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Thursday, February 28, 2013
Wednesday, February 20, 2013
Japanese inflation: a monetary or fiscal phenomenon?
Author: Ippei Fujiwara, ANU
Monetary policy has once again become a very hot issue in Japan.
The country has been experiencing deflation, or, at least, disinflation, for a long time, which some claim makes real interest rates higher and constrains growth. In the recent election, the LDP, which won handsomely, argued that the Bank of Japan should take much more aggressive measures to enhance inflation. New Prime Minister Abe has said that the central bank should set an inflation target of 2 per cent, which is OK, but in order to achieve this target, the Bank of Japan may be required to increase quantitative easing and make very large purchases of government bonds.
There are many concerns with this view. First of all, although mild inflation rates of around 2–3 per cent seem to be desirable, theoretical studies have not yet found that mild deflation causes any significant welfare losses. Second, it is not clear whether further quantitative easing or increased government bond purchases by the central bank would spur mild inflation, especially under the zero lower-bound constraint on nominal interest rates.
Both these issues are very important. The first relates to how the target level of inflation should be set. The details can be very complex, but at a basic level the answer depends on one’s own point of view as to how nominal variables such as inflation affects real variables such as GDP. This is a crucial issue beyond the scope of this article.
The second point raises an interesting question for Japanese policymakers: will more aggressive monetary policy, in the form of a direct purchase of government bonds by the central bank, create mild inflation or could it instead lead to hyperinflation? There are two famous macroeconomic views on this subject. The first regards inflation as determined by monetary policy; the second regards it as a product of fiscal settings.
Most readers are probably more familiar with the monetary view. Central banks conduct monetary policy to control the aggregate spending of a nation via nominal interest rates. If nominal interest rates are lower, households and firms can borrow more cheaply and therefore increase spending on, for example, durable goods or investment. Increased spending should result in higher production and production costs — and wages. As a result, the inflation rate increases. In this view, an increase in the supply of money plays almost the same role as a reduction in nominal interest rates by the central bank, unless the nominal interest rate is constrained at the zero lower bound.
On the other hand, the fiscal view states that price levels, and therefore inflation, are determined by fiscal policy. This idea is sometimes called the fiscal theory of the price level (FTPL). According to the FTPL, the price level is determined so that the current real deficit is equal to the present discounted value of real net tax receipts. Otherwise, the government is unable to pay its debts. If you hold a government bond, you do not want to hold it forever. Rational agents will not be so kind as to lend money without hope of the repayment — not even the government is entitled to a free lunch. Given Japan’s high debt–GDP ratio, a period of hyperinflation would be theoretically unsurprising.
The fiscal view of the price level determination is very simple and mathematically compelling, but doubts remain, especially in respect of day-to-day price or wage setting by firms. Aggregate inflation is eventually determined by the price and wage setting by firms. And in setting day-to-day prices, firms would appear to consider monetary, not fiscal conditions.
Still, history shows that hyperinflation occurs in countries with huge government debt. This is basically the reason why independent central banks were created.
So which is the more compelling theory? It is difficult to tell, but if Japanese citizens start to believe that the government is unable to collect enough tax to repay its debt, hyperinflation will become a distinct possibility, according to the FTPL. This is because inflation becomes the only way for the government to honour its obligations. A large direct purchase of government debt by the Bank of Japan could be a turning point in this regard — Japanese citizens might suddenly doubt the country’s fiscal sustainability.
In any case, it is unclear whether the purchase of the government bonds by the central bank would drive mild inflation. If there is a positive relationship it is likely to be non-linear. It is almost impossible to foresee the exact consequences of the bond purchase suggested by the LDP, but hyperinflation is not out of the question. Hyperinflation leads to significant wealth transfer between economic agents and creates a highly uncertain economic environment. Japan must remain fiscally sustainable.
Ippei Fujiwara is Associate Professor of Economics at the Crawford School of Public Policy, Executive Director (acting) at The Australia-Japan Research Centre and Deputy Director at The Centre for Applied Macroeconomic Analysis, The Australian National University.
Scaling up efforts to sustain forests in Southeast Asia
Author: Fitrian Ardiansyah, ANU
Avoiding and reversing the loss and degradation of forests is a crucial element of any sustainable development and climate change solution formulated in Southeast Asia.
Southeast Asia’s forests contain some of the richest and most valuable resources and habitats on earth. These include the Greater Mekong Subregion that covers 60 million hectares of tropical forests and rivers in Cambodia, Laos, Myanmar, Thailand, Vietnam and China, and the Heart of Borneo that comprises 24 million hectares of equatorial rainforests stretching along the borders of Indonesia, Malaysia and Brunei.
These forests and terrestrial ecosystems have a vital role to play in the fight against global warming. They also have significant economic and ecological value. Hundreds of millions of people depend on the healthy productive capacity of these natural systems to sustain key ecosystem services such as clean water, food and fibre.
These forests are also home to a significant part of the world’s biodiversity and possess a high level of endemism across all groups of plants and animals. Southeast Asia’s forests are the only place on earth where orang-utans, tigers, elephants and rhinoceroses still co-exist and where forests are large enough to maintain viable populations.
Deforestation and forest degradation are making a significant contribution to environmental degradation in this region and overall global emissions of greenhouse gases. In 2009, the Food and Agriculture Organization reported that deforestation rates in Southeast Asia remained high at 3.7 million hectares per annum. In general, forests and terrestrial ecosystems in Southeast Asia, including peatlands, wetlands and rivers, are in a state of rapid ecological decline due to human over-exploitation.
The degradation of forest and wetland habitats affecting hydrological regimes is threatening water supply and the viability of one of the most important freshwater fisheries in the world — including, for instance, in the Tonle Sap fishery in Cambodia where the larger migratory species have declined significantly. The biggest threat to the Mekong River’s ecological system is the long-time deforestation of the river basin.
The island of Borneo, as well as Sumatra and many other places in this region, has also experienced high deforestation rates. According to several studies, between 1985 and 2005 Borneo lost an average of 850,000 hectares of forest annually — roughly a third of the island’s total rainforests — due to indiscriminate logging and forests being cleared for timber and oil palm plantations.
The increasing frequency of forest and land fires between 1997–2007 is indicative of the pressure to deforest. It is a combination of plantation and timber companies, unresolved land tenure disputes and land clearing by a massive number of individuals are the main causes of these fires.
Because of these issues, the governments of Southeast Asia are under pressure to devise smart development strategies that not only promote economic growth but also conserve the areas’ globally important biodiversity, ecosystems and natural resources.
Regional cooperation is emerging. Initiatives include the Mekong River Commission (MRC), which coordinates the formulation and implementation of sustainable development for the Greater Mekong Subregion, and the Heart of Borneo initiative, which facilitates cooperation among parties in protecting, conserving and sustainably managing remaining forests and adjacent areas.
Since 2009, countries in the Greater Mekong Subregion have agreed to use the Biodiversity Conservation Corridors Initiative (BCCI) to accelerate efforts to address conservation and climate change. One BCCI initiative is to channel economic stimulus to the rural poor within the corridors. The aim of this initiative is to strengthen sustainable management of forest and water resources. As the people become poorer and need resources to get out of poverty, there is likely a huge pressure for further and faster natural resource extraction — hence, actions to address poverty tends to have positive results on the environment.
The Heart of Borneo recently launched a ‘green economy’ approach aimed at concretely and seriously tackling threats from unsustainable land-use activities and further improving enabling conditions like good economic policy. This will create positive incentives for stakeholders to employ sustainable practices and foster good governance, clear land tenure and reformed sectoral development.
Reports also show an increase in the private sector’s involvement in the promotion, development and application of sustainability principles in their management of key commodities including forestry (through the Forest Stewardship Council) and palm oil (through the Roundtable on Sustainable Palm Oil).
In November 2007 only 0.8 million hectares of Southeast Asia’s natural forests were certified under the Forest Stewardship Council. Now more than 2 million hectares of natural forests have been certified under a similar scheme. In mid-2011, just three years after certification commenced under the Roundtable on Sustainable Palm Oil, the palm oil industry reached one million hectares of certified production area globally. The biggest contributors were Malaysia and Indonesia.
ASEAN has commenced the Reducing Greenhouse Gas Emissions from Deforestation and Forest Degradation (REDD+) initiative. Since 2008 ASEAN and its member countries have developed programs to improve in-countries’ capacity and have initiated demonstration projects so that stakeholders are ready to implement REDD+.
These efforts to retain the remaining forests of Southeast Asia may nevertheless be inadequate given constant pressures from global and regional demand for commodities like palm oil and timber. A 2010 UN report estimated that the illegal timber trade in Southeast Asia was worth US$3.5 billion.
There is urgent need for ASEAN countries to scale up their collaboration on deforestation so that they are seen as a strong front that can negotiate the channelling of financial and technical support to address deforestation in their region. At the United Nations Framework of Convention on Climate Change, ASEAN is not seen as a strong lobby group that can influence the negotiation of the financial and policy aspects of REDD+.
In setting up a monitoring system for deforestation, countries in the region can learn from Brazil, which is considered to have an advanced deforestation monitoring system. The Brazilian system combines real-time satellite observation and regular ground checking. Using an ASEAN platform, countries in Southeast Asia have the opportunity to replicate such a system in a cost-effective and transparent way.
Stronger collaborative efforts among countries, state and non-state actors in Southeast Asia is the key to significantly reducing deforestation and mitigating its impacts. Further involvement of producers in the REDD+ initiatives through timber concessions and incentives for oil palm plantations could accelerate the implementation of sustainable practices.
Financial institutions in the region and at global level also have a significant role to play. They must develop robust investment screening policies to discourage high-risk investment patterns leading to deforestation. Consumers of related commodities can also help by favoring goods that are produced through certified sustainable operations.
If done properly, efforts like these would lead to fundamental changes in how Southeast Asians manage, protect and sustain their forests. The impact of those efforts will be felt by the global community in the form of emissions reductions, and by people in Southeast Asia through their ability to maintain timber and non-timber forest production, water supply, and other ecosystem goods and services.
Fitrian Ardiansyah is a PhD candidate at the Australian National University and the recipient of Australian Leadership Award and Allison Sudradjat Award.
This article appeared in the most recent edition of the East Asia Forum Quarterly,‘Energy, Resources and Food’.
Avoiding and reversing the loss and degradation of forests is a crucial element of any sustainable development and climate change solution formulated in Southeast Asia.
Southeast Asia’s forests contain some of the richest and most valuable resources and habitats on earth. These include the Greater Mekong Subregion that covers 60 million hectares of tropical forests and rivers in Cambodia, Laos, Myanmar, Thailand, Vietnam and China, and the Heart of Borneo that comprises 24 million hectares of equatorial rainforests stretching along the borders of Indonesia, Malaysia and Brunei.
These forests and terrestrial ecosystems have a vital role to play in the fight against global warming. They also have significant economic and ecological value. Hundreds of millions of people depend on the healthy productive capacity of these natural systems to sustain key ecosystem services such as clean water, food and fibre.
These forests are also home to a significant part of the world’s biodiversity and possess a high level of endemism across all groups of plants and animals. Southeast Asia’s forests are the only place on earth where orang-utans, tigers, elephants and rhinoceroses still co-exist and where forests are large enough to maintain viable populations.
Deforestation and forest degradation are making a significant contribution to environmental degradation in this region and overall global emissions of greenhouse gases. In 2009, the Food and Agriculture Organization reported that deforestation rates in Southeast Asia remained high at 3.7 million hectares per annum. In general, forests and terrestrial ecosystems in Southeast Asia, including peatlands, wetlands and rivers, are in a state of rapid ecological decline due to human over-exploitation.
The degradation of forest and wetland habitats affecting hydrological regimes is threatening water supply and the viability of one of the most important freshwater fisheries in the world — including, for instance, in the Tonle Sap fishery in Cambodia where the larger migratory species have declined significantly. The biggest threat to the Mekong River’s ecological system is the long-time deforestation of the river basin.
The island of Borneo, as well as Sumatra and many other places in this region, has also experienced high deforestation rates. According to several studies, between 1985 and 2005 Borneo lost an average of 850,000 hectares of forest annually — roughly a third of the island’s total rainforests — due to indiscriminate logging and forests being cleared for timber and oil palm plantations.
The increasing frequency of forest and land fires between 1997–2007 is indicative of the pressure to deforest. It is a combination of plantation and timber companies, unresolved land tenure disputes and land clearing by a massive number of individuals are the main causes of these fires.
Because of these issues, the governments of Southeast Asia are under pressure to devise smart development strategies that not only promote economic growth but also conserve the areas’ globally important biodiversity, ecosystems and natural resources.
Regional cooperation is emerging. Initiatives include the Mekong River Commission (MRC), which coordinates the formulation and implementation of sustainable development for the Greater Mekong Subregion, and the Heart of Borneo initiative, which facilitates cooperation among parties in protecting, conserving and sustainably managing remaining forests and adjacent areas.
Since 2009, countries in the Greater Mekong Subregion have agreed to use the Biodiversity Conservation Corridors Initiative (BCCI) to accelerate efforts to address conservation and climate change. One BCCI initiative is to channel economic stimulus to the rural poor within the corridors. The aim of this initiative is to strengthen sustainable management of forest and water resources. As the people become poorer and need resources to get out of poverty, there is likely a huge pressure for further and faster natural resource extraction — hence, actions to address poverty tends to have positive results on the environment.
The Heart of Borneo recently launched a ‘green economy’ approach aimed at concretely and seriously tackling threats from unsustainable land-use activities and further improving enabling conditions like good economic policy. This will create positive incentives for stakeholders to employ sustainable practices and foster good governance, clear land tenure and reformed sectoral development.
Reports also show an increase in the private sector’s involvement in the promotion, development and application of sustainability principles in their management of key commodities including forestry (through the Forest Stewardship Council) and palm oil (through the Roundtable on Sustainable Palm Oil).
In November 2007 only 0.8 million hectares of Southeast Asia’s natural forests were certified under the Forest Stewardship Council. Now more than 2 million hectares of natural forests have been certified under a similar scheme. In mid-2011, just three years after certification commenced under the Roundtable on Sustainable Palm Oil, the palm oil industry reached one million hectares of certified production area globally. The biggest contributors were Malaysia and Indonesia.
ASEAN has commenced the Reducing Greenhouse Gas Emissions from Deforestation and Forest Degradation (REDD+) initiative. Since 2008 ASEAN and its member countries have developed programs to improve in-countries’ capacity and have initiated demonstration projects so that stakeholders are ready to implement REDD+.
These efforts to retain the remaining forests of Southeast Asia may nevertheless be inadequate given constant pressures from global and regional demand for commodities like palm oil and timber. A 2010 UN report estimated that the illegal timber trade in Southeast Asia was worth US$3.5 billion.
There is urgent need for ASEAN countries to scale up their collaboration on deforestation so that they are seen as a strong front that can negotiate the channelling of financial and technical support to address deforestation in their region. At the United Nations Framework of Convention on Climate Change, ASEAN is not seen as a strong lobby group that can influence the negotiation of the financial and policy aspects of REDD+.
In setting up a monitoring system for deforestation, countries in the region can learn from Brazil, which is considered to have an advanced deforestation monitoring system. The Brazilian system combines real-time satellite observation and regular ground checking. Using an ASEAN platform, countries in Southeast Asia have the opportunity to replicate such a system in a cost-effective and transparent way.
Stronger collaborative efforts among countries, state and non-state actors in Southeast Asia is the key to significantly reducing deforestation and mitigating its impacts. Further involvement of producers in the REDD+ initiatives through timber concessions and incentives for oil palm plantations could accelerate the implementation of sustainable practices.
Financial institutions in the region and at global level also have a significant role to play. They must develop robust investment screening policies to discourage high-risk investment patterns leading to deforestation. Consumers of related commodities can also help by favoring goods that are produced through certified sustainable operations.
If done properly, efforts like these would lead to fundamental changes in how Southeast Asians manage, protect and sustain their forests. The impact of those efforts will be felt by the global community in the form of emissions reductions, and by people in Southeast Asia through their ability to maintain timber and non-timber forest production, water supply, and other ecosystem goods and services.
Fitrian Ardiansyah is a PhD candidate at the Australian National University and the recipient of Australian Leadership Award and Allison Sudradjat Award.
This article appeared in the most recent edition of the East Asia Forum Quarterly,‘Energy, Resources and Food’.
Asia’s energy problems: why APEC now?
Asia’s energy problems: why APEC now?February 8th, 2013
Author: Takato Ojimi, APERC
The world’s energy environment is undergoing great change.
In particular, the Asia-Pacific region, which accounts for over half of the world’s energy consumption, is approaching a turning point with regard to energy security.
On the demand side, despite a relative slowdown in the economic growth rate across Asia as an effect of the European financial crisis, primary energy consumption is still showing steady increases. On the supply side, concerns over the safety of nuclear energy are escalating globally after the Fukushima nuclear power plant accident in Japan and decisions to review the energy mix have been on the political agenda in many countries. Counteracting this ambiguity in the future of supply is the shale gas revolution.
Energy security has increased in importance since the ‘Arab Spring’ as the resulting political instability and other geopolitical risks in the Middle East make energy resources there less reliable. The Asia-Pacific is particularly at risk from these developments because it imports much of its energy from the Middle East.
To tackle these hot issues, ‘energy intensive’ discussions have taken place within APEC’s Leaders meetings and Energy Ministers’ meetings. At the Vladivostok summitthis year, following the declaration agreed upon at the 2011 Honolulu summit, APEC leaders agreed ‘to develop an Action Plan in order to achieve the aspirational goal to reduce APEC’s aggregate energy intensity by 45 per cent by 2035’.
According to the Asia Pacific Energy Research Centre’s (APERC) calculations, satisfactory improvements in energy intensity are observable in the period 2005–2008. But emission-intensity levels have stagnated at around 34 per cent as of 2010. Greater efforts are needed to fulfil APEC’s challenging goal of a 45 per cent reduction by 2035.
APERC is contributing to this effort by implementing a Peer Review on Energy Efficiency (PREE) program, issuing policy guidelines to economies in the region and undertaking sector-specific activities such as the Cooperative Energy Efficiency Design for Sustainability (CEEDS). Efforts to address the issue from the supply side include the Peer Review on Low Carbon Energy Supply (PRLCE) and some regional initiatives of Low Carbon Model Town (LCMT) projects in Tianjin, China, and Samui Island, Thailand.
Nuclear power continues to be an important energy source for Asia. The recent APEC Leaders meeting made a declaration to ‘Ensure the safe and secure use of nuclear energy as a clean energy source in interested economies by sharing expertise, knowledge and best practices, improving nuclear safety standards and coordinating emergency response and preparedness mechanisms’.
For Japan, where nuclear energy has been one of the most important sources of energy supply, public opinion on nuclear energy is split, and even the energy-starved government is cautious about planning new energy policies. Yet the number of nuclear power plants will increase throughout the rest of Asia in the near future. This makes it vital that APEC deepen cooperation and learn lessons from Japan’s recent experiences by paying closer attention to safety, staff training and sharing crisis-management policies.
Natural gas has a smaller impact on the environment than any other fossil fuel. Its reserves are also relatively evenly distributed, meaning that we can safely predict its continued market expansion and expect steady investment in the development of natural gas and liquefaction facilities along with expansion of trade in Liquefied Natural Gas (LNG).
At this year’s summit in Russia, which is a large producer and exporter of natural gas, APEC leaders recommended that authorities ‘Review the current state and prospects of energy markets of the APEC region, with a view to increasing the share of natural gas in the energy mix as one of the most widespread and cleanest burning fossil fuels in the region’.
In response, Japan’s Ministry of Economy, Trade and Industry and APERC jointly held an ‘LNG Producer–Consumer Conference’ in Tokyo in September this year. It was attended by over 500 delegates from around the world, including the energy ministers of Japan, Australia, Canada, Qatar and South Korea, with the aim of increasing transparency in the demand and supply of LNG and facilitating better trade in the resource.
Many APEC economies have a high level of energy dependence on the Middle East, which is notoriously volatile. There is thus a need to strengthen security strategies to prepare for emergencies. Previously, initiatives for responding to oil supply shortages were taken under the International Energy Agency; but, since the use of LNG is predicted to spread throughout the APEC region in the near future, the need to explore emergency response exercises for both oil and natural gas is increasing.
With this understanding the latest APEC summit decided to ‘Promote activities to improve the response to oil and gas emergency situations in the region’. This was a follow-up to the APEC energy ministers’ clear directive to ‘encourage the Energy Working Group and APERC to work on activities to improve the response to oil and gas emergency situations in the APEC region, including emergency response workshops and exercises’.
APERC releases an APEC energy demand and supply outlook report every two to three years. The fifth edition is currently being finalised, with the target year of 2035. APERC predicts that, on the energy demand side, energy efficiency will improve by 45 per cent by 2035 under an assumption of 4 per cent economic growth per annum across the region. This would see APEC meet its energy intensity target.
Oil production within the region will also increase, but not enough to meet expanding consumption. Imports of oil from outside the region will thus also increase. This is clearly a danger for energy security and economic stability within the region. Alongside oil, demand for all fossil fuels is forecasted to increase, and as a result CO2emissions are predicted to grow by 72 per cent by 2035.
The projection outlined above assumes ‘business as usual’. If serious changes in policy can be enacted it would be possible to create a framework which is softer for the environment. In particular, if there is increased use of natural gas, the fossil fuel that emits the least CO2, we can expect a much better energy balance to become reality. In such a scenario, if restrictions such as price interventions and export prohibitions in the gas sector can be lessened, APERC predicts a 30 per cent increase in gas production by 2035. If this gas displaces coal power, CO2 emissions will be reduced by 15 per cent in electrical production and will contribute to a 5 per cent reduction in CO2 emissions throughout the APEC region.
In the quarter of a century since APEC was founded it has dealt with a number of energy crises. These have always battered the region. Even now, energy problems in the APEC region are running hot. To combat these challenges all the APEC economies must strengthen cooperation in the energy field to enjoy continued and lasting stable growth and prosperity.
Takato Ojimi is President of the Asia Pacific Energy Research Centre.
This article appeared in the most recent edition of the East Asia Forum Quarterly,‘Energy, Resources and Food’.
Why invest in Thailand - BOI
Gateway to Asia
Thailand enjoys a strategic location and serves as a gateway into the heart of Asia – home to what is today the largest growing economic market.
The country also offers convenient trade with China, India and the countries of the Association of Southeast Asian Nations (ASEAN), and easy access into the Greater Mekong sub-region, where newly emerging markets offer great business potential.
Hub of ASEAN
Thailand was one of the founding members of ASEAN and has been instrumental in the formation and development of the ASEAN Free Trade Area (AFTA). AFTA entered into force on 1 January 2010 for the six original ASEAN (ASEAN-6) members (Thailand, Singapore, Malaysia, Indonesia, Philippines, and Brunei) thereby reducing import duties to zero; the so-called CLMV countries (Cambodia, Laos, Myanmar and Vietnam) will follow suit in 2015.
Thailand is ideally located at the crossroads of Asia, with easy access to the region’s dynamic markets, including its own booming domestic consumer market of 67 million people. Thailand has long been a proponent of free and fair trade and its attractiveness as a production base for leading international companies is enhanced by a number of free trade agreements, and Thailand is certain to be a beneficiary of the ASEAN Economic Community (AEC), which will enter into force in 2015.
Social and political stability
Thailand is a foreigner friendly and welcoming Buddhist country. The country's form of government is a constitutional monarchy, with a high reverence for the Thai Monarchy, and devotion to the teachings of Buddhism. And although the vast majority of the people in Thailand are Buddhist, all religions are welcome, and His Majesty the King is the patron of all religions.
Growing economy
Economically, this country of 67 million people is characterized by steady growth, strong exports and a vibrant domestic consumer market. Abundant natural resources and a skilled and cost-effective work force help attract foreign investors, and enable them to prosper and develop industry in Thailand.
World-class infrastructure
In addition to a growing highway system that now connects not only every province in Thailand, but also to neighboring countries of Laos, Cambodia and Vietnam, Thailand also offers:
• 7 international airports
• Modern city-wide mass transit
• 3G/WiFi and broadband access
• 6 deep sea ports and 2 international river ports, including containers, tank farms and liquid jetties
Thailand’s development plans for 2012 – 2022 include a high speed rail network that will connect north, south, east and west of Thailand, as well as to southern China. The mass transit system is being expanded into the suburbs and air and marine transportation will be further strengthened to meet the pace of growing demand.
FDI policies
The country's well-defined investment policies focus on liberalization and encourage free trade. Foreign investments, especially those that contribute to the development of skills, technology and innovation are actively promoted by the government. Thailand consistently ranks among the most attractive investment locations in international surveys, and the World Bank’s 2012 Ease of Doing Business report places Thailand as the 17th easiest country in the world (and second-rnajked country in Southeast Asia) in which to do business.
Likewise, the United Nations Conference on Trade and development (UNCTAD) ranks Thailand as the 10th most attractive host economy in the world.
Government support and incentives
Numerous government agencies support investors. Through the Board of Investment, the government offers a range of tax incentives, support services and import duty exemptions or reductions to an extensive list of promoted activities.
Companies receiving investment promotion privileges from the Board of Investment are not subject to foreign equity restrictions in the manufacturing sector, and there are no local content requirements nor export requirements, as Thailand's investment regime is in total compliance with WTO regulations.
The Board of Investment also coordinates the activity of the One-Stop Service Center for Visas and Work Permits, which enables foreign staff of BOI-promoted companies to obtain work permits and long-term visas within three hours or less.
The BOI also administers the One Start One Stop Investment Center, which opened in November 2009 to facilitate a full range of services and streamline investment procedures by bringing representatives from more than 20 government agencies under one roof.
In addition to the activities of the BOI, other government organizations, such as the Department of Export Promotion and international chambers of commerce, provide invaluable support and a host of other important services.
Long–established and newly emerging industries
With steady economic development and strong support industries, the country's industrial production has grown and diversified rapidly both in long–established and newly emerging industries.
The government has emphasized attracting investment in six sectors that have been determined to be key to the country's developmental objectives. These six target industries include: agriculture and agro-industry, alternative energy, automotive, electronics and ICT, fashion, and value-added services including entertainment, healthcare and tourism.
Friendly and rich culture
Thailand has gained a well-deserved reputation throughout the world for its gracious hospitality. The friendliness of its people and the diverse nature of Thai culture make visitors feel safe and at home in Thailand.
Education and healthcare services
The education standards in Thailand are accepted by many international examining bodies, and a great number of international schools and colleges offer world-class education, while its universities are outstanding.
In terms of healthcare, the country has developed an excellent reputation globally, due to its internationally-certified doctors and medical staff, and modern facilities and equipment. It is so good that one of the fastest-rising tourism sectors is medical tourism, with international patients visiting Thailand to take advantage of Thailand's world-class and extremely affordable health care system.
Tuesday, February 19, 2013
Saturday, February 16, 2013
USA Vs CHINA
China's economy was once a world unto itself. We possess all things, the Qianlong emperor boasted to British visitors in 1793, and set no value on objects strange or ingenious. It is, therefore, remarkable that China last year eclipsed America as the world's biggest trader. New figures show that America's imports and exports of goods amounted to $3.82 trillion in 2012, compared with China's $3.87 trillion (see chart). These figures count only trade in objects (ingenious or mundane). If services are added, America retains its lead for the moment. Tax dodges may also inflate China's numbers, but its trade networks are spreading. The Associated Press says 124 countries count China as their leading trade partner. The Qianlong emperor claimed, somewhat optimistically, that his dynasty's majestic virtue had penetrated every country under heaven. China's exporters and importers have now accomplished exactly that.
Azim Premji for balance between manufacturing and services sector
Wipro Technologies Chairman Azim Premji on Saturday said balance should be maintained between services and manufacturing sector since the latter is witnessing displacement.
"India surprisingly has a component of services industry contributing 58 per cent of the GDP, which is equal to developed nations. Unfortunately, it has come at the displacement of manufacturing," he said here after distributing Earthian awards to school and college students.
Premji said a share of GDP which could have gone to manufacturing has not happened because of its lesser penetration in the country.
The services sector has provided a good foundation to build the economy but the country should also strive for a balance between the two sectors.
"We require more depth in manufacturing as we excessively depend on imports," he said.
"The service sector's good thing is that it is very employment generating, it is important in our country that we give thrust to areas that is employment generating," he said.
Premji said what happened to manufacturing sector 10 years ago due to globalisation was now actively happening in service industry. "As it is happening to services sector, the globalisation across the world is generating more accelerated growth in services," he added.
Young talent and less expensive tariff among the emerging countries were driving the growth of service sector, he said.
On the Centre's proposal for making profit-making companies earmark funds under Corporate Social Responsibilities (CSR), Premji said there was no clarity on the intention of the government.
"India surprisingly has a component of services industry contributing 58 per cent of the GDP, which is equal to developed nations. Unfortunately, it has come at the displacement of manufacturing," he said here after distributing Earthian awards to school and college students.
Premji said a share of GDP which could have gone to manufacturing has not happened because of its lesser penetration in the country.
The services sector has provided a good foundation to build the economy but the country should also strive for a balance between the two sectors.
"We require more depth in manufacturing as we excessively depend on imports," he said.
"The service sector's good thing is that it is very employment generating, it is important in our country that we give thrust to areas that is employment generating," he said.
Premji said what happened to manufacturing sector 10 years ago due to globalisation was now actively happening in service industry. "As it is happening to services sector, the globalisation across the world is generating more accelerated growth in services," he added.
Young talent and less expensive tariff among the emerging countries were driving the growth of service sector, he said.
On the Centre's proposal for making profit-making companies earmark funds under Corporate Social Responsibilities (CSR), Premji said there was no clarity on the intention of the government.
http://www.financialexpress.com/news/premji-for-balance-between-manufacturing-and-services-sector/1075298
China now biggest market for Jaguar Land RoverUpdated
LONDON - British-based luxury carmaker Jaguar Land Rover has announced that China hasovertaken Britain to become its largest market, with 71,940 cars sold in the country last year.
According to figures released by Jaguar Land Rover on Sunday night, the company sold357,773 vehicles in 2012, up by 30 percent year-on-year thanks to strong marketperformances in Britain, China and the United States.
Land Rover registered an increase of 36 percent and Jaguar 6 percent, according to the company.
The carmaker, now owned by Indian Tata, attributed the fast growthin global sales to new model introductions and update.
China is now Jaguar Land Rover's largest marketdelivering its best ever sales performance in 2012, withsales up 71 percent, the company said.
It is followed by Britain (68,333 units, up 19 percent), theUnited States (55,675 units, up 11 percent), Russia(20,549 units, up 43 percent) and Germany (16,722 units,up 41 percent).
Jaguar Land Rover plans to increase its dealershipnetwork in China by a further 30 percent in the comingyear, according to John Edwards, Jaguar Land Rover'sglobal brand director, despite the "intense competition" inthat market.
"I think what the Chinese consumers want are true British brands with real integrity," he said ina BBC program.
"That's where we have a real opportunity," he said.
Jaguar Land Rover sealed a joint venture deal with China's Chery Automobile in November.
For more subscription details ofAutoChina, please visit our E-Shop.
Luxury car sales in overdrive
China market is the best route for makers of expensive vehicles who want to rev up profits
"You could never imagine how important the China market is to Bentley," said Nigel Lofkin, factory tour guide and former leather trimmer in the British premium brand's Crewe headquarters.
"Of the eight Bentley Mulsanne Grand Tourers we produce today, six are going to China. The other two were booked by customers from the UK and Saudi Arabia," Lofkin, who has been working for Bentley for 33 years, told China Daily.
However, China's new rich sports-car enthusiasts favor more Bentley's other model, the Continental GT, a two-door grand touring coupe, which hit the market in 2003.
"The Continental GT follows the racing heritage of Bentley. Bentley won four consecutive victories at Le Mans (1927-30) and the Continental GT helped boost our business in China. In the first quarter in 2012, China overtook the United States to be Bentley's largest market," said Lofkin.
The British brand in January announced a global year-on-year growth of 22 percent in 2012 as deliveries to customers increased to 8,510 cars.
Though the US finished 2012 as Bentley's largest market with sales of 2,457 units, a 22 percent increase, China reported a 23 percent increase on the previous year, delivering Bentley's largest-ever sales volume of 2,253 units in the region.
In 2012, four of the 10 Bentley Mulsanne Tourers were purchased by Chinese customers. Seeing the enthusiasm from China, the British brand even debuted its limited edition Royal Diamond Jubilee Mulsanne in April in Beijing, to celebrate the 60th anniversary of Queen Elizabeth's ascent to the British throne. The 60 limited editions were well received by Chinese consumers.
"Actually, in my heart, China is the most important market for Bentley now and in the future," said Lofkin.
"The increasing demand will probably drive China to become Bentley's largest market in 2013," he added.
But the French also know a thing or two about style.
China's FDI drops 3.7%
Foreign direct investment in China in 2012 declined 3.7 percent year-on-year to $111.72billion, the Ministry of Commerce said at a news briefing on Wednesday.
December saw FDI in China drop 4.5 percent from a year earlier to $11.7 billion.
The US investment in China in 2012 increased 4.5 percent year-on-year to $3.13 billion whileEU spending in 2012 decelerated 3.8 percent year-on-year to $6.11 billion. FDI from Japan in2012 rose 16.3 percent year-on-year to $7.38 billion despite the islands row.
China's non-financial outbound direct investment in 2012 surged by 28.6 percent year-on-yearto $77.22 billion.
Data from the National Bureau of Statistics showed that China's economy grew by 7.4 percentyear-on-year in the third quarter of 2012, slowing for the seventh consecutive quarter. Keyeconomic figures for the last quarter are scheduled to be released on Friday.
However, the economy has shown some signs of stabilization in recent months.
China's Purchasing Managers' Index, a key barometer for the manufacturing sector, remainedat 50.6 percent in December, according to official data released early this month.
The PMI figure stood above the boom-or-bust line of 50 percent for a third consecutive month,demonstrating a trend of moderate economic recovery.
"China's economic growth will be generally sound in 2013," Minister of Commerce Chen Demingsaid here on Monday in a meeting with large foreign enterprises investing in China.
Chen predicted that FDI into China this year will stay at the level of 2012 as domesticconsumption and investment are likely to maintain steady growth.
"Representatives of foreign companies investing in China are still positive about China'sinvestment climate and expressed willingness to continue to expand their investment," saidShen, who also attended the meeting.
Pakistani soldier in Kashmir shot dead by Indian troops
Indian-Pakistani tensions increase as latest fatal shooting over disputed territory threatens to derail uneasy truce
A Pakistani soldier who strayed across the border separating the disputed territory of Kashmir has been shot dead by Indian troops, an incident that threatens to derail the ceasefire agreed a month ago.
The shooting comes after a similar incident in January in which five soldiers – three Pakistani; two Indian – were killed, heightening tension between the neighbours.
A Pakistani military official accused Indian troops of killing the soldier on Thursday after he identified himself and explained why he had entered the line of control that separates the Pakistani- and Indian-held sides of Kashmir. "We condemn such an inhuman and brutal act of killing our soldier after he had identified himself and explained his position," the military said.
Pakistan has asked India to conduct an investigation into the incident. But the Indian authorities blamed the Pakistani soldier, saying he opened fire when confronted by their troops.
Lieutenant Colonel Rajesh Kalia, a spokesman for the Indian army in Kashmir, said the soldier had been killed in a gun battle with Indian troops in which an Indian soldier was injured. He added: "Our troops challenged him. The individual resorted to indiscriminate firing. Our troops retaliated." He said Indian forces realised the dead man had been a soldier after the Pakistan army contacted its officers.
Insurgents have been fighting in Kashmir for more than two decades, demanding a separate state or merger with Muslim-majority Pakistan. India accuses Pakistan of financing and supporting insurgents in the region. Exchanges in the area are not uncommon but rarely result in fatalities.
http://www.guardian.co.uk/world/2013/feb/15/pakistani-soldier-kashmir-shot-indian
Greenpeace condemns French President's promotion of nuclear interests in India
MUMBAI: The French President's promotion of nuclear interests in India, has got the greens worried. Environment NGO, Greenpeace worded out a strong condemnation of the French President Francois Hollande's promotion of India's nuclear ambitions.
A French multi-national having expertise in nuclear energy is to build two European pressurised reactors (EPR) at Jaitapur in Maharashtra's Ratnagiri district. Jaitapur has been a hotbed of protests against the nuclear reactors for the last few years now. After the Fukushima nuclear plant disaster in Japan, the protests grew more vehement.
A French multi-national having expertise in nuclear energy is to build two European pressurised reactors (EPR) at Jaitapur in Maharashtra's Ratnagiri district. Jaitapur has been a hotbed of protests against the nuclear reactors for the last few years now. After the Fukushima nuclear plant disaster in Japan, the protests grew more vehement.
French president arrives in India to clinch $12 billion jet deal
NEW DELHI: French president Francois Hollande embarked on a fresh push on Thursday to clinch a $12-billion sale of Rafale fighter jets as he held talks in India on his first visit to Asia since taking office.
The Socialist president was accompanied by a high-powered delegation of five ministers including foreign minister Laurent Fabius and defence minister Jean-Yves Le Drian and the chiefs of more than 60 top French companies.
The trip is aimed at building on the "strategic Indo-French partnership launched 15 years ago", a French official said.
It marks Hollande's first visit to Asia since taking office in May and both Indian and French officials say the mission underscores the importance France attaches to ties with the world's second-fastest growing major economy.
Thursday, February 14, 2013
World's First 100% Organic Nation ?
Bhutan Announces Plans to Become the World's First 100% Organic Nation
Bhutan has announced plans to become the first country in the world to grow all of its crops using only organic agricultural practices. The Himalayan nation, which borders India and China, plans for its food production to become 100 percent organic by 2020. Instead of using artificial chemicals, Bhutanese farmers will rely entirely on animal and farm waste for fertilizers.
Bhutan, a small nation of only 700,000, is already largely organic, as most of its farmers don’t use artificial pesticides and herbicides due to their high costs. The country is planning to export its foods to growing market for organic goods in neighboring countries, like India and China.
The country’s minister of agriculture and forests, Pema Gyamtsho, announced Bhutan’s decision to completely shift its agriculture towards organic food production at the Delhi Sustainable Development Summit 2013 earlier this month. The minister pointed out the harmful effects of chemical fertilizers, as they tend to produce fruits and vegetables with lower nutritional value and leach away into the ground water.
While in the west organic food is thought to reduce the size of crops, as it is less resilient to pests, the Bhutanese are developing new techniques to grow more and keep the soil from losing quality.
“We are experimenting with different methods of growing crops like SRI but we are also going to increase the amount of irrigated land and use traditional varieties of crops which do not require inputs and have pest resistance,” says Gyamtsho.
However, harsher weather in the past few years has made it difficult for farmers throughout the county to grow enough to sustain their families. As people are leaving the rural areas for the cities in search of better opportunities, many farms are left with labor shortages.
“Going organic will take time,” said agriculture minister Gyamtsho. “We have set no deadline. We cannot do it tomorrow. Instead we will achieve it region by region and crop by crop.”
Via The Guardian
Photos by Poverty-Environment Initiative Asia Pacific Flickr
Read more: Bhutan Announces Plans to Become the World's First 100% Organic Nation | Inhabitat - Sustainable Design Innovation, Eco Architecture, Green Building
http://inhabitat.com/bhutan-aims-to-become-worlds-first-100-organic-nation/
Bhutan has announced plans to become the first country in the world to grow all of its crops using only organic agricultural practices. The Himalayan nation, which borders India and China, plans for its food production to become 100 percent organic by 2020. Instead of using artificial chemicals, Bhutanese farmers will rely entirely on animal and farm waste for fertilizers.
Bhutan, a small nation of only 700,000, is already largely organic, as most of its farmers don’t use artificial pesticides and herbicides due to their high costs. The country is planning to export its foods to growing market for organic goods in neighboring countries, like India and China.
The country’s minister of agriculture and forests, Pema Gyamtsho, announced Bhutan’s decision to completely shift its agriculture towards organic food production at the Delhi Sustainable Development Summit 2013 earlier this month. The minister pointed out the harmful effects of chemical fertilizers, as they tend to produce fruits and vegetables with lower nutritional value and leach away into the ground water.
While in the west organic food is thought to reduce the size of crops, as it is less resilient to pests, the Bhutanese are developing new techniques to grow more and keep the soil from losing quality.
“We are experimenting with different methods of growing crops like SRI but we are also going to increase the amount of irrigated land and use traditional varieties of crops which do not require inputs and have pest resistance,” says Gyamtsho.
However, harsher weather in the past few years has made it difficult for farmers throughout the county to grow enough to sustain their families. As people are leaving the rural areas for the cities in search of better opportunities, many farms are left with labor shortages.
“Going organic will take time,” said agriculture minister Gyamtsho. “We have set no deadline. We cannot do it tomorrow. Instead we will achieve it region by region and crop by crop.”
Via The Guardian
Photos by Poverty-Environment Initiative Asia Pacific Flickr
Read more: Bhutan Announces Plans to Become the World's First 100% Organic Nation | Inhabitat - Sustainable Design Innovation, Eco Architecture, Green Building
http://inhabitat.com/bhutan-aims-to-become-worlds-first-100-organic-nation/
Wednesday, February 13, 2013
Senkaku/Diaoyu: Islands of Conflict- Brief History
Senkaku/Diaoyu: Islands of Conflict
A look back
On September 7th, 2010 a Chinese fishing craft collided with two Japanese coastguard patrol boats near the oil-rich, uninhabited islands in the East China Sea known as Senkaku in Japan and Diaoyu, meaning ‘fishing platform’, in China. Following the collision, coastguards boarded the trawler and arrested its crew and captain Zhan Qixiong who, as subsequent video footage revealed, had rammed his boat into the coastguard vessels. Following the incident, anti-Japanese protests were held in Chinese cities including Beijing, Shanghai, Hong Kong and Shenyang. Chinese tour groups visiting Japan were recalled, four expatriate employees of Fujita, the Japanese car component manufacturers, were arrested in the northern Chinese province of Hebei and, more critically, a decision was made to suspend the export of rare earths to Japan. Chinese premier Wen Jiabao turned down requests to meet with his Japanese counterpart, Naoto Kan, and on November 1st Dmitri Medvedev, the Russian president, in a provocative move, visited the disputed southern Kuril Islands, which the Soviet Union annexed from Japan in 1945.
These events marked a low point in foreign relations for Japan, already mired in controversy over its plan to relocate the Futenma military base used for decades by US forces in Okinawa. Japan seemed to be under siege from all sides, while a rising China appeared increasingly powerful and assertive, capable of undermining Japan’s vital interests and infringing her territorial sovereignty.
It is important to look at the current dispute between China and Japan in the light of the history of Chinese foreign policy. Chang Chi-hsiung of Taiwan’s Academia Sinica has argued that the pre-modern Chinese world order was based on status and stability (mingfen zhixu). Legitimacy rested not on physical control but on the recognition and enactment of the proper roles and duties appropriate to one’s status. Under the logic of this system, emperors extended their power beyond China’s borders not by force, but by their ‘benevolence’ or ‘virtuous’ rule, which Confucian thinkers believed would lead foreign states to acknowledge the emperor’s moral suzerainty. Thus, outside China proper, it was possible to rule even where there was no mechanism of physical governance in place. Practical benefits accompanied acceptance of China’s nominal status at the head of this universal structure: tributary trade with China was not only extremely profitable but also provided many goods that could not be easily accessed elsewhere. On the other hand, gifts and titles from the Chinese emperor allowed rulers to strengthen their own position vis-Ã -vis their subjects. Although Japan stayed out of the system during its Tokugawa period (1603-1868) the vast majority of states in east, inner and south-east Asia, including the Ryukyus (modern-day Okinawa), accepted a tributary relationship with China.
This Sinocentric international order was much weakened during the Qing dynasty (1644-1912). Defeat by Britain in the Opium Wars (1839-42) and the resultant Treaty of Nanjing (1842), as well as the Treaty of Wangxia with the United States in 1854, allowed western powers to impose European-derived international law on their relations with east Asia. The British institutionalised legally a system of treaty ports and control of Chinese maritime customs, which combined to reduce China to semi-colonial status (see ‘China’s Age of Fragility’ by Robert Bickers, History Today March 2011). Although some revisionist historians argue that the Qing responded swiftly and that by 1862 scholars at the government-run language school Tongwen Guan were reading key texts such as Henry Wheaton’s Elements of International Law (1836) there was considerable confusion as to how the Qing should apply this understanding to relations with China’s neighbours. Meanwhile during its Meiji period (1868-1912) Japan launched an aggressive programme of modernisation and industrialisation, which included adoption of the western lexicon into its diplomatic language. In 1876 Japan forced China’s closest ally Korea into signing the Kanghwa Treaty, copying the methods employed by US Admiral Perry to open up Japan to overseas trade 22 years previously. Conflict over Chinese and Japanese relations with Korea came to a head at a meeting at Tianjin in 1885 in which China rebuffed Japanese demands for the Japan-Korea relationship to be recognised under western international law. Rather than pleading ignorance of western norms as Korean negotiators had done, the Chinese viceroy Li Hongzhang told the Japanese statesman Ito Hirobumi that there was a ‘striking difference’ between Korea’s tributary relations with China and the mere treaty obligations that she had towards Japan.
In her study Japan’s Colonisation of Korea: Discourse and Power (2005) Alexis Dudden argues that Japan was able to undermine China’s central position in Asia during the late 19th century by using the language and force of western international law to replace Chinese legal terms hitherto widely accepted in east Asia, introducing a new Sino-Japanese lexicon translated from English. At Tianjin Ito refused to communicate with Li Hongzhang either in Chinese or Japanese but instead spoke in English, catching the Chinese viceroy by surprise. The conflict between the Chinese and Japanese visions for east Asia would be decided on the battlefield. Despite basic naval parity Japan took advantage of a series of disastrous political and strategic errors by Li to defeat China decisively in 1894-95, establishing control over both the Senkaku/ Diaoyu islands and Korea in addition to seizing Taiwan. At a later meeting in 1905 the Chinese viceroy Yuan Shikai complained that there was a Chinese word in the text that he had not seen before, only to be humoured by the Japanese representative, who replied that the word kogi was translated from ‘protest’ in English. Japan, not China, was to be the new source of the modern vocabulary in kanji(Chinese characters) both legally and in other fields, from botany to economics.
How does this relate to the present dispute over the Senkaku/Diaoyu islands? Since 1970 the People’s Republic of China, Taiwan and Japan have all put forward bold sovereignty claims over the islands, which are equidistant from Taiwan and the southwestern tip of the Ryukyus. According to Chinese sources the first mention of the Senkaku/Diaoyu islands is in a 15th-century document now held at the Bodleian Library in Oxford. Early sources tended to mention only the islands’ location on the voyage to the Ryukyus from China, but by the 17th century Chinese sources clearly named the maritime boundary between the Senkaku/Diaoyu islands and the Ryukyus as the Heishuigou (‘Black Water Trench’), an area of high turbulence which we now know marks the edge of the continental shelf. In 1720 Xu Baoguang, the deputy Chinese ambassador sent to confer the royal title upon the Ryukyuan king, collaborated with the local literati to compile the travelogue Zhongshan Chuanxin lu(Record of the Mission to Chusan), which demarcated the westernmost border of the Ryukyuan kingdom at Kume-jima south of the Heishuigou Trench. Deputy ambassador Zhou Huang likewise identified Heishuigou as the boundary in 1756 and later the envoy Li Dingyuan noted the practice of sacrificing a live goat or pig when convoys crossed the trench. In the late 19th century the reformer Wang Tao, who had had experience of travelling in Europe, responded to the Japanese annexation of the Ryukyus by referring to Japanese sources which listed the Ryukyus as a separate country in 1670. He argued that even though the islands were vassals of both China and the Japanese state of Satsuma, the former relationship was more formal; the conquest of an inner tributary (Ryukyus) by an outer tributary (Japan) of China was a cause for outrage.
In contrast Japan’s argument largely ignored the historical position put forward in Chinese accounts. Claiming that the uninhabited islands were not occupied by any power, or terra nullius, Japan annexed the islands in 1895 shortly after its victory in the Sino-Japanese War. Japan claimed that the islands were ‘discovered’ in 1884 by Fukuoka merchant Koga Tatsushiro, who then applied to lease the land from the Japanese state. At the time, however, the interior ministry noted that it was still unclear as to whether the islands belonged to Japan, especially as there was detailed knowledge of the islands in Chinese and Ryukyuan writings, making Koga’s claims of ‘discovery’ difficult to substantiate. Nonetheless a Cabinet decision in 1895 ruled that the islands should become part of Japan, which provided the basis for their inclusion in Japan’s territories under the San Francisco Peace Treaty of 1952 that concluded the Second World War in Asia, but at which neither China nor Taiwan were present.
From the Chinese perspective there is little substance to Japan’s claims that the islands were not ‘occupied’, given that a fine distinction exists between ‘uninhabited’ and ‘unoccupied’. Sources suggest that there are graves of Taiwanese fishermen on the island. Although US occupation authorities in Okinawa administered the Senkaku/Diaoyu islands from 1945 until 1972 and used them as a training base, the US government did not see the transfer to Japan of the right of administration over the islands as equivalent to the transfer of sovereignty, which it insisted was a matter to be resolved by the relevant parties. Realising that such an ambiguity existed, the Okinawa Legislative Assembly, still under US control at the time, passed a resolution in August 1970 which declared the islands to be part of Japan and its claims were backed up by the then foreign minister Aichi Kiichi in the National Diet. In the meantime Taiwan issued an official protest, followed before the end of the year by similar complaints voiced by official Chinese media.
The dispute over the islands is a time bomb, given the enormity of the stakes involved. Despite Japanese claims that Chinese and Taiwanese interests in the islands are guided primarily by the possibility of major oil deposits, there has been little constructive dialogue between the countries involved in the question of the recent disputes over ownership of the islands. This remains at the very centre of broader tension between China and Japan, with the Nanjing Massacre of 1937 a focal point. Japan’s intransigent position on atrocities committed during the Second World War helps to fuel Chinese popular sentiment against it and makes the country an easy scapegoat for domestic discontent. Yet these days it is also easy to forget that China was the underdog for much of the 20th century; even today China is less articulate on the global scene than Japan.
The Chinese stance over the Senkaku/Diaoyu Islands is comparable with the situation in the 1930s when Nationalist China refused to accept or acknowledge Japan’s control over Manchuria (Manchukuo in Japanese) despite widespread concern that militarily China would not be able to withstand Japanese aggression. By refusing to recognise Japanese control over the lost territories China sought to destabilise the foreign presence there even though the Chinese Nationalist government then based in Nanjing was unable to exert physical control. At the same time the government’s defiance of Japan helped to consolidate its claim to be China’s sole and legitimate rulers. China’s insistence on its sovereignty over Manchuria during the 1930s and over the Senkaku/Diaoyu Islands now is overwhelmingly more important in driving its foreign policy than the stress on physical control that is common to the West. The tussle between the People’s Republic of China and Taiwan is another such example. Despite Taiwan’s physical separation from the mainland, it would be unthinkable for any Beijing government to consider it culturally or politically separate. Any attempt by Taiwan to declare formal independence is likely to end in armed conflict.
The situation viewed from Tokyo today sees a more assertive China flexing its muscles and imposing an arbitrary or at least un-western and unfamiliar logic on the world, infringing Japan’s control over territories that so far as it is concerned were acquired legally in the 19th century under the prevailing norms of the time.
However the dispute between China and Japan cannot be understood without grasping the complexities of nation state formation in Asia in the late 19th century. Despite the economic rise of East Asia since the Second World War border disputes remain an enduring legacy of the late 19th century when sharp differences of power existed between countries that understood the ways of the West, such as Russia and Japan, and those, such as China, which were less swift to respond. The fact that Japan had temporarily triumphed over the islands did not necessarily mean that an alternative worldview based on a different vision of legitimacy was completely wiped out. Tensions have subsided, probably briefly, in the aftermath of the earthquake and tsunami that devastated parts of Japan’s north-east coast in March. Yet Japan has ongoing border disputes not only with China but also with Russia and Korea. While these were marginal issues during the peak of its postwar economic expansion, since the 1990s gradual shifts in the balance of power in the region have highlighted Japan’s vulnerabilities in acute ways. As the discrepancy between the territorial status quo and the political and economic balance of power becomes more glaring in East Asia, the potential for conflict will only increase.
Philippines sees stellar economic growth at 6.6%
The figures that government economists and statisticians announced Thursday beat their targets and analysts' expectations.
Socioeconomic Planning Secretary Arsenio M. Balisacan said that on hindsight, the government's 5- to 6-per cent growth target for the past year seemed conservative.
Median forecasts from the World Bank and other institutions were 5.9 per cent for the fourth quarter and 6.4 per cent for the full year.
Compared with the latest available data from other Asean countries, the Philippines' fourth quarter growth in gross domestic product (GDP), the value of goods produced and services rendered in a given period, was higher than Vietnam's 5.4 per cent and Singapore's 1.1 per cent.
China's economy expanded by 7.8 per cent in the last quarter. Other countries still do not have available data for the full year.
Unsurprisingly, the GDP announcement by the National Economic and Development Authority (Neda) and the National Statistical Coordination Board (NSCB) was trending on Twitter, earning kudos from industry groups, such as the Makati Business Club.
Private economists, however, were not as impressed, noting that the lingering question was whether such figures could be sustained and translated into better incomes for many Filipinos.
Expectedly, the Palace cheered the "exceptional" growth rate, trumpeting it as proof of the country's ability to move toward "equitable progress" on a policy of good governance.
"It is a resounding affirmation of the Aquino administration's fiscal strategy, backed as it is by our robust macroeconomic fundamentals and more importantly, the principles of good governance," Budget Secretary Florencio Abad said in a statement.
Presidential spokesperson Edwin Lacierda attributed the economic growth to private sector activity goaded by the administration's policy reforms.
While it was initially driven by government stimulus, the economic growth was now increasingly being driven by private sector activity, including investments, which grew by 8.7 per cent in 2012, Lacierda said in a briefing.
"This means growth is becoming more sustainable from a fiscal and macroeconomic perspective. Private sector activity has been enabled by the Aquino administration's dedication to positive reform. Without doubt, good governance means good economics," he said.
Not quite impressed
Benjamin E. Diokno of the University of the Philippines School of Economics, however, was not impressed.
Diokno said that under President Corazon Aquino, the economy grew by 6.8 per cent in 1988 after a weak growth in 1987, while under President Gloria Macapagal-Arroyo, the economy grew 6.7 per cent in 2004 after a weak growth in 2003, and again by 7.6 per cent in 2010, after a near recession in 2009.
"I agree it's a strong growth. Considering its long-term growth potential and growth higher than 6 per cent might be considered strong. Is it sustainable? That remains to be seen. We've seen this kind of growth before and they were not sustained. Is it inclusive? I'm afraid not," he said.
Diokno said the contribution of agriculture to GDP continued to shrink, posting the lowest growth among the three major sectors.
"Based on the October labour statistics, the recent growth may be characterised as labour-shredding growth. Close to 1 million jobs were lost," Diokno said. Most Filipinos still depend on agriculture and related sectors for a living.
NSCB Secretary General Jose Ramon G. Albert said industry and services led economic growth on the supply side (sources of goods and services).
On the demand side (where goods and services are used), growth was still largely driven by household consumption and external trade.
Industry grew 6.5 per cent, more than twice the 2.3-per cent growth in 2011.
The Neda said the expansion in public and private construction, and the electricity, gas and water sector led the growth.
In the first two quarters of last year, it was public construction that took up the slack in construction, but the private sector took over beginning the third quarter.
"This is what we mean by the private sector upping its stakes in the economy," said Balisacan, who is also the Neda director general.
"Equally remarkable was the growth in the electricity, gas and water sector, growing by 5.1 per cent, a far cry from its growth of 0.6 per cent in 2011. No doubt this was in support of the increased economic activity in 2012," he said.
The service sector also beat expectations with a 7.4-per cent growth from trade, transport and communications, real estate, renting and business activities and other services.
Trade grew by 7.5 per cent in 2012, more than twice the figure in 2011. Growth in transport and communications accelerated at 9.1 per cent compared with 4.3 the previous year.
"We had expected a slower growth for the real estate, renting and business activities, which includes the IT-BPO, owing to the continued slowdown in the global economy. And yet the sector still managed to grow faster than expected at close to 8 per cent," Balisacan said.
There were also notable gains in other services, particularly, tourism-related subsectors, such as hotels and restaurants, and recreational, cultural and sporting activities. These subsectors grew 13.3 per cent, compared with only 7.1 per cent in 2011.
Balisacan said he was also pleasantly surprised with the growth in agriculture (2.7 per cent).
"We only expected a 2.2-per cent growth from the sector owing to weather disturbances forecast for the year," he said.
In the first two quarters of 2012, it looked like the sector would underperform with a contraction in the fisheries sector. However, the turnaround happened beginning the third quarter and especially in the fourth quarter when the sector grew by 4.7 per cent.
"We are also pleased to note that the output in the fishery sector had gone up by 3.3 per cent, from eight consecutive quarters of contraction if not stagnant growth," Balisacan said.
Household consumption
On the demand side, household consumption remained the largest contributor to growth in 2012, growing by 6.1 per cent. Although the growth was slower than the 6.3 per cent in 2011.
Balisacan noted that the growth had been on the increase coming from 5.1 per cent in the first quarter up to 6.9 per cent in the fourth.
Growth was supported by the higher level of economic activity, low and stable inflation, inflows of overseas Filipinos' remittances and government subsidy mainly through the conditional cash transfers.
"Note, however, that remittances of overseas Filipinos increased by 8 per cent in dollar terms, but only by 2.8 per cent in peso terms in October and November 2012," Balisacan said.
Exports of goods recovered with a growth of 8.7 per cent for the year from a contraction of 4.2 per cent in 2011. Exports of services grew by 9.8 per cent, more than twice the growth the previous year.
"However, this growth was actually slower than expected. Perhaps the sector is already feeling the pinch from the combined impact of the global economic slowdown and the appreciating peso," Balisacan said.
Fixed capital formation also improved to 8.7 per cent in 2012 as growth in investments for public and private construction and durable equipment registered significant increases.
In spite of the country's achievements in 2012, Balisacan said the government would not be "lulled" into complacency.
"It is our immediate task to put in place policies and implement programmes that will sustain our economy's growth over the medium term. We shall continue planting the seeds of a structural transformation in our economy to make it more investment and industry-led. This, in turn, will mean more jobs and employment opportunities of high quality for Filipinos, thus ensuring that growth is inclusive and benefits all sectors of society," he said.
Raise productivity
Cid L. Terosa of the University of Asia and the Pacific said the growth level of at least 6 per cent could be maintained as long as the Philippines kept building up productivity.
So far, Terosa said, the fourth quarter and full year 2012 growth rates were impressive but the question remained whether those numbers could translate into better income for many.
"Employment and continuous structural changes are keys to economic growth over the medium-term," he said.
http://ph.news.yahoo.com/philippines-sees-stellar-economic-growth-6-6-061002052.html
Is Railways’ 2,000cr train food business on track?
With meals that are just about palatable, limited menu options and a take-it-orleave-it attitude, the Indian Railways has not been known for its catering services for many years now. In fact, stories from old-timers — of iconic dining cars in trains like the Calcutta Mail and Deccan Queen— that served baked beans on toast for breakfast and had an impressive English style full tea service almost sound like fairy tales.
The value of having good food onboard is not lost on the Railways though. The estimated market for catering on trains is worth about Rs 2000 crore annually. Since the past few years, the ministry of railways has been trying desperately to consolidate its share of this lucrative business. But most of its schemes have fallen flat.
"There have been too many ad-hoc experiments," says a former member of the Railway Board. "For instance, the railways catering policy of 2010 took away catering services from IRCTC, a unit that was specially formulated to provide such services. And now, there is the decision to do away with pantry cars and instead set up base kitchens to provide packaged meals. What purpose will it serve unless quality is strictly monitored and enforced? "
Food industry observers agree the move to outsource food services to private players may be, on the face of it, a sound one since catering is not the Railways' core business. But it has not worked because of poor quality control and limited accountability on the part of the contractors. "The expectations of the travelling public with regard to food are much more now," says Vinayak Chatterjee, chairman of Feedback Infrastructure Services who served as a member of the expert group for modernization of Indian Railways. "The Railways urgently needs to put in place rigorously enforced service standards to derive quality from its contractors."
For that, the Railways will first need to clean up its tendering process. "A review of the present tender system for catering is absolutely essential," says celebrity chef Sanjeev Kapoor. "In my opinion it is heavily tilted in favour of people who have been providing these services for years. As a result, very few new people are able to get into the system and there is no competitive environment that can help deliver a memorable food experience."
While the Railways is still struggling to get its act in place, a number of private players have latched onto the demand for good food on trains by setting up web and phone-based delivery services. These deliver hot and fresh meals to passengers right at their seats when their train stops at designated railway stations. "It's a huge opportunity," beams Piyush Kasliwal of Mera Food Choice, a webbased service that caters to around 500-800 passengers daily through its tie-up with restaurants located near stations." Considering there are 14,000 trains with around 1000 passengers daily, our business can only grow further." Remains to be seen who chugs ahead in this rail race.
http://timesofindia.indiatimes.com/india/Is-Railways-2000cr-train-food-business-on-track/articleshow/18482543.cms
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