To Everybody Assembled Here…

This is a presentation about a phenomenon

called….

Asia

Lee Kuan Yew

• Born 16th Sept, 1923 in Singapore

• Name means “The Light that shines far and wide”

• The founding father of modern Singapore

• First Prime Minister

Angkor Vat

• Pluvial Mountains, Cambodia

• Marvelous cathedrals and Buddhist monasteries

• Means “Capital” in Khmer Language

The Buddhas of Bamiyan

• Two Buddhas with a height of 53 m & 38 m at an alt of 2500 Mtr

• 4th & 5th century AD• Constantly assaulted

by the iconoclasts• Bamiyan valley in

the hands of Taliban in 1998 led to its final destruction

Petronas Towers•Kuala Lumpur,

Malaysia•Height: 452 mtrs –

higher than Sears Towers

•Work started in 1994, will be completed in 2009

•Pride of Malaysia

Akio Morita• 1921 – 1999•Set up Sony in 1946•The “MAN” behind

the WAKMAN•Target – America •Respected for his

business acumen and negotiation skills

Junichiro Koizumi• Japan’s Prime Minister•59-yr old bachelor –

also known as “Lone Wolf”

•Fan of both Heavy Metal and Opera

•Has the unenviable task of getting back Japan from the doldrums

Junichiro Koizumi• Japan’s Prime Minister•59-yr old bachelor –

also known as “Lone Wolf”

•Fan of both Heavy Metal and Opera

•Has the unenviable task of getting back Japan from the doldrums

Taj Mahal•Eighth wonder of

the world•Work began 1631

& ended in 1655•A workforce of

20,000•Built entirely of

marble

Great Wall of China• Only man-made

construction visible from the moon

• Started in 7th Century B.C.

• A wall to separate and protect

• A total length of 6000 kms

Hong Kong• Leased by China to

the British – returned to China on July 1, 1997

• One land – Two Govt• Most of China’s trade

done through HK• Trade & Finance -

the strengths of Hong Kong

Deng Xaoiping• 1904 - 1997• “Whether a cat is

black or white, it is good as long as it catches mice”

• Came to power in 1978

• Creation of market economy

• Responsible for the Tiananmen Square

Singapore Exchange• Asia’s best derivatives

trading exchange• 1 billion outstanding

shares• Incorporated in 1973• It has the best foreign

currency exchange• 25.8 mn contracts –

the highest in any exchange

The Asian Biggies Mass Transit Railways Hong Kong

             

Infosys Technologies India

Astra International Indonesia

The Asian Biggies

Toyota Motor Japan              

Genting Malaysia

Jollibee Foods Philippines

The Asian Biggies

Singapore Airlines Singapore

Samsung Electronics S Korea

Taiwan Semiconductor Taiwan

Charoen PokphandThailand

I. C. N. A. Presentation

Region Readies for Recovery“Is the East Asian Recovery

Happening?”

Binay Jajodia (9037)Jacob Joseph (9038)

Far Eastern Economic Review, January 10, 2002

Contents• Fundamentals of Economics -

“So that we understand the analysis”

• The facts about Asia – “Lies, Damned Lies and Statistics”

• The Final Analysis – “Are the Asian economies really recovering?”

Economic Fundamentals

• Balance of Payments

• What does a Current A/c deficit really mean?

• Capital Account Liberalization

• Capital Controls

• Fixed, Floating & Adjustable Exchange Rates – The Trilemna

Balance of Payments

• Current Account– Merchandise Trade

– Services & Invisibles

• Capital Account– Direct Investments

– Securities

– Bank Claims & Liabilities

Current Account Deficit/Surplus

• What does it really mean?

• Current A/c & Capital A/c are reflections of one another

• Zero Sum Game

• Why should one worry about persistent current account deficits?

Capital Account Liberalization

• What does it really mean?

• It is really in whose interest?

• What do the statistics say? – Damned Lies

• Some winners – rest losers

Capital Controls

• What does it really mean?

• Types of controls– Quantity – based controls

– Price – based controls

– Regulatory Controls

• Rationale of Capital Controls

The Trilemna

• Features of Fixed Exchange Rates

• Features of Floating Exchange Rates

• Which one will you choose?– Monetary Policy

– Fiscal Policy

• Pegged & Adjustable Exchange Rates

REASON FOR EARLIER SLOWDOWN

• Most of Asian economies are export dependent economies

• Japan’s slide into recession • East Asia excels in

manufacturing of high – tech products

• 9/11

JAPAN

- Export dropped 9.1%

- Bankruptcies set to rise

- Unemployment could hit 6%

- Continuing weakness of the stock market

- Weakening of Yen

JAPAN

% change 2000 2001* 2002*GDP 2.4 -0.4 -0.6

Private Consumption

0.6 0.2 -0.5

Fixed Investments

10.4 1.4 -3.2

Industrial Production

5.9 -7.1 -4.3

Current Account ($ billion)

98.9 76.1 76.9

Budget Balance ($ billion)

-248.7 -283.2 -307.6

*Estimates Source:Consensus Economics Inc.

VIETNAM

• Oil export earning to decline by 20%

• Government has launched a campaign to dramatically expand cotton production

% change

2000 2001* 2002*

GDP 6.1 6.1 5.8

Current Account

($ billion)

0.2 0.2 -0.7

*EstimatesSource:Consensus Economics Inc.

CAMBODIA

• Agriculture generating nearly half of national income

• Strong growth in garment exports

• Increase in tourist arrivals by 34%

GROWTH AND RECOVERY IN 2001

- Real Sector Developments

- Asset Market Developments

- Fiscal and Monitory Policies

- Financial and Corporate Restructuring

- Social Sector Developments

REAL SECTOR DEVELOPMENT

INDICATORS:

- Real GDP Growth- Growth of Manufacturing- Growth of Merchandise Exports- Growth of Electronic Exports- Growth of Real Private Consumption- Growth of Real Gross Domestic

Investment- Growth of Merchandise Imports

ASSET MARKET DEVELOPMENT

INDICATORS:

- Composite Stock Price Indexes- Exchange Rate Indexes- Office Property Rents- Office Property Vacancy Rates

Indo Pak War

•3rd December, 1971•Indian army overruns East Pakistan (Bangladesh) and takes 93,000 POW

•Pakistan President – Yahya Khan•Indian Prime Minister – Mrs Indira Gandhi

Indo Pak War

Attack on Karachi

Indo Pak War• Gen Sam Manekshaw orders Indian

army to enter East Pakistan• Within 6 days, India runs into East

Pakistan• The Navy gets its act together –

attacks Karachi – PT 15 missiles• Famous battle of Longewal• Pakistan accepts ceasefire and ends

the war

Vietnam War•The longest and most unpopular

war ever fought by the United States

•58,000 Americans lost their lives•Financial cost to US: $150 bn•War Period: 1965 - 1973•Roots laid after World War II

when French rule returned to Indochina

Vietnam War• Ho Chi Minh unable to convince USA

about his legitimate war against French

• French Generals and American Army expect Ho’s ragtag guerilla army to be defeated easily

• US supports South Vietnam in order to stem the spread of communism

• Ho’s determined effort to unite Vietnam drags USA into the war

• Vietnam finally unites on April 30, 1975

Tiananmen Square

Tiananmen Square• June 4 1989, Beijing•Students fight for democracy –

“Law, not Authoritarianism”•Deng Xaioping – averse to the

idea•Warning by US embassy against

use of force•3000 students killed when tanks

run over the peaceful protesters

Khmer Rouge•The Khmer Rouge government

controls Cambodia from 1975 – 79•Pot Pot – leader of the Khmer

Rouge•More than a million Cambodians

died from hunger, execution and torture

•Major failure of human rights•Trials still going on – justice not

yet done

Nepal – Murder & Monarchy

• June 1, 2001: Regicide of King Birendra & family at Royal Palace at Kathmandu

• 1945 – 2001 • The king was considered to be an

incarnation of Lord Vishnu• Crown Prince Dipendra responsible for

the tragedy – linked to Devyani Rana

The Golden Triangle• Thailand, Burma and

Laos – Known as the Golden Triangle

• Prominent role in drug trade

• Opium produced here attracts European traders

• Considered an exotic land

The Silk Route

The Silk Route• One of the most significant

achievements in history of world civilization

• The Silk route served as important means of business relations between East and West

• Trade done in spices, precious stones, silver goods, byzantine cloth, turkic cloth

• One of the earliest traces of foreign trade

Analysis

•Export Led growth is not always the best - it worsens the terms of the trade– Larger exports causes the countries to receive lower price for exports (also called immiserizing growth)

Analysis

•Dependence on a single country is not a prudent strategy– Recession in the country may dampen receipts

– All East Asian Countries

Analysis

•Improve your internal fundamentals– Improve productivity– Channel money and aid into proper ventures

– Increase consumption within the nation

– Thailand, S Korea, Indonesia

Analysis

•Stronger trade links between the Asian countries– Don’t forget your brothers – An Asian Free Trade Union

– Don’t depend too much on one country

– At least, we can bail each other out

Analysis

•Currency Depreciation– No more fixed currency– Good for exports– Not too good for imports; leads to increased productivity

– Indonesia, Malaysia, Thailand

Analysis

•Foreign Direct Investment– Long term flows– Welcome, FI Investments– Put a time period before they pull out

– Is it time for Tobin Tax?

Analysis

•Capital Account Controls– It is time to impose controls on capital inflows and outflows

– South East Asian Crisis– The idea whose time has returned

Analysis

•Improve infrastructure within the countries– Welcome the FDI Inflows– Leads to quicker development of the local industry

Analysis

•Impact of Sept 11 attacks on Asia– Financial Market Channel– Capital Flows Channel– Trade and Terms of Trade Channel

– Service Sector Linkages

Analysis

•A move from the recession is happening, albeit slowly– Inventory levels going down– Exports rising slowly but surely

– Various markets being tapped now

Bibliography

•Far Eastern Economic Review•Taming Global Financial

Flows – Kanwaljit Singh• International Economics –

Robert Carbaugh• International Money &

Finance – Sukumar Nandi

Bibliography

•www.aric.adb.org•www.feer.com•Asia Rising – Jim Rohwer•Remade in America – Jim Rohwer

•www.timeasia.com

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