- IV.
International
.
During hard times, SE
Asians used to turn to informal financing networks among
relatives, their villages or loan sharks.
.
The region’s own banks
neglected consumers to focus on channeling the public’s savings
into corporate manufacturing and roads, bridges, steel mills,
refineries and the like.
.
When the crisis hit, it
left banks buried in bad debts. Finance companies, like GE
Capital, were the only lenders left standing.
.
Capital OK is a newcomer
in a market that has been gathering momentum in SE Asia for the
past 4 years.
.
As strengthening
economies enable more consumers to emerge from poverty to the
lower middle class, banks & finance companies are greeting
them with financing options once limited to developing nations.
.
Purchase agreements
known as lay-away plans allow customers to pay for a television,
personal computer or bedroom furniture in installments.
.
Customers can use their
cards to pay for anything, from college tuition to a mobile phone,
have them designate that those items be separated from their main
credit balance and paid off instead in regular installments.
.
East Asian countries,
including China, now face higher labor costs and are moving up the
ladder of comparative advantage.
.
China agreed to invest
$10 billion in Brazil over the next 2 years as the 2 countries
strengthen economic & trade ties, Brazil’s trade minister
(Luis Fernando Furlan) said.
.
Corporate profit margins
are narrowing for Chinese manufacturers, economists said, after
new inflation figures showed that the prices consumers pay for
products were rising much less quickly than the costs of raw
materials and energy.
.
China’s National
Bureau of Statistics said its consumer price index cooled to a
4.3% annual pace in October, from 5.2% in September easing
inflation that that have spurred China’s central bank to raise
interest rates for the first time in 9 years.
.
NBS believes exports
increased 27% this year, but expects them to rise only 15% in
’05 due to softening markets in US & Europe.
.
Because of the submarine
controversy, Chinese leaders are keen to avoid further trouble
following recent friction over disputed island territories,
competition for access to Russian oil resources, and Japan’s
concern at Chinese exploitation of oil fields near its economic
zone.
.
China leads the pack as
the largest textile exporter to the US, but may gain even more at
the expense of other countries on January 1. The overall balance
of quality, reliability and price makes China probably the most
competitive market in the world. Top countries reporting textiles
& apparel to the US in 2003 in billions: China ($11.6
billion), Mexico ($7.9), Hong Kong ($3.8), India ($3.2), Canada
($3.1), South Korea ($2.6), Honduras ($2.5), Vietnam ($2.5),
Indonesia ($2.4), and Pakistan ($2.2).
.
China is clamping down
on domestic media coverage of popular protests, following recent
outbreaks of unrest.
.
A China
Eastern Airlines went down in Baotou, a city in the Inner
Mongolia region, 330 miles NW of Beijing after take-off, the
official Xinhua News Agency said. The plane, a Bombardier CRJ-200,
was headed for Shanghai with 47 passengers & 6 crew members. A
worker on the ground was also killed.
.
Japan is not buying
China’s contention that the submarine incident was an accident
rather than intentional. The incident, seen widely as a
provocation by the Chinese government, comes at a time when the
bilateral relationship has been strained by a range of contentious
issues.
.
While economically Japan
and China have become interdependent, politically relations
between the two have soured to the extent they have not yet been
able to schedule a top-level meeting during the Asia-Pacific
Economic Cooperation forum in China in late November.
.
Territorial issues and
competition for energy resources are likely to remain thorny.
Also, there are no influential China lobbyists in a position to
smooth relations between Japan’s increasingly hawkish ruling
party and the Chinese leadership.
.
South Korea’s economy grew 0.6% in Q3 as exports and consumer spending slowed. It’s
cutting taxes and has lowered a key interest rate to revive
domestic demand.
.
Thousands of South
Korean public sector employees have taken to the streets in
protest at government plans to prohibit strikes and allow greater
use of temporary workers.
.
Thailand is proving that
“microfinance has proved its value as a weapon against poverty
and hunger. It really can change people’s lives for the
better—especially the lives of those who need it most.”
.
The concept evolves in
response to the deficiencies of the traditional banking system
whose high overheads often made small loans affordable to
relatively small clients.
.
Microfinance
has grown at an average annual rate of 25.30% over the past 5
years, involving an increasing number of banks, such as Citibank,
Deutche Bank and India’s ICICI.
.
Indonesia’s new
government is expected to announce fresh anti-corruption
initiatives, including a review of the regulations that let the
former strongman Suharto avoid prosecution by pleading ill-health.
.
Indonesian police are
launching an investigation into the death of a prominent human
rights activist after Dutch authorities concluded he died of
arsenic poisoning during flight to Amsterdam.
.
Indonesia is one of the
countries pushing to return APEC to its traditional focus on
trade, giving security a back seat. Newly-elected Indonesian
president Yudhoyono also asked Bush to restore military ties,
severed in 1999 over human rights concerns.
.
India’s steady rise in
national income by nearly 6% per year for 2 decades has made the
country one of the world’s top growth performers.
.
Industrial expansion was
powered for a decade or two by exports of labor-intensive
manufactured goods.
.
In contrast, India has
not had a broad-based industrial revolution and industry’s share
of GDP rose from 20% in 1960 to only 27% in 2002.
.
Some people think that
the IT sector could be India’s savior. But its quantitative
significance in the near term is extremely limited. IT-related
output is currently less than 1% of GDP. The sector employs fewer
than 1 million people which would increase by another million in
2010.
.
It pales into
significance when one considers that India’s labor force will
rise by 40 million by 2010 to an estimated 450 million people (and
much of the rise will occur in backward states).
.
Growth of the IT sector
will be constrained by rates at which supply of educated labor can
be increased. Only 5% of India’s relevant age-group receives
college education.
.
Microsoft
signed software partnership with India’s leading outsourcing
firms, Infosys Technologies
and Wipro.
.
The main separatist
alliance in Indian Kashmir insisted on holding talks with Pakistan
before reviving a dialogue with New Delhi, a demand India’s PM
said was not acceptable.
.
India began to pull some
of its troops out of Kashmir, coinciding with PM Manmohan
Singh’s first trip to the region, an army official said.
.
After 8 years in jail on
corruption charges, the husband of former PM Benazir Bhutto of Pakistan
was released on bail in a move that the government called a step
toward political harmony with her opposition party, said
officials.
.
The Taliban movement
suffered a serious psychological and military setback after
failing to disrupt Afghanistan’s
presidential election last October but a formidable threat is
still possible from the radical Islamic militia.
.
Saudi
Arabia is looking for
new friends and finding them in Asia. It feels spurned and disliked by its traditional allies in the
West. Ties have never been quiet as warm since 9/11/01.
.
The Gulf
States are looking toward Asia because they find that the
suspicion & scrutiny that greets Arabs in the West is
increasingly becoming an obstacle to doing business. So their
officials & businessmen have been visiting places like
Singapore & Malaysia.
.
Hordes of Arab tourists
now flock to Malaysia to escape the desert heat in the summer,
more than 200k a year. They stay at 5-star hotels and shop for
expensive brands.
