In order to buffer themselves against the downturn and subsequent slump in exports, emerging Asia’s governments are taking some serious measures.

While the Indian government announced a second stimulus package within a month, lowering policy interest rates, easing overseas borrowing norms and increasing the foreign investment limit in corporate bonds to US$15 billion, other South East Asian nations also implemented changes.

Singapore, one of Asia’s worst performing economies will announce changes to boost the economy during their annual budget session, which has been pre-poned to January instead of February this year; China, which is feared to perform its worst in two decades is expected to announce several more measures to boost their economy soon too. South Korean and Malaysian leaders have also expressed interest in taking steps to stimulate the economy this month. (more…)

ASEAN’s 10 member countries agreed to and enforced a charter which will set political, economic and social benchmarks, for the diverse region. Moving closer to forging an European Union-style community, the constitution of this charter sets out rules of membership, trade, investment, the environment, transforms ASEAN into a legal entity and envisages a single free trade area by 2015 for the region of some 500 million people. Until now ASEAN nations have been forming bilateral trade relations amongst themselves and neighboring countries in order to support each other.

“This is a momentous development when the ASEAN is consolidating, integrating and transforming itself into a community,” Indonesian President Susilo Bambang Yudhoyono told the AFP after the charter came into force on Monday, adding that the implementation of the charter “is achieved while the ASEAN seeks a more vigorous role in Asian and global affairs.”

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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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Even as news of Japan’s trade deficit due to falling Asian exports trickled in and Asian companies slashed jobs across the board, APEC leaders decided the financial crisis would end by 2010, within 18 months.  Prudent or not,  the leaders decided to strike an optimistic note “We are convinced that we can overcome this crisis in a period of 18 months,”a joint statement said.

Hedging himself on emerging Asia, Bob Buckle, chairman of the APEC Economic Committee told the AFP “If China and India come through this crisis with very good growth rates that would be very important for the rise of global economy.”

The IMF added that emerging economies, which include China and India — will account for approximately 2.2 percent of global growth next year. According to the AFP, it estimates rich nations’ economies will together grow by just 0.1 percent this year while the developing world will grow by 5 percent.

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While large emerging Asian countries jostled for greater say at the G20 summit last weekend, Prime ministers from Thailand, Cambodia, Laos, Myanmar and Vietnam, met to discuss food and energy security and strengthening transport, trade and investment ties amongst themselves. The group, named after the region’s three major rivers met in Vietnam and forms the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) forum. Smaller Asian nations have realized that their growth lies in regional cooperation, a reason why Laos, Cambodia, Vietnam and Myanmar are trying to attract investments from neighboring countries Thailand, China and India.

In strengthening regional ties, Cambodia and Vietnam recently agreed to connect Phnom Penh to Vietnam by rail at a cost of more than US$500 million. “China has promised to build the railroad from Phnom Penh to Vietnam as part of the project to create a link from Singapore to Kunming in China,” Hor Namhong told the AFP on his return from regional meetings in Hanoi, Vietnam. Thailand on its part is also investing in rail, road links and bridges to Laos a landlocked country. The group also talked of industrial and energy cooperation particularly hydro-power and oil and gas exploration. (more…)

If China lifts the proposed steel export tax of 5 percent from December 1, the move could severely affect the steel industry in emerging Asia, especially India, warn industry insiders.

China, which is the world’s largest steel market, is mooting to drop steel export prices in a bid to boost the local steel industry which has been severely hit by the global slowdown. India, which imports about 1 million tons of steel (of its 3.6 to 4 million tons steel imports) from China alone will be drastically hit. The problem is expected to be accentuated by the already depressed demand and cut in steel production in India. The effect of the cut in China’s export tax is further compounded as India got rid of its steel import duties last April.

Although India has taken measures to protect their domestic steel industry by increasing import taxes and withdrawing export duties on certain iron and steel products, steel makers are still skeptical about cheaper Chinese steel.

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With bilateral trade between India and China escalating beyond the 2010 target of US$40 billion this year, amidst the global crisis, senior officials in the Indian commerce department are worried that excess stocks of mass produced Chinese goods, might wash up on Indian shores.

Recently, an Indian manufacturer of Penicillin-G - Alembic Ltd, demanded an investigation into alleged dumping of Penicillin-G from China. According to the Hindu, the Vadodra based chemical company sought to argue that China being a non-market economy the normal value of the product is to be determined on the basis of prices in India after deducting the customs duty applicable for the period of investigation (PoI). The applicant stated that there is sufficient evidence that the normal value of the subject goods in China is significantly higher than its net export price, essentially indicating that “the subject goods are being dumped by the exporters” from China.

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Asian markets rebounded optimistically on Wednesday as news of Obama’s victory resounded across the continent. The Nikkei climbed nearly 4.5 percent by the closing bell, while the Hang Seng shot 5.7 per cent, or 812.53 points, higher. The Shanghai exchange jumped more than 4 per cent, and the Korean Kospi finished 2.4 percent higher. Singapore’s Straits Times index progressed by 2.1 percent. The only two markets to fall yesterday were Taiwan’s Taiex index which dropped 0.3 percent and the Bombay Stock Exchange’s Sensex index which fell by 4.8 percent on Wednesday, to 10,120.01, snapping a five-day gain.

The markets however might not echo the skepticism of Asian governments. Most East Asian governments are weary of Obama’s protectionist trade policies as well as tougher environmental and labor regulations.

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China and India are aggressively and strategically competing over gaining control of international waters south of Hambantota, Sri Lanka. Over the years, the two countries have been fortifying their forces around the vital water way in a bid to gain influence in the region.

The vital water way lies south of Sri Lanka and north of Antarctica in the Indian Ocean and is one of the world’s great trade arteries, the shipping lanes where thousands of vessels carry oil from the Middle East and raw materials to Asia, return with toys, clothes, television sets and sneakers for European consumers.

According to the International Herald Tribune these tankers provide 80 percent of China’s oil and 65 percent of India’s fuel desperately needed for the two countries’ rapidly growing economies. Japan, too, is almost totally dependent on energy supplies shipped through the Indian Ocean. Any disruption — from terrorism, piracy, natural disaster or war — could have devastating effects on these countries and, in an increasingly interdependent world, send ripples across the globe.

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