"The national burden of government debt has once again become a hot subject of public debate ahead of the presidential election in Indonesia. However, the issue is not just that government debt has increased, but more importantly about what level of sustainability those debts can achieve. Despite the significant increase in government debt, the burden has been lessened as overall debt is more sustainable.

As a percentage of gross domestic product, government debt fell from 57 percent in 2004 to 33 percent as of last December. This means that in terms of the economy the government is able to fully service its debts in a timely fashion because the size of the debt has increased along with expansion of the economy."

"Thailand's economy is being helped by government spending after sliding into its first recession since the Asian financial crisis in the first quarter, according to Prime Minister Abhisit Vejjajiva. The government in April began pumping cash into an economy that shrank 7.1 percent in the first quarter, giving handouts to the nation's poorest after the global recession led to a collapse in exports.

While gross domestic product isn't likely to expand until the fourth quarter, the central bank has said there are signs the contraction is moderating. The government last month unveiled a $41 billion stimulus plan that it intends to implement by the end of 2012. Public debt may rise to 60 percent of GDP from 40 percent as more public funds are raised for spending. The level is still manageable and in line with other countries, Abhisit said."

"Viet Nam will open a new exchange for informally traded stocks in an attempt to increase investor confidence and support the turnaround in its equity market. Viet Nam has been increasing regulations to try to lure investors back to its nine year-old market after the benchmark VN-Index plunged 66 percent last year. There are signs the moves may be paying off.

Vietnam had at least 959 companies that trade over the counter with a combined capital of $6.8 billion as of May 8, according to figures from the State Securities Commission. Demand for stocks traded outside Viet Nam's two exchanges surged in 2007, when the VN-Index reached a record high. The shares typically exchange hands on street corners outside brokerages, in coffee houses, and between friends and family."

"An expected bumper wheat harvest should reduce widespread food insecurity and bring down food prices in Afghanistan, according to officials. Over eight million people across the country are believed to be food insecure and in need of food assistance.

Largely owing to good rainfall, Afghanistan is expected to produce over six million tons of cereals, including over 4.5 million tons of wheat, by the end of August. Half of the country's 34 provinces are expected to produce 25,000-50,000 tons more than their needs, but 17 other provinces, mostly in the east, central and southern areas, will face wheat deficits of 25,000-50,000 tons."

"In the newly announced budget for Pakistan only 2.3 percent of the GDP has been allocated to the education sector, which is far less than the Millennium Development Goals (MDGs). Meanwhile, only 0.7 percent of GDP has been allocated to the health sector despite the fact MDGs require that public health expenditure must be raised up to 2 percent of GDP by 2015.

Pakistan is lagging behind in its goal of achieving Universal Primary Education where the net primary enrolment ratio and literacy rate is far less than what has been prescribed in the MDGs. Similarly, the performance in the majority of health sectors is not satisfactory. There had been a poor performance in the reduction of the child mortality rate including the mortality rate among children less than five years and the infant mortality rate."

"Debate is taking place within the Finance Ministry over a proposal to reintroduce an investment allowance for companies implementing new projects or creating productive assets to expand their businesses. The investment allowance for expenditure incurred by industry on plant and machinery was withdrawn from April 1990. Until then Indian companies could claim a deduction of an amount equal to 20 percent of the cost of plant and machinery installed or put to use while computing their profits from business.

At that time, the government argues that as the corporation tax rate was reduced by 10 percent to 40-50 percent, incentives and concessions like the investment allowance needed to be withdrawn. Proponents of a reintroduction of the investment allowance are using this as their main argument. Since an across-the-board cut in corporation tax rates is unlikely because of its adverse impact on the government's fiscal deficit, the ministry should consider concessions such as the investment allowance to promote investments during an economic downturn."

"The trade minister admitted last week that the implementation of free trade zones (FTZs) on three Indonesian islands near Singapore is beset with administrative problems and that institutional capacity is inadequate. Coordination between the central government and local administrations could have accelerated the development of the agencies in charge of managing the FTZ system, including all matters related to investment or business licensing.

But what many businesses have faced is arduous bureaucratic procedures and confusion in the division of licensing authorities, and, yet more damaging, much slower customs clearance. To be successful, a FTZ requires superior logistical efficiency, which is anchored on the fast flows of goods, labor and documents. All this in turn needs efficient tax administration and customs and immigration service, flexible labor regulations and expedient business licensing -- as well as superb basic infrastructure."

"Chinese President Hu Jintao has offered Central Asian states $10 billion in credit support to help counter the global economic slump. The gesture comes at a time when beleaguered economies across the region are looking to Beijing for purchases, investment and loan deals.

Beijing's credit support for the Central Asian economies may come in return for greater access to oil, gas and other resources in the region to fuel China's economic growth."

"Asia's share of global greenhouse gas emissions could rise to more than 40 percent by 2030, making it the world's main driver of climate change, experts warned Tuesday. The most populous continent with the fastest-growing economies in PRC and India already accounts for a third of world emissions of gases blamed for warming weather, including carbon dioxide, Asian Development Bank President Haruhiko Kuroda told a conference in Manila.

Its share of discharges from energy use has tripled over the past 30 years, he said. Asia also stands out as the most vulnerable region to climate change. In addition to water shortages, crop yields in Central and South Asia could drop by 30 percent by 2050, and coastal cities including Bangkok, Jakarta, Karachi, Manila, Mumbai and Shanghai will be vulnerable to flooding or damage from unpredictable weather patterns."

"Shanghai plans to develop into one of the world's top financial and shipping centers by 2020. Shanghai is already China's financial hub, home to the country's largest stock market, its major futures market for metals and energy, its gold bourse and its foreign exchange center.

There are four necessary preconditions for success: making the yuan fully convertible, Shanghai playing the leader in China's financial reforms, taking additional policy measures to step up development, and embracing change. The Chinese government has been moving fast toward making the yuan fully convertible. In April 2009, five major trading cities got the central government's nod to use the yuan in overseas trade settlement. That's a critical move toward making the yuan an international currency."

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.