http://www.asiarisk.com/exsum.pdf
Executive Summary of Major Risks in 2010
Australia is the best graded country in our report, followed by
Singapore, Hong Kong and
Japan. Australia scores well in virtually all major categories of
risk. Its government system is
stable and it has very well developed national institutions that are
staffed by professionals
and operate largely free from political interference. Social
instability risks are lower only in
Japan and Singapore. It faces fewer external threats than any other
country covered by this
report.
India is the worst-graded country in our report. Although India is
trying to position itself as
another emerging market success story to rival China, it faces
external security risks and
internal divisions in the form of terrorist threats, insurrection
movements, and state-level
disputes that are largely absent from China. These risks, combined
with the policy
implementation weaknesses associated with a very fragmented
multi-party coalition
government, the poor quality of physical infrastructure, and
suffocating levels of bureaucracy,
mean that most comparisons between China and India will show China in
a more favorable
light.
The biggest socio-political risk in a single country in Asia in 2010
is that Thailand's revered
king will die, further destabilizing the political environment and
causing such a high level of
uncertainty that investors delay implementing new plans until they see
how the country
handles the transition.
Overall Country Risk Ranking
0
1
2
3
4
5
6
7
8
9
10
2009
2010
Grades are scaled from zero to 10, with zero representing the best
situation possible and 10 the worst.
Grade
PERC
POLITICAL & ECONOMIC RISK CONSULTANCY LTD.
Asian Risk Prospects – 2010
2 Political & Economic Risk Consultancy, Ltd.
The biggest regional risk is arising from the rapid growth of
capital outflow from China, some of which reflects the proceeds from
corruption. Although the outflow amounts are hidden behind even bigger
capital inflow amounts, they are large and growing. Many other Asian
countries are depending on this capital to fuel industries like
gaming, hotel, retail business and real estate. In other words, many
Asian governments are trying to push their own economies by tapping
into China's underground economy. Sooner or later Beijing might try to
crack down on these outflows, shocking other economies in the region
and perhaps resulting in diplomatic strains and high-profile scandals.
Malaysia's immediate political outlook entails two distinct downside
risks. One is if the existing ruling coalition resorts to more
authoritarian tactics to hold onto political power in the face of a
major challenge by the Opposition. The other is if the Opposition
succeeds in gaining political power but then performs very badly as a
government, due either to poor policies or to internal disagreements
that leave it fractured. Currently, the only thing really uniting
different Opposition groups is their desire to overthrow the dominant
ruling coalition. On the other hand, if the ruling coalition is able
to reform itself or if the Opposition gains political power and is
able to be an effective government, Malaysia's outlook would be much
improved.
There will not be much headway in reducing systemic problems like
corruption and bureaucratic inefficiency, especially in countries like
India, the Philippines and Indonesia. In most cases, what you see is
what you will get. Where there will be changes for the better are in
cross-Strait's commercial relations between China and Taiwan and an
emphasis on cooperation between the major powers of Northeast Asia
(China, Korea and Japan),
The biggest security risks in Asia, namely, an outbreak of violence
on the Korean Peninsular or between Pakistan and India on the
Subcontinent, are likely to stay under control in 2010. These are
long-standing risks that investors need to consider, but it would
probably be a mistake to put too much weight on them as immediate
risks. The longer-term likelihood is that the worst-case scenarios
will not happen – if only because their regional and global fallout
would be so serious that all parties with an ability to influence the
relationships involved will work hard to prevent an outbreak of
military conflicts. Moreover, if there were military conflicts, the
South would be heavily favored to emerge victorious in the Korean
conflict and India would be favored to defeat Pakistan.
In general, socio-political risks in 2010 are lower for Asia than in
2009. Most countries showed that their governments can manage through
very difficult economic times without experiencing a serious increase
in social unrest or political turmoil. Since economic conditions in
2010 are likely to be better than in 2009, pressure on governments
should be reduced.
--
उर्वशी शर्मा
"सूचना का अधिकार " हेल्पलाइन: 8081898081
yaishwaryaj@gmail.com
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