Regional Outlook: Southeast Asia 1993-94 9789814414050

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REGIONAL OUTLOOK Southeast Asia 1993-94

I5ER5 Institute of Southeast Asian Studies The Institute of Southeast Asian Studies was established as an autonomous organization in 1968. It is a regional research centre for scholars and other specialists concerned with modern Southeast Asia, particularly the many-faceted problems of stabiUty and security, economic development, and political and social change. The Institute is governed by a twenty-two-member Board of Trustees comprising nominees from the Singapore Government, the National University of Singapore, the various Chambers of Commerce, and professional and civic organizations. A ten-man Executive Committee oversees day-to-day operations; it is chaired by the Director, the Institute's chief academic and administrative officer.

REGIONAL OUTLOOK

Southeast Asia 1993-94 Chairman Professor K.S. Sandhu Co-ordinating Committee Sree Kumar Roselie Ang Russell Heng Hiang Khng Khin Maung Nyunt Linda Low Mya Than Sharon Siddique Daljit Singh Tin Maung Maung Than Toh Mun Heng

Southeast Asia

1993-94

I5EA5

INSTITUTE OF SOUTHEAST ASIAN STUDIES

Published by Institute of Southeast Asian Studies Heng M ui Keng Terrace Pasir Panjang Singapore 0511. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior consent of the Institute of Southeast Asian Studies.

© 1993 Institute of Southeast Asian Studies, Singapore. The responsibility for facts and opinions expressed in this publication rests exclusively with the contributors and their interpretations do not necessarily reflect the views or the policy of the Institute or its supporters.

Cataloguing in Publication Data Regional Outlook : Southeast Asia. 1992-931. Asia, Southeastern. DS501 S720 1992 sls91-209988 ISSN 0218-3056 ISBN 981-3016-47-7

Typeset by The Fototype Business, Singapore Printed in Singapore by Kin Keong Printing Co Pte Ltd

CONTENTS Foreword K.S. Sandhu

I

POLITICAL OUTLOOK

Vll

1

Southeast Asia 1993-94 Daljit Singh

II

POLITICAL OUTLOOK

23

Myanmar 1993-94 Tin Maung Maung Than

III

POLITICAL OUTLOOK

29

Indochina 1993-94 Russell Heng Hiang Khng

IV

ECONOMIC OUTLOOK

37

ASEAN 1993-94 Linda Low and Toh Mun Heng

V

ECONOMIC OUTLOOK

63

Myanmar 1993-94 Mya Than

VI

ECONOMIC OUTLOOK

69

Indochina 1993-94 Khin Maung Nyunt

Appendices

79

FOREWORD

rn

he world is undergoing dramatic transformations in the wake of the crumbling of the Cold War order, and the ebbs and flows of these changes are not passing unnoticed in Southeast Asia. Indeed, the region is witnessing its own mini-versions of glasnost and perestroika, as countries like Vietnam, Cambodia, Laos, and Myanmar, for instance, seek their niches in the emerging opportunities and constraints that characterize the international economic and political scene. This, coupled with the dynamism of the member states of ASEAN, makes Southeast Asia a particularly promising and exciting area - at a turning point in world history and human affairs. These developments have reinforced a growing awareness at the Institute for the need for a publication produced in and from the region and devoted exclusively to the geo-politics and geo-economics of Southeast Asia. Accordingly, the Institute inaugurated Regional Outlook last year. Cast in a format and style that is unencumbered by lengthy analyses or commentaries, Regional Outlook provides succinct yet substantive and easily readable overviews and insights into the current geo-political and economic situations in the individual countries and the region as a whole, together with the likely trends over the next year or so. The Institute very much hopes that the review will serve as a useful and handy guide to the region's aspirations and prospects each year, in addition to casting a look ahead. It is thus all the more pleasurable to wish Regional Outlook and the individual contributors all the best, as well as express the hope that Regional Outlook will circulate widely among all interested in the affairs of the region, and especially so among the busy executives, and other decision-makers in both the public and private sectors. In recording these expectations it is, of course, understood that responsibility for facts and opinions expressed in the review rests exclusively with the individual authors, and their interpretations do not necessarily reflect the views or policy of the Institute or its supporters. Professor K.S. Sandhu Director Institute of Southeast Asian Studies 1 December 1992

SOUTHEAST ASIA 1993-94 Daljit Singh

POLITICAL OUTLOOK OVERVIEW

rn

he prospects for peace and stability in Southeast Asia appear to be good in the short to medium term, that is, up to about IQ five years. During this period the overall Asia-Pacific security t environment is expected to stay relatively benign. A credible U.S. military presence will probably remain; Japan will still be enmeshed in the security alliance with the United States; China will be more preoccupied with domestic problems and still without a significant long distance power projection capability; and Russia will be largely absorbed with keeping its own house in order. With the signing of the Cambodian peace agreements, political and economic relations between the ASEAN countries and the Indochina states have improved further. Vietnam and Laos have acceded to ASEAN's Treaty of Amity and Co-operation and have been admitted as observers to the annual ASEAN Ministerial Meeting. Similar links between ASEAN and Cambodia can be expected once a new government, elected according to the terms of the peace accords, comes to power in Phnom Penh. The ASEAN countries are stepping up their efforts at co-operation. The Singapore Summit in January 1992 decided to form an ASEAN Free Trade Area (AFTA) in fifteen years. It also agreed to strengthen the ASEAN Secretariat, and the powers of the new Secretary-General. There is also a desire for new modes of co-operation and confidence-building in the Asia-Pacific region. This is in response to the new situation which has arisen from the end of Soviet-U.S. confrontation in the region and the U.S. military withdrawal from bases in the Philippines. The ASEAN post-Ministerial Conference has become a forum for discussions on Asian-Pacific security. The AsiaPacific Economic Conference (APEC), established here is a desire for new modes of in 1989, is strengthening its organizational maco-operation and confidence-building chinery and embarking on new projects. While its in the Asia-Pacific region . This is in immediate rationale is economic co-operation, over response to the new situation which has the longer-term, there are likely to be political and arisen from the end of Soviet-U.S. confidence-building yields as well. confrontation in the region and Finally, the domestic situations in the ASEAN the U.S. military withdrawal from bases countries are mostly stable. Four of them - Indoin the Philippines. nesia, Malaysia, Singapore and Thailand - have co~tinued with impressive economic growth despite the slow-down in some of the OECD (Organization for Economic Co-operation and Development) countries. There is cautious optimism that the Philippines may be able to enter the fast growth league if the political system there allows President Ramos to implement the necessary policies.

T

2

SOUTHEAST ASIA 1993 94

rn

he major security uncertainty over the next few years in the broader Asia-Pacific region is Korea. The situation there has been adjusting to the end of the Cold War between the superpowers and the dissolution of the Soviet Union. Moscow and Beijing have established diplomatic relations with South Korea; the two Koreas have been talking more to each other; and both have been admitted to the United Nations. Yet, the uneasy military confrontation between the North and the South continues, and the former remains unpredictable in its military intentions. A related question that arises is how fast and in what manner fundamental changes will take place. It will be difficult for the North to continue with its present policies in view of its diplomatic isolation and its dire economic straits, brought about in part by the withdrawal of Soviet aid and the loss of Eastern European markets. Will the change be managed peacefully? Will North Korea become a nuclear power? A nuclear-armed Pyongyang could have grave implications for the peninsula and for international relations in Northeast Asia, including very unsettling effects on Japan.

[l]

n Southeast Asia two situations give rise to some concern. They are the political uncertainty in Cambodia and the territorial disputes in the South China Sea. Irrespective of whether the Khmer Rouge take part in the Cambodian elections in 1993 the situation will remain fragile, with the likelihood of a weak and squabbling coalition government and, if the Khmer Rouge are excluded from the elections, also continued low-level violence in parts of the countryside. However, the situation is unlikely to have significant adverse effects on regional peace because, at least currently and in the near future, it does not seem to be in the interests of outside powers, including China, to aggravate the situation by arming one side or another. The Spratly Islands remain a potential flash-point, even though the various countries involved in the territorial claims, including China, have agreed that the dispute should be settled peacefully. All the claimants, except Brunei, have troops in the Spratlys area. China has continued to make strident claims to large areas of the South China Sea. While protesting its peaceable intentions, it has made a number of moves which indicate a surprising assertiveness. In February 1992, it

The Korean Peninsula

Southeast Asia

some concern

3

POLITICAL OUTLOOK announced a new law on territorial waters and contiguous zones which covers the Spratlys. In early July, China was reported to have occupied a reef in an area claimed by Vietnam. Geopolitical objectives in Southeast Asia probably feature importantly in China's calculations, not merely the desire to keep up pressure on Vietnam . While incidents between China and Vietnam in the area cannot be ruled out, China will probably seek to avoid actions which will further increase suspicions about its intentions in Southeast Asia and alarm other major powers with vital interests in the area, especially Japan. At the same time , however, it may not want to resolve the dispute, preferring instead to wait until it can do so on its own terms. There are, of course, other potential trouble-spots in Southeast Asia: for instance, various bilateral disputes, several of them of a territorial nature, including those relating to maritime boundaries. Some of the disputes between the ASEAN countries include the Philippines' claim to Sabah, which though dormant, remains unresolved; the disputes between Malaysia and Indonesia over Simpadan and Litigan Islands; and that between Malaysia and Singapore over Pedra Branca (known as Pulau Batu Puteh in Malaysia). However, these disputes are unlikely to lead to conflict or a rupture in relations. They will most probably remain muted or will eventually be settled peacefully in the spirit of ASEAN co-operation and of the Treaty of Amity and Co-operation. There are also very important questions about the prospects for domestic stability in each of the countries in Southeast Asia. These will be addressed separately below.

eace and stability in Southeast Asia are bound to be crucially affected by developments in the broader Asia- Pacific region, especially the policies of three major powers - the United States, China, and Japan. A credible U.S. military presence in Southeast Asia will continue for the near future, but the longer term prospects are uncertain. Both Japan and China want to have a larger influence in East and Southeast Asia and there are signs of incipient rivalry between them as U.S. power gradually declines. A sharp deterioration of U.S.-China relations can be expected if the Clinton Administration removes China's most-favourednation status. Such a development, if it occurs, would be a major setback for international relations in the entire region.

4

SOUTHEAST ASIA 1993-94

[M]

ost countries in East and Southeast Asia now desire the continuation of a credible U.S. military presence in the Western Pacific and the U.S.-Japan military alliance. They fear that, without such a U.S. presence, major regional powers like Japan and China will become engaged in a competitive buildup of forces to secure their strategic or economic interests in East and Southeast Asia, resulting in new tensions and new pressures on the smaller countries in the region. Even Malaysia and Indonesia are now prepared to offer repair facilities to U.S. naval ships on a commercial basis. Singapore, Thailand, and Brunei already have arrangements to make facilities available to help sustain a U.S. presence in the region. It is likely that total U.S. military forces will eventually be trimmed by more than the presently projected 25 per cent by 1995. This is bound to affect the Pacific area as well. For the next 3-5 years there will probably be sufficient capability in forward positions in the Western Pacific, even after further trimming. However, beyond that, say by the end of this decade, it is not possible to predict whether credible forces will remain if American politicians and the public seek soft options for their domestic problems. At a time when there is no real external military threat to U.S. security, the defence budget can become an easy target for cuts by a new U.S. Administration which is more inward-looking and has various competing domestic priorities.

The U.S. Presence

lready with a strong economic presence in East and Southeast Japan Asia, Japan is seeking a larger political role. The Japanese Government, encouraged by the United States, feels that as an economic superpower it must start to make its contribution to international and Asian security, preferably under the United Nations. Cambodia is presently the focus of a larger Japanese role - under the U.N. umbrella. The despatch of units of the Self Defence Forces to Cambodia is a he despcdch a un"tt f t historic event, notwithstanding the fact 1bod a i a h tor1 PVei t that they are strictly for non-combat the fact. that t ey ar shi I for support roles such as in communicaml... s as in commuruc tro iS tions, construction and medical aid. rnedical aid It first time si It is the first time since World War II +hat Jaoan se ground force ..; a that Japanese ground troops have been sent abroad.

v

5

POLITICAL OUTLOOK The decision to send troops to Cambodia was taken amidst much unease both at home and in many parts of East/Southeast Asia. Overt anti-Japanese sentiments over its actions in World War II have resurfaced recently, particularly in East Asia. Obviously, some countries also see this as a useful instrument to prevent a Japanese domestic consensus emerging on a larger security role; on the other hand, there are also countries which see Japan as a useful counterweight to China in the event of a power vacuum caused by a drastic U.S. withdrawal. But Japan has done little or nothing to educate its population, particularly the young, about its wartime atrocities in occupied countries. Calls for school and college textbook revisions to help achieve this have gone unheeded. The end of the Cold War has not diminished Japan's security anxieties. Concerns about China's military power seem to have increased and longer term worries about Russia remain. No doubt, there would also be anxieties about the prospects of a militarily strong re-united Korea. Thus, U.S.- Japan security threat perceptions may become increasingly divergent- China, Korea and Russia are on Japan's doorstep while they presently constitute little or no direct threat to the superpower on the other side of the Pacific.

China

6

fter the caution displayed since the Tiananmen pro-democracy disturbances in 1989, China decided in 1992 to step up the pace of economic reform. Deng Xiao-ping seems anxious to set in place the broad direction in policies which can continue after his departure from the scene. Changes in personnel at the top rungs of the Communist Party have also been made at the fourteenth Party Congress in October 1992. The Congress, as expected, endorsed the policies of economic reform. However, the various pronouncements and the composition of the new top party leadership suggest a desire to proceed step by step and by consensus. China is going through an extended period of leadership transition and socio-economic changes of historic proportions which carry with them inherent risks. It will be a difficult period, with potential for instability and disruptions. It is not clear what will happen if Deng dies in the near future, though China's leaders are acutely conscious of the importance of managing change and maintaining stability. It is primarily for this reason that political pluralism is not being allowed because it could lead to a weakening of control over the future direction of the country.

SOUTHEAST ASIA 1993-94 The economy grew by 12 per cent in the first half of 1992 and phenomena like corruption, and conspicuous differences in wealth and consumption could come to the fore again. Although the security services can be expected to prevent or defuse the outbreak of any disorder, the social and economic system could come under increasing stress as the economy continues to grow at a fast pace and more reforms are implemented, especially of state-owned enterprises which employ nearly half the industrial work-force. In the Southeast Asian region, China's position is today better than at any time since the end of World War II. It is presently the key outside player on mainland Southeast Asia and it has a diplomatic presence in all the ASEAN countries. Its rapid economic growth, the disappearance of Soviet power from the East/Southeast Asian equation and the prospects of a more inward-looking United States appear to have given it a new assertiveness, as reflected, for instance, by its actions and pronouncements in relation to the South China Sea territorial disputes. China probably wants to use the South China Sea disputes to keep up pressure on Vietnam and to stake out a strong strategic position for itself in the Southeast Asian region. There are reports that it is acquiring high performance Russian-made war-planes as well as aerial refuelling technology which could give its airplanes the capability, by around 1995, to cover the Spratlys area. China's policies and actions in the South China Sea and in Indochina and Myanmar will no doubt be under close scrutiny in the coming years, and not just by Southeast Asian countries (for Japan will also be watching anxiously) to see if it has hegemonic ambitions. new ::~"''"'P~"71 Its relations with the United States remained uneasy in 1992. They will deteriorate sharply if the United States removes China's most-favoured-nation status because of disputes over trade or human rights issues. The danger of this happening receded with the reported resolution of some of the trade issues. But it could arise again under the Clinton Administration.

[B

arring the unforeseeable, it is unlikely that there will be in 1993-94 other developments elsewhere of a political or security nature which will have a significant effect on peace and stability in Southeast Asia.

7

POLITICAL OUTLOOK The prospects for Arab-Israeli peace have improved with the coming to power of the Labour Government in Israel, but complex negotiations may still lie ahead and there is no certainty that a settlement will be reached in the near future. Iran seems to be adopting a somewhat more confident and assertive posture in the Gulf region, but given the U.S. commitment to the oil-rich Gulf states, no major conflict is expected. On the Indian subcontinent, the Kashmir problem will fester on but the likelihood of another Indo-Pakistani war is small.

ASEAN COUNTRIES ~ runei is an oasis of calm in an ASEAN region caught in a vortex of change. The sounds of political competition, even within ...__ ____. limits, are missing as are the signs of poverty. The country is a monarchy, with the Sultan the absolute ruler. Everyone is well looked after, thanks to the large oil revenues in a country of only 270,000 people. If sceptics envisage stirrings of discontent with the system over the longer term, there are few signs, if any, of them at present. The

I Ir

_

Brunei Darussalam

8

Land Area:

5,765 sq km

Population:

270,000

Capital:

Bandar Seri Begawan

Type of Government:

Sultanate

Head of State:

His Majesty Sultan Hassanal Bolkiah

Prime Minister:

His Majesty Sultan Hassanal Bolkiah

Currency Used:

Brunei dollar

US$ Exchange Rate on 30 November 1991 :

US$1

B$1.63

SOUTHEAST ASIA 1993-94 national ideology, Melayu Islam Beraja (MIB), is being actively promoted to protect the citizens from undesirable influences from the outside world. The principles of MIB inform government policies. MIB was also much in evidence in the celebrations during 1992 marking the Silver Jubilee of the Sultan's rule. Attempts are being made to diversify the economy away from reliance on oil. Planners have been consciously studying the comparative advantages which the State can offer, especially when seen in the context of the different endowments available in the next-door East Malaysian states of Sabah and Sarawak. Much will depend on an expanded economic zone as the domestic market is small, labour expensive and entrepreneurship in short supply. Overall, with its economic prosperity, there is no internal threat to stability in the foreseeable future.

rn

he Soeharto era is about to enter its last phase, as, according to all indications, the President seeks and obtains a sixth five-year term of office in the presidential election of March 1993. He is doing so on a record of a remarkable quarter century of stability and development and after a good mandate for his government in the elections for parliament (DPR) held on 9 June 1992. (The five percentage points decline in popular vote for GOLKAR, the ruling Functional Group, from the exceptionally high 73 per cent in 1987 was within the margins expected and not a cause for concern). Moreover, the passing of the Chairmanship of the Non-Aligned Movement to Indonesia in 1992 has allowed President Soeharto to assume a larger international leadership role on the eve of his re-election to his sixth term of office. The economy has been growing at an annual rate of around 6 per cent in recent years. The management of the economy has continued to inspire confidence among foreign investors and aid donors. The incident in Dili, East Timor, on 11 November 1991, in which civilians were killed by troops, has not affected this confidence, partly because of Soeharto's adroit handling of the matter. The new World Bank-chaired multilateral aid group has pledged US$4.9 billion for 1992-93, slightly more than requested by Jakarta - surely a resounding vote of confidence. The President is very much in control. However, there are some undercurrents of dissatisfaction and uncertainty about the future. One uncertainty is whether there will be a smooth transition from Soeharto to a new president in 1998, or earlier, if his health were to fail some

9

POLITICAL OUTLOOK time during his final term. This question arises because Soeharto has so far not indicated who his successor will be. Although reported to be in good health at present, he will be 72 in 1993, and the possibility of incapacitation, and even death, in office cannot be discounted. Indonesia will continue to need a strong leader to deal with new political and economic challenges that are bound to arise in the remaining years of this decade as the country industrializes and as strategic changes occur in the Asia-Pacific region. The military leadership, with stability of the country uppermost in mind, has therefore been hoping that Soeharto would designate early enough a successor who is also acceptable to the military. There have been reports in the past of unhappiness among sections of the military leadership over Soeharto's unwillingness to do so. If it becomes evident in March 1993 that there has been no understanding between the military and the President on a successor, ndonesia will continue to need notwithstanding the appointment of a new a strong leader to deal with new Vice-President (the President can change his political and economic challenges that Vice-President during his term of office), or are bound to arise in the remaining if the military is opposed to the choice, there will be some unease about the future . It is years of this decade as the country possible that Soeharto may not have found industrializes and as strategic changes a candidate with the requisite formidable occur in the Asia-Pacific region. combination of qualities - loyalty enough to him to protect his name in history and the interests of his family; strength and decisiveness; as well as acceptance by the military. Or he may not want to be a "lame duck" by committing himself to a successor early. Another area of contention concerns the role of the President's children in Indonesian business. Sections of the military feel that this is a political liability for the government and bad for stability. Indeed, although Soeharto still wields enormous power and authority, his standing and respect in the military, the bureaucracy, and the public at large have been dented somewhat in recent years by the business interests of his family members. This is also related to the issue of unequal distribution of wealth in the country which he himself has addressed in his public speeches. In a society where 27 per cent of the people (about 50 million) are officially classified as living below the poverty line, the conspicuous wealth of a relatively small number, including members of the President's family, can be a sensitive issue. While such differences exist, there is no question, at least at present,

I

10

SOUTHEAST ASIA 1993 94

Indonesia Land Area:

1,919,443 sq km

Population:

179.2 million (mid-1990 census)

Capital:

Jakarta

Type of Government:

Presidential government based on Pancasila Democracy

Head of State:

President Soeharto

Next Election:

1993 (Presidential)

Currency Used:

rupiah

US$ Exchange Rate on 30 November 1992:

US$1

2,054 rupiahs

of the loyalty of the military command to the President. The top military command is scrupulously loyal to the Constitution and committed to the principle of constitutional change of leadership. Like the President, it is also committed to the maintenance of stability and order, which it knows is crucial for continued economic progress. Hence, even if the succession issue is not resolved in 1993, the military leadership is likely to avoid a confrontation with the President. Whether a new President is Soeharto's chosen successor and takes over from him peacefully only when Soeharto steps down - which is the more likely scenario- or whether he is someone else who emerges through a crisis, it is almost certain that he will be from the present military-civilian power elite and will, therefore, subscribe to the same fundam entals of policy in politics, economics and fo reign relations. Pancasila will remain the national ideology and the country will continue to follow the same developmental path, with its reliance on aid from the West and Japan and foreign direct private investment. The other situations which could cause instability would be economic or regional crises. A prolonged economic recession in the OECD countries, which seriously affects the non-oil exports on which Indonesia

11

POLITICAL OUTLOOK now increasingly depends, could bring such a crisis, but presently such a recession does not seem likely. The chances of a regional rebellion based on a sense of alienation and perceived economic neglect, though not high, nevertheless do exist, because there is considerable dissatisfaction in certain areas, especially in Eastern Indonesia. However, if it occurs, the armed forces should be able to deal with it effectively. There is no other significant threat to the regime as none of the usual opposition groups- students, intellectuals and professionals who want more democracy; or sections of the more orthodox Muslims who may want a greater political role for Islam - can seriously threaten the government alone or collectively. To conclude, Soeharto will be elected to a new five-year term in March 1993. There is some unease about how the transition to a new leader in 1998, or earlier, if Soeharto dies or is incapacitated by ill health, will be managed. There are fairly good prospects of a smooth and peaceful transition. However, the possibility, though small, of a more difficult transition amidst some instability, cannot be completely discounted. Whoever eventually emerges as successor to Soeharto is likely to continue with the same basic policies.

Malaysia

12

[D]

r Mahathir's position and authority on the Malaysian political scene remain unchallenged. This situation can be expected to continue at least for the near term. The UMNO (the ruling United Malays National Organization) elections, presently scheduled for late 1993, are generating some excitement in the party and speculation among political observers. This is because it is widely believed that the elections will throw up Dr Mahathir's successor. The Information Minister Datuk Mohamed Rahmat was quoted in the press as having said: "The next party elections will determine who succeeds Dr Mahathir". This may well be so but it is by no means certain. While there have been reports that Dr Mahathir would prefer someone other than his present deputy, Ghaffar Baba, to succeed him (Finance Minister Anwar Ibrahim's name has been mentioned in this context), he may not want to make any change in 1993 which could increase factionalism in the party. However, even if the post of the party's Deputy President is contested, or even if Dr Mahathir seeks to change his deputy in the party by some other means, it is unlikely that there will be instability affecting the business climate. It is true that jockeying and manoeuvring within

SOUTHEAST ASIA 1993-94

Malaysia Land Area:

330,434 sq km

Population:

14.4 million (1990 estimate)

Capital:

Kuala Lumpur

rype of Government:

Federated parliamentary democracy on Westminster model, with constitutional monarchy

Next Election:

October 1995

Head of State:

His Majesty the Yang di-Pertuan Agong Sultan Azlan Shah

Prime Minister:

Dato' Seri Dr Mahathir bin Mohamad

Currency Used:

ringgit

US$ Exchange Rate on 30 November 1991:

US$1

2.52 ringgit

UMNO, particularly between the supporters of Ghaffar Baba and Anwar Ibrahim, have started, and poison-pen letters, a customary barometer of political competition and rivalry, have been making the rounds. There may well be more tensions and political infighting in the party as the party elections draw near. But Dr Mahathir 's position in the party today is much stronger than in 1987 when the turmoil and split in UMNO took place. An open split in the party would, therefore, be most unlikely. The political fate of those who left the party with Tengku Razaleigh has provided an object lesson which will not be easily forgotten. Another situation that would create uncertainty would be if Dr Mahathir were to suddenly and unexpectedly depart from the political scene, leaving Ghaffar Baba to manage the transition. Then there could be a showdown between the main factions , and the emergence of new alignments in the party. There have been a number of other domestic problems during the past year, but none posing any significant threat to stability in the near term . In the case of Sabah, the PBS (Parti Bersatu Sabah) elections

13

POLITICAL OUTLOOK held in July showed that almost half the delegates did not want confrontation with the central government. However, the hardliners among the leaders survived the electoral challenge from the moderates. In the absence of a change in party leadership and the confirmation of Bernard Dompok, a hardliner, as successor to Datuk Pairin Kitingan as Chief Minister, no improvement in relations with the central government is likely. Kuala Lumpur had earlier rejected overtures by the PBS to rejoin the National Front coalition and can be expected to keep up the pressure on the PBS state government. The tussle with the Malay rulers over what they can or cannot do seems to have entered a respite with the Proclamation of Constitutional Principles by the rulers on 4 July 1992. This is the first time since independence in 1957 that UMNO has been able to commit the rulers in writing to the limits of their constitutional powers, even though only six of the nine rulers signed the document. The significance of the document is disputed , with UMNO viewing it as a victory while those opposed belittling its importance. The issue, if not pressed further, will have no effects on stability. The tussle with PAS (Parti Islam SeMalaysia) in Kelantan is not unrelated to the issue of relations with the Malay rulers. Observers agree that PAS benefited significantly during the 1990 general election from the perceived desire of the popular Sultan of Kelantan, a nephew of Tengku Razaleigh , that the people vote for the opposition. Indeed, from present indications, as long as the Sultan remains opposed to UMNO, the prospects of wresting any state or parliamentary seat in Kelantan from PAS are not bright. What has captured the headlines in the press, however, is the desire of the PAS state government to establish an Islamic administration in the state, and in particular to institute Islamic hudud laws. These laws cannot be instituted without an amendment to the Federal Constitution through a two-third vote in the federal parliament, which is most unlikely to be obtained. Even if Dr Mahathir lifts the whip and allows MPs (Members of Parliament) to vote according to their personal wishes and even if all Muslim MPs vote for the amendment, non-Muslim MPs would still muster more than one-third of the total vote. PAS, while being cognizant of this fact, has been trying to use the issue to highlight UMNO as not being genuinely committed to Islam. However, such tactics are unlikely to register any significant increase in support for PAS among Malays outside Kelantan. Thus, the overall prospects for Malaysia during 1993-94 are good. Dr Mahathir's position in UMNO and in the country as a whole has perhaps never been stronger. There are no major political challenges

14

SOUTHEAST ASIA 1993-94 or developments on the horizon in the near future which could significantly affect the stability of the country. The economy is booming. Real growth, which had reached more than 9 per cent in the two years 1990-91, is expected to consolidate at 7.8 per cent in 1992 and 8.1 per cent in 1993.

[l]

n President Ramos the Philippines has an experienced and able leader, but the problems he has to address are numerous and and complex. Faster economic growth is urgently needed to deal with massive unemployment and poverty, and to repay the foreign debt. Nearly a third of the labour force is reported to be out of work and about 50 per cent of the population is living below the poverty line. Foreign debt stands at US$29 billion. The GNP is expected to increase by only about 2.5 per cent in 1992. Meanwhile, population growth is about 2.4 per cent a year, one of the highest in the region. Rapid economic growth can come about only through large-scale investment and reforms to make the economy more efficient. Foreign investors need the confidence that there will be political stability and

hilippines

Philippines Land Area:

300,000 sq km

Population:

61 million (1990)

Capital:

Manila

Type of Government:

Republic, with President and a Congress, as in the United States

Head of State:

President Fidel Ramos

Next Election:

May 1998 (Presidential and Congressional)

Currency Used:

peso

US$ Exchange Rate on 30 November 1991 :

US$1

24.63 pesos

15

POLITICAL OUTLOOK that economic reforms will be implemented. Ramos has moved to build this confidence. He has stressed his commitment to the reforms required by the International Monetary Fund (IMF); sought to form a national consensus on an agenda for what needs to be done; built bridges to the political opposition to obtain support in Congress erhaps the most important for his policies; and offered amnesty and legalization to the communists if they factor in the Philippines will would give up their destructive insurbe the working of the political gency. These moves, combined with system. Will it deliver the his own presence at the helm and the sustained reforms the President relatively greater political certainty after wants and allow his plans the elections, have helped to increase and policies to be implemented? confidence in the country. But there are still problems which need to be tackled urgently to encourage foreign investors to put their money into the Philippines. Among the more serious are crime and a critical shortage of electric power, which if not ameliorated, will perhaps be the biggest single impediment to rapid growth in the next few years, particularly on the two largest islands of Luzon and Mindanao. Perhaps the most important factor in the end will be the working of the political system. Will it deliver the sustained reforms the President wants and allow his plans and policies to be implemented? Ramos' own political party does not control the two houses of Congress. He was elected with only a quarter of the popular vote. Using his considerable powers of patronage as President, he seems for the present to have obtained a working coalition in both houses of Congress to support him. However, it is a tenuous arrangement which may not last, especially if he is seen to falter and lose public support. If the economy is not seen to be improving sufficiently over the next two years, and if public confidence in the President wanes as a result, political stability can be threatened from both the Left and the Right. The communists may not give up their armed struggle and, even if they do, in a country with acute social and economic problems, they will probably retain the capacity for fomenting civil opposition or disorder at a carefully chosen time. Similarly, the threat of a military coup from disgruntled military elements, though low now, cannot be ruled out entirely especially if the country is seen to be making no progress after a couple of years and the President's standing declines. At this juncture the prospects for 1993-94 can only be described as cautiously optimistic.

16

SOUTHEAST ASIA 1993-94

[S]

ingapore has a one-party dominant political system. The ruling People's Action Party (PAP) has been in power for the past 33 years. It has a solid record of economic and social achievement and the opposition is weak and fragmented. Paradoxically, in Singapore the electorate wants a stronger opposition but will entrust the governance of the country only to the PAP. The fact that the two Deputy Prime Ministers (DPMs) have cancer introduces, for the first time, some uncertainty about who will succeed Goh Chok Tong. But it is not likely to affect political stability, even assuming that Brigadier General Lee Hsien Loong has to opt out for health reasons. Whatever differences in views may exist over policy matters, the PAP leaders are more likely to jell rather than divide in a situation of perceived uncertainty or threat to the collective. The ill health of the two DPMs also brings home dramatically to Singaporeans the need to intensify the search for talent for ministerial positions. Singapore faces the challenge of upgrading and restructuring its economy to deal with the constraints of a small population base and growing competition from the other newly industrializing countries (NICs) and fast growing countries like Malaysia, Thailand and China. As the economy matures, growth will have to come not from expansion of the factors of production, but from more intensive use of them and from income repatriated from Singapore investments abroad. The country, therefore, has no choice but to invest abroad and strive to move towards the skills and technological levels of developed states. In line with the policy to make the economy as efficient as possible government subsidies will be kept to a minimum. The basic principle is to encourage self-supporting institutions and market-priced services. It is recognized that education, public housing (which houses over 85 per cent of Singaporeans), and health services will continue to need subsidies but these subsidies will be gradually reduced, or at least capped. As the restructuring and deregulation of health services proceed and as more schools are privatized, there are fears that large increases in costs will take place. The government, however, has assured that the needy will continue to be subsidized, and has outlined measures to cushion the impact on others. The recent slowing down of the economy also adds to the unease, as people feel that cost increases will outpace income growth. Indeed, the cost of living became a political issue in the 1991 general election. Although Singapore's inflation rate has been low (3.4 per cent in 1990 and 199lL many people feel that the cost of living is higher than that indicated by government figures. There is no clear explanation yet for this apparent paradox. The government, recognizing the problem,

Singapore

17

POLITICAL OUTLOOK

Singapore Land Area:

633 sq km

Population:

3.0 million (1990)

Capital:

Singapore

Type of Government:

Parliamentary democracy

Head of State:

President Wee Kim Wee

Prime Minister:

Goh Chok Tong

Next Election:

By August 1996

Currency Used:

Singapore dollar

US$ Exchange Rate on 30 November 1992:

US$1

S$1.63

has set up a Cost Review Committee, which includes businessmen, academics, union and grassroots leaders, MPs, and journalists to look into the matter and to examine whether the Consumer Price Index (CPI) reflects rises in costs fairly and accurately. It may be noteworthy in this context that significant numbers of people in Singapore still have relatively low incomes. In fact, 80 per cent of Singaporeans have incomes below the per capita income of US$10,582 (1990) . They are the lower middle classes with rising expectations, and a significant portion among them have low incomes. Nearly 60 per cent of the electorate in 1991 did not possess '0' level qualifications. It is thought by government leaders that the majority of the low income electorate is Chinese-speaking. Before the general election of 1991, Prime Minister Goh Chok Tong had committed himself to by-elections within 12 to 18 months ''after the new government has settled down". It is likely that the by-elections will be held before April1993. It is not known how many constituencies will be up for re-election and whether they will include both Single

18

SOUTHEAST ASIA 1993 94 Member Constituencies and Group Representation Constituencies. Byelections in many democratic states tend to witness a larger protest vote against the ruling party than general elections. If the Singapore electorate follows this pattern of voting, it is entirely possible that the 1o WJtnes · a laraer !l rote.;;.:;t vote PAP's share of total votes nd ng party cast may decline by some e Si percentage points and, dei pattern of pending upon how many ent1rely seats are contested, the party possi b 1~ that the PAP's e.; of iotal may also lose seats. votes ca.bt may dechne by some percentage However, even if the pol tts ami, depenarng upon how many ruling party suffers such reverses, it would not change the fundamentals, that is, that the electorate only wants a somewhat stronger opposition in Parliament, not an opposition government in power. Nor is it likely to lead to any change in the top government leadership. The opposition parties, whether singly or combined, will pose no real threat to PAP rule for the foreseeable future.

rn

he violence and bloodshed in May 1992 following the appointment of former Army Commander, General Suchinda Kraprayoon, as Prime Minister resulted in his ouster and the discrediting of the entire junta, primarily from Class 5 of the Chulachomklao Military Academy, which had spearheaded the coup of February 1991 and then schemed a constitution which was supposed to ensure their continued hold on the levers of power. However, the political demise of the junta does not mean the final end of military involvement in politics. This involvement has deep roots in the past and in the self-perception of the military, as an institution, as saviours of the country when, in their view, things start to go awry. With the violence of May 1992 still fresh in the minds of the people, it is virtually impossible for the military to make a political come-back over the short term. But memories can be short, and depending in particular upon how the civilian government performs and how the military's vital

Thailand

19

interests are treated, a reassertion of the military, under a new leadership, into the political ith the violence of arena after some years cannot be ruled out. May 1992 still fresh in It may be worth recalling that there was some the minds of the people popular sympathy for the military, and certhe military will be more tainly little opposition, when it removed the Chartichai government in 1992. cautious about future Does this mean that the events of 1991-92 interventions in the political will have made no difference to the traditional process and will find it cycle of coup, rewriting of the constitution, more difficult to legitimize civilian government, and coup again? They its control of Thai politics. probably have made some difference as the military will become more cautious about future interventions in the political process and will find it more difficult to legitimize its control of Thai politics. But democracy in Thailand will progress only slowly, sometimes in a zig-zag fashion, and proper civilian control over the military as in other democratic states will be possible only when the rural areas have been brought more into the middle class revolution, and equally important, when civilian politicians can demonstrate their ability to provide stable and good government. This will take time. More than 60 per cent of the people still live in the rural areas where the traditional politics of patronage and personal influence hold sway. The political party structure in Thailand is such that elections produce coalition governments, after much political horse-trading, which usually do not have any shared ideology or political principles. The present government under Chuan Leekpai has at least the saving grace of an ideological affinity among its principal component political partiesthey are the so-called "angel" or pro-democracy parties - and Chuan himself is clean. But the problem is that his coalition harbours two strong-willed and ambitious politicians, both retired generals, who want to become Prime Minister. It would be politically inexpedient for them at this juncture to be seen not co-operating with Chuan, whose Democrat Party won the largest number of seats. Yet, it is not likely to be in their nature to wait until the end of the government's four-year term. After the honeymoon period is over, they may try to exploit weaknesses in the coalition to advance their own interests. If this occurs, new coalitions may be formed or Chuan may be compelled to call another general election in a bid to get a stronger mandate. The prognosis for 1993-94 is optimistic. There could be shifting alliances, changes in government, and even a new election. However,

20

SOUTHEAST ASIA 1993-94

Thailand Land Area:

514,000 sq km

Population:

55.9 million (end 1989)

Capital:

Bangkok

TYpe of Government:

Constitutional Monarchy

Head of State:

King Bhumibol Adulyadej

Prime Minister:

Chuan Leekpai

Next Election:

Not known

Currency Used:

baht

US$ Exchange Rate on 30 November 1992:

US$1

25.47 bahts

this would be normal Thai-style politics, with little or no effect on business confidence. More serious instability will arise only if some zealot tries to strip the military of all political influence or if egregious displays of political instability and corruption over a period of time produce in the military, once again, the wish to save the country and, in the public, amnesia about past military excesses. It seems that for quite a long while yet a balance between the civilian politicians, the military and the technocrats would be n eeded for stability in the country.

21

MYANMAR

1993-94 Tin Maung Maung Than

POLITICAL OUTLOOK

m

[E

arly 1992 signalled a change in the structure of the leadership in Myanmar. The Cabinet was expanded to include two civilian technocrats, three retired military officers, and a number of generals. New ministries were formed and eleven new deputy ministers were appointed. The State Law and Order Restoration Council (SLORC) was also enlarged to include newly-appointed regional military commanders, and the Navy and Air Force chiefs were replaced by their deputies in February. All these changes were made in the name of enhancing administrative efficiency and furthering the cause of democratization in Myanmar. However, the regime's detractors and critics viewed it as further evidence of its entrenchment. The sceptics were, therefore, confounded when the SLORC subsequently declared that it would release promptly those "detained politically" but who posed no danger to the security of the state, and "meet and co-ordinate, within two months" with elected representatives on the issue of convening a constitution-drafting convention. The declaration also promised to convene, within six months after the co-ordination meeting, a national convention to "lay down the basic principles for drafting of a firm and stable Constitution".

Myanmar

'

24

Land Area:

678,576 sg km

Population:

41.55 million (estimate at September 1991)

Capital:

Yangon

Type of Government:

Military

Head of State:

Chairman of State Law and Order Restoration Council (SLORC), General Than Shwe

Next Election:

Not known

Currency Used:

kyat

US$ Exchange Rate on 30 November 1992:

US$1

6.27 kyats

MYANMAR 1993-94 This was followed by the release of U Nu, the last democraticallyelected premier who was detained for forming a parallel government, and hundreds of detainees including students and party activists. The family of the most prominent detainee, Daw Aung San Suu Kyi (the 1991 Nobel Prize winner) who has been under house arrest since July 1989, was also allowed to resume visits. In order to reinforce the SLORC's claim that the democratization process was being steadily advanced as security conditions permit, other measures were also initiated under the new leadership. Offensive operations in the Kayin State, directed mainly against the Karen National Union (KNU) rebels, were suspended in April. The promised co-ordination meeting with elected representatives from the political parties and selected independent candidates took place in the last week of June. Tertiary institutions which had remained closed for almost four years since early 1988 were reopened on 24 August after the staff underwent "re-orientation", which emphasized patriotism and methods of student control. In the same week, Myanmar acceded to the four humanitarian principles of the 1949 Geneva Convention on War. The night curfew, imposed since the coup on 18 September 1988, was lifted shortly before its fourth anniversary, followed within the month by the revoking of martial law decrees empowering military tribunals. All these events suggest that the SLORC is confidently implementing its agenda for democratization spelt out in its Declaration 1190 of July 1990, which emphasized the need to institute a "firm" constitution before any transfer of power to elected representatives could take place. As for the so-called opposition parties led by the National League for Democracy (NLD), which won a large majority of seats in the May 1990 elections, many of their candidates and activists seem to have run foul of the stringent election laws and security requirements, and remnants of their decimated leadership have acquiesced to the SLORC's terms for participation in national politics. The SLORC government has enjoyed continued support from the People's Republic of China and other regional states pursuing the policy of "constructive engagement" with Myanmar. Despite pressures from its dialogue partners from the West, ASEAN has refused to comment on human rights and democratic reforms in Myanmar as these have been considered to be "internal affairs". The concerns expressed by states with Muslim majorities over the issue of (over 200,000) displaced Muslims from the Rakhine State (known as Rohingyas), who fled across the border into Bangladesh during early 1992, have been assuaged with the conclusion of a bilateral agreement, in April 1992, between the two countries for conditional repatriation. Myanmar's bid to rejoin

25

POLITICAL OUTLOOK the Non-Aligned Movement, which it left in 1979, was successful at the September summit held in Jakarta. Although bilateral and multilateral assistance to Myanmar have been suspended and an arms embargo has been mentioned, there seems to be very little economic leverage left to the West as Myanmar has alternative sources of trade in commodities and arms. Recent developments in Myanmar's energy policy seem to be moving towards accommodation with the international oil companies and interested neighbouring states and we may yet see a major breakthrough in this direction which will substantially increase the resources of the SLORC regime. However, the economy remains the vulnerable link in the SLORC endeavours and, unless the sluggish economy with its rising inflation can be turned around quickly, economic exigences may destabilize the delicate process of instituting political reforms in he SLORC has announced that a a constitutional setting. natton-wide const1tuttonal conventJon The SLORC has anw•ll be held m January 1993, whrch nounced that a nation-wide could result in a referendum later m constitutional convention the year or 1994. will be held in January 1993, which could result in a referendum later in the year or 1994. However, it would take some time for the expanded new Cabinet of September 1992 to bring its policies to fruition, and one could not expect it to hand over power to elected representatives before such a time deemed appropriate by the SLORC. This would mean that fresh elections under a new constitution would be likely only after 1994. Meanwhile, it is unlikely that Daw Aung San Suu Kyi would be allowed to participate in the political process. Whether the SLORC's credibility will be strengthened by the current trends in its reform process to the extent that Official Development Assistance could resume, remains to be seen. The improving trend in the overall security situation is likely to continue, given the SLORC's overwhelming resources. But the present unilateral suspension of the military offensive may not last beyond 1992 in view of the several forays undertaken by the rebels, who were apparently taking advantage of the lull in fighting. The government will probably pursue a dual-track policy of stepping up military pressure on the rebels while expressing its willingness to negotiate on its own terms. A proactive stance in international relations is expected. The actual repatriation of the Rohingyas, which has stalled with their refusal to

T "

26

.J

,

_

n,.

~

'

"'

•

_

MYANMAR 1993-94 return without international guarantees, could still turn out to be a thorny problem. However, it is unlikely that the SLORC will jeopardize its bid to regain Myanmar's place in the international fora by being intransigent on the repatriation arrangements. The Myanmar Government may attempt to enhance its legitimacy by ceding to the ASEAN Treaty of Amity and Co-operation once the new constitution is in place. All in all, despite the presence of uncertainties and latent tensions in the Myanmar political scene, current trends suggest that the likelihood of the SLORC loosening its grip in the near future is extremely remote.

27

INDOCHINA

1993-94 Russell Heng Hiang Khng

POLITICAL OUTLOOK Vietnam

ietnam anxiously awaits the normalization of relations with the United States and the lifting of the American economic embargo. This eventuality holds economic benefits which will be crucial for Vietnam. More than just the influx of American investment, which may be slow in coming, there will be soft loans from institutions like the World Bank and the International Monetary Fund which have been held up by the embargo. These loans are necessary for large-scale infrastructural projects which will enable Vietnam to attract and absorb the higher level of foreign investment needed for the economy to take off. However, while the embargo is generally expected to be lifted in 1993, it is by no means certain as much will depend on the vagaries of U.S. domestic politics, in particular, the emotional issue of MIAs (American soldiers missing in action during the Vietnam war). Meanwhile, Japan and major Western countries have resumed their aid. Even if the lifting of the U.S. embargo is delayed, the year 1992 has generated a level of confidence which will carry over into the next. The inflation rate is at an all-time low. The country's currency has

1-

Vietnam

Land Area:

330,300 sq km

Population:

69 million (June 1992)

Capital:

Hanoi

Type of Government:

Communist people' s republic

Head of State:

President Le Due Anh

Prime Minister:

Vo Van Kiet

Party Secretary-General:

Do Muoi

Currency Used:

dong

US$ Exchange Rate at end October 1992:

US$1

L 30

10,805 dongs

INDOCHINA 1993-94 strengthened against the U.S. dollar. These factors have enhanced a sense of having overcome the myriad of problems, both worst of economic hardships expected in 1991 economic and po!it1cal when the hitherto massive aid and trade from the and often .nterrelated~ remain now defunct Soviet Union all but disappeared. and show signs of growing worse. However, a myriad of problems, both economic and political and often interrelated, remain and Unemployment urban drift, show signs of growing worse. Unemployment, increasing social disparity urban drift, increasing social disparity and corand corruptHl.1 among other ruption, among other things, are a worrying brew thmgs, are a >ilforrying brew for the leadership. Nevertheless, the prevailing for the leadership picture is still one of enthusiasm for reforms and energetic business activities attracting the interest of foreign investors. Vietnam enters 1993 with a new constitution adopted in April the year before. A major aim of this document, finalized after much debate, is to strengthen the foundation of law in the country, a current weakness which hampers economic and political reforms. In theory, the Vietnam Communist Party will set the general political line, but it will leave the legislative details to the elected National Assembly and abide by the laws which are enacted. The new constitution has also replaced ideological rhetoric with a more proper form of legalese. However, it is unlikely that there will be a quick overhaul of the bureaucratic system because it is in the nature of legal and political reforms, particularly in socialist countries, to be protracted in their process. The country also has a new 395-seat National Assembly elected in July 1992. Initially hailed as the country's most democratic election because it could be contested by independent candidates for the first time, the final event was a disappointment. Only two out of more than forty potential independent candidates were allowed to stand for elections, and they lost. All other candidates were either Party members or endorsed by the Party. About three-quarters of the previous Assembly have been replaced, among them some very vocal critics. This has fuelled a suspicion that the leadership does not want to encourage the same level of clamorous debate and scrutiny of legislation seen in the previous Assembly. By and large, the relatively open political climate will continue, but tempered by a constant preoccupation with the attendant threats. In the short-term and more specific in form, there are the sporadic anti-communist activities of some overseas Vietnamese organizations. A dramatic example in September 1992 saw one such emigre hijack a plane to scatter anti-government leaflets over Ho Chi Minh City. Vietnam's

31

POLITICAL OUTLOOK leaders are, however, more concerned with the broader and more amorphous challenge to the communist system, which they term "peaceful evolution". This is a coded reference to the attempts by the Western countries to promote democracy world-wide. For 1993, Vietnam also has to grapple with a growing security challenge from an external source: China. Although a summit in November 1991 formally ended their recent phase of hostile confrontation, centuries-old resentment still colours the Vietnamese perspective of their giant neighbour. While political relations have been normalized and considerable cross-border trade is done, the situation over the disputed Spratly Islands is still unresolved. Beijing passed a law in February 1992 formalizing its claims on the Spratlys. Since then, Hanoi has charged the Chinese with occupying more islands in the group and prospecting for oil on Vietnam's continental shelf. The difficult relationship is further complicated by a host of other issues: territorial disputes along their land border and the deluge of cheap smuggled Chinese goods which is undermining Vietnam's industry. While both countries clashed over the Spratlys in 1988, this is not expected to happen again because neither side will want to escalate tension. In particular, the Vietnamese can no longer confront the Chinese army without erstwhile Soviet support. Thus, Hanoi will continue to promote friendly ties with Beijing even if it feels disadvantaged in these dealings. Another tactic will be to try and garner some diplomatic support from ASEAN, which is also wary of assertive moves by China in the Spratlys, parts of which are claimed by some members of the Association. In this regard, Vietnam's accession to the ASEAN Treaty of Amity and Co-operation in July 1992 will be useful. Meanwhile, China has talked about joint development of the disputed islands.

[T]

he year ahead is one of great political uncertainty in Cambodia. Preparations by the United Nations Transitional Authority in Cambodia (UNTAC) for elections no later than May 1993 have been slowed down by the Khmer Rouge's (KR) refusal to surrender their weapons and to be quarantined according to the peace accord. This has affected the willingness to disarm among the other three factions: the Pracheachon Party (PP), or what is popularly referred to as the Hun Sen government, which has de facto control of Phnom Penh and key portions of the country; the United Front for an Independent, Neutral and Peaceful Cambodia (FUNCINPEC), which is loyal to

32

INDOCHINA 1993-94

Cambodia

Land Area:

181,040 sq km

Population:

8.0 million (1990 estimate)

Capital:

Phnom Penh

Type of Government:

The transitional authorities pending national elections are the United Nations Transitional Authority in Cambodia (UNTAC) and the Supreme National Council (SN C)

Head of State:

Prince Sihanouk is Chairman of the SNC

Next National Elections:

Early 1993

Currency Used:

riel

US$ Exchange Rate at end October 1992:

US$1

2,000 riels

Prince Sihanouk; and the Khmer People's National Liberation Front (KPNLF). The need to match the KR militarily is particularly felt by the PP, which was installed in power by the Vietnamese after the latter invaded Cambodia in 1979. The other two factions, which started out as non-communist resistance movements supported by ASEAN and the West, have always been too weak to count for much in the military equation. Under the circumstances, either one of two broad scenarios is possible. In the event that the KR cannot be pursuaded to lay down arms, the major powers and ASEAN which have brokered the peace process may agree to hold elections without the unpopular KR. The

33

POLITICAL OUTLOOK latter will be allowed to keep to its redoubts in the remote parts of Cambodia. This, however, will make it an uncertain peace as the task of watching and containing the well-armed KR troops will have to be performed by either U.N . forces or those of a newly elected Cambodian government. Should that happen, it is unlikely that the KR would have ... elections in Cambodia the means or intention to take over the are unlikely to produce country militarily, but it will remain a much-needed a considerable destabilizing factor. strong government with The other scenario is that the KR will capable technocrats. contest the elections after reaching a compromise with UNTAC on the terms for disarming. But with or without the KR, elections in Cambodia are unlikely to produce a much-needed strong government with capable technocrats. The PP probably has the best organized electoral machinery throughout the country but it is unpopular. Even if it wins a clear majority, politics in Cambodia will be marked by dissonance, and personal and ideological rifts. The PP itself is divided, and fractious politicking has long characterized the FUNCINPEC and the KPNLF. Prince Sihanouk, the best known and arguably the most popular of Cambodian leaders, will stay above the fray and provide conciliation when the bickering gets too disruptive. An effort is being made at the United Nations to strengthen his position but it is uncertain whether this will result in the forceful leadership needed in Cambodia. Foreign business interest, which has been growing despite the political uncertainty, will continue unless large-scale warfare breaks out. This is unlikely because the various factions no longer have foreign supporters willing to underwrite any military escalation. However, a certain level of inter-faction hostility may well persist in the form of localized skirmishes. This, together with the threat of inflation, breakdown of law and order, and corruption will place great stress on any fledgling government emerging from the peace process. The already serious unemployment problem will worsen as soldiers are demobilized and more people return from the refugee camps. Given such a situation, a custodial foreign presence is necessary as an underpinning for stability. That itself is contingent on the United Nations mustering the will and resources to carry on with this difficult task of peacekeeping and doing what is necessary.

34

INDOCHINA 1993-94

rn

he end of 1992 saw leadership changes with the death of President and party chief Kaysone Phomvihane in November. This, however, will not affect the country's programme of economic and political reforms. Growing foreign business interest has contributed to a sense of optimism but like the rest of Indochina, development continues to be hindered by lack of resources and burea·ucracy. Confidence in the year ahead is also strengthened by some key developments in foreign relations during 1992 which have long-term implications for the country. First, in February, a Treaty of Amity and Co-operation was signed with Thailand, making it the first such treaty Laos has signed with any foreign country. Later that year, the Thai military launched crackdowns on anti-Vientiane Laotian rebels operating from sanctuaries in Thailand . This has removed a major irritant in their relationship. From Vientiane's perspective, rebel activities from across the border were a major security problem because, even under the best of circumstances, the Lao People's Revolutionary Party (LPRP) did not have the resources to control its vast territory effectively. While racial, linguistic and cultural similarities have facilitated bilateral ties at many levels, they also fuel a Laotian wariness of too

Laos

Laos

Land Area:

236,800 sq km

Population:

4.1 million (1990)

Capital:

Vientiane

Type of Government:

One-party communist people's republic

Head of State:

President Nouhak Phoumsavan

Party Chairman:

Khamtay Siphandon

Prime Minister:

Khamtay Siphandon

Currency Used:

kip

US$ Exchange Rate on 30 November 1992:

US$1

715 kip

35

POLITICAL OUTLOOK large a Thai influence in their country. A long-term border dispute remains unsettled and, as economic ties with Thailand expand, there is a keen desire to diversify economic relationships away from the Thais. China is seen as a clear possibility, and Chinese presence has increased significantly in Laos. This is also the new strategic reality which Laos must assiduously court after years of pursuing an antiChinese foreign policy under the erstwhile influence of Vietnam and the now defunct Soviet Union. Relations with Vietnam are still closely based on the ideological affinity between the communist parties in both countries and the personal relationships of their top leaders. But Vietnam no longer has the means to impose tutelage on Laos and this has returned the latter to its traditional practice of balancing its much larger neighbours against each other. In the long-term, Laos is looking to joining ASEAN and , together with Vietnam, it acceded to the Association's Treaty of Amity and Co-operation in July 1992. The relationship with the United States is also on the mend and in August 1992, Washington upgraded diplomatic ties by appointing its first ambassador to Vientiane since the Laotian communists came to power in 1975.

36

A SEAN

1993-94 Linda Low and Toh Mun Heng

ECONOMIC OUTLOOK

rn

he global economy continued to be anaemic in 1992, with a flagging recovery in the United States and Japan slipping into a recession in the first quarter of the year. Other major industrial economies are in no better shape, but economic reforms for market-led growth are occurring speedily, from the former Soviet Union and Eastern Europe to China and Mexico. The world has also seen much economic pluralism with the loss of political and economic hegemony of the United States, leading to the emergence of a multipolar global trading system. The new paradigm in international trade looks at shifts in the composition and direction of direct foreign investment in tandem with new patterns of locations of multinational corporations (MNCs). This has been prompted by industrial restructuring, changes in technology, and supply and demand in an increasingly borderless world. There is also a decline in effectiveness of the traditional gatekeepers of international trade (General Agreement on Tariffs and Trade, GATT) and the international financial system (International Monetary Fund, IMF). Regionalism has grown apace, coexisting under a framework of globalism. Whether in response to moves in Western Europe and North America or out of its own accord, the Asia-Pacific region has also embarked on various concepts and configurations of an economic community. Fifteen economies in the Asia-Pacific Economic Co-operation (APEC) forum and twenty in the Pacific Economic Co-operation Council (PECC) currently constitute the more active Asian-Pacific groupings, apart from other efforts. Within the Association of Southeast Asian Nations (ASEAN), more innovative ideas have emerged, based on private initiative as the locomotive of growth. An APEC-like proposal for the East Asian Economic Caucus (EAEC), including the six ASEAN states, Japan, South Korea, Taiwan, Hong Kong, China and even the Indochinese states, was mooted by Malaysia. Meanwhile, the Johor-Singapore-Riau growth triangle, encompassing complementary manufacturing-cum-tourism activities, launched in 1991, gathered further momentum as the governments concerned and the private sector became more involved in its development. At the fourth ASEAN Minister's Summit Meeting in Singapore in 1992, the ASEAN Free Trade Area (AFTA) was endorsed together with the EAEC and the growth triangle as economic framework agreements.

38

ASEAN 1993-94

CHART 1 CPI of Six Major OECD Countries (1986 = 100)

CHART 2 CPI of Asian NIEs (1 986 = 100) Index

Index 160,--

- - - --

-

-

-

-

-

- -- -- - ,

160 , . - - -- - - - -- --

-

- --

-------,

150

150 140 130 )20

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1981

198 2

1983

198 4

1985

-canada

+France

*Germany

-Hong Kong

+Korea

•u.s.

*U.K.

+Japan

*Singapore

• Taiwan

[E

conomic performance in the ASEAN countries has slowed down in 1992 in line with global trends. Apart from the Philippines, which recovered from a decline in 1991 to achieve a small positive growth in 1992, all the other ASEAN economies have slowed down. As small and open economies, all the ASEAN countries have adopted more or less the same export-led growth strategy based on industrial restructuring and diversification away from their traditional sectors. These countries recognize that they have neither the size nor the capacity to isolate themselves as an inwardlooking group. ASEAN has, in fact, taken a higher international profile to project its interests. Apart from markets, capital and other factor flows, technology from external sources 1s a vital growth ingredient that ASEAN seeks to nurture.

1986

1987

1988

1989

1990

1991

SEAN rowth Strategies

39

ECONOMIC OUTLOOK

Basic Indicators in the ASEAN Economies GNP Per Capita Population (million) 1990

GNP (US$m) 1990

0.3 178.2 17.9 61.5 3.0 55.8

1932 107290 42400 43960 34600 80170

Brunei Indonesia Malaysia Philippines Singapore Thailand

Average Annual Inflation Rate

(US$) 1990

Average Annual Growth (%) 1965-90

1965-80

1980-90

9379 570 2320 730 11160 1420

na 4.5 4.0 1.3 6.5 4.4

na 35.5 4.9 11.4 5.1 6.2

na 8.4 1.6 14.9 1.7 3.4

SouRCE: World Bank, World Development Report 1992; and country sources.

Distribution of Employment by Industry in the ASEAN Economies, 1990

Brunei* Indonesia Malaysia Philippines Singapore Thailand*

Primary (%)

Secondary (%)

Manufacturing (%)

Services (%)

Total (%)

Total (million)

12.2 54.0 27.4 44.9 0.4 64.0

39.9 15.0 25.1 28.3 37.9 12.3

na 10.6 18.8 10.2 28.4 9.1

47.6 30.9 47.5 26.8 61.7 23.7

100.0 100.0 100.0 100.0 100.0 100.0

0.1 73.7 6.8 22.5 1.5 25.2

* 1989 figures. SouRCE: World Bank, World Development Report 1992; and country sources.

Distribution of Employment by Occupations in the ASEAN Economies, 1990

Brunei# Indonesia# Malaysia# Philippines Singapore@ Thailand# # 1989 figures. @ 1991 figures.

Prof & Tech

Admin & Mgr

Clerical

Sales

Services

Agr

Prod, etc

16.4 8.1 7.6 6.2 15.7 3.4

3.6 8.9 2.0 1.1 8.2 1.5

12.9 na 9.5 4.4 13.3 2.5

4.7 23.3 11.9 13.6

25.4 0.2 11.8 9.4

4.7 35.6 30.8 44.3 0.3 63.6

32.3 23.9 · 26.5 21.0 50.6 15.5

13.2* 10.0

3.6

* Comprises sales and services.

SouRcE: World Bank, World Development Report 1992 and country sources.

40

ASEAN 1993-94

CHART 3 CPI ofASEAN (1986 = 100) Index 180 170 160 150 140 130 120 110 100

,09~8o:--:-::19'::-:81----:-::19'::-:82----:-::19'::-:83----:-::19'::-:84----:-::19'::-:85----:-::19'::-:86----:-::19'::-:81:--:-::19'::-:88----:-::19'::-:89----:-::19'::-:90~1991

3

+Malaysia

*Indonesia

*Brunei

._The Philippines

•Thailand

Since the rapid decline in oil prices in 1986, Indonesia has initiated deregulation and reforms in economic policies. Between 1986 and 1989, the growth of manufactured exports was above 50 per cent per annum. It slowed down only between 1989 and 1990 to 16 per cent per annum. During the 1983-90 period, the share of manufacturing in real gross domestic product (at 1983 prices) increased from 12.7 per cent to 19.5 per cent while the share of agriculture fell from 22.8 per cent to 22.0 per cent and that of mining from 20.7 per cent to 15.3 per cent. Rapid developments, especially in the manufacturing sector, have accentuated the shortage of skilled and productive workers, supervisors and middlelevel managers. Malaysia's current transformation from a commodity to a manufacturing-based economy has imposed new quantitative and qualitative demands on its human resources. Increasingly, Malaysia is no longer competing as a labour abundant production base as it gears itself to more high technology and skilled operations. Its manufacturing sector grew at an annual average of 10.3 per cent in the last two decades, contributing to 60.4 per cent of total exports in 1990, compared to 12 per cent in 1970. The fast growing pace of Singapore has slowed noticeably as the domestic constraints of land and labour are felt, despite the import of

41

ECONOMIC OUTLOOK

CHART 4 GOP of Six Major OECO Countries (In US$ trillions)

CHART 5 GOP of Asian NIEs (In US$ billions)

250,......--------~~-----~

200

150

100

. Germany

llu.K.

CHART 6 GOP of ASEAN (In US$ billions) 100 , . . . . . . . . - - - - - - - - - - - - - - - - - - - .

-

80

-

- - - - -

-

60

-

40

20

~u....liii.,II.L..III!I~IL-¥ ~ ~::l~:ll.,!!"L-J!::I!I_""---!!LJIII!IL~J.....III.,UiU ~

42

~

~

~

m

.Malaysia

.Indonesia

lSI Brun~i

•

The Philippines

~

~

.

Thailand

. Hong Kong

. Korea

• singapore

SJ Teiwan

foreign workers and the relocation of labourintensive industries elsewhere. Thailand, on the other hand, is also consolidating its high growth rates because of infrastructural constraints and political crisis. Increasingly, Singapore, Malaysia and Thailand have become more competitive at the higher value-added end of products, while they remain complementary with Indonesia and the Philippines at the lower end. The development strategies of most of the ASEAN economies remain convergent because their export-led growth industries are being fuelled by the same sources of investment and markets. But ASEAN is aware of the factors threatening the continued success of export-led growth from both supply and demand sides. On the demand side, the openness and absorption of exports by the United States from Japan and the Asian newly industrializing economies (NIEs) are flagging. On the supply side, clearly there are more export-led

ASEAN 1993-94 producers in competition, including non-ASEAN economies such as China, Indochina, Mexico, and others.

bile intra-ASEAN trade is still low, the prospects may improve somewhat in the long term with the proposed AFTA. Singapore as the traditional entrepot, accounts for most of the intra-ASEAN trade. All the ASEAN economies have stronger external trade links with non-ASEAN countries, such as the United States, Japan and the European Community (EC). These three are also the largest

Demographic Structure and Trends in the ASEAN Economies, 1990

Population (million) Brunei Indonesia Malaysia Philippines Singapore Thailand

0.3 178.2 17.9 61 .5 3.0 55.8

Age Structure 0-14 15-64 (%) (%) 35 .7 35 .8 38 .3 47.4 21.0 35.4

Population Group 1989-2000 (%)

61.7 60.3 58 .1 50 .1 70.2 60.6

na 1.6 2.3 1.8 1.2 1.5

Crude Crude Birth Rate Death Rate (per 1000 pop) 27 26 30 29 17 22

8 9 5 7 5 7

SouRcE: World Bank, World Development Report 1992.

Labour Force Participation Rates in the ASEAN Economies (In percentages) Year Brunei Indonesia Malaysia Ph ilippines Singapore Thailand

1986 1990 1991 1989 1991 1989

Male 80.0 70 .9 85 .7 81.8 79 .8 58 .1

Female

Total

38.7 44.0 47.5 47.5 50 .5 47.5

60 .3 57.3 66 .8 64.5 64.8 52 .6

SouRCE: Country sources.

43

ECONOMIC OUTLOOK sources of investment in the ASEAN countries. While direct foreign investments from the United States and Japan still dominate, increasingly, ASEAN is receiving large flows of investment from the Asian NIEs. By 1990, the major foreign investors in three ASEAN countries, Malaysia, Indonesia and Thailand, were Taiwan, Japan, Korea, Hong Kong and Singapore, displacing the United States and Europe. Table 1

TABLE 1 Intra-Asian Investment, 1991 (US$ million) From

Thailand 1 Amt %change

Philippines2 Amt %change

Malaysia3 Amt %change

lndonesia4 Amt %change

Asia Japan

472 272

-55 -27

307 210

-57 -31

1519 423

-19 -36

3051 929

-38 -59

Asian NIEs Hong Kong South Korea Singapore Taiwan

179 52 9 15 102

-71 -86 -78 -75 -28

68 8 44 3 12

-82 -96 110 -78 -92

958 114 137 134 572

-13 128 115 13 -34

1981 278 301 346 1056

-24 -72 -58 31 71

96

-6

330

624

133

-30

1173

0.3

United States

109

23

87

47

159

130

276

80

Total

775

-44

783

-19

2020

-12

8778

0.3

To

Europe

1

Registered foreign capital of investment projects approved by the Board of Investment with promotional privileges. 2 Foreign equity investment approved by the Board of Investment. 3 Foreign equity in manufactu ring projects approved by the Malaysian Industrial Development Authority. 4 Total foreign capital in projects approved by the BKPM , exclud ing investment in oil , and financial sectors. NOTE: Figures from different countries are .not strictly comparable, given different definitions used. Asia comprises the total of Japan, Malaysia, India and the NIEs; Europe comprises the total of Germany, UK and the Netherlands. SouRcE: Merrill Lynch , Asian Economic Commentary, May 1992.

44

ASEAN 1993 94 shows that in 1991, Japan was the largest investor in Thailand, followed by Taiwan . In 1990, the largest investor had been Hong Kong. The negative growth rates in investment in Thailand reflect infrastructural constraints. In the Philippines, Japan accounted for the major part of foreign investment in 1991, followed by the United States. In Malaysia, the top investor in 1990 and 1991 was Taiwan, followed by Japan. In Indonesia , the top investor in 1991 was Japan, while Singapore displaced Hong Kong as its second largest investor. The ASEAN countries, together with China and Indochina, have become vital components of the specialization system operated by Japanese capital and, increasingly, capital from the Asian NIEs. The transition of the Japanese industrial structure, from "heavy, thick, long and big" to "light, thin, short and small" , decanting the former type of activities elsewhere, is being replicated by the NIEs. Japan's interest in ASEAN remains strong while it diversifies into the United States, Europe and other industrial countries to protect and maintain market shares, and to other developing regions such as Latin America to exploit ln. SEAN cheaper costs. with China and Indochina The structure and composihave become vital components tion of Japanese investment in ASEAN have, however, changed of the specialization system as the region no longer provides operated by Japanese capital cheap production bases and has increasingly, capital been moving up the industrial NIES. ladder. For instance, Japan's share of investment in textiles in ASEAN has dropped from 38.8 per cent to 15.0 per cent between 1976 and 1988. Its share in electrical machinery rose from 4.6 per cent to 13.7 per cent in ASEAN during the same period. Its mining interest in ASEAN is still dominant, being 82.5 per cent of total non-manufacturing direct foreign investment in 1976, and 88.0 per cent in 1988. As a comparison, the ASEAN countries absorbed more Japanese investment in total manufacturing in 1988, while the Asian NIEs' share in non-manufacturing was only slightly larger than that of ASEAN. In ASEAN, as elsewhere, MNCs have created "spider webs" that link many countries and industries. The role of information technology, telecommunications, microelectronics, and other processes may well have replaced the traditional product cycle in affecting direct foreign investment. These innovations have enabled computer-aided design and

45

ECONOMIC OUTLOOK manufacturing (CAD/CAM), computer-integrated manufacturing (CIM), flexible manufacturing systems (FMS), just-in-time (JIT) inventory systems, and others which are just as revolutionary. Speed and efficiency are further enabled by satellite and fibre optics telecommunication systems, and link-ups can be achieved in nanoseconds. The ASEAN economies have also become aware of the merging of manufacturing and services, with increasing "servicization", which will induce profound structural changes in the future. The networking concept is carried further, from suppliers of hardware and software to financial services and others as an extension of "strategic corporate family planning" practised by global MNCs. Translated into operational terms, location at source is crucial to ensure "closeness to market", or "time to market". Thus, it may not be enough just for MNCs to be global companies. ASEAN provides MNCs with regional outposts to serve their regional and global expansion. By providing complementary production bases and incorporating emerging technological trends in their growth strategies, ASEAN can compete effectively with other developing areas such as China, Indochina and Latin America for the same types of direct foreign investment. China is currently the big draw in the Asian region, spawning economic zones like the Pan Yellow Sea (Huang Hai) Economic Zone covering the west coast of South Korea, Shantung and Liaotung in China, and Kyushu and Yamaguchi in Japan; the Taiwan-Fujian Economic Zone covering the areas on both sides of the Formosa Strait extending to Shanghai in China; the Thmen Jiang Economic Zone covering the cities of Vladivostok and Yenchi in Chilin near the mouth of the Tumen Jiang River; and the Pan Japan Sea Economic Zone surrounding the outer rim of the Tumen Jiang Economic Zone. But China's intrinsic draw is its large domestic market and relatively cheaper costs which even some ASEAN countries might want to exploit. Links with China have, in recent years, been strengthened as Overseas Chinese have become drawn into China's development. There are an estimated 21 million ethnic Chinese in five ASEAN countries - 7.2 million in Indonesia, 5.8 million in Thailand, 5.2 million in Malaysia, 2.0 million in Singapore and 0.8 million in the Philippines. As prodigious savers, these Chinese have deployed their accumulated capital through a distinctive network of social and business organizations based on personal acquaintance, trust and obligation. Thus, the global network through which money, goods, services, people, ideas and other intangibles flow from one country to another or one firm to another, has been made possible by kith and kin relationships. This community-based linkage is now being extended into China and its efforts at industrial development.

46

ASEAN 1993- 94

PROSPECTS IN SOUTH CHINA AND HONG KONG FOR ASEAN

C

hina's open-door policy, begun in 1979, took the form of Special Economic Zones (SEZ) and Economic and Technology Development Zones (ETDZ). The latter provide tax exemptions and deductions for industries particularly certified as "technology-advanced, export-oriented or infrastructureenhancing" but not for service industries. Since China's crackdown against pro-democracy demonstrations in Tiananmen Square in 1989 and its subsequent isolation, China has plugged back into the international community. In 1992, China's State Planning Commission approved the setting up of ten economic zones, each comprising one or more provinces or cities and placed under the central government. The individual economic zones allow regional conditions to be taken into account and enable co-operation and co-ordination among authorities, although no unitary administration would be set up in each zone. With such liberal economic reforms, the Chinese economy is on a fast growth track. Guangdong, the leading province in China, is touted as a possible fifth dragon

in Asia. Barring extreme outcomes in the power struggle among the "second echelon" leaders attempting to become the "cross century cadres" leading China into the twenty-first century, or the internal rivalry between GuangdongShenzhen and Shanghai-Pudong, growth in China will continue. Rather than fear competition from China, the ASEAN countries could consolidate and forge new links with its economic zones. Investment, technology, expertise and proven development strategies are what China is looking for and this is what the ASEAN countries can offer. Overseas Chinese ties are highly valued in China, and the ASEAN countries have an advantage here. Nevertheless, the sensitivity of having both China and Taiwan as partners in development should be noted as China is still intransigent in matters concerning Taiwan. The pivotal role of Hong Kong in the Pearl River Delta area should also not be overlooked under China's "one country, two systems" formula. Singapore, for instance, is building strong links with Hong Kong.

47

ECONOMIC OUTLOOK number of emerging trends can be identified for the ASEAN region in the 1993-94 period. These include the concept of open regionalism, AFTA and NAFTA, other regional responses to economic co-operation, the technological and human resource alliance, and human resource movement in the region.

Open Regionalism

s all the ASEAN countries are small open economies dependent on trade and direct foreign investment, open regionalism or global regionalism would be the most appropriate approach for ASEAN. The concept of open regionalism in the Asia-Pacific is radically different from the discriminatory form adopted by the EC. The essential features of open regionalism include a commitment to non-discrimination in trade, co-operation in diplomacy to support the multilateral trading system, and co-operation in the provision of international public goods among neighbouring countries. Examples of such public goods include environmental protection and energy security, matters requiring collective action, and which are the spillovers of industrialization. Although ASEAN is charting new directions in economic co-operation, whether in growth triangles or through the AFTA, these are not retaliatory or inward-looking. The new paradigms in international trade and direct foreign investment are causing a greater and more intense degree of global interdependence. The ASEAN economies have displayed greater sensitivity to reduce the vulnerability rather than have head-on competition with other trade and economic groupings.

rn

he lethargy in ASEAN economic co-operation in the 1960s and 1970s has been attributed to the institutional structure and the inward-looking industrial projects crafted by bureaucrats rather than by market forces. Even the ASEAN Preferential Trading Arrangement (PTA) has been fogged with cosmetic "padding" of items

48

ASEAN 1993-94

PROSPECTS IN VIETNAM AND CAMBODIA FOR ASEAN

ike China, the Indochinese states of Cambodia, Laos and Vietnam are adopting economic reforms to turn their socialist economies into market economies. They are sending clear and positive signals for investment and expertise from the ASEAN countries. In a vision of an expanded ASEAN as well the proposed EAEC, Malaysia has always included the possibility of the Indochinese states as members. Owing to proximity in spatial and cultural terms,

L

the Indochinese states are currently closer to Thailand, as seen in the unofficial emergence of the "baht area", based on commercial motives. Singapore has reviewed its foreign relations policy with respect to Vietnam, and investment and trade are now officially approved and strongly encouraged. The way into the Indochinese states is now unhampered and the private sector has been quick to follow up.

as the philosophy appears to have been based on co-operation to exclude competition rather than to enhance competition. While tangible results may be lacking, the intangible human web of linkages and communication networking should not be underestimated. Over the years, the ASEAN spirit and solidarity have evolved to produce sufficient trust and goodwill among the politicians, bureaucrats and businessmen of the member countries. This environment and ambience have become important and meaningful for more tangible efforts in economic co-operation. The renewed interest in AFTA stems from external pressure for ASEAN to maintain market shares in the face of other trade blocs. By 1992, ASEAN had achieved a large domestic market of 330 million people with a combined gross national product (GNP) of he renewed interest in AFTA US$300 billion, or US$1,100 per capita. The commore ASEAN economies have evolved stems from external pressure for plementary industrial bases. Singapore and ASEAN to maintain market shares Thailand, for instance, have specialized in in the face of other trade blocs. different niches and products and not merely based on low-cost labour.

T

49

ECONOMIC OUTLOOK

TABLE 2 Industries Affected by AFTA*

Problem Areas

Indonesia

Areas of Probable Comparative Advantage

Wood/rattan furniture Chemicals Plastics Cement

Malaysia

Cement Textiles Gems/jewellery

Fertilizer Pulp Wood products Rubber products

Philippines

Cement Textiles Vegetable oil Rubber products Wood/rattan

Fertilizer Pulp

Thailand

Pulp Plastic resins Vegetable oil Glass, mirror Electrical Rubber Leather

Textiles Gems/jewellery Plastics Cement Chemical products Ceramics

* Singapore and Brunei are free-trading nations, and their industries would not suffer from withdrawal of tariff protection. SouRCE: Crosby Research, Quarterly Economic Review, No.1 (1992); and D. Sawamiphakdi et al., "AFTA: The Case of Thailand" (Paper presented at a conference on "Trade, Development and Regional Groupings in East and South East Asia" , organized by the International Centre for the Study of East Asian Development [ICSEAD], Kitakyushu City, 30-31 July 1992).

50

ASEAN 1993-94 All the ASEAN economies have vastly improved their competitiveness through deregulation, privatization, and reductions in import tariffs. For instance, Indonesia has deregulated many sectors of its economy consistently since the early 1980s, and the environment for foreign investment has also been liberalized. The Common Effective Preferential Tariff (CEPT) is an added incentive to harmonize internal tariffs for selected ASEAN products. The list of goods under fifteen product categories due for deep tariff cuts in 1993 include cement, fertilizer, textiles, pulp, jewellery and gems, electronics, plastics, vegetable oils, rubber products, copper cathodes, pharmaceuticals, leather products, wooden and rattan furniture, and ceramic and glass products. The possible winners and losers with AFTA are projected in Table 2. While AFTA is to come into existence over the next fifteen years, possible obstacles in the form of the "six minus X" formula, where member countries are given more time to reduce tariffs on "sensitive products", or allowed to suspend concessions if they perceive "serious injury" to their domestic industries, remain. More worrying is the fact that the economic impact of AFTA has been estimated to be minimal. In earlier studies using the elasticity approach, the effects of economic integration on trade creation were found to be small. More recent econometric studies, using a multi-country ASEAN Link model, come to the same conclusion.

TABLE 3 Increase in Exports (1990 as base year) 80% 100% 50% as % of Total Export

50% US$mil

80% US$mil

100% US$mil

Indonesia

411

658

822

1.5

2.3

2.9

Malaysia

919

1149

2.0

3.2

4.0

Philippines

574 110

176

220

1.4

2.3

2.8

Singapore

554

887

1108

1.0

1.6

2.0

Thailand

380

608

761

1.8

2.9

3.6

2030

3248

4060

1.4

2.3

2.9

Tariff Reduction Increase

ASEAN

SouRCE: Toh Mun Heng and Linda Low, " Is the ASEAN Free Trade Area a Second Best Option? " (Mimeographed , National University of Singapore, August 1992).

51

ECONOMIC OUTLOOK Table 3 demonstrates that complete trade liberalization would result in total intra-ASEAN export increasing by about 3 per cent of ASEAN's total exports. If tariffs were to be reduced by 100 per cent for all traded items among the ASEAN countries, then income increase would range from 5.5 per cent for Singapore to 1.8 per cent for the Philippines, as shown in Table 4. ASEAN gross domestic product (GDP) would increase by 3.1 per cent (with 1990 as the reference year).

TABLE 4 Tariff Reduction and Income Generated (1990 as base year) Tariff Reduction · ·. Income Generated Indonesia Malaysia Philippines Singapore Thailand A SEAN

NAFTA

52

50%

80%

Income US$r11il

%of Base Income

Income US$mil

1258 1087 397

1.2 2.6 0.9

2013 1739 635 1514 1711

80% % of Base Income

1.9 4.1 1.4 4.4

100%

100%

Income US$ mil

%of Base Income

2517 2174 793 1892 2139 9515

2.3 5.1 1.8 5.5 2.7 3.1

ith the NAFTA (North Atlantic Free Trade Area) proposal, the United States appears to be departing from multilateral principles on which it had based its post-war trade policy. The political and foreign policy dimensions of multinational trade have taken on greater prominence with the increased use of voluntary restraints (VERs), intellectual property rights issues, and other retaliatory actions. A political economy approach is thus important to appreciate trade blocs like NAFTA. While the political stability of Mexico is crucial to the United States, both the latter and Canada are wary of the possible

flood of Mexican goods in their economies. This is especially so if NAFTA induces more investment in Mexico to capture the North American markets. In this respect, some ASEAN countries, such as Malaysia and Thailand, are concerned with investment diversion into Mexico.

TRADE AND INVESTMENT DIVERSION WITH NAFTA

P

ossible trade and investment diversion as a result of NAFTA may be discerned from the current pattern of exports and investments by the North American countries and Japan in ASEAN. The table below shows the export and investment dependency of ASEAN on the United States, Canada and Japan. Between 1989 and 1990, the ratio of various. ASEAN countries' exports to the United States was the highest among the three export markets, ranging from 36.5 per cent for the Philippines to 15.8 per cent for Indonesia, and ASEAN exports to the United States was 21.6 per cent of total ASEAN exports. If as a result of NAFTA, the United States were to import less from ASEAN and more from its NAFTA partners, the Philippines would be the most severely affected.

In terms of investment diversion, based on the 1991 investment pattern, Thailand would be most dependent on direct foreign investment from Japan (35.1 per cent) compared to Indonesia (10.6 per cent). Thus, any investment diversion after NAFTA would affect Thailand most if Japanese direct foreign investment were to focus more in the NAFTA countries. Traditionally, both the United States and Japan have been major investors in ASEAN. But the Asian NIEs, that is, Singapore, Hong Kong, Taiwan and South Korea, are also increasing their investment in the other ASEAN countries. However, it is also possible that some of their investment may be diverted to the NAFTA countries.

Export and Investment Dependency of ASEAN Countries (In percentage)

Indonesia Malaysia Philippines Singapore Thailand ASEAN

Ratio of Exports to U.S. Canada Japan

Investment from U.S. Japan

15.8 18.7 36.5 23.3 21.8 21.6

3.1 7.9 11.1 39.4 14.1 8.8

0.5 0.7 1.5 0.9 1.5 0.9

42.2 16.0 19.7 8.6 17.0 18.4

10.6 20.9 26.8 29.0 35.1 16.4

53

ECONOMIC OUTLOOK Other Regional Responses

ompared with the results of trade liberalization, intra-ASEAN trade may grow more speedily through policies promoting economic transformation. Other alternatives to AFTA in terms of achieving the same if not better and faster results with greater political and bureacratic expediency, should not be overlooked or ignored. Trade liberalization via tariff cuts alone will not be sufficient. The ideal is the concurrent pursuit of AFTA together with effective macro-economic policies to provide better overall economic performance. More easily achievable areas include intensified deregulation and privatization, growth triangles, subregional co-operation. and facilitating private sector initiatives through investment guarantee agreements. Promoting investment by indigenous ASEAN firms and MNCs would enhance economic integration. The relocation of industries from Singapore to Malaysia has not lost its momentum and a second wave of smaller companies to support bigger investors is taking place. Batam is currently also experiencing investment inflows similar to the first wave to Malaysia which occurred between 1988 and 1991.

Technological and 1-iurnan Resource Alliances

ll the ASEAN economies have recognized the merits of a growth strategy which favours active government intervention in human resource development. Apart from traditional market failures induced by market-distorting policies such as minimum wages, import tariffs, ethnic quotas for jobs and inefficient capital markets for educational loans, there are newer ones confronting social absorption capacity. These include institutional and social factors affecting the public and private resource allocation mechanisms to match technological learning capacity and utilization. The ASEAN countries are beginning to make the connection between technology and human resource development. Singapore has achieved relative success in technological and human resource development through alliances with MNCs and foreign governments through its many co-sponsored training centres and institutes.

[B]

eflecting the pace of industrial restructuring and growth in the ASEAN region is the increase in labour mobility. The net importers of labour in ASEAN are Brunei and Singapore. In 1990 Brunei had almost 39,000 registered foreign workers in the private sector, comprising about 73.0 per cent of the private sector work-force. About 49.0 per cent of them were in the construction sector. The policy

54

dilemma in Singapore is between attaining high rates of growth and the cost of a higher dependence on foreign workers. The estimated number of foreign workers who were progressively allowed into the service sector, in addition to the construction and manufacturing sectors, was between 200,000 and 250,000, or some 12-15 per cent of the total labour force in 1991. Indonesia has human resource movements within and out of the country to contend with. Out-migration from Java has increased from 3.5 million in 1980 to 4.9 million in 1990, of which 3.4 million went to Sumatra. Apart from the Middle East, Malaysia has increasingly become a large importer of Indonesian labour. Estimates vary widely, from 100,000 to 300,000 in Peninsular Malaysia, and 100,000 to 150,000 in East Malaysia, principally in Sabah, although the total official figure is only 59,000. If the estimated figures are correct, Malaysia would have about half a million Indonesian workers, making the Middle East outlet almost insignificant. Malaysia is both an exporter and importer of foreign labour. Labour movements into Malaysia are due to the acute shortages of plantation workers and those required in the construction and manufacturing sectors. Malaysia was estimated to have 1.2 million foreign workers, or 17.5 per cent of its labour supply in 1990. About 70 per cent were in the construction sector, with another 30 per cent in agriculture and forestry. The majority of these foreign workers are illegal. In 1992, the Malaysian Government implemented compulsory registration and work permits, and granted foreign workers protection and benefits equal to that for Malaysian workers . Like Singapore, Malaysia introduced an annual foreign worker levy, but unlike Singapore, this is on a graduated basis biased against skilled and professional workers. The foreign worker levy in Singapore discriminates against the unskilled. The Philippines had an unemployment rate of 11.7 per cent, and under-employment of 33.3 per cent in 1991, reflecting highly inadequate employment opportunities. According to Social Weather Stations, a polling organization in Manila, there were 2.5 million Filipinos, or 8 per cent of the labour force, who were actively seeking employment abroad in 1992. Remittances from Filipinos were estimated to be about 14 per cent of commodity exports between 1980 and 1989. In the latter year, the amount remitted was US$973 million. This is still an underestimate as many Filipino contract workers abroad remit their earnings through couriers and other delivery services, with only a minority using normal banking channels. A more realistic figure for land-based Filipinos could be as high as US$2,750 million, or three times the unofficial figure, and this excludes the remittances of Filipino seamen.

55

ECONOMIC OUTLOOK In comparison, Thailand is not as outward-oriented in terms of labour movement, although about 60,000 Thai workers were in the Middle East in mid-1982. About two-thirds of Thai overseas workers are skilled, mainly in building and construction. There is now a diversification away from the Middle East to ASEAN. The number of Thai workers in Brunei in 1988 doubled to overtake the number in Singapore. Japan also appears to be an emerging market for Thai labour. However, the Thai economy seems to be on the verge of casting off the shackles of underdevelopment as its GDP has grown at 9.8 per cent per annum between 1986 and 1990. The Thai industrial sector is likely to be able to absorb surplus labour over the next few years, turning Thailand from a net exporter of labour to a net importer. Human resource movements are natural responses to market forces but, unfortunately, it has also spawned an undesirable illegal industry where unscrupulous employment agents and employers have exploited foreign labour. As policies for the improvement of human capital become more commonplace, there will be numerous opportunities for the education and training sectors in ASEAN. These will include standardization of curricula, manpower training and skills enhancement programmes. The potential human resource development opportunities for both the private and public sectors in the region are therefore significant.

[T]

he forecasts for the ASEAN countries for 1993-94 are based on econometric country models. The projections for the rest of 1992 are as given although many ASEAN countries have at least the results of the first quarter if not the first half year. Besides growth in real GDP and the consumer price index (CPI), this outlook also provides projections of the components of GDP, as well as sectoral forecasts and shares. Finally, growth projections for ASEAN as a whole, weighted by their trade shares, are also provided. Table 5 shows the forecasts by components (consumption, government expenditure, investment, and n general, the ASEAN economies exports and imports) of GDP for Indonesia, Malaysia, the Philippines, Singapore and Thailand (ASEAN5). will have slower growth in 1992, Such data for Brunei are not available. with some improvement by In general, the ASEAN economies will have 1993 and 1994. slower growth in 1992, with some improvement by 1993 and 1994. For Indonesia, the improvement in

I

56

ASEAN 1993-94

TABLE 5 Forecasts of Real Growth Rates of GOP and Major Components in ASEAN (In 1985 prices)

19901 19911 1992 1993 1994 Indonesia

GOP Consumption Government lnvestment2 Exports3 lmports3 Inflation

Singapore

7.0 6.4 4.1 3.8 9.7 8.6 12.0 10.5 6.7 6.1 7.2 6.6 7.8 9.2

6.6 4.0 8.7 10.4 6.4 6.8 8.3

6.9 3.8 7.8 9.1 5.8 6.2 7.2

7.1 4.5 9.0 10.5 6.9 7.3 6.5

GOP Consumption Government lnvestment2 Exports3 lmports3 Inflation

8.3 6.6 11.3 15.0 12.8 15.5 3.4

6.7 5.2 6.0 6.1 4.0 3.2 3.7 3.9 8.1 6.2 7.1 7.1 13.9 10.1 11 .2 10.8 9.8 7.4 8.4 8.3 9.0 6.8 7.8 7.8 3.4 2.5 2.3 2.2

9.4 8.8 10.5 9.7 5.9 5.7 19.8 17.0 15.4 13.7 19.6 16.9 3.5 4.4

7.8 8.5 5.2 13.9 11.7 13.9 4.7

8.1 8.8 5.5 13.7 11.7 13.7 4.3

7.9 9.0 6.0 12.9 11.4 12.9 4.0

Thailand GOP Consumption Government lnvestment2 Exports3 lmports3 Inflation

9.8 11 .0 3.8 28.2 11 .7 19.0 6.5

7.7 7.3 7.9 8.3 8.5 8.0 8.6 9.0 3.1 3.1 3.5 3.8 18.9 16.2 16.2 15.8 9.0 8.4 9.0 9.4 13.7 12.3 12.8 12.8 5.8 4.3 4.4 4.2

Malaysia

GOP Consumption Government lnvestment2 Exports3 lmports3 Inflation

19901 19911 1992 1993 1994

Philippines

GOP Consumption Government lnvestment2 Exports3 lmports3 Inflation

3.2 0.0 6.2 0.0 4.0 0.0 10.1 0.0 -0.3 0.0 10.3 0.0 14.8 17.8

2.6 4.4 4.8 4.9 8.2 8.6 3.2 5.5 5.9 7.7 12.4 12.6 -0 .3 -0.5 -0.6 7.9 12.7 12.8 9.8 8.0 7.0

Actual. 2 Gross domestic capital formation. 3 Merchandise goods and services. 1

57

ECONOMIC OUTLOOK

GROWTH AND ENVIRONMENT

A

s all the ASEAN economies, with the exception of Singapore, are resource abundant, they are naturally concerned with the current issues and controversies surrounding growth and possible damage to the environment. As forests are exploited for timber products, the governments are conscious and sensitive to the priorities of reafforestation, protection of wild-life, and managing water and other natural resources. Similarly, MNCs and industrial producers are now expected to play their role as responsible corporate citizens by installing appropriate technology and devices to cut down industrial pollution. Recent incidents of forest fires in some ASEAN countries have required multilateral resources from governments, private sector groups and international agencies to fight them. While these may constitute short-term costs for some corporations, the long-term gains in physical terms and goodwill should be recognized. If sensibly and consistently imple-

mented, all environmentally friendly cooperative efforts by the private sector, in conjunction with the governments, would not require drastic legislation which would increase direct costs and the costs of enforcement. The ASEAN countries are modernizing and forward-looking economies which have compelling reasons to contribute to environmental protection by harnessing the technology, expertise and resources of many MNCs located here. A necessary step is the clarification of rights of ownership, and enforcement of such rights to improve environmental outcomes. In Thailand, for instance, the recent assignment of ownership titles and tenurial rights to land have made it more profitable for farmers to invest in soil conservation and land improvement, thus reducing soil erosion. Strengthening individual and communal rights would help to prevent overuse and abuse of natural resources which affect the livelihoods of people living in these developing areas.

real GDP will not occur until 1994 while for Malaysia, there will be a slight dip in 1994. Inflationary pressures will, however, ease from 1992 onward. With growth of imports higher than that of exports and current account deficits being experienced in most of the ASEAN countries except Singapore, further difficulties in the current account and balance of payments are implied. Investment growth is assumed to be strong in all the ASEAN economies during the forecast period. Tables 6 and 7 show the forecasts of growth rates of major sectors, and the projections of their sectoral shares. In all the ASEAN countries

58

ASEAN 1993-94

TABLE 6 Forecasts of Real GOP Growth by Sectors in ASEAN

19901 Brunei2

Real GOP Agriculture Industry Services

2.9 -4.1 -2.3 10.8

3.0 -4.6 -2.5 10.4

3.0 -5.0 -2.6 9.7

3.0 - 5.2 -2.7 8.8

3.0 -5.5 -2.8 8.1

7.0 4.6 9.0 7.9

6.4 4.6 8.6 7.7

6.6 4.5 8.2 7.4

6.9 4.8 8.5 7.6

7.1 5.1 8.6 7.8

9.4 4.1 15.4 8.8

8.8 4.0 13.8 8.3

7.8 3.7 11.7 7.4

8.1 4.0 11.7 7.7

7.9 4.1 11.3 7.6

3.2 2.0 2.4 3.3

0.0 -0.1 -0.1 -0.1

2.6 1.9 3.3 2.6

4.4 3.2 5.5 4.4

4.8 3.6 5.9 4.8

8.3 -8.0 9.2 9.7

6.7 -1.3 7.7 6.4

5.2 -1.1 5.9 5.0

6.0 -1 .3 6.5 5.6

6. 1 -1.5 6.9 5.9

9.8 -3.6 15.8 11.1

7.7 -3.2 11.7 8.6

7.3 -3.4 10.7 8.1

7.9 -4.1 11.2 8.7

8.3 -4.8 11.5 9.1

Indonesia

Real GOP Agriculture & mining Industry Services Malaysia

Real GOP Agriculture & mining Industry Services Philippines

Real GOP Agriculture & mining Industry Services Singapore

Real GOP Agriculture & mining Industry Services Thailand

Real GOP Agriculture & mining Industry Services 1

2

Actual. In Brunei, industry includes mining as well as manufacturing, utilities and construction.

59

ECONOMIC OUTLOOK

TABLE 7 Forecasts of Sectoral Shares in ASEAN 19901

1991 1

1992

1993

1994

100.0 1.1 56.4 42.5

100.0 1.1 53.4 45.5

100.0 1.0 50.5 48.5

100.0 0.9 47.8 51.3

100.0 0.8 45.2 54.0

100.0 35.4 25 .0 39.6

100.0 34.6 25.4 40.0

100.0 33.9 25 .8 40.3

100.0 33.3 26.2 40.5

100.0 32.6 26.6 40.8

100.0 29.2 31.9 38.9

100.0 27.9 33.4 38.7

100.0 26.8 34.6 38.6

100.0 25.8 35.7 38.5

100.0 24.9 36.8 38.3

100.0 28.4 31.5 40.1

100.0 28.4 31 .5 40.1

100.0 28.2 31.7 40.1

100.0 27.9 32.1 40.1

100.0 27.5 32.4 40.0

100.0 0.4 34.2 65.3

100.0 0.2 34.2 65.1

100.0 0.0 35.1 64.9

100.0 0.0 35.2 64.7

100.0 0.0 35.5 64.5

100.0 16.4 33.4 50.2

100.0 14.7 34.6 50.7

100.0 13.3 35.7 51.0

100.0 11.8 36.8 51.4

100.0 10.4 37.9 51.7

Brunei 2

Real GDP Agriculture Industry Services Indonesia

Real GDP Agriculture & mining Industry Services Malaysia

Real GDP Agriculture & mining Industry Services Philippines

Real GDP Agriculture & mining Industry Services Singapore

Real GDP Agriculture & mining Industry Services Thailand

Real GDP Agriculture & mining Industry Services 1 2

60

Actual. In Brunei, industry includes mining as well as manufacturing, utilities and construction .

ASEAN 1993-94

TABLE 8 Projections of Real GOP Growth for ASEAN , 1992-94 19901

19911

1992

1993

1994

Indonesia

7.0

6.4

6.6

6.9

7.1

Malaysia

9.4

8.8

7.8

8.1

7.9

Philippines

3.2

0.0

2.6

4.4

4.8

Singapore

8.3

6.7

5.2

6.0

6.1

Thailand

9.8

7.7

7.3

7.9

8.3

ASEAN5 unweighted

7.5

6.0

5.7

6.6

6.8

ASEAN5 weighted

8.2

6.9

6.0

6.7

6.9

1

Actual .

except Brunei, the strongest sectoral growth is registered for industry, comprising utilities, construction and manufacturing. Table 8 summarizes the GDP of the individual ASEAN countries and th e unweighted and weighted growth rates for the five ASEAN countries. The weights are based on the average export trade shares between 1987 and 1989. Brunei is excluded because of lack of such export data. For 1992, the weighted growth rate for the five ASEAN economies is 6.0 per cent, increasing to 6.7 per cent and 6.9 per cent in the next two years. While the weighted ASEAN growth rates have been larger than the unweighted growth rates since 1990, the gap between the two seems to be closing from 1992, implying that export shares, in total ASEAN GDP, of fast-growing countries like Malaysia and Thailand are increasing. Singapore no longer dominates as it used to.

61

MYANMAR

1993-94 Mya Than

ECONOMIC OUTLOOK

rn

he Myanmar economy shrank in the three years prior to introducing an "open door" policy in 1988-89. Inefficiency in national economic management and an adherence to inward-looking policies were the main reasons for this state of affairs. However, the introduction of trade liberalization measures, liberal foreign investment laws, and deregulation of private sector activities, together with the formalization of border trade, have had positive effects on the economy. In the short period between 1988 and 1990, Myanmar's gross domestic product (GDP) swung from -11.4 per cent to 3.7 per cent. Nevertheless, these initial achievements were dampened somewhat in 1990-91 as growth of GDP dipped to 2.7 per cent, accompanied by a high inflation rate resulting from incomplete reforms. The economy slowed further in 1991-92, as GDP grew by only 1.3 per cent, although the target hoped for was 4.9 per cent. This was attributed to problems in implementing plans in the agriculture, mining, industry and service sectors. Despite the shift towards a market-oriented economy, state-owned industries still play an important role in the industrial sector. Some of

INFLATION IN MYANMAR

T

he official inflati~n indicator increased from 17 per cent m 1988 to 23 per cent in 1990, and 35 per cent in 1991. However, the informal rate is at least twice higher. Although this is a trend seen in all liberalizing planned economies, it would appear, as the Asian Development Bank (ADB) has asserted, that market-oriented reform is not the reason for the high inflation rate in Myanmar. The huge budget deficits can be cited as the main cause of high inflation. The increase in the amount of currency in circulation has resulted in a rise in the consumer price index (CPI), as shown in Chart 1. The figure also shows that the parallel foreign exchange rate and the price

64

of rice are positively correlated to the increase in CPl. To this must be added the uncertainties associated with the course of the government's economic reforms, which have led to speculation and lack of confidence in the local currency. However, the government perceives inflation as a result of "destructive elements" (meaning private hoarders of commodities) who wish to destabilize commodity prices, which may be partly true. Its measures are therefore aimed at curbing inflation by punishing the hoarders rather than addressing the structural and policy framework underlying inflation.

MYANMAR 1993 94

CHART 1 Parallel Exchange Rates, CPI, Rice Price and Currency in Circulation in Myanmar

Index (1986=100)

500 ~----------------------------------------------------------~

400

300

200

0

1 2 3 4 56 7 8 9 10 11121 2 3 4 5 6 7 8 91011121 2 3 4 5 6 7 8 9 1011121 2 3 4 56 7 8 91011121 2

88

I

89

-..-- Exchange rates +

I

Currency

90

*

I

91

19 2

C P I -a- Rice prices

these industries have formed joint ventures with foreign firms. However, low levels of capacity utilization (30 per cent in recent years) among the State Economic Enterprises (SEEs) have resulted in a decline in industrial sector GDP by 0.4 per cent in 1991-92, compared to a growth of 0.1 per cent in the previous year. Although exports and imports increased by 4.2 per cent and 3.0 per cent respectively in 1991 - 92 , the trade deficit worsened. Overall trad e increases were due to the formalization of border trade which accounted for about 40 per cent of total official trade. Tax reforms were instituted to increase revenues but this did not occur. In fact, the government deficit increased by about 200 per cent over that of 1990-91 , and this has been financed by increasing the money supply.

65

ECONOMIC OUTLOOK Trade an I ve tm nt

ecent restrictions on border trade, such as a ban on exports including rice, teak, petroleum, fish and fishery products; imposition of export and import licensing; and the closure of some border points with Thailand, have acted to dampen trade. While exports and imports have grown, the trade deficit widened by about 1.4 per cent. The main trading partners continue to be China, Singapore, Japan and the European Community (EC) . Recent reports indicate that Singapore became the largest trading partner in 1990. Political uncertainties and the continued suspension of aid from the industrialized countries served to choke off investment inflows into Myanmar in 1992. The number of approved foreign direct investment (FDI) projects as well as the value as at February 1992 remained almost the same as in 1991. Foreign investors have been bypassing Myanmar as better investment opportunities have become apparent in the neighbouring countries, especially Vietnam.

TABLE 1 GOP, CPI , Exports and Imports Growth Rate, Current Account Balance, and Foreign Exchange Rate Forecast 1992- 94 (In percentages) 1991/92 (Actual)

Real GOP

1.3

2.0

2.5

32.3

50.0

74.0

Exports

4.2

0.5

10.0

Imports

3.0

-0 .1

13.0

-407.5

-250.0

-100.0

83.7 6.2

100.0 6.4

120.0 7.0

CPI

Current Account Balance (US$ million) Exchange Rate (K/US$) Parallel Official

66

1992/93 1993/94 (Forecast)

MYANMAR 1993 94

rn

he financial year 1992-93 was pronounced as the "year of the conomic Forecast economy" by the State Law and Order Restoration Council 9 3 94 (SLORC). The objective of the slogan is to kick-start the economy by boosting the agricultural sector after two years of economic slowdown. Three priorities are being established: expansion of agricultural exports; diversification of production by introducing horticultural crops; and encouraging more value-added production in the fisheries and livestock sector. These priorities are not new as they had already been espoused in the economic plans of the defunct Burma Socialist Programme Party. The "year of the economy" is the first of the current Four.Year Plan drawn up by the SLORC government. Although the regime has publicly dissociated itself from the socialist economic system and introduced a market-oriented economy, the growth plan for 1992-93 is based on the former centrally planned system. It is mainly concerned with quantitative inputs and outputs of the various sectors rather than with strategic planning as in market economies. Given the average weather and price incentives for cash crops, agriculture may perform as planned. Industry, however, faces the same constraints - shortage of raw materials, power blackouts and foreign exchange restrictions- as in 1991-92, and it is unlikely that targets will be achieved. However, from an efficiency perspective, private sector industries are likely to outperform the state sector. The export sector target of 28 per cent growth in 1992-93 appears to be grossly overestimated, given the frequent changes in trade policy, negligible foreign investment, overvalued exchange rate, and the complex foreign exchange regulations that traders have to follow. Despite ongoing attempts to reduce the budget deficit, it will continue to be as large as in the past few years. This is partly because defence spending, excluding other security-related expenditures under different budget titles, is already estimated at 35 per cent of the total budget. While there are measures afoot to cut the money supply, the huge budget deficit and continued suspension of foreign aid (even the UNDP has not approved its assistance allotment of US$93 million ear-term growth in exports will be marginal for the next five years) will make because of supply constraints, frequent changes these efforts ineffective. Hence, high in trade policy and the overvalued exchange rate. inflation will continue unabated. Foreign investment inflows are unlikely to increase Near-term growth in exports in the wake of political uncertainty, poor domestic will be marginal because of supply business conditions, and the better investment climate constraints, frequent changes in and opportunities in the neighbouring countries. trade policy and the overvalued exchange rate. Foreign investment

N

67

ECONOMIC OUTLOOK inflows are unlikely to increase in the wake of political uncertainty, poor domestic business conditions, and the better investment climate and opportunities in the neighbouring countries. On the other hand, recent agreements with foreign oil companies for reactivation of suspended oilfields and granting of onshore and offshore gas exploration and production blocks suggest that FDI in the energy sector may be boosted in 1993-94. If some near-term projects come on-stream in 1994, the fuel bottleneck is likely to ease and create opportunities for higher growth in the industrial and transport sectors. Nevertheless, as 1992-93 has been earmarked as the "year of the economy", government agencies are expected to try and achieve the targets set by the plan. This may ameliorate marginally the performance of the economy. Overall, the GDP growth rate for 1992-93 and 1993-94 will not exceed 3-4 per cent unless the government commits itself to continue economic reforms in a comprehensive and consistent manner.

68

INDOCHINA

1993-94 Khin Maung Nyunt

ECONOMIC OUTLOOK

[T]

here is a n ew wave of market-oriented transitional economies in the countries of Indochina - Laos, Vietnam and Cambodia. Since 1988, economic reforms and political liberalization in the Indochinese states have paved the way for them to re-enter the global system and improve their economic growth. The n ew thinking in economics suggests that institutions can either facilitate or retard growth in developing countries. Accordingly, institutions must develop simultaneously with reforms so as to capture innovations in order to achieve economic growth. In line with this theory, the recent economic and political liberalization measures accompanying institutional changes in the Indochinese states have been encouraging. In July 1992, Laos and Vietnam signed the Treaty of Amity and Cooperation with ASEAN. Accordingly, they gained observer status in ASEAN which should help to fost er trade and investment linkages. Meanwhile, the European Community (EC) will continue to be a major aid donor to th e Indochinese states.

Laos

70

[T]

he New Economic Mechanism (NEM), launched in 1986 and based on market-pricing and better distribution policies, should continue to reform the multi-sector economy. Laos' economic reforms and policies since 1990 include the introduction of a new accounting system in production and domestic trade, assigning a permanent body for monitoring budgetary revenue, promulgating a central bank law, and integrating official and parallel exchange rates. Real GDP (gross domestic product) growth in Laos, at constant 1988 prices, was reported to be 4 per cent for 1991 , and is proj ected to grow at 4 per cent and 4.5 per cent in 1992 and 1993 respectively. The Laotian economy is characterized by a high share of government consumption (89.6 per cent of the national economy in 1991) . Thus, greater economic liberalization and privatization will be required to capture improved economic efficiency and growth in the future. Agriculture and agro-forestry will remain the major economic sectors in Laos on the basis of sectoral employment and output. The agricultural labour force represents about 85 per cent of the total labour force while agricultural output constitutes about 60 per cent of total output. The current structure of the Laotian economy seems to show the A-I-S (Agriculture-Industry-Services) pattern, compared to the I-A-S pattern for Malaysia and Thailand, and the S-I -A pattern for Singapore. The successful transformation and diversification of agricultural crops and

INDOCHINA 1993-94

CHART 1 GOP Growth Rates (Per cent)

..... Lao, PDR

+ Myanmar

* Vietnam

•cambodia

the development of a multi-sectoral economy could play a leading role in reshaping its economy. The third Five-Year Plan (1991-95) places more emphasis on regional specialization in agriculture in five major regions (Vientiane, PaksanPaakding, Sbangfai, Sebanhiang-Sedone, and Chapassak). The Mekong River basin development, financed in large part by the Netherlands, is being executed with the Lao-Thai Mekong Irrigation Project and is expected to be completed in 1996. As Laos is a land-locked country, the extension of the transport and communication network is crucial. In particular, the Trans-Mekong Bridge will boost border trade between Thailand and Laos. In addition, Laos will have to use sea ports in Thailand and Vietnam for its exports.

71

ECONOMIC OUTLOOK Laos' direction of trade has changed in favour of the NIEs, ASEAN and China owing to increased co-operation with these countries on the one hand and the collapse of the Soviet economy on the other. Laos' exports to ASEAN comprise about 15 per cent of total exports while its exports to the NIEs account for 10 per cent. More than half of exports are directed to the socialist countries. Logs and electricity are the major export items. Restructuring of the banking system and reforms will improve the financial sector by allowing private initiatives to provide banking services. Meanwhile, liberalization of prices and wages as well the use of expansionary monetary policy is expected to result in an inflation rate of about 10 per cent in 1992.

[E

conomic growth will be constrained by the slow progress in agriculture and shortages in labour. Real GDP is expected to grow at 4.5 per cent in both 1993 and 1994, while exports are expected to increase by 18 and 20 per cent respectively. Imports of goods and services will possibly grow by 20.5 per cent in 1993 and 22 per cent in 1994. Given these trends, it is not likely that the economic outlook for Laos will change significantly in the next two years.

ietnam appears to be the most dynamic among the Indochinese states. Since the beginning of 1990, it has committed itself to economic and political liberalization as well as economic co-operation with ASEAN, the NIEs, China, and the EC. The rapid growth rate of private consumption in 1989 and 1990 had been accompanied by only moderate GDP growth. In 1992 a GDP growth rate of 4.5 per cent is expected. In 1993 the GDP is expected to grow by about 5 per cent. The inflation rate, proxied by changes in GDP deflator using 1989 as the base year, has continued to fall and in 1992 it is likely to be 20.8 per cent. In both 1993 and 1994, exports are expected to remain the main engine of growth. It is estimated that total exports of goods and services contracted by 15 per cent in 1992. Heavy domestic demand, on the other hand, will induce imports of goods and services. The Ministry of Trade has issued a list of commodities which will come under quota control on the basis of quantity, species, and market demand. The ten export commodities under quota control

72

INDOCHINA 1993 94

TABLE 1 Economic Performance of the Indochinese Countries

Laos GDP growth rate(%) (1988 constant prices) Inflation rates(%) Rate of growth of money supply (M2) Exchange rate (Kips/US$)2 Official rates Parallel rates Debt service ratio Budget deficit/GOP ratio3 Vietnam GDP growth rate (%) (1989 constant prices) Inflation rates (%)4 Rate of growth of money supply (M2) Exchange rate (Dongs/US$) Debt service ratio Budget deficit/GOP ratio3

-1.1

-1.8

13.5

6.6

4 .0

6.6 308.7

14.8 37.1

75.0 89.3

19.6 14.0

10.4 9.7

-5.8

450 496 20.0 -20.3

710 720 17.4 -16.4

695 698 15.2 -13.5

15.7 -9.1

2.6

5.7

8 .0

5.1

4.0

356.2 324.3 1000

408 .3 445.4 4500

-3.7

-6.9

69.1 170.0 4000 58 -8.5

56.3 59.5 5200 60 -6.0

60.3 60.0 9750 60 -2.3

205

207 240

385 390

Cambodia

GNP per capita (1988 constant prices) General index of agricultural production (1979-81 =100) Inflation rates (%) Exchange rate (Riels/US$) Exports (US$ million) Imports (US$ million) Debt service on long-term external debts (US$ million)

130

174

199

14 140

32 127

11

12

44 135

53 140

200 700 11 178

1

Estimates. 3 Excluding grants. 2 Buying rates. 4 Changes in GDP deflator. SouRCES: Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries 1991; Economist Intelligence Unit, Indochina: Vietnam, Laos, Cambodia-1992; and respective country sources.

73

ECONOMIC OUTLOOK are rice, peanuts, coconut oil, coffee, round logs, rubber, eucalyptus wood, sawn timber, metal and metal scraps. The sixteen import commodities under quota control comprise cement, tourist automobiles, motor-cycles, bicycles, bicycle spare parts, electric fans, complete electronic sets, electronic parts, tobacco, cigarette sub-material, liquor, beer, other beverages, ready-made garments, cloth material, and cosmetics. The main market for Vietnam's exports is Japan, followed by Hong Kong, Malaysia, Thailand, Singapore and Indonesia, while its imports are predominantly CHART 2 Japan, Hong Kong, Indonesia and from GDP of Myanmar and Indochina Singapore. Vietnam seems to favour an (Domestic currency) export-oriented strategy as a result of the influx of foreign investments. Billions Billions 60.-------------------,300 Out of a total cumulative foreign direct investment of US$2 billion, about - - - 50 one-quarter came from Taiwan, and about 40 one-sixth from Hong Kong. Most of the investments in 1991 went into the follow150 30 ing sectors: oil and gas (24 per cent), hotel 100 20 and tourism (23.4 per cent), forestry and 10 fishery (20 per cent), and manufacturing (20.9 per cent). The inflation rate stood at 60.3 per cent in 1991 as measured by a year-to-year change in GDP deflator. In 1992 the inflation rate fell, and it is now projected to . Lao, POR • Myanmar rise by 20.8 per cent over the previous Left scale: Myanmar year. While there is growth in private Right scale: Laos & Vietnam consumption, weaker growth momentum in the economy will reduce the potential for rampant inflation. Positive elements, such as falling inflation and stable currency, can also be found in the overall cost structure in 1992, compared to that of 1988 and 1989.

Outlook for 1993-94

74

hile there will be supply-side constraints and structural impediments to rapid industrialization, the economy can be expected to grow by 5.0 per cent in 1993 and 6.0 per cent in 1994.

INDOCHINA 1993-94

TABLE 2 Forecasts of Growth Rates of Real GOP and Major Components of Indochinese States Actual

Forecasts

1991

1992

1993

1994

4.0 5.2 7.3 4.4 3.0 9.0 10.4

4.0 5.1 7.0 4.4 4.5 9.2 9.5

4.5 5.7 7.7 4.9 4.5 9.7 9.0

4.5 5.7 7.5 4.9 4.5 9.2

4.0 4.8 5.4 17.7 15.0 12.0 60.3

4.5 5.3 6.0 17.5 15.0 9.4 20.8

5.0 5.9 6.5 17.3 18.0 20.5 20.2

6.0 7.0 7.7 18.6 20.0 22.0 19.1

Laos

GOP Consumption Government Investment1 Exports2 lmports2 Inflation (%) Vietnam

GOP Consumption Government lnvestment1 Exports2 lmports2 Inflation (%)3

1 Gross fixed capital formation. 2 Merchandise goods and services. 3 Changes in GOP deflator.

rn

he country's Five-Year Plan (1991-95) has placed emphasis on the agricultural sector so that national income can attain the 1970 level. The GDP in 1989, at constant 1988 prices, is estimated at US$1.6 billion. In terms of resource endowment, forests comprise 70 per cent of its total area. Water resources have great potential for irrigation, fishing, aquaculture, animal husbandry and hydroelectric power.

Cawnbodia

75

ECONOMIC OUTLOOK

CHART 3 Selected Development Indicators of Laos and Vietnam

Budget Deficit/GOP(%)

Inflation Rate(%)

-10

80

Growth Rate of Exports(%)

Cambodia's imports in 1990 was three times its exports, with the trade deficit being financed through foreign loans and aid. Total exports of Cambodia in 1990 amounted to US$53 million, with the Soviet Union being the major trading partner. Continuing political difficulties have kept foreign investors away and, until such uncertainties are removed, foreign direct investment will remain elusive. Nevertheless, various joint ventures have been approved, including rubber plantations, vehicle assembly and mining. It is hoped that Thailand, France, Taiwan and returning Cambodians will play a leading role in Cambodia's redevelopment. A "privatization" programme was launched in 1989. Under this programme, 40 state enterprises have been leased to the private sector and 24 have been run by the local party committees. Of the 40 enterprises, 12 were leased to overseas Cambodians, 24 to other foreigners, and 4 to local Cambodians.

76

INDOCHINA 1993-94 The country's commercial bank has been restructured so as to function with some degree of autonomy. In 1991, the Siam Commercial Bank established a joint venture with the Cambodian state bank to provide not only regular banking functions but also letters of credit, international monetary transfers, and foreign exchange.

[IJ

n the short-term, Cambodia will rely extensively on aid from international organizations and foreign governments to rebuild its infrastructure. Much remains to be done in improving the war-ravaged physical infrastructure and in redeveloping the agricultural base. It is difficult to predict any potential growth in Cambodia in the wake of the current political uncertainty.

Outlook for 1993-94

77

TABLE A-1

Brunei GOP CPI (1985=100) Exports Imports Indonesia GOP CPI (1985=100) Exports* Imports* Malaysia GOP CPI (1985=100) Exports * Imports * Philippines GOP CPI (1985=100) Exports * Imports * Singapore GOP CPI (1985=100) Exports * Imports* Thailand GOP CPI (1985= 100) Exports * Imports * Myanmar GOP CPI (1985=100) Exports * Imports * Laos GOP CPI (1985=100) Exports * Imports * Vietnam GOP CPI (1989=100) # Exports* Imports*

GROWTH RATES OF REAL GOP, EXPORTS, IMPORTS AND CPI (In percentages)

1984

1985

1986

1987

1988

1989

1990

1991

Ave rag e 1984-91

0.6 3.1 -5.5 -14.1

-1.5 2.3 -7.8 -2.6

-2 .9 1.8 -38.7 7.8

0.9 1.3 0.1 96.8

2.4 1.2 2.8 -2.5

2.0 1.3 3.9 19.2

2.9 2.1 14.8 15.3

3.0 4.0 -

0.9 2.1 -4.3 17.1

3.0

6.7 10.5 0.6 -22 .1

2.5 4.7 -8.0 2.7

5.9 5.9 14.4 10.6

4.9 9.2 8.8 3.8

5.8 8.0 1.1 -18.7

7.4 6.5 7.1 7.7

7.0 7.4 4.9 5.3

6.4 9.2 4.5 4.8

5.8 7.7 4.1 -0.7

7.8 4.0 13.8 6.5

-1.0 0.3 0.4 -9.8

1.2 0.7 11 .8 -6.5

5.4 0.9 14.6 8.5

8.9 2.0 11 .8 24.5

8.7 2.8 18.2 30 .2

9.4 2.6 15.4 19.6

8.8 4.5 13.7 16.9

-6.0 50.4 8.2 -16.4

-4.3 23.2 -7.2 -23.0

3.4 0.8 21 .8 12.9

4.8 3.8 -1.3 26.5

6.3 8.8 16.0 34.8

6.1 10.6 8.3 25.9

3.2 12.7 -0.3 10.3

8.3 4.0 8.2 7.6

-1 .6 0.5 -3 .2 -3.8

1.8 -1.4 15.5 13.3

9.4 0.5 16.1 15.1

11 .1 1.5 29.0 26.3

9.2 2.4 9.3 8.8

7.1 0.8 17.6 1.8

3.5 2.5 10.6 -1 .7

4.9 1.8 14.6 3.3

9.5 2.6 22.6 28.4

13.2 3.8 270 32.4

4.9 4.8 -10.6 -3 .0

2.8 6.9 -9.0 -5.2

-1.1 9.3 19.6 -18.5

-4.0 24.8 -18.6 0.3

6.4 27.0 -

3.9 65 .3 22.1 28.7

4.8 34.0 -1.1 14.1

-

-

-

-

-

-

-

5.2 35.5

* Merchandise goods and services # Changes in GOP deflator For 1984-90

-

1992

Projections 1993 1994

3.0

-

-

-

-

3.0 -

6.6 8.3 6.4 6.8

6.0 7.2 5.8 6.2

7.1 6.5 6.9 7.3

6.2 2.2 12.5 11 .2

7.8 4.7 117 13.9

8.1 4.3 117 13.7

7.9 4.0 11.4 12.9

0.0 17.7 0.0 -0 0

1.7 16.0 5.7 8.9

2.6 9.8 -0.3 7.9

4.4 8.0 -0 .5 12.7

4.8 7.0 -0 .6 12.8

8.3 3.5 12.8 15.5

6.7 3.4 9.8 9.0

6.7 1.8 12.2 11.5

5.2 2.5 8.3 7.8

6.0 2.3 6.4 5.9

6.1 2.2 6.9 6.5

12.0 5.4 22.2 25 .6

9.8 6.0 11.7 19.0

7.7 5.8 9.0 13.7

8.5 3.6 16.9 15.3

7.3 4.3 8.4 12.3

7.9 4.4 9.0 12.8

8.3 4.2 9.4 12.8

-11.4 16.0 10.7 -20.8

3.7 27.2 56.6 57.7

2.7 17.6 24.7 34.6

1.3 28.7 4.3 5.4

-0.1 16.9 9.7 6.3

1.1 32.3 4.2 3.0

2.0 50.0 -0. 7 -0.1

2.5 74.0 10.0 13.0

-1 .1 6.6 12.7 -1.4

-1.8 14.8 48.9 1.6

13.5 75.0 6.2 40.4

6.6 19.6 15.0 21.6

4.0 10.4 3.0 9.0

4.5 31.6 13.4 14.2

4.0 10.0 4.5 9.2

4.5 9.5 4.5 9.7

4.5 9.0 4.5 9.2

2.6 358.4 9.7 1.7

5.7 420.7 24.6 16.2

8.0 69.1 67.8 3.3

5.1 56.3 16.6 9.0

4.0 60.3 15.0 12.0

5.1 @ 193.0@ 23.2t 13.0t

4.5 20.8 15.0 9.4

5.0 20.2 18.0 20.5

6.0 19.1 20.0 22.0

-

-

@For 1987-91 + For 1986-91

81

TABLE A-2 COMPOSITION OF EXPORTS (In percentages)

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

Average 1981-92

Bru nei 0.1

0.1

0.1

0.2

0.2

0.6

0.6

0.7

0.7@

0.7@

0.4 #

SITC 3

98.9

99.0

98.9

98.8

98.5

97.2

97.5

97.5

97.5@

97.5@

98.1 #

SITC 5-9

1.0

0.9

1.0

1.0

1.3

2.2

1.9

1.8

1.8@

1.8@

1.5 #

SITC Ot 1+2+4

14.9

11.9

13.9

15.3

17.5

23.5

23.2

27.4

20.5

17.8

19.2@

19.2@

18.7

SITC 3

79.8

82.4

76.4

73.3

68.6

56.1

50.1

40.2

39.5

43.8

39.4@

39.4@

57.4

5.3

5.7

9.7

11.4

13.9

20.4

26.7

32.4

40.0

38.4

41.4@

41.4@

23 .9

45 .2

42.7

40.9

40.1

36.2

37.7

38.2

38.2

32.5

26.0

22.4@

21.7@

35.2

31.7

15.1@

22.3

SITC Ot 1t2+4

Indonesia

SITC 5-9 Malaysia SITC Ot 1t2t4 SITC 3

26.4

28.4

28.4

29.6

22.4

19.9

15.8

16.3

18.3

15.6@

SITC 5-9

28.4

28.9

30.7

30 .3

32 .1

39.9

41 .9

46.0

51 .2

55.7

620@

63.2@

42.5

52.6

48 .8

45.2

40.6

36.9

36.5

32 .3

31.4

28.8

25 .1

24.7@

24 .7@

35.6

0.7

0.7

2.3

1.6

0.9

1.4

1.7

2.2

1.5

2.2

2.3@

2.3@

1.7

46.7

50.5

52.5

57.8

62.2

62 .1

66.0

66.4

69.7

72.7

73.0@

73.0@

62.7

SITC Ot 1t2t4

14.4

13.9

13.5

15.7

13.3

12.3

11 .5

11.1

9.9

8.2

8.0

7.9@

11.6

SITC 3

36.2

40.3

34.7

31.5

32.8

24.1

20.2

15.6

15.4

18.2

17.0

16.9@

25.3

SITC 5-9

49.4

45.8

51 .8

52.8

53.9

63.6

68.3

73.3

74.7

73.6

75.0

75.2@

63.1

61 .3

66.3

66.9

63.9

51.1

56.6

53.4

46.1

43.5

40.9

34.2@

33.3@

51.4

0.1

0.0

0.0

0.0

0.3

1.3

0.8

0.7

0.8

0.7

0.8@

0.8@

0.6

38.6

33.7

33 .1

36.1

48 .6

42.1

45.8

53.2

55.7

58.4

65 .0@

65.9@

48 .0

87.0

90.2

93.7

89.7

90.4

92.6

88.9

83.7

43.9

42 1@

42. 0@

42.0@

73.8

SITC 3

5.4

3.7

0.8

2.5

1.8

0.6

1.0

1.7

1.8

1.3@

13@

1.3@

1.9

SITC 5-9

7.6

6.1

5.5

7.8

7.8

6.8

10.1

14.6

54.3

56.6@

56.7@

56.7@

24 .3

Philippines SITC Ot 1+2+4 SITC 3 SITC 5-9 Singapore

Thailand SITC Ot 1t2t4 SITC 3 SITC 5-9 Myanmar* SITC Ot 1t2t4

@Estimates * Border trade included in SITC 9 since 1989.

82

# Fo r 1981- 90

TABLE A-3 COMPOSITION OF IMPORTS (In percentages)

1990

1991

1992

Average 1981-92

1981

1982

1983

1984

1985

1986

1987

1988

1989

18.8

16.0

18.7

22.2

21 .6

21.7

25 .0

25.2@

25 .1@ 25 .1@

21 .9#

1.3

1.4

1.4

1.6

1.8

1.0

1.2

0.4@

0.4@

1.1#

79.9

82 .6

79.9

76.2

76.6

77.3

73.8

74.4@

74.5@ 74.5@

77.0 #

SITC Ot 1t2t4

15.0

10.4

11 .3

11 .8

13.0

13.9

14.1

15.6

16.9

SITC 3

13.0

21 .0

25.4

19.5

12.6

10.3

9.2

7.2

7.7

8.9

7.8@

7.8@

12.5

75.8

76.7

77.2

75.4

78.2

74.9@

74.8@

73.4

15.0

14.6

14.1

12.5

9.7

9.2@

9.9@

13.3

4.8

5.1

5.1@

5.5@

9.2

Brunei SITC Ot 1t2t4 SITC 3 SITC 5-9

0.4@

Indonesia

SITC 5-9

72.0

68.6

63.3

68.7

74.4

16.6

15.2

14.5

14.3

14.5

12.9

17.3@

17.4@

14.1

Malaysia SITC Ot 1t2t4 SITC 3

17.2

15.1

13.8

10.4

12.2

8.6

7.4

5.4

SITC 5-9

66.2

69.7

71.7

75.3

73.3

76.4

78.0

80.5

82.7

85.2

85.7@

84.6@

77.5

SITC Ot 1t2t4

11 .1

12.8

11.4

11.0

13.7

15.0

13.4

15.6

15.2

14.8

14.8@

14.8@

13.7

SITC 3

30 .1

26.5

27.5

26.5

27.8

17.0

18.2

13.3

13.4

14.9

14.9@

14.9@

20.4

70.3@

70.3@

65 .9

8.0

80@

10.9 22.1 67 .0

Ph ilippines

SITC 5-9

58.8

60.7

61 .1

62.5

58.5

68.0

68.4

71.1

71.4

70.3

12.1

11 .5

12.0

14.1

12.8

12.7

11.1

10.6

9.4

8.1

Singapore SITC Ot 1t2t4 SITC 3

34.0

34.0

31 .3

27.7

29.5

19.8

18.3

14.1

13.8

15.8

14.1

13.8@

SITC 5-9

53.9

54 .5

56.7

58.2

57.7

67.5

70 .6

75.3

76.8

76.1

77.9

78.2@

Thailand SITC Ot 1+2+4

10.3

10.0

9.8

9.7

10.5

11.4

13.0

12.1

12.1

12.0

11 .1@

10.8@

11 .1

SITC 3

31 .1

30.0

30.9

24.1

23.4

22 .6

13.4

13.2

7.6

9.1

9.4@

9.2@

18.6

SITC 5-9

58.6

60.0

59 .3

66.2

66.1

66.0

73.6

74.7

80.3

78.9

79.5@

80.0@

70.3

SITCOt1+2t4

4.5

5.4

5.6

4.9

7.4

3.4

1.6

1.5

1.6

0.6@

05@

05@

3.1

SITC 3

3.3

2.0

2.6

1.0

3.3

2.1

2.0

0.9

1.7

0.5@

0.5@

0.5@

1.7

92 .2

92.6

91 .8

94.1

89.3

94 .5

96.4

97.6

96.7

98.9@

99.0@

99.0@

95 .2

Myanmar *

SITC 5-9

@Estimates * Border trade included in SITC 9 since 1989.

# For1981-90

83

00 .j:::,.

TABLE A-4 SELECTED ECONOMIC INDICATORS: BRUNEI Particulars

1980

1981

1982

1984

1985

1986

1987

1988

1989

3418.6

3500.4

3535.3

4951 .0

4493.5

4664.6

4486.2

100.0

100.0

100.0

1983

1990

1991

1992

NATIONAL ACCOUNTS Million Brunei Dollars

(At Constant 1985 Prices) Gross domestic product STRUCTURE OF PRODUCTION GOP by industrial origin Agriculture

3768.8

2771.5

3027.5

4616.3@ 4754.8@

4897.4@ 100.0 1.0@

Per Cent 100.0

100.0

100.0

100.0

100.0

100.0

100.0

1.0

1.1

1.2

1.2

1.1

1.2

1.4

1.4

1.3

1.2

1.2

100.0 1.1@

62 .7

60.6

57.5

54.4@

50.5@

36.0

38.2

41.3

44.5@

48.5@

100.0

Industry

81 .2

77.9

76.9

76.0

71.9

71.4

68 .8

65.3

Services

17.8

21.0

21.9

22 .8

27.0

27.4

29.8

33 .3

4588.6

4001.0

3183.0 2934.0

1798.0

1799.0

1849.0 1921.0

2206.0

1285.0

1253.0

1494.0

1722.0 107.9

Million US$

INTERNATIONAL TRANSACTIONS Merchandise Exports Merchandise Imports PRICE INDEX AND MONEY SUPPLY Consumer price index (1985= 100) Money supply-M2 (Million Brunei $) EMPLOYMENT AND WAGES Employment Wages in manufacturing/hour(B. $) @Estimates

3786.0

3367.0

573.0

589.0

732.0

724.0

622.0

606.0

653.0

80.7

88.1

93.7

94.8

97.7

100.0

101 .8

103.1

104.3

105.7

1262.1

1885.7

1941.3

2582.6

2926.2

3620.8

3126.4

4445.5

4162.7

4178.0

na

68128

na

na

na

na

81104

3.59

3.29

2.72

3.44

5.68

3.51

4.07

4.11

4.05

112.2@

TABLE A-5 SELECTED ECONOMIC INDICATORS: INDONESIA Particulars

1980

1981

70568

76202

1982

1983

1984

1985

1986

1987

1988

1989

1990

88554

94666

96997

102695

107754

113931

122350

131037

54442

56616

57201

58453

60385

62727

65331

68017

1991

1992

NATIONAL ACCOUNTS Billion Rupiahs

(At Constant 1985 Prices) Gross domestic product Private consumption Government consumption Gross fixed capital formation

Agriculture

139424@ 148626@ 70611 @

73456@

42706

50155

54400

7280

8163

8919

9786

10120

10893

11196

11177

12024

13285

14586

15842@

17221 @

17581

22198

20863

22367

24426

25766

28735

32575

36536

40361 @

44557@

100.0

100.0

100.0

100.0

14729

16295

Per Cent

STRUCTURE OF PRODUCTION GOP by industrial origin

77849

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

38.4

24.0

29.8

29.9

24 .0

24.2

23 .9

23.4

21 .1

20.6

19.7

18.9

30.1

29.8

37.6

36.6

37.4

36.7

40.1

40.1

40.7

41.4

40.1

40.3

38.4

39.2

38.7

39.9

38.8

39.3

39.6

39.7

Industry

30.9

42.0

Services

30.7

34.0

Million US$

INTERNATIONAL TRANSACTIONS Merchandise Exports

21909

22260

22293

21152

21902

18590

16075

17135

19465

22160

23733@ 24896@

26017@

Merchandise Imports

10834

13272

16859

16352

13882

10262

10718

12891

13249

16444

1771 0@ 18649@

19544@

(Current account balance)

3011 .0

-566.0

-5324.0

-6338.0

-1856.0

-1923.0 -3911.0

- 2098.0

-1397.0 -1108.0

-2369.0 -4100.0@

Foreign exchange

5012.0

4521.0

2593.0

3639.0

4702.0

3919.0

5483.0

1125.00 1641.00

1650.00

105.8

115.6

124.9

133.0

142.9

23153.0 27661.0

33885.0

41998.0

58705.0

84629.6

15.35

18.42

17.75

18.57

19.63

62458.0 68338.0

70403.0

na

na

Balance of payment

626.75

644.00

692.50

994.00

1074.00

PRICE INDEX AND MONEY SUPPLY Consumer price index (1985= 100)

62.9

70.6

77.3

86.4

95.5

Money supply-M2 (Billion Rupiahs)

7691 .0

9716.0

11075.0

14663.0

17937.0

6.00

6.00

5357.0

7353.0

6.00

19.77

18.40

51553.0 59123.0

57803.0

57811.0

60084.0

562.7

700.3

816.3

899.9

100.0

1731.00 1797.00

16.88

EMPLOYMENT AND WAGES Employment (Thousand) Wages in manufacturing/month (Rupiahs)#

468.2

@Estimates # Labour cost in manufacturing/year (thousand)

co CJ1

9151.0

1901 .00 1992.00

Per Cent

INTEREST RATES Bank deposit rates(6 months)

4948.0

Rupiahs/US$

Exchange rates (End of period)

4838.0

952 .3

72518.0 73425.0 na

na

76061 .6@ na

156.1

169.1 @

00

O"l

TABLE A-6

1992

1983

1984

1985

1986

1987

1988

1989

1990

68449

72707

78351

77470

78361

82586

89960

97879

107045

35384

36548

37712

40145

40283

36251

36997

42965

49101

54239

11048

12014

12563

11948

11844

11994

12170

12765

13734

14538

14611 @

14617@ 33442@

1980

1981

Gross domestic product

60399

64590

Private consumption

33675 9747

Particulars

SELECTED ECONOMIC INDICATORS: MALAYSIA 1982

1991

NATIONAL ACCOUNTS Million Ringgits

(At Constant 1985 Prices)

Government consumption Gross fixed capital formation

18009

21265

Agriculture

54727@

24811

25545

23124

18875

18038

20792

27421

32840

33398@

100.0

100.0

54766@

Per Cent

STRUCTURE OF PRODUCTION GOP by industrial origin

22968

116251 @ 125319@

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

22.9

23.0

23.4

22.0

20.1

24.2

23.9

21.9

21 .1

20.4

19.4

17.3 43.8

Industry

35.8

36.0

29.7

30.3

37.5

36.6

37.4

38.3

39.8

40.5

41.7

Services

41.3

41.0

46.9

47.7

42.4

39.2

38.7

39.8

39.1

39.1

38.9

38.9

12958

11765

14130

16590

15442

13753

17939

21110

25053

29613@

34173@

38855@

22496

29290@

35031 @

40951 @

Million US$

INTERNATIONAL TRANSACTIONS Merchandise Exports

12031

10820

11581

12395

13198

14069

12301

10823

12701

16551

(Current account balance)

-284

-2444

-3601

-3497

-1671

-613

-122

2635

1816

-175

-1231

Foreign exchange

4114

3816

3509

3509

3470

4621

5697

7055

6134

7393

9327

10421

2.2224

2.2423

2.3213

2.3383

2.4250

2.4265

2.6030

2.4928

2.7153

2.7033

2.7015

2.7240

79.7

87.4

92.5

95.9

99.7

100.0

100.7

101 .6

103.6

114.1

Merchandise Imports Balance of payment

Ringgits/US$

Exchange rates (End of period) PRICE INDEX AND MONEY SUPPLY Consumer price index (1985=1 DO) Money supply-M2 (Million Ringgits)

27652.0 32370.0

41193.0

45888.3

109.3 83902.9

Per Cent

INTEREST RATES Bank deposit rates (6 months)

37648.1

106.5

48396.5 53767.0 59771.7 64968.9 74066.6

6.54

9.67

9.94

8.25

9.52

9.06

7.17

4.00

3.33

4.60

5.90

4835

5061

5247

5429

5566

5625

5707

5881

6088

6351

6603

EMPLOYMENT AND WAGES Employment (Thousand) @Estimates

119.5@

TABLE A-7 SELECTED ECONOMIC INDICATORS: THE PHILIPPINES 1992

1983

1984

1985

1986

1987

1988

1989

1990

1991

674.67

680.95

640.10

612.68

621 .38

650.69

691 .37

730.34

748.89

741.40

760.67@

438.13

451.77

464.66

469.52

469.13

473.54

500.65

530.77

561.23

595.79

595.42

595.41@

46 06

48.99

47.08

44.23

44.04

43.86

47 01

50.41

53.56

55.54

55.52

55.52@ 141.17@

1980

1981

Gross domestic product

630.84

655.64

Private consumption

421.44 44.44

Particulars

1982

NATIONAL ACCOUNTS Billion Pesos

(At Constant 1985 Prices)

Government consumption Gross fixed capital formation

172.99

180.21

179.11

175.76

118.64

89.97

76.52

91.43

105.56

128.30

141.31

141.17

Per Cent

STRUCTURE OF PRODUCTION 100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Agriculture

25.6

23.0

25.6

24.8

27.0

29.2

29.8

28.1

27.4

27.0

26.9

22.8

Industry

36.2

37.0

36.1

35.9

34.1

32.3

31.1

32.0

32.7

33.2

33.0

35.0

Services

38.2

40.0

38.3

39.3

38.9

38.5

39.1

39.9

39.9

39.8

40.1

42.2

5741

5655

4890

5274

4607

4770

5649

7032

7755

7522@

7522@

7296@

12322@

22046@

GOP by industrial origin

Million US$

INTERNATIONAL TRANSACTIONS Merchandise Exports Merchandise Imports Balance of payment (Current acc.bal.) Foreign exchange

4968

8295

8479

8263

7976

6432

5459

5359

7144

8721

11171

12322@

-1904

-2061

-3200

-2750

-1116

-103

954

-444

-390

-1456

-2688

1365

868

3186

2846

2064

885

746

574

550

1675

913

951

Pesos/US$

Exchange rates 7.600

8.200

9.171

14.002

19.760

19.032

20.530

20.800

21.335

22.440

28.000

26.650

87.0

92.8

96.7

100.5

101.2

100.0

97.5

98.3

103.1

106.8

110.0

172.9

55431

65638

78703

97119

111169

125923

139518 158315

195984

251091

297307

14.0

13.5

14.5

13.4

20.1

18.8

11.0

7.4

11.8

14.2

20.3

Employment (Thousand)

16434

17452

17371

19212

19673

19801

20595

20795

21498

21849

22532

Wages in manufacturing/month (Pesos)

860.0

983.0

1091.0

1248.0

1642.0

1951.0

2183.0

2537.0

2676.0

(End of period) PRICE INDEX AND MONEY SUPPLY Consumer price index (1985= 100) Money supply-M2 (Million Pesos)

Per Cent

INTEREST RATES Bank deposit rates EMPLOYMENT AND WAGES

@Estimates

00 '-1

-2000.0@

18.8

185.0@

CX> CX>

TABLE A-8 SELECTED ECONOMIC INDICATORS: SINGAPORE Particulars

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

NATIONAL ACCOUNTS (At Constant 1985 Prices)

Million Singapore $

Gross domestic product

28832.5 31603.1

33772.3

36537.2

39572.5

38923.5 39641 A 43387.4

48221.6 52669.6

57016.2

60893.5

61171 .0@

Private consumption

14809.7 15491.3

16086.4

16852.1

17711.6

17552.9 18287.7 20052.5

22757.6 24397.0

26056.1

26256.2

26266.7@

3411.6

3863.8

4235.9

4457.2

6228.8

6290.3

6293.5@

11126.6 12810.3

15405.7

17067.7

18677.4

21958.4

19764.3

19661 .6@

100.0

Government consumption Gross fi xed capital formation

3241 .5

STRUCTURE OF PRODUCTION GOP by industrial origin

5548.5

5606.8

5666.5

16424.8 14540.2 15028.0

5363.7

5588.3

16259.6 19138.9

Per Cent 100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

1.2

1.0

1.0

0.9

0.9

0.8

0.7

0.5

0.4

0.4

0.3

0.3

Industry

32.0

31.2

31 .2

31 .9

32.3

30.5

35.7

36.1

36.6

36.3

35.9

36.3

Services

66.8

67.8

67.8

67.2

66.8

68.7

63 .6

63.4

63.0

63.3

63 .8

63.4

Agriculture

INTERNATIONAL TRANSACTIONS

Million US$

Merchandise Exports

19376

20967

20787

21833

24070

22812

22495

28687

39306

44665

52752

57922@

62208@

Merchandise Imports

24007

27572

28167

28158

28667

26285

25511

32559

43864

49667

60899

66380@

70894@

-1563

-1469

-1296

-610

-385

-4

319

224

1255

2547

2350

3372@

6491

7443

8351

9130

10291

12686

12751

15000

16861

20136

27535

2.1780

2.1050

2.1750

1.999

1.9462

1.8944

1.745

Balance of payment (Current account balance) Foreign exchange

Million US$

Exchange rates (End of period)

33931

Singapore $/US$ 2.0935

2.0478

2.1085

2.1270

PRICE INDEX AND MONEY SUPPLY Consumer price index (1985= 100) Money supply-M2 (Million S$)

85.3

92.3

95.9

97.0

99.5

100.0

98.6

99.1

100.6

103.0

106.5

16065

19671

22804

25526

27121

28148

30955

37089

42088

51544

61845

9.28

10.82

7.56

6.49

7.03

5.23

4.06

3.09

3.05

3.68

5.11

1077

1113

1141

1167

1175

1154

1149

1193

1239

1278

1325

na

na

na

na

na

na

732.44

772.69

828.22

908.13

991 .04

INTEREST RATES Bank deposit rates (6 months)

Per Cent

EMPLOYMENT AND WAGES Employment (Thousand) Wages in manufacturing/month (S$)#

110.1 @

@Estimates # Labour cost in manufacturing/year (thousand)

4.63

112.9@

TABLE A-9

SELECTED ECONOMIC INDICATORS: THAILAND 1984

1986

1987

1988

1989

1990

1991

914777

979973 1014399 1064270 1165028

1319028

1480021

1625662

1747586

1875160@

566821

606436

649646

662665

691129

752052

818372

957751

985578

986817

986907@

115938

124718

133719

142917

143190

144523

149533

169808

160622

160783

160795@

202698

228753

253777

240283

231173

266764

324956

435029

494713

495949

496040@

1980

1981

1982

Gross domestic product

770805

819623

852932

Private consumption

541517

552340

98660

112082

197697

206768

Particulars

1983

1985

1992

NATIONAL ACCOUNTS Million Bahts

(At Constant 1985 Prices)

Government consumption Gross fixed capital formation STRUCTURE OF PRODUCTION GOP by industrial origin

Per Cent 100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Agriculture

20.6

24 .0

24.3

23.7

23.6

23.2

22.3

17.3

16.9

15.6

14.6

13.8

Industry

30 .8

28.0

28.9

29.1

29.7

29.4

29.8

31.7

32.2

34.2

35.2

36.4

Services

48.6

48.0

46.8

47.2

46.7

47.4

47.9

51 .0

50.9

50.2

50.2

49.8

Merchandise Exports

6505

7031

6945

6368

7413

7120

8794

11654

15830

20078

22427@

24446@

26499@

Merchandise Imports

9214

9955

8549

10287

10398

9242

9177

12925

20285

25148

32745@

37231 @

41811 @

INTERNATIONAL TRANSACTIONS

Million US$

Balance of payment (Current account balance) Foreign exchange

Million US$ -2069

-2569

-1006

-2882

-2411

-1491

300

-290

-1552

-2413

-4132

1552

1671

1513

1561

1890

2157

2736

3906

5997

9461

13247

17287

20.63

23.00

23.00

23.00

27.15

26.65

26.13

25.07

25 .24

25.69

25.29

25.28

77.9

88.3

93 .1

96.2

96.9

100.0

101.8

104.4

108.4

114.2

121.0

128.00

133.5@

251.80

292.91

363.82

450.50

537.88

593.49

672.77

808.58

956.13

1207.20

1529.2 12.25

12.25@

Exchange rates (End of period)

Bahts/US$

PRICE INDEX AND MONEY SUPPLY Consumer price index (1985=1 00) Money supply -M2(Billion Bahts)

Per Cent

INTEREST RATES Bank deposit rates (6 months)

10.00

11 .00

11.00

11.00

13.00

13.00

9.50

7.00

8.20

9.50

14.20

22524

24366

24831

25184

25999

25853

26691

27639

29464

30142

30835

1506

1506

1696

1706

2717

2826

2631

2950

3383

EMPLOYMENT AND WAGES Employment (Thousand) Wages in manufacturing/month (Bahls) @Estimates

CP

CD

2754@

2817@

c.o

0

TABLE A-10 SELECTED ECONOMIC INDICATORS: MYANMAR Particulars

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

50902

51564@

NATIONAL ACCOUNTS (At Constant 1985-86 Prices)

Million Kyats

Gross domestic product

43833

46619

49232

51878

54437

55986

55396

53178

47141

48883

50226

Private consumption

37232

39486

42377

44916

48523

49532

49053

47629

41086

42428

44206

7879

8959

10175

9142

8546

8646

8271

7556

5409

8323

9695

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

Agriculture

37.20

37.60

37.80

37.80

37.60

37.00

37.00

37.00

47.80

51.10

49.60

47.90

Industry

15.20

15.40

15.60

16.30

15.90

16.40

16.40

15.60

11.70

12.20

12.20

13.00

Services

47.60

47.00

46.60

45.90

46.50

46.60

46.60

47.40

40.50

36.70

38.20

39.10

Government consumption

}

Gross fixed capital formation STRUCTURE OF PRODUCTION GDP by industrial origin

Per Cent

INTERNATIONAL TRANSACTIONS

Million US$

Merchandise Exports

406.6

471.5

385.6

421.5

373.7

302 .8

288.0

219.0

147.0

215.0

351 .0

348.5@

346.1@

Merchandise Imports

739.9

770.7

810.5

646.8

601.2

566.6

304.0

268.0

244.0

194.0

604.0

606.0@

608.0@

-347.1

-314.0

-498.7

-344.1

-217.8

-205.5

-294.0

-381.0

-276.0

-161 .0

-543.0

-659

-510@

253.7

215.8

88.8

82.0

55.3

33.9

33.1

27.1

77.3

262.8

455.0

316

8.2231

8. 7512

7.8420

7.0395

6.1097

6.4104

6.4942

6.0804

6.2154

Balance of payment (Current account balance) Foreign exchange Exchange rates (End of period)

Kyats/US$ 6.7572

7.3970

7.7775

PRICE INDEX AND MONEY SUPPLY Consumer price index (1985= 100)

80.0

80.3

84.5

89.3

93.6

100.0

109.3

136.4

158.3

210.3

236.8

257.8

342.1@

Money supply-M2(Million Kyats)

9931

12010

13565

15702

18469

18145

23748

18126

23521

30942

27510

37099

38067@

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5@

13.52

13.79

14.19

14.50

14.79

15.13

15.41

15.40

15.14

15.22

15.74

16.01

337.09

226.6

235.85

252.76

167.46

258.48

262.91

na

na

na

na

na

INTEREST RATES Bank deposit rates

Per Cent

EMPLOYMENT AND WAGES Employment (Thousand) Wages in manufacturing/month (Kyats) @Estimates

na

TABLE A-11 Particulars

1984

SELECTED ECONOMIC INDICATORS: LAOS

1985

1986

1987

1988

1989

1990

1991

1992

NATIONAL ACCOUNTS (At Constant 1988 Prices) Gross domestic product

Million Kips 204782

212768

222981

220529

216559

245795

262017

272498

283398@

21949

24546

26295

21695

26722

31729

34507

36302

38168@

147399

162929

179005

181960

155978

201997

227533 \,

244030

261188@

67195

67976

71411

65197

65426

75259

80715

84240

87906@

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

Agriculture

59.03

60.41

60.34

59.00

59.36

60.28

55.10

57.3

Industry

21 .75

21 .09

20.67

17.48

18.38

19.48

19.20

17.8

Services

19.22

18.50

18.99

23.52

22 .26

20.24

25.70

24.9

Private consumption Government consumption Gross fi xed capital formation STRUCTURE OF PRODUCTION GOP by industrial origin

Per Cent

INTERNATIONAL TRANSACTIONS

Million US$

Merchandise Exports

11 .38

5

5

65.8

97.2

110.7

118.6

121 .0@

131 .7@

Merchandise Imports

40.5

29

29

88.5

114.4

131 .1

141 .3

146.4@

155.0@

-82.8

-93.7

-90.5

-117 .7

-93.7

-95.0

-129.0

10.6

25.3

31 .8

20.6

16.1

49.0

58.0

88

357

540

699

Balance of payment (Current ace. bal.) Foreign exchange Exchange rates (End of period)

-126.0

-150.0@

Kips/US$ 35

35

95

Consumer price index (1985= 100)

60.5

100.0

134.0

145.0

159.0

178.0

212.0

Money supply-M2 (Million Kips)

2300 *

2280 *

3876

15842

21715

41113

46869.0@

700

PRICE INDEX AND MONEY SUPPLY 233 .2@

255.4@

51415.0@

Per Cent

INTEREST RATES na

9.6

9.6

9.6

14.0

14.0

14

Employment (Thousand)

na

1757

1705

1833

1874

1912

1956

2026@

2100@

Wages in manufacturing/month (Kips)

na

na

7000

7000

7000

7000

7581

8010@

8210@

Bank deposit rates

14

EMPLOYMENT AND WAGES

@Estimates * M1

c.o .......

co

I"V

SELECTED ECONOMIC INDICATORS: VIETNAM

TABLE A-12 1986

1987

1988

1989

1990

1991

1992

Gross domestic product

20579

21395

22498

24307

25538

26565

27760@

Private consumption

19464

20377

21240

22154

23505

24626

25932@

Government consumption

1676

1759

1954

2204

2357

2484

2632@

Gross fixed capital formation

3072

3229

3064

2817

3579

4211

4948@

100.0

100.0

100.0

100.0

100.0

38.05

36 91 @

Particulars NATIONAL ACCOUNTS (At Constant 1989 Prices)

Per Cent

STRUCTURE OF PRODUCTION GOP by industrial orig in

100.0

100.0

Agriculture

40.4

43.9

40.90

40.49

39.10

Industry

31.5

30.7

25.82

23.26

22 .80

22.44

22.06@ 41 .03@

Services

28.1

25.4

33.28

36.25

38.10

39.51

Million US$

INTERNATIONAL TRANSACTIONS Merchandise Exports

785.0

880.0

1073.0

1502.0

2027.7

2165.6

2642.0@

Merchandise Imports

2155.0

2191 .0

2616.0

3056.0

3242.0

3890.0

4435.0@

-1423

-1360

-1542

-1101

-490

-704

-770@

Balance of payment (Current account balance)

Dongs/US$

Exchange rates (End of period)

250.0

1000.0

4500.0

4000.0

5200.0

9750.0

-

358.4

420.7

69.1

56.3

60.3

27399

28940

30286

31091

31744@

32461@

2413

11882

54522

54522

PRICE INDEX AND MONEY SUPPLY Consumer price index (1989=100)# EMPLOYMENT AND WAGES Employment (Thousand) Wages in manufacturing/month (Dongs) @Estimates # Changes in GOP deflator

20 .8@

APPENDICES 1. Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries. 2.

International Monetary Fund, International Financial Statistics.

3.

IMF, Direction of Trade Statistics, Yearbook.

4.

International Labour Office, Yearbook of Labour Statistics.

Sources of Data

5. The World Bank, World Development Report. 6.

Department of Statistics, Singapore, Monthly Digest of Statistics.

7.

Statistics Division, Economic Planning Unit, Ministry of Finance, Brunei Darussalam Statistical Yearbook .

8. The Union of Myanmar, Review of the Financial, Economic and Social Conditions. 9.

General Statistical Office, Trade Information Centre, Hanoi, Economy of Trade and Vietnam: 1986-1991.

10. Economist Intelligence Unit, Indochina: Vietnam, Laos, Cambodia. 11. General Statistical Office, Socialist Republic of Vietnam, Economy and Trade of Vietnam: 1987-1991 (Hanoi, 1992).

93

THE CONTRIBUTORS

Russell Heng Hiang Khng is a Fellow at the Institute of Southeast Asian Studies.

Khin Maung Nyunt was a Research Associate at the Institute of Southeast Asian Studies.

Linda Low is a Senior Lecturer, Department of Economics and Statistics, National University of Singapore.

Mya Than is a Fellow at the Institute of Southeast Asian Studies.

Daljit Singh is a Fellow at the Institute of Southeast Asian Studies.

Tin Maung Maung Than is a Research Fellow at the Institute of Southeast Asian Studies.

Toh Mun Heng is a Senior Lecturer, Department of Economics and Statistics, National University of Singapore.