Indonesia Revisited

While we are debating whether 1Malaysia really works or just lip service, while we are debating whether corruption is more prevalent now than before, while we are debating the transparency and selection process in which projects are being farmed out by ETP and Petronas, while we are trying to pooh-pooh the World Bank's report on outflows and and brain drain issues, while we are debating over the usage of the word Allah, while we are debating over yet another stupid sex video .... Indonesia has surged past Malaysia by a huge margin as the preferred investment destination over the last 5 years. Use any statistics you want, Indonesia would have come up trumps against Malaysia.



Heck, while we are at it, even Thailand is a better preferred destination than Malaysia over the past 3 years, and bear in mind that Thailand had a serious and long drawn "riots/clashes between the reds and yellows" ... and still FDI wants to be there than in Malaysia.

EVER WONDERED WHY LOCAL MEDIA HAD VERY LITTLE NEWS ON INDONESIA'S BRILLIANT RUN OVER THE LAST 3 YEARS???

Indonesia is showing everyone that it takes VERY LITTLE to change and improve. So, what did they do, and what didn't we do:
- Indonesia effectively eradicate important channels of corruption (even though pockets of corruption still exists), bring corrupt big dogs down by charging them in court, as Indonesian courts have more of a backbone than our flawed justice system - that brings forth accountability, enforceability, and that improves perception and comfort level for foreign investors.
- improve corporate governance and government governance.
- give back total independence to the judiciary.
- cut out as much leakages and wastage from the country as possible.
- conduct all projects, resource allocation with utmost transparency and fairness.
- the total lack of acceptance to have a fair media environment in Malaysia, one should issue publishing licences to those who want, let an objective and independent judiciary decide if and when any of them do "wrong things", not up to the government to judge ... who in Malaysia still reads the mainstream media as a serious information disseminating service?
- a vibrant and relatively open media in Indonesia.
- conduct fair elections at every level to weed out discontent and to absolutely get the people's voice and backing.
- This one gutted me the most, Indonesia has linked up so well with India and China, like you would not believe, what Malaysia has done with India (negligible) and China (probably one-fifth of what Indonesia has inked with China) has been deplorable. Considering Malaysia HAD THE NATURAL EDGE with their Malaysian Chinese and Malaysian Indians citizens ... why??? ... its because they WERE NOT EVER EMPOWERED by the government and their supporting policies and functionary bodies.


Yes, its nice to beat their football and badminton fellas, but I'd rather we match their strides in governance, transparency and fairness.

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International financial company JP Morgan praised Indonesia`s economic policies that had made the country one of the world`s most attractive investment destinations.

"The Indonesian government has worked well and we believe Indonesia has become an attractive place for investment and it will continue to develop," JP Morgan Chase`s Chief Executive Jamie Dimon said to newsmen after meeting with President Susilo Bambang Yudhoyono recently.

He said he had discussed a number of economic issues with President Yudhoyono in the meeting including investment, energy and development.

"We have also been briefed about the Indonesian economic development acceleration program (MP3EI) and hope we can help and be involved in it," he said at a press conference with head of the Capital Investment Coordinating Board (BKPM), Gita Wirjawan.

Gita Wirjawan meanwhile said President Yudhoyono in the 30-minute meeting with Dimon had explained about the government`s plan in implementing the program. President Yudhoyono had expressed wish for banks like JP Morgan to help with funds as the program would require a lot of funds.

Besides discussing MP3EI they had also talked about Indonesia`s position which has become better and more attractive as an investment destination country as well as the settlement of global bonds with JP Morgan worth UD$2.5 billion.

"Several days ago they just helped the Indonesian government through the finance minister to settle the global bonds worth US$2.5 billion with yields at the lowest so far. This gives a good prospect as the pricing of global bonds has already reflected Indonesia`s eligibility as an investment grade country," Gita said.

He said "we hoped persons like Jamie Dimon could tell his colleagues in the international financial institutions that Indonesia has a right to be given an investment grade status."

Regarding the Overseas Private Investment Corporation (OPIC) meeting Gita said Indonesia would be the host for the meeting with minimally 250 businessmen from the United States from various sectors.

"This is the initiative of the US government for Indonesia. The business leaders that would come are from companies operating in infrastructure, renewable energy. We hope there would also be technology companies so that we could conduct joint investment and production," he said.



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The State Enterprises Ministry has hinted dividend payments by state firms to the government this year are likely to increase to Rp30.763 trillion from last year`s Rp27.59 trillion.

The dividend payments would consist of cash dividends worth Rp27.590 trillion and interim dividends worth Rp3.173 trillion, State Enterprises Minister Mustafa Abubakar said.

The increase in dividend payments included interim dividends, he said. However, he stopped short of revealing which state firms had paid interim dividends amounting to Rp3.173 trillion. The government has set the target of dividend payments from state firms at Rp27.5 trillion for this year, or 8 percent lower than those in 2010. Dividend payments to the government from state firms last year rose to Rp30.09 trillion from Rp29.5 trillion a year earlier.

Mustafa said the rising dividend payments were fueled by an increase in state companies` profit. "State companies are estimated to have posted a combined net profit of around Rp100.4 trillion in 2010, surpassing the target of Rp98 trillion."

In total, state firms booked more than Rp1,000 trillion in income last year compared to Rp930 trillion the year before, according to the ministry.

Mustafa said the rising income resulted from the improving financial performance of state firms particularly those engaged in the energy, mining and banking sectors. (*)


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Industrial products served as the main engine of Indonesia`s non-oil/non-gas exports in the first quarter of 2011 when they grew 34 percent compared with the same period last year, Trade Minister Mari Elka Pangestu said.

In the first quarter of 2011, industrial products contributed US$28.4 billion to the state coffers compared to US$21.1 billion in the corresponding period last year, she said when disclosing monthly export and import performance.

Quoting data from the Central Statistics Agency (BPS), she said industrial products accounted for 62.57 percent of non-oil/non-gas exports in the first quarter of 2011 compared to 59.39 percent in the same period last year.

"The increase in industrial product exports is one of the indicators that the domestic industries have begun to recover," she said.

Among the industrial products that recorded growth at the start of this year were textiles and textile products, footwear, electronics and automotive products. Data from the Trade Ministry show textile and textile product exports rose 14.4 percent to US$1.89 billion in the first two months of this year from US$1.65 billion in the same period last year. The data also show electronic product exports increased 12.2 percent to US$1.63 billion in the January-February 2011 period from the year before. Footwear exports jumped 44.1 percent to US$507.4 million in the year to February 2011 from US$352 million a year earlier. Automotive product exports meanwhile climbed 46.1 percent to US$490.6 million in January and February 2011 from US$335.9 million in the same period last year.

According to BPS, large-and medium-sized industries in the first quarter of 2011 recorded a 5.51 percent increase in their production compared to 4.26 percent in the same period last year.

"This is quite good because it exceeds 5 percent," BPS Chief Rusman Heriawan said.
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Despite mounting concerns about inflation, Jakarta says GDP of 7-8 per cent is achievable in coming years if the current trends of strong consumer demand and large capital inflows continue.

“Economic growth will be more than (the projected) 6.4 per cent this year. If there are extraordinary circumstances, the economic growth could expand to reach close to 7 per cent”, Central Statistics Agency chief Rusman Heriawan was quoted by the Jakarta Globe as saying.

But to achieve such an ambitious target the country will need to address concerns of investors about government red tape, weak infrastructure and rising inflation, say observers.

The economy expanded by roughly 6 per cent in 2010 and the official government forecast is for an acceleration to 6.4 per cent in 2011. The country’s vice president and former central bank governor, Boediono, was even more optimistic:

“Our economic growth may exceed 6.4 per cent. Given the current positive trend, reaching between 7 per cent and 8 per cent is not impossible”, he told the Tempo newspaper.

Finance Minister Agus Martowardojo said with improved infrastructure alone, GDP would surpass 6.4 per cent this year. That – optimistically – implies the government will succeed in implementing plans to spend tens of billions of dollars on roads, ports, power plants and railways.

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Interesting Newsbites

- Did you know that Indonesia's reserves, which used to be below 20% of Malaysia's total a few years back, is now at the same level as Bank Negara's.

- While corruption still exists, in particular at certain government departments and local councils, there has been a massive improvement in eradication of corruption at the corporate level and at important ministries (finance, immigration and custom).

- Foreign portfolio investment in Indonesian equities hit US$1.29 billion in Q3 2010, up 137% y/y (more than 200% q/q) and representing the highest USD value of equity inflows in the market's history, narrowly beating the previous high of US$1.28 billion set in Q2 2007 (which was followed by another US$1.26 billion in Q3 2007). That said, inflows into debt securities dwarfed those into stocks, reaching US$4.9 billion in Q3 2010, still significantly below the Q1 2010 high of US$6.2 billion. This surge in debt investment helped drive foreign holdings' share of outstanding government debt to an all-time high of 30% by end-2010.

- In 2009, Indonesia had the world’s second-best performing stock market, up nearly 86%. And in 2010, it has climbed nearly another 50%.

- The improvement has been led by reduced global risk aversion and capital inflows, Indonesia's superior economic performance relative to other ASEAN countries and political stability after parliamentary and presidential elections in April and July 2009. The SBY era has heralded a lot of effective change and transparency. Yes, a lot of credit should go to the ex-Finance Minister, Sri Mulyani Indrawati, and a lot more should have been done to save her position. She was a victim for fighting with the indispensable Bakrie Group - that episode could have been better handled.

- Indonesia suspended trading for the first time in eight years on October 8-10, 2008, after a sell-off in Asia and emerging markets caused a 10% stock-market slide, the biggest decline since 1998. The central bank reserves the right to conduct open market operations. Regulators may halt trading if the index falls below certain level.

- In late 2008, the government began allowing firms to buy back shares worth up to 20% of their paid-up capital (upping the previous limit of 10%), with government funding of US$420 million. The government also eased the rule requiring firms to have shareholder approval to do so.

- Political stabilization has enhanced investor sentiment and foreign investment inflows. Indonesia's large population has supported robust domestic consumption and allowed Indonesia to depend less on international trade. The government's US$7.2 billion stimulus package (2009) and supportive economic policies will continue to attract foreign investment.

- Indonesia is the third largest democracy, according to the Economist. Another reason: it is home to 245 million (the fourth largest population). It is the 16th largest economy (according to the CIA World Factbook). And in 2009, Indonesia joined the G20.

- Indonesia's economy grew 6.9% in the fourth quarter, year-on-year, the fastest pace in six years. And that "resilient economic performance" was one of the reasons that S&P upgraded the country's credit rating to the highest level since the Asian credit crisis in 1997. The country's debt is now one level below investment grade (with equivalent rankings from Moody's and Fitch Ratings). And S&P's "positive" outlook has implications: if the country achieves an investment grade rating it will increase capital inflows as it opens the way for more funds to invest there. But the real vote of confidence came from Saudi Arabia. Saudi Aramco, the world's largest oil exporter, will expand into Indonesia.

- But Indonesia has problems as well. The day the government reported their GDP reading, religious violence killed three people. And the next day three churches were burned to the ground by an angry mob. Extremism is an unfortunate part of the fabric of life, and according to estimates religious violence increased 50% last year (with over 100 attacks in 2010).

- And then there's inflation. Some are concerned … the Indonesian government is not. Inflation slowed to 6.65% last month (back in September 2008 consumer prices rose 12.4%).

- Although GDP per capita grew by 11% in each of the past three years, the country still has among the lowest labor costs in the region, with wages that are roughly0ne-third the level of Malaysia and half the going rate in China. This low-cost looks to make the quickly growing country a manufacturing powerhouse in the near future as more businesses look beyond China for cheaper options.

- Unlike many countries in the region, Indonesia has a robust consumer driven economy which is rare for a country of its economic development level. This is largely due to the country’s large middle class and its strong population trends; by 2012 the middle class will have increased by 50%; representing the addition of 27 million households (or adding the entire population of Malaysia) to its ranks. Additionally, the country has slightly more than half (55%) of its population under the age of 30, and one-third under the age of 15 which could be good news as these citizens age and reach their top earning years in the near future.

- Indonesia’s economic growth may accelerate to 7 percent starting in 2011, providing a case for its inclusion in the so-called BRIC economies along with Brazil, Russia, India and China, Morgan Stanley said. Political stability, improved government finances and “a natural advantage from demography and commodity resources are likely to unleash Indonesia’s growth potential.”



Challenges

The main obstacles for further development in Indonesia include deficiencies in basic infrastructure as well as health care and primary education, as highlighted by the Global Competitiveness Index. Furthermore, the country is limited in terms of capital access, due to its macroeconomic environment. Corruption is perceived to be very high, as evidenced by Indonesia’s performance in Transparency International’s Corruption Perceptions Index.

Some of the major problems in Indonesia today are:

• Indonesia remains prone to sectarian and ethnic violence

• More than 15% of Indonesians live below the poverty line

• Infrastructure is poor, if not non-existent

Trade regulations, on the other hand, are less restrictive although the country does impose protective tariffs. The tax regime in Indonesia is welcoming towards investment, both domestic and foreign, and the country has a well-established bankruptcy law. Indonesia has signed and ratified the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States. Corruption is extensive and of concern to investors, reflected in Indonesia’s ranking of 143rd out of 180 countries in Transparency International’s 2007 Corruption Perceptions Index.

Indonesia Outlook 2010 And Beyond:

Asia is believed to be the source of world economic growth in the future. Led by China, the East Asian economy is projected to contribute to three quarters of 2.5 percent of world economic growth in 2010. Although its not just India and China in the Asian growth story. With a wealth of natural resources including copper, gold and coal Indonesia today is becoming an increasingly attractive investment market. With growth rates rising exponentially in China, its appetite for commodities also makes Indonesia - with its close proximity and abundance of natural resources - an ideal partner. Indonesia today is reaping the rewards of good economic policy and responsible debt management, boasting a 4.5 percent growth rate last year and expected to grow by 5.5-6 percent in 2010

Since ASEAN was founded in 1967, Indonesia has always been playing important role in ASEAN. Private consumption accounts for about two-thirds of Indonesia's GDP. Indonesia is also making real efforts to increase accountability in its energy and resources sector by moving to become a candidate country in the Extractive Industries Transparency Initiative (EITI).

Indonesia needs at least $140 billion in investment over the next five years to upgrade infrastructure and meet President Yudhoyono’s goal of 6 - 7 percent annual growth. Two-thirds of that funding will have to come from foreign investment. An enormous market size, young work force, growing economy, and political stability, Indonesia is dressing up for foreign investors in the times to come.

The country still has issues with deeply entrenched corruption, failing infrastructure and legal uncertainties. Yet it still offers big returns for investors to revel in.

• Overall, Indonesia has sound economic fundamentals and sustainable economic growth at around 6%.
• It also boasts low benchmark interest rates, high foreign currency reserves and strong foreign direct investment.

That all factors into why the Japan Credit Rating Agency upgraded Indonesia’s government debt to investment grade this year.

It should know, since Japan is Indonesia’s largest, foreign, long-term investor. Investors there have long-kept parts of their fellow Asian nation in their portfolios.

Indonesia Stock Bubble Formation?

While the Indonesia markets surge attracting foreign investors to the countryForeign investors are snapping up Indonesia’s stocks and bonds. It's important to note that Bank Indonesia board members last year discussed the risks posed by an influx of foreign funds, and the bank studied the feasibility of imposing capital controls. Whatever might be the case, its quite clear that Indonesia is one of the most promising emerging markets not only in Asia but in the whole world.

Best Finance Minister Vs Vested Interests

Mulyani had been very effective at eradicating corruption in her rle as Finance Minister. She resigned from her position to join the World Bank. Was the "prickly vested interests" getting to her? She has taken a swipe at the forces she believes made her position untenable, describing them as rapacious and "just like the New Order" of the late dictator Suharto.

Sri Mulyani Indrawati's appointment as a Washington-based managing director at the World Bank shook Indonesian politics when it was announced a fortnight ago.

Dr Indrawati, widely regarded as incorruptible and the key architect of the reform process that President Susilo Bambang Yudhoyono hopes will be the legacy of his leadership, had since refused to explain the reasons for her resignation as minister.

However at a forum entitled Public Policy and Ethics, attended by the cream of Indonesia's progressive and intellectual elite, the US-educated economist let fly at forces which she said were involved in politics purely for personal gain.

Although she did not mention by name businessman Aburizal Bakrie, the chairman of junior coalition partner the Golkar party and the person appointed manager of coalition business within a day of Dr Indrawati's resignation, her reference to him was too pointed to miss.

``You yourselves can see, when government officials with business backgrounds, even though they say they have put aside all their businesses, but everyone knows that their siblings, their children, who knows who else from their families, are still running the firms,'' she said.

The reference was clearly intended to be to Mr Bakrie, whose family business Bumi Resources is the giant of the Indonesian stock exchange. Mr Bakrie was also coordinating minister for the economy, and then minister for people's welfare, in the first Yudhoyono government between 2004 and 2009, before retiring from representative politics to seize control of Golkar in a party room vote last year.

Mulyani, 47, will start June 1 as one of the Washington-based bank’s three managing directors, the highest rank under Zoellick.

She will replace Juan Jose Daboub, former minister of El Salvador, who will complete his four-year term June 30, overseeing 74 nations in Latin America, the Caribbean, East Asia and the Pacific, the Middle East and North Africa, the World Bank said.

Analysts said this was a good exit for Mulyani, who with Vice President Boediono, was the target of an opposition campaign accusing them of abusing their authority during the Rp 6.7 trillion (US$716 million) bailout of Bank Century in 2008.

Finance Asia: The World Bank got its hands on an experienced and talented new team member when it poached Mulyani Indrawati, Indonesia's reformist finance minister, earlier this month. But her departure also dealt a blow to Indonesia's efforts to combat corruption.



Indrawati's resignation on May 5 came as a surprise. She started a second term just last October and her progressive approach had helped to win the confidence of foreign investors and the international community in general -- though she was not always so popular at home.

Rival politicians, led by Aburizal Bakrie, had been calling for her head ever since the $730 million bailout of Bank Century in 2008. It is not clear what role this played in Indrawati's departure, but it seems likely to have been a big part of her decision to take the job at the World Bank. She starts on June 1.

The pressure is now on for President Susilo Bambang Yudhoyono to name a capable successor of the country's $650 billion economy. His choice will be used as a measure of the government's continued commitment to reform in the wake of Indrawati's departure. The deputy finance minister, Anggito Abimanyu, is widely regarded as the choice least likely to spook markets.



The worst result for investors would be a political appointment that would threaten to bring a halt to the ministry's market-led reform programme.

In total, 61% of our readers said that Indrawati's resignation represented a big step backwards for the country's reform programme, while 21% said it did not and 18% said that it could go either way.

Indonesia's Getting All The Applause

While most Asian countries are coming to terms with a stuttering global recovery plus a China that is hiking rates, coupled with the REDS in Thailand - Indonesia is getting all the positives from international investing community. The strong political will to push through "real eradication of corruption" over the past 5 years are now bearing fruit.

• Overview: With attractive yields, a strong domestic currency, a recent debt ratings upgrade and the revival of the global carry trade, Indonesia’s bond market was attractive in 2009, which helped the government to finance its budget deficit by issuing sovereign, Islamic and samurai bonds. Yields declined in 2009 due to monetary easing by the central bank and the faster-than-expected economic recovery. The yield curve steepened in June 2009 as rising inflationary pressures increased the expectation of monetary tightening in early 2010. In 2010, the government’s bond issuance is expected to decrease due to the smaller budget. But, with the expected economic recovery and attractive yields, Indonesia’s debt market will remain attractive to investors.

• Indonesia’s debt market offers higher returns compared to the equity market, thus attracting more foreign investment. Faster economic recovery, global liquidity, attractive yields, and the potential for further ratings upgrades will buoy the debt market in 2010. Monetary tightening starting in Q2 2010 will further widen Indonesia’s interest rate differentials with Japan and the U.S. will boost carry trade. Any slowdown in the U.S dollar-funded carry trade will cause only temporary volatility in the market as investors will soon switch to the yen-funded carry trade, given attractive IDR-JPY spreads and low currency volatility.

Ratings

• On March 12, 2010, Standard & Poor’s (S&P) raised Indonesia’s long-term foreign-currency rating to ‘BB’, the highest level in 12 years, from ‘BB-‘ with a positive outlook. S&P also affirmed Indonesia’s long-term local currency rating of ‘BB+’ and short-term foreign and local currency rating of ‘B.’ According to S&P’s statement, the upgrade was driven by improving government debt conditions and rising foreign exchange reserves, helping reduce Indonesia’s vulnerability to external shocks. S&P believes that Indonesia’s government debt ratio will continue to improve, given appropriate fiscal policies and double-digits nominal GDP growth. However, Indonesia's relatively high external debt, low per capita GDP, high level of corruption and lack of infrastructure constrain further rating upgrades. S&P expects continued economic and political reforms, as well as management of inflation and external debt in order to bring about any further ratings upgrades.

• On January 24, 2010, Fitch upgraded Indonesia’s long-term foreign and local-currency credit ratings from BB to BB+, the highest level since the 1997 financial crisis, with a stable outlook. BB+ is one level below investment grade. Fitch also upgraded the country ceiling to BBB- from BB+ and affirmed the short-term foreign currency rating at B. Ngiam Ai Ling, the director of Asian sovereigns at Fitch noted that Indonesia’s ratings upgrade was supported by the economy’s resilience to the global cues in 2008-09 thanks to “the improvement in public finances, a fundamental sovereign rating strength, and a material easing of external financing constraints.” The public debt to GDP ratio has shown a downward trend while the country’s foreign exchange reserves have increased. These factors will help Indonesia weather any abrupt capital outflows.

Current Performance

• Yield Curve: In March 2010, Indonesia’s yield curve turned steeper relative to January 2010 as inflation expectations rose. In March, the two-year bond yield was around 4.7% (January: 5.7%), the five-year bond yield was 8.1% (January: 8.2%), 10-year bond yield was 9.6% (January: 10.2%) and the 20-year bond yield was 10.8% (January: 10.9%).

• Foreign holding in Indonesia’s bond market increased in 2009 thanks to global risk appetite, attractive Indonesian yields, credit ratings upgrades and positive economic outlook. Relatively high interest rates, prospects of monetary tightening in 2010, an appreciating domestic currency and global liquidity make Indonesian bonds an attractive carry trade asset funded by USD and JPY. Indonesia’s debt market offers higher returns compared to the equity market, and attracted over US$11 billion in foreign investment in 2009. Large debt inflows have put upward pressure on the Indonesian currency and hurt export competitiveness vis-à-vis other Asian countries. However, Indonesia is unlikely to impose capital controls in the debt market as it needs to finance its fiscal deficit. However, some analysts argue that Indonesia might restrict foreign investment in the central bank’s one-month short-term bills (known as SBI) if capital inflows remain buoyant in 2010.

• The budget deficit is expected to reach 1.6% of GDP in 2010 from over 2.0% of GDP in 2009 (can someone please compare that with Singapore, Malaysia and Thailand??!!). Indonesia’s finance ministry announced that in order to finance the fiscal deficit, gross debt issuance would reach US$18.5 billion in 2010, 20% higher than in 2009. The government will diversify its funding sources by issuing local and foreign currency bonds, samurai bonds and sukuk bonds. The government plans to finance 75% of the bond issues via domestic sources and shift foreign investors into debt with maturity of over five years.

Bond Issuance

• Indonesia began 2010 with a successful sale of US$2 billion in U.S. dollar denominated bonds, maturing at 10 years with a yield of 6%. Indonesia's budget deficit will drop from 2009. Due to favorable growth prospects and macroeconomic stability, Indonesia's ratings have either been upgraded or remained stable, depending on the agency. To meet its funding needs, Indonesia will issue a range of bonds in 2010, including local currency, Islamic, samurai, and U.S. dollar denominated. A strong Indonesian rupiah will increase the attractiveness of local currency bonds while expected increases in inflation in mid-2010 will steepen the yield curve.

• On January 13, 2010, Bloomberg reported that Indonesia sold US$2 billion in U.S. dollar bonds with 10-year maturities at 6% yield. Indonesia had planned US$4 billion in sales but scrapped plans for 30-year bond issues as investor appetite for emerging market debt waned slightly in the recent weeks.

• Corporate bond sales are up more three times from the same period in 2009 as investors are seeking higher yielding assets and infrastructure companies look to expand to meet plans to double spending on infrastructure this year. Poor infrastructure continues to be cited by analysts and investors as one of the key impediments to stronger growth in Indonesia. PT Macquarie Securities Indonesia is quoted in estimating that Indonesia could reach growth rates of 8-9% with the proper investment in power and roads.
  

Outlook

• Economist Jahanna Chua at Citigroup said in a March 12, 2010 report titled “S&P Finally Upgrades: Outlook Positive” that, with strong and improving fiscal and external liquidity positions, Indonesia’s ratings might upgraded to high double B in 2010 and Indonesia could become investment grade by 2011-12.

• Sovereign Analyst Aninda Mitra at Moody’s said that “ongoing flexibility in the economic policy fame work” and robust economic recovery backed by limited economic openness, a well diversified economy, low leverage and a large domestic consumption base have helped improve Indonesia’s debt ratings. Implementation of structural reforms will sustain Indonesia’s credit ratings.

Indonesia’s stock market, the Jakarta Composite Index (JCI), surged 87% in 2009, making it the second-best-performing equity market in Asia. Robust GDP growth, the prospect of a faster-than-expected economic recovery and improvement in exports and IPOs are sustaining investor sentiment.

• The JCI's improvement has been led by reduced global risk aversion and capital inflows, Indonesia's superior economic performance relative to other ASEAN countries and abating political uncertainty after parliamentary and presidential elections in April and July 2009, respectively. Positive economic growth in Q1 and Q2 2009 based on robust domestic demand improved investors' risk appetite, bringing them back to the market.

• While strengthening commodity prices will be an upside for the stock market ahead, the revival of global risk aversion and capital outflows, reduction in capital expenditure and greater-than-expected slowdown in GDP growth are risks.

• In 2008, the market was hit by global risk aversion and capital outflows, commodity correction and sluggish growth as a result of the global recession. This led to significant government intervention. In late 2008, the government broadened the limit for firms to buy back shares from 10% to 20% of their paid-up capital, with government funding of US$420 million. Firms no longer required shareholder approval to do so. The central bank kept the option of conducting open-market operations or letting regulators halt trading if the index falls below a certain level.

• Credit Suisse forecasts Indonesia’s stock market will continue to surge 32% in 2010 on the back of companies' strong balance sheets and high economic growth. Companies are raising debts to expand their business while the economy is strong. However, the central bank’s monetary tightening policy will be a risk to Indonesia’s stock market in 2010, and a short-term correction is expected before it rebounds.

• The Indonesian stock market is still attractive to international funds. Political stabilization has improved investor sentiment, resulting in stronger foreign investment inflows. The country's large population has allowed for robust domestic consumption, reducing Indonesia's dependence on global trade. The government's US$7.2 billion stimulus package and promising economic policies will continue to attract foreign investment.

The Indonesian currency, the rupiah, appreciated 16% against the U.S. dollar (USD) in 2009, making it Asia's best performing currency for the year. However, we also need to be aware that the rupiah was Asia's worst performing currency of the decade, dropping 24%. The rupiah's rally in 2009 was led by strong capital inflows into Indonesia's equity and debt markets.

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• The rupiah's appreciation in 2009 has been due to a number of factors: a stock market rally, improved bond yields, the revival of global risk appetite, relatively robust economic growth, positive election results, the central bank's monetary easing policy, the revival of the carry trade, an upgraded Moody's rating, a trade surplus, USD weakness and agreements for bilateral and multilateral currency swaps.

• The central bank has been intervening in the FX market to ease the external debt burden and contain currency appreciation as exports continue to contract. Intervention will continue as long as inflation is subdued to allow the central bank to build up reserves. In 2010, the central bank may allow the currency to appreciate to contain import inflation, but this will largely depend on the strength of the export recovery and the recovery in global oil and commodity prices.

• According to Milan Zavadjil, an IMF senior resident representative, the rupiah is not overvalued. Given Indonesia's current account surplus and robust economic growth, the rupiah is in the line with fundamentals.

• EIU: The revival of global interest in the carry trade, combined with Indonesia's stable political situation and strong economic growth amid the global economic downturn, has boosted investor sentiment regarding Indonesia'a asset markets and caused the rupiah to appreciate.

p/s photos: Bianca Bai Xin Hui

The Nasties Of Hot Money In Asia

Is there "hot money" in the system? Yes, the Fed's and ECB's low interest rates policy has already started the USD carry trade a few months back, and it could add a Euro carry trade to its banner soon. So, where do you think the money is headed or has been residing? Its Asia. The easy way to see where it has been headed over the past few months is to look at Asia's strongest currency this year. At the top of the heap was the Indonesian rupiah, followed by the Korean won and then the Indian rupee. So much so that the central banks at South Korea and Indonesia have expressed strong concerns over the inflow of hot money into their system. Beware of the current gains you have been seeing in stocks, property and currency in these two countries. They could just as easily disappear overnight. It also appears that the new favoured son by these carry trades is Taiwan.

Hence, we may well appreciate the efforts of Bank Negara a bit more over the past 18 months because Zeti refused to join in the bandwagon to "allow" the ringgit to appreciate too much. Rightly or wrongly, much of the hot money bypassed Malaysia and the ringgit because the ringgit is still not "that accessible and free-floated". By maintaining a disciplined approach, Bank Negara has basically staved off any future problems that may have to do with hot money moving too fast into the system and then too fast out of the system.

Many have been wondering why the Malaysian markets did not rise by as much as their regional peers. In fact Malaysian stock market has been in the bottom quartile in performance when compared to other Asian bourses. A huge part of the answer lies in the currency issue just discussed. Safe to say that taking that point further, we may argue that much of the rise in asset prices in other Asian markets may have been mostly "inflated" by the liquidity rush.

Is the region in grave danger of a collapse when these funds exit? What would cause the funds to exit? Well, if the Fed starts to raise rates, not likely over the next 6 months at least. Well, if there is a fresh war or political instability somewhere that causes people to rush to the reserve currency, and/or a massive jump towards risk aversion. The key I guess, is to monitor the rumblings and big trades in USD and the interest rate policy discussions.

On November 10, 2009, Taiwan's Financial Supervisory Commission barred foreign investors from parking their money in time deposits after bringing funds into the country. Plus, foreign investors will not be allowed to extend the deposit maturity beyond three months. Until now, foreign investors were allowed to deposit 30% of the inflows in time deposits for three months with a possible extension for another three months. Portfolio investors can still invest 30% of the net inflows in government bonds, money market instruments, money market funds and derivatives. As of October 2009, foreign investors had parked US$15.5 billion in Taiwan dollar accounts, almost five times the level considered appropriate by the central bank. The central bank has voiced concerns that beside investing in Taiwanese stocks, foreign investors were putting money into Taiwan Dollar deposits to earn interest plus currency arbitrage given the appreciating Taiwan dollar.

The move follows large capital inflows into Taiwan's dollar accounts recently which is putting upward pressure on the Taiwan Dollar and hurting export competitiveness. The central bank has been intervening in the FX market and had recently hinted at capital controls to contain currency strength.

This need not be an explosive issue as it seems that the central bankers in the affected countries are aware of the situation. The danger is when the central bankers do not have the political will to act as they should, or they act too slow to temper the liquidity inflow. One can easily reduce the inflow with various measures, so as to minimise the ill-effects of withdrawal of these kind of hot money.

Funnily, the US Federal Reserve Bank of Philadelphia president Charles Plosser said that the capital flows into Asia are a result of a stronger recovery in the region. He added that the flows are not such that he would consider them to be threatening or inconsistent with fundamentals. OMG, the danger is when enough people in high places in Asia believe that diatribe. These are not long term FDI, its short term, its a play on currency outlook and interest rate differentials, is short term - how in the world can Plosser say its not threatening. It can move asset prices up by 30%-50% in 6 months, and we know its seriously never going to be long term, so when they exit, how can Plosser say that it won't be threatening???!!!


p/s photos: Reon Kadena

Susilo Ensures More Stability & Better Economic Prospects

# July 8: Exit polls show that current President Susilo Bambang Yudhoyono won the Presidential elections by winning twice as many votes as his competitors. Yudhoyono got over 60.9% of votes which gives him the majority count to defeat the two opponents and lead to a single-round victory. Indonesia held its second direct election after ending the authoritarian rule. His competitors included former President Megawati Sukarnoputri and the President's deputy Jusuf Kalla who won over 25% and 12% of votes respectively.
# Yudhoyono's win will seal political stability and will be a positive for the booming equity and currency markets. He has selected Boediono (the former central bank governor) as his running mate, raising credibility in running credible macroeconomic policies. Improving regulation, reforming labor laws and tax policies to raise foreign investment will be his challenges. Continuing with his anti-corruption and anti-extremism approach, and targeted policies for the poor will also boost investor sentiment.
# Given Yudoyono's Democratic party's majority win in April 2009 Parliamentary elections, he will have enough support to implement policies. President Yodhoyono's Democratic Party won over 20% seats in the April 2009 Parliamentary elections which is enough to nominate Yodhoyono as the Presidential candidate without forming a coalition. Parties had to secure at least 20% of seats in the House of People's Representatives (DPR, the legislature) or 25% of the vote to be eligible to nominate presidential candidates for election in July 2009.
# Factors benefiting Yudoyono: Under Yudoyono's rule, GDP growth has risen from 5% in 2004 to 6.5% in 2008 which has benefited job growth and consumer spending. Indonesia is among the few Asian countries to avoid a recession in 2009 and having strong domestic demand. Capital inflows into stock and debt market have boosted these asset markets and raised investment. FDI has improved. Resource sectors and rural incomes have benefited from the recent commodity boom. Government has used fiscal stimulus measures (tax incentive for firms, spending on infrastructure, public services, job creation) to reduce impact of recession on the economy and job losses. Government cut fuel prices in January 2009 and has offered targeted financial support for the poor. The ruling party and President Yudhoyono have encouraged a democratic and secular system and tried to reduce extremism and violence. Yudhoyono has also helped reduce corruption.
# Reform challenges: Foreign investment in resource based sectors has been a point of debate due to impact on poor and social implications. Domestic and foreign investment is also deterred by regulations and red tape, poor infrastructure and investor protection, especially in commodity sectors. This has constrained the much needed foreign investment and technology transfer to develop the commodity sector. Labor laws have led to high structural unemployment and deterred investors. Tax system is also a negative for investors. Fuel subsidies burden the fiscal deficit.
# Indonesia has the potential to achieve higher growth rates provided Yudhoyono emerges with a strong mandate to cut regulations that hinder companies and investment.
# The election has helped consolidate democracy in Indonesia. Yudhoyono and his Democratic Party (PD) is the strongest force in parliament. This will deepen and quicken the pace of reforms and help Indonesia attain higher growth.
# Yudhoyono is considered positive for business and foreign investment, partly on perception of anti-corruption strategy and tendency to appoint qualified policymakers.
# Reform expectations could prove unrealistic. The PD will still require the support of other parties to pass legislation, ensuring that policy-making frustrations will persist during Yudhoyono's second term. Yudhoyono has pledged to double infrastructure spending, privatize state-owned companies and improve Indonesia's attractiveness to foreign investors, which can raise Indonesia's medium- and long-term growth. This will also require additional investments in infrastructure, curtailing corruption and bureaucracy, regulatory reform and stabilization of the currency markets.
# The result of presidential elections will not be a big event for the market as the market-friendly incumbent was expected to return. Nevertheless, removing political uncertainty will further boost capital inflows.
# Yodhoyono seems to have made the best of the tools at his disposal. Small fiscal deficit can provide more fiscal stimulus. Strong private consumption, buoyed by tax cuts and handouts, supported GDP growth in Q1 2009. Rupiah, appreciated against the U.S. dollar since November 2008, has been steadied by various stand-by-loans and currency swap agreement. Stock market has boomed in 2009.
# Golkar and PDIP parties might unify and pose challenge to Yudhoyono, not in the presidential race, but as a challenging opposition to legislative reforms in parliament.
# As long as Indonesia continues to be led by secular parties and leaders who do not pose threat to ethnic minorities (e.g. Chinese business establishment), the investor community is unlikely to be concerned.


p/s photos: Pace Wu Pei Ci

The Wave & The Tide, Or Is It A Tidal Wave

After last March, followed by the Obama event, you'd think its a wave or things are just coincidental. Do political trends in one country affect another? If I can only say Yes or No, then I would say Yes. If its a neighbouring country, then it will be a more resounding Yes.

When we had the March 2008 tidal wave, many in Singapore were rattled. Some were in awe, some shocked, many began to question and wonder if something similar could ever occur in Singapore. Even ruling politicians in Singapore must have had many sessions and meetings debating the consequences and repercussions - the need to govern closely to to the pulse and will of the nation. It is when there is a growing divergence that waves and tides eventuate.

Neighbouring countries especially in Southeast Asia tend to look over at each other closely because culturally and racially we are quite similar in many ways. Caveat - we all don't know what the Thais themselves really want??!!! Now we just got wind of the election results for Indonesia. Is it a gentle wave or a tidal wave?

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The party of Indonesia's president won a resounding victory in parliamentary polls, handing him a stronger mandate to push a reformist agenda in the world's third largest democracy.

Unofficial counts from five polling agencies showed Friday that President Susilo Bambang Yudhoyono's Democratic Party would be the largest in the 560-seat lower house after collecting 20% of the popular vote. It ranked fifth in the last election in 2004.

That was a clear sign of widespread public approval for Yudhoyono's performance in his first years, but he will still have to form a coalition to garner enough seats to contest July 8 presidential polls and build a parliamentary majority that can push through his policies.

With preliminary, official results not expected for days, Yudhoyono made no comment about possible coalition partners, but analysts expect he will again join forces with the late dictator Suharto's party, Golkar, which took a beating at the ballot box, and any number of smaller Islamic parties.

Parties or coalitions need a fifth of the legislature or 25% of the popular vote to nominate a candidate for the presidential race.

The parliamentary election put Yudhoyono on track for "a landslide" in the presidential polls, said researcher Sunny Tanuwidjaja at the Jakarta Center for Strategic and International Studies. "This is an indication Yudhoyono is still very strong, very popular."

But while it gave him the political clout needed to seek a more ambitious agenda, it remains to be seen whether he would "dare to actually deliver the breakthroughs... He has always been perceived as a slow and indecisive figure," he said.

Indonesia, the world's most populous Muslim nation, emerged from 32 years of dictatorship when Gen. Suharto was swept from power in 1998, leading to reforms that freed the media, vastly improved the country's human rights record, and for the first time allowed citizens to vote for president. But corruption is still endemic throughout government institutions and the courts, undermining its democratic transition. Critics say deeper reforms are still badly needed.

Voting went smoothly at more than half a million polling stations across 17,000 islands, but pre-election violence left five dead in the easternmost province of Papua in an apparent rebel attack. There were also complaints about ballot paper mix-ups and incomplete registration lists that meant some people couldn't vote at all.

Copyright © 2009 Associated Press

p/s photos: Tomiko Van

A man cannot choose to be born as part of a certain race or ethnic group...

The Jakarta Post Wed, 10/29/2008

The House of Representatives has unanimously passed a bill that terms ethnic and racial discrimination as serious crimes.

Deputy Speaker Muhaimin Iskandar, who presided over the House's plenary session to approve the draft law, said Indonesia no longer had any room for any form of racial or ethnic discrimination.

Chairman of the House's special committee deliberating the bill, Murdaya Poo, said the endorsement of the bill should put an end to the long-standing dichotomy between indigenous and non-indigenous people in the country.

"A man cannot choose to be born as part of a certain race or ethnic group, and therefore discrimination must cease to exist," said Murdaya, who is Indonesian-Chinese.

He said the House proposed the bill as part of its effort to ratify the International Convention on the Elimination of All Forms of Discrimination, which has been enacted since 1999.

Under the new law, leaders of public institutions found guilty of adopting discriminatory policies would face jail terms one-third more severe than those stipulated in the Criminal Code.
Citing an example, Murdaya said the governor or government of Aceh could not ban a gathering held by Javanese ethnics in the province.

He said the deliberation process had been delayed by a disagreement on whether imprisonment should be made the minimum punishment.

Jail as a minimum sentence is typically sought for serious crimes, such as corruption, terrorism, money laundering or drug abuse.

"We decided to set prison as the minimum sentence to deter people from committing racial or ethnic discrimination," said Murdaya, a member of the Indonesian Democratic Party of Struggle (PDI-P).

The bill was passed on the same day Indonesia celebrated the 100th anniversary of Youth Pledge, which Murdaya said should encourage Indonesians to uphold the diverse nature of the nation. -- JP

p/s photos: Coco Chiang

Opinion On CPO

CS view: The 1985 recession in Malaysia led to a 23% and 37% drop in new planting in 1986 and 1987. The 1998 recession and the sharp drop in palm oil prices in 1999 led to a 73% drop in new planting in 2000. Historical cycles for palm oil prices (trough-to-trough) lasted from 37 to 46 months. If history repeats itself, we should be close to the trough for palm oil prices, as the current cycle is in its 44th month. CS assumed that palm oil prices will average RM1,400 for the rest of the year (FY2008 - RM2000) while FY09 forecast RM2,250 and RM2500 for FY10.

Macq view: Our expectations of improvement in the stock-to-usage ratio of edible oils as well as strong CPO production growth in Indonesia in the coming years, we believe that CPO prices will continue to decline over the next two years, as the market increasingly factors in the strong supply outlook. Long term price for palm oil at about US$400/t or RM1,400/ton

JPM view: CPO prices traded at a trough level of M$660/t (US$190/t) historically since 1996 to mid-2006. However, higher cost of production currently we believe will likely help keep CPO prices above the historical trough level. we see a floor in CPO prices at the M$1,500/t level (US$440/t). This is close to the long-term 10-year average CPO price stripping out the bio-diesel impact of the past two years, and is also close we believe to the production cost per ton for the marginal CPO player.

UBS view: CPO price assumption for 2009 US$450/t, 2010 US$480, 2011 US$510, long-term CPO price assumption lower from US$740/t to US$570/t.

Production

CS view: Slower production growth due to cutback in expansion plans, tree stress due to higher fertilizer cost.

Macq view: We expect Malaysian production to stagnate at 17.6m tonnes next year due to a decline in the yield cycle. For Indonesia, we expect a jump of 2mt; we also expect world production to increase by ~2.4mt. Further, if we assume consumption growth will slow to 2.5mt (vs 3.8mt previously) due mainly to the slowdown in biodiesel and oleochemical usage, we expect the stocks-to-usage ratio to potentially rise from last year's level. Post 2008, we expect CPO production growth to slow in 2008–09 to 2.4mt from 4.9mt in 2007–08 due to expected biological stress cycle on the trees after a record production year. Other industry sources such as Oil World expects palm oil production growth to slow to as little as 2mt next year.

JPM view: Oil World is forecasting global supply growth to moderate from 13% in 2008E to 6% in 2009E, just slightly below demand growth of 7% estimated for next year.

UBS view: Inventory remains persistently high because of weaker demand—we think demand will continue weak and therefore it will take longer for inventory to clear.

Demand

CS view: Global edible oils consumption has never contracted, even during global recessions, but the growth rate is normally lower than during boom times. Demand for edible oils increased by 2 mn to 4 mn tonnes per annum (t.p.a.) between 1980 and 2004. Between 2005 and 2008, edible oil demand grew 6 mn to 8 mn t.p.a., boosted by rising demand for biodiesel.

Macq view: The USDA data for the past 30 years indicate that on average, there is fairly stable consumption in food items such as coffee and palm oil in volume terms. Consumption of palm oil has grown on average by 9%, soy oil by 5% and produce such as coffee by 2% pa for the past 30 years. Even during periods of weak economic conditions, contraction in volumes, if any, is small.

JPM view: Based on Oil World''s forecast, global palm oil demand growth is forecast to moderate from 10% in 2008E to 7% in 2009E, During the previous Asian crisis in 1998, global demand growth for palm oil still rose, but at a much slower rate of 3%.

UBS view: The significant cut in our assumptions is based on new lower global GDP growth and crude oil forecasts made by UBS on 30 October 2008. UBS's crude oil forecast for 2009 was lowered from US$105/barrel to US$60/barrel, a cut of 43% compared with our CPO price assumption cut of 31%. UBS also lowered global GDP growth from 2.2% to 1.3%.

Comments: If you look at too many indicators, you would end up being confused. Best to isolate a few that really matters. Predicting a price for CPO for the next 12 months is difficult and largely a moving target. On the way up, CPO price had a high correlation to oil price jumps - there is a strong involvement by hedge funds and commodity funds in ramping up long positions in all soft and hard commodities. On the way down, it looks like a positive correlation as well but that isn't really true because its a de-leveraging process. I believe oil price and CPO have decoupled and now trades on purer fundamentals of supply and demand. CPO price may see some volatility as producing nations try to bolster the supply-demand equation with new regulations.

To spot good entry levels, we need to monitor the monthly inventory levels. As at end Sep 08 the inventory was at a historic high of 2m tonnes, with a similar situation in Indonesia. Octo and Nov should see inventory rising further to 2.2m tonnes. Hence there is NO HURRY to go long on CPO stocks, you can and should trade them but not buy and hold yet. CPO should only start a genuine recovery trend when inventory reaches around 1.6m tonnes. As it gets closer to that level, you can start buying. Hence we may very well see RM1,300-1,400 for CPO as the bottom of the barrel.

The present discount gap between soy oil and CPO was at a staggering US$300, far from the average US$100 per tonne. Watch the spread closely, if it starts going below US$200, that is a sure sign that genuine buying has resumed. Right now end users are keeping a low buying inventory as they expect demand to be uncertain and CPO prices volatile with a downside bias. They can only keep a low inventory for so long.

The measure to blend 5% of palm biodiesel with diesel is a good move but MUST be properly thought out. The move is good because it takes 500,000 tonnes of CPO a year. It would be bad if its not a permanent strategy as that would hurt the biodiesel industry again. Has the government given sufficient consideration if CPO price were to be at RM3,000 again, would the 5% still make sense. Theoretically it should as with CPO at RM3,000, the price of oil should also be higher, maybe at US$110. But, what IF CPO price were to hit RM3,000 and oil stays at US$70... does it still make sense. If its to be a good long term strategy, I would make the ruling permanent. Stress test it with various combinations of both prices, and stick to it through thick and thin. Only then can investors and entrepreneurs invest properly into a viable and sustainable biodiesel industry, and valuations be properly accorded. Implement and then take away is not sound for business. Having said that, the policy will only take effect in 1Q2010, which will not play any part in the demand supply equation for the next 12 months.

I expect a high low of RM1,900-1,300 for the next 12 months, with a higher bias further down the road, and a bias towards the low end in the short term. That being the case, its pointless to look at P/BV or ROE. Just look at CAGR, PER and dividend yield going forward. Under those measures, the Malaysian CPO firms are not attractive compared to regional players in Singapore and Indonesia. Astra Agro and Golden Agri both looked much more attractive. Best among the locals are IOI Corp and Hap Seng Plantations.

p/s photo: Elanne Kong

ASEAN Confidential

I came across this interesting study completed by Dr. Eric Thompson of National University of Singapore and Dr. Chulanee Thianthai of Chulalongkorn University to gauge regional awareness and identity among ASEAN residents. They have some interesting findings, are we like the European Union, how do we regard the ASEAN vision, do we feel collectively empowered or held back by the association. The survey covered 2,000 university students from all the ASEAN countries.

Q. I FEEL THAT I AM A CITIZEN OF ASEAN (Agree % / Disagree %)
Brunei 82.2 / 17.8
Cambodia 92.7 / 7.3
Indonesia 73 / 27
Laos 96 / 4
Malaysia 86.4 / 13.6
Myanmar 59.5 / 40.5
Philippines 69.6 / 30.4
Singapore 49.3 / 50.7
Thailand 67 / 33
Vietnam 91.7 / 8.3
average 76.8 / 23.2
Comments: This is a good start, the vast majority find that belonging to ASEAN is necessary and positive. Its an important association, it helps all countries in ASEAN to be "treated" properly and with more respect when they can move with one voice. The noted divergence is Myanmar naturally as ASEAN admitting Myanmar is akin to recognising the military junta, which has been terrorising the people of Burma. Thailand is surprising low on the YES votes as well, I see a lot of sympathisers with the Burma condition there or they feel they are always getting the raw end of the trade talks. The other surprising statistic is Singapore, they certainly feel they can perform better as a sole nation with a few million people. The Singapore YES figure is even lower than Myanmar, go figure the obstinacy and arrogance. Yea sure, wake up, Singapore government wants in so that they can defuse any intentions to invade or take over Singapore.

Q. MEMBERSHIP IN ASEAN IS BENEFICIAL TO MY COUNTRY
Brunei 85.3 / 14.7
Camboodia 96.3 /3.7
Indonesia 83.5 / 16.5
Laos 99 / 1 Malaysia 90.9 / 9.1
Myanmar 58.3 / 41.7
Philippines 94 / 6
Singapore 92 / 8
Thailand 89.5 / 10.5
Vietnam 96 / 4
average 88.5 / 11.5
Comments: Again its understandable for Myanmar to diverge. But look at the hypocrisy of Singapore. They do not feel they belonged to ASEAN but they think they are MUCH BETTER OFF economically by being in ASEAN. That's so Singaporean. Gee, this is supposed to be a neutral review but now looks like being a Singapore-bashing thing (again). At least we can quote this study when we are asked why we don't like Singapore.

Q. ASEAN COUNTRIES ARE SIMILAR CULTURALLY
Brunei 45.4 / 54.6
Cambodia 84.3 / 15.8
Indonesia 84 / 16
Laos 81 / 19
Malaysia 50.2 / 49.2
Myanmar 50.2 / 49.8
Philippines 78 / 22
Singapore 49.3 / 50.7
Thailand 73.5 / 26.5
Vietnam 78.4 / 21.6
average 67.4 / 32.6
Comments: This is very important I think because the countries that voted half-half shows up in countries where cultural differences are apparent, and in a large aspect accepted as well. The other countries would show a much more cohesive local viewpoint that they are one people as a country and culturally. Very interesting indeed.

Q. ASEAN COUNTRIES ARE SIMILAR ECONOMICALLY
Brunei 29.4 / 70.6
Cambodia 39.7 / 60.3
Indonesia 46.8 / 53.2
Laos 49.5 / 50.5
Malaysia 46.3 / 53.7
Myanmar 40.4 / 59.6
Philippines 34 / 66
Singapore 11.8 / 88.2
Thailand 44.5 / 55.5
Vietnam 54.4 / 45.6
average 39.7 / 60.3
Comments: I think this is revealing for different reasons. The countries that think that their own economy is more "sophisticated" and "value-add", would have a stronger DISAGREE votes, e.g. Singapore.

Q. ASEAN COUNTRIES ARE SIMILAR POLITICALLY
Brunei 23.4 / 76.6
Cambodia 50.7 / 49.3
Indonesia 49.6 / 50.4
Laos 44.2 / 55.8
Malaysia 29 / 71
Myanmar 28 / 72
Philippines 31.4 / 68.6
Singapore 13.3 / 86.7
Thailand 25.5 / 74.5
Vietnam 54 / 46
average 35 / 65
Comments: Western media would always find it convenient to lump th entire region as one politically and that pisses me off no end. Each country has its own varying levels of democracy. It might not be a two party system, some are even dictatorial, there is varying levels of paternalism in politics. You may generalise a bit in saying that corruption is rife (with the exception of Singapore). As a whole, we have a lot of growing up to do politically. Each with its own set of problems and issues. Hence is it any wonder that the first rule for admission into ASEAN is that "we do not question country politics". Naturally in a group of very ugly girlfriends, they will not want to hold a beauty contest.

p/s photo: Taw Natoporn Taemeeruk