic development in which high growth is unachievable through manufacturing only. “The financial industry should work as the other wheel paring with that of manufacturing.” He said cutting edge financial technologies and cost cuts in financing could enhance the competitiveness of other sectors.

He pointed out that the ratio of financial assets to the world gross domestic production (GDP) tripled to 316 percent in 2005 up from 109 percent in 1980. “The financial industry has become a key engine for changes and innovation in the global economy,” Lee said.

“This is based on knowledge and information, and high value added. It is also an eco-friendly future industry.” He said the industry, whose productivity is limitless, is incomparable to any other industry in terms of job creation or domestic income creation.

He advised that Korea should work on the global niche markets. “Other countries are building up a competitive edge in the financial industry, focusing on the niche market.” He cited Luxembourg and Hong Kong as models for Korea.

Despite being small countries like Korea, they have successfully transformed themselves into international financial hubs through specialization and a niche market strategy. “Luxembourg specialized in euro bonds, establishing itself as a regional financial hub in Western Europe. It is now at the center of euro bonds and investment funds. Hong Kong turned into a global financial center by specializing as a monetary intermediary.” He said Hong Kong was very lucky as Japan was strengthening regulation and China was growing explosively.

Capital Market Consolidation Act

He said the Capital Market Consolidation Act would be a big step forward toward deregulation.

Lee was positive about the financial industry policies implemented by the former President Roh Moo-hyun administration. “The Capital Market Consolidation Act, modeled after the financial `Big Bang’ in the United Kingdom, set up the basis for the development of the financial industry.” He expected the act to be a catalyst for the development of the financial industry.

“However, there should have been concrete policy implementations and support. It hasn’t brought about notable accomplishments yet,” he said. Lee added that the financial industry needs a very concrete policy plan, deregulation, and extensive infrastructure, ranging from insurance, law and accounting to medical and education services.

He expected there to be heated competition in the market following the implementation of the act, adding that Korea needs global-scale investment banks most of all.

“Financial players should become bigger, and the easiest way to achieve this is through merger and acquisitions (M&A) between financial businesses.” He said, however, that there still seems to be negative views and systematic limitations regarding M&As in Korea.

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.

Bangkok Face-off

Thai Prime Minister Samak Sundaravej warned Sunday that anti-government protesters blocking a Bangkok thoroughfare would have to leave, but backed away from threats to forcibly break up the rally.Samak on Saturday told the nation that he had prepared police and military forces and would bring an end to the week-long anti-government protest, sparking fears of instability or even another coup.

About 1,200 police, many with shields and batons, gathered in the capital’s historic district near the regional United Nations headquarters.

But the tense face-off with 6,500 protesters from the People’s Alliance for Democracy (PAD) ended as night fell with Interior Minister Chalerm Yoobumrung saying there would be no crackdown.

“I never threatened to smash it up,” Samak, who is also defence minister, insisted on his regular Sunday morning television address to the nation.

“Police without any batons will go and talk and tell them they cannot do this. Protesters will be asked to move their things from the road — if not, the police will move it.”

Although he denied there had been any threat of violence, his tone was much less forceful than that used in his Saturday television address, when he warned protesters that “today will be the day.”

“Authorities will not make threats or attack them,” he said. “We have no plans to arrest anyone … There is no D-day — police will find the appropriate time to remove them.”

US Defence Secretary Robert Gates, who arrived in Bangkok on Sunday for talks with Samak, told reporters that their discussions would focus on regional issues, but he briefly touched on the domestic upheaval.

“Our position is pretty consistent — we want to see democratically-elected governments, and we will convey that message,” Gates said.

About 800 protesters guarded by 200 police remained at the protest site on Sunday, a police spokesman said.

Analysts said the newly-elected prime minister’s quick switch in tactics betrayed a lack of support.

“Samak has come out of this looking very inept,” Chulalongkorn University professor Thitinan Pongsudhirak told AFP.

“He got very angry for no good reason and he made a hasty decision that his coalition parties didn’t agree with and then galvanised the PAD even further.”

Thai police and the army are also reluctant to crack down on the protesters, said Taweesak Suthakavatin, a professor at the National Institute of Development Administration in Bangkok.

“They still don’t have a very good image with the people. I believe senior officers will be very careful to not use violence,” he told AFP.

The smart thing for the prime minister to do would be to lay off PAD and let the protests run out of steam, Thitinan said.

“Five thousand, ten thousand people cannot hold the whole country (and) Thai democracy hostage,” he said.

When asked how long demonstrators would camp out, Chamlong Srimuang, one of the rally’s leaders, told Thai television that they would only move if the authorities allowed them to march to Government House.

“If not, we will stay here,” he said.

The rally began a week ago in protest at Samak’s drive to amend Thailand’s constitution, written by a military-backed panel after the September 2006 coup, and drew up to 10,000 people.

Protest leaders are now also demanding that Samak — who won elections last December and formed a coalition government — step down, accusing him of acting as a proxy for deposed former prime minister Thaksin Shinawatra.

Two years ago, PAD protests against Thaksin led to the coup that ousted him from power, and the latest stand-off has sparked rumours of a fresh military intervention.

The speculation grew so intense that the head of the armed forces and the finance minister both had to deny that a putsch was on the horizon.

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