Siah Hwee Ang on Brexit repercussions, turmoil in the South China Sea, technology in Vietnam, Singapore has to pick sides, Aussies v Kiwis & more

Today's Top 10 is a guest post looking at the latest happenings across Asia Pacific from Professor Siah Hwee Ang, the BNZ Chair in Business in Asia at Victoria University.

As always, we welcome your additions in the comments below or via email to david.chaston@interest.co.nz.

And if you're interested in contributing the occasional Top 10 yourself, contact gareth.vaughan@interest.co.nz.

See all previous Top 10s here.

1. The discussion around the Brexit’s impact on Asian economies continues….

Until Article 50 is triggered, there is little to assess the Brexit on except who the winners and losers might be. London-based Capital Economics suggests that the Brexit would cause at the most a drop of 0.2% in gross domestic product (GDP) across Asia. The argument is that Asia will be affected as the Brexit will cause a substantial decline in the UK’s imports.

The thinking behind this seems lop-sided. What’s going to happen to trade substitution?

Well, at least Bloomberg economists have now come back with a response. China, Japan and Hong Kong are likely to be winners, as UK will deepen its links with its Asian trading partners, especially those with strong investment, financial, tourist and trading ties to the UK.

2. The saga of the South China Sea may continue

We were beginning to think that ASEAN and China had started to quiet down to have a civilised discussion about the South China Sea. China and the Philippines in particular are set to engage in bilateral talks.

Yet, last week US President Obama stepped on to the scene.

In his meeting with ASEAN nations, he emphasised that July 12th’s international arbitration ruling against China on the South China Sea was binding, and that US would seek to help ASEAN and China reduce these tensions, and promote diplomacy and regional stability.

In response, Chinese Vice Foreign Minister Liu Zhenmin told reporters, “A couple of extra-regional countries still wanted to use the occasion of the East Asia Summit to talk about the South China Sea, particularly to press on the regional countries to abide by the arbitration, which is untimely and inappropriate.”

3. New chapter in Philippines-US relationship?

A spat between Philippine President Rodrigo Duterte and US President Barack Obama made for a spectacular sideshow at the East Asia Summit.

The US is the Philippines’ second largest trading partner and home to the largest number of Philippine migrants.

At the summit, Duterte launched a tirade against Obama after being told the US President intended to raise concerns about the war on drugs in the Philippines that has claimed 2,500 lives in just over two months.

“Son of a whore, I will curse you in that forum,” was Duterte’s response.

Obama cancelled a meeting with Duterte and urged the Philippine President to conduct his war against crime in “the right way”.

Subsequently, Duterte delivered an impromptu speech about US military killings in the Philippines. It has been suggested that Obama snubbed Duterte at the conclusion of the Summit by avoiding a handshake.

4. Continuing the war on drugs in Indonesia

A New Zealand woman was arrested in a Bali drugs case about two weeks ago.

Myra Williams had allegedly been partying in Melbourne and had taken crystal meth, ecstasy and marijuana before flying to Bali.

She was detained at the airport.

Officers found 0.43 grams (0.01 ounces) of crystal methamphetamine after a search.

By law in Indonesia, possession of just five grams of drugs results in the death penalty.

While Williams will avoid this, if found guilty of possession she will be facing up to 12 years in jail.

An expensive lesson considering the miniscule amount of the substance involved. But this serves as a timely reminder to all travellers to be aware of local laws and to behave accordingly—there’s indeed huge differences between nations that adopt a more social/health focused approach, rather than a punitive one to combating. Does that remind you of the Philippines as well?

5. Technology startups in Vietnam

While the rest of the world is still labelling Vietnam a beneficiary of China’s exit from basic manufacturing, Vietnam seems to have its own ideas.

These days, Vietnam is not just a key location for basic manufacturing, it is also fast becoming a hub for technology startups.

With technological development comes the need for a good intellectual property protection regime. In this regard, the programme is still in its infancy.

Quickly establishing its technological regime is crucial to ensure the steady development of Vietnam’s high-tech sector.

6. Even a country as neutral as Singapore has to pick sides

There’s no doubt that Singapore has enjoyed a good working relationship with China over the last 40 years.

But Singapore can’t turn a blind eye as China’s global profile rises and the US starts to respond to China’s ‘threatening’ position.

Diplomats in China have told Singapore, a non-claimant state in the South China Sea, to stay out of the dispute. In fact, they have further suggested that Singapore should better ‘coordinate’ the dialogue between China and ASEAN.

Speaking about the South China Sea, Singapore Prime Minister Lee Hsien Loong had said the verdict delivered a strong statement about international law in maritime disputes.

During a trip to the United States last month, Lee also told American President Barack Obama that Singapore hoped Washington would remain actively engaged in the region.

These statements will not go down well in China.

Nobody wins by siding with either the US or China. But neither do those who don’t take a stance at all!

7. Is the Aussie-Kiwi relationship fizzling out?

Australia and NZ often work together and are seen as a pair by other countries.

Most recently, however, a Kiwi advocacy group has started to hit back on the discriminatory treatment of Kiwis in Australia.

Their concerns centre on the fact that Kiwis pay a lot of taxes in Australia but see little return.

Zed Seselja, Australia’s Minister for Multicultural Affairs, made the awkward statement: “New Zealanders also have a greater ability to come here and work, just with their New Zealand passport, so there are opportunities they get in Australia that people in other countries don’t.” He added that he could not understand why New Zealanders were feeling resentful towards their adopted country.

This statement gives the impression that Kiwis are begging to be allowed to go to Australia. Absurd no doubt.

Basically, New Zealanders on the Special Category Visa (SCV) that has been issued since 2001 have no more rights than a working holiday maker or a student visa temporary resident. No pathway to citizenship, just more tax.

A reform to the SCV, which will allow New Zealanders to become Australian citizens, will kick in from July 1 next year.

This, however, will be available only to SCV holders who have lived in Australia for at least five years, and are earning over $54,000 a year, the equivalent of the Temporary Skilled Migration Income Threshold.

8. Japan can also help out in development

Japan has a good history of helping out in the development of other countries, for example through the Asian Development Bank.

And despite its own economic issues, it continues to do its part for global infrastructural development.

Just last week, the Japanese Government has committed to provide the Vietnamese Government with another US$106 million loan in the 2016 fiscal year to help improve socio-economic infrastructure and the competitiveness of the Southeast Asian economy.

With the loan, the Japanese government has so far committed nearly US$27 billion in overseas development assistance to Vietnam.

Nhat Tan Bridge uses Japanese ODA (Source: Vietnam News Agency)

9. Canada to apply to join the Asian Infrastructure Investment Bank (AIIB)

Canada looks set to join the 57-member AIIB. In a meeting between AIIB President Liqun Jin and Canadian Finance Minister Bill Morneau at AIIB’s headquarters, the North American country flagged its interest to join AIIB.

Chinese President Xi Jinping welcomed Canada’s interest in joining the AIIB in his talks with Canadian Prime Minister, Justin Trudeau, on Wednesday, saying China was willing to expand cooperation with Canada in energy and finance.

Should this materialise, it will leave Japan to be the only US ally to be a non-member of the AIIB.

Canada’s gross domestic product expanded just 1.2% last year, and observers have said it needs to diversify its trade and become less reliant on the US.

Given China’s rising role in the world economy, this latest move from Canada represents more of a long term interest to deepen economic ties, as opposed to short term gains from membership.

10. Enhanced India-South Korea relationships

On the side lines of the 14th India-Asean Summit and the 11th East Asia Summit, India and South Korea reviewed the progress made in the negotiations to improve the India-South Korea Comprehensive Economic Partnership Agreement (CEPA).

South Korea also announced a US$10 billion financial package to support India’s infrastructure development.

The countries believe that their shared commitment to democracy, free market economy and complementary strengths make them ideal partners.

India has also set up the Korea Plus programme, which will see greater investments in India by Korean firms.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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25 Comments

Another subprime explosion near,according to Aljazeera,this time starting in China.
Hidden camera shows property broker adding 100k to the value of a property which would have allowed supposed buyers a 280k mortgage on a 300k property that he valued at 400k.
He also offered for $20 to falsify a tax income statement to allow them to get a loan from the banks.
More to come i would imagine.

It's 78% because they can't get welfare that's why if they could get welfare that percentage would be lower.

New Zealanders should go back home to New Zealand if they don't like the rules & laws of Australia.

Before the changes in 2001 by John Howard it was costing Australian taxpayers $1.1 billion as compared to costing New Zealand taxpayers only $100 million.

The NZ Government is crying out for taxes to pay its Government pensions so why don't they go back to New Zealand & start paying taxes?

Not to mention they are comparing 2% of the NZ-born population in Australia against 72% of the Australian-born population.

Zed Seselja is only speaking the truth. Kiwis get things in Australia without even becoming a citizen: Government Student loans, Medicare & First home Government grants.

New Zealanders are the only immigrant group exempt from the foreign property buyer restrictions in Australia.

Kiwis can't get welfare on instant arrival in any other country so why should they get it in Australia?

Most Kiwis in Australia don't like this entitlement mentality of the minority & from what I have seen neither do Kiwis in New Zealand.

Discriminatory? Kiwis are being treated similar to any other migrant group. Kiwis shouldn't think they are above other immigrant groups in Australia.

what was costing A$1.1 bil? Kiwis in Aussie? Rubbish. Kiwis go to Aussie for jobs and opportunities that are not available in NZ. Bigger Country, more opportunities. If you Aussies don't think Kiwis who pay tax in Australia should reap the benefit of those taxes, why not cut their tax rate under the proviso, up front that they cannot get the benefits? They are not treated the same as any other immigrant. The laws about benefits for immigrants specifically exclude Kiwis.

Also the relationship has been fraught for years. David Lange, once out of office, stated that Keating told him that the ANZAC frigates were to be built in Aussie ship yard or else CER would be sunk. NZ could have save $500 mil to have them built in the Dutch Meko ship yards. Aussie has long been the neighbourhood bully, it is just becoming really obvious now so that even the dumbest can see it. And only the classic Aussie would defend it.

Cut their tax rate? NO! how about they go back to New Zealand if they don't like it & start paying taxes to their own Government instead which needs more taxpayers at the present time. Australia is not a ATM.

No way should one group of people pay a lower tax rate than everybody else in a country. If those Kiwis don't like the rules & laws of my country then they should go back home to New Zealand.

Time Australians were put first by its own Government over foreign nationals.

The $1.1 billion entitlement for Kiwis before 2001 as the flood of people coming from NZ into Australia was overwhelming the system.

NZ was the stepping stone of people from the Pacific & Asia to hop onto Australian welfare as soon as they got NZ citizenship.

Neighbourhood bully? yet whose politicians are trying to tell another sovereign country what to do on its own rules & laws? New Zealand politicians like Andrew Little & David Shearer.

The hypocrisy from New Zealand is astounding when it comes to worrying about Asylum seekers on Nauru & Manus Island. It took NZ almost 30 years to finally increase its annual refugee quota.

Just like New Zealand is trying to intimidate Fiji recently.

Sounds sought of like the U.S. trying to dictate the domestic policy of another country.

Kiwis pay taxes in the UK,USA,Canada & other countries are they reaping the benefits there? Nope.

Lol Jobs & Opportunities? exactly why migrants move to New Zealand for yet the complaining about the high immigration of migrants to New Zealand by most people who comment on this site while 40,000-50,000 Kiwis moved to Australia annually over the last 15 years.

Australia grew by the total population of New Zealand within the last 13 years.

If Jobs & Opportunities was the reason then they wouldn't be asking for benefits at all.

The Trans-Tasman border should have had a population cap put in place back in 2001 with the changes made by John Howard.

NZ gangs such as Black Power & Mongrel Mob expanding into Australian cities. http://www.goldcoastbulletin.com.au/news/crime-court/violent-new-zealand...

http://www.couriermail.com.au/news/queensland/kiwi-crime-gang-mongrel-mo...

http://www.heraldsun.com.au/news/law-order/evil-new-zealand-gang-comes-t...

http://www.theage.com.au/victoria/rival-kiwi-crime-gangs-black-power-and...

Lets not forget either the New Zealand Government was paying unemployed Kiwis one-way tickets to Australia years ago. http://www.news.com.au/finance/work/nz-giving-unemployed-one-way-airfare...

Australia needs its own Donald Trump in regards to putting Australian citizens first over foreigners.

"NZ gangs such as Black Power & Mongrel Mob expanding into Australian cities."

So glad we didn't have to suffer that sort of incursion here, only the Rebels MC. I'm sure they are paragons of virtue regardless of what the police and judiciary say.

You already have your own Donald Trump recently elected to the senate. Thankfully the vast majority of your compatriots do not share such distasteful politics and as such she, and the diatribe you inflict on this forum, will never be considered as anything other than an amusing annoyance.

Vast majority? So you know the opinions of most Australians do you? If they didn't her party wouldn't have been elected to the senate in the first place.

Diatribe? yet most people complaining on a regular basis about the Chinese & high immigration on this site isn't considered diatribe to you? LMFAO!

"NZ gangs such as Black Power & Mongrel Mob expanding into Australian cities"
Black Power and Mongrel Mob? Pussies!
We've got ANZ, Westpac and IAG over here bleeding us white. Quit Ya Bitchin

Tell that to their victims. But ironic you mention that considering (AIG) is on the All Blacks jersey!

AIG the major insurance corporation that was bailed out by the U.S. Government for $180 billion is a sponsor to the All Blacks. AIG was a central player in the financial crisis of 2008.

Nothing ironic about it. I was talking about IAG, the Aussie insurance company that has this country in a cosy duopoly with another aussie outfit Suncorp.
People go on about the Chinese but look at the money (tribute) flowing across the ditch to the Aussie shareholders in banking, insurance retail, grocery, infrastructure and service companies.
Don't get too nasty.

Your comments just get more funny to me.

This time you comment about the banking industry which is a common one by Kiwis while NZ dairy giant (Fonterra) is a huge major competitor in the Australian dairy industry that is hugely dominated by foreign-owned companies such as (Parmalat) from Italy.

Not to mention A2 Milk company,Kathmandu,Xero etc.

Also Last I checked Air New Zealand still owned shares in Virgin Australia.

Not to mention New Zealand is very dependent on Australia as 20% of all New Zealand exports still go to Australia.

New Zealand earns a ton of revenue from Australian tourists which are still the largest group by a long mile ahead of the Chinese.

3 Chinese-owned banks are established in New Zealand (China Construction Bank,Bank of China, Industrial & Commercial Bank of China).

2 Indian-owned Banks (Bank or Baroda & Bank of India).

A Japanese-owned bank (The Bank of Tokyo-Mitsubishi UFJ).

A Dutch-owned bank (Deutsche Bank).

Perhaps those Australian investors should just sell their local assets in New Zealand to the Chinese & Indian investors.

After Solid Energy in New Zealand was considered to be sold to investors in India.

I know a Kiwi finance company operating in Australia (Silver Fern Finance) & Kiwi Home Loans Pty Ltd.

Nasty? you don't remember the (Boycott Countdown) Facebook page? The New Zealander operating that Facebook page was very nasty towards Australia during the bushfires saying "NZ firefighters should come home & let Australia burn". https://e2nz.org/2014/02/24/new-zealand-hate-site-says-let-australia-bur...

Full of yourself aren't you? We are not asking for a special deal. Just fairness and equity. You demand full taxes but deny the benefits of those taxes. The evidence as indicated is that the Kiwis in Aussie contribute more to Aussie than the equivalent Aussie does. So your attitude is based on myths and lies. All we ask is that Kiwis in Aussie are treated the same way we treat Aussies here. Why can't that happen?

Well if that is the case then they should contribute to their own country then instead of to another country. New Zealand needs them more than Australia ever would. Australia could replace them easy with not much effort.

New Zealand has a lower unemployment rate.

Australia has 100,000+ people living homeless.

Because look at the comparison 650,000+ New Zealanders in Australia vs 60,000 Australians in New Zealand. way unbalanced.

15% of the total New Zealand population lives in Australia.

New Zealanders are the 2nd largest migrant group in Australia just behind the British.

Australians are the 4th largest migrant group in NZ behind the British,Chinese & Indians.

It's you who is being full of himself thinking 2% of the population contributed more to Australia than 72% of the majority.

How disrespectful of you without that 72% majority population the Australian economy wouldn't have prospered from the beginning to currently being the 13th largest economy in the world.

From the stories over the years in the New Zealand media I have seen of Australians living in New Zealand they actually have jobs & are not at the dole queue at WINZ.

One for example was working in the Christchurch rebuild that moved to NZ from the Central Coast,NSW.

Another was an Australian family who had started their own business online while living in New Zealand.

An Australian man with a job in the I.T sector in Wellington.

Australians wouldn't be moving to New Zealand for the benefits anyway its very much all second-rate compared to Australia.

The New Zealand Prime Minister & Deputy Prime Minister both said local Kiwi workers were "lazy", "pretty damned hopeless" as to the reason why NZ businesses had to employ overseas workers.

It's also said that New Zealand has a "skill shortage".

British floor layer Derek Alexander who told Story quite bluntly that in his experience, "young Kiwis are lazy".

"No surpises there" if you get my reference, you will be a kiwi. From our arrival we have wondered at the stereotypical state of Australians in general, been bewildered by practices and attitudes which are so blindingly inept as to be laughable. In order to stand out here you often only need turn up. At each new political or sporting absurdity it confirms my joy at the thought of one day leaving, having played them for suckers when we could. Most Kiwi's in Oz will tell you it is remarkably easy to drink upstream from the herd, they don't seem to recognise it as possible.

Well its about time for most Kiwis to move back home to New Zealand. 650,000 Kiwis live in Australia. Australia isn't going to bow down to foreign nationals.

Re items 2 and 6 - See Chinese arrogance, greed and stupidity below.
https://en.wikipedia.org/wiki/Nine-dash_line

Is this Chinese "Lebensraum" which didn't end too well for Europe/Germany/Hitler?

At some point NZ will have to get off the fence and grow a pair.

The only way to stop the tension in the South China Sea is for China to stop its aggression. China is claiming virtually the entire SCS which is clearly delusional and imperialistic. The US is keeping the SCS open so that all countries can freely move their goods. Blaming the US for the situation is like a criminal blaming the police for arresting him - it is so hypocritical. Of course China wants bilateral agreements as it can bully and threaten each individual countries but if the other countries stick together the Communists will back down as the cowards they actually are.

The U.S. said its trying to shift its focus from the Middle East to the Asia-Pacific. The U.S. has its forces in countries across the region such as Japan,South Korea,Philippines,Australia.

All China & the USA are doing is trying to overpower the other global superpower. both of them are trying to influence countries around the region.

The U.S. has around 800 military bases around the world. For every other nation with military bases outside its borders you get about 30 combined.

I believe the US government to be a greater enemy than China. US forces are providing air support for terrorist groups in the Middle East and have been doing so for a long time. This week they killed over 60 Syrian soldiers who were actively fighting ISIS. ISIS is a direct result of the disbanding and making unemployed the regular Iraqi army.The sooner there is a big shake up in the US government the better. It's time for change. The people of the US do not support American intervention. Who in their right minds would? They are either evil or a bunch of incompetent buffoons - I suspect the latter.

The support provided by the US Govt is why many people live in a free world.
Might not be perfect, but not much is.

Only in recent years has the US government supported groups affiliated with Al-Qaeda and ISIS. We live in a so called free world because of quite different policies that were followed before this time.
Current US policy now imperils the entire free world. But things can be fixed - Trump 2016! Impeach the Neocons.

#7
Good deal of superficiality in the professor's comment

What he could comment on is if you are unemployed in Auckland it is far cheaper to get on a plane and try your luck in Brisbane, or Sydney, or Melbourne, compared to Wellington, Christchurch or Dunedin. Even worse getting to Invercargill or Nelson

# "We thought the South China sea issue was going to settle down now" Really. I think this one is just the opening to a century of tension, possibly war, involving a vast section of the globe.

...and I see Arctic sea ice has bottomed out at 4 million km2 for the year. That's only 4 million km2 off zero km2. I hope the children will be ok.

http://psc.apl.uw.edu/wordpress/wp-content/uploads/schweiger/ice_volume/...

The children are stuffed, you know it, everyone knows it. It's that which can't be spoken.

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