South China Sea disputes a threat to Asean-China relations

After 15 years of discreet and patient diplomacy over overlapping claims for the South China Sea, both Asean and China are showing signs of fatigue as there has been no progress yet towards a resolution or joint development schemes. Alleged intrusions and confrontations in the resource-rich maritime territory by various claimants have increased over the past two years.

The most serious incident occurred on March 2 when the Philippine oil exploration ship, MV Veritas Voyager, was harassed by Chinese Navy patrol boats at Reed Bank, near the Philippines. It topped the agenda when the visiting Chinese Defence Minister Gen Liang Guanlie visited the Philippines last week. The incident immediately brought back memories of March 1995, when the Philippines confronted China after the discovery of new structures in the Mischief Reefs, which subsequently led Asean to issue a joint statement, the first and the only one, expressing "serious concern" over Beijing's action.



















Over the years, there were high hopes that the Declaration of Conduct for Parties in the South China Sea in 2002 would not only encourage the claimants to restrain from any activity that would destabilise the whole region but help to resolve issues related the territorial sovereignty. Somehow the longstanding pledge for the promotion of trust-building measures and mutually beneficial cooperation have continued to be an elusive goal over the past nine years.

One stumbling block remains the wording of implementing guidelines of the 2002 document, which was agreed on when bilateral relations were at a zenith. The Asean claimants, Vietnam, Brunei, Malaysia, the Philippines and China were still fighting over them when senior officials last met in Medan, Indonesia. Given the current tension and growing mutual suspicion, especially between China and Vietnam/Philippines, it is doubtful if they will be able to finalise the guidelines in time for next year's 10th commemoration in Phnom Penh, when Cambodia chairs the 20th Asean summit. Their collective assertiveness shows that the disputes in the South China Sea represent core national interests.

More than conflicting parties like to admit, the relatively benign environment which Asean and China used to enjoy tackling the South China Sea problem since Mischief Reef in 1995 effectively ended last July. The dispute got an international stamp when the US State Secretary Hilary Clinton raised the issue openly on the freedom and safety of navigation in the South China Sea and expressed strong support for the Asean document. Furthermore, the US also offered to facilitate diplomatic efforts to find a resolution. From that moment, China and the Asean claimants knew full well that their disagreements have been thrown into the international spotlight — after they had been kept under wraps for the past 15 years.

China was quite happy to continue negotiating with Asean over the guidelines without intervention from other players. Back in 1994, when China was still a consultative partner of Asean, visiting Chinese Foreign Minister Qian Qichen told his Asean counterparts in Brunei Darusalam that Asian countries must solve their problems in an Oriental Way. Somehow this approach rings hollow and does not bode well in the current atmosphere. The lack of progress and the claimants' growing presence and visible physical structures has provided a raison d'etre for the Asean claimants, in particular Vietnam and the Philippines, to harden their pursuit of more tangible outcomes. To add fuel to the fire, last week, the two Asean countries agreed to work on a joint exploration project for oil and gas in the disputed areas.

Previously, the Asean claimants and China held bilateral negotiations trying to craft collaborative frameworks that would be acceptable to both sides — settling sovereignty issues with Asean claimants and overall cooperation with all Asean members. Unfortunately, some claimants viewed the exercise as a foot-dragging tactic to further strengthen presence in claimed islands or islets. At the moment, Vietnam occupies 23 islets while China and Malaysia occupy seven each. The Philippines has claimed the so-called Kalayaan Island group made up of 54 islands, reefs and shoals.

Last July in Hanoi, Chinese Foreign Minister Yang Jiechi was visibly upset when the South China Sea issue was brought up and discussed openly at the Asean Regional Forum. It was a radical departure from the modus operandi agreed at the Huangzhou meeting between China and Asean in April 1995, with both sides keeping the dispute under wraps. At this hill resort meeting, Asean for the first time jointly called on China to be more transparent about claims over the South China Sea including the significance of the nine-dot line. The lack of better answers and practice gradually pushed the Asean claimants to ditch bilateral frameworks. The fact that the dispute received wider international attention last year was also partly attributed to the Asean chair's diplomatic manoeuvrability.

One immediate consequence of this shift may be a less polite (bu ke qi in putonghua) attitude and policy by China towards Asean. It is currently in a reset mode. Beijing views Asean's positions over the guidelines as problematic and undermining its claims for sovereignty. With Asean members juggling their positions between claimants and non-claimants as well as China's ambivalence to Asean as a whole, relations between the grouping and the regional power will be severely tested from now on.

Without a law-binding code of conduct, it is hard to foresee long-term peace and stability in the region's maritime territory. The whole scheme of things is further complicated by the new strategic landscape with the rise of China and its navy fleet, as well as the US's proactive engagement in Asia. As such, it is not hard to envisage other non-claimant players or facilitators wanting to guarantee the safety of sea lanes for vital mercantile activities.

Finally, if the ongoing disputes are not properly handled, it will have huge spill-over effects on broader China-US rivalry in this region. The Philippines is a treaty ally of the US, as are Japan and South Korea, which also have overlapping claims on islands with China. For instance, a small incidental armed attack in the Kalayaan Island chain could easily turn ugly amid growing China-US rivalry. The Philippine government is confident that any attack on a Filipino ship in areas under its administration is a direct attack on the US, as stipulated in its defence treaty with the US. By Kavi ChongkittavornThe Nation, Bangkok

Five years of toxic sludge flung over Indonesia's Bakrie's image

Money Can't Buy Him Love



As one of the richest and most powerful men in Indonesia, Aburizal Bakrie gets just about whatever Aburizal Bakrie wants. But to his frustration, Bakrie, the head of Golkar, the country's second-biggest political party and the third-generation patriarch of the Bakrie family empire, can't buy the thing he wants most — to be liked.

Popularity is the essential ingredient in the plot Bakrie is cooking up to become president in 2014. But all of his power and money can't stop the force of nature that has become the politician's worst public relations nightmare: Drilling by his family's gas company is blamed for causing the world's biggest mud volcano disaster. Sunday marked five years since the toxic sludge began spewing all over villages — and the Bakrie family name.

The mud has flowed continually since 2006, displacing more than 40,000 people and swamping at least 12 villages in Sidoarjo, East Java. Scientists predict the volcano will continue erupting right through Bakrie's projected presidential term and beyond, for anywhere between 20 and 80 years.

The company, Lapindo Brantas, had been drilling for gas 200 meters away from the rice fields where the volcano formed. Many geologists point to the drilling as the cause, while the company blames an earthquake 280 kilometers away in Yogyakarta. Lapindo was relieved of responsibility by Indonesia's notoriously corrupt Supreme Court, but under considerable pressure from the president and the public, the company agreed to pay some of the victims.

The Bakries had little choice. If their patriarch was to have any chance at winning the nation's top job, they had to pay up as images of victims, sick children and flattened homes were splattered over newspapers and on TV.

Bakrie has tried to distance himself as much as possible from the volcano. At a panel discussion in 2007, he answered journalists' questions on the volcano defensively: "You had better ask Lapindo, OK? I am the Minister, the Coordinating Minister of Social Affairs."

Bakrie resigned on paper from all of his family's companies in 2004 when he became chief economic minister, but is believed to still control much of Bakrie & Brothers' business affairs. His brother Nirwan has become the official face of the conglomerate, which owns coal, telecommunications and property companies.

Nirwan Bakrie claims that Lapindo is not paying compensation, but that it is buying the land from the victims in an act of good faith.

"We felt that the society is very close to us. We always help people in disasters, in Aceh, Yogykarta, Bandung," he said.

"Bakrie & Brothers has existed since 1942 in Indonesia and we always care about the people. Anything to do with a disaster, we're always there."

But the Bakries' message is not filtering down to the people. Aburizal Bakrie's personal approval ratings are low, and he is often seen as the enemy of reform. He spearheaded a campaign against the country's leading reformist, Sri Mulyani Indrawati, who had told the president she would resign if the Bakries' companies were given special treatment during the 2008 financial crisis. After going head-to-head with Bakrie over a bank bailout scandal, she did resign and took a senior position at the World Bank in the United States.

Hundreds of protesters gathered outside the Sidoarjo mayor's office last week and addressed the Bakries and Lapindo directly: "Get out of Sidoarjo until you give us our money. You are not welcome here," they yelled on megaphones.

Just one week before the eruption's five-year anniversary, Lapindo missed its deadline to pay victims the final compensation installment, together worth US$140 million. The company says it has missed deadlines due to enormous losses in the 2008 financial crisis, and that it hopes to complete payment by the end of next year. Lapindo has plans to drill just 2.5 kilometers from the volcano in August, a plan protesters also rejected.

The family have tried hard to turn around their muddied image after a string of negative media reports, including a Tempo magazine cover that depicted Bakrie with the devil's number, 666, superimposed on his forehead. Bakrie had initially threatened to sue Tempo, but eventually settled for a complaint with the Press Council.

In a more extreme attempt to win over the public and the mudflow victims, the Bakries in 2008 bought the Surabaya Post, based in Sidoarjo's big, bustling neighboring city. The paper was facing closure when the Bakries added it to their media network.

Ross Tapsell from the Australian National University studied the paper's takeover last year and spoke to reporters at the Surabaya Post, who said that their coverage of the disaster had been compromised since the Bakries bought the paper and appointed two former Lapindo executives as managers of the paper.

"Those inside the Bakrie empire say [Aburizal] basically just appointed two trusted employees, which is common when a media mogul buys a newspaper. But the result was very much self-censorship inside the newsroom," Tapsell told Asia Sentinel. Tapsell points out that it is not uncommon for Indonesian politicians to own a media organization, which can be used as a political mouthpiece.

"The president has his own newspaper, Jurnal Nasional, and [National Democrat] Surya Paloh owns Media Indonesia. There is some legacy, perhaps, of the newspapers from back in revolutionary times in the 1940s, when chief editors were heavily involved in politics."

Bakrie use of the Surabaya Post for political gain has not done him any favors. He has kept himself aligned with holdover crooks from the Suharto era — something he will need to rethink before the gun is fired for the presidential race. Winning the people's trust while the sludge keeps flowing over Sidoarjo is a massive challenge indeed, and if Bakrie somehow wins the presidency in 2014, it will be perhaps the biggest PR spin-win in Indonesia's recent political history.


Written by Angela Dewan

Thaksin Reveals His Ambitions

He says he wants to come back to run the country

In a wide-ranging interview with The Straits Times of Singapre from his base in Dubai, former premier-turned-fugitive Thaksin Shinawatra recently made no secret of his intention to return to Thailand and indeed run the country again.

The one-hour interview covered almost all aspects of Thailand’s current political crisis, with a special focus on the upcoming elections due to take place on July 3. It is certain to further irritate the Bangkok elite who, after all this time, have wanted to tear out Thaksin’s legacy in politics by the roots. They thought that the coup was their effective tool in getting rid of Thaksin and his kind of politics.

But the return of the ousted premier’s proxies in politics in 2008, and possibly in 2011, reconfirmed that the battle against his faction was, and will be, arduous. Not only do the elite need to fight with Thaksin and his cohorts, but also his political supporters in the far-flung north and northeast regions of the kingdom.

Thaksin acknowledged that he had asked his youngest sister, Yingluck Shinawatra, to represent him in the elections because he did not trust any politicians, even those in the pro-Thaksin Puea Thai party. In other words, Yingluck is simply his political nominee, just as were the late Samak Sundaravej and Somchai Wongsawat, Thaksin’s brother-in-law, who all once acted as his proxies.

The interview has received a mixed response in Thailand. And Thaksin, a fugitive after having been convicted in absentia of corruption, apparently realizes that his latest views would either attract more supporters or in fact create more enemies. Analysts are anxious to see if his new round of intervention will convince some Thais who are politically neutral to tilt towards the Puea Thai party.

Thaksin, at the beginning of the interview, accused Prime Minister Abhisit Vejjajiva of failing to heal the growing rifts in society after more than 30 months in power. He pledged on behalf of the Puea Thai party that if it were to be offered a chance to form a government, the party would bring back a sense of normalcy in Thai politics.

"Normal not in the sense that the Democrat Party wants. They carried the flag of reconciliation for two and a half years and they failed; they made the country more divided. It is now our turn to lead the reconciliation effort," Thaksin said.

In the meantime, he reiterated his support for the principle of democracy, something that his opponents would find ironic. Thaksin said, "It is time to come back to the principle that we respect the people’s views. If you can your country democratic, you have to respect the people’s will and then things will move on. I do not care about the criticism, I do not care about going back home or not; I care about when Thailand will come back to normal."

Thaksin then touched on the most controversial topic: a surge of complaints and charges of lèse-majesté, or insulting King Bhumibol Adulyadej and members of his family. "If you respect and are loyal to His Majesty, stop showing loyalty by this stupidity; it only makes things worse," Thaksin stressed. The former premier also said that when he was in office, the King told him that he did not want to see the law used unnecessarily.

Thaksin used the opportunity to emphasize that he has always paid loyalty to the King, asserting that "The military was paranoid because it alleged I wanted to turn Thailand into a republic and be president. Actually, that is not true at all. When you become a leader, you have to be strong; otherwise you cannot change things that have been chronic for many years. Then when you become strong, they say you want to be president, which is nonsense." Thaksin added, "That is why we will have a lady prime minister so they will not think the lady will do this."
The interview revealed other aspects of Thaksin’s personality. He apparently seeks to create a new image of an imperfect leader who indeed made mistakes in the past, but would be willing to learn from them. Regarding the protracted conflict in the Thai south, Thaksin told the Straits Times, "I admit, being a policeman you are taught to use both iron fist and velvet glove. I used more iron fist and now I regret it. I should use more velvet glove. This is what I will change."

Thaksin said that if the Puea Thai won the elections, the party would grant the troubled southern provinces more autonomy, a touchy subject in the Thai political establishment, since this would allow some to question the homogeneity of the nation. Obviously, Thaksin’s discussion on this subject had one key objective: to gain votes from the Southeast residents. It is known that the south has long been the Democrats’ territory and Thaksin was unpopular there because of his hard-nosed policy in the past.

Lastly, Thaksin’s view on the ongoing conflict with Cambodia over the Preah Vihear Temple was his attempt to delegitimize the Abhisit administration. Thaksin condemned the military-led approach in dealing with Cambodia. He suggested, "We should talk, not just send in the military. If you shoot your own neighbor, how can you live together? If you are bigger or rich you should have a kind heart for people who are poorer or smaller."

The interview was very comprehensive. And as the July elections draw near, Thaksin may have thought that he needed to gamble by exerting his provocative perspectives. The end result may be to see more support offered to Yingluck, or perhaps more ferocious retaliation by his political opponents in the period leading up to the judgment day in July.

By Pavin Chachavalpongpun fellow at Singapore’s Institute of Southeast Asian Studies.

The China Story Darkens

Market valuations look stretched Portfolio investors‘ illusions about the "great China growth" story are being stripped away day by day. Instead of the Chinese market looking relatively cheap, at least by comparison with both its past and the nation‘s assumed economic growth rate, it looks seriously over-valued for two very different reasons.

The first is the least remarked, being overshadowed by the recent spate of headlines about bogus accounts and disappearing bosses. It is this. Even if one were to actually believe the published aggregate accounts of major mainland companies listed in Hong Kong and Shanghai, there is scant case for regarding this market as anything other than expensive relative to both developed markets and to some of the currently less fashionable developing countries (such as Thailand).

For sure, Chinese companies can look forward to faster overall top line growth than those in the US. That is a given considering that even under the worst circumstances GDP growth will probably be twice the US level for the next decade, with the consumer and service sectors especially strong. But what about the issue that for equity investors is at least as important: return on capital?

Recent research by McKinsey & Co finds that there is no empirical justification for the fact that Chinese shares, particularly the Hong Kong-listed H-shares, are now trading at higher multiples than their western equivalents. In other words "fear" of poor corporate governance has been superseded among investors by the "greed" prospects of rapid growth. Investors have bought the China story of improving quality and sustained opportunity. But this is more myth than fact.

It turns out that over the past decade returns on investment in China have barely improved. Some sectors are better, some worse, but they remain little more than half those of US and European firms. McKinsey calculates that to justify a current price-to-earnings ratio of 16.9, H-shares would need to raise their rates of return from 6.8 percent to 10.9 percent. The numbers for Shanghai are different but the message is the same.

Combine growth prospects with rates of return and there is no reason why Chinese companies should be more highly rated than US ones. Add in the governance and accounting credibility factors and they should probably be at a discount. Of course, US returns may fall, Chinese ones rise. But there doesn‘t seem to be much prospect of that any time soon. US ones may fall but Chinese ones could well do so as well as the economy slows and debt levels are more evident.

In principle Chinese firms know the importance of increasing efficiency of capital use. However the prospects for improvement appear slim in the foreseeable future. There are several reasons for this:
• The big state firms have the easiest access to capital from the banks and thus the least incentive to use it efficiently. They are often run by party insiders more concerned with size than profits and who respond more to political than to price signals.The cost of capital has been abnormally low, even by Chinese standards, since the 2008 global financial crisis. Real interest rates remain negative. This cannot continue indefinitely. Higher real interest rates will severely squeeze equity returns.
• The post-2008 lending spree led to particularly wasteful, state-driven, investment. This will inevitably lead to a sharp rise in nonperforming loans by banks and probably losses by non-financial companies lending in the informal money market.
• The state sector has tended to increase its grip on key sectors thus reducing the scope for the more dynamic private and semi-private sectors. Companies with ready access to cash have been expanding into unrelated fields. Mergers aimed at improving returns are negligible as companies seek size above all else.
• Urbanization is slowing due to China‘s demographics. This will make ever more apparent the massive overinvestment in infrastructure which in turn will continue to prevent the consumer sector, which can usually offer higher returns to capital and in which the state sector plays a lesser role, from growing as fast as it should.
None of these realities is likely to affect investor sentiment while the China and emerging market stories continue to transfix the foreign media and offer easy money for investment bank myth salesmen.
But focus on fundamentals may follow on from the Chinese corporate shell-shocks that have recently been coming almost daily -- auditors resigning, false accounting being revealed, in some cases the existence of two sets of books, one for the tax man, the other for investors.

The shocks are likely to continue as money becomes tighter in China and hitherto gullible western investors look more closely at the companies now listed on foreign exchanges, let alone at the A shares in Shanghai among which scams and ramps are likely even more prevalent.

Perhaps it is unfair to call investors gullible. They have in most cases been led into this by so-called respectable western investment banks and auditors only too happy to assume that they are being told the truth by mainland so-called professionals.

Worst hit perhaps are the US investors who snapped up shares in US-listed companies which were transformed from small, little traded companies into hot China stocks through the injection of assets of go-go mainland companies. In a whole slew of cases, these assets are now being found to be worth very less than originally claimed, for profits to have been derived from aggressive revaluations rather than actual trading or to have used cash to acquire high-priced assets from related parties. The tricks are all very familiar, particular to investors who remember the "wild east" days of ramps and scams on the Hong Kong and Kuala Lumpur exchanges in the 1980s.

The equivalent mainland racketeering is now being helped by markets such as Hong Kong which should have learned lessons long ago. The US markets may be forgiven a certain naiveté and to have assumed that those responsible for China asset injections had been duly diligent. But Hong Kong has fewer excuses given its proximity and the use, till very recently, of local firms to audit mainland company accounts.

But no, greed has trumped fear for all market operators. Making matters worse has been the inability of the Hong Kong authorities to carry their investigations into China and their unwillingness to ask hard questions of politically-connected companies, let alone prosecute outright illegalities in corporate reporting. The decision now to allow mainland auditors alone to audit Hong Kong-listed mainland stocks can only make matters worse. Indeed the rash of scandals since that was announced demonstrates the combination of greed and irresponsibility shown by the Hong Kong Exchanges and Clearing, the government-controlled monopoly chaired by the property oligopoly‘s former Mr Fixit, Ronald Arculli.

Of course the really big, centrally-controlled Chinese state corporations are unlikely to be caught in the sort of scams unfolding among provincial, municipal or privately controlled entities lower on the totem pole. But that is another worry for investors. It is the state behemoths which have the least regard for return on capital because they find it so easy to borrow and often have to put political priorities ahead of investor interests.

So investors, look out for being further squeezed between honest but low returns and of bogus accounting cancelling out the growth promise of mid-size companies in a fast growing economy.
by Philip Bowring

BALI Latest Updates

Om Swastiastu ...read the full report at http://www.balidiscovery.com/update/update768.asp

The Non-Aligned Movement conference was opened by President Yudhoyono in Bali this past week. Find out why the President is taking "heat" for opening that event in the English language.

Rabies is back in the news with officials admitting the soonest Bali can now be certified "rabies free" is 2015. On the bright side, new cases of rabies and dog bites against humans are on thr decline.

Two Central Java lawmakers caught with drugs in a Bali hotel are now on trial, facing the possibility of 15 years in prison.And, a Chinese tourist dies in a rafting accident in Bali.

Governor Pastika discusses the possibility of standing for reelection in 2013. Also on the political front, there’s news that President Barack Obama may be Bali bound this November.

Development news sees Bali’s regents and mayors continuing to reject the implementation of the new zoning law. We also look at the "soft" commencement of a cross-island public bus system planned for June.

Hotel news includes a Green Globe certification for the Anantara Resort and the appointment of a new general Manager for the Aston Bali Beach Resort. Illegal villas are back in the news with the regent of Badung demanding the names of illegal hotels and villas be published. Meanwhile, lawmakers think the only solution for the illegal Best Western Kuta is to tear that hotel down.

We've got a story of three men starting a 550 km barefoot-walk around Bali to raise awareness and money for Indonesian street children. There’s a new "Museum of Marketing" now open in Ubud. And we share information on a book in praise of Balinese religious offerings.

Bali now has its first Search and Rescue Helicopter.

Coming events:
• "Regalia – The Enchanted Forest" premieres on Saturday, June 4, 2011 and commences performances every Thursday, Friday at Saturday -starting on June 9th. Click Here
• A Night in Tuscany with fine Italian wine and delicious cuisine from the Mozaic Bali in Ubud on June 4th. Click Here
• Shakespeare by the Sea – "The Tempest" at the Bloo Lagoon Villas in Padang Bai on June 5th. Click Here
• Come join the Cabaret organized by the Bali Bash on behalf of South Australian and Bali charities on Friday, June 11th. Tickets are still available. Click Here
• Bali International Women's Association (BIWA) Bazaar is Sunday, June 12, 2011.
• BIZNET Bali International Triathlon on Sunday, June 26, 2011 www.balitriathlon.com
Readers in Bali and Australia - we're offering free transfers to anywhere in Bali when you purchase your flights on Virgin Blue from Bali Discovery.


Om Çanti Çanti Çanti Om ...

J.M. Daniels - Bali Update
Bali Discovery Tours

Australia's promise

The next Golden State

With a bit of self-belief, Australia could become a model nation



IMAGINE a country of about 25m people, democratic, tolerant, welcoming to immigrants, socially harmonious, politically stable and economically successful; good beaches too. It sounds like California 30 years ago, but it is not: it is Australia today. Yet Australia could become a sort of California—and perhaps a still more successful version of the Golden State.

It already has a successful economy, which unlike California’s has avoided recession since 1991, and a political system that generally serves it well. It is benefiting from a resources bonanza that brings it quantities of money for doing no more than scraping up minerals and shipping them to Asia. It is the most pleasant rich country to live in, reports a survey this week by the OECD. And, since Asia’s appetite for iron ore, coal, natural gas and mutton shows no signs of abating, the bonanza seems set to continue for a while, even if it is downgraded to some lesser form of boom (see article). However, as our special report in this issue makes clear, the country’s economic success owes much less to recent windfalls than to policies applied over the 20 years before 2003. Textbook economics and sound management have truly worked wonders.

A flash in the pan?

Australians must now decide what sort of country they want their children to live in. They can enjoy their prosperity, squander what they do not consume and wait to see what the future brings; or they can actively set about creating the sort of society that other nations envy and want to emulate. California, for many people still the state of the future, may hold some lessons. Its history also includes a gold rush, an energy boom and the development of a thriving farm sector. It went on to reap the economic benefits of an excellent higher-education system and the knowledge industries this spawned. If Australia is to fulfil its promise, it too will have to unlock the full potential of its citizens’ brain power.

Australia cannot, of course, do exactly what California did (eg, create an aerospace industry and send the bill to the Pentagon). Nor would it want to: thanks to its addiction to ballot initiatives, Californian politics is a mess. But it could do more to develop the sort of open, dynamic and creative society that California has epitomised, drawing waves of energetic immigrants not just from other parts of America but from all over the world. Such societies, the ones in which young and enterprising people want to live, cannot be conjured up overnight by a single agent, least of all by government. They are created by the alchemy of artists, entrepreneurs, philanthropists, civic institutions and governments coming together in the right combination at the right moment. And for Australia, economically strong as never before, this is surely such a moment.

What then is needed to get the alchemy going? Though government should not seek to direct the chemistry, it should create the conditions for it. That means ensuring that the economy remains open, flexible and resilient, capable, in other words, of getting through harder times when the boom is over (a sovereign-wealth fund would help). It means maintaining a high rate of immigration (which started to fall two years ago). It means, above all, fostering a sense of self-confidence among the people at large to bring about the mix of civic pride, philanthropy and financial investment that so often underpins the success of places like California.

Many Australians do not seem to appreciate that they live in an unusually successful country. Accustomed to unbroken economic expansion—many are too young to remember recession—they are inclined to complain about house prices, 5% unemployment or the problems that a high exchange rate causes manufacturing and several other industries. Some Australians talk big but actually think small, and politicians may be the worst offenders. They are often reluctant to get out in front in policymaking—on climate change, for instance—preferring to follow what bigger countries do. In the quest for a carbon policy, both the main parties have chopped and changed their minds, and their leaders, leaving voters divided and bemused. There can be little doubt that if America could come to a decision on the topic, Australia would soon follow suit.

Its current political leaders, with notable exceptions, are perhaps the least impressive feature of today’s Australia. Just when their country has the chance to become influential in the world, they appear introverted and unable to see the big picture. Little legislation of consequence has been passed since 2003. A labour-market reform introduced by the Liberals was partly repealed by Labor. A proposed tax on the mining companies was badly mishandled (also by Labor), leading to a much feebler one. All attempts at a climate-change bill have failed. The prime minister, Labor’s Julia Gillard, admits she is unmoved by foreign policy. The leader of the opposition, Tony Abbott, takes his cue from America’s tea-party movement, by fighting a carbon tax with a “people’s revolt” in which little is heard apart from personal insults. Instead of pointing to the great benefits of immigration—population growth is responsible for about two-fifths of the increase in real GDP in the past 40 years—the two parties pander shamelessly to xenophobic fears about asylum-seekers washing up in boats.

…or a golden future?

None of this will get Australians to take pride in their achievements and build on them. Better themes for politicians would be their plans to develop first-class universities, nourish the arts, promote urban design and stimulate new industries in anything from alternative energy to desalinating water. All these are under way, but few are surging ahead. Though the country’s best-known building is an opera house, for example, the arts have yet to receive as much official patronage as they deserve. However, the most useful policy to pursue would be education, especially tertiary education. Australia’s universities, like its wine, are decent and dependable, but seldom excellent. Yet educated workers are essential for an economy competitive in services as well as minerals. First, however, Aussies need a bit more self-belief. After that perhaps will come the zest and confidence of an Antipodean California.
The Economist

China and the world economy

Crosstown traffic

The global economy is slowing. For one of its biggest members, that is good news
FOR the past year or two, the big economies have experienced a “multi-speed” recovery, as the IMF calls it. The recovery has resembled third-world traffic, where juggernauts and rickshaws, cars and cycles ply the same lanes at different speeds, often getting in each other’s way.

But for the past month or two, this traffic has slowed in unison. The deceleration is evident in the prices of commodities, which have fallen by 8.6% since mid-February, according to The Economist’s commodity-price index. It is also reflected in American manufacturing. New orders for durable goods, such as engines and cars, fell by 3.6% in April (albeit after a strong rise the month before). Factory output is still growing modestly, according to the Philadelphia Fed’s latest survey, but has lost more momentum since March than in any two months since November 2008.

America’s recovery relied for longer than most on fiscal injections. But by early August the federal government will bang up against a debt limit imposed by Congress. Any deal to raise the limit would almost certainly require spending reductions, and failure to strike a deal at all would require drastic cuts as the government stops selling debt. Even if the government is allowed to keep selling debt, the Federal Reserve will soon stop buying it, as it reaches the end of its latest round of “quantitative easing”, a programme to buy longer-dated paper with freshly printed money.

The euro zone’s prospects of growing its way out of trouble are receding, according to surveys of purchasing managers by HSBC and Markit, an information provider. Their “flash” (ie, preliminary) index for the euro-area economy fell sharply from 57.8 in April to 55.4 in May, a drop not seen since late 2008. In services the pessimism expressed about the coming year was reminiscent of mid-2009, before the recovery had picked up any speed at all.

The “flash” causing the biggest splash this week was, however, not in Europe but in China. HSBC’s preliminary estimate for Chinese manufacturing fell to 51.1 (see chart), well below the long-term average of 52.3, confirming a slowdown evident in April’s industrial-production figures. The release hurt stockmarkets worldwide. In a single day the Shanghai Composite index gave up its gains for the year.

This strong reaction was curious. In China, unlike the euro area or America, a slowdown is overdue. Its growth in the past two quarters was too fast to sustain, resulting in a worrisome rise in inflation. The government has been trying to slow the economy, by reining in runaway lending. The industrial slowdown is welcome evidence that these measures are working.

A PMI reading above 50 indicates rising output; one of 51.1 is consistent with GDP growth of 9%, says HSBC. But the figure immediately raised fears of a much harder landing. Observers may worry that inflation has already got out of hand, forcing the government to hammer the economy to bring prices back under control. At the end of 1994, for example, China faced inflation of over 25%. In the next two years, tight macroeconomic controls knocked 4.6 percentage points off its growth rate.

But inflation in China is now only 5.3%. Vegetable prices have fallen, and non-food inflation may be easing. China’s inflation has proved more stubborn than expected. But growth will not have to slow by four points to quell it.

Some observers worry that the economy will run out of steam because coal is increasingly costly and electricity in short supply. In recent months Chinese industry has suffered power cuts reminiscent of 2004. But China had outages then because its power stations could not make enough power, points out Mark Williams of Capital Economics. It suffers cuts now because they cannot make enough money. The government has not allowed electricity tariffs to rise in step with coal prices, forcing producers to operate at a loss. Raising tariffs is the solution, even if it adds temporarily to the inflation figures.

The final reason to worry is also the most grave. Many fear that China’s overstretched property market will collapse, leaving insupportable debts in its wake. The government’s curbs on mortgage borrowing and speculative homebuying are having some effect on sales (down by 10% in the year to April) but not yet on “starts”, or new homebuilding, points out Tao Wang of UBS Securities. Perhaps the government’s drive to build more affordable housing is offsetting a slowdown in unaffordable housing.

If the bubble were to burst, developers would suffer horribly. Recent homebuyers would also find themselves out of pocket. But in China, unlike America, housing is a vehicle for saving, not for borrowing. Householders are not up to their necks in mortgage debt, although it has risen quickly to about knee height: over a third of disposable income last year, compared with less than a quarter two years before. If prices fell heavily, the damage to households’ wealth might dampen spending. But they would not be submerged in debt.

Banks also say their exposure to property is manageable, at about 20% of loans. Their indirect exposure might go much deeper. But if their ratios of non-performing loans (NPLs) ever rose too high, the government would step in. As Stephen Green of Standard Chartered puts it, “small NPLs are a bank’s problem; big NPLs are the government’s problem.”

Given the improbability of a hard landing in China, the swings of sentiment towards its economy are difficult to understand. Ms Wang suggests one explanation: “Outside China most people’s exposure to the country is through the commodities market,” she says. “In that market, things tend to get accentuated…[they] are either great or they are a disaster.” It is like the little-known tale of Goldilocks and the Two Pandas. The Chinese economy is either too hot or too cold, but never just right. The Economist

China and the world economy

Crosstown traffic






The global economy is slowing. For one of its biggest members, that is good news
FOR the past year or two, the big economies have experienced a “multi-speed” recovery, as the IMF calls it. The recovery has resembled third-world traffic, where juggernauts and rickshaws, cars and cycles ply the same lanes at different speeds, often getting in each other’s way.

But for the past month or two, this traffic has slowed in unison. The deceleration is evident in the prices of commodities, which have fallen by 8.6% since mid-February, according to The Economist’s commodity-price index. It is also reflected in American manufacturing. New orders for durable goods, such as engines and cars, fell by 3.6% in April (albeit after a strong rise the month before). Factory output is still growing modestly, according to the Philadelphia Fed’s latest survey, but has lost more momentum since March than in any two months since November 2008.

America’s recovery relied for longer than most on fiscal injections. But by early August the federal government will bang up against a debt limit imposed by Congress. Any deal to raise the limit would almost certainly require spending reductions, and failure to strike a deal at all would require drastic cuts as the government stops selling debt. Even if the government is allowed to keep selling debt, the Federal Reserve will soon stop buying it, as it reaches the end of its latest round of “quantitative easing”, a programme to buy longer-dated paper with freshly printed money.

The euro zone’s prospects of growing its way out of trouble are receding, according to surveys of purchasing managers by HSBC and Markit, an information provider. Their “flash” (ie, preliminary) index for the euro-area economy fell sharply from 57.8 in April to 55.4 in May, a drop not seen since late 2008. In services the pessimism expressed about the coming year was reminiscent of mid-2009, before the recovery had picked up any speed at all.

The “flash” causing the biggest splash this week was, however, not in Europe but in China. HSBC’s preliminary estimate for Chinese manufacturing fell to 51.1 (see chart), well below the long-term average of 52.3, confirming a slowdown evident in April’s industrial-production figures. The release hurt stockmarkets worldwide. In a single day the Shanghai Composite index gave up its gains for the year.

This strong reaction was curious. In China, unlike the euro area or America, a slowdown is overdue. Its growth in the past two quarters was too fast to sustain, resulting in a worrisome rise in inflation. The government has been trying to slow the economy, by reining in runaway lending. The industrial slowdown is welcome evidence that these measures are working.

A PMI reading above 50 indicates rising output; one of 51.1 is consistent with GDP growth of 9%, says HSBC. But the figure immediately raised fears of a much harder landing. Observers may worry that inflation has already got out of hand, forcing the government to hammer the economy to bring prices back under control. At the end of 1994, for example, China faced inflation of over 25%. In the next two years, tight macroeconomic controls knocked 4.6 percentage points off its growth rate.

But inflation in China is now only 5.3%. Vegetable prices have fallen, and non-food inflation may be easing. China’s inflation has proved more stubborn than expected. But growth will not have to slow by four points to quell it.

Some observers worry that the economy will run out of steam because coal is increasingly costly and electricity in short supply. In recent months Chinese industry has suffered power cuts reminiscent of 2004. But China had outages then because its power stations could not make enough power, points out Mark Williams of Capital Economics. It suffers cuts now because they cannot make enough money. The government has not allowed electricity tariffs to rise in step with coal prices, forcing producers to operate at a loss. Raising tariffs is the solution, even if it adds temporarily to the inflation figures.

The final reason to worry is also the most grave. Many fear that China’s overstretched property market will collapse, leaving insupportable debts in its wake. The government’s curbs on mortgage borrowing and speculative homebuying are having some effect on sales (down by 10% in the year to April) but not yet on “starts”, or new homebuilding, points out Tao Wang of UBS Securities. Perhaps the government’s drive to build more affordable housing is offsetting a slowdown in unaffordable housing.

If the bubble were to burst, developers would suffer horribly. Recent homebuyers would also find themselves out of pocket. But in China, unlike America, housing is a vehicle for saving, not for borrowing. Householders are not up to their necks in mortgage debt, although it has risen quickly to about knee height: over a third of disposable income last year, compared with less than a quarter two years before. If prices fell heavily, the damage to households’ wealth might dampen spending. But they would not be submerged in debt.

Banks also say their exposure to property is manageable, at about 20% of loans. Their indirect exposure might go much deeper. But if their ratios of non-performing loans (NPLs) ever rose too high, the government would step in. As Stephen Green of Standard Chartered puts it, “small NPLs are a bank’s problem; big NPLs are the government’s problem.”

Given the improbability of a hard landing in China, the swings of sentiment towards its economy are difficult to understand. Ms Wang suggests one explanation: “Outside China most people’s exposure to the country is through the commodities market,” she says. “In that market, things tend to get accentuated…[they] are either great or they are a disaster.” It is like the little-known tale of Goldilocks and the Two Pandas. The Chinese economy is either too hot or too cold, but never just right. The Economist

Where Have All the Geckos Gone?

The call of the tokek, or gecko, is one of the most familiar sounds in Indonesia. Next to the smell of clove cigarettes, the calls to prayer, the friendly smiles and the ferocious afternoon rainstorms, it stands as one of the most easily identifiable characteristics of the country.

But when did you last hear a gecko call? When we recently considered this question, we couldn’t help but suspect that geckos are growing increasingly rare. We asked 65 Indonesian colleagues working in environmental research and natural resource management, and found that two-thirds of them felt that geckos were less common now than 10 years ago.

That observation bears out in several ways. Indonesian geckos are increasingly exported to China, Japan and other Southeast Asian countries, where their dried skins are used in medicine and skincare products. We recently spoke with a farmer near Yogyakarta who said collectors went everywhere in Java to buy up geckos.

A study in the journal Biodiversity & Conservation suggested that in 2006 the overseas trade in geckos from Java amounted to some 1.2 million dried specimens, greatly exceeding the quota of 25,000 set by Indonesian authorities.

Some of this has made the news. One recent story reported that workers in the East Java city of Probolinggo collect 3,000 tokeks each day, pocketing earnings of half a US dollar per gecko. The Sarawak Police recently raided a market that had geckos for sale originating from Pontianak, West Kalimantan.

All of this leads one to consider whether the gecko could actually disappear from Indonesia. After all, given the current notions of conservation and resource protection in the country, it isn’t far-fetched to think that the once ubiquitous gecko may one day fall silent.

Geckos are not protected here. Neither are they listed by the major conservation organizations as being endangered in Indonesia, which means that keeping, killing or selling them is, within limits, perfectly legal. This raises the question: If this trade is affecting gecko populations to the point that we can no longer hear their nightly calls, are the limits enough?

We talk a lot about the sustainable management of forests and seas in this country, which should mean that resources are managed so that we can keep harvesting and using them forever without changing their inherent qualities. At the same time we know that money talks, and that people will pursue short-term gains unless rules are in place to stop them.

It bears asking just how likely is it that the Department of Conservation in the Ministry of Forestry would ever act to reduce the trade and killing of a species like the gecko. If the failure to do anything meaningful for orangutans or tigers is anything to go by, we shouldn’t be holding our breath. And at least orangutans and tigers are furry, warm creatures that do well in the media. What does anyone know or want to know about the scaly anteaters, pythons, crocodiles and hundreds of bird species of Indonesia that have been collected to the point of near extinction in the wild?

Indonesia’s history of resource management is not one of overwhelming success. The country is facing a wildlife crisis, and not just because wildlife habitats are poorly managed and disappearing or being degraded, but also because Indonesia is killing and selling its wildlife to the point that populations are disappearing from even its most remote corners. Collective commitment from all Indonesians is the only way to stop this decline. In a democratic nation, the government plays a major role in convincing its electorate that the issue needs addressing.

First, the government needs to recognize the problem. Second, it needs to publicize that such a problem exists. Then it needs to tell the people what they can and cannot do according to the law, and then enforce those laws. Finally, and probably most important, the government needs to set the right example in the broader management of natural resources.

It would be great if some visionary in the government could show the people what this country will look like in 25 years. Will it have any forests left and will the seas still be home to plentiful fish? Where will its people live and how well off will those people be? Will the gecko still call?

Perhaps the tokek offers an opportunity to build local conservation momentum. Much conservation in Indonesia is still pushed by outsiders, especially those caring about the most charismatic creatures. The challenge now is to envision a conservation movement that is truly supported by the local society. Maybe there would be associations of fishermen for the preservation of their most important fish resources. Or a group of Dayaks for sustainably managed pig populations, or an organization for the protection of wild stocks of favorite caged birds. Perhaps the Indonesian Tokek Society would exist. too.

In some ways, the gecko is symbolic for Indonesia. In popular lore this has long been true: When the loud “tokek” sound rings out at night, many people count the number of calls. An odd number means luck. Seven calls mean very good luck and fair weather the next day, and nine means the height of happiness and success.

But while the country traditionally believes in the good things that the species brings, it runs the risk of selling this luck for short-term financial gains.

The old balance between long-term happiness and luck and rapid economic progress needs to be reassessed, and Indonesians play a key role.

By Erik Meijaard senior forest adviser for People and Nature Consulting International AND Ramadhani Achdiawan researcher at the Center for International Forestry Research.

India in Africa Playing catch up

Long timid in international affairs, India is starting to make waves


FOR all its elephantine weight, India has long shown mouselike diplomatic clout. Historically, its diplomacy was constrained by poverty at home, fraught relations with neighbours, notably Pakistan and China, and an anxiety to avoid taking sides in the cold war. Even today, its foreign service remains woefully understaffed: both New Zealand and Singapore have more serving diplomats. Now India is trying harder to get noticed.

About time. India’s growing economy and population need far more energy than can easily be produced at home, requiring eyes to be raised to distant horizons. Already the world’s fourth-biggest oil consumer, within 15 years India will import nearly all its oil. India is set on diversifying supply away from the Middle East.

Increasingly, it expects to get supplies from Central Asia and Africa.

As it happens, India’s prime minister, Manmohan Singh, has just spent six days in Africa, along with hordes of Indian ministers and businessmen. An Afro-India summit, the second in three years, with leaders of 15 African countries, produced a surge of shared goodwill. Mr Singh had admirable deeds to point to. India is the third-biggest contributor of UN peacekeepers to the continent, helping clamp down on civil wars in Sudan and Congo. India’s navy chases Somali pirates. And, the prime minister reminded listeners, India’s record of speaking out against apartheid in South Africa was an honourable one.

More striking, Mr Singh promised $5 billion of loans on easy terms over the next three years for Africans willing to trade with India, plus another $1 billion to pay for education, railways and peacekeeping. It is a steep rise in aid and assistance—last year India gave a mere $25m to Africa—and marks a striking shift, especially since India itself is still a big recipient of aid. But Mr Singh wants something in return: African backing for another round of long-stalled efforts to reform the UN Security Council. India craves a permanent seat, and will back an African permanent one, too, probably for South Africa.

Booming two-way trade, likely to pass $50 billion this year, is the backdrop to all this goodwill. Oil exports account for much of the trade, thanks in part to a rash of investments by Indian oil firms in eight producing countries. Minerals matter too. India’s large jewellery industry gobbles up South African diamonds and gold. Mozambique’s coal fuels power stations. India wants uranium from Malawi and Niger for nuclear power.

Mr Singh talks cheerily of all this helping Africa to prosper. For now, however, rival China plays the bigger role. The value of its trade is three times India’s. Whereas China’s African embassies are large and well staffed, the handful of Indian diplomats in Mozambique struggle to speak Portuguese. Bids by Chinese state-owned firms for African oil concessions routinely knock Indian ones aside. It helps that Chinese-built infrastructure projects have already charmed governments.

Land Activists Face Prison in Vietnam

Hard time faces 7 people who dared challenge government land seizures


Late on a Tuesday evening, sitting four floors up in a Ho Chi Minh City cafe overlooking the city’s landmark opera house, a worried man who used the pseudonym Long had the look of someone who thought he was being watched.

"I drove around the city for 45 minutes before heading here," he said, hunched over and leaning forward on his seat in a restaurant that was almost empty. Looking around edgily, he said softly, "I wanted to make sure I wasn’t being followed."
At the heart of Long’s problems, and that of his fellow members of a Mennonite Church offshoot, is what they deem to be unfair land seizures that are then turned over to major companies for development by the Vietnamese government. The state maintains sole ownership of land and confiscation in the name of economic development is a continuing irritation. Landowners frequently complain about unfair compensation and criticize the laws on land use, which they say are often abused by corrupt local officials.

Although the Mennonite Church has official recognition from the government, Long belongs to a splinter group with about 10,000 members called the "Cattle Shed Church" in Ho Chi Minh City.

The Cattle Shed Church’s pastor is an activist named Duong Kim Khai, who was arrested on Aug. 10 last year on charges of attempting to overthrow the government. Khai, who has been held incommunicado since his arrest, was previously jailed for two years between 2004 and 2006 after police seized his property, which they said was being used as an unsanctioned place of worship. Upon his release, he relocated the congregation to a friend's cattle shed, hence the name of his church.

Khai is expectedto be tried starting Monday in the People's Court of Ben Tre along with six other activists who have been linked by officials to the overseas pro-democracy group Viet Tan, a proscribed organization in Vietnam’s one-party state. Opposition parties are effectively banned in Vietnam, and membership in such organizations can be deemed subversion under Article 79 of the Vietnamese Penal Code.
The group includes two other Mennonites and four land rights activists, including one from the Hoa Hao Buddhist sect. Khai and his group were working with fellow Vietnamese, helping them file letters of complaint over the loss of their land, which had been seized by local governments and sold to developers.

Nineteen years ago, Long himself lost 320 square meters of land in the city, with the government paying compensation amounting to a little over one-eighth of the property’s value, he says. "I read more about the law to try help my own case. It was no good. But I try to help others now."

Khai, Long says, "helped farmers who lost their land. It means that the government considers the pastor the leader of the farmers who protest losing their land." Echoing his own two-decade old case, he said "the government took the land from the farmers and paid the lowest compensation"

The pastor, along with two other Cattle Shed members, Tran Thi Thuy and Nguyen Thanh Tam, have been held without access to lawyers or their families. "The attorney cannot contact the detainees til now," Long said. According to Viet Tan, the group's legal team have not been given access to necessary documents, in contravention of Vietnamese law.

The seven are expected to face what is feared will be a show trial along the lines of the recent case of Cu Hu Va Huy, who on April 4 was sentenced to seven years in prison under Vietnam's opaque national security laws, also for defending victims of land confiscation. It was possibly Vietnam's highest-profile political trial in recent years.

Cu Hu Va Huy's father was a confidante of Vietnam's Communist revolutionary icon Ho Chi Minh. The son previously represented the Vietnamese Government in international cases. However he fell from favor with the ruling Communist Party of Vietnam (CPV) elite after twice attempting to sue Prime Minister Nguyen Tan Dung, in one case over a controversial bauxite mine in the Central Highlands.

His most recent arrest, leading to the seven year sentence, came after his attempts to represent Catholics from Con Dau near the coastal city of Danang, who were arrested after protesting police blockage of a funeral in May. The authorities said that the 135-year-old cemetery was on state land, apparently designated by the government as the future site of an eco-tourist resort.

Since the sentencing, more than 2,000 people have signed a petition for Cu Hu Va Huy's release, including senior communist party members, retired army officers and government officials. Other activists, such as Hanoi-based lawyer Le Quoc Quan, were detained by police after showing up at Cu Hu Va Huy's trial.

The government is taking a very strict line on Monday's trial of the Mennonites and the other activists. Now, according to Long, anyone thinking of showing up at Ben Tre is being told to think again. by Simon Roughneen

Thailand’s Politicians should talk about real issues in the South

Instead of rhetoric about possible autonomy, people in the South want to hear about genuine future prospects from election candidates


With at least seven political parties running for parliamentary seats in the violence-plagued three southernmost provinces of Pattani, Yala and Narathiwat, one would think that the platforms would be much more interesting and innovative than the rhetoric and speculation that has been circulating.

There has been a lot of hot air from the various parties over the proposed semi-autonomous region dubbed the "Pattani Metropolitan Administration". The idea was tossed out last year by Chavalit Yongchaiyudh, then chairman of the Pheu Thai Party, who has now left both his post and the party.





To begin with, the veteran former prime minister, who always claimed to have a good working relationship with the Malay-speaking region, no longer has the needed political capital to push such an idea through. This will not happen with his backing now, nor would it have done when he threw out the idea during his tenure as Pheu Thai chairman. Others picked up on the proposal, but it simply didn't gain much traction. In the end it became a political slogan, a sales pitch for interested policy-makers and national leaders, without much real thought given as to how it could ever be accomplished.

There is no need to remind the public how important the issue of Southern autonomy is, and how seriously the ongoing conflict has affected the livelihood of the region's people and officials, regardless of their ethnicity or religion.

The idea of autonomy is not a bad one in itself, but it has to be understood in the national context. Any form of decentralisation, for any region of the country, should be carried out in a context of understanding. For too long, too much emphasis and responsibility has been placed on the central government. It's high time we empowered local communities and seriously considered the proposals made by the now-defunct National Reform Committee under the leadership of former prime minister Anand Panyarachun.

Prime Minister Abhisit Vejjajiva has repeatedly said over this past year that he is open to ideas on autonomy for the deep South, and that such a notion should not be confined to political or administrative entities. In this respect, the idea of greater cultural space for the Malays of the deep South should not be overlooked. After all, research after research supports the argument that the conflict is ethno-nationalist in nature because the Malays in the southernmost provinces do not embrace the state-constructed identity that Thailand has tried to impose on them for more than a century.

If history is any indication, the Malays of the deep South are willing to be part of Thailand, but it has to be on their terms - not the terms dictated by the state.
But it's far too hard for Thai politicians to address this sticky issue - that the Malays question the legitimacy of the Thai state in the region, and reject the state-constructed identity - because they know that it would be too hard a sell to their constituencies. And so they stick to the ambiguous rhetoric, hoping this will get them elected to Parliament.

In some strange way, many politicians even have the audacity to promote the idea of autonomy. Many were around and in power during the Tak Bai massacre in 2004, and none made any critical comments about the brutal treatment of the unarmed demonstrators at the hands of the military.

Instead of shouting slogans about autonomy, why not talk about real issues such as equality and justice? People in the deep South - both Malay Muslims and Thai Buddhists - want to know about the future prospects for their children. They want to know about social mobility and equality for themselves and their children.

The Malays who challenge the Thai identity want to know how the nation will treat their cultural heritage, their historical narrative and their different outlook. If these key issues are not addressed, the anger that fuels the resentment and has driven many young men to take up arms against the state will produce the next generation of militants. We owe it to future generations to get out of this vicious cycle. The Nation, Bangkok

How Asean Can Avoid Arms Race

There is no denying that a major upgrading of the defensive capabilities of Asean member countries is overdue, and that there is no reason to worry if and when any do so. After all, we cannot expect Asean member countries to deal with present-day non-conventional security concerns, such as human trafficking, smuggling and piracy, while their armed forces are equipped with weapons so obsolete as to make pitchforks and parang a security threat.

There is, however, some cause for concern when the upgrading of the defensive capabilities of some countries lends the impression that the new weapons technologies that are being purchased may also be used for more belligerent intentions; and even more worrisome when there is the threat that such weapons technologies may fall into the wrong hands.





Furthermore, it has to be added that for most Asean member countries, the pressing needs of development have to come first: across both maritime and mainland Southeast Asia, there remains the dire need for better communication, transport infrastructure, schools and other educational facilities as well as the provision of healthcare -- all of which contribute to the sum total of a nation's social and material development. Nuclear weapons are not much use for countries where illiteracy remains a problem, it can be argued.

How then should the nations of Asean proceed in terms of the upgrading of their armed forces? Asean's formation in the 1960s was meant to serve as an instrument for the prevention of war: to prevent the Cold War from spilling into the region, and to prevent war from erupting between the member states. Thus far, Asean, along with the European Union, can claim some credit for being able to hold off the threat of both.
However, as the Asean member states continue to develop according to their own pace and trajectory, there is the need to ensure that communication between them remains at an optimum, real-time level. This has to be so in order to ward off any untoward incidents and concerns that might arise when one country suddenly ups the ante by acquiring a new weapon system that radically tips the balance of power in favour of it, at the expense of others.

























It is in this light that we need to consider Indonesia's latest testing of its Yakhont anti-ship missile, which was launched in the Indian Ocean recently. The successful test-firing of the Russian-made missile marks a significant development in the military potential of Indonesia. The anti-ship missile has a range of around 300km and flies at Mach 2.5, more than twice the speed of sound.

Vietnam, likewise, has the same missile capabilities, but its anti-ship missiles are based in land installations, rendering them useful for only defensive operations. Over the past few years, other countries in Asean have beefed up their anti-ship missile capabilities: Malaysia has introduced underwater-launched anti-ship missiles in the Scorpene submarines.

The concern of some security analysts, however, is that these new arms purchases may inadvertently contribute to an arms race of sorts in Southeast Asia, and thereby decrease, rather than increase, Asean's role as a peacekeeping arrangement between its member states. Furthermore, one has to wonder how anti-ship missiles contribute to the safety of our territorial waters where -- in some regions -- the threat of piracy, smuggling and human trafficking seem to be the real problems that need to be resolved. Are the naval forces of Asean going to stop the smuggling of pirated DVDs by launching million-dollar missiles in the future?

Countries like Indonesia do indeed need to upgrade and even expand their armed forces for reasons that ought to be clear to anyone with a grasp of arithmetic: it would be impossible for the armed forces of Indonesia to maintain security in an archipelago of 14,000 islands stretched across an area the size of Europe unless it has a bigger army that is professional and well-equipped. But this also means purchasing less glamorous equipment like transport ships, coastal patrol boats, observation aircraft, and, of course, improving the salary, training and level of professionalism of the ordinary soldiers themselves.

Such stuff may not be to the liking of fans of Rambo and other gory war flicks, but the bottom line is that the running of a professional army is akin to the running of a well-organised company: the accounts have to be in order, logistics have to be accounted for, supplies have to be regular, and professionalism has to prevail always.

For the sake of the communities of Asean, whose combined population now stands on a par with Europe at well above 300 million, policymakers in the region need to remain lucid and cognisant of these simple economic facts.

Asean does need security and safety, but it does not need an arms race.
New Straits Times [Malaysia]

Crime as Government in the Philippines

MANILA - When Hollywood screenwriter Skip Woods hired the services of a private investigation firm to locate his prized customized motorbike stolen in Texas last year, little did he expect that it would be traced halfway around the world in the Philippine southern island of Mindanao. Apart from Woods' US$80,000 Harley Davidson bike, 24 other smuggled cars and motorcycles were seized during a raid by Philippine National Bureau of Investigation (NBI) agents aided by a tip-off from the United States Federal Bureau of Investigation (FBI). The FBI later confirmed that eight vehicles seized in the raid were stolen from the US based on their serial numbers.

The recovery of the stolen US vehicles in the Philippines has put a spotlight on the country's rampant smuggling and ports corruption. Contraband, including smuggled oil and agricultural products, flow easily across the archipelago's loosely controlled maritime borders. The recent raid indicates that local smugglers are moving up the value-added chain and apparently have deep connections with criminal syndicates in the US and possibly other countries.

The incident has raised questions about President Benigno Aquino's anti-corruption pledge, one of the key planks of the reform campaign he rode to an overwhelming electoral win last year. Some have interpreted the high-profile bust as indication that his government is serious about uprooting endemic corruption, including at the notoriously graft-ridden Bureau of Customs (BoC). Others believe Philippine authorities only acted under pressure from the US and will likely wilt in the prosecution phase once it becomes clear the extent of high-level official complicity in the criminal racket. Either way, the lack of perceived progress was reflected in a recent Social Weather Station survey that showed public disappointment in Aquino's efforts in eradicating graft and corruption, with perception ratings slipping by eight percentage points from last November to this March.

Lynard Allan Bigcas, a Mindanao-based importer, a US immigrant and the main suspect in the luxury vehicle smuggling racket, allegedly received the seized shipment from Hispanic car thieves in Houston, Texas, according to officials. NBI authorities have also accused Bigcas of involvement in illegal gun-running with possible links to international terrorist groups after several high-powered firearms and ammunition were recovered during the May 3 raid. Bigcas has maintained his innocence of the charges.

Philippine agents also seized an alleged list of his clients which apparently includes several influential political clans in Mindanao. The black book was made public during a congressional hearing on the controversy on Monday. Ilocos Norte congressman Rodolfo Farinas, who heads the government investigation, claimed there were 90 names in Bigcas' book, including governors, mayors and political clan members, with monetary amounts for apparent placed orders listed next to their names. Those mentioned have denied any connection to Bigcas. Lanao del Norte governor Mohammad Khalid Dimaporo claimed at the hearing that it was the first time he had heard Bigcas' name, although long-time residents of Lanao said that the Dimaporo family is close to Bigcas, who is reportedly a rider and supplier of parts to the Sultan Naga Dimaporo racing team.

Lawyer Noa Dimaporo, a deputy customs collector at a container port in Mindanao, was identified during the congressional hearing of asking Bigcas for the price of certain smuggled firearms, giving some credence to NBI director Magtanggol Gatdula's allegation that Bigcas had high-level contacts at the BoC. Bigcas said during the congressional hearing that he imported the luxury vehicles by disassembling and shipping them in so-called "balikbayan" boxes, or door-to-door shipments, by overseas Filipino workers that are not subject to tariffs. He pleaded ignorance that the practice was illegal under Philippine law. NBI investigators deemed his testimony as improbable and argued that the claim was likely made to avoid exposing official complicity at the BoC.

Customs commissioner Angelito Alvarez said they were looking into the possibility that the smuggled items were actually transported by sea and not by cargo plane, which would have been checked by BoC officials. This would raise doubts about Bigcas' claim they were delivered by "balikbayan" boxes. Alvarez said the BoC is investigating reports that the shipment passed through either Japan or South Korea, where the import papers were allegedly changed. He also said that Bigcas was probably part of a smuggling ring his office raided in Davao a month ago. At the same time, there are questions about possible high-level BoC involvement in the transnational smuggling racket. When asked by reporters whether he felt miffed that the BoC was not informed in advance of the NBI's planned raid, Alvarez said that he would have done the same given the NBI's hunch that BoC officials were in cahoots with the smugglers.

During the congressional hearing, it was revealed that the seized shipment was made prior to Alvarez assuming the BoC's directorship. Yet the embattled commissioner has had to fend off critics who have pounced on the news of the raid to accuse him of negligence or even complicity. Alvarez has denied any involvement in the alleged smuggling ring. His BoC is nonetheless under fire. Graft charges were recently filed at the National Office of the Ombudsman by anonymous aggrieved BoC employees against Alvarez, secretary of finance Cesar Purisima and finance undersecretary Guillermo Parayno Jr for allegedly overlooking extensive smuggling of used clothing into the country, which is strictly prohibited under law.

The anonymous internal complaint also alleged that the trio took in non-customs personnel to perform various official BoC functions, including administration of top staff salaries. Alvarez believes that the anonymous accusations against him are being driven by individuals and firms that have been hurt by anti-smuggling campaigns he has initiated and overseen in line with Aquino's anti-corruption drive. That campaign includes at least 32 alleged smuggling cases that the BoC has recommended for prosecution to the justice department, including big ticket complaints against Pilipinas Shell Petroleum Corp ($551 million), Phoenix Petroleum Philippines Inc ($116 million) and Foodsphere Inc ($26 million).

It's still unclear how much, if any, high-level corruption the congressional hearings into the alleged Bigcas smuggling ring will unearth. Yet some observers already sense hints of a behind-the-scenes deal that will allow him to escape sanction. Bigcas has maintained his freedom despite the strong evidence against him, and failed to appear in court for a hearing on Monday where the head of the Justice Department was in attendance. That's sentsignals to some that Aquino officials are either unwilling or unable to deliver on his government's corruption-busting pledge, especially when it potentially involves high-level officials.

By Joel D Adriano independent consultant and award-winning freelance journalist. He was a sub-editor for the business section of The Manila Times and writes for ASEAN BizTimes, Safe Democracy and People's Tonight.

Indonesia Unveils Giant 2025 Economic Plan

The government on Friday outlined its blueprint for the country’s development over the next 14 years, presenting a series of startling numbers, including some Rp 4,000 trillion ($470 billion) in investment and a predicted 550 percent rise in GDP.

The Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI) would see 17 infrastructure projects worth a total of Rp 190 trillion start this year, said Hatta Rajasa, coordinating minister for the economy. The projects are part of the Rp 4,000 trillion investment plan.

Launching the master plan — a part of Indonesia’s bid to become one of the world’s 12 largest economies by 2025 — President Susilo Bambang Yudhoyono outlined five major obstacles: slow bureaucratic processes, selfish regional governments, investors failing to meet commitments, unfavorable policies and political gridlock.

“We can’t predict what will happen 15 years from now,” Yudhoyono said. “There are two possibilities, Indonesia can successfully implement this master plan and achieve its goal or it can fail. I am not about to see it fail.

“Our future is negotiable and it’s up to ourselves and God to change the future.”





The master plan foresees per-capita income soaring to up to $16,00 in 2025 from last year’s $3,000, and gross domestic product possibly reaching up to $4.5 trillion in 2025 from $700 billion in 2010, when the economy was the world’s 17th largest.

“It’s impossible to achieve our long-term economic goals without the master plan,” Yudhoyono said. “We also can’t rely wholly on market mechanisms. The government’s role, as a visible hand, is important.”

The blueprint is based on six economic corridors, each with specific competitive advantages. Sumatra has been pegged as a center for agriculture and energy, Kalimantan for mining and energy, Sulawesi and North Maluku for agriculture and fisheries, Bali and Nusa Tenggara for tourism and food production, Papua and Maluku for natural and human resources and Java for industry and services.

The MP3EI earmarks Rp 544 trillion for infrastructure projects through 2014, with state companies pledging to contribute Rp 836 trillion and business groups, represented by the Indonesian Chamber of Commerce and Industry (Kadin), promising to invest Rp 1,350 trillion over that period.

Kadin chairman Suryo Bambang Sulisto said the plan had been a long time coming. “We see this not only as a plan to accelerate development, but a golden opportunity to invest,” he said. “Private sector participation sends a strong signal to foreign investors that the government is going all out in implementing the master plan.”

Investors and local businesses have long complained about infrastructure inadequacies and bottlenecks in the economy.

Important legislation needed to boost infrastructure development, such as the land acquisition law, also remains uncertain, and overlapping bureaucracies due to decentralization continues to hinder investment. Jakarta Globe

Chinese Bomber Receives Outpouring of Sympathy Online

The day after a Chinese man set off bombs in local government buildings and killed himself, Chinese internet users said they understand his frustration – and his actions. Chinese websites and microblogs boiled over on Friday with messages of sympathy and support for a man who killed himself and two others in a bomb attack on local government buildings in southern China Thursday, also wounding 10 bystanders.
Qian Mingqi, who spent a decade unsuccessfully attempting to win legal redress for what he said was the illegal demolition of his home, set off three bombs in three government offices in Fuzhou, Jiangxi province. In a post that was sent on a Chinese microblog similar to Twitter just before his attack, he said he wanted “to use action to remove evil-doers for the people.”

The flood of supportive comments online since his death is a sign of widespread public frustration at the government's disdain for ordinary citizens. Most of the comments have treated his action as righteous vengeance, rather than a terrorist attack.

The cost of urbanization

As China urbanizes at breakneck speed and the demand for land grows, local authorities across the country have often resorted to violence to force farmers off their land or residents from their homes, generally paying them a pittance while profiting handsomely from developing the confiscated land. Those abuses have drawn increasing public attention in recent years, but courts generally follow the wishes of the local government and rarely intervene.

Qian left a trail of posts online which explained his futile efforts, through lawsuits and petitions to the government, to win compensation for his property and home, which he said had been illegally knocked down by the authorities. The website of the government-owned China Business News Daily reported that Qian had been forced to move from his home in 1995 to make way for a road. In 2001, when the local government drove another highway

through his property, he was evicted from a new house he had built. The local court refused to hear a lawsuit he brought against the Fuzhou government.
“Ten years of fruitlessly trying to seek redress have forced me to take a path I did not wish to take”, Qian wrote on his profile on Sina Weibo, China’s most popular microblog site.

The need for a public outlet

Messages of condolence over the past 36 hours have hailed his action. “Warrior, rest in peace,” read one. “How brave you are to do such things. I hope you win justice,” said another. On Friday evening, Qian's Sina Weibo account was cancelled, a sign of official nervousness about the support he has received online.

This is not the first time that the Fuzhou government’s development drive has proved fatal. Last September, three residents set themselves on fire as police entered their home, which was slated for destruction. One of them died. Nor is it the first time that public opinion has sided with someone who has used deadly violence against the authorities. Three years ago, a young man who was falsely accused of bicycle theft stabbed six policemen to death in Shanghai after being beaten up in a police cell. He won widespread sympathy. The Christian Science Monitor