Helen Cabalu

Vulnerability of natural gas supply in the Asian gas market

Gas supply interruptions, increasing gas prices, transportation and distribution bottlenecks, and a growing reliance on imports over longer distances have renewed interest on gas vulnerability in Asia. Japan, Korea and Taiwan are heavily reliant on LNG imports for their gas supplies from Malaysia, Brunei, Indonesia, Australia and the Middle East. Countries like Malaysia, Thailand and Singapore import gas via trans-border pipelines. This paper examines the relative vulnerability of eight gas-importing countries in Asia for the year 2006 using four market risk indicators (ratio of value of gas imports to GDP; ratio of gas consumed to GDP; ratio of gas consumed in an economy to population; and ratio of gas consumption to total primary energy consumption) and two supply risk indicators (ratio of domestic gas production to total domestic gas consumption and geopolitical risk). Using principal component analysis, a composite index of gas vulnerability is estimated by combining the individual indicators. The results demonstrate that there are significant differences in the values of individual and overall indicators of gas vulnerability among countries. This implies that policy measures to address gas vulnerability in one country could differ in another country.

Does AFTA Create or Divert Trade

In this article the changes in trade patterns introduced by the ASEAN Free Trade Area (AFTA) are examined. Variation in growth trends and the shift-and-share methodology are used to identify the impact of trade liberalization under AFTA on intra- and extra-regional commodity trade. Data at the commodity level are used and the results indicate that AFTA had trade creation effects, with little evidence of trade diversion.

Energy Security in Asia: The Case of Natural Gas

Natural gas consumption in the future is expected to increase due to its low environmental impact, ease of use and rise in the number of natural gas-fired power plants. This chapter measures natural gas supply security in six Asian economies including Japan, Korea, China, India, Singapore and Thailand from 1996 to 2009. Disruptions to long term security of supply can be caused by inadequate investments in production and transmission infrastructure, lack of supply diversity and import dependency. A composite gas supply security index is derived from four indicators of security of gas supply, with a higher index indicating higher gas supply vulnerability. Results show that China and India are the least vulnerable in terms of natural gas security because of their significant domestic gas production and small share of gas in the energy mix. Thailand is the most vulnerable among the countries studied due to its high reliance on natural gas to power its electricity generation industry as well as its greater exposure to geopolitical risks. With these analyses, governments can target possible sources of supply disruptions and mitigate their effects. Diversification is highly encouraged to spread the risk across different import and energy sources.

Reforms in corporate governance in Asia after the financial crisis

Reforms in corporate governance in selected Asian countries were introduced after the financial crisis of 1997–1998. After the financial collapse, several crisis-affected economies overhauled their corporate governance, strengthening market forces, implementing tougher regulations and focusing on transparency in decision-making and accountability. Since then, a commitment to improving corporate governance has grown as governments recognised the need to protect investors’ interests, reduce systemic market risks, maintain financial stability and enhance investors’ confidence to encourage the return of capital to the region through better accountability and transparency. The incentive for corporations to follow best practice is to boost their corporate performance and attract investment. Effective corporate governance is also recognised as essential for economic growth. Governments are realising that good governance of corporations is a source of competitive advantage and critical to economic and social progress. Since the financial crisis, corporate governance has become a key policy issue in most of Asia. Progress in reforming corporate governance, however, has been uneven across Asia. This paper documents that progress.

The role of regional cooperation in energy security: the case of the ASEAN+3

This article examines the energy profile of the ASEAN+3 countries in terms of energy availability, accessibility, acceptability and affordability. It proposes stronger regional cooperation through cross-border energy trade, investment in infrastructure and energy resource development, and information and technology sharing within the region as an effective solution to deal with the energy imbalance. Greater energy interdependence among ASEAN+3 countries will reduce their vulnerability to supply disruptions and price volatility, as energy consumers and producers are linked by favourable transport costs and geographical setting.