"A growth rate of 6.1 percent in the first quarter of 2009, the lowest in a decade, has reaffirmed the PRC government's commitment to stimulate its economy through massive domestic spending and targeted foreign assistance. Macroeconomic indicators show that China's stimulus package is already having a significant impact. Car sales in March were up 10.2 percent from a year earlier. Property sales in major cities also rose and the import of raw materials in March hit record levels in anticipation of greater demand.

According to government data, the manufacturing sector in China grew for the first time in six months. The surge has led to speculation that China may have turned a corner, bottoming out from the global economic freefall of 2008. But bottoming out is not recovery. China will likely still take a long time to recover, and a number of daunting challenges remain."

"The 12 new oil and natural gas mining contracts awarded by the Indonesian government should be confidence-building deals for the country's hydrocarbon industry at a time when the global credit crunch and sharp economic downturn have forced many oil firms to defer investment. Despite stepped up efforts to diversify sources of Indonesia's commercial energy away from fossil fuels (into geothermal, biodiesel and coal-bed methane), oil and gas still account for more than 60 percent of energy consumption in this country.

The problem, though, is that most of Indonesia's oil and natural gas fields are already quite mature and have reached their peak production capacity. Without any new proven reserves, Indonesia will see the last drop of its oil extracted within eleven years. But proven oil reserves can increase only through exploration, and no oil firms will invest in such high-risk business without the right investment conditions."

"The export of hi-tech products in Viet Nam over the last three years accounted for just 8.4 percent of the total export value, which is half that of PRC's in 1998 and Thailand's in 1986, and one-third of Malaysia's in 1980. Viet Nam still has to mainly rely on labor-intensive industries that don't require advanced technology, have low added value and undermine the country's competitiveness.

Foreign direct investment (FDI) has been pouring into the country recently. However, most of it has been in the service and property sectors and only a small proportion in heavy and light industries. The government should set issue policies to transfer advanced technology systematically, and consider putting off industrial development plans to spend more time on developing high-tech sectors."

"A shortage of cash has led authorities in Uzbekistan to delay paying pensions, according to observers. A media-watcher in the Bukhara region of western Uzbekistan says elderly people in the province have not received their pensions for two months now. The situation seems to be even worse in Khorezm in the northwest, as the cash flow problems are affecting the entire population.

Authorities have started deducting payments for electricity, gas and other utilities at source, apparently so as not to have to hand out so much cash. The benefit delays are a direct result of falling government revenues as businesses slow."

"Among Central Asian states, disputes over the allocation of water have prevented the creation of a sound water-management framework. But the lack of regional consensus has not stopped Astana from doing what it can to increase the efficiency of internal water-related policies. Better management of the existing flood-drought cycle poses the most daunting challenge. Hundreds of thousands of people live along the flood plains of the Syr Darya.

Each spring local authorities boost flood defenses, set up evacuation points and spend months monitoring the movement of ice jams down the river, ready to dynamite them if they get blocked, This year, the government made funds available to build concrete-reinforced levees that are expected to shield the town from flooding for at least 20 years. Every year, as officials battle floods, they have one eye on another problem: come summer, will there be enough water to irrigate crops? One solution is to plant less thirsty crops."

"Up until six years ago, Apayao in the north of the Philippines had a relatively respectable poverty rate of 16.8 percent. By 2006, however, the majority of Apayao families were struggling, with the province posting a poverty rate of 57.5 percent. There are several possible reasons why many of Apayao's families suffered a decline in fortune. But those reasons could not have included a lack of new infrastructure projects, which have long been believed to be among the tools that could help alleviate poverty by providing greater access to basic needs and services.

Despite the surge of civil works funds nationwide in the last seven years, poverty in general not only persisted, it even worsened. The fast-growing population and the failure of household incomes to rise as fast as commodity prices are a major reason why more Filipino families are joining the ranks of the poor. Contractors and government officials say that as much as 30 percent to 50 percent of the cost of infrastructure projects continues to be lost to corruption."

"The pharmaceuticals sector, unlike other export-oriented industries, has a huge local market worth about $1.43 billion. The industry already meets 95 percent of the needs of the country. The quality of the drugs the local pharmaceutical industry produces is of such a high standard that Bangladesh has been exporting drugs to 70 countries.

At a roundtable recently held in the city, leading drug manufacturers of the country and others concerned brought some issues that are hindering the further growth of this sector to the fore. Those include some policy-related barriers that should be withdrawn as soon as possible, if the country wants to take advantage of the market opportunity created by the recession in developed economies. The industry will require the facility of an independent drug-testing laboratory in the country."

"The Thai government faces borrowing another 800 billion baht ($22 billion) to stabilize its finances and pay for the second stage of its economic stimulus scheme. The latest heavy borrowing was made necessary after tax collection receipts fell sharply in the first half of fiscal 2009.

This is a good time for the government to borrow from the domestic money market, which has about 2 trillion baht in excess liquidity, as it could get a low interest rate. Private investment has also slowed, so government borrowing would not crowd out private borrowers from getting access to money. The borrowing would raise public debt to 58-61 percent of gross domestic product by 2012, up from its present 40 percent."

"The Indonesian garment industry needs to make radical changes to cope with the economic slowdown, by improving competitiveness, experts say. Decreasing demand has forced the garment industry globally to cut expenses through layoffs, relocation of production activities to lower cost countries or even by selling majority shareholdings to bigger companies.

Most garment companies depended mainly on cheap labor to enhance competitiveness. The labor cost in Indonesia is $0.50 an hour, higher than that of Viet Nam ($0.38), Pakistan ($0.37), or Cambodia ($0.33). The lack of competitiveness in Indonesia was shown by data from the Global Competitiveness Report 2008-2009, which recorded Indonesian labor market efficiency with a ranking of 43 out of 143 countries."

"One year after Cyclone Nargis swept across southern Myanmar, the people of the Ayeyarwady Delta are rebuilding their lives, but thousands remain vulnerable as this year's monsoon rains approach. Aid workers say survivors need support to rebuild their livelihoods -- to buy tools, fertilisers, livestock, fishing nets and boats -- or their existence will remain precarious.

At the same time, thousands of families do not have adequate shelter to withstand the monsoon rains likely to start next week. More than 500,000 people -- including 200,000 children -- are still living in makeshift shelters which will not withstand the usual heavy rains."

"Malaysia needs to move its economy from a middle income to a high income model by focusing on domestic consumption and diversifying exports to leverage on the growth of China, India and the Middle East, according to a minister. There is an increasingly ambitious target to sustain economic growth of 7.5 percent and this is only possible if the economy is re-energized toward higher income and growth trajectory.

To move to a higher income-based economy, it is necessary to move toward a knowledge- and innovation-based economy where skilled labor is needed. Currently, Malaysia is trapped in a middle income gap."

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 unsubscribe from ADBI e-newsline please visit:
http://www.adbi.org/e-newsline/subscribe.php

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.