Vietnam: The Asia Times has a fairly detailed article on Vietnam’s transportation bottleneck.  Specifically, it takes a look at Vietnam’s port capacity as compared to its neighbors in the region, and how it’s current infrastructure needs to improve if Vietnam wishes to continue to see economic growth.  To remedy the issue, the Vietnamese government is calling on private investors to fund more development projects.  However, in the current world economy, in combination with Vietnam’s history of extreme corruption in such projects, this strategy does not look hopeful.  To make matters worse, Vietnam’s exports have been down, declining for the first time since economic reforms began in the nation.   Hanoi has also been forced to devalue its currency by 5% in the last month (which is becoming all too common).  Lastly, Vietnam’s growth rate dropped to almost half of its typical growth rate of 7%.  It is, at best, uncertain that there will be enough capital inflow to cover the cost of these projects considering the unattractiveness of the investment environment.

…..click here to read more

Obama at APEC Summit/ France 24

Overview:

The predominant trend in Southeast Asia this year has been one of increasing regional integration, but this has been tempered by historic issues of nationalism, which continue to challenge the region and serve as the largest obstacle for a more united ASEAN.  2009, was an excellent year for various free trade initiatives, between ASEAN member states, as well as, ASEAN and external actors.   It was also a year that saw an escalation in regional conflict, including internal conflicts between rebel groups and the national governments of Myanmar, Thailand, and the Philippines.   There were also border skirmishes between Cambodia and Thailand, the naval mobilization of Malaysia and Indonesia against each other, and the long standing conflicts that China has had with various nations in the region over borders in the South China Sea and its activities on the Mekong River.  This year has also seen the resurgence of U.S. interest in the region, in an effort to moderate China’s rise and ensure U.S. security interests.

Person of the Year:

The person of the year is U.S. President Barak Obama.  He, more than anyone else, has done the most to shift the political equation in the region by re-engaging all nations, including regimes that have previously been black listed in Washington, such as Myanmar, Cambodia, and Laos.  The central reason for this rapprochement is to make up for the gains China made in Southeast Asia at the expense of a largely absent Bush Administration.

Most Unexpected Event:

The most unexpected event was America’s engagement with Myanmar, especially President Obama meeting with Myanmar Prime Minister Thein Sein at the recent APEC Summit.  This about-face appears to be designed as a carrot and stick approach to potentially give the Myanmar junta an option to Chinese “vessel” status, while at the same time allowing America to gain some movement on the human rights front.  The last 20 years have shown quite clearly that sanctions have not changed the situation in Myanmar, if America does not play, it will not win with this regime, especially with China as an enthusiastic benefactor.

What to Watch in 2010:

China will not sit idly by and watch the U.S. marginalize its interest in Southeast Asia, neither will it openly confront America.   In the coming year,  China will likely formulate and implement an indirect response through increased diplomacy and trade, as well as shoring up relationship with nations of concern, such as Myanmar and Vietnam.  China wants to see its soft power and hard power grow in the region.  Much of this is to give China more control over shipping routes in the South China Sea, due to strategic security regions.  China must insure that it can maintain a steady supply of natural resources to fuel its economic growth, even in the case of conflict, such as with Taiwan.  Southeast Asia is also resource rich and ripe with investment oppronuties, which will enable China to expand its own economy.   Southeast Asia will be a central battleground in this proxy faus-cold war between Chinese and American interests in Asia.

*Attention: Readers,  I will be taking a two week break from posting.  Posting will restart December 20th*

Cambodia:  More on the battle between soft authoritarian leader, Prime Minister Hun Sen and Cambodian opposition leader, Sam Rainsy.  Rainsy’s theatrics concerning a territorial dispute between Vietnam and Cambodia resulted in Hun Sen stripping Rainsy of his parliamentary immunity, leaving him open to criminal charges and possible expulsion from the National Assembly.  This is probably not likely to happen; it is more likely Hun Sen just wants to show that he is the boss.

Malaysia: The Anwar Ibrahim vs the UMNO circus continues. Anwar faces sodomy charges, yet again.

Vietnam: The World Bank is expressing confidence in the Vietnamese governments measures to stabilize its economy.

Myanmar: The regimes highest court is considering an appeal from opposition leader Daw Aung San Suu Kyi over the 18 month extension of her house arrest.  This comes as no surprise, due to the political rapprochement by the Obama Administration with the regime (the EU is involved as well), the junta is interested in “making nice”, for the time being.

Vietnamese Dong

Vietnam - Well it finally happened. Vietnam devalued its currency, again, this time by 5% and increased its interest rates by 1% (moving it to 8%).  This is the 3rd devaluation of the Vietnamese Dong since June of 2008.  This blog reported that Vietnam was having some currency liquidity issues for awhile, but they were not seeking international help, it seemed they were trying to buttress their currency with hard currency from Japan.  Analyst are worried how the increased competitiveness of Vietnam’s exports will affect other nations in the region in regard to certain textiles, agriculture, and manufacturing markets.  However, unlike China’s continual currency manipulation to maintain its low peg to the dollar, Vietnam appears to be decreasing the value of the Dong as a “devaluation to end all devaluations…”:

Vietnam has economic problems, though, many of which contributed to the decision to devalue. In sharp contrast to many other emerging markets, whose currencies have gained value against the dollar this year, Vietnam continues to face severe downward pressure on its currency, in part because it is one of Asia’s only economies with both a fiscal budget deficit and a current-account deficit.

…..click here to read more