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TOP HEADLINES 22 May 2015
1. ASIA: Japan announces $110 billion infrastructure aid
2. INDONESIA: Growth target for 2016 realistic?
3. INDIA: One third of students suffer malnutrition
P O V E R T Y   S P O T L I G H T
THAILAND: Farmers under pressure
4. PRC: Challenges on way to better public health
5. PHILIPPINES: Port gridlock choking growth
6. BANGLADESH: Revisiting export subsidies
7. INDONESIA: Inflating a credit bubble?
8. LAO PDR: Cooperation grows with PRC
9. BANGLADESH: Bandwidth export deal with India
10. VIET NAM: Central bank pledges to rein in bad debt
IN DEPTH
1. ASIA: Japan announces $110 billion infrastructure aid
Source: jiji.com

"Japan will provide a total of $110 billion over the next five years to boost by 30 percent financial assistance for promoting infrastructure development in other Asian countries, Prime Minister Shinzo Abe said Thursday. The aid, to be provided through government-affiliated bodies and the Japan-led Asian Development Bank, is part of plans to utilize both public and private funds to help Asian economies to improve infrastructure, Abe said in a speech in Tokyo.

The prime minister also encouraged the ADB to increase its capital. The sum is just slightly higher than the expected $100 billion capital of the Asian Infrastructure Investment Bank (AIIB) that Beijing and more than 50 founding member states are establishing."



2. INDONESIA: Growth target for 2016 realistic?
Source: thejakartapost.com

"The Indonesian government's newly unveiled 2016 economic growth target has raised eyebrows, with economists describing it as being too ambitious. Finance Minister Bambang Brodjonegoro said the government expected GDP growth would reach between 5.8 and 6.2 percent next year, higher than the already ambitious target of 5.7 percent set for this year, despite lingering global uncertainties.

Speaking to lawmakers at the House of Representatives on Wednesday, Finance Minister Bambang Brodjonegoro acknowledged that global uncertainties would remain next year, citing China's slowing economy, volatile commodity prices and the US Federal Reserve's unclear interest rate schedule. However, the government argued the target would be supported by domestic factors, as it believed various ongoing infrastructure projects would begin to pay off in 2016."



3. INDIA: One third of students suffer malnutrition
Source: business-standard.com

"About 56 out of 1,000 kids under the age of five died in India in 2012 due to malnutrition. Almost a third of children continue to show signs of malnutrition at age 12 with high rates for economically- and socially-marginalized children and those in rural areas. These are some of the findings of a pilot study in the state of Andhra Pradesh and Telangana by Young Lives, an international study of childhood poverty involving 12,000 children in four countries over 15 years.

The report shows positive trends in school enrollment and some indicators like access to clean drinking water. 97% of 12-year-olds were enrolled in elementary schools in 2013; up from 89% in 2006. However, nutrition and sanitation, especially in villages, continues to be poor. Also, the situation of youth, especially young women, has not improved much. The study has reported how children from economically- and socially-disadvantaged backgrounds were the most likely to have left school, many without gaining a secondary-level certificate."


P O V E R T Y   S P O T L I G H T
THAILAND: Farmers under pressure
Source: asia.nikkei.com

"It is a harrowing time to be in Thailand's farming business. Tough business conditions are being felt industrywide. Farmers are not buying equipment because they are saddled with debt. The previous government of Prime Minister Yingluck Shinawatra ran a controversial program to purchase rice at inflated prices. This prompted growers to take out loans to expand production, counting on higher income. When the government found itself overwhelmed by the transactions and the program fizzled, farmers were left in the lurch.

Slumping international prices for rice and natural rubber are making things worse. And farmers' problems are Thailand's problems, since they account for half of the country's population. Farm equipment is not the only sluggish market. New-car sales declined, year on year, for the 23rd straight month in March. This was partly a correction, following the end of incentives the Yingluck government dangled for auto buyers."


4. PRC: Challenges on way to better public health
Source: chinadaily.com.cn

"There has been widespread interest in China's health sector among economists around the world. Today, China is in transition, from export- and investment-oriented to consumption- and services-driven economic development. The role of health insurance is central to this transition. Studies have shown improved health insurance has a huge impact on consumption as the need for precautionary savings falls.

The establishment of a better social safety net for health with two urban and one rural insurance scheme is an important achievement. But despite being widespread, this insurance is shallow and Chinese people still believe in precautionary savings, particularly as healthcare costs rise. The advantage of more reliance on health insurance and healthcare is evident. Lower savings and higher consumption rates blunt the impact of slower growth on improving living standards. But there are hazards in this scenario. Healthcare has historically suffered from low productivity gains."



5. PHILIPPINES: Port gridlock choking growth
Source: ejinsight.com

"Traffic congestion around the Philippine's main container port has become a matter of national urgency and a drag on the economy. At least $1 billion worth of imports was lost from April to December last year, according to reports. The Philippine economy has exploded in recent years, with gross domestic product expanding 6.1 percent in 2014, but the associated surge in trade has left sections of the country's outmoded infrastructure struggling to cope.

It is normal to see long lines of trucks clogging up Manila's main roads well past midnight. Residents complain that the chronic traffic congestion is worsening every year. The Philippine government has established a 'cabinet cluster' led by top official Rene Almendras to tackle the impasse. Emergency measures recently included enforcing a 24-hour single truck lane on major roads, raising storage fees for containers that have cleared customs and encouraging port operators and logistics firms to work at weekends."



6. BANGLADESH: Revisiting export subsidies
Source: thefinancialexpress-bd.com

"It may sound strange that half of the cash incentives provided to Bangladesh's export-oriented sectors of the economy is virtually eaten up by the readymade garment (RMG) industry. This sector far outshines all others in terms of productivity, employment, backward linkages and exports. With its whooping 75 percent share in the country's total exports, the RMG sector counts rather too heavily when it comes to government facilitations by way of incentives.

It remains to be seen whether feeding a single voracious sector is a well-guarded proposition or not. The flow of cash incentives to knitwear exporters is extremely lucrative; they get more than 3.0 cents for earning one-dollar equivalent of exports as they use around 80 percent local fabrics as the most vital input for their apparel products, according to a recent Bangladesh Institute of Development Studies study. As for the woven garment exporters, they get 1.3 cents against each dollar earned from export."



 DEVBlogs ROUNDUP
Foreign tourists who are already exempt from visa requirements will be allowed to extend their stay in Vietnam to up to 30 days, instead of 15 days. Tourists from Denmark, Finland, Norway, Sweden, Japan, Russia and Korea are eligible for Vietnam's visa waiver policy. Vietnam's tourism earnings hit $11.76 billion last year but there have been concerns over significant drops in the number of foreign arrivals this year. Under a regional agreement, Vietnam also offers a 30-day visa waiver for tourists from ASEAN countries, except for those from Brunei who receive a 14-day waiver.

7. INDONESIA: Inflating a credit bubble?
Source: cnbc.com

"Historically, stories that begin with central banks easing bank lending requirements don't often have a happy ending, but Indonesia may be able to dodge creating a credit bubble. One key reason is that making it easier to get a loan in the archipelago doesn't mean there will be a lending surge. But cutting its policy rate from the current 7.50 percent isn't a palatable step, as Indonesia is vulnerable to a potential spike in inflation and its currency, the rupiah, is already weak.

On Thursday, the central bank governor said inflation in the second and third quarter was expected to be around 7 percent. Because the country has a current account deficit, it could also face a renewal of fund outflows once the U.S. Federal Reserve increases interest rates, something analysts expect as early as September. So Bank Indonesia has turned to easing loan-to-value requirements on mortgages and lowering downpayments for auto and motorcycle loans, as well as reviewing banks' reserve requirements."



8. LAO PDR: Cooperation grows with PRC
Source: vientianetimes.org.la

"China's financial assistance to Laos has climbed to more than 3,077 billion kip (2.35 billion yuan), which has been used to finance various development projects, according to an official report. Trade between the two countries reached more than 29,325 billion kip ($3.61 billion) in 2014, an increase of 31.89 percent compared to the year before.

Investments by Chinese companies hit more than $5.2 billion, making China the top foreign investor in Laos, according to statistics provided by the Lao Ministry of Planning and Investment. Recently, Laos and Yunnan agreed to step up cooperation in the fields of tourism, trade, economics, transport, agriculture and hydropower. The two sides agreed to establish the Boten-Mohan Economic Cooperation Zone border crossing between Luang Namtha and Yunnan provinces."



9. BANGLADESH: Bandwidth export deal with India
Source: bdnews24.com

"Bangladesh will sign an agreement with India to export its unused submarine cable bandwidth during Indian Prime Minister Modi's visit in June. The Cabinet, on April 20, endorsed the draft agreement, as the government felt it would not impact internet service in Bangladesh.

Bangladesh is connected to SEA-ME-WE-4 submarine cable with 200gbps bandwidth, of which it uses only 30gbps. The BSCCL will lease out 10gbps (gigabyte per second) bandwidth on a commercial basis, netting in $1.2 million a year for Bangladesh. The deal will be in force for four years, and the bandwidth could be increased to 40gbps, depending on Indian requirements. The government thinks the agreement will be a 'win-win situation' for the two countries."



10. VIET NAM: Central bank pledges to rein in bad debt
Source: thanhniennews.com

"The State Bank of Vietnam said it stands by its target to reduce bad debt in the banking system to 3 percent of loans by the end of the year. Governor Nguyen Van Binh said that even though the ratio slightly increased in the first two months, up to 3.59 percent from 3.25 percent last December, the bad debt situation was 'under control.'

One of the bank's main solutions is to order local lenders to sell at least 75 percent of their bad debt to its asset management company VAMC by the end of June. Between September 2012 and December 2014, the State Bank of Vietnam 'tackled' $1.42 billion of bad debt, or 67 percent of the amount the bank had originally planned to deal with. About 44 percent of that was purchased by VAMC."



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