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ISEAS MONITOR is a socio-political survey of Southeast Asia which examines current events to identify trends in
specific countries and in the wider region.

1
1he keg|on: Geopo||t|ca| Cverv|ew

AL Lhe 43
Lh
ASLAn MlnlsLerlal MeeLlng (AMM) held ln !uly aL hnom enh, ASLAn
lorelgn MlnlsLers falled, for Lhe flrsL Llme, Lo lssue a [olnL communlque, slgnalllng
Lhelr lnablllLy Lo reach a common poslLlon on Lhe acLlvlLles of clalmanL sLaLes ln Lhe
SouLh Chlna Sea. Cambodla, Lhe currenL ASLAn Chalr, was expecLed Lo Lake Lhe lead
ln worklng for a negoLlaLed compromlse.

1hls fallure led Lo Lhe subsequenL lssuance of Lhe ASLAn's Slx-olnL rlnclples on
Lhe SouLh Chlna Sea" sLaLemenL by ASLAn lorelgn MlnlsLers on 20 !uly. lollowlng
Lhls a monLh laLer was Lhelr sLaLemenL on recenL developmenLs ln Myanmar's
8akhlne SLaLe, lssued on 17 AugusL. 1he furore followlng Lhe 43
Lh
AMM, and Lhe
subsequenL dlplomaLlc endeavours by lndonesla Lo secure a common ASLAn
poslLlon, hlghllghL Lwo key learnlng polnLs.

1he flrsL ls Lhe lmporLance of ASLAn's unlLy of purpose. 1hls unlLy, Lhough ofLen
echoed ln mlnlsLerlal speeches and Lhe organlsaLlon's rheLorlc, may noL always be as
sLeadfasL as one may be led Lo belleve. LxLernal or lnLernal facLors may weaken Lhls
unlLy, and lL ls up Lo Lhe pollLlcal wlll of key lndlvlduals of Lhe day Lo salvage lL. 1he
second ls Lhe cruclal role of Lhe ASLAn Chalr. 1o be an effecLlve ASLAn Chalr
requlres a deep undersLandlng of, and commlLmenL Lo, ASLAn processes and
lnsLlLuLlons, and Lo ASLAn's cenLral role ln reglonal and lnLernaLlonal dynamlcs.

1he presslng quesLlon now ls how fuLure ASLAn Chalrs wlll deal wlLh Lhe SouLh Chlna
Sea and oLher conLenLlous lssues. 8runel uarussalam wlll chalr ASLAn ln 2013 and
Myanmar ln 2014. 1here are concerns over Myanmar's ablllLy - Laklng Lhe ASLAn
Chalr for Lhe flrsL Llme - Lo deal wlLh aLLempLs Lo lnfluence Lhe Chalr. lL ls Lo be
hoped LhaL Myanmar - Laklng Lhe lessons from hnom enh - wlll glve lmporLance
Lo Lhe counLry's commlLmenL Lo ASLAn ln 2014.

key po|nts: 1be lmmeJlote tosk ls to eosote A5ANs oolty ot tbe opcomloq 21
st

A5AN 5ommlt lo lboom leob lo Novembet, wbeo A5AN leoJets wlll meet wltb
coootetpotts ftom blq ootloos, locloJloq tbe u5 ooJ cbloo.


1he keg|on: Lconom|c Cverv|ew

SouLheasL Asla ls esLlmaLed Lo have grown by 4.3 per cenL ln Lhe flrsL half of 2012
year-on-year agalnsL lSLAS's esLlmaLe of 4.3 per cenL (l5A5 Mooltot no. 2 2012).

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uomesLlc demand has been cruclal ln keeplng Lhe growLh flgure aL a healLhy level,
albelL aL a slower pace. 1he lasL Lhree monLhs saw negaLlve global developmenLs. ln
Lurope, lncreased pollLlcal uncerLalnLy ln Creece and Lhe Spanlsh banklng secLor
problem have led Lo flnanclal sLress ln Lhe global markeL. 1he blg economles of Asla,
such as Chlna and lndla, have been hlL by slowlng domesLlc demand as pollcy
LlghLenlng measures ln Lhe lasL year Lake effecL. WlLh percelved growLh uncerLalnLy
and lncrease ln lnvesLor rlsk, many emerglng markeL economles have wlLnessed noL
only equlLy prlce decllne buL also caplLal ouLflows and currency depreclaLlon. rlces
of crude oll decllned Lo around uS$78 per barrel ln !une, 27 per cenL below Lhe end-
lebruary hlghs. Colng forward, lL ls expecLed LhaL Lhe condlLlon ln Lurope wlll ease
as pollcymakers work on Lhe declslons made aL Lhe Lu leaders' summlL ln !une.

lor SouLheasL Asla, Lhe Cu ls expecLed Lo grow by 3.1 per cenL year-on-year for Lhe
full-2012 (see 1able 1). MosL of Lhe economles are expecLed Lo slow down ln Lhe
second half of 2012, wlLh Lhe excepLlon of 1halland, whlch was recoverlng from
flood relaLed losses ln end-2011. LxporLs, wlLh repercusslon on Lhe manufacLurlng
secLor, wlll be a drag on Lhe economles. CrowLh ln Lhe servlces secLor (LransporL and
oLher Lrade relaLed servlces) wlll ease, buL wlll remaln sLable. Agaln, domesLlc
demand should hold up. AlLhough Lhere can be some degree of moderaLlon,
lnvesLmenL (especlally governmenL developmenL pro[ecLs) and prlvaLe consumpLlon
should keep Lhe reglon on a falrly healLhy growLh paLh.

WlLh an expecLed moderaLlon ln Lhe economy and lower crude oll prlces, elevaLed
levels of headllne lnflaLlon may come down. 1he consumer prlce lnflaLlon may sllp
from 4.3 per cenL ln 2011 Lo 3.6 per cenL ln 2012. 1hls wlll keep Lhe pollcy raLe on
hold or wlll LranslaLe lnLo furLher easlng. lor SouLheasL Asla, downward rlsk
conLlnues Lo loom large from exLernal facLors such as lnsufflclenL pollcy acLlon Lo
Lackle Lhe Luro crlsls, posslble flscal LlghLenlng ln Lhe uS, and slowdown ln Chlna's
lnvesLmenL spendlng.


1able 1: Lconomlc lorecasLs
Cu CrowLh (consLanL prlces, y-o-y) lnflaLlon (average Cl, y-o-y)
2012 2012
2011 !an-!un !ul-uec
(f)
lull-
?ear (f)
2011 !an-!un !ul-uec
(f)
lull-
?ear (f)
lndonesla 6.3 6.3 6.0 6.1 3.4 4.1 3.1 4.6
Malaysla 3.1 3.1 4.7 4.9 3.2 2.0 2.0 2.0
hlllpplnes 3.7 6.0
+
4.6 3.3 4.7 3.0 3.7 3.4
Slngapore 4.9 1.8 3.9 2.8 3.2 3.1 3.9 4.3
1halland 0.06 2.3 9.3 3.9 3.8 2.9 3.6 3.3
vleLnam 3.9 4.33

6.0 3.2 18.7 12.3 3.0 8.7
Southeast
As|a
*
4.4 4.3 S.8 S.1 4.S 3.4 3.7 3.6
Cl: Consumer rlce lnflaLlon.
f: forecasL.

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+ esLlmaLe as second quarLer offlclal Cu flgures were noL ouL Llll 26-08-12.
* 1he Cu flgures of SouLheasL Asla are a slmple average of Lhe slx counLrles, Lhe lnflaLlon flgures are
a slmple average of flve counLrles, excepL vleLnam.
Source: CLlC uaLabase, lMl World Lconomlc CuLlook (Aprll 2012, updaLe !uly 2012), lSLAS esLlmaLes.

key po|nts: Clobol cooJltloos polot towotJs weoket ptoJoctloo ootpot ooJ expotts.
2012 Cul ls expecteJ to be 5.1 pet ceot yeot-oo-yeot. otope temolos tbe blqqest
tlsk.


Country Ana|ys|s

Cambod|a

8llaLeral Lles beLween Cambodla and 1halland have been sLralned by border clashes
beLween Lhelr Lroops slnce Lhe hlsLorlc reah vlhear 1emple was granLed un World
PerlLage sLaLus ln !uly 2008. 1he lnLernaLlonal CourL of !usLlce (lC!) ruled ln 1962 LhaL
Lhe Lemple of reah vlhear belonged Lo Cambodla, buL 1halland's recenL clalms over
4.6 sq km of land surroundlng Lhe 1emple seL ln moLlon a serles of border clashes
beLween Lhe Lwo sldes from 2008. 1hls has damage noL only bllaLeral relaLlons
beLween Lhe Lwo counLrles, buL has also LhreaLened reglonal peace and sLablllLy as
well as Lhe credlblllLy of ASLAn, of whlch boLh counLrles are members.

8oLh counLrles have Lrled Lo seLLle Lhls Lhrough exlsLlng bllaLeral mechanlsms buL Lo
no avall. 1halland has lnslsLed on a bllaLeral approach, buL Cambodla has opLed for a
mulLllaLeral approach because of lLs lack of confldence ln bllaLeral negoLlaLlons wlLh
1halland.

ln !uly 2011, Lhe lC! ordered 1halland and Cambodla Lo wlLhdraw Lhelr Lroops from
Lhe Lemporary demlllLarlsed zone ln a dlspuLed porLlon of Lhelr border around Lhe
Lemple, and urged boLh counLrles Lo allow ASLAn observers lnLo Lhe dlspuLed zone.
AlLhough Lhe Lwo nelghbours agreed Lo ablde by Lhe courL's order, llLLle progress has
been achleved and Lhe prospecL of a peaceful soluLlon ls sLlll somewhaL eluslve.

ln laLe !uly 2012 boLh counLrles pulled back Lhelr Lroops from Lhe dlspuLe border, buL
ASLAn was noL formally lnvlLed Lo observe Lhe Lroop wlLhdrawal. Powever, Lhe !olnL
8order CommlLLee has resumed lLs work on border demarcaLlon slnce Lhe ?lngluck
governmenL came Lo power ln 1halland.

key po|nts: 1be lcI ls expecteJ to ooooooce lts Jeclsloo ovet tbe lotetptetotloo of tbe
1962 joJqmeot ot tbe eoJ of 2012. lt temolos to be seeo lf tbe coott tolloq wlll beot
ooy posltlve tesolotloo ooJ ollow A5AN to meJlote.

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Indones|a

1he lnLeresL ln lndoneslan naLlonal pollLlcs ls currenLly focused on SurkarLa mayor,
!oko !okowl" Wldodo's, unexpecLed challenge Lo lncumbenL lauzl 8owo for Lhe
poslLlon of !akarLa governor. As all parLles have falled Lo garner 30 per cenL of Lhe
voLe, Lhe Lwo fronLrunners wlll face each oLher agaln for a flnal run ln SepLember.
Wldodo's aLLenLlon-grabblng bld has even prompLed some Lo conslder hlm and hls
runnlng maLe, 8asukl 1[ah[a, as poLenLlal conLenders for Lhe presldenLlal elecLlons ln
2014. 1hls ls lnLeresLlng as Wldodo and resldenL ?udhoyono are boLh from Lhe
uemocraL arLy, wlLh Lhe laLLer supporLlng Lhe campalgn of lauzl 8owo. 1he
uemocraL arLy has been sLruggllng wlLh corrupLlon allegaLlons lnvolvlng several key
flgures for over a year, wlLh poLenLlally deLrlmenLal consequences for Lhe 2014
parllamenLary polls. Wldodo, by conLrasL, has an lmage of a comparaLlvely clean"
pollLlclan.

1he polls are sLlll almosL Lwo years away buL several parLles have made publlc Lhelr
candldaLes for presldency. Among Lhe nomlnees, Lhe former head of Lhe Army
SLraLeglc 8eserve Command and chalrman of Lhe Cerlndra arLy, rabowo SublanLo,
ls perhaps Lhe mosL dlvlslve. All ma[or surveys puL hlm amongsL Lhe Lhree leadlng
conLesLanLs. 1he Lwo oLhers are usually Lhe chalrperson of Lhe lndoneslan
uemocraLlc arLy, MegawaLl SukarnopuLrl, and chalrperson of Colkar cum buslness
magnaLe, Aburlzal 8akrle.

1here ls conslderable naLlonal aLLenLlon currenLly on Lhe Lrlal of Anand krlshna, a
splrlLual acLlvlsL whose books promoLe rellglous plurallsm. uurlng hls Lrlal, Lhe courL
appeared Lo pay more aLLenLlon Lo hls Leachlngs Lhan Lhe (lack of) evldence relaLed
Lo Lhe charges of alleged sexual mlsconducL. Pls evenLual acqulLLal was recenLly
overLurned by Lhe Supreme CourL and he ls currenLly flllng a case revlew. Anand's
case ls a manlfesL slgn LhaL corrupLlon ln lLs varlous forms conLlnues Lo be Lhe
blggesL and mosL complex challenge ln lndonesla. Cf 33 governors, 13 currenLly are
ln [all or face Lrlal. LsLlmaLes puL Lhe number of corrupL senlor publlc offlclals aL
abouL 30 per cenL.

key po|nts: Amooq tbe molo lostltotloos toskeJ to tockle cottoptloo lo loJooeslo,
ooly tbe cottoptloo toJlcotloo commlssloo bos o cleoo tecotJ. nowevet, lts
efflcleocy ls ofteo comptomlseJ by potllomeototloos tbemselves.


Ma|ays|a

Lven Lhough neL exporLs fell by 36.2 per cenL, Lhe Malayslan economy reglsLered a
sLrong second quarLer growLh of 3.4 per cenL malnly due Lo a 13.8 per cenL growLh ln
domesLlc demand. uomesLlc demand ln Lhe nexL few monLhs wlll remaln sLrong
because Lhere ls momenLum generaLed by huge publlc consLrucLlon pro[ecLs and by

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Lhe clvll servlce pay rlses and governmenL cash handouLs. Whlle Lhe full year growLh
for 2012 ls expecLed Lo be nearly 3 per cenL, global economlc uncerLalnLles could
adversely lmpacL growLh as early as Lhe flrsL half of 2013.

8ecause Lhe publlc secLor wlll remaln a key drlver of growLh, na[lb's admlnlsLraLlon
wlll sLruggle Lo recLlfy Lhe plLfalls posed by balloonlng federal budgeL deflclL and
federal debL. ln vlew of Lhe lmpendlng general elecLlon, Lhe governmenL cannoL
afford Lo scale down subsldles or lncrease lLs revenue base Lo reduce lLs deflclL and
debL. SLrong economlc growLh, however, wlll barely address Lhe rlslng cosLs of llvlng
faced by ordlnary Malayslans, Lrlggered by prlvaLlsaLlon and corporaLlsaLlon of
servlces, especlally ln Lhe educaLlon, healLh care, and uLlllLles secLors. Malayslan
household debL, 8M340.3 bllllon, Lhe second hlghesL ln Asla, wlll hold sLeady, lf noL
rlse, as clLlzens Lake ouL more loans and make use of easy credlL from credlL cards Lo
cope.

ollLlcally, Lhe governmenL has noL much Llme lefL as Lhe 13
Lh
Ceneral LlecLlon musL
be held wlLhln Lhe nexL slx monLhs. na[lb's efforLs Lo pro[ecL a moderaLe lmage have
been undermlned by uMnC pollLlclans and L8kASA exLremlsLs, as well as Lhe
uMnC-owned newspaper utosoo Moloyslo harplng on raclal and rellglous lssues. lL
appears LhaL na[lb ls borrowlng a leaf from MahaLhlr's manlpulaLlve use of scare
LacLlcs and lnLlmldaLlon LhaL helped Lhe laLLer Lo wln Lhe 1999 elecLlon. A cockLall of
exploslve and recurrenL lssues - May 13, hudud, Malay rlghLs, and rellglon - wlll be
hlghllghLed and explolLed by uMnC-8n ln Lhe run up Lo Lhe elecLlon.

ulvlslons and dlfferences beLween and wlLhln Lhe Anwar-led akaLan coallLlon
parLles wlll be fully explolLed by uMnC-8n. SelecLed opposlLlon pollLlclans wlll be
enLlced Lo be 'pollLlcal frogs'. AL leasL Lwo key AS leaders are belng courLed by
uMnC. Crowlng elecLoral dlsconLenL ln Sarawak and especlally Sabah (over lllegal
lmmlgranLs, oll royalLles, Lhe 20-polnL AgreemenL, and ChrlsLlanlLy) wlll geL more
aLLenLlon from Lhe na[lb admlnlsLraLlon.

key po|nts: Neqotlve covetoqe of opposltloo locol qovetomeots, pottles, ooJ
polltlcloos wlll qolo mote spoce ooJ olt tlme lo tbe molostteom meJlo. now socb
covetoqe wlll ploy oot omooqst tbe electotote temolos to be seeo.


Myanmar

Myanmar ls belng confronLed wlLh a serlous challenge Lo Lhe rule of law and Lhe
lnLegrlLy of Lhe consLlLuLlonal arrangemenL by a conLroversy over Lhe rullng by Lhe
ConsLlLuLlonal 1rlbunal (C1) regardlng Lhe sLaLus of parllamenLary bodles. lL began
when parllamenLarlans lnslsLed LhaL commlLLees, commlsslons and bodles formed by
parllamenL be accorded Lhe sLaLus of unlon" (cenLral) level organlsaLlons ln order Lo
fulflll Lhelr 'check and balance' funcLlon.

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A requesL Lo clarlfy Lhe lssue was senL Lo Lhe resldenL early Lhls year. 1he ALLorney-
Ceneral, on behalf of Lhe resldenL, submlLLed Lhe lssue Lo Lhe C1 for a rullng. 1he
C1 ruled, ln lebruary, LhaL Lhe lnLerpreLaLlon of commlLLees, commlsslons and
bodles formed by each PluLLaw [parllamenL] as unlon Level CrganlsaLlons" was
unconsLlLuLlonal. Many parllamenLarlans dld noL accepL Lhe verdlcL and 191 Ms
from Lhe ylLhu PluLLaw (P, lower house) lnformed lLs Speaker ln Aprll Lhelr
lnLenLlon Lo Lable a moLlon calllng for Lhe lmpeachmenL of Lhe C1 chalr and
members.

When negoLlaLlons Lo resolve Lhe dlspuLe falled, 301 Ms from Lhe P agaln
prompLed Lhe Speaker, on 8 AugusL, for Lhe lmpeachmenL clLlng breach of
consLlLuLlonal provlslons and fallure Lo fulflll Lhelr duLles. 1he Speaker senL a
message Lo Lhe resldenL on 14 AugusL suggesLlng LhaL Lhe ALLorney-Ceneral's
submlsslon Lo Lhe C1 be wlLhdrawn and Lhe C1 chalr and members should reslgn
volunLarlly before 21 AugusL. 1he resldenL replled ln a message, daLed 20 AugusL,
Lo Lhe Speaker LhaL Lhe submlsslon could noL be wlLhdrawn because Lhe verdlcL had
already been reached and he could noL acL Lo make Lhe C1 chalr and members, who
had lndependenLly made a declslon ln accordance wlLh Lhe ConsLlLuLlon, reslgn as
LhaL would be unfalr and agalnsL Lhe law.

1he C1 also held a press conference on 20 AugusL Lo explaln lLs poslLlon and reafflrm
lLs commlLmenL Lo sLand by Lhe declslon and Lo carry on lLs Lasks and duLles.
SubsequenLly, lL was announced LhaL Lhe lmpeachmenL process would be lnlLlaLed
by Lhe AmyoLha PluLLaw (upper house) ln Lhe currenL parllamenLary sesslon. 1he
specLre of pollLlcal dlvlslon looms.

key po|nts: 1be c1 ooJ Mls ote oo o colllsloo cootse. 1bls coolJ ottest tbe
momeotom of mocb-oeeJeJ polltlcol ooJ ecooomlc tefotms, ooJ etoJe tbe
leqltlmocy of tbe Jemoctotlc lostltotloo. lo tbe wotst cose, lt coolJ be oo excose fot
tbe tetoto of ootbotltotloolsm.


h|||pp|nes

ConLlnulng a poslLlve Lrend, Lhe hlllpplne economy grew beLween 6.3-7 per cenL
durlng Lhe second quarLer, maklng lL Lhe fasLesL growlng ln Asla, afLer Chlna. 1hls
was drlven by a boosL ln buslness process ouLsourclng and manufacLurlng, a
recovery ln exporL-orlenLed secLors, and governmenL spendlng on lnfrasLrucLure.
lnLeresL raLes have been kepL Lhe same, and lnflaLlon ls down, wlLh Lhe governmenL
on course Lo meeL lLs flscal deflclL LargeL of 2.6 per cenL of Cu for 2012. 1he
counLry's good economlc performance and prudenL flscal pollcy have led Lo Lhe
hlllpplnes recelvlng a 88+ raLlng by Lwo lnLernaLlonal agencles, one sLep below
lnvesLmenL grade.

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ln May, Lhe lmpeachmenL process agalnsL former Supreme CourL Chlef !usLlce
8enaLo Corona concluded. Corona was convlcLed of falllng Lo dlsclose forelgn
currency accounLs worLh more Lhan uS$1.8 mllllon. ln !uly, former resldenL Clorla
Macapagal Arroyo was freed on ball afLer elghL monLhs of deLenLlon for elecLoral
saboLage. Whlle Lhe courL ruled LhaL Lhe evldence agalnsL her was weak, lL ls llkely
LhaL Lhere wlll be furLher charges of plunder assoclaLed wlLh a sLaLe-owned loLLery.
Whlle Lhese processes are lmporLanL for resldenL Aqulno's anLl-corrupLlon drlve, lL
ls lmporLanL LhaL he and Congress noL llmlL Lhelr aLLenLlon Lo pursulng Arroyo and
her allles.

1he currenL lssue before Lhe Pouse of 8epresenLaLlves ls Lhe much awalLed
reproducLlve healLh blll, whlch, lf passed, would requlre Lhe governmenL Lo make
conLracepLlves wldely avallable Lo Lhe publlc, among oLher measures. Whlle
supporLed by Aqulno and popular wlLh buslness and employers' groups, lL ls hoLly
opposed by Lhe CaLhollc Church. ln Lhe evenL LhaL lL passes Lhrough Lhe Pouse of
8epresenLaLlves, lL musL Lhen be passed ln Lhe SenaLe, where approval would be
dlfflculL.

ln !uly, a Lwo monLh sLandoff beLween Lhe hlllpplnes and Chlna ended, wlLh bad
weaLher forclng boLh counLrles Lo wlLhdraw Lhelr shlps from Lhe Scarborough Shoal,
clalmed by boLh counLrles. Powever, Lenslons flared laLer LhaL monLh, when
followlng Lhe ASLAn MlnlsLerlal MeeLlng, ASLAn member counLrles were unable Lo
lssue a [olnL communlque for Lhe flrsL Llme ln Lhe grouplng's hlsLory. 8equesLs from
hlllpplnes and vleLnam Lo lnclude menLlon of Lhe SouLh Chlna Sea ln Lhe sLaLemenL
were re[ecLed by Lhe ASLAn Chalr, Cambodla. Aqulno has pledged Lo lncrease
mlllLary spendlng by uS$1.8 bllllon over Lhe nexL flve years.

key po|nts: wlll tbe teceot flooJloq lo Moollo offect bosloess seotlmeot? wlll Apoloo
oppolot o commltteJ ootl-cottoptloo compolqoet ot o stooocb olly to tbe cblef
Iostlce posltloo? now wlll tbe noose of kepteseototlves vote oo tbe teptoJoctlve
beoltb blll?


S|ngapore

very few counLrles are as self-consclous as Slngapore. 1hls ls Lrue for lmage as well
as pollcymaklng. 1he educaLlon mlnlsLer and former economlsL, Peng Swee klaL, has
been Lasked by Lhe rlme MlnlsLer Lo lead a commlLLee of younger mlnlsLers Lo
revlew pollcles across Lhe board, osLenslbly Lo beLLer prepare Lhe counLry for Lhe
nexL 20 years. 1he challenge would be Lo enLhuse Lhe general publlc who may have
come accusLomed Lo such 're-Lhlnklng commlLLees' whlch have, over Lhe years,
lncluded Lhe Lconomlc 8evlew CommlLLee (2001) and Lhe 8emaklng Slngapore
CommlLLee (2002).

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8

A poLenLlally dlvlslve lssue brewlng ls Lhe rullng by Lhe CourL of Appeal Lo allow a
legal challenge Lo 377A of Lhe penal code whlch crlmlnallses sex beLween men. ln
2010, 1an Lng Poon was arresLed and charged under SecLlon 377A for engaglng ln
oral sex ln a shopplng mall LolleL. 1an, represenLed by human rlghLs lawyer M 8avl,
applled Lo Lhe Plgh CourL Lo declare SecLlon 377A unconsLlLuLlonal because lL
vlolaLes ArLlcle 12 of Lhe ConsLlLuLlon whlch guaranLees equal proLecLlon and
LreaLmenL under Lhe law, an appllcaLlon Lhe Plgh CourL subsequenLly Lurned down.
1he CourL of Appeal has, however, overruled Lhe Plgh CourL, and declded LhaL Lhere
are sufflclenL grounds on whlch 377A may be legally challenged. 1he legallLy of
homosexual acLs ls an emoLlve one glven Lhe slgnlflcanL ChrlsLlan and Musllm
communlLles. Cbservers may recall Lhe hlghly, noL Lo menLlon rellglously, charged
parllamenLary debaLes over 377A flve years ago and conclude LhaL old wounds may
soon be scraLched open.

llnally, afLer years of campalgnlng from local acLlvlsLs, Lhe governmenL announced
LhaL Lhe deaLh penalLy would no longer be mandaLory for cerLaln drug Lrafflcklng
cases. lf Lhe courLs are saLlsfled LhaL Lhe drug Lrafflcker was noL lnvolved ln drug
dlsLrlbuLlon acLlvlLles, cooperaLed subsLanLlally wlLh Lhe auLhorlLles or suffers from a
menLal dlsablllLy, Lhe [udge may exerclse dlscreLlon. 1hls quallfled concesslon,
neverLheless, represenLs a small vlcLory for acLlvlsLs who wlll be encouraged Lo
furLher press for Lhe abollshmenL of Lhe deaLh penalLy. 1helr growlng momenLum
may soon see slgns of a confllcL beLween progresslve and conservaLlve forces
shaplng up wlLhln Lhe counLry.

key po|nts: 1be coootty ls becomloq locteosloqly polotlseJ ovet o vost votlety of
lssoes ftom polltlcs to motollty. xpect mote ftepoeot Jebote ooJ cooftoototloo, oot
oecessotlly olwoys ployloq oot lo tbe molostteom meJlo.


1ha||and

LxLravaganL efforLs Lo avold pollLlcal Lenslons and blckerlng durlng Lhe run-up Lo klng
8humlbol Adulyade['s 83
Lh
blrLhday on 3 uecember should noL dlsLracL analysLs from
Lhe shorL-Lerm challenges confronLlng 1halland. Cn Lhe economlc fronL, conLlnued
weakness ln Lurope and Lhe uS, and Lhe prospecL of a slowdown ln Chlna make lL
unllkely LhaL exporLs wlll drlve sLrong Lhlrd quarLer growLh. uroughL ln many areas of
Lhe counLry wlll puL downward pressure on lncomes and upward pressure on prlces.
1he aLLachmenL of Lhe ?lnglak ShlnawaLra governmenL Lo Lhe poorly deslgned pollcy
of guaranLeelng above-markeL prlces for rlce wlll undermlne confldence ln economlc
managemenL.

1he lnvesLlgaLlon on Lhe parL of Lhe !usLlce MlnlsLry's ueparLmenL of Speclal
lnvesLlgaLlon lnLo Lhe vlolence of March-May 2010 may have flgures ln Lhe former

ISEAS MONITOR I A QUARTERLY SURVEY OF SOUTHEAST ASIA I ISSUE: 2012 NO. 3

9
uemocraL arLy governmenL as lLs prlnclpal LargeLs. 8uL lL has already provoked Lhe
lre of Lhe mlllLary. As Lhe lnvesLlgaLlon proceeds, LhaL lre LhreaLens Lo prove Lo be a
source of serlous pollLlcal Lenslon. 1he uemocraLs wlll conLlnue Lo do all LhaL Lhey
can Lo de-sLablllse Lhe governmenL and Lo undermlne confldence ln lL.

1he ?lnglak governmenL ls llkely Lo go slow ln lLs efforL Lo effecL former rlme
MlnlsLer 1haksln's reLurn Lo 1halland. 8uL furLher Lenslons wlll neverLheless resulL
from LhaL governmenL's conLlnued hard-llne ln prosecuLlng 1hals for alleged lse
mojest and from acceleraLlng efforLs among provlnclal 8ed ShlrL leaders Lo organlse
Lhelr followers lndependenLly of Lhe governmenL. lL remalns Lo be seen lf rlme
MlnlsLer ?lnglak's recenL commlLmenL Lo pay greaLer aLLenLlon Lo Lhe confllcL ln
1halland's ueep SouLh wlll have any pracLlcal effecL. 1he posslblllLy of rapld
deLerloraLlon ln Lhe healLh of Lhe klng, Lhe queen, or boLh remalns real, wheLher or
noL news of such deLerloraLlon ls made publlc.

key o|nts. 1be ecooomlc ootlook ls o coose fot cooceto. 1be estobllsbmeot-loqlok
telotloosblp tepoltes coostoot otteotloo. 1be beoltb of tbe kloq ooJ poeeo coo ooly
qtow mote ftoqlle.


V|etnam

A Loxlc cockLall" - Lhe words of economlsL Le uang uoanh - apLly descrlbe
vleLnam's slLuaLlon for Lhe fourLh quarLer of 2012. 1he lngredlenLs are economlc
sLagnaLlon, banklng scandals, pollLlcal lnsecurlLy caused by arLy recLlflcaLlon and
anLl-corrupLlon drlves, and challenges Lo vleLnamese soverelgnLy ln Lhe SouLh Chlna
Sea.

arLy recLlflcaLlon alms Lo curb abuses of power and corrupLlve behavlour by
governmenL offlclals ln cahooLs wlLh buslnesses Lo enrlch boLh sldes. ollLlclan-
banker, nguyen uuc klen, and Lhe head of Lhe Asla Commerclal 8ank, Ly xuan Pal,
have been arresLed. noLably, whlle Lhe rumour mlll has for years llnked klen Lo
rlme MlnlsLer nguyen 1an uung, Lhe Chlef of ollce has declared LhaL lL was Lhe
rlme MlnlsLer hlmself who dlrecLed Lhe arresLs. Larller reporLs gave credlL Lo Lhe
MlnlsLer for ubllc SecurlLy buL Lhe order probably came from Lhe ollLlcal 8ureau.

1he arresLed palr of klen and Ly could reveal Lhe exLenL of lllegal acLlvlLles ln Lhe
banklng secLor. 8umours are polnLlng Lo lmprudenL bank loans arranged by klen, as
well as hls role ln Lhe merger/acqulslLlon of anoLher bank, an acL percelved as
pollLlcal bullylng. ln Lhe nexL Lwo monLhs Lhere wlll be an lnLense sLruggle over how
Lhe offlclal reporLs regardlng arLy recLlflcaLlon should be wrlLLen. lndlvldual leaders
would wanL Lo avold blame, and mosL lmporLanL, reLaln Lhelr poslLlons. arLy
recLlflcaLlon would also go down Lo provlnclal level and lower. CreaLer conservaLlsm

ISEAS MONITOR I A QUARTERLY SURVEY OF SOUTHEAST ASIA I ISSUE: 2012 NO. 3

10
and cauLlon ln offlclals' behavlour, lf only Lo avold maklng mlsLakes, leadlng Lo rlsk-
averslon, ls Lo be expecLed.

1he economy has noL llved up Lo earller opLlmlsm. lmporLs have decreased and
analysLs noLe LhaL Lhls would lmpacL negaLlvely on exporLs ln Lhe nexL quarLer. CredlL
growLh ls aL an unhealLhy low whlle Lhe bursL of Lhe real esLaLe bubble has Lurned
speculaLlon lnLo locked lnvesLmenLs. SpeculaLors are noL reallslng losses and banks
are unable Lo recover loans. Close Lo 100,000 companles, mosLly from Lhe prlvaLe
secLor, have ceased operaLlons. Cn Lhls downward spln, Lhere are yeL no slgns of
exLernal help, be lL from a buoyanL world economy or Lhe lMl. 1he sLagnaLlon ls
expecLed Lo be relleved sllghLly as Lhe end of Lhe year usually sees a rlse ln
consumpLlon, buL Lhe overall Lrend ls a downward one.

key po|nts: wblle vletoom ooJ cbloo oppeot to bove teocbeJ o polet ooJ
oocomfottoble Jteote ovet tbe 5ootb cbloo 5eo, expect mote bllotetol ptoblems os
tbe flsbloq seosoo tesomes tbls 5eptembet.