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1 Asia democracy in peril (The New York Times) Street protests in three Asian countries — Cambodia, Bangladesh and Thailand — are a vivid reminder of the fragile state of democracy in many developing countries, particularly those that do not have independent judiciaries and professional police forces and militaries. While the immediate causes for the turmoil are different in each country, they share several shortcomings. Lack of sufficient democratic checks and balances in all three countries has undermined faith in elections and helped to create the conditions for civil unrest. Autocratic and corrupt political leaders have used government agencies, in some cases over decades, to serve themselves and their cronies.
In Cambodia, protests started after Prime Minister Hun Sen, who has ruled Cambodia through intimidation and violence for nearly three decades, was declared the winner of an election in July that international monitoring organizations say was riddled with irregularities. Workers in the country’s clothing factories also joined the protests to demand that the government set the minimum wage for the industry at $160 a month; the government has offered to raise the minimum to $100 a month, up from $80 now. While the economy has grown fast in recent years, lifting up living standards, about one-fifth of the country’s population lives below the country’s poverty line.
In Bangladesh, the current prime minister, Sheikh Hasina, and her party won an election held on Sunday because the main opposition party boycotted it. While Bangladesh has made significant progress in reducing poverty and improving public health, Ms. Hasina and opposition leader Khaleda Zia have often sacrificed the country’s stability to settle scores with each other and have done little to strengthen institutions like the judiciary and the police.
In Thailand, the country’s Election Commission said elections scheduled for next month would go ahead despite efforts by protesters to sabotage them. Led by opposition politicians, the protesters want to replace the country’s elected government with an appointed council of technocrats because they have been unable to win elections against the party of Prime Minister Yingluck Shinawatra. There are no easy or quick solutions to the crisis in these three nations. While elections are vital, they are not sufficient to create stable democracies. Until these countries build institutions capable of serving as a check on political leaders, they will remain vulnerable to civil unrest.
2 Samsung sees 18% profit fall (BBC) Samsung Electronics, the world’s biggest maker of mobile phones and TVs, has forecast a fall in profit for the October-to-December quarter. It expects to make an operating profit of 8.3 trillion won ($7.8bn) for the quarter, down 18% from the previous three months. Compared to the same period in the previous year, it is a 6% decline.
Samsung did not say what caused the dip, but analysts said falling profit margins for smartphones had hurt it. “As the growth in the smartphone sector matures, and vendors seek expansion in emerging economies, both prices and operating margins have been coming down,” Manoj Menon, managing director of consulting firm Frost & Sullivan, said. He added that profit margins of smartphone makers were likely to “remain under pressure” in the coming months.
3 Record orders for Boeing in 2013 (BBC) Boeing has revealed record deliveries and orders for 2013, putting it on track to become the world’s largest plane maker for a second consecutive year. The plane manufacturer delivered 648 commercial planes last year and had a backlog of 5,080 unfulfilled orders – both company records. The figures mean it is likely to have beaten rival Airbus which will reveal its 2013 orders on 13 January. Airbus is expecting 620 deliveries.
Boeing Commercial president and chief executive Ray Conner said all three of its US-based commercial plane factories had delivered a record number of planes. Overall, Boeing booked a record 1,531 gross commercial orders for the year, with 1,355 net commercial orders, the second-largest in its history.
4 Rising bad loans a threat for India (Nupur Acharya in The Wall Street Journal) Bad loans in India have jumped to a record high, hurting profits and stocks of state-owned banks and threatening to curb lending in Asia’s third-largest economy. With India’s expansion slowing to a decade low and higher interest rates taking hold, companies are struggling to pay back what they have borrowed after a credit binge in recent years.
As a percentage of total loans, nonperforming assets at Indian banks climbed to 4.2% in September, up from 2.4% in 2009, according to the latest data available from India’s central bank. Analysts expect the ratio to rise as high as 5.7% in the next four months. The country is stuck in a painful slowdown. Growth in gross domestic product is expected to be less than 5% in the year ending in March, a sharp decline from more than 9% just three years ago.
The pressure on lenders has led the government to inject cash into state-run banks for the past six years, according to data from the Reserve Bank of India. In the fiscal year ending in March, state banks will be receiving a 140 billion rupee ($2.25 billion) infusion, up from 125 billion rupees the year before.
While private-sector lenders have been able to keep their books relatively clean, state-run banks have seen their bad loans jump in recent years. India’s banking system is dominated by public-sector lenders that account for three-fourths of the total lending in the country and they also shoulder close to 90% of the country’s bad and stressed loans, according to the Reserve Bank of India. The nonperforming loan ratio at Indian banks is much higher than elsewhere in Asia. Japan’s nonperforming assets are around 2.4% of all loan and even Indonesia’s are closer to 2% according to the latest data from the World Bank.
Indian banks may be understating their bad loans, analysts said. Data from Crisil Ratings, a Standard & Poor’s company, showed that Indian banks by the end of September had restructured outstanding loans of more than 3 trillion rupees of private companies facing difficulty in repaying loans. Restructuring means they forego the interest or defer repayments for a certain period to help borrowers get back on their feet.