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T O P H E A D L I N E S 3 July 2009

1. ASIA: Road to recovery long and bumpy
2. INDIA: Gov't seeks property entitlements for urban poor
3. VIET NAM: Foreign banks against move to tighten credit
4. KAZAKHSTAN: Major expansion of oil pipeline to PRC completed
5. PRC: Manufacturing sector shows signs of recovery
6. VIET NAM: Hydropower projects drying up water supplies
7. INDONESIA: Facing up to population explosion
8. INDONESIA: Moving away from dependence on mining-related economy
9. PHILIPPINES: Plans to ease spending in bid to narrow budget deficit
10. SRI LANKA: Growth forecast raised as borrowing costs ease

P O V E R T Y S P O T L I G H T

INDONESIA: Development needs investment in the poor

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I N D E P T H

1. ASIA: Road to recovery long and bumpy

Source: China Daily

"Despite signs of the bottoming-out shown in the first half of this year, Asia's recovery from the global economic downturn will be mild and slow, according to a top economist with the Asian Development Bank (ADB). ADB Chief Economist Jong-Wha Lee said Asia is now in a transition period from the bottom of the crisis to the road of recovery. But he warned that there are a lot of downsized risks along the road.

The ADB in March forecasted the economic growth for developing Asia to plunge to 3.4 percent in 2009 and climb up to 6 percent next year. Countries like China, India and Indonesia continued to show strong growth momentum while manufacturing sectors in some other export-dependent countries improved over the past quarter."

Full article: http://www.chinadaily.com.cn/bizchina/2009-07/02/content_8349078.htm

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2. INDIA: Gov't seeks property entitlements for urban poor

Source: Domain

"In a move that seeks to empower the urban poor, the government in India has initiated steps to provide the weaker segment of urban society with suitable property entitlements. There are about 81 million urban poor, or slum dwellers, in the country according to a 2004-05 census.

The scheme would focus on according rights to slum dwellers with the state providing basic amenities such as water supply, sewerage, drainage, internal and approach roads, street lighting and social infrastructure facilities. The ministry has proposed that master plans include reservation of land to build houses for the poor and also for helping them carry out their economic activities like street vending."

Full article: http://www.domain-b.com/economy/infrastructure/hsg/20090702_government.html

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3. VIET NAM: Foreign banks against move to tighten credit

Source: Thanhnien News

"A new amendment that will further limit the amount foreign banks can lend to their customers in Viet Nam would have a negative impact on the economy, industry insiders say. Under a draft amendment to the Law on Credit Institutions, all banks and branches of foreign banks in Viet Nam will not be able to lend sums that exceed 15 percent of their registered capital to a single customer.

For foreign bank branches the current cap is also set at 15 percent, but is based on the capital of their parent banks, which means much higher credit limits. As most of the 40 foreign bank branches operating in Viet Nam have a registered capital of only $15 million, they will not be allowed to lend more than $2.25 million to a customer if the new limit comes into effect. If it is approved, many branches of foreign banks in Vietnam will have to either raise their capital or cut back on lending."

Full article: http://www.thanhniennews.com/business/?catid=2&newsid=50345

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4. KAZAKHSTAN: Major expansion of oil pipeline to PRC completed

Source: China Daily

"Kazakhstan said it had completed the expansion of a major oil pipeline to PRC. The first test shipment of oil had been successfully completed through the newly built Kenkiyak-Kumkol pipeline. The implementation of this project will have tremendous influence on the whole oil and gas industry, providing new opportunities for oil exports.

The first phase of the pipeline, between central Kazakhstan and China's western Xinjiang region, was completed in 2006. The latest link expands this pipeline to Caspian Sea oil fields. Kazakhstan, hit hard by the global economic crisis, has stepped up contacts with China for fresh investment."

Full article: http://www.chinadaily.com.cn/china/2009-07/02/content_8348504.htm

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5. PRC: Manufacturing sector shows signs of recovery

Source: Reuters

"PRC's manufacturing sector extended a steady recovery in June, recent surveys showed, adding to evidence across Asia that the regional economy is finally pulling out of a deep dive. Beijing responded to last autumn's slump in global demand with a massive 4 trillion yuan ($585 billion) stimulus package, ultra loose credit policy and an array of tax breaks.

Alongside improvements in other timely data such as power consumption, tax revenues, industrial profits and cars sales, the latest reports indicate that the pump-priming is working. The government's goal of 8 percent GDP growth for all of 2009, once dismissed as far-fetched now looks attainable."

Full article: http://www.reuters.com/article/marketsNews/idUSPEK13888320090701?sp=true

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6. VIET NAM: Hydropower projects drying up water supplies

Source: Viet Nam Net

"The wave of investment in hydro-power plants in the central region of Viet Nam continues, sparking fears of an environment disaster from the blocking of streams in the Vu Gia and Thu Bon rivers. It is feared that 1.7 million people, including 850,000 in Da Nang and the rest in Quang Nam, will be short of water for nine months a year, from January to September.

Moreover, over 20,000 hectares of agricultural land in the lower reaches of the Vu Gia river will lack water. The construction of many hydro-power plants on the same river will affect flows downstream. Da Nang will be one of locations that suffers the most once river flows dry up."

Full article: http://english.vietnamnet.vn/reports/2009/07/855913/

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7. INDONESIA: Facing up to population explosion

Source: Jakarta Post

"The population of Indonesia could soar to 470 million by 2060 if the government -- and also the citizens -- fail to curb the annual rate of population growth, now reaching 1.3 percent. If the growth rate prevails, the population would jump from 235 million in 2010 to 470 million by 2060 and 940 million by 2110, doubling every 50 years.

The world's population has jumped to 6.5 billion people now from six billion in 2000, five billion in 1987 and four billion in 1975. Family planning can play an important role in putting the brakes on population growth. It could help reduce the poverty trap."

Full article: http://www.thejakartapost.com/news/2009/07/02/indonesia-faces-population-explosion-official-says.html

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8. INDONESIA: Moving away from dependence on mining-related economy

Source: Jakarta Post

"It is imperative that Indonesia attempt to alleviate its dependence on a mining-related economy, which has the propensity to put wealth into the hands of a few, according to a leading researcher. The next government must also focus on improving agricultural. In order to catch up with Thailand, Indonesia must provide free training and education to farmers.

This in turn will induce and enhance the entrepreneurship that is much needed in Indonesia . While entrepreneurs are aplenty, in most cases they tend to remain small due to impediments in government policies and institutional reforms. Other development agendas in the next 5 years should include more spending on infrastructure, education, health care and social protection. However, in order for spending to be effective, institutional reform must also be accelerated."

Full article: http://www.thejakartapost.com/news/2009/07/01/moderate-improvements-through-2014-cards.html

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9. PHILIPPINES: Plans to ease spending in bid to narrow budget deficit

Source: Bloomberg

"The Philippines plans a smaller increase in its 2010 spending plan as it seeks to narrow a record budget deficit while new tax measures trim revenue, government officials said. The government is expected to propose a 'modest' budget of about 1.5 trillion pesos ($31.2 billion) for 2010. That would be an increase of less than 1 percent and compares with planned spending of 1.489 trillion pesos this year, which is 17 percent higher than 2008.

The world's recovery from its deepest slump since the Great Depression may help the Southeast Asian nation accelerate growth to a range of 2.6 percent to 3.6 percent next year from as little as 0.8 percent in 2009, the government predicts. Expansion in the $144 billion economy will probably be faster in 2011 or 2012."

Full article: http://www.bloomberg.com/apps/news?pid=20601080&sid=aJ1MzVnl8_9o

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10. SRI LANKA: Growth forecast raised as borrowing costs ease

Source: Bloomberg

"Sri Lanka's central bank raised its growth forecast for 2009 as slowing inflation helps ease borrowing costs and the South Asian island rebuilds after the civil war. The $32 billion economy is expected to grow between 3.5 percent and 4.5 percent this year, up from a 2.5 percent expansion forecast in April, the central bank said.

Sri Lanka's inflation eased to the weakest pace in more than five years in June, giving the central bank room to further cut interest rates to spur spending and investment and make up for slowing exports. Consumer prices in Colombo rose 0.9 percent in June from a year earlier after gaining 3.3 percent in May."

Full article: http://www.bloomberg.com/apps/news?pid=20601091&sid=aweCMnI4VuTU

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P O V E R T Y S P O T L I G H T

INDONESIA: Development needs investment in the poor

Source: Jakarta Globe

"About 37 million Indonesians are currently living below the poverty line. Through the National Program for Community Empowerment, the government has allocated Rp 10.4 trillion ($1 billion) to every district and Rp 1.7 billion for employment-related development activities to help tackle poverty. It is hoped that the management of this enormous fund, which has its origins in foreign debt, comes with high levels of transparency and supervision.

For development, more important than 'productive investment,' is investment in the poor, in particular in children's health and education. Many countries that have applied this are currently reaping the results, such as Malaysia and Korea. Without it, a vicious circle will only take place."

Full article: http://thejakartaglobe.com/opinion/development-takes-investment-in-the-poor/315432

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D E V B l o g s R O U N D U P

Remittances have emerged as a key driver of economic growth and poverty reduction in Bangladesh, increasing at an average annual rate of 19 percent in the last 30 years. Revenues from remittances now exceed various types of foreign exchange inflows, particularly official development assistance and net earnings from exports. The bulk of the remittances are sent by Bangladeshi migrant workers.

Full article: http://blogs.worldbank.org/endpovertyinsouthasia/remittances-bangladesh-determinants-and-2010-outlook-0

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