1 FRONTIER'S "INVEST MONGOLIA TOKYO 2018" WWW.MONGOLIANBUSINESSDATABASE.COM PUBLISHED:2018/09/19      2 U.S.-CHINA TRADE TUSSLE IS CREATING WINNERS IN SOUTHEAST ASIA WWW.BLOOMBERG.COM PUBLISHED:2018/09/19      3 YUSAKU MAEZAWA: THE JAPANESE BILLIONAIRE WHO WANTS TO FLY TO THE MOON WWW.BBC.COM PUBLISHED:2018/09/19      4 MONGOLIAN FOREIGN MINISTER RECEIVES CARDANO BLOCKCHAIN FOUNDER WWW.NEWS.MN PUBLISHED:2018/09/19      5 ERDENE ANNOUNCES RESOURCE ESTIMATE FOR THE HIGH-GRADE KHUNDII GOLD PROJECT WWW.GLOBENEWSWIRE.COM PUBLISHED:2018/09/19      6 RUSSIAN GIANT COPPER PROJECT IN TALKS TO RAISE $1.25B WWW.REUTERS.COM PUBLISHED:2018/09/19      7 MONGOLIA GRADUALLY WITNESSING PROGRESS IN TOURISM WWW.TRAVELANDTOURWORLD.COM PUBLISHED:2018/09/19      8 CHINA, MONGOLIA, RUSSIA PUSH FOR ‘ECONOMIC CORRIDOR’ WWW.RUSSIABUSINESSTODAY.COM PUBLISHED:2018/09/19      9 EXPERTS FROM CHINA, MONGOLIA, RUSSIA TALK ON CONSTRUCTION OF ECONOMIC CORRIDOR WWW.XINHUANET.COM PUBLISHED:2018/09/19      10 PM U.KHURELSUKH PAYING AN OFFICIAL VISIT TO THE UNITED STATES WWW.MONTSAME.MN PUBLISHED:2018/09/18      ШЕНГЕНИЙ БОГИНО ХУГАЦААНЫ ВИЗИЙН МЭДҮҮЛГИЙГ УЛААНБААТАР ХОТОД АВНА WWW.MEDEE.MN НИЙТЭЛСЭН:2018/09/19     2018 ЭХНИЙ 7 САРД МОНГОЛЧУУД ГАДААД РУУ ЭМЧИЛГЭЭНД ЯВАХДАА 19.5 САЯ АМ.ДОЛЛАР ЗАРЦУУЛЖЭЭ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/09/19     ӨНӨӨДӨР ТӨВ ТАЛБАЙД 4000 АЖЛЫН БАЙРАНД БҮРТГЭНЭ WWW.DNN.MN НИЙТЭЛСЭН:2018/09/19     ЗАЛУУЧУУДЫН ГАРААНЫ БИЗНЕСИЙН ШАЛГАРСАН ТӨСӨЛД 10,0 САЯ ТӨГРӨГИЙН ДЭМЖЛЭГ ҮЗҮҮЛЛЭЭ WWW.MONTSAME.MN НИЙТЭЛСЭН:2018/09/19     WORLD ECONOMICS: МОНГОЛЫН АЖИЛ ЭРХЛЭЛТИЙН ТҮВШИН СҮҮЛИЙН 5 ЖИЛИЙН ДЭЭД ТҮВШИНД ХҮРЛЭЭ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/09/19     ERD: "ХӨНДИЙ" АЛТНЫ ТӨСЛИЙН ТОГТООГДСОН НӨӨЦ 751 МЯНГАН УНЦ АЛТ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/09/19     ХЯТАДЫН $200 ТЭРБУМЫН ИМПОРТОД ТАРИФ ТОГТООВ WWW.ZGM.MN НИЙТЭЛСЭН:2018/09/19     ШИВЭЭХҮРЭН БООМТООР ХОНОГТ 60-80 МЯНГАН ТОНН НҮҮРС ЭКСПОРТОЛЖ БАЙНА WWW.GOGO.MN НИЙТЭЛСЭН:2018/09/19     БНХАУ-ЫН 200 ТЭРБУМ АМ.ДОЛЛАРЫН ИМПОРТОД 10 ХУВИЙН ТАРИФ НОГДУУЛАХ ШИЙДВЭР ИРЭХ 7 ХОНОГООС ХЭРЭГЖИНЭ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/09/18     ӨВӨЛ ЦАХИЛГААН СААТВАЛ ХОТ ДӨРВӨН ЦАГИЙН ДОТОР Л ХӨЛДӨНӨ WWW.ZGM.MN НИЙТЭЛСЭН:2018/09/18    

Events

Name organizer Where
Frontier's "Invest Mongolia Tokyo 2018" Frontier Securities Tokyo Japan
"Open to Export" ICC WTO International business award ICC WTO London

NEWS

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EU project to help Mongolia to export honey products www.montsame.mn

Ulaanbaatar /MONTSAME/ A team of an EU project “Support to the Modernization of Mongolia's Standardization System” has worked in Selenge aimag on April 12-13. The team was composed of project team leader Henk De Pauw, expert Andre Francois and other members. Their mission of the Selenge working tour was to assist with exporting honey and honey products made in Selenge aimag to the European Union.
The project team met with B.Munkhtur, Director of Food and Agricultural Department of Selenge province to exchange views on research works of exporting honey products to the European Union.
Moreover, the team visited some honey farms of Shaamar soum and co-held workshop on “Exporting honey products to the European Union” in cooperation with the Governor's Office and Food and Agriculture Department of Selenge province. The workshop was attended by over 100 honey farmers came from Suhkbaatar, Zuunburen, Shaamar, Tsagaanuur and Eruu soums of the province.

B.Amarjargal

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Mortgage Corporation’s special purpose entity to release securities www.montsame.mn

Ulaanbaatar /MONTSAME/ On April 13, the Financial Regulation Commission (FRC) granted a financial activity license to ‘MIC Active Twelve Months”, a special purpose entity established by the "Mongolian Mortgage Corporation“ company last August and registered its securities. 
‘MIC active twelve months” company is releasing mortgage loan guaranteed securities of 2.7 million with nominal value of MNT100 000 and 30-year term. The Commission assigned the two companies to insure the loan package for long term and in accessible way, meeting the interest and demand of the insured.
During its meeting, FRC resolved 30 issues, including merger approval of “Standart Agriuculture Group” LLC to “Uujimkhangai” JSC, “Anumargad erdene nonbanking financial institution”LLC to “Diamond capital nonbanking financial institution” LLC, “Tuusjam nonbanking financial institution” LLC to “Ashivtuvshin finance nonbanking financial institution” LLC. The commission also granted licenses to five nonbanking financial institutions and 8 savings and credit cooperatives.

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Land farmers meet to discuss 2017 goals www.montsame.mn

Ulaanbaatar /MONTSAME/ During his opening speech at the National Symposium of Land Farmers which took place last Friday, April 14, P.Sergelen, Minister of Food, Agriculture and Light Industry informed that 458 thousand ha land will be cultivated for sowing in 2017.

In particular, 381.6 thousand area will be sowed this spring inclusive of 362.1 thousand ha for wheat, 15.1 thousand ha for potatoes, 8.5 thousand ha for vegetables, 23.2 thousand ha for fodder, 28.6 thousand ha for oil plants and 1 thousand ha area for fruit.

From this, the agricultural industry has set an objective to harvest 498.5 thousand tons of grain including 477.6 thousand wheat, 166.5 thousand tons of potatoes, 102.1 thousand tons of vegetables, 46.4 thousand tons of fodder, 22.8 thousand tons of oil plants and 4 thousand tons of fruit.

To reach this goal, some 1360 entities and individuals are preparing for seed and oil plant sowing on the national level and 468 entities and 35 thousand households for vegetable, potato and fruit planting.

Attended by over 500 land farmers from the capital city and 21 provinces of Mongolia, the symposium addressed the 2017 objectives of the industry and measures and technologies to be adopted including ‘Young Land Farmer’ and ‘Agricultural technology leasing’ projects.
Kh.Aminaa

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Steel, stimulus drive China's strongest economic growth since 2015 www.reuters.com

China's economy expanded faster than expected in the first quarter as higher government infrastructure spending and a gravity-defying property boom helped boost industrial output by the most in over two years.

Growth of 6.9 percent was the fastest in six quarters, with forecast-beating March investment, retail sales and exports all suggesting the economy may carry solid momentum into spring.

But most analysts say the first quarter may be as good as it gets for China this year, and worry Beijing is still relying too heavily on stimulus and "old economy" growth drivers, primarily the steel industry and a property market that is showing signs of overheating.

"The Chinese government has a tendency to rely on infrastructure development to sustain growth in the long term," economists at ANZ said in a note.

"The question we need to ask is whether this investment-led model is sustainable as the authorities have trouble taming credit. We need to watch closely whether China’s top leadership will send a stronger signal to tighten monetary policy shortly."

Even as top officials vowed to crack down on debt risks, China's total social financing, a broad measure of credit and liquidity in the economy, reached a record 6.93 trillion yuan ($1 trillion) in the first quarter -- roughly equivalent to the size of Mexico's economy.

At the same time, spending by the central and local governments rose 21 percent from a year earlier.

That helped goose the pace of growth in the first quarter well above the government's 2017 target of around 6.5 percent, and pipped economists' forecasts of 6.8 percent year-on-year.

Such a strong bolt from the gate could see Beijing once again meet its annual growth target, even if activity starts to fade later in the year, as many analysts widely expect.

"Main indicators were better than expected...which laid a good foundation for achieving the full-year growth goals," statistics spokesman Mao Shengyong said at a news conference.

SAME OLD GROWTH DRIVERS?

Once again, China's policymakers leaned on infrastructure and real estate investment to drive expansion in the first quarter. Growth in both areas has accelerated from last year and helped offset slightly weaker growth in the services sector.

"Faster growth in industrial output is the primary factor in the first quarter surprise, and due mostly to higher value-added growth related to supply-side consolidation in heavy industry," said Brian Jackson, China economist at IHS Global Insight.

Real estate investment also remained robust in the first quarter, expanding by 9.1 percent on-year, and the pace of new construction quickened despite intensifying government measures to cool soaring prices.

Most analysts agree the heated property market poses the single biggest risk to China's economic growth, but predict the cumulative weight of property curbs will eventually temper activity, not produce an outright crash.

"Sales have started falling, which means tightening measures are starting to take effect," said Shen Jianguang, an analyst at Mizuho Securities in Hong Kong, noting that will start to drag on both the services and construction sectors.

More than two dozen cities announced new or additional property cooling measures in March and early April, after curbs late last year appeared to have little lasting effect.

Buoyed by a near 12 percent increase in housing starts, China produced a record amount of steel in March, Reuters data showed, though analysts say warning signs are flashing.

Rising inventory levels and recent falls in steel prices suggest output has been growing faster than China's actual demand, raising worries of a glut later in the year, which could heighten trade tensions with the U.S. and its other major trading partners.

INCOME GROWTH PICKS UP

There were also positive signs on the consumer front in Monday's data dump.

After slowing for five quarters, disposable income growth picked up to 7.0 percent in the first quarter, the fastest since the end of 2015.

Auto sales also showed signs of recovering after weakening in the first two months of the year after the government reduced subsidies on small cars.

Analysts are closely watching for signs that consumption is accounting for a greater share of China's economy, which would

not only make growth more resilient and broader based but also reduce the need for more debt-fueled stimulus and reliance on "smokestack" industries.

FOCUS ON STABILITY, THEN REFORMS

Though policymakers have pledged repeatedly to push reforms to head off financial risks and asset bubbles, the government is seeking to keep the economy on an even keel ahead of a major leadership transition in later this year.

China's central bank has gingerly shifted to a tightening policy bias in recent months, and is using more targeted measures to contain risks in the financial system, after years of ultra-loose settings.

It has bumped up interest rates on money market instruments and special short- and medium-term loans several times already this year and further modest increases are expected, especially if U.S. rates continue to rise.

"I think China should be directing the economy to slow down its growth in the long term...but on the contrary, growth is accelerating," said Hidenobu Tokuda, senior economist at Mizuho Research Institute in Tokyo.

"This is good for now but it makes it difficult to see how China's economic slowdown will land in the future. Uncertainties remain high."

(Reporting by Kevin Yao and Yawen Chen; Writing by Elias Glenn; Editing by Kim Coghill)

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China's Ant Financial raises offer for MoneyGram to $1.2 billion www.reuters.com

 
China's Ant Financial has raised its offer for electronic payment firm MoneyGram International Inc and the deal was unanimously approved by the U.S. firm's board, outbidding rival Euronet Worldwide Inc.
 
Ant, the finance affiliate of Alibaba Group Holding Ltd, increased its offer to $18 per share in cash from $13.25, and the transaction is valued at around $1.2 billion, a statement by Ant and MoneyGram said.
 
A successful deal would be the Ant's first major step to expand its business overseas. Ant, valued at around $60 billion, is also planning an initial public offering.
 
"MoneyGram... will add valuable cross-border remittance capabilities to the Ant Financial ecosystem, serving our more than 630 million users globally," Doug Feagin, President of Ant Financial International, said in the statement.
 
The two firms said they have made progress toward obtaining the regulatory approvals necessary to complete the transaction, including winning U.S. antitrust clearance.
 
The deal will also be reviewed by the Committee on Foreign Investment (CFIUS), a U.S. inter-agency panel that looks at foreign acquisitions for national security risks.
 
CFIUS has been a stumbling block for several Chinese deals in the United States and is considered a big hurdle for Ant Financial.
 
A Euronet deal is likely to be more agreeable to U.S. policymakers amid rising tensions between China and the United States over trade and foreign policy.
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Mitsui & Co. bets big on former Rio Tinto CEO www.asia.nikkei.com

Resource magnate Sam Walsh becomes Japanese company's external director

TOKYO -- Japanese trading house Mitsui & Co. stunned the market by announcing on March 22 that Sam Walsh, who just stepped down as chief executive officer of British-Australian mining giant Rio Tinto last July, will become its external director in June.

Walsh spent about twenty years in the auto industry after graduating from university, and held senior roles with General Motors and Nissan Australia. He joined Rio Tinto in 1991.

Walsh served as head of Rio Tinto's core iron ore division between 2004 and 2013 before becoming CEO. He slashed costs by adopting Toyota Motor's kaizen, or continuous improvement, production system and Japanese construction machinery maker Komatsu's driverless trucks. That helped Rio Tinto weather the plummeting resource prices in 2015 and 2016, which put other resource giants in significant difficulty.

Mitsui, which logged its first net loss after posting an impairment loss in the resource business in the year through March 2016, is pinning big hopes on Walsh's extensive experience. Market players are also looking to Walsh's capital policy.

Walsh rejected a takeover bid for Rio Tinto from Swiss-based commodities giant Glencore while CEO in 2014. Around that time, he also increased shareholder payouts. Rio Tinto generated a positive operating cash flow of $8.5 billion and spent $3.6 billion on dividends and stock buybacks for the year through December 2016.

As CEO he was also responsible for bolstering the company's financial standing to better cope with fluctuating commodity prices. S&P Global Ratings' last summer revised its outlook on Rio Tinto from "negative" to "stable" and affirmed its A- long-term credit rating. Instead of boosting shareholder payouts with financial leverage, he focused on liabilities, shareholders' equity and cash flow in a balanced manner.

Akifumi Hayashi, senior analyst at Mizuho Securities, said Walsh is an excellent manager, not only because he turned around the business, but also because of his disciplined allocation of capital. Market watchers expect that his stance toward capital policy and expertise will have a positive impact on Mitsui's management.

Mitsui is expected to formulate a new dividend and capital policy when it releases its medium-term management plan in May. The company's earnings and shareholder payouts have been subject to commodity prices, as it has determined the latter based on free cash flow.

Mitsui's decision to cut dividends for the year ended March was also a disappointment to market players. If Walsh's expertise can help Mitsui stabilize its earnings and shareholder payouts, market evaluations may change for the better.

Australian media reported that Rio Tinto has been under investigation on corruption charges for a mine interest in Guinea. Mitsui stressed there is no evidence that Walsh has any involvement. The focus is now on what kind of role Walsh will play at Mitsui after obtaining approval at the annual shareholders' meeting in June.

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United Airlines changes policy after 'horrific' passenger ordeal www.bbc.com

United Airlines is changing its policy on giving staff last-minute seats on full flights after a man was dragged screaming from an overbooked plane.
The airline said that in future crew members would be allocated seats at least an hour before departure.
It comes after passenger Dr David Dao lost two front teeth and suffered a broken nose when he was forcibly removed from a flight last Sunday.
United Airlines said the move was aimed at improving its customer services.
The incident involving Dr Dao caused outrage and widespread condemnation of the airline after shocking footage was shared and watched by millions of people online.
His daughter, Crystal Dao Pepper, later told a news conference in Chicago that the family had been "sickened" by what had happened.

Law enforcement officials dragged Dr Dao off a flight departing from Chicago for Louisville, Kentucky, because it was fully booked, and the airline wanted four passengers to make way for staff members.
The 69-year-old Vietnamese-American physician had refused to leave, saying he needed to go home to see his patients. He was then dragged down the aisle of the aircraft.
His lawyer later said that Dr Dao found the experience "more horrifying and harrowing than what he experienced when leaving Vietnam".

The ordeal led to demonstrations at Chicago's O'Hare International Airport and turned into a public relations disaster for United Airlines.

The situation escalated when a response from the airline's chief executive, Oscar Munoz, failed to mention any use of excessive force.
"This is an upsetting event to all of us here at United. I apologise for having to re-accommodate these customers," he said in a statement. He also said that Dr Dao was "disruptive and belligerent".
Days later Mr Munoz, who was facing calls to resign from online petitions that had received thousands of signatures, said he felt "shame and embarrassment" and vowed that it would never happen again.
The airline offered compensation to all customers on board last Sunday's United Flight 3411.

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BSGR sues George Soros over loss of Guinea iron project www.mining.com

On April 14th, BSG Resources filed a lawsuit in federal court in New York against George Soros and is asking for $10 billion in damages based on allegations that the billionaire’s “illegal conduct destroyed” the group’s investment in Guinea’s Simandou deposit.

According to Bloomberg, the company controlled by Israeli mining magnate Beny Steinmetz says Soros’ defamation campaign stripped them of rights to the African iron ore deposit and other business opportunities around the world.

Steinmetz was arrested in Israel in December of 2016 on suspicion of bribing government officials in Guinea to obtain rights over Simandou. After the period of restriction elapsed in January, he was released without charges.

Now, the diamond tycoon wants to flip the coin. His controlled company’s suit says that Soros and his controlled entities influenced government officials in Guinea to hinder BSGR’s plans. It also says that the Hungarian-American business mogul had no economic interest in Guinea and was “motivated solely by malice.”

BSGR sues George Soros over loss of Guinea iron project
In detail, BSGR’s complaint says Soros was driven by a grudge that dates back to 1998 around a business in Russia. It adds that that was the reason behind Soros-funded companies’ decision to fabricate reports about Steinmetz’s alleged payment of millions of dollars in bribes to obtain permits to one of the world’s richest iron ore sites.

The Guinean government –Bloomberg’s account adds- used those reports to forbid BSG Resources Ltd. from claiming rights to the Simandou deposit in April of 2014.

Simandou has over two billion tonnes of reserves and some of the highest grades in the industry (66% – 68% Fe which attracts premium pricing).

The same day the lawsuit was filed in New York, different media outlets including Bloomberg, The Telegraph, and Reuters tried contacting Michael Vachon, a spokesman for Soros, but he didn't immediately respond to requests for comments made outside of regular business hours.

This is the latest chapter in a long, ongoing battle that has also “shaken to the core” Anglo-Australian Rio Tinto (LON:RIO). Back in November, the world’s second largest mining company unveiled emails sent by some of its executives in May 2011 related to a dubious payment made to an external consultant working on the firm’s Simandou project.

The revelations triggered several probes as well as a couple of management shakeups, including the polemic dismissal of the company’s’ energy and minerals boss Alan Davies.

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New pipeline broadbases gas supplies www.chinadaily.com

The 1,454-km Kazakh-China link will transport 5 billion cu m annually

A new strategically important natural gas pipeline running from southern Kazakhstan to China began operating on Friday, China National Petroleum Corp said in a statement.

The company said the pipeline, which has annual installed transportation capacity of 6 billion cubic meters of gas, will help ensure diversification of the nation's gas supplies.

The 1,454 kilometer pipeline is being jointly operated by CNPC Trans-Asia Pipeline Co Ltd and Kazakhstan's state KazTransGaz-and will provide China with 5 billion cu m of natural gas each year-according to Asia's biggest oil and gas producer CNPC.

CNPC said it is a key energy project between the two countries as well as a significant part of the Central Asia-China gas pipeline, which starts at Turkmen-Uzbek border city Gedaim and runs through central Uzbekistan and southern Kazakhstan before reaching Horgos in China's Xinjiang Uygur autonomous region.

According to the State-owned CNPC, which provides more than two-thirds of the country's natural gas, the pipeline is a typical project along the Belt and Road Initiative and Kazakhstan is located in a prominent position.

Analysts said the new natural gas pipeline would further diversify China's sources of gas imports and followed the China-Russia crude oil pipeline, the China-Kazakhstan oil pipeline as well as the China-Myanmar crude oil pipeline, which started operations on Monday.

Li Li, energy research director at ICIS China, a consulting company that provides analysis of China's energy market, said there is also a chance that China might face a gas surplus.

Li said the growth of China's gas consumption had also moderated since the start of the economic slowdown.

A bonus was that the safety standards for pipeline transmissions were much higher and the project would also ensure a stable energy supply to China, she added.

A researcher at State-owned China National Petroleum Corp in November said the country could face a gas surplus of 50 billion cu m a year by 2020, due to long-term contracts for imports of liquefied natural gas and pipeline expansion plans, energy news agency Platts reported.

CNPC said the pipeline would also provide more than 2,000 jobs for locals and provide natural gas for more than 1.5 million local residents.

The start of gas flows at the southern Kazakhstan natural gas pipeline followed news that a CNPC unit specializing in oil engineering, manufacturing and construction-China Petroleum Engineering & Construction Corp-signed a contract with Russian gas giant Gazprom to take part in the construction of the Amur gas processing plant, a move to further secure domestic gas supplies.

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World bank: Modest recovery expected in Mongolian economy in 2018 www.en.montsame.mn

 
Ulaanbaatar /MONTSAME/ The outlook for developing East Asia is expected to remain broadly positive in the next three years, driven by robust domestic demand and a gradual recovery in the global economy and commodity prices, according to a new World Bank report.
 
The report was presented at the World Bank Mongolia Office on April 13.
 
It says: Poverty in the region is likely to continue to fall, driven by sustained growth and rising labor incomes.
 
The global environment and domestic vulnerabilities, however, still pose risks to the region’s prospects. In the face of faster-than-expected interest rate hikes in the U.S., protectionist sentiments in some advanced economies, and rapid credit expansion and high levels of debt in several East Asian countries, the report recommends that policy makers continue to focus on prudent macroeconomic management and ensuring sustainable fiscal balances in the medium term.
 
The just-released East Asia and Pacific Economic Update expects the Chinese economy to continue to slow down gradually, as it rebalances toward consumption and services. It forecasts China’s growth rate to be 6.5 percent in 2017 and 6.3 percent in 2018, compared with 6.7 percent in 2016. In the rest of the region, including the large economies in Southeast Asia, growth is expected to pick up slightly to 5 percent in 2017 and 5.1 percent in 2018, up from 4.9 percent in 2016. As a whole, the economies of developing East Asia and Pacific are projected to expand at 6.2 percent in 2017 and 6.1 percent in 2018.
 
“Sound policies and a gradual pickup in global economic prospects have helped developing East Asia and Pacific sustain growth and reduce poverty,” said Victoria Kwakwa, World Bank Vice President for East Asia and Pacific. “For this resilience to be sustained, countries will need to reduce fiscal vulnerabilities while improving the quality of public spending and fostering global and regional integration.”
 
Growth in the region will continue to be driven by strong domestic demand, including public, and increasingly private, investment. This trend will also be supported by gradually rising demand for exports, as emerging markets and developing economies recover. The slow pace of recovery in commodity prices will benefit commodity exporters in the region, but won’t unduly hurt the economies of commodity importers in East Asia.
 
In China, growth will continue to moderate, reflecting the impact of the government’s measures to reduce excess capacity and credit expansion. As a result, the report expects activity in the real estate sector to slow down.
 
The large developing economies in the Association of Southeast Asian Nations will likely expand slightly faster in 2017-18, although for different reasons. The Philippines will benefit from higher public spending on infrastructure, an uptick in private investment, credit expansion, and increased remittances, as growth accelerates to 6.9 percent in both 2017 and 2018. Higher government subsidies, more infrastructure spending and rising exports will push up Malaysia’s economy by 4.3 percent in 2017 and 4.5 percent in 2018.
 
In Indonesia, credit expansion and higher oil prices will help the economy grow 5.2 percent in 2017, up from 5 percent in 2016. In Vietnam, growth will rise to 6.3 percent in 2017, in line with favorable market sentiment and strong foreign direct investment.
 
The region’s smaller economies will generally benefit from the continued vitality of their larger neighbors, and some will also benefit from higher commodity prices. Cambodia’s economy will grow 6.9 percent in 2017 and 2018, with higher public spending and the expansion of agriculture and tourism offsetting a drop in the construction and garment sectors. In Myanmar, growth will reach 6.9 percent in 2017 and 7.2 percent in 2018, up from 6.5 percent in 2016, as infrastructure spending increases and structural reforms attract more foreign investment.
 
Papua New Guinea will see its economy gradually recover, thanks to a number of new mining and petroleum projects. Mongolia’s economy will stagnate in 2017, as the government restores its debt to sustainable levels, but a modest recovery is expected in 2018.
 
“Despite favorable prospects, the region’s resilience depends on policy makers taking account of, and adjusting to, significant global uncertainties and domestic vulnerabilities,” said Sudhir Shetty, Chief Economist of the World Bank’s East Asia and Pacific Region. “Policy makers should prioritize measures that counteract global risks threatening the availability and cost of external finance, as well as export growth. Efforts should also be made to strengthen policy and institutional frameworks to spur increases in productivity.”
 
The report calls for macroeconomic prudence to address the significant risks to the region’s economic prospects. Across the region’s large economies, increasing fiscal revenues can help governments finance programs that boost growth and foster inclusion while reducing risks to fiscal sustainability, the report says. Some smaller commodity-exporting economies will need to take steps to increase their fiscal solvency. With rising inflation – albeit from a low level – and potentially more volatile capital flows, the report says policy makers in much of the region should consider adjusting their accommodative monetary policies.
 
In China, the report recommends that the government sustain its efforts to reduce corporate debt and restructure state-owned enterprises, tighten the regulation of shadow banking and address rising household mortgage debt. Reforms to reduce excess industrial capacity could be complemented with improved social transfers and labor policies. With credit growth remaining high across much of the region, including Vietnam, the Philippines and Lao PDR, the report suggests an emphasis on strengthening regulation and enhancing supervision.
 
The longer-term challenge for the region lies in sustaining rapid growth while ensuring greater inclusion. Governments can address these challenges by increasing productivity and investment, which have slowed recently in several economies, as well as by improving the quality of public spending.
 
In the face of rising protectionism outside the region, East Asia can seize opportunities to advance regional integration, including by deepening ongoing initiatives, lowering barriers to labor mobility and expanding cross-border flows of goods and services within the ASEAN Economic Community.
 
In addition, the report says policy makers can put future economic prospects on a more sustainable path if they take steps to reduce pollution caused by farming, a rising threat amid the intensification of agriculture in the region.
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