China's WTO entry places squeeze on Southeast Asia<\/p>\n
Bernice Han, Agence France-Presse, Singapore<\/p>\n
China's entry into the global trading community next month
\nwill place even more strain on Southeast Asia, already reeling
\nfrom the worldwide downturn and repercussions of the September
\nattacks in the United States, research reports said.<\/p>\n
Unlike Hong Kong and Taiwan which are set to gain from
\nBeijing's formal accession into the World Trade Organization on
\nDec. 11, Southeast Asia is seen as a loser in the medium-term on
\nthe currency and foreign investment fronts, the reports said.<\/p>\n
"The most obvious challenge to Southeast Asia will be
\ninvestment," Southeast Asia's biggest lender DBS Bank said in a
\nreport this week.<\/p>\n
"Taking the blame here is China's twin allure of cheap and
\nabundant labor, coupled with the promise of a huge domestic
\nmarket," the Singapore-based bank said.<\/p>\n
According to DBS, Southeast Asia's share of the foreign direct
\ninvestment (FDI) that flowed into the region outside of Japan was
\na paltry 8.6 percent in 2000, compared with the 80 percent share
\nheld jointly by China and its territory, Hong Kong.<\/p>\n
Southeast Asia's declining FDI share -- it had 33.5 percent in
\n1996 -- is also a reflection of the region's failure to improve
\nits financial systems after the 1997-98 crisis, said DBS Bank.<\/p>\n
"Investors are still wary the region is still licking its
\nwounds from the Asian crisis, and that not enough progress has
\nbeen made on reforms to rehabilitate weak financial systems," the
\nbank said.<\/p>\n
"For Southeast Asia, the message is simple. The room for
\ncomplacency is getting narrower. Time to get back on the path of
\nreforms."<\/p>\n
On the currency front, U.S. investment bank JP Morgan said the
\nThai baht and Indonesian rupiah are likely to be Asia's biggest
\nlosers.<\/p>\n
It said "the Thai baht will face some similar pressures to the
\nrupiah following China's WTO entry as both trade and FDI inflows
\nare likely to be lower."<\/p>\n
Thailand is however expected to fare better than Indonesia,
\nthe U.S. company said as "Thailand's government is perceived to
\nexert a more stable influence on local markets, and because
\nmarkets themselves are relatively more open and liquid."<\/p>\n
Turning to Hong Kong, JP Morgan said the territory will reap
\nthe benefits of China's WTO membership over the next five years.<\/p>",
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