December 1, 2009 News Roundup

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.

Vietnam’s problems stem from years of rapid expansion from 2000 to 2007, when gross domestic product grew an average of 7.5% a year, making the country a darling of global investors. Policy makers were unable to manage the massive inflows of capital, and inflation began, reaching a peak of 28% in August 2008 and threatening an economic crisis.

The global credit crunch helped to ease inflation by depressing oil and food prices. But it also knocked out much of the foreign direct investment on which Vietnam had come to depend, and exports slumped. The trade deficit ballooned, reaching $10.2 billion in the first 11 months of the year, while dollar sales aimed at stabilizing the dong shrunk foreign reserves. All that — coupled with billions of dollars in spending on economic stimulus — added to the pressure on the dong.

The BBC has an article on Vietnam diaspora returnees.  The Vietnamese government is actively courting the four million ethnic Vietnamese that live outside of Vietnam (Viet kieu), hoping they will return to Vietnam in order to help the nation develop economically.  The Viet Kieu currently send as much US$10 billion in remittance yearly.  However, there are mixed feelings, as many in the overseas communities are refugees who fled the current communist regime.  As such, they are hesitant about engaging a state that is still not democratic.

Malaysia:  Another Malaysian citizen wants to change their religion, and is facing opposition.  This time, a woman  from a Hindu family claims she was forcefully converted to Islam in an orphanage as a child.  She married a Hindu man in a religious ceremony, but because Malaysian citizens cannot marry outside their religion her husband is not recognized by the state and she can not even put his name on their childrens’  birth certificates.   I wonder can a Muslim man marry a non-Muslim, it is obvious that Mohammad married nonMuslim women  and did not make them covert.

Cambodia:  The NY Times is running and article on the Cambodian government’s softening stance toward foreign land ownership as fears of a foreign speculator based bubble subside.

ASEAN: ASEAN is pushing for an “open skies” agreement with Beijing, which it hopes the liberalization of air policies will boost trade between ASEAN and China.

One of the few factors that will be under consideration in an open skies deal is the availability of space or the capability of airports to handle the increase in flights.

Another main issue, according to Porciuncula, was how to deal with the expected increase in air traffic that may lead to airspace congestion in the area as a result of the accord.

Aviation safety regulations in the region also have to be harmonized, he said.

ASEAN has also issued a joint statement with China on legal assistance:

Under the joint statement approved at the meeting, prosecutors-general affirmed the necessity for collaboration in the fight against terrorism and terrorism sponsorship, human trafficking, drug trafficking, cross-border smuggling, corruption, money laundering, hi-tech crimes and other transnational crimes.ration among prosecution services of China and ASEAN countries.

One issue is that China has often used such agreements in the past, such as with the Shanghai Cooperation Organization to pressure smaller states to cooperating in deporting Chinese nationals engaged in anti-Chinese activities (such as human rights, ethnic self-determination) back to China, where they have been executed.