The global financial crisis created by the U.S. subprime mortgage crisis exacted a heavy toll on the Southeast Asian economy, which is pursuing export-oriented industrialization.
Singapore and Thailand’s economic growth started to post negative figures in the fourth quarter of 2008. Malaysia saw its economic growth plunge to 6.2 percent in the first quarter of 2009 from a year earlier. Although economic growth in Indonesia and the Philippines, countries with relatively low external dependence, remained in positive territory, they suffered a significant slowdown. Helped by the stabilizing global economy in mid-2009, Southeast Asia was able to begin to recover in the third quarter.
Singapore was the first country to post positive economic growth followed by Malaysia and Thailand, which turned to positive growth in the fourth quarter. In the first quarter of this year, the region’s recovery picked up speed, with growth topping pre-crisis levels.
Singapore’s economy led the way with 15.5 percent growth, followed by 12.0 percent in Thailand and 10.1 percent in Malaysia.
The biggest contributor to Southeast Asia’s economic recovery was robust exports. Southeast Asian countries’ total exports, which started to decline in October 2008, rebounded at the end of 2009, posting positive year-on-year growth in December. In the first quarter this year, it completely recovered to the pre-crisis level.
Electronic goods and primary commodities have led the comeback in the region’s exports. For the January-April period, electronics exports from the Philippines and Malaysia soared 45.1 percent and 32.3 percent, respectively. As a result, the weight of electronics in total exports increased sharply. Electronics represented 58.4 percent of the Philippines’s total exports; 39.1 percent of Malaysia’s total exports.
Primary commodities exports from Indonesia, Malaysia and Thailand also rose rapidly. Crude oil exports by Malaysia soared 75.4 percent while those by Indonesia rose 41.5 percent. Indonesia’s mineral resource exports and rubber exports from Malaysia and Thailand exhibited a higher-than-average growth compared to other export items.
As for destination, China was a main recipient of Southeast Asian exports; the rise in shipments to the world’s No. 3 economy exceeded overall export growth. During the January-April period, Indonesia’s exports to China jumped 65.6 percent while Malaysia increased 56.2 percent. Thai exports to China increased 47.6 percent by April, almost double the growth rate of total exports (24.3 percent).
The main products shipped to China were electronic goods and basic natural resources (e.g., oil and raw metals). Exports of semiconductor integrated circuits, in particular, had a rapid run-up in sales to China. Based on Chinese statistics, China’s imports of semiconductor integrated circuits from Malaysia amounted to $6.7 billion by April, which was a 93.5 percent year-on-year jump. Shipments of primary commodities, including Malaysian oil and rubber, Singapore’s oil and chemical products, Indonesian coal and mineral resources and Thai rubber, to China increased greatly. Indeed, China increased coal imports fivefold and bituminous imports ninefold from Indonesia.
Whether or not the recovery of the Southeast Asian economy will continue is unclear. Sovereign debt worries in the Southern European countries could weigh down the global economy and political instability and fiscal deficits in the Southeast Asia countries can be troublesome. However, the mid to long-term outlook of the Southeast Asian economy isn’t bleak. Southeast Asia is becoming more appealing to foreign investors as an investment alternative to China, where rising labor disputes and wage demands are raising risks to foreign companies. Realizing this, Southeast Asian governments are stepping up efforts to improve the business environment for foreign investors.
Such efforts to improve the investment environment will not only help the Southeast Asian economy recover quickly from any future slump but also enable it to pursue further growth over a long term. Accordingly, Korean companies need to renew their perception of Southeast Asia. They need to diversify their export items which have been mostly components and materials. They should pay more attention to Southeast Asia to distribute investment risks that are centered on China’s manufacturing industry and take advantage of the mushrooming Southeast Asian market.
As the rainy season (June ~ the middle of July) arrived yesterday, Lotte Department Store displayed colorful rain boots at its branch in Busan. According to the Korea Meteorological Administration, the precipitation in Jeju was 13.5 millimeters (0.5 inches) and the rain is expected to advance north from Sunday.
Seoul and Beijing will likely begin proper free trade negotiations early next year, Trade Minister Kim Jong-hoon said on Wednesday.
"The two governments can start preliminary talks around September on sensitive items" such as automobiles and agriculture. Despite China's estimate that preliminary talks will take about six months, "it'll be possible to finish them quickly if everything proceeds smoothly," he added.
"Korea is sensitive about agro-fisheries products and China about industrial products like cars and IT goods," Kim said. "In preliminary talks, the two countries will discuss which of the target goods should be treated as sensitive items."
The ultimate goal is to establish a free trade zone in East Asia involving Korea, China and Japan by concluding a free trade agreement with them, he added.
Commenting on the Korea-U.S. FTA bill, which has been epically delayed in the U.S. Congress, Kim said, "My visit to the U.S. in May gave me the impression that Congress is unlikely to ratify the FTA before mid-term elections there in November." But he pointed out that a group of congressmen has been stressing the importance of the trade pact for American business.
The government has decided that emergency measures to shield the economy from the global financial crisis can be wound down now that growth is buoyant. But it said it will continue and even increase efforts to help the underprivileged, entrepreneurs and small businesses.
According to Minister of Strategy and Finance Yoon Jeung-hyun, Korea’s economy will grow 5.8 percent this year thanks to healthy exports and capital investment, which is higher than the ministry’s December estimate of 5 percent growth. The Organization for Economic Cooperation and Development has also predicted 5.8 percent growth for 2010, higher than the Bank of Korea’s 5.2 percent projection or the International Monetary Fund’s 4.5 percent estimate.
“The figure is not a goal but an outlook,” Yoon said at a joint press conference with heads of other ministries at the government complex in Gwacheon, Gyeonggi, yesterday. “Without special circumstances, we’ll be able to achieve 5.8 percent growth. It could be even higher.”
Local consumption and corporate investment are expected to grow 4.6 percent and 15.6 percent, respectively, and exports will increase 25 percent, the finance ministry said. The number of newly employed is expected to be 300,000 this year, 50,000 more than anticipated. Consumer prices are likely to rise 3 percent this year, with growing inflationary pressure.
The economy grew 8.1 percent in the first quarter from a year earlier, the highest among the OECD countries, and the government predicted a 6.3 percent on-year growth for the second quarter. Asked whether the government would implement an “exit strategy” from the emergency measures used to fight the global economic crisis, including a hiking of interest rates, Yoon said the decision will depend on the economy’s performance in the second quarter and will be made by the monetary policy committee.
Yoon, however, expressed concern that the poor were gaining least from the recovery. “The poor are usually the hardest hit by an economic slump but they are the last to benefit from economic recovery,” Yoon said.
To protect the less privileged, an increase in the rise of public utility rates will be minimized if possible, the ministry said. This echoes President Lee Myung-bak’s recommendation yesterday to economic policy makers.
Despite the common goal of helping the poor and reviving the economy, there were some differences between ministries expressed at the press conference. The finance ministry said earlier it hoped to allow for-profit hospitals in free economic zones but the health ministry said it would oppose such a move unless there are policies in place to prevent problems.
“If for-profit hospitals are allowed in the country, small hospitals in provincial areas could go bankrupt and there is a high likelihood of increases in medical bills,” said Jeon Jae-hee, minister of health and welfare. “The health ministry is drawing up policies to avoid negative outcomes but it has been very difficult. ”
The economic policies announced for the latter half of the year include:
- Providing jobs for young adults and seniors. The government will continue offering public sector jobs under the Hope Works program.
- Improving the social safety net.
- Finding growth engines.
- Lowering the income tax for temporary workers to 6 percent from current 8 percent.
- Encouraging mobile telecom carriers to charge fees on a 1-second basis instead of a 10-second basis to lower phone bills.
- Boosting health insurance coverage to include MRI scans and cancer treatment.
- Despite the depressed real estate market, the government will continue to enforce the loan-to-value (LTV) and debt-to-income (DTI) rules on real estate loans to prevent household debt from growing too fast.
Sales of imported cars jumped as much as 20 percent last month compared to a year ago, according to data from the Ministry of Land, Transport and Maritime Affairs.
Some 460,892 imported cars were newly registered in Korea as of late May, an increase of 20 percent from 383,962 in the same month last year. Imports accounted for 2.62 percent of all new car registrations, up from 2.45 percent in May last year.
BMW was the most popular foreign brand, with 72,735 cars registered. Mercedes-Benz came in second with 64,219, followed by Toyota-Lexus with 49,100, Honda with 36,914 and Audi with 31,489.
Most of the new vehicles or 48.3 percent were German, trailed by Japanese (25.9 percent) and U.S. (12.8 percent). Large cars accounted for 75.5 percent and mid-sized vehicles 21.6 percent, while compacts and mini cars made up 2.6 percent and 0.3 percent, respectively.
Kia Motors is seeking to build a plant in India to produce 300,000 vehicles a year starting from 2012, the automaker said Wednesday.
"We're conducting a feasibility study to select a site for the plant near Chennai," a Kia spokesperson said. "Based on data from Hyundai Motor which entered the Indian market in 1998, we're estimating costs and time to build the plant, as well as examining demand forecasts and Hyundai's sales figures there," he added.
Hyundai currently operates two plants in Chennai with a combined annual output of 600,000 cars. Of the 560,000 units produced at the plants last year, Hyundai sold 290,000 in India, grabbing a 20-percent share of the market.
Kia's move has been apparently motivated by its wish to find an alternative market to Europe, the destination of the majority of its exports, where demand has been sluggish due to the recession.
Some 1.4 million passenger cars were sold in India last year, compared to 1.1 million units sold here. The Indian auto market is expected to grow to 3 million units by 2015 to become the world's fourth largest, trailing only China, the U.S. and Japan.
Office of Commercial Affairs, Royal Thai Embassy in Korea
Source : http://www.depthai.go.th