Not surprising, three emerging Asian countries out of the top five were voted as the most likely to pay bribes to win business in other countries. In a survey conducted by anti-corruption organization Transparency International, Russia was voted the most likely to pay bribes, followed by China and India. Conversely, wealthier, more developed countries Belgium, Canada and the Netherlands were voted the least likely to pay bribes to win business in other countries.

In the previous Bribe Payers Index (BPI), published in 2006, India was named as the worst, followed by China and Russia, while Switzerland, Sweden and Australia got the highest scores.

Looking at the larger picture, experts who specialize in governance relate a country’s level of corruption to long-term economic growth and investment. In Asia, this means countries  such as Singapore and Hong Kong which have made concerted efforts to stamp out corruption have witnessed higher growth and FDI inflows as compared to country’s such as Myanmar which was ranked amongst the world’s most corrupt countries by TI. Of the emerging countries, Malaysia ranks high, followed by Thailand, Vietnam, Indonesia and the Philippines in that order.

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American auto sales plunged 37 percent in November, the worst in 26 years. European new-passenger-car sales slumped 26 percent in November and now its Asia’s turn. While auto sales have crashed in most Asian countries Japan has taken the hardest hit.

Optimistic forecasts say Japan’s car sales next year could fall to the lowest in 31 years. Sales of trucks, buses, cars and mini cars, may fall 4.9 percent to 4.86 million vehicles in 2009 from estimated 5.11 million in 2008, the Japan Automobile Manufacturers Association told Bloomberg. The tally would be the lowest since 1978 when automakers sold 4.68 million units.

Toyota, Japan’s top automaker that makes the Camry sedan and Prius hybrid, has already slashed its profit forecast for the fiscal year through March to US$5.9 billion, or about a third of its previous year’s earnings. Expectations are rife another downward revision is coming. Honda Japan’s second-largest automaker, cut its annual profit outlook 62 percent.

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Its hard to find positive news to start this week off with, so lets try to find the silver lining around the cloud of gloom.  The International Air Transport Association (IATA) based in Geneva announced last week that although the airline industry will be loosing US$5 billion in 2008, lowered oil prices and passenger traffic during the second half of 2008, will mean airlines will cut fares in 2009 by about 5 percent.

The IATA announced that Asia-Pacific airlines will be the most severely hit  loosing approximately US$1 billion in 2009 predominantly due to a drop in cargo. Asia-pacific carriers currently account for 45 percent of global cargo market .

Describing the present industry crisis as the toughest revenue environment in 50 years Giovanni Bisignani, director-general of the IATA told the Times of India “Asia Pacific losses will more than double to $1.1 billion, the biggest ever…. Japan is in recession. China is suffering from a major drop in export market. India’s carriers, already suffering high taxes and insufficient infrastructure, can expect a drop in demand from last month’s tragic events.”

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As companies begin to downsize and trim the fat globally, they are looking at outsourcing many operations to lower cost destinations. While undisputed leader in offshore services India and her greatest challenger in terms of potential scale China continue to remain top destinations for companies looking at cutting costs Vietnam and Thailand too have aggressively captured a larger share of the world outsourcing pie.

According to Gartner’s 30 Top countries for Offshore Services in 2008 report, 10 Asia Pacific countries made it to the list. Amongst them were Australia, China, India, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, Thailand and Vietnam. The IT research and advisory company said costs, language skills, cultural compatibility, time zone and travel time were important considerations in choosing these locations. Further, many customers preferred Australia, New Zealand and Singapore due to their mature environments while others outsourced to Malaysia, Pakistan, the Philippines, Thailand, and Vietnam for cost benefits.

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Even as the Asian Development bank dims its Asia GDP growth forecast for 2009, from 7.2 percent to 5.8 percent, Central bankers from East Asia - China, Japan and South Korea have decided to meet this weekend to discuss regional economic and financial issues.  The meetings will be aimed at enhancing dialogue among the financial policymakers who feel the region needs to work cohesively to withstand impacts of the crisis. (more…)

A shrinking western demand, rising inflation and a  scarcity of trade finance have resulted in a significant slump in Asian exports, putting a dampener on the festive season. While governments have tried various measures to stimulate their economies including generous stimulus  packages, reducing interest rates by up to 1 percent and increasing inter-regional trade, exports have continued to decline.

Exports are the growth engine of Asia and contribute more than 46 percent of gross domestic product for the region’s main economies outside Japan. The 5-6 percent drop in demand from richer western nations has meant a significant drop in goods and services exported from Asia. As a result, not only are many Asian economies experiencing the lowest exports since the dot com bubble seven years ago, but their currencies have also nosedived. Bloomberg said eight of the region’s 10 most-traded currencies excluding the yen dropped this week as investors became net sellers of shares from South Korea, Thailand and the Philippines. 2point6billion, rounds up the fall in exports and currencies around Asia.

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The terrorists that attacked Mumbai came to the city via sea. The effortless way in which they entered the city and took it hostage begs the question of why India doesn’t have a better naval security system or the larger and more important question of why an international city like Mumbai, with massive traffic woes doesn’t use its waterways better?

Other Asian cities such as Thailand, the Philippines, Indonesia, Vietnam, Malaysia, Hong Kong, Macau, Japan and Taiwan all use their waterways to some extent - either to ease traffic congestion, for tourism or for floating markets. An inexpensive and environment friendly way to commute, using inland waterways is increasingly been promoted by governments as a better way to move about.

The best example is probably Bangkok’s boats that ply both between the two banks of the Chao Phraya river as well as along the river. Transporting thousands of people a day, Thailand’s river transportation has considerably solved the massive traffic and pollution the city suffered from.

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There’s a very good summary by Kishore Mahbubani, dean of the National University of Singapore in the Financial Times explaining why Asia has managed to apparently keep its head well above the flood gates of the global credit crisis. Complaining with some justification that the Western media has not commented very much at all on the reasons for Asia escaping the worst of the West’s excesses, he reminds us that U.S. and European policymakers are now doing exactly the opposite of what they told Asia to do during the parallel Asian Financial Crisis a decade ago: do not rescue ailing banks, raise interest rates, balance the budget, and avoid government interference.

Asia is indeed ten years to the wise in terms of what Western nations are now facing – the Chinese government itself had to deal with the newly acquired Hong Kong going into financial meltdown soon after the handover. It’s a sense of déjà vu for much of Asia. For more on the similarities, please see this 2point6billion.com article from earlier in October. (more…)

Asia hosts 15 of the top 30 cities expected to drive growth globally, according to the 2008 Mastercard Worldwide Centers of Commerce: Emerging markets Index. While Chinese cities—15 out of 65 including Shanghai, Beijing, Guangzhou and Shenzhen—dominated the index, Mumbai represented India in the top 20 and Kuala Lumpur and Bangkok also proved themselves as strong regional growth hubs amongst Asian nations.

The report says it compares emerging cities as regional growth hubs as compared to countries as due to their dense, hybrid populations its these cities that have emerged as financial and intellectual growth engines rather than the countries they belong to.

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An Indian lawyer, living in Beijing since the past two years, Nitin Sen has a keen, practical  understanding of both India, and China - the economic, social and political changes surging through the nations as well as the unique complimentary relationship the countries share.  2point6billion, discusses Asia and its combined potential, the legal systems and the road ahead with this multi talented lawyer.

2point6billion.com: Are there any aspects of the Chinese legal system which will help it ride the financial tsunami? / grow?

Mr. Sen: The strict regime on RMB convertibility and exchange rate as well as restrictions on investing abroad have ensured that China has remained relatively unaffected. We can be sure that the policy makers will fine tune the regulatory system to ensure that China remains protected from exposure to the financial tsunami.

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