"South East Asia's largest economy is facing a big problem -- how much longer can the state electricity company meet the country's growing demand for power? Indonesia's economy is growing at about 6.3% a year. Its demand for electricity is growing even faster. To cope with this, the state electricity company PLN needs to add 1500-2000MW a year to its capacity -- and it is currently falling far short.

According to analysts, maintenance of the state electricity network is not good. Many power stations are running at 75% capacity -- just under half the country is still without power, and there is already very little room to cope with extra demand from the half that is. Most major companies have their own power supply to turn to in emergencies. But even if business does not stop, the unpredictability and expense weigh against the benefits of investing or expanding here."

"Vietnam blasted into the satellite age on Saturday when a rocket launch from South America propelled its first orbiter into space, allowing it to beam home telecoms data and television signals. From a command center outside the capital Hanoi, scientists tracked the Arianespace rocket as it propelled the Vinasat-1 on its path to hover 36,000 kilometers above the equator.

The blast-off represents one great leap for Vietnam, a developing country with patchy phone coverage that only introduced the Internet a decade ago. Vinasat will seek to close the communication -- and economic -- gap between urban Vietnam and the other 70 percent of the population who live in the countryside. Vinasat, with a capacity equivalent to 120 television channels, could also bring long-distance learning and tele-medicine to the most isolated regions."

"Perhaps no other region has played so vital a role in China's growth as the Yangtze River Delta. Home to Shanghai, Jiangsu and Zhejiang provinces, the delta has become the country's commercial core, accounting for roughly 20 percent of GDP and nearly half of all foreign direct investment. Though Shanghai remains at the economic core, new projects are starting to change this situation and accompanying the development of Jiangsu and Zhejiang.

Among the toughest challenges has been implementing a unified plan for the region's harbors. While Shanghai is still the delta's major destination point for cargo ships, its rapid growth has brought about opportunities for neighboring cities looking to support their own ports. As a result, some cities now compete almost as much as they cooperate with the region's megalopolis. Overall growth in the region is now being spurred by needed upgrades to the existing infrastructure. Difficulties remain, particularly in terms of integration, but the progression of the region's transportation network is such that new projects like connecting Anhui province to the Yangtze River Delta should now enjoy more attention."

"It became clear years ago that organizations promoting regional cooperation, including free trade agreements (FTAs), would take the place of the World Trade Organization (WTO) in global trade after the WTO faced huge pressures on its multilateral negotiations. Now that more countries are seeking to reach FTAs with their trading partners, the WTO can no longer function as it did. Bilateral negotiations are usually focused on the substantial interests of each partner without paying much attention to ideological issues. When the negotiators have to worry only about the trade terms, there is a better chance that they will reach a consensus.

Such negotiations are also more flexible than multilateral ones in many ways. Financial aid or increased trade volumes under favorable trade terms are often added as a supplementary leverage to help reach agreement on FTAs. One of the most important targets for an FTA is to lower trade barriers or to eliminate trade restrictions between two countries. Bearing that in mind, negotiators should consider trade ties in all sectors as a whole."

"Vietnam's large current account deficit could trigger an economic crisis, according to a State Bank of Vietnam official. The government has been urged to pay more attention to the trade deficit, which reached a record $7.4 billion in the first three months of this year. If these inflows changed course, Vietnam would have to depreciate its currency to reduce the trade gap, thus destabilizing the economy.

Vietnam should learn from the 1997 Asian financial crisis, which caught out countries with large trade deficits and overheated real estate markets. At the moment, Vietnam is experiencing a high trade deficit, high inflation, as well as a real estate bubble. The Vietnamese government has sensed the danger and is trying to reduce imports. At the same time, the central bank is also increasing its foreign currency reserves."

"Indonesia's chief finance minister will face the twin challenges of soaring inflation and a massive corruption scandal when he takes over as head of the central bank next month, analysts said. Parliament in April finally approved Budiono, a highly respected economist, to take over at the helm of Bank Indonesia (BI) after rejecting the president's first two candidates for the job. Budiono is widely regarded as a safe pair of hands at a turbulent time for the central bank, with rising fuel and food prices threatening the stability of Southeast Asia's biggest economy.

The main challenge for him will be to deal with the problem of excess liquidity in the banking sector. BI issues high-yielding certificates to mop up excess liquidity in the banking sector, but there are concerns this is deterring commercial banks from making riskier investments, depriving Indonesian businesses of funds. His job will be to find a way of making this huge fund useful in creating real sector growth."

"Dying towns are rare in booming China, but the expanses of rubble and abandoned homes that ring the once-wealthy oil center of Yumen mark it out as one of them. Yumen is one of many resource towns that should probably never have existed, clinging to mountains in a high-altitude corner of poor northwestern Gansu province, with a single oilfield as its gushing but fragile economic base. China has identified 118 cities that have developed around the mining of natural resources.

The people who built the single-purpose cities relied entirely on a state that promised to provide cradle to grave support, making few plans or provisions for a bleaker future. Now, the central government's energy bureaucrats have moved out of micro-management, abandoning Yumen to local officials who never took steps to plan for a future without oil. With stability a top concern as the gap between rich and poor widens, Beijing knows it has a serious problem on its hands -- its finance minister mentioned revamping resource towns at the annual session of parliament earlier this month."

"Economists and the head of the largest association of employers in the Philippines are worried that the formal sector of the economy has shrunk and the informal sector has grown despite the spectacular economic growth the Philippines has enjoyed these past years. The domestic economy continues to grow but the number of informal sector workers and operators is rising. This costs the government about P100 billion of forgone revenues annually.

Is there a true and long-term solution to the problem of uplifting the nation's expanding informal economic sector? Some believe is it to revive the moribund industrialization and to reinvigorate agriculture and enrich the rural areas. It is also proposed as the solution to the problem of food security and massive poverty. But that will take a new outlook. And something that the present leadership considers a step backward from the promised bliss of free trade and globalization."

"Kazakhstan has slapped a ban on wheat exports in a bid to stem domestic inflation and stave off a repeat of last year's bread shortages, which caused widespread dissatisfaction. But Astana's decision could have a destabilizing impact on the rest of Central Asia by generating a new burst of inflationary pressure. Skyrocketing prices for grain have been attributed to several factors, including drought in some grain-producing countries, the use of land for bio-fuels rather than for comestibles, and increased global demand for foodstuffs.

Kazakhstan's neighbors -- especially Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan -- stand to suffer the most from the export ban. Tajikistan appears to be in an especially dire predicament after severe winter weather wrought havoc with the country's economy, destroying, for example, much of the winter wheat crop."

"The installation of 115kV transmission lines between Laos and Cambodia will begin by the end of this year, giving Laos a new electricity export market. The power lines will run for 26km, from Hat village in Khong district, Champassak province, to the border, where they will connect with a 54km line from Cambodia.

Laos and Cambodia signed a memorandum of understanding (MoU) on energy purchase in December last year. This was the initial move for the sale of Lao electricity to Cambodia, and an important step in the cooperation of the two energy sectors. But the two governments have yet to agree on how many megawatts Laos will sell to Cambodia and over what period of time. Currently Laos has MoUs to provide 5,000MW to Thailand until 2015, and a further 2,000MW after this date until 2020. Vietnam has also agreed to purchase 5,000MW of electricity from now until 2020."

Please share this e-newsline with others interested in the development of Asia-Pacific.

For questions, comments, complaints please visit our online contact form

To change your email address or to unsubsribe from ADBI e-newsline please visit:
http://www.adbi.org/e-newsline/subscribe.html

Sign-up for ADBI's free e-notification service to ensure you receive an e-mail when we post new publications and opportunities.

The stories and links selected and the views expressed in e-Newsline are those of the authors and editors and do not necessarily reflect the views or policies of the ADB Institute. The Institute does not endorse them and accepts no responsibility whatsoever for any consequences of their use. Original name usage is retained in quoted articles, although it may not necessarily follow ADB naming conventions.