SINGAPORE: Can India's new government boost welfare spending without losing control of its budget deficit? Can Taiwan soothe ties with China? Can the Philippines widen its tax base and end Muslim and communist insurgencies?
As a busy election year in Asia draws to a close, the political risks for investors is shifting in many countries from uncertainty as to who will wield power to doubts whether freshly minted governments can implement promised pro-business policies.
"The problems for governments now are going to be to meet the expectations and fulfil the promises they've made, and they're not necessarily going to be able to do that," said Bruce Gale with security risk consultants Hill and Associates in Singapore.
Some signs are promising. Malaysian Prime Minister Abdullah Badawi, elected in March, has given the green light to closer financial and investment links with Singapore and has lifted his predecessor Mahathir Mohamad's veto on free trade talks between the Association of South East Asian Nations and Australia and New Zealand.
India's new left-leaning central government has reached a deal with state governments to introduce a long-delayed valued added tax deemed crucial to improving the public finances.
But analysts say questions of legitimacy could dog some newly elected leaders, forming an unsettled political background for investors already unnerved by prospects of rising US interest rates and fears of a hard landing in China.
An index of non-Japan Asian shares compiled by Morgan Stanley Capital International has fallen 14.3 per cent since April 13 and is down 5.5 per cent so far in 2004.
NARROW VICTORIES: Taiwan President Chen Shui-bian won election in March by just 0.2 per cent of votes cast after garnering sympathy for surviving a mysterious assassination attempt.
In the Philippines, the opposition has charged that Gloria Macapagal Arroyo, who is due to be proclaimed president this week, cheated her way to a narrow, three percentage point victory. Three bombs have been found in Manila since Sunday.
Steve Wilford of consultants Control Risks in Singapore said markets could take comfort at least that Philippine film star Fernando Poe Jr, a political novice, did not win the poll.
But Arroyo, who took power in 2001 when her predecessor, Joseph Estrada, was ousted after people power protests, did not receive the overwhelming popular mandate she was seeking. As a result, Wilford said the chances were slim that she could overcome vested interests and force through badly needed reforms such as an overhaul of the tax agency.
INDONESIA, HONG KONG: Asia's election season is not yet over. Indonesia holds its first direct presidential election on July 5, with polls suggesting former army general Susilo Bambang Yudhoyono could score an outright victory.
If no candidate wins a majority, the top two will square off in September. Yudhoyono, who was security minister until he resigned in March, has quickly become the favourite of financial markets desperate for a strong leader to enact the myriad reforms needed to lure foreign investment and boost growth.
"Without economic growth there will be instability, there will be terrorism, there will be violence," said Jim Castle, who runs a business information company in Jakarta. -Reuters
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