The two-day AEM Retreat in Chiang Mai ended yesterday.

Thai Commerce Minister Apiradi Tantraporn said Asean ministers had seen CLMV as developing countries with high economic growth rates, minimal impacts from the global economy and capabilities to drive the overall Asean economy.

Thailand and Malaysia have been asked to provide assistance to strengthen them, as the two countries have higher levels of development, she said.

Arin Jira, chairman of the Asean Business Advisory Council and vice chairman of the Federation of Thai Industries, said the council had agreed to have Laos as the logistics centre for products exported from several countries.

The Asean ministers at the retreat agreed to continue negotiations with China, India, South Korea, Japan, Australia and New Zealand on the Regional Comprehensive Economic Partnership (RCEP), which they believe will enhance trade and investment connectivity. The negotiations are targeted to be finalised this year.

Under RCEP, 80 per cent of products traded between Asean member states and the other six countries are expected to see tax reductions within 10 years. Initially, 65 per cent of the products traded must undergo tariff cuts.

TPP

Arin said the RCEP would be advantageous for the region, and if Thailand joins the US-led Trans-Pacific Partnership (TPP), that could also be good for trade and investment.

The Chiang Mai event was the first AEM Retreat since the Asean Economic Community (AEC) materialised late last year. A formal meeting of Asean economic ministers will be held in August.

“Trade and investment have been rising, particularly for CLMV, for the first two months of the AEC. IfAsean countries cooperate more, regional trade and investment could definitely be higher,” Apiradi said.

Arin said the business sectors in each country were keeping track of problems arising after theAEC that need state assistance. These problems include insufficient access by small and medium-sized enterprises to capital and technology. However, he urges SMEs to help themselves through more collaboration.

At the retreat, Asean ministers also discussed ways to promote Asean as the global producer of raw materials for food, which is in line with Thailand’s target to become the world’s kitchen, as the region contains sufficient quality food resources, Apiradi said.

Next year, an Asean-style food exhibition will be held and chefs from across the region will be invited to present each country’s cuisine at the event.

The ministers also discussed having the United States set up electronic connectivity centres in conjunction with Asean. The centres, which will facilitate trade and investment in technology and energy, are planned for Thailand, Indonesia and Singapore.

Asean is waiting for the US to send formal information about this plan to the bloc.

“We expect credit losses of Asia-Pacific banks to rise as growth in major regional economies is likely to slow down,” said S&P credit analyst Geeta Chugh. “China’s slowing economy has also set the stage for increasing credit losses for these banks.”

Standard & Poor’s believes Asia-Pacific banks have a sufficient cushion to absorb higher credit costs. It said the banks had built up sufficient capitalisation and earn?ings buffers in recent years.

They also enjoyed a predominance of deposit funding, thereby limiting their reliance on capital markets, and benefit?ed from mostly highly supportive governments.

S&P notes that the signs of credit dis?tress that first hit China’s wholesale and retail trade and export-oriented light industry had spread to broad-based manufacturing industries.

Hong Kong and Taiwanese companies were also feeling the pain from their linkages to mainland China, while Japan’s lagging economic recovery and its central bank’s protracted accommodative monetary stance would likely add to the stress on its banks’ net interest margins.

S&P said high household debt in some Asia-Pacific economies had left their banking systems vulnerable to |sudden drops in income or to spikes in interest rates.

Thailand was the most exposed, |followed by Malaysia, South Korea and Singapore.

Dislocations in commodity, currency, property and interest rate markets |could also adversely affect banks in the region.

S&P expects higher loan delinquencies as the commodities rout continues.

“We believe most banks will adopt defensive strategies in 2016, focusing on preserving asset quality and minimising credit losses,” Chugh said.

Asia-Pacific banks currently appear fairly well padded against recent and future currency depreciations, Standard & Poor’s said.

The Malaysian ringgit and Indonesian rupiah have been among the worst performers, partly exacerbated by China’s devaluation of the renminbi, or yuan.

“The major Asia-Pacific banks we rate have very low net open positions, reflecting their general practice of matching their foreign-currency assets and liabilities,” Chugh said.

“However, the second-order impact on asset quality from unhedged debt exposure of corporate borrowers could hurt banks.”

Economists say pressure is mounting for governments to ramp up spending in support of ailing economies, instead of relying largely on monetary policy as they did in the past.

Manufacturing activity in China contracted at its fastest pace in over four years last month according to an official survey out yesterday.

The government statistics bureau said the manufacturing purchasing managers’ index (PMI) fell to 49 from January’s 49.4, its weakest reading since November 2011. A reading below 50 implies contraction. China’s official PMI figure has been in contractionary territory for the seventh straight month now.

A private survey by data monitoring company Markit, called the Caixin manufacturing PMI, pegged China’s PMI at 48.0, its 12th consecutive month of contraction.

The disappointing figures were released just one day after the Chinese central bank reduced the reserve rate ratio for banks, which is the amount banks must hold in reserve.

The move aims to lift growth by making it easier for banks to lend out money.

HSBC Greater China economist John Zhu said the policy move “may provide a boost to activity and expec

tations”, but more measures are needed “to reverse what looks increasingly like an entrenched broad-based slowdown, which is leading to a worrying deterioration in labour market conditions”.

Meanwhile, factories elsewhere in the region are also suffering output declines. Taiwan, seen as a bellwether of high-tech trade, logged manufacturing PMI of 49.4 last month, down from January’s 50.6.

Only three of the Asian economies surveyed, Japan, India and Vietnam, have signalled manufacturing expansion so far this year, said Chris Williamson, chief economist at Markit.

The Singapore Institute of Purchasing and Materials Management is expected to release its monthly manufacturing PMI for Singapore today, while Markit’s Singapore data will be out tomorrow.

Manufacturing, which makes up a fifth of the economy here, has been hit hard by the slowdown and was the main drag on growth last year.

This comes amid a “historically weak” period for manufacturing around the world, though Williamson said the sector is not yet in crisis.

The scenario is worsening, however, and the outcome will depend on how central banks and governments react, he added during a conference call with media yesterday.

“If we are moving into a period of secular stagnation, monetary policy alone won’t be able to pull the global economy out of it,” he said. “Governments must step in to support their economies through fiscal measures and structural reform.”

AFP reported that the compensation is valued at US$1.3 million or approximately Bt46 million. However, Andy Hall, a British labour activist who has been assisting the Myanmar workers at Golden Prize Tuna, told The Nation some 1,200 workers would be compensated between Bt50,000-Bt80,000, or approximately Bt70 million. He also added that some 200 piecemeal workers were dissatisfied with the rate and planned to submt a petition to the Samut Sakhon governor.

“All workers are back to work now,” he said, adding that a rights group is working with worker leaders in solving the issue of the 200 workers.

Hundreds of Myanmar labourers at Golden Prize Tuna Canning, a processing plant in Samut Sakhon that sells fish to markets around the globe, have spent months seeking compensation for exploitative working conditions.

Thailand is the globe’s third-largest seafood exporter, but the industry is plagued with rights abuses and fuelled by trafficked labour from neighbouring Myanmar and Cambodia.

The sector has come under heightened scrutiny from foreign governments over the past year, with the European Union currently weighing an all-out ban on Thai fishing products.

The United States also recently passed a bill outlawing products made from forced labour that could see Thailand crippled with sanctions.

Rights groups say Golden Prize workers had long been subject to unlawfully low salaries and abuse from supervisors.

Following a 1,000-strong worker strike last week, company representatives joined negotiations with military officers, government officials and migrant worker leaders, reaching an agreement late Monday evening.

“The company began paying 1,100 workers last night involving money of 48 million baht ($1.3m),” Boonlue Sartpetch, the head of the province’s labour department, told AFP Tuesday.

He said 700 workers have been paid, with the rest expected to receive compensation Tuesday.

Golden Prize Tuna Canning, which employees nearly 2,000 workers, mostly from Myanmar, declined to comment.

The US’s labour department currently lists Thai fish and shrimp as products the government has reason to believe are manufactured by slave labour.

Thailand’s ruling military junta, which seized power in a 2014 coup and has struggled to revive a flagging economy, is desperate to avoid any damaging sanctions on the fishing sector.

Officials have touted new legal regulations and periodical crackdowns on traffickers and fishing factories as evidence of reform.

Hall said he suspected that the spectre of massive trade sanctions was finally forcing the Thai government to act.

“To get a dispute like this that involves so much money and actually have it settled is very unprecedented,” he told AFP, adding that the tuna company and local labour department have dodged the worker’s complaints for nearly a year.

In the past some Thai factories have responded to rights abuse allegations by filing defamation lawsuits, which Hall is currently facing for highlighting exploitation at a Thai fruit company.