To Everybody Assembled Here

This is a presentation about a phenomenon called.

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
Japans 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
Japans 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 Chinas 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
Asias 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 Genting
Jollibee Foods

Japan Malaysia
Philippines

The Asian Biggies

Singapore Airlines Singapore

Samsung Electronics

S Korea

Taiwan Semiconductor Taiwan

Charoen Pokphand

Thailand

I. C. N. A. Presentation
Region Readies for Recovery
Is the East Asian Recovery Happening?
Far Eastern Economic Review, January 10, 2002

Binay Jajodia (9037) Jacob Joseph (9038)

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 Japans 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
GDP

2000
2.4

2001*
-0.4

2002*
-0.6

Private Consumption Fixed Investments

0.6 10.4

0.2 1.4

-0.5 -3.2

Industrial Production
Current Account

5.9
98.9

-7.1
76.1

-4.3
76.9

($ billion)
Budget Balance -248.7 -283.2 -307.6

($ billion)

*Estimates

Source:Consensus Economics Inc.

VIETNAM
Oil export earning to decline by 20% Government has launched a campaign to dramatically expand cotton production
% change GDP Current Account ($ billion) *Estimates 2000 6.1 0.2 2001* 6.1 0.2 2002* 5.8 -0.7

Source: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 Hos ragtag guerilla army to be defeated easily US supports South Vietnam in order to stem the spread of communism Hos 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
Dont forget your brothers An Asian Free Trade Union Dont 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

Our Special Thanks To

Technical Support Sanjeev Kumar Manthan Biyani Amit Jhunjhunwala

Our Special Thanks To

Download Support Rujuta Jagtap Abhinav Kumar Pallavi Marathe

Our Special Thanks To

And also to Shilpa Patil Namita Minocha

And to many others. For their immense support