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24 money flowing into business. Then a huge amount of private debt was shifted from the banks onto the public books. South Korea, Malaysia and Indonesia together moved some US $76 billion of non-performing bank loans into government-owned management companies (Thailand has left debt with the banks). In effect, government has taken over control of the companies owing this money. In Indonesia, for instance, it is estimated that 70% of corporate assets are now controlled by the state. The debts already taken over do not represent anywhere near all the bad loans. They range from around 26% of the non-performing bank loans in South Korea to perhaps 66% in Indonesia, but it is expected that the banks will have to be relieved of considerably more debt before the banking systems are restored to health. The plan is that the state investment should be repaid by the sale of the assets securing the loans. So far, however, only a tiny fraction of these assets has been sold off. In addition to injecting funds and taking over corporate debts, governments have been forced to take over ownership of many banks and financial institutions. In Indonesia, 12 commercial banks have been nationalized, while four in South Korea and four in Thailand have passed into public ownership. The result is that state banks now account for well over half the outstanding loans still in the banking system in Indonesia and South Korea and around 45% in Thailand. A study by one group of World Bank economists calculates that, on average, bank loans in Indonesia, South Korea, Malaysia and Thailand now held by the state are equivalent to 98% of their GDPs. The risk is that the rapid build-up of public debt in these countries could constrain economic recovery. By the time all the public funds needed to restore the financial systems to health have been allocated, public debt as a percentage of GDP will have increased by half in Malaysia, doubled in Indonesia, tripled in South Korea and increased 06 Last Khmer Rouge leader at large, Ta Mok, arrested in Cambodia. 09/ China’s National People’s Congress debates 10 constitutional amendments to recognize Deng Xiaoping’s “socialist market economy” and protect private enterprises. 09 Sony announces 10% cut to global work force, reduction of manufacturing facilities from 70 to 55. 12 Japanese government grants 15 banks $95 billion in public funds to help cover bad loans. 12 Japan agrees to lend $1 billion to Indonesia and $382 million to Thailand to help recovery. 13 Indonesia closes 38 insolvent commercial banks and takes over seven others. 16 North Korea agrees to let US inspect suspected nuclear site in return for food aid. 17 Japanese government presents $1 trillion budget to pull country out of recession. 19 At least 33 people killed during ethnic riots in Kalimantan. 20 Malaysian soldiers slaughter 40,000 pigs believed to be carrying Japanese encephalitis virus which killed 61 people. 22/ Talks between China and Philippines over 23 possession of Mischief Reef in Spratly Islands end with no agreement. 23 Japanese navy chases two suspected North Korean spy boats out of Japanese waters. 23 ADB approves US $3.06 billion Asian Currency Crisis Support Facility to assist countries hit hard by the crisis. 24 Trial of Anwar Ibrahim ends abruptly as his lawyers refuse to make closing arguments after request to have presiding judge dismissed is ignored.
six-fold in Thailand. With the exception of Indonesia, costs of servicing the increased debt will not be unmanageable. At less than 15% of government revenue, their burden is much smaller than that faced by the government of Canada, which allocates 27% of its revenue to debt servicing. But it is taking the countries into unfamiliar fiscal territory. When combined with the added costs of developing social safety nets — another result of the crisis — it means the region is facing medium-term fiscal pressures, and a need to raise revenue, that it has not previously known. The budget deficits of the three affected Southeast Asian economies, plus South Korea, ranged between 5% and 6.5% of GDP in 1999. This level of fiscal pressure may have a dampening effect on investment and growth over the next few years as governments either trim spending, or raise taxes and their own borrowing. The other unresolved problem left over from the financial crisis is corporate restructuring. There is a sense within Asia that, with economic growth picking up, the urgency of rebuilding balance sheets has eased. Unfortunately, the figures suggest otherwise. Although low interest rates and the return to economic growth have reduced the acute financial pressures on companies, World Bank calculations suggest a grimmer reality. Even with the current low interest rates, almost a quarter of publicly traded Thai corporations and more than half of those in Indonesia will still not be able to meet their interest obligations by the end of 2002. If interest rates in South Korea return to historically high levels from their present abnormal low, about a quarter of firms in that country would also show a cash-flow deficit. The problem is that debt-laden companies are resisting the sale of assets or conversion of debt into equity. Their preference for rescheduling debt or capitalizing unpaid interest is, in effect, putting off radical restructuring in the belief that they can 25 30 Thai cabinet announces $5.2 billion economic stimulus package, backed by Japan and World Bank, to create jobs and cut taxes. APRIL 04 Parti Keadilan Nasional (National Justice Party) formed in Malaysia, headed by Anwar Ibrahim’s wife Wan Azizah Ismail. 05 Jailed East Timorese independence leader, Jose Alexandre “Xanana” Gusmao, calls for war against Indonesian army and pro-Indonesia militia groups. 06/ Chinese Premier, Zhu Ronji, visits US seeking 14 WTO deal. 10 AIADMK Party, second largest in India’s governing coalition, withdraws from government. 11 India test-fires long-range ballistic missile capable of carrying nuclear warhead. 12 Suharto’s youngest son, Hutomo “Tommy” Mandala Putra, charged with corruption over 1997 property deals. 13/ Thai Deputy Prime Minister, Supacahi 17 Panitchpakdi, and Minister of Science, Technology and Environment, Suwit Khunkitti, visit Ottawa. 14 Anwar Ibrahim found guilty of abuse of power, sentenced to six years in jail. 14 Pakistan test-fires long-range ballistic missile. 14/ Chinese Premier, Zhu Ronji, visits Canada to 20 seek WTO deal. 16 Nissan announces 5,000 job cuts and lowers production from 2 million to 1.5 million cars a year. 25 10,000 Falun Gong followers hold sit-in in Beijing’s Tiananmen Square to ask government not to outlaw their organization. 26 Indian parliament dissolved after ruling coalition defeated and Congress Party fails to form new government.
Page 1 and 2: asia pacific foundation of canada 1
Page 3 and 4: ○ ○ ○ ○ ○ ○ ○ ○ ○
Page 5 and 6: October 2000, we will hold the firs
Page 7 and 8: OVERVIEW 1 asia in convalescence 7
Page 9 and 10: ○ ○ ○ ○ ○ ○ ○ ○ ○
Page 11 and 12: GRADE ‘98 Inward Investment C- In
Page 13 and 14: THE CHALLENGE OF GLOBALIZATION Unde
Page 15 and 16: The largest pool of investable Cana
Page 17 and 18: enabled Canada to take a stronger r
Page 19 and 20: emoval. However, most of the change
Page 21 and 22: MAJOR EVENTS 2 a year in review 21
Page 23: stock markets were climbing. As the
Page 27 and 28: the past played a very small role i
Page 29 and 30: it had allowed in recent years. A m
Page 31 and 32: SECURITY BACKTRACK While economic c
Page 33 and 34: Outbreaks of violence in other part
Page 35 and 36: ECONOMIC RELATIONS 3 looking for a
Page 37 and 38: TODAY’S DELAY IS TOMORROW’S LOS
Page 39 and 40: ○ ○ ○ ○ ○ ○ ○ ○ ○
Page 41 and 42: to achieve operating efficiencies t
Page 43 and 44: Finally, foreign investment by Cana
Page 45 and 46: NORTH AMERICAN INTEGRATION 4 too mu
Page 47 and 48: similar to that with the US with on
Page 49 and 50: British Columbia provides a recent
Page 51 and 52: part of US-assembled goods bound fo
Page 53 and 54: ASIAN EXPERTISE 5 hidden advantage
Page 55 and 56: cautioned that “not every Asian C
Page 57 and 58: usiness skills to enhance Canada-As
Page 59 and 60: 6 DEVELOPMENT ASSISTANCE ODA for a
Page 61 and 62: the term “development assistance
Page 63 and 64: The report emphasizes the need to
Page 65 and 66: ASIA PACIFIC FOUNDATION OF CANADA 7
Page 67 and 68: CANADIAN EDUCATION CENTRE NETWORK T
Page 69 and 70: NOTES CHAPTER 1 1. Based on markets
Page 71 and 72: NOTES 5. Research by Tamim Bayoumi
Page 73 and 74: REFERENCES —. Statistics Canada.
Page 75 and 76:
REFERENCES United Nations Conferenc
Page 77 and 78:
STATISTICAL APPENDIX ASIAN MOTHER T
Page 79:
STATISTICAL APPENDIX CANADA’S TRA
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