Southeast Asian economies are starting to feel the pinch of trade tensions, recession fears and other global trends.
Thiam Hee Ng
Thiam Hee works on allocating and monitoring ADB's concessional assistance resource. He used to work on financial integration, macroeconomic surveillance, and early warning systems. He also managed the Asian Bonds Online web portal and the Asia Bond Monitor, a quarterly report on local currency bond market developments in Asia. Prior to joining ADB, he worked for UNIDO and the Central Bank of Malaysia.
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If Malaysia truly wants to reach high-income countries, it must first arrest and then reverse its structural regression, and improve the business environment to revive private investment in manufacturing.
After years of smooth sailing through calm market conditions, bond markets in East Asia are navigating through stormier weather. ADB data released this week shows that weaker growth in the US and the PRC has weighed down overall regional growth.
Debt has ballooned in developing Asia following the 2008-2009 global financial crisis, supported by plentiful global liquidity. With the US Federal Reserve about to raise interest rates, data from the Asian Development Outlook 2015 gives a clearer picture about the possibility of a credit slowdown in the region.
The offshore renminbi bond market has boomed since the People’s Republic of China (PRC) authorities first allowed domestic banks to issue them in Hong Kong, China in June 2007. But appetite for the paper—popularly known as “dim sum bonds”—is starting to wane as access to onshore markets becomes easier. To stay relevant, the dim sum market must develop further.
The ASEAN Economic Community, planned to come into effect in 2015, is expected to liberalize goods, capital and skilled labor flows in the ASEAN region. While there has been considerable progress in the area of trade integration, financial integration still lags behind. The ASEAN Banking Integration Framework, which aims to liberalize the banking market by 2020, could help pave the way for further integration and the entry of ASEAN banks into regional banking markets.
The global market for sukuk – or Islamic debt securities – has soared from a tiny US$15 billion in 2001 to US$281 billion in 2013. Helping issuers tap the large pool of funds seeking shari’ah-compliant investments would help lower the cost of financing infrastructure, while the innovative profit-sharing structures of some sukuk could also lower the risk of financing such projects.