Post Financial Crisis in

South East Asia

(Asian Contagion)
Bryan m. floro
Maed social studies
What is the cause of financial crisis

No prudent regulations
1. Firm barrow money
w/unprecedented record
2. Financial institution granted
credit to heavily debt in Asian
Firm
ASIAN FINANCIAL
CRISIS Currency Attack
July 2007 Lack of Risk Management
1. Financial institution in the West
rushed into Asian market fought
for greater market share.
2. Expanding credit irresponsibly
to projects obviously in low
return
What is the cause of financial crisis

Thailand
Currency Attack Currency Attack Market Panic
Baht
Philippine peso
Indonesian Rupiah
Malaysian Ringgit Pull out of Foreign
Hongkong dollar Capital
What is the cause of financial crisis

• Falling currencies Debt in Foreign

Currency
• Devalued stock market (dollar)
• Rise in private debt

Bankrupt
After AFC

• International Monetary Fund, World Bank, ADB and the

The international region’s governments provided foreign exchange
community quickly came liquidity and budget support
to the rescue • ADB offered $7.8 billion to Philippines, Republic of
Korea and Thailand.

• They adopted more flexible exchange rates,

strengthened financial sector regulation and
Monetary policy
governance and implemented structural reforms.
After AFC 1997

Macroeconomic policies
supported by fiscal • adopted more flexible exchange rates, strengthened
prudence and more financial sector regulation and governance and
independent central implemented structural reforms.
banks.

Cooperation among Asian Strong impetus to regional cooperation initiatives.

Regions
After AFC

• It is now based on a “production sharing network

model,” in which different countries share parts of
“flying geese model” production processes, not necessarily reflecting their
development stages.

• This new process enables developing countries to

integrate into the regional and global value chains more
production sharing quickly, thereby facilitating technical and skills
network model, transfers which broaden growth opportunities for late
comers.
 Challenges to Asia after AFC

Asia should not be First, Third, both

Fifth, Asia must
complacent. Around countries must also address
macro- and micro-
330 million of its climate change
continue prudential policies
risks through both
people still live in pursuing sound are critical to
mitigation and Finally,
absolute poverty, and macroeconomi maintain financial
adaptation
stability. regional
many economies are c policies. measures cooperation
experiencing rising
can mitigate
inequality. Further
Sixth, human risks from
steps are needed to Second,
Fourth, the capital globalization.
make economies more countries development is
resilient and ensure region must
need deeper essential for
sustainable and narrow large countries to
and broader
inclusive growth. infrastructure advance and avoid
financial
gaps the middle-income
systems.
/ China trap.
Post Financial Crisis in Asia

• The International Monetary Fund, World Bank, ADB and the region’s
governments provided foreign exchange liquidity and budget
support.
• ADB offered $7.8 billion in loans over two years, mainly through fast
disbursing policy-based lending for financial sector reform and
social protection to Indonesia, the Republic of Korea and Thailand.
• After the initial stabilization measures, authorities at crisis-affected
countries reinforced sound macroeconomic policies supported by
fiscal prudence and more independent central banks.
Post Financial Crisis in Asia

• Countries adopted more prudent approaches to capital account

liberalization with better sequencing, consistent with domestic
economic conditions.
• The crisis also gave strong impetus to regional cooperation
initiatives.
Industrialization in
Southeast Asia
Bryan m. floro
Maed social studies
Southeast Asian Region
Industrialization in SEA

• Indonesia
• Vietnam
• Philippines
• Thailand
• Malaysia
• Singapore
• Cambodia
• Laos
• Myanmar
• Brunei
• Timor leste
Industrialization in SEA- Indonesia
Major Industries
• The industrial sector is the sector that currently contributes most
to Indonesia's annual GDP growth.
• The two most important sub-sectors of industry are mining and
manufacturing, both being major pillars of during Suharto's New Order
regime.
• Although the manufacturing sub-sector has lost its momentum after
the Asian Crisis of the late 1990s, it still constitutes the most popular
sub-sector of Indonesia in terms of foreign direct investment (FDI),
followed by the mining sub-sector
 Industrialization in SEA- Indonesia

Primary Industries

• Coal • Footwear After 2008,foreign companies

and investors have regained
confidence in this sector due to
• Oil • Textile Products
robust domestic demand
brought on by a growing
• Gold • Paper Products middle-class, low wages and
the promising perspectives of
• Automobiles • Furniture the mining sub-sector

• Electronics
Industrialization in SEA- Indonesia
Mining in Indonesia
• Indonesia is currently a major producer of coal, copper, gold, tin
and nickel.
• The country remains the leading global exporter of thermal
coal.
• In January 2009 a new law "Mining Law No. 4 2009" came into
force with the aim of providing a conducive mining investment
climate which is more environmentally friendly, foresees a larger
role for domestic stakeholders and aims for more value-added
processing within the country.
Industrialization in SEA- Indonesia
Challenges to Indonesia
• Investments in the mining sector have been limited in recent years due
to regulatory uncertainty.
• Improvement in Indonesia's infrastructure to make industries more
productive and cost-efficient.
• Recent free trade agreements (such as the China ASEAN free trade
agreement in 2010)
• It will be important for the Indonesian industry sector to become both
more effective and efficient in the production process as well as logistics
Industrialization in SEA- Vietnam

• In 2001, the National Congress of the Communist Party of Vietnam

announced plans to accelerate industrialization and modernization.
• The goal was to bring the country into the fold of modern, industrialized
nations by 2020.
Industrialization in SEA- Vietnam
Slowing Economic Growth
• Vietnam lags well behind other industrializing Asian nations like
Malaysia and Thailand in terms of standards of living, technology, and
infrastructure.
• Lack of a defining industry.
• Vietnam has been striving towards industrialization since the 1990's, it
has seen little improvement in its science and technology.
Industrialization in SEA- Vietnam
Slowing Economic Growth
• Vietnamese companies have done little to innovate, and today’s
industrial production resembles how it was more than 20 years ago.

• Vietnam ranks 99th out of 144 economies for technological readiness,

and 118th in adopting the latest technologies. (2014-2015 Global Competitiveness
Report from the World Economic Forum)
Industrialization in SEA- Vietnam

Improvement Requires Government Commitment!

• Unfortunately, the government of Vietnam does not yet appear prepared
to take the actions necessary to facilitate reaching its own targets for
industrialization.
• Without initiatives targeted at encouraging businesses to invest in new
technologies and programs to improve the nation's infrastructure, growth
will likely remain hobbled.
Industrialization in SEA- Philippines

• 21st century marked the paramount of Philippines’ own “Industrial

Revolution”, as multinational companies become more and more
interested to invest in the Philippines in the field of offshore
outsourcing, particularly in the call center industry.
• To be an industrialized, Philippines has to undergo structural
transformation that would shift economic activities from agriculture to
manufacturing, then services.
• Modern industrial sector is needed to lead the country’s growth. This
would require the development of basic industries like iron and steel, and
chemicals that serve as inputs to a lot of other industries.
Industrialization in SEA- Philippines
Current Challenges of Philippine Industrialization
• In the past, the Philippines did not experience structural transformation
of the economy from agriculture to manufacturing.
• There was no rapid industrial growth led by manufacturing, instead,
what we observed was a rise in the services sector and a declining and
stagnant manufacturing industry.
Industrialization in SEA- Philippines
New Industrial Policy
• Inclusive Innovation Industrial Strategy or i3S, (Inclusive Innovation
Industrial Strategy) (i3S).launched by the DTI.
- prioritizes the growth and development of 12 major industries including
manufacturing sectors
(auto and auto parts, aerospace parts, electronics, chemicals, shipbuilding, garments,
iron and steel, and agribusiness along with tourism, IT-business process management,
particularly knowledge process outsourcing, construction and infrastructure and
logistics)
Industrialization in SEA- Philippines
New Industrial Policy
• The government continues to be relentless in its efforts to revive
factories, expand production.
• Considered as a services-oriented economy for the past few years, the
Philippines is now looking to transform itself to become globally
renowned as a manufacturing powerhouse.
Industrialization in SEA- Thailand

Thailand Industries
• More than 30 years since industrialization kicked off in Thailand, led by
labor-intensive manufacturing industries, the country wants to move to
the "next level," - Deputy Prime Minister Somkid Jatusripitak
• Eastern Economic Corridor (EEC)- Thai government aims to attract at
least 300 billion baht ($9.4 billion) of new investment to the corridor this
year.
-The EEC targets 10 industries, including biotechnology, aerospace, and
automation and robotics. It will offer tax holidays of up to 15 years.
Industrialization in SEA- Thailand

Thailand Industries
• Agriculture, forestry and fishing
- agriculture, forestry and fishing contributed 8.4 percent to GDP; in rural areas,
farm jobs supply half of employment
- Thailand is the world's third-largest seafood exporter. Overall fish exports were
worth around US$3 billion in 2014, according to the Thai Frozen Foods
Association.
• Industry and manufacturing
- The most important sub-sector of industry is manufacturing, which accounted for
34.5 percent of GDP in 2004.
Industrialization in SEA- Thailand

• Energy
- Thailand is a net importer of oil and natural gas; however, the government is
promoting ethanol to reduce imports of petroleum and the gasoline additive
methyl tertiary butyl ether.
• Automotive
- Thailand is the ASEAN leader in automotive production and sales. The sector
employed approximately 417,000 workers in 2015, representing 6.5 per cent of
total employment across all manufacturing industries.
Industrialization in SEA- Malaysia
Industries in Malaysia
1.Electrical and electronics- The electrical & electronics (E&E) industry is
the leading sector in Malaysia's manufacturing sector.
2.Electronic components- Malaysia is a major hub for electrical
component manufacturing, with factories of international companies
like Intel, AMD, Freescale
Semiconductor, ASE, Infineon, STMicroelectronics, Texas Instruments,
3.Photovoltaics- Malaysia is a major hub for solar equipment manufacturing, with
factories of companies like First Solar, Panasonic, TS Solartech, Jinko Solar, JA
Solar, SunPower, Hanwha Q Cells, and SunEdison in locations
like Kulim, Penang, Malacca, Cyberjaya and Ipoh.
Industrialization in SEA- Malaysia
Industries in Malaysia
4. Automotive- The Malaysian automotive industry is the third largest
in Southeast Asia, and the 23rd largest in the world.
5. Construction- Malaysia has a large construction industry of over RM102.2
billion (US$32 billion).
Industrialization in SEA- Singapore
Singapore Industrialization
• The economy of Singapore is a highly developed free-market economy
• Singapore's economy has been ranked as the most open in the world,7th
least corrupt, most pro-business, with low tax and has the third highest
per-capita GDP in the world in terms of Purchasing Power Parity
(PPP). APEC is headquartered in Singapore.
• Exports, particularly in electronics, chemicals and services including
Singapore's position as the regional hub for wealth management.
• Rely on agrotechnology
Industrialization in SEA- Singapore

• Information Technology -A second key was computers and related electronics,

which in the late 1980s constituted Singapore's largest industry.
• Petroleum- Petroleum and petrochemicals were another base of Singapore's
industrial and economic life. In the late 1980s, Singapore was the world's third
largest oil-trading center and also the third largest center for petroleum
refining.
Industrialization in SEA- Cambodia

• The government prepared and adopted an Industrial Development Policy (IDP) last
March 2015 as a guide to provide systemic solutions to developing a competitive
industrial sector in Cambodia
• A key aim of the IDP is driving economic (and export) diversification beyond
garment and footwear manufacturing.
• Key industries include garment and light manufacturing, food and beverage
processing, construction and real estate, tourism, as well as the emerging mining
and exploration industry.
Industrialization in SEA- Cambodia
Cambodia Key Industries
• Manufacturing
-The manufacturing sector accounted for 31 percent of Cambodia’s economy
in 2016.5 The country’s growth rate for value added in industry is the highest
in Southeast Asia.
• Agriculture
- The agriculture sector accounted for about 26 percent of Cambodia’s
economy in 2016. As part of the government’s policy to support the
agriculture industry, materials and equipment used in agricultural production
are exempt from import duties.
Industrialization in SEA- Laos
Industrialization of Laos
• Improved infrastructure and trade integration help Laos to attract
investors and develop an industrial.
• Bridges across the Mekong river, new roads and electricity lines, and
planned railways offer improved links with expanding markets in South-
East Asia.
• Economic reform in compliance to WTO and ASEAN Trade Agreement
Industrialization in SEA- Laos
Economic Reform of Laos
• China, France, Japan, Malaysia, South Korea and the US have announced
plans to establish production bases in Laos.
• Laos officially joined the World Trade Organisation (WTO), and its
membership of the Association of South-East Asian Nations (ASEAN)
Economic Community.
 Industrialization in SEA- Laos
Laos Industries
• Hydropower and mining continue to drive much of this growth.
• Mining sector have reduced the number of exploration, but the two largest
mines, Sepon and Phu Bia, reached their copper production targets for 2012.
• An influx of foreign-owned factories will boost growth
1. Lao Powerpro Manufacturing, a Chinese-funded venture, which is building a
US$2m plant to produce uninterruptible power source (UPS)
2. Japanese car-parts manufacturer, Meiwa Engineering, which in September
2012 reached an agreement to build a factory outside the Lao capital,
Vientiane
Industrialization in SEA- Laos
Challenges to Laos’s Industrialization
• The rule of law remains weak in the country
• Corruption has increased in recent year
• Labour has long been the biggest problem for garment factory owners
in Laos
Industrialization in SEA- Myanmar
Myanmar: a long road to industrialization
• Modern Industrialized Country - framework for Myanmar's economic and
social reforms
• Myanmar has a very underdeveloped industrial and manufacturing sector,
especially in terms of employing people.
• The private sector dominates in agriculture, light industry, and transport
activities, while the military government controls energy, heavy industry, and
rice trade.
• Industries have traditionally been small and family-owned
Industrialization in SEA- Myanmar
Important Industries in Myanmar
• Important industries: agricultural processing; knit and woven apparel;
wood and wood products; copper, tin, tungsten, iron; construction
materials; pharmaceuticals; fertilizer; cement; natural gas.
• Burma is also the world's second largest producer of opium, accounting
for 8 percent of entire world production and is a major source of illegal
drugs, including amphetamines.
• Industrial production focuses on goods for local consumption, although a
handful of factories produce for exportation.
Industrialization in SEA- Myanmar
Important Industries in Myanmar

• Local industries include textiles and footwear, wood processing, mining,

the production of construction materials, pharmaceuticals, and fertilizer
manufacturing.
• Country has substantial gem, oil, and natural gas reserves, extraction
and processing capabilities are limited.
Industrialization in SEA- Brunei
Macro-economic trend and Industrialization
Oil and gas industry
• Brunei Shell Petroleum (BSP), a joint venture owned in equal shares by the Brunei
Government and the Royal Dutch/Shell group of companies, is the chief oil and gas
production company in Brunei.
• Brunei's natural gas is liquefied at Brunei Liquefied Natural Gas (LNG) plant, which
opened in 1972 and is one of the largest LNG plants in the world
• The Japanese company, Mitsubishi, is a joint venture partner with Shell and the
Brunei Government in Brunei LNG, which together produce the LNG and supply it
to Japan.
• Brunei's non-petroleum industries include agriculture, forestry, fishing, and
banking
Industrialization in SEA- Brunei
Macro-economic trend and Industrialization
Petrochemical industry
• Methanol Company, a joint venture between PetroleumBrunei and two
leading Japanese companies, Mitsubishi Chemical Holdings and Itochu.

Challenges to Brunei
• In 2015, Brunei registered its third year of economic recession, the only
ASEAN nation to do so. Declining oil prices and a drop in production due
to maintenance and repair work at major oil wells have dented the
country's budget which will see a deficit in the fiscal years 2015-16 and
2016-17
Industrialization in SEA- Timor-Leste
Industrialization of Timor -Leste
• The country faces great challenges in continuing the rebuilding of
infrastructure and the strengthening of the infant civil administration.
• Joint development with Australia of petroleum and natural gas resources
in the south-eastern waters.
• Asian Development Bank (ADB) is leveraging the skills and capacity of
Timor-Leste's high youth population to help the country's thriving coffee
industry become a key contributor to inclusive growth and sustainable
development.
Industrialization in SEA- Timor-Leste
Industrialization of Timor –Leste
Gas and Petrochemicals
• Proposed multi-billion dollar “Tasi Mane” petrochemical industry project
designed to process gas from the Greater Sunrise oil and gas field
• Timor-Leste faces a race against time to ensure its economic future by
successfully diversifying into new industries.
Thank you…