Publication in Economics, Politics and Public Policy in East Asia and the Pacific

Singapore: Economy bounces back, but…?

Author: Mukul G. Asher, NUS, Singapore

The 2008 global crisis and its aftermath have not adversely impacted Singapore’s medium term growth performance. After only 1.4 per cent growth in 2008, and negative 2.0 per cent growth in 2009, the economy rebounded strongly in 2010, with the most recent projected growth rate of 14.8 per cent. The cyclical upturn in the global demand has been a major factor in the strong rebound in 2010 with goods producing sectors, including electronics manufacturing, being the largest contributor.

The services sector was aided by the commencement of casinos during 2010. This is reflected in the projected S$300 million in collections from levy on Singapore residents who visit casinos. The projections are that Singapore’s gambling market could exceed that of Las Vegas by end 2011. Read more…

The US-Asia relationship in 2010: Progress and problems

Author: Simon Tay, SIIA

President Obama’s 10 day tour of Asia’s four largest democracies showed a continued commitment to engage Asia, even if difficult Tea Party politics at home might derail the practicalities of increased regional engagement. For Americans, President Obama brought home deliverables on jobs in India and helped lay groundwork for trade agreements with Korea. For some Asians, there is a feeling of relief that US-Asia relations will continue.

Yet while the trip was positive, there is no room for complacency. While the US and Asia remain interdependent, there remain significant obstacles to the development of the post-crisis relationship, in spite of leaders’ best intentions. Read more…

Japan’s challenges all begin with ‘D’

Author: Akira Kojima, JCER and GRIPS, Tokyo

Japan has faced a number of ‘D’ challenges throughout 2010 that will be increasingly difficult to handle in 2011 unless they are addressed properly and quickly. Time is not by any means a friend in this.

The ‘D’ challenges that Japan currently faces include Deflation, De-population or Demographic changes, public Deficit and Debt, Dilution of the stock market, De-leveraging, Dollar Depreciation, Defense and DPJ (Democratic Party of Japan) governance. Read more…

The de facto ‘free trade area’ in East Asia

Author: Thomas Hale, Princeton

Over the last two decades, East Asian countries have signed more preferential trade agreements (PTAs) than any other region. At the beginning of the 1990s there were essentially no PTAs in East Asia. Today there are dozens, with regional leaders discussing the negotiation of a region-wide free trade zone.

But according to a new study forthcoming in the Review of International Political Economy, this goal has already been outstripped by reality. Focusing on applied tariffs – not the legal ceilings they agree in formal trade agreements – the data reveal a striking pattern.   Read more…

Vietnam: Balancing growth and stability in a more market-oriented economy

Author: Suiwah Leung, ANU

A new generation of leadership is expected to emerge from the 11th national congress of the Vietnamese Communist Party in January 2011. Both the President and the Secretary-General of the Vietnamese Communist Party are expected to be stepping down, and a question mark hovers over the re-appointment of the current Prime Minister, Mr Nguyen Tan Dung.

After leading the country into the WTO, amongst other market-oriented reforms, Mr Dung’s personal standing within the Party has been tarnished in recent months by the near-collapse of the large state-owned shipbuilding conglomerate, Vinashin. Read more…

Building Singapore’s cultural capital

Author: Wang Tai Peng, Vancouver

Singapore is turning 45 this year. With a humble beginning, a small territory, and a population of only 1.5 million, it has become an undisputed regional economic powerhouse. As a centre of the new global economy, it is in the same league as New York, Tokyo, London, Frankfurt, Paris, Zurich, Toronto, Amsterdam, Milan, Hong Kong, Taipei and Seoul.

As Anthony Tung, author of Preserving the World’s Great Cities, and a critic of Singapore’s authoritarianism, candidly admits: ‘Few societies in the world have created such shared economic prosperity’. Read more…

Japan’s public pension: The great vulnerability to deflation

Author: Mitsuo Hosen, ESRI

Deflation since the mid-1990s has had a serious negative impact on the Japanese economy in many respects. This essay focuses on its impact on public pension finance. In the current institutional setting in Japan, deflation increases the real pension benefit level, while keeping the real pension contribution schedule constant; it thus has a negative impact on Japan’s public pension finance. In this sense, Japan’s public pension schemes are not neutral to deflation. This essay is intended to explain this non-neutrality and to quantify the impact of deflation on public pension finance.

There are three major problems with the current public pension schemes under deflationary circumstances. Firstly, the actual pension benefit level has been higher than the permanent level on a provisional basis since the financial year 2000 primarily because of deflation. Read more…

Observing the transit of Asian power

Author: Peter Drysdale

This rapidly fading year has been marked by new focus on the rise of China and its impact on the international political order in Asia and the Pacific — a focus encouraged perhaps by no one more than the ANU’s Hugh White. White’s essay this week reflects again on the transit of Asian power. Appropriately it begins our annual series of essays on developments in the region in the past year and what lies ahead for the region and all its economies and polities.

Over the next two weeks and more EAF will bring you the reflections of our distinguished contributors from Japan, Korea, China, Vietnam, Thailand, Malaysia, the Philippines, Singapore, Indonesia, Australia, New Zealand, Papua New Guinea, Fiji, Pakistan, and India on what has happened in their countries and our region in the year past and what the prospects are for the year ahead. Read more…

Negotiating the China challenge

Author: Hugh White, ANU

If 2009 was the year it became inescapably clear that China’s economic rise was powering an equally significant increase in its strategic and political weight, then 2010 was the year it became inescapably clear that China is using its new weight to test the US-led order in Asia. Whether intended by Beijing or not, the series of disputes over maritime issues in the South China Sea, East China Sea and Yellow Sea clearly signal China’s desire to rewrite the rules governing the exercise of power in the Western Pacific.  The rest of us now need to decide how to respond.

America, along with its friends and allies in Asia, has a big choice to make at the outset.   Read more…

APEC’s new ‘financial inclusion’ initiative

Author: John Conroy, ANU

APEC Finance Ministers, meeting in Kyoto this past November, launched an initiative on ‘financial inclusion’ to be conducted by member economies. Their Ministerial Statement set out the rationale:

Efficient and affordable financial services are critical to the success of economic activity at all levels including the micro, small and medium enterprise and the households sectors. To this end, we have launched an APEC Financial Inclusion Initiative to identify concrete actions that financial policy makers can take to expand the reach of financial services to the underserved. Read more…

India’s FDI policies: Paradigm shift

Author: Nabeel A. Mancheri, NIAS

The Government of India has recently raised the possibility of opening the retail sector (both in single and multi-brand retailing) for foreign direct investment. FDI in multi-brand retailing is presently not allowed in India. FDI in single-brand retailing was permitted in 2006, up to 51 per cent of ownership. Between then and May 2010, a total of 94 proposals have been received. Of these, 57 proposals have been approved. An FDI inflow of US$196.46 million under the category of single brand retailing was received between April 2006 and September 2010, comprising 0.16 per cent of the total FDI inflows during the period.

The government is considering permitting 100 per cent foreign direct investment in single-brand retail. The Department of Industrial Policy and Promotion (DIPP), the nodal agency for FDI policy-making, has released a discussion paper on opening the FDI in multi-brand retail inviting opinion from all stakeholders. Read more…

Affordable delays for the Chiang Mai Initiative?

Author: Joel Rathus, Adelaide University

While the worst of the Global Financial Crisis may have passed, in East Asia the economic pressures are still mounting. Regional economies are struggling with inflation, asset bubbles and now increasingly volatile exchange rate movements. One mechanism which might aid the regional economies to coordinate their exchange rate policies, to fend off currency speculation and assist with reigning in increasingly problematic ‘hot money’ flows is the Chiang Mai Initiative Multilateralisation (CMIM).

However, getting Japan and China to agree has proven difficult – especially on the issue of contribution and (therefore) voting weight. This is important because these two are both required to effectively bankroll the CMIM. Read more…

Who deserves the first Confucius Peace Prize?

Author: Vikas Kumar, Bangalore

The Chinese Communist Party (CCP) has been extremely combative ever since the Nobel Peace Prize panel identified Liu Xiaobo, serving a prison sentence for inciting subversion, as this year’s Nobel Peace Laureate.

He was chosen in recognition of ‘his long and nonviolent struggle for fundamental human rights in China.’ The CCP responded with its usual attacks on free press, democracy, and the West. Read more…

China and European unity

Author: Jonas Parello-Plesner, European Council on Foreign Relations

The EU can work together – at least when it is pushed together. China’s heavy-handed effort to get European nations to skip the Nobel peace prize ceremony in Oslo last week did the trick.

Not only did member states show up but Serbia and Ukraine, both countries with EU ambitions, were encouraged to show up as well. Yet this was atypical of a relationship with the EU in which China, with newfound power, has found it easy to divide-and-rule. Read more…

Three reasons why Japan should join the TPP

Author: Ippei Yamazawa, Hitotsubashi University

The 2010 APEC meeting in Yokohoma ended one month ago but the Japanese media is still discussing whether or not Japan should join the Trans Pacific Partnership (TPP). Prime Minister Kan planned to announce Japan’s accession officially at the leaders’ meeting so as to make it a highlight of APEC 2010 but he had to postpone it until June next year because of strong objections of agricultural protectionists.

Two arguments in favour of Japan’s joining the TPP have already been made. Read more…