Stats for ASEAN Econ Change

Question 1

Indonesia ISI

Answer 1

Pertamina

70% of govt revenue by 80s, 78% of export earnings
Petrodollars used to invest further in ISI

Corruption: Suharto military 10 billion debt, 300% budget deficit

Mixed, can use for both sides

Question 2

Indonesia Agriculture

Answer 2

BIMAS 1965 + Repelita I (1969-74)
Provided Padi farmers fertilisers + infrastructure + cash advances

23% of Repelita budget to irrigation
1/3 of GDP 2/3 of Employment
Self suffiency by 1985

Good - basis for growth in the later stages

Question 3

Indonesia EOI

Answer 3

1967 Foreign Investment Law
Tax concessions, provisions against expropriation of foreign assets

Suharto willing to engage in econ measures - world bank, imf favoured
“Berkely Mafia” - Western trained Indonesian economists; policy formation and credibility

Millions of debt from World Bank loans
1972 debt levels > Sukarno times
Volker shock compunded debt (US increase i/r)

Mixed but is good growth

Question 4

Indonesia FDI

Answer 4

Expansionary fiscal policy (direct government spending, lower tax) to encourage foreign investments
1967 Foreign Investment Law protected MNC assets from being nationalised

Doubled manufacturing production in 2 decades

Good

Question 5

Explain Chinese dominance in IND

Answer 5

Suharto laws for econ equity
Bank credit only approved for firms 75% owned by indigenous people

Alibaba agreements to avoid (Ali in shopfront, Baba actually in charge)
3.8% population = 76% economy

Question 6

Ethnic Chinese dominance in SEA

Answer 6

Bamboo Network
underlying principles, normas, informal relationships tying Chinese businesses together

55 million Chinese, control 500 of the biggest SEA public corporations, $500 billion total assets, $2 trillion in liquid assets

Question 7

Cukong IND

Answer 7

Suharto’s 50 Chinese business elites
Helped carry out govt policies at least 3 decades

Question 8

Entrepot Trade SG

Answer 8

Initial strat for growth
trash post-war equipment
13% unemployment

Question 9

EOI SG

Answer 9

EDB 1961
Econ Expansion Act 1967

tax benefits for ‘pioneer’ companies
Jurong Industrial Town

20% COP reduction + english speaking workforce + politically stable
15% GDP growth, Unemployment at 3.5%

Question 10

FDI SG

Answer 10

NDB 1981
Train IT workforce
Attract foreign companies to buy and sell software

IT sales 10x increase
Skilled employees up to 22% in 1985

Question 11

Internal restructuring SG

Answer 11

CPF 1955
NTUC 1972

7.3% GDP growth

Question 12

Malaysia ISI Initial Success

Answer 12

1959 Pioneer Industries Ordinace (ISI start)
1963 Tariff Advisory Board (TAB)

13% growth 60s-70s

Good at start, failure later

Question 13

MY ISI failure later

Answer 13

Proton Car project 1983
Aimed at the growing car mkt but poor quality
Econ burden of RM1.6 Billion

Malay bureaucracy overlooked efficiency (preoccupied with econ restructure social inequality)
Public sector deficit RM15 Billion by 80s

Question 14

Tiger economies

Answer 14

MY in the 1990s
SG of course

Question 15

MY Agriculture

Answer 15

Largest rubber, palm producer exporter

12% GDP growth during 60s to 70s

Question 16

MY FDI

Answer 16

Investment Incentive Act 1968
Incentive for pioneer industries + locations in less developed + labour intensive

Boost FDI, MNC, export, import
Export of G&S>50% of GDP
Investments grow 11% annually

Question 17

MY EOI

Answer 17

Free Trade Zone Act (1971) encourage EPZ (Export Processing Zones)
Firms to export 80% of product, exempted from custom duties
Invited Japs for joint venture but reserve 30% stock for bumiputera

Malay middle class increase dramatically
9% growth in 90s

Question 18

MY Equity

Answer 18

New Economic Plan 1971
Special priveleges for Malays in finance sector and Petronas

Poverty halfed to 17% in late 80s
avg Malay income still 1/2 Chinese, 2/3 Indian
reduce % of foreign ownership of capital but replaced by local non-malays

Limited success

Question 19

Burma Nationalisation

Answer 19

Nationalisation U Nu 1948
poor 8 year plan
50s: rice exports down 2/3, mineral exports down 96%

Question 20

Burmese Socialism

Answer 20

Burmese Way to Socialism 1962
isolationist, nationalist policy, promote self-sufficiency

Entrepreneurship discouraged, foreign investments dried up
Country bankrupted 1962-1988

Question 21

Burma opening up

Answer 21

5 Year Plan (1996-2001)
Small scale capitalism, foreign investment welcome, trade with SEA

$2 billion in exports
GDP 6.4% growth

NOT SUSTAINED - Aung San imprisoned 1996 (slapped sanctions on Burma)
Govt banned nonessential imports/exports resulting in black market and inflation + 1/2 of govt budget to military

Question 22

Burma equity

Answer 22

1965 Tenancy Law (collectivisation)
Distribute land based on need not efficiency

1.2% growth annually only
Highest income 5x higher than lowest (equity)
Poverty

Question 23

Vietnam Socialism

Answer 23

Agriculture collectivisation
Farmers combine their labour, sell quota of grain to state at fixed price in exchange for consumer G&S below mkt rate

1982 - only 0.6% of Mekong Delta
1976-79 - nationwide rice production decreased by 2 million tonnes
National income decreasing 2% a year

Question 24

Vietnam Agriculture

Answer 24

Doi Moi 1986
Farmers responsible for own plot of land - incentive to raise productivity levels

Vietnam net rice exporter again
Per capita rice production increase from 242kg to 293kg
Rice exports more than 3 million tonnes by 90s

Question 25

Vietnam EOI

Answer 25

Doi Moi 1986
1995 join ASEAN - flow of investment from wealthier SEA neighbours

$173 million SEA investments
GDP 8% growth annually
Ho Chi Minh 15% econ growth

Question 26

Thailand ISI

Answer 26

1959 Board of Investment & Industrial Promotion (BIIP)
Promote investment in “modern sector”, Tariff barriers

Thai economy could produce component parts + other intermediate capital goods

Creation of conglomerates of Sino-Thai families and indigenous elites - large, no incentive to innovate, inefficient

Can pair with TH lack of EOI

Question 27

Thailand lack of EOI (initially)

Answer 27

By 1981 - Tariff increased in 53 categories of goods, only reduced in 19

BOT deficit, unstable economy - deficit up to 20 billion baht due to oil crisis 1973, govt borrowing = debt

Question 28

Thailand Agriculture

Answer 28

Larger producer and exporter of rice, comparative advantage in agriculture

Abundant, available land meant majority of population could get into and stay in agriculture

Sustained (but slow) growth up till 1980s - main source of growth and revenue

Question 29

Thailand EOI (textile market)

Answer 29

Opening of textile market
1972 Textile market boom, Import quota implemented on Jap by US allowed TH to capture bigger proportion of market

Textiles comprise 29% of total exports by late 80s
Manufactured exports up to 65% of export earnings by 1993

Question 30

Thai FDI/EOI

Answer 30

Investment Promotion Act 1977
Aggressive attract FDI w low state intervention

Annual export rate 8-12% per annum up to AFC
Thailand fastest growing economy in world late 80s

Question 31

Thailand AFC

Answer 31

Overdependence on foreign trade = AFC die

Econ vulnerable to external shocks (financial overexposure)
Potential short tern interests -> hot money inflows into real estate -> price bubble which caused AFC

Unregulated foreign credit flowing in -> US$57 billion in 1995 (7x increase)