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East Asian Economy <Lecture Note 4S1-Singapore Malaysia Thailand Indonesia Philippines> 2013.10.17
East Asian Economy: SupplementsEach South East Asian Economies G1
* Some parts of this note are borrowed from the references for teaching purpose only.
Semester: Fall 2013
Time: Thursday 2:00-5:00 pm
Professor: Yoo Soo Hong
Classroom: 423
Mobile: 010-4001-8060
E-mail: [email protected]
Home P.: http://yoosoohong.weebly.com
1
Singapore
2
History of Singapore’s Economic Development
The 1960s: A time of turbulence and economic uncertainty
Poor infrastructure, unemployment, labor unrest..such were odds against Singapore in 1960s.
The 1970s: The move into skills-intensive industries
Economic Development Board of Singapore positioned as a quick operations start-up
location where factories were built in advance of demand and a highly-skilled workforce was
readily available.
The 1980s: The era of capital-intensive and high-technology industries
Singapore manages to attract the first wafer fabrication planet in he South East Asia
region. The move into R&D, engineering design, and computer software services marked
what was known as the Second “Industrial Revolution” for Singapore.
The 1990s: Services identified as a second pillar of the economy
As manufacturing was further strengthened, the service sector was identified as a second
pillar of the Singaporean economy.
The 2000s: A focus on innovation, knowledge and R&D
Innovation, R&D and Intellectual Property became Key economy drivers, requiring new
commercial and legal framework.
3
Major Economic Indicator-Singapore
2007
2008
2009
2010e
2011f
GDP (100 million dollar)
1,773
1,894
1,833
2,227
2,666
GDP per capita (dollar)
38,646
39,136
36,777
43,864
51,240
Economic growth (%)
8.8
1.5
-1.1
14.5
5.5
Consumer price inflation (%)
2.1
6.6
0.6
2.8
4.6
Exchange rate (S/dollar)
1.51
1.41
1.45
1.36
1.25
Current account balance
(million dollar)
47084
36,011
46,271
46,671
Export (million dollar)
302,822
342,776 273,411 358,373 431,668
Import (million dollar)
256,859
316,161 243,180 310,391 381,122
Foreign reserve (million dollar)
162,517
173,649 186,005 223,890
Debt balance/GDP (%)
14.4
13.5
32,628
11.1
9.8
..
8.8
Source: Korea Eximbank Overseas Economic Research Institute. 2010. 2010 World Country Review
4
Development Strategies

Expanding external ties - embracing globalization through the multilateral
trading framework of the WTO, regional co-operation as well as bilateral
Free Trade Agreements.

Maintaining competitiveness and flexibility - keeping the burden of taxes as
low as possible, reviewing the labor market and wage system to make them
more flexible, and pricing factors of production competitively.

Promoting entrepreneurship and domestic companies - encouraging people
to be innovative and improving the ability of firms to develop new ideas and
businesses, tap new export markets and broaden the economic base.

Growing manufacturing and services - upgrading these sectors by
improving cost competitiveness, equipping the labor force with relevant
skills, and developing new capabilities and industries.

Developing human capital - investing in education, helping workers train
and upgrade, and welcoming global talent to augment the indigenous talent
pool.
5
Singapore’s GDP Growth
6
Singapore's Ranking in Doing Business
(Out of 183 economies)
-Singapore is ranked first for having the most open economy for international
trade and investment
-Ranked as the world's easiest place to do business
-Ranked the most competitive country in the world
Source: The International Bank for Reconstruction and Development/The
World Bank. 2010. “Doing Business 2010, Singapore”
7
Skilled Employment
-Ranked 7th in the world and 2nd in Asia for having the most motivated
workforce
-Among the top 5 in Asia for the best skilled labor
-Labor regulations are the most business conducive in Asia
Source: Economic Development Board, Singapore
8
Trade and Singapore’s Economy
-Singapore’s trade in goods and services was more than four times of its GDP
in 2007.
-In nominal terms, Singapore trade in goods and services reached US$698.6
billion in 2007.
-Merchandise trade comprised about three-quarters of Singapore’s trade (78.3
per cent) in 2007. In nominal terms, domestic exports stood at US$155.9
billion in 2007 while Re-exports was US$162.0 billion in the same period.
-Malaysia, China, the United States, Indonesia and Japan are Singapore’s top
five trading partners, accounting for 48 per cent of total merchandise trade
in 2007
9
Composition of Singapore’s Merchandise Exports
10
Growth of Singapore’s Merchandise Trade
and GDP
30.0%
Trade
GDP
25.0%
Growth Rate (%)
20.0%
15.0%
10.0%
5.0%
0.0%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
-5.0%
-10.0%
-15.0%
Source: Singapore’s Department of statistics and IE Singapore.
Note: Data in Current Market Prices.
11
Growth of Singapore’s Merchandise Trade with Asian
Countries, 1980-2007
-Singapore’s trade moved in tandem with its trade with Asia
-63% of Singapore’s trade was with emerging Asian countries.
-Main Asian trading partners:
Malaysia (Top trading partner with a 13% of Singapore’s trade in 2007)
Indonesia (4th ranked trading partner with a 7.8% share of Singapore’s trade in 2007).
Source: IE Singapore, 2009
12
Singapore’s Exports to China as per cent of
Singapore’s Total Exports, 1985-2007
-Singapore’s trade with China rose from US$2.59 billion in 1985 to US$60.8 billion in 2007.
-Singapore’s exports to China also rose impressively by an average annual rate of 24.4
per cent between 1986 and 2007; with China’s share of Singapore’s exports increasing
from 1.5 per cent in 1985 to 9.5 per cent in 2007.
-About 40% of Singapore's Exports were destined for China.
Source: IE Singapore, 2009
13
References
Asian Development Bank. 2010. “Asian Development Outlook 2010”.
Economic Development Board, Singapore. 2010. “EDP Annual Report”.
International Enterprise Singapore. “Globalization Effect on Singapore's Trade”.
The International Bank for Reconstruction and Development/The World Bank.
2010. “Doing Business 2010, Singapore”.
14
Malaysia
15
Basic Information of Malaysia
-
Population : 28.3067 million (2009)
Age structure (2009):
0 – 14
15 – 64
65 above
31.8%
63.6%
4.5%
- Total fertility rate : 2.95 child born/ women (2009)
- Life expectancy (2009):
-
Male
Female
70.56
76.21
GDP 2009 : -3%
GDP per capita 2009 : USD 5,406
Major Industry : Manufacturing (55%)
Major trading partner (2008) :
Export
Singapore (14.7%)
USA (12.4%)
EU (11.3%)
Japan (10.8%)
Import
China (12.8%)
Japan (12.5%)
EU (11.8%)
Singapore (11.0%)
16
Nominal and Real Growth Rate
Nominal GDP
Real GDP
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source : Central Bank of Malaysia
17
Nominal and Real GDP
Nominal GDP
Real GDP
250,000
Million USD
200,000
150,000
100,000
50,000
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
Source : Central Bank of Malaysia
18
Major Economic Indicator-Malaysia
2007
2008
2009
2010e
2011f
GDP (100 million dollar)
1,861
2,216
1,928
2,378
2,820
GDP per capita (dollar)
6,850
7,992
6,912
8,418
9,850
Economic growth (%)
6.2
4.6
-1.7
7.2
5.1
Consumer price inflation (%)
2.0
5.4
0.6
1.7
3.3
Exchange rate (M/dollar)
3.44
3.33
3.52
3.22
2.99
Current account balance
(million dollar)
29,770
38,914
31,801
26,108
27,217
Export (million dollar)
176,220
199,733 157,655 197,010 227,701
Import (million dollar)
138,493
148,472 117,402 156,572 186,124
Foreign reserve (million dollar)
101,019
91,149
95,432

Debt balance/GDP (%)
33.5
32.8
39.7
36.2
30.2
Source: Korea Eximbank Overseas Economic Research Institute. 2010. 2010 World Country Review
19
Four Phases of Economic Growth
- In the last 5 decades, Malaysia has witnessed major structural transformation of the
economy.
1986-99
1957-70
1971- 85
2000 onwards
Commodity-driven
and import
substitution
Rural development and
nascent industrialization
1997-98
Asian
Crisis
1985
Recession
1960
1970
Towards higher
knowledge-based
economy…
Rapid industrialization
and global integration
1980
1990
2009
Global
Recession
2000
2009
•A private-sector
driven, commoditybased economy
•Pursued an import
substitution strategy
•Government
emphasised on rural
development and
initiated effort on
industrialisation
•Malaysia entered first
recession in 1986 collapse in commodity
prices, twin deficit
position
•Post-crisis, Government •Policy thrust to
develop Malaysia
pursued rapid
into a knowledgeindustrialisation, export
based economy
promotion and
introduced economic
•Growth was driven
liberalisation
by domestic
demand
•Malaysia entered
second recession in
1998 – due to
speculative attacks on
20
Asian currencies
Economic Development
- The standard of living has improved immensely for the average person
since 1957. From close to zero, access to piped water, electricity and TV
are all 100%. The Malay poverty level is < 17%.
- The New Economic Plan (NEP) of 1971 was a 20 year plan to eliminate
prosperity as a function of race. It sought rapid growth in the Malay sector
without weakening Chinese enterprise.
- The NEP also sought to increase the Malay share of capital ownership to
30%, reduce foreign share to 30% from 63% and allow a 40% Chinese
share.
- Malaysia’s economy is a market oriented, export economy with state
ownership of heavy industry, only. Growth rate of GNP has been about 8%
in the 1980s and 90s.
- Factors include global market liberalization, competition for FDI, especially
from China and Vietnam and difficulties integrating into global supply
chains.
21
-
Per capita income of US$6,800 (2009) clearly significant achievement but
seemingly caught in “middle income” trap
-
Major preoccupation with identifying new sources of economic growth;
episodic promotion of ICT, biotechnology, Islamic finance, tourism, services,
etc.
-
Key policy thrusts include human resource development, innovation
clustering, etc. i.e. knowledge-driven activities.
-
After 50 years of empowerment through development, citizens are
educated, have choices and less susceptible to patronage.
-
Close political-economic nexus also necessitated being trade, market and
private enterprise-friendly to large degree.
22
-
Growth and development story incomplete without (A) primary commodities,
(B) foreign direct investment, and (B) oil and gas to furnish foreign reserves.
-
In late 1980s to mid-1990s, growing economic confidence led to massive
infrastructure privatization, supported by foreign capital inflows.
-
Malaysia moved from being ‘someone else’s production platform’ to
recognition as a significant economic entity and market in its own right.
-
1997 Asian Financial Crisis meant “openness” threatened stability of
multiracial coalition; political-economic nexus, however, was not at risk.
-
Rebounding from contraction in 2009, GDP rose at a faster rate than
anticipated in the first half of 2010.
-
Exports recovered strongly, sparking a broad-based increase in domestic
demand that powered the growth in GDP.
23
Foreign Investments
Foreign Investments To Malaysia In 2009
Foreign Investments By C
ountry 2009
2009
FDI
2009
New
Expansion /
Diversification
Total
471
295
766
Potential
Employment
39,706
24,624
64,330
Total Capital
Investment (US$ mil)
6,447.8
3,095.1
9,542.9
- Domestic (US$ mil)
1,653.5
1,414.4
3,067.9
- Foreign (US$ mil)
4,794.3
1,680.8
6,475.0
Number of projects
NOTES:
• Summation of totals may not be exact due to roundi
ng difficulties.
• 2009 : US$1 = RM3.42
COUNTRY
No. of
projects
Foreign
Investment
(US$)
Japan
54
2,058,886,863
Hong Kong
7
1,554,289,782
USA
19
685,668,785
Singapore
92
582,588,744
Taiwan
32
209,384,375
Netherlands
21
140,262,261
Korea,Rep.
11
133,193,666
SOURCE: MIDA
24
Malaysia’s Trade openness
• Source: Department of statistics Malaysia,
various years.
Source: Department of statistics Malaysia, various years.
25
Outcomes of Economic Transformation
 Transformation into an upper middle income economy
− 7-fold increase in per capita income from RM1,132 in 1970 to RM25,800 in 2008
− Incidence of absolute poverty reduced from 49% in 1970 to 3.6% in 2007
 Sectoral diversification into services and manufacturing
− Services share of GDP grew from 42% in 1970 to 55% in 2008
− Manufacturing share of GDP rose from 13% in 1970 to 29% in 2008
26
Investment Abroad
Investment Abroad / Nominal GDP
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source : Central Bank of Malaysia
27
Innovation Challeng and the Restructuring of the
Malaysian Economy
 Value drivers, levers and enablers in the economic value chain
28
The New Economic Model
 From a Middle Income to a High Income Economy by 2020.

-
New Economic Model is expected to be anchored on:
Innovation
Creativity
High value sources of growth
Modern services sector
Skilled manpower
29
The Way Forward
Government
Transformation
Programme
New Economic Model
10th Malaysia Plan
Private sector leads,
Government Facilitates,
Review of subsidies,
Innovation, creativity,
value-added activities
30
30
Issues and Challenges
-
-
Middle income trap.
Slower economic engine and emergence of other developing economies.
Declining investment and attractiveness as investment destinations.
Composition of exports were mainly commodities and low value-added man
ufactured products.
Slow productivity growth due to low creativity and product innovation (less
focus on R&D).
High dependency on low skilled workers and foreign labors.
Critical stage of human capital – brain drain, migration.
Wider gap between the rich and poor.
The Government is burdened with subsidies.
31
Reference
Saleem, Ayesha, et al. 2009. “Malaysia’s economic situation from Macroeconomics
perspective”.( google: ppt)
Wong,Steven C.M. “Malaysia’s Growth and Development Story”. (google:ppt)
Zakaria, Muhd Shahrulmiza.2009. “Malaysian New Economic Model”. (google:ppt)
32
Thailand
33
Thai Economy
Avg.
GDP Structure (%)
External
GDP
Growth
(%)
Agriculture
Industry
Service
Sector
(X+M/GDP)
(%)
1960s
8.4
29.0
22.6
48.3
38.7
1970s
6.9
24.5
26.1
49.4
43.7
1980s
7.2
18.4
30.3
51.3
54.7
1990s
5.3
11.4
38.4
50.2
85.1
2000
4.8
10.3
41.1
48.6
114.5
2005
4.5
8.7
43.9
47.4
123.8
Source : NESDB
34
Major Economic Indicator-Thailand
2007
2008
2009
2010e
2011f
GDP (100 million dollar)
2,470
2,726
2,637
3,189
3,560
GDP per capita (dollar)
3,757
4,110
3,940
4,720
5,220
Economic growth (%)
5.0
2.5
-2.3
7.8
4.3
Unemployment rate (%)
1.4
1.4
1.5
1.1
1.6
Consumer price inflation (%)
2.2
5.4
-0.9
3.3
3.8
Exchange rate (D/dollar)
34.52
33.31
34.29
31.69
30.22
Current account balance
(million dollar)
15,677
2,210
21,862
15,416
9,494
Export (million dollar)
151,240
175,215 150,712 194,526 226,277
Import (million dollar)
124,478
157,830 118,022 162,044 199,017
Foreign reserve (million dollar)
85,110
Debt balance/GDP (%)
25.0
108,317 133,599 165,656
23.8
26.7
25.7
..
25.1
Source: Korea Eximbank Overseas Economic Research Institute. 2010. 2010 World Country Review
35
Thai and World Economy: Trends and Projection
(%)
15.0
2004
2007
2010
10.0
5.0
0.0
4.9 5.1
4.8
5.2
4.5 3.0
44
2005
2008
2011
World
2006
2009
2012
11.6
10.4
10.1
3.6
2.9
9.1
9.59
7.8
2.0
2.8
1.5 2.2
1.8
2.6
USA
2.9
1.7
2.70.6
1.6 2.7 2.4
1.1 1.9
1.7
Euro Zone
2.0
2.3
2.8
4.6
4
4.9
2.6
1.1
-1.2
Japan
-0.5
-2.4
-5.0
10.5
9.6
6.3
5.2
0.4
-0.6
13.0
China
Thailand
-2.2
-4.1
-5.2
-10.0
Note : 2004-2011 Actual
Source : IMF, World Economic Outlook (September 2011)
(36)
Thailand GDP Growth Trends and Forecast
(%)
15
-10
2011
1.8
4
2012
2.5
2010
2007
2006
2005
2004
2003
2002
2000
1999
1998
1997
1995
1994
1993
1992
-5
4.6 5.1 4.9
2.2
-1.4
1991
0
5.3
4.4 4.8
2001
5
7.8
2009
5.9
7.1 6.3
2008
8.6 8.1 8.3 9 9.2
1996
10
-2.2
-10.2
-15
Note: Update September 2011
Source: IMF. World Economic Outlook (September 2011)
(37)
Economic Development
•
Adopted market capitalism since 1960
•
During 1960s – 1970s, the role of external sector was still small, less than
50% of GDP
•
From 1980s --- greater foreign exposure resulted from various trade and
investment promotion policies,
- Investment Promotion Act, 1977
• Encourage FDI
• Set out the types of rights and benefits offered to foreign investment
• BOI has been established to promote FDI to Thailand
- Export-oriented strategy in 1982
•
From 1960 – 2010, Share of external sector has increased overtime,
especially during 1980s
- Agricultural share decreased, whereas industrial share increased
38
- Share of external sector increased from 75.8% in 1990 to 89.8% and
98.7% in 1995 and 2000 respectively
- More linkage with global capital market
Exports
Outstanding
(USD Bn.)
Debt (USD Bn.)
FDI
PI
Loans
Total
1991
28.3
37.9
3.7
2.3
13.6
19.6
1993
36.6
52.1
2.6
11.0
18.2
31.8
1995
55.7
100.8
3.0
10.1
21.4
34.5
1997
56.7
109.3
5.1
24.8
17.9
47.8
Source: BOT
Foreign Capital Inflow (USD Bn.)
39
Potentials of Thailand in ASEAN
Country
1. Indonesia
Population
(thousand)
234,181
Country
GDP
(US$ mil.)
Country
GDP per
Capita (US$)
Country
Total
Trade
(US$ mil.)
1. Indonesia
708,032
1.Singapore
43,929
1. Singapore
699,273
28,830
2. Thailand
377,719
2. Vietnam
86,930
2. Thailand
318,709
2. Brunei
3. Thailand
67,312
3. Malaysia
238,849
3. Malaysia
8,262
3. Malaysia
364,531
4. Philippines
60,163
4. Singapore
223,015
4. Thailand
4,735
4. Indonesia
293,442
5. Myanmar
60,163
5. Philippines
189,326
5. Philippines
3,149
5. Vietnam
156,993
6. Malaysia
28,909
6. Vietnam
107,650
6. Indonesia
3,023
6. Philippines
109,660
7. Cambodia
15,269
7. Myanmar
35,646
7. Vietnam
1,238
7. Brunei
11,952
1,045
8. Myanmar
11,798
10,480
8. Laos
6,230
8. Brunei
11,952
8. Laos
9. Singapore
5,077
9. Cambodia
11,168
9. Cambodia
731
9. Cambodia
6,508
10. Myanmar
592
10. Laos
10. Brunei
415
10. Laos
6,938
Source : ASEAN Secretariat, 2010
40
Potentials of Thailand in ASEAN (cont’)
Country
Change in
FDI inflow
(%)
35,520
1. Malaysia
2. Indonesia
12,737
3. Malaysia
Change
in tourist
arrival
(%)
Country
Tourist
Arrival
(thousand)
Country
525.8
1. Malaysia
24,577
1. Vietnam
33.9
2. Indonesia
161.2
2. Thailand
15,936
2. Laos
25.1
8,643
3. Singapore
132.5
3. Singapore
10,511
3. Cambodia
16.0
4. Vietnam
8,000
4. Brunei
70.3
4. Vietnam
5,050
4. Thailand
12.6
5. Thailand
5,778
5. Cambodia
45.2
5. Vietnam
4,735
5. Indonesia
10.7
6. Philippines
1,713
6. Thailand
16.1
6. Philippines
3,292
6. Philippines
9.1
7. Cambodia
783
7. Vietnam
5.3
7. Laos
2,513
7. Singapore
8.6
8. Brunei
629
8. Laos
(12.5)
8. Cambodia
2,508
8. Malaysia
3.9
9. Myanmar
579
9. Philippines
(12.7)
9. Myanmar
792
9. Myanmar
3.8
10. Laos
279
10. Myanmar
(40.7)
10. Brunei
112
10. Brunei
Country
FDI inflow
(ml. US$)
1.Singapore
(29.2)
Source : ASEAN Secretariat, 2010
41
International Trade of Thailand
(Bil. US$)
200
(%)
12.3 9.3
180 6.0
160
140
120
5.5
2.5 2.7 3.8 1.4
23.5
12.7
-8.2
0.9
-0.3 19.3
14
-4.6
-9.5 -7.9 -8.6-8.8
-14.7-16.1
20
2.60
-20
100
-40
80
-60
60
40
-80
20
-100
19
9
19 0
91
19
9
19 2
9
19 3
9
19 4
95
19
9
19 6
9
19 7
9
19 8
99
20
0
20 0
0
20 1
02
20
0
20 3
0
20 4
0
20 5
06
20
0
20 7
0
20 8
0
20 9
10
20
1
20 1
12
0
Export
Import
Balance
Source : Thailand Statistical Office.
(42)
Thailand International Reserves
(Bil. US$)
180.4
172.1175.1
138.4
111.0
87.6
67.0
18.4 21.2
25.4 30.3
37.0 38.7
27.0 29.5
34.8 32.7 33.0
38.9 42.1
49.8 52.1
19
91
19
92
19
93
19
9
19 4
9
19 5
9
19 6
9
19 7
98
19
99
20
00
20
01
20
0
20 2
0
20 3
0
20 4
05
20
06
20
07
20
08
20
09
20
1
20 0
1
20 1
12
200
180
160
140
120
100
80
60
40
20
0
Note : As of Feb 2012
Source : http://www.bot.or.th/Thai/Statistics/Indicators/Docs/indicators.xls : Table8
44
Indonesia
45
Major Economic Indicator-Indonesia
2007
2008
2009
2010e
2011f
GDP (100 million dollar)
4,332
5,102
5,394
7,066
8,427
GDP per capita (dollar)
1,842
2,148
2,245
2,908
3,430
Economic growth (%)
6.3
6.0
4.6
6.1
6.1
Unemployment rate (%)
9.1
8.4
7.9
7.1
6.7
Consumer price inflation (%)
6.3
9.9
4.8
5.1
6.0
Exchange rate (D/dollar)
9,141.0
9,699.0
10,389.9
9,090.4
8,612.2
Current account balance
(million dollar)
10,493
126
10,192
6,294
8,175
Export (million dollar)
118,014
139,606
119,646
158,201
188,762
Import (million dollar)
85,260
116,690
89,499
127,108
152,679
Foreign reserve (million dollar)
54,737
49,339
60,572
89,970
..
Debt balance/GDP (%)
33.0
29.6
29.1
22.8
20.0
Source: Korea Eximbank Overseas Economic Research Institute. 2010. 2010 World Country Review
46
A Story of Growth and Stability…
Strong and Consistent Real GDP
Growth (% yoy)
Above Average GDP Growth
Lower Growth Volatility
5-year Real GDP Growth Average (%)
Volatility of GDP (%)
5.7
Indonesia
BBB-rated Sovereign median
BB-rated Sovereign median
5.3
5
4
Indonesia
BBB-rated Sovereign median
BB-rated Sovereign median
3.4
3
3.3
2
1
0.9
0
2006-2010
2006-2010
Source: Ministry of Finance, BPS, Bank Indonesia and Moody’s; Moody’s Medians
47
Source: Fitch Ratings, as of 2010 (latest available)
UK
Colombia
(6.1)
3.2
Mexico
Indonesia
5-year Standard Deviation
8
7
6
5
4
3
2
1
0
(4.9)
(1.7)
Source: Ministry of Finance and Moody’s Statistical Handbook
Ranked according to 2009 GDP growth rate
South Korea
Source: Ministry of Finance, BPS and Bank Indonesia
*Medians derived from S&P – no data available between 2000 to 2003
2010 B udget
2011
2010
Vietnam
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2009
Malaysia
-4%
2008
Philippines
Indonesia
B B -rated Sovereign median
B B B -rated Sovereign median
-2%
Brazil
0%
India
2%
Peru
4%
China
4.6%
3.6%
14.5
6.5%
9.6
9.1
10.3
10.7
3.2
8.8
6.9
8.0
8.6
5.1
(0.2)
7.5
3.7
1.1
7.3
4.7
7.2
6.3
5.3
6.8
2.3
0.2
6.2
6.0
4.6
6.1
1.5
5.5
2.4
1.5
4.3
(0.1)
1.3
6.1%
1.8
6.3% 6.0%
(1.2)
5.0%
4.5% 4.8%
4.9%
5.7% 5.5%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
Singapore
2006 – 2010 Avg. = 5.7%
8%
6%
Demonstrated resilience throughout the
global financial crisis
Strong Investment Underpinned by Competitiveness
and Stability
Realized Foreign Direct Investment
(USD bn)
16.2
14.9
Realized Domestic Direct Investment
USD6.7bn
(Rp tn)
60.6
10.8
10.3
37.8
34.9
6.0
20.8
2006
2007
2008
2009
2010
Source: BKPM
2009
16,215
1,050
1,428
2011
6,462
59
44 46
36 38 39
24 24 26 21
19 22
8,530
2006
2007
Source: Bank Indonesia
756
1,293
706
655
628
1,183
2008
2009
2,229
2010
Source: World Economic Forum
Philippines
1,612
704
Malaysia
714
439
955
747
3 3 2
5,046
S Korea
647
4,171
Indonesia
2,000
3,305
India
3,204
China
4,000
75
56 54
29 27 26
4,100
4,006
5,992
75
49 51
10,815
10,341
87 85
2010
6,000
0
2010
Significant Improvement in the Global
Competitive Scorecard
GC Index Rankings
Real estate, industrial estates and business activities
Electricity, gas and w ater supply
Other sectors
Transportation, storage and communications
Trade and repair
Motor vehicle and other transport equipment
Metal machinery and electronic
Chemical and pharmaceutical
14,883
Paper and printing
Food
3,676
Mining
10,000
8,000
2009
Vietnam
12,000
2008
Thailand
14,000
2007
Singapore
16,000
2006
Source: BKPM
Note: USD / Rp. exchange rate of 8,597, the BI middle exchange rate as of June 31, 2011. US dollar values are f
or convenience only
FDI By Sector (USD mm)
18,000
20.4
65
Indonesia’s growth remains strong in Q2 2011…
GDP Growth (%)
• Some countries experienced some GDP slowdown vs Q2-2010.
• Indonesia GDP growth in Q2-2011 was 6.5% or higher than Q2 2010 of 6.1%.
Source: Statistic Bureau (BPS) & Bloomberg
49
Global inflation tends to increase along with the
higher food and energy price….
Inflation in ASEAN
23
19
%
Thailand
Singapura
Philipina
Indonesia
Malaysia
Vietnam
Inflation in Developed Countries
23,02
5
15
5,44*
11
4,79
7
3
-1
-5
-
7
%
USA
Jerman
Jepang
6,20
Uni Eropa
China
3,63*
2,50
3
4,29
4,25
2,40
1
0,20*
3,40*
-1
-3
Higher food and energy prices have driven higher inflation in China
and USA
Inflation in ASEAN also tends to increase in which Vietnam shows the
highest inflation 23.02%.
50
Trading Partnership
2000
USA
13.64%
Others
19.94%
2005
USA
11.52%
Other Europe
11.31%
ASEAN
17.49%
Others
21.01%
Other Europe
8.96%
ASEAN
18.47%
Europe
14.3%
South Korea
6.95% China
Japan
23.20%
Europe
11.9%
PIIGS
3.01%
4.46%
• Indonesia’s export shares to Japan and US has
been declining, however export to ASEAN
countries and China increase. In addition, export
share to PIIGS relatively small (3.17%).
• It shows that the exposure from US and PIIGS
debt crisis will be limited for Indonesia.
Japan
21.07%
PIIGS
2.92%
South Korea
China
8.27%
7.78%
2010
USA
8.99%
ASEAN
20.98%
Other Europe
7.47%
Others
25.17%
Europe
10.6%
South Korea
7.97%
China
9.90%
Japan
16.34%
PIIGS
3.17%
51
51
Indonesia’s Economic Growth and Projections
Projected GDP per capita - Indonesia Vision 2030
1992
2015
Lower Middle
Income Country
$
25,000
2023
Upper Middle
Income Country
High
Income Country
22,500
Economic
Projection
2011 - 2045
20,000
18,000
15,000
14,900
GDP per capita
reached
US$3,005 in 2010
12,449
9,000
10,000
5,300
5,000
7,231
3,005
1,660
2,359
3,923
0
1990
1995
2000
2006
2010
2015
2020
2025
2030
page 52 Indonesia Forum Foundation (Yayasan Indonesia Forum), team analysis
Source:
Indonesia Vision
2030
Sustainable Fiscal Management
Fiscal Deficit (% of GDP)
0.0
2005
2006
2007
2008
2009
2010
2011
2012
-0.5
-1.0
-1.5
8-year fiscal deficit
average= -1.1%
-2.0
-2.5
Debt to GDP Ratio Has Been Sharply Declining Since Crisis Period
(Trillion
9,000 IDR)
8,000
100%
85%
89%
90%
80%
77%
7,000
70%
67%
6,000
61%
5,000
60%
57%
47%
4,000
3,000
50%
39%
35%
2,000
33%
40%
28% 26.1%
24.9%
23.8%
20%
1,000
10%
0
0%
1999
Source: FPO
30%
2001
GDP
2003
2005
Outstanding Debt
2007
2009
2011-Revised
budget
Debt to GDP Ratio (RHS)
53
Growth Projections
GPD Nominal Growth (2009 – 2015)
Russia
15.7%
Indonesia
14.5%
China
12.4%
India
12.1%
Brazil
11.7%
South Korea
10.0%
Turkey
9.9%
USA
4.1%
Japan
4.0%
ASEAN
Indonesia)
(excl.
9.6%
Source: International Monetary Fund, World Economic Outlook Database, April 2011
54
Strengths
Natural
Resources
 Economic growth, including key emerging markets
driving demand
– Hard commodities, e.g. metals, oil, coal, etc.
– Soft commodities, e.g. rubber, palm oil, etc.
Infrastructure
Rise of
Consumer
Spending
Power
 Continued development of infrastructure:
transportation, energy, communications,
water & waste, etc.
 Based on 2010 GDP per capita (US$3,005),
Indonesia has reached the critical threshold  rapid
growth in consumption, discretionary and luxury
spending
55
Conducive National Conditions
Political
Environment
 Maturing democracy
 Regional autonomy
 Supportive regulations  balanced open markets
 Strengthening institutions
Increasingly
integrated
networks
 Regional – improving efficiency of domestic production
and distribution chains
 Global – geographic position provides excellent access
to India, China, Japan, etc.
Resilient
Financial
System
 Government debt and foreign reserves at healthy levels
 Improving investment climate
 Indonesian banks performed well during global crisis
56
Exports Performance
Constant pri
ces
Growth
1990
1996
1998
Categories
Oil/Gas
13.1
15.1
14.4
1999 2004 2006* 90-'9
6
14.3
11.1
9.3
2.4
Growth
96-06
-4.7
Current price
Growth
Growth
Price effe
ct
9096
96-0
6
1990-'
96
1996-'
06
8.4
6.2
6.0
10.9
4.0
Rubber
0.9
1.4
1.6
1.5
1.9
2.3
8.4
5.1
18.7
9.2
10.
3
Coffee & Cocoa
0.7
0.9
0.9
0.9
0.9
1.3
4.6
4.1
12.9
4.2
8.4
0.1
Minerals
2.1
4.3
11.2
5.4
8.9
10.1
13.0
8.8
19.4
14.0
6.4
5.2
Copper
0.4
1.9
2.1
2.2
2.0
2.5
28.7
3.0
27.8
12.0 -1.0
9.0
Nickel and Tin
0.4
0.5
0.6
0.5
1.0
1.3
6.2
9.1
4.9
14.3 -1.3
5.1
57
Cont’d
Constant
prices
Current price
Price
effect
90Growth Growth Growth Growth 96
Categories
Total nonoil/gas
90
11.1
96
98
33.2 101.1
9606
1996'06
99
04
06*
55.4
58.3
68.0
20.0
7.4
26.3
6.8
6.4 -0.6
90-'96
96-06
1990-'96
Labor intensive
manufactured
exports
Textiles &
footwear
2.2
8.0
7.8
11.0
10.3
12.1
23.6
4.2
23.3
1.6
-0.3 -2.6
Furniture
0.2
0.8
0.5
1.4
1.8
1.8
22.4
8.5
23.5
5.6
1.0 -2.9
Total-labor
intensive manuf.
2.5
8.8
8.3
12.4
12.1
13.9
23.5
4.7
23.3
2.1
-0.2 -2.6
58
Philippines
59
Skewed Wealth, Skewed Growth

Richest 1% account for 60% of GDP

Income of top 150,000 families = income of bottom 6 million

Only 3 of richest 15 are into manufacturing
 Wealth Increase of 40 Richest vs. Absolute Increase in GDP (2011)

Philippines:
$13 billion vs. $17 billion (76.0%)

Thailand:
$9 billion vs. $26.7 billion (33.7%)

Malaysia:
$2.3 billion vs. $41 billion (5.6%)

Japan:
$11 billion vs. $381 billion (2.8%
)
60
Philippines and Thailand
Indicator
Population (million)
Population G.R. (%)
GDP Per Capita (US$)
GDP Share (%)
Agriculture
Industry
Services
Gross Dom Inv (%GDP)
Gross Dom Saving (%GDP)
FDI Stock (Billion US$)
1970
Thai
Phil
36
36
3.1
3.1
250
250
2009
Thai
Phil
66.9
92.2
0.6
2.0
4062 1796
32.0
26.0
23.0
27.5
45.2
46.7
1965
20.0
20.0
18.5
20.3
1998
7.8
2.3
11.6
14.8
43.3
30.2
45.1
55.0
2009
21.8
14.6
31.7
15.6
2009
93.8
22.9
61
Philippines & Indonesia
62
Human Development Indicators
(Worsened in Past Decade)
•
No. of poor Filipinos went up by 970,000, or 185,000 families between
2006 and 2009 (Poverty line: P7,017/month per family of 5)
•
Net elementary school participation rate fell from 97% in 2001 to 85%
in 2008
•
Net high school participation rate fell from 66% to 62%
•
Malnutrition incidence went up in most provinces
•
Wide disparities persist in life expectancy across provinces
63
:
Inflation Trends, 2007-Present (%)
9.3%
3.2%
2.8%
2007
2008
2009
3.8%
2010
4.4%
2011
64
Opportunities of the Philippines Economy
•
Continuous influx of East Asian tourists
•
Expansion in mining and energy investments
•
Pump priming in infrastructure spending
•
Above-average growth in agricultural production due to
improved infrastructure support
•
Expansion in low- and medium-costs housing and office
buildings
•
Medical tourism and retirement villages
65
Threats to the Philippines Economy
•
Net factor income will be slightly lower as the recession host countries
will affect remittances and deployment growth
•
Slowdown in consumer spending
•
Industry sector on a slowdown in 2009 and 2010
•
Slowdown in exports
•
High though slowing inflation rate
•
Higher government deficit
•
Higher trade deficit
•
Depreciating Peso
66
References
Hellendorff, Bruno. 2013. “Military Spending and Arms Transfers in
Southeast Asia: A Puzzling Modernization”. GRIP.
International Strategic Analysis. 2013. “ISA Region Report East Asia and
Pacific”.
Majid, Munir. 2012. “Southeast Asia between China and the United States”.
IDEAS reports - special reports, Kitchen, Nicholas (ed.) SR015. LSE
IDEAS, London School of Economics and Political Science, London,
UK.
Mohan, C. Raja. 2013. “ Emerging Geopolitical Trends and Security in the
Association of Southeast Asian Nations, the People’s Republic of
China, and India (ACI) Region” ADBI Working Paper Series. No.412.
67