"Indonesia and the rest of Asia continue to grow robustly, while financial institutions in the region have largely escaped the problems confronting their counterparts in the United States and Europe. Improved macroeconomic frameworks and vast reserves mean that Asia is generally far less vulnerable than a decade ago and better placed to implement needed policies to deal with a global slowdown. Nevertheless, 2008 is likely to be a challenging year for the region.

Despite Asia's success in diversifying its exports, both trade exposure to, and financial integration with, the United States have actually increased over this period. While Asian financial markets have held up well, a further deterioration in the global financial environment could affect the region, by raising funding costs, reducing confidence or increasing the volatility of capital flows."

"India may harvest record crops of rice and wheat after good rainfall and sunshine boosted yields, which would help the government tame inflation that's near a three-year high. Food grain production in the year to June will rise 4.6 percent to 227.3 million metric tons. A bigger harvest of wheat and rice is crucial to efforts by the government to cool inflation before general elections within a year.

The prospect of lower prices may deter the government from extending a ban on wheat futures to other commodities as early as this week. The government last year halted trading in wheat and lentils, and has since banned exports of edible oils and rice to curb inflation. India's central bank ordered banks to set aside more money to cool lending, adding to government efforts to rein in inflation that has more than doubled in the past four months amid soaring commodity and food prices."

"PRC's power sector is better equipped this year to deal with the annual shortages during the summer months, said an official with the State Electricity Regulatory Commission. The gap between capacity and actual demand this year is projected at only 1,000 megawatts this summer, a marked improvement compared with previous years.

The damage inflicted on China's power infrastructure by the heavy winter storms has now been almost completely repaired, and the grid networks that allow Guangdong to source power from the neighboring region of Guangxi had also been put back in full operation. Record high coal prices, coupled with the impact of the winter storms, have meant that 40 percent of China's electricity producers operated at a loss in the first two months of this year."

"The Indonesian government has introduced a new policy to lower book prices, considered one of the sources for the high cost of education, and make then more available. The plan involves lengthening the shelf life of a book to a minimum of five years, buying up the copyrights of textbooks and uploading them in digital form to the Internet and making them available for free download.

Extending the life of school textbooks to five years from the present one year would mean that books could be passed down to younger siblings, donated to poor families or sold to secondhand bookstores. The government has allocated $2.19 million this year to buy the copyrights of widely used school textbooks and upload them to the Internet. Students will then be free to download and print the books."

"We must be careful not to equate high crop prices with hunger around the world. Most of the world's hungry people do not use international food markets, and most of those who use these markets are not hungry. In the poor countries of Asia, rice is the most important staple, yet most Asian countries import very little rice. As recently as March, India was keeping imported rice out of the country by imposing a 70 percent duty.

Data on the actual incidence of malnutrition reveal that the regions of the world where people are most hungry, in South Asia and Sub-Saharan Africa, are those that depend least on imports from the world market. Hunger is caused in these countries not by high international food prices, but by local conditions, especially rural poverty linked to low productivity in farming."

"The introduction of microfinance in the Philippines since the 1990s has brought some hope to poor communities. Among the benefits include increased access to financial services or reduced dependence on high-cost credit. Microfinance institutions have become a ready source of credit and financial services like savings and insurance.

However, not all is rosy with microfinance. The rise in income may be high in percentage but not in absolute amounts. The micro-level business of trading has not produced enough margins to lift people out of poverty. Whatever little gains achieved are now being threatened by the rising prices of goods, particularly rice and fuel."

"The government in PRC appears to be gaining ground in its efforts to clear out low-value, high-polluting, industries from Guangdong province, one of the country's most important industrial areas, and replace it with higher-quality manufacturing. The campaign was also aimed at releasing land, in short supply after 30 years of intense industrialization, for more productive uses.

Relocation of factories to more remote and cheaper provinces would also improve employment prospects there and reduce the need for cheap immigrant labor in Guangdong. Shoe manufacturers are having to struggle with more than government policies. Their material and labor costs are increasing, while exporters have to compete against an anti-dumping tariff imposed by the European Union. Some export-oriented manufacturers producing for foreign brands are trying to compete by creating their own brands, increasing their own research and development."

"Because of rising food prices, nearly 77 million people in Pakistan, half the population, can now be considered food insecure, according to the World Food Program (WFP). Rising food prices have the potential to pull more people into poverty, and deepen food insecurity among the already vulnerable groups. Globally, the WFP has appealed to donors for $755 million to address increased costs among already approved projects for 2008.

In the past year, there were approximately 60 million food insecure people in Pakistan. Because of rising food prices, an additional 17 million people can now be considered food insecure, which will raise the number to 77 million, nearly half of the country's population."

"By the end of the first quarter of 2008, the total mobilized capital of the whole banking system had increased by 5.48%, and total outstanding loans had increased by 10.8% over the end of 2007. State owned banks, which were once the biggest lenders on the interbank market, now have become borrowers.

The tightened monetary policies have been making it difficult for businesses to access bank loans. As a result, many businesses which have deposits at banks have drawn money out to lend to other businesses to get higher interest rates. As the real estate market has cooled down, investors cannot sell properties to take back capital; therefore, they do not have money to make bank deposits."

"After tightening rice export regulations earlier this month, the Indonesian government has raised the purchasing price of rice in the hope that farmers will benefit from the surge in global rice prices and to discourage smuggling. With the new prices, traders planning to hoard would not be able to compete with what the agency had to offer.

However, critics believe the government's purchasing price increase has arrived too late for farmers, many of whom have already sold most of their rice to traders. Some say the government's purchasing price increase would benefit traders more than the farmers themselves."

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