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Wednesday, November 21, 2012

US Fiscal Cliff poses threat to economy worldwide!

Falling off the fiscal cliff would have a global economic impact, analysts say

The so-called "fiscal cliff" has been on the horizon for two years, but now the 31 December deadline is almost here.

Now that the presidential election is over it is hoped that policymakers will knuckle down to find a solution.



US fiscal cliff may hamper Malaysian economy, says economist

KUALA LUMPUR: Malaysia could experience a slower economic growth of between 3% and 4% next year if the US fiscal cliff kicks in by next January, OCBC Bank Bhd's economist Gundy Cahyadi (pic) said.

“It's going to create a huge impact if this were to happen. The fiscal cliff will create a recession in the US where its economy will likely contract by 0.5% and this may lead to a bigger than expected recession in the eurozone. The spill over effects may lead to global trade falling quite significantly.

“On the whole, we expect a growth of between 3% and 4% for next year,'' he said at a press briefing on OCBC's regional and global economic outlook for 2013. Fiscal cliff involves the simultaneous move to increase tax and spending cuts to reduce budget deficit.

He said on the whole OCBC was projecting the country's gross domestic product (GDP) for next year to be at 5.2% year-on-year, adding that at this juncture, the risk posed by the fiscal cliff was expected to be limited as the US government might finalise a new deal.

Gundy said the economic growth would be supported by Malaysia's investment growth, which was more than 20% for the first three quarters of this year, and strong positive momentum in private consumption growth.

However, he added the 20% investment growth would not recur next year but it would still expand by close to double digit, at least in the first half of 2013 as the Government was expected to continue ramping up infrastructure overhaul currently in progress.

The main risk to the bank's projection he said was the possible slump of global demand, especially as exports remained a main drag to Malaysia's growth in 2012.

External demand had continued to be a large drag on the country's economy, he said, noting that in terms of nominal value and its contribution to GDP growth, net exports were at a record low in the third quarter of this year.

Exports growth had been sluggish throughout the year, he said partly on the back of commodity price correction, and falling exports earnings would not only affect growth directly but would have negative spillover effects to households' spending behaviour.

There may be further pressure from the recent slump in crude palm oil prices which could be quite detrimental given the commodity boom seen in the past several years had led to a spike in investment in palm oil related industries, Gundy added.

On inflation, he said OCBC expected it to trend higher next year to about 3% from the likelihood of below 2% this year.

BY DALJIT DHESI The Star/Asia News Network

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Tuesday, November 20, 2012

Asean nations feud over South China Sea

PHNOM PENH - Southeast Asian leaders feuded on Monday over how to handle tense maritime territorial disputes with China, overshadowing talks at a regional summit meant to strengthen trade and political ties.

The leaders of the 10-member Association of Southeast Asian Nations had hoped to present a united front on the South China Sea row as they host Chinese Premier Wen Jiabao and US President Barack Obama for annual talks.

But that effort broke down just before Southeast Asian leaders were scheduled to meet Wen, amid divisions between Chinese ally Cambodia and the Philippines.

Cambodia, this year's ASEAN chair, said on Sunday that Southeast Asian leaders had agreed not to "internationalise" the disputes and would confine negotiations to those between the bloc and China.

The apparent deal would have been a victory for China, which has long insisted that it should only negotiate directly with rival countries and that the Philippines should not seek support from the United States.

However Philippine President Benigno Aquino on Monday publicly rebuked Cambodian Prime Minister Hun Sen, telling his fellow leaders no such consensus had been reached and he would continue to speak out on the global stage.

"The Philippines... has the inherent right to defend its national interests when deemed necessary," Philippine Foreign Secretary Albert del Rosario told reporters, quoting Aquino's comments to his fellow leaders on Monday morning.

The feud echoed unprecedented infighting at an ASEAN foreign ministers' meeting in Phnom Penh in July, which ended for the first time in the bloc's 45-year history without a joint communique.

The Philippines and Vietnam had wanted the communique to make specific reference to their disputes with China. But Cambodia, the hosts of the talks and a close China ally, blocked the moves.

ASEAN members Vietnam, the Philippines, Malaysia and Brunei, as well as Taiwan, have claims to parts of the sea, which is home to some of the world's most important shipping lanes and believed to be rich in fossil fuels.

But China insists it has sovereign rights to virtually all of the sea.

Tensions have risen steadily over the past two years, with the Philippines and Vietnam accusing China of increasingly aggressive diplomatic tactics to stake its claims.

Temperatures could rise again later Monday when Obama arrives in Phnom Penh to join the East Asia Summit, a two-day event also involving the leaders of Japan, South Korea, India, New Zealand and Australia.

Obama has previously angered China, and emboldened the Philippines, by calling for the rival claimants to agree on a legally binding code of conduct to govern their actions over the sea.

Analysts said he would likely repeat that call in Phnom Penh, as well as make comments highlighting the importance of freedom of navigation in the sea.

ASEAN officials had said they would push Wen during their talks on Monday to quickly start high-level, formal negotiations on a code of conduct.

But Chinese foreign ministry spokesman Qin Gang insisted that China wanted to continue with the current arrangement of lower-level talks on the issue. "We already have good discussions with ASEAN," Qin said.

Even with the South China Sea row festering, countries involved in the East Asia Summit were expected to focus on ways to expand economic ties.

ASEAN nations are set to officially launch negotiations on Tuesday for an enormous free trade pact with China, Japan, India, South Korea, Australia and New Zealand.

And despite their own territorial rows, China, Japan and South Korea are likely to hold talks in Phnom Penh on Tuesday aimed at kickstarting three-way free trade negotiations, according to Qin. - AFP


China opposes 'internationalisation' of sea row


Phnom Penh (AFP) Nov 19, 2012 - Chinese Prime Minister Wen Jiabao told Southeast Asian leaders Monday that negotiations to end territorial disputes in the South China Sea should only be held between claimant countries.


Wen stressed Beijing's position during a summit with the 10-member Association of Southeast Asian Nations (ASEAN) in the Cambodian capital of Phnom Penh, Chinese foreign ministry spokesman Qin Gang told reporters.

Qin said Wen quoted from a 2002 deal reached between ASEAN and China in which they agreed to limit negotiations to "directly concerned" countries.

Wen said that among the principles under the 10-year-old declaration is to "oppose the internationalisation of the issue".
"So Premier Wen quoted the principles... enshrined in the declaration," according to Qin.

ASEAN members Vietnam, the Philippines, Malaysia and Brunei, as well as Taiwan, have claims to parts of the sea, which is also believed to be rich in fossil fuels.

But China insists it has sovereign rights to virtually all of the sea.

Tensions have risen steadily over the past two years, with the Philippines and Vietnam accusing China of increasingly aggressive diplomatic tactics to stake its claims.

The Philippines has consistently sought wider help, such as from close ally the United States, in dealing with its more powerful Asian neighbour on the South China Sea issue.

The controversy of "internationalisation" flared again in Phnom Penh this week with the Philippines insisting it should not have to confine its negotiations to just with China.

US President Barack Obama, who arrived in Phnom Penh on Monday night for an 18-nation East Asia Summit, was also expected to raise his concerns over the South China Sea, which would anger the Chinese but embolden the Philippines.

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Asean, an arena of superpowers

Sunday, November 18, 2012

Australia, still an US's sheriff in the Asian Century?

Down Under and all over: Australia is still finding its place in the world, a work very much in progress. 

Reeking of Austro-centrism: The White Paper has been criticised for remaining centred on Australia’s own concerns and interests, with scant consideration for Asia. — AFP

TWO Sundays ago, Australian Prime Minister Julia Gillard released the White Paper “Australia in the Asian Century”. For many, it was a long-awaited document.

Australia’s history, polity and geography make for an odd mix. Anglophone settlers had to reconcile themselves with a strange terrain, unfamiliar Aboriginal people, isolation from mother country Britain, even conflict between allegiance to the British crown and incipient republicanism, and now a rising Asia.

White settlers “tamed” the land and established thriving outposts around the edges of the vast island. Asian immigration followed, driven by push-pull factors of a relatively undeveloped East Asia and a more developed Australia.

As the 20th century began, a racist White Australia Policy restricted non-white immigration while encouraging European settlement. It lasted half a century and took another quarter of a century to dismantle.

Meanwhile, the indigenous peoples suffered disproportionately lower levels of life expectancy, education, employment and higher imprisonment rates.

Then later in the 20th century, East Asian economies surged. Trade links with East Asia multiplied in number and volume.

The self-image of Australia, the largest country in Australasia, Oceania or the South Pacific, became more fraught. Its geography, history, politics and society were not characteristically Asian, yet it felt increasingly overwhelmed by a rising East Asia even as it experienced the prosperity.

When the Labour Party’s Paul Keating was prime minister in the 1990s, he “declared” Australia an Asian country. After he left office, he reversed that stand and admitted that Australia was not an Asian country.

John Howard of the conservative Liberal Party next became premier and distinctly identified Australia as a Western, US-led ally in the world. President George W. Bush affirmed that by saying Australia was not just Washington’s “deputy sheriff” but its sheriff.

Labour’s Kevin Rudd next became premier, and much was made of his fluency in Mandarin. This was to be an Asian Century of economic paramountcy, led by a rapidly rising China.

Interactions with Asia and Asians, parti­cularly in economics, continued and grew. But Australia remained firmly rooted in the US-led Western sphere with its geopolitical concerns.

This added to Canberra’s fuzzy regionalism and amorphous identity in relation to Asia. The more Asia grew in global stature and consideration, the more vexed Australia’s strategic relationship with it became.

Amid these rising stakes, a White Paper as an official declaration of intent assumes considerable significance. But the heightened expectations produced general disappointment instead: most of the White Paper’s 320 pages and nine chapters concerned Asia, but seen narrowly for Australia’s own interests.

Reception to the document within Australia was reportedly supportive, but criticism from various quarters was also evident. There was more agreement over the need for the White Paper for an insular Australia than with the contents of this particular White Paper.

The parliamentary opposition criticised it for being long on rhetoric but short on detailed directions. The business community found it redundant since it was already relating very much with Asia.

Evidently these business critics saw international relations only through the prism of their business deals. The social, cultural, strategic and other aspects of external relations typically escaped them.

The White Paper itself begins with a decent outline of an ascendant Asia, a vast continent with mounting prospects, growing middle classes and expanding markets combining to change Australia’s priorities and “strategic environment”. Where East Asia was once seen as the source of unwanted migrants, it is now regarded as the fount of fresh capital and trade orders.

Much of what follows is an Australia-centric diagnosis and prescription of what Australians should do to benefit from such an Asia.

That Australia itself is so moved by Asia’s rise testifies to the cross-border nature of such fortunes, yet the White Paper remains centred on Australia’s own concerns and interests, with scant consideration for Asia.

A commentary by the Australian-born veteran industrialist, technical consultant and academic Murray Hunter, who has spent a productive working life in Asia, is telling. Writing in Indonesia’s Jakarta Post newspaper, he wondered aloud whether the White Paper actually depicted Australia finding its way in the Asian Century or just getting lost in Asia.

He said the document “reeked of Austro-centrism”, one-way concerns to get what it wants from Asia, and “niggling China with its staunch loyalty to the US” even though “China saved Australia from a deep recession”.

Action spoke louder than words, he said, and “Australia needs the region more than the region needs Australia”. He said the country had to overcome its deep-set belief that its own cultural values were somehow universally accepted across the region.

Murray said “the White Paper is still haunted by Australia’s past”, with Asia “seen only as a means for Australian incomes” to rise. He found the document failed to provide the “vital key” of “accommodation of Asia to what Australia really has to offer” as an independent country “willing to put its lot with Asia and not with the US”.

A recent high-level bilateral forum organised by ISIS Malaysia in Kuala Lumpur examined several aspects of the White Paper. “Chatham House Rules” meant that speakers could not be quoted or identified, but several comments remained pertinent.

The White Paper was seen to omit, among other things, measures for building relations with Asean countries and Asean itself. Some questions were also raised.

It was then explained that the “US military base” in Darwin was more of a facility than a base, since it would host only a rotation of US troops rather than a permanent emplacement. Australia was said to respect China’s right to modernise its military, while feeling equally entitled to nurture its security with the US.

It was further explained that Australia’s role was originally to find ways to engage the US in the region. It was “in Australia’s DNA” to seek security from US involvement in the region.

In a brief exchange later with visiting Australian Foreign Minister Senator Bob Carr, I asked him how the White Paper positioned Australia differently from the past in its relations with Asia.

He said Australia now better understood that its economic future was dependent on Asia, adding that Malaysia’s development was an example of what a growing middle class in the region signified.

On how Australia could better partner with East Asian countries for mutual benefit, he pointed to good governance, a record of economic reform and an exchange programme with young Malaysian Muslims for better understanding.

Carr said Australia should seek its security in Asia but not from Asia, while accepting Asean centrality.

He alluded to Australia’s role in the peace agreement in the southern Philippines brokered by Malaysia.

When asked about policy fluctuations between the Liberal and Labour parties, he said that although Australia is seen as a country with a security relationship with the US, there was more that could be said of that. He added that a country was entitled to look after its own security with its own foreign relations (Australia with the US).

Then when asked how Australia’s foreign policy was changing in respect of Asia, Carr said the fact that he was here in Malaysia while Gillard was in Vietnam, and both of them were heading to Bali (for an Asean-convened meeting), said it all.

Behind The Headlines By Bunn Nagara