COVID-19 Outbreak

Governments Calibrating Stimulus Packages to Boost Economies (12 Feb – Ongoing)

Singapore Deputy Prime Minister and Finance Minister Heng Swee Keat outlined measures to address the economic impact of COVID-19 in the 2020 Budget. Singapore is expected to be significantly affected by the outbreak, with the Ministry of Trade and Industry lowering its 2020 growth forecast to -0.5% to +1.5%. To address these challenges, relief measures included one-off corporate tax rebates and temporary rental waivers or discounts, while more than S$4 billion (US$2.9 billion) would be spent to support businesses and families. For example, Heng outlined an S$1.3 billion (US$1 billion) Job Support Scheme to protect jobs through wage subsidies to employers. There was also a S$1.6 billion (US$1.1 billion) “Care and Support Package” and a S$800 million (US$574 million) pledge to support frontline agencies fighting the outbreak. In all, Singapore is slated to spend over S$6 billion (US$4.3 billion) to address the outbreak directly.

Sources: The Straits Times

Indonesian President Joko Widodo “Jokowi” called on his ministers to accelerate their spending plans for 2020 at a Cabinet meeting on 11 February, Tuesday. For example, to prevent household spending from falling, Finance Minister Sri Mulyani Indrawati said that the government would push to release more money under social spending programmes in the first quarter of 2020. Officially, Indonesia has not reported any confirmed cases of COVID-19, and Bank Indonesia is maintaining its projected 2020 growth rate of 5.3%. However, concerns are rising that the virus’ economic impact on China will have significant ramifications for the country and the region at large.

Sources: The Business Times, The Jakarta Post

Malaysian Finance Minister Lim Guan Eng has hinted at a stimulus package for Malaysia. Reasoning that the national economy “should be able to rebound” if the COVID-19 outbreak ends by April, he described the package as a means to ensure that industry players remain afloat to benefit from an anticipated post-COVID-19 rebound. The full details of the package are due to be announced on 27 February, and could include spending pledges of up to US$3.6 billion.

Sources: The Edge Markets MY, Malay Mail, New Straits Times

Thai Finance Minister Uttama Savanayana said that his ministry is preparing a batch of economic stimuli to cover tourism, consumption and investment. The stimulus will be proposed for the cabinet’s approval by the middle of March, and ideally be implemented in April. The Finance ministry has already instituted measures such as tax relief for tourism operators and a 1.5-time tax deduction for renovation expenses of accommodation operators.

Sources: Bangkok Post

Indonesia

Indonesia and Australia Ratify a Comprehensive Economic Partnership Agreement (6 Feb)

Lawmakers in Indonesia officially ratified the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) on Thursday, 6 February. The agreement is expected to boost trade and investment between the two countries, which have traditionally underperformed (i.e. Indonesia is only Australia’s 13^th biggest trading partner). The IA-CEPA also goes beyond economics by including five pillars of cooperation: enhancing economic and development[al] partnerships, connecting people, securing the region’s shared interests, maritime cooperation and contributing to Indo-Pacific stability and prosperity. Specifically, when President Jokowi gave a speech to the Australian parliament on 10 February, he called for collaboration on issues such as addressing climate change and opposing protectionism. The two countries are expected to adopt a 100-day action plan to implement the terms of the IA-CEPA.

Sources: The Jakarta Post, The Jakarta Post, The Straits Times

Omnibus Bill on Job Creation Submitted to the Indonesian Parliament (12 Feb)

The omnibus bill on job creation was submitted to the House of Representatives on Wednesday, 12 February after a delay of over a month. The bill was part of a series of four legislative articles that President Jokowi has been pushing to reduce red tape and attract foreign investment to Indonesia. However, the job creation bill in particular was the subject of criticism by labour rights groups, who said that they were not consulted during the writing of the bill. While the details of the bill have not been officially disclosed by the government yet, The Jakarta Post reported that it included items such as the revocation of Article 159 of the current manpower law, which allowed workers to file a lawsuit to challenge their dismissal.

Sources: The Jakarta Post, The Jakarta Post, Reuters, The Straits Times

Indonesia Posts Larger-than-Expected Trade Deficit in January (17 Feb)

Indonesia’s exports to key trading partners in January 2020 fell sharply, leaving the trade balance at a deficit of US$864.2 million. While the country posted a US$320 million surplus in the non-oil sector, the US$1.18 billion deficit in the oil and gas sector brought the balance into the red. Total exports fell 3.71% year-on-year to US$13.41 billion, with exports to China seeing the steepest decline on a month-on-month basis (12.07%). Volatile prices of commodities such as copper, along with the stoppage of nickel ore exports, were also singled out as reasons for the deficit.

Sources: The Business Times, Jakarta Globe

Malaysia

Rumours About Government Realignment Gain Traction (6 Feb – Ongoing)

Murmurs of a potential move to shake up the Pakatan Harapan (PH) government have increased in volume over the past two weeks. Speculation about Prime Minister Dr Mahathir Mohamad’s plans gained a second wind when a leaked audio recording of United Malays National Organisation (UMNO) President Ahmad Zahid Hamidi on 4 February appeared to show him discussing the prospect of working with Dr Mahathir with party leaders. Reports also emerged of Parti Islam Se-Malaysia (PAS), the other opposition party, planning to table a vote of confidence in Dr Mahathir in March 2020.

The current speculation is that Dr Mahathir aims to create a new coalition government, called Pakatan Nasional. It would include members of UMNO and PAS, along with Dr Mahathir’s Parti Pribumi Bersatu Malaysia (PPBM). This realignment might not only eject the Democratic Action Party (DAP) and Parti Amanah Negara (Amanah) from the government, but also discard the plans for Parti Keadilan Rakyat (PKR) President Anwar Ibrahim to take over from Dr Mahathir. Reports also emerged on 14 February that as many as 138 members of parliament had signed statutory declarations in support of Dr Mahathir completing a full term as Prime Minister. This is just 10 seats shy of a two-thirds majority in the Malaysian parliament.

Dr Mahathir has dismissed speculation surrounding this issue, reiterating that he will keep his promise to hand over power to Anwar after the Asia-Pacific Economic Cooperation (APEC) summit that Malaysia will host in November 2020. A key indicator of whether he will do so lies with the PH Presidential council meeting on 21 February, Friday, where the transition plan is expected to be finalised.

Sources: The Straits Times, Free Malaysia Today, SCMP, Free Malaysia Today, The Edge Markets MY, Malaysiakini

Malaysia’s Q4 2019 Economic Growth Hits 10-Year Low (13 Feb)

Malaysia’s gross domestic product (GDP) growth rate fell to a 10-year low in the fourth quarter of 2019. While economists had expected a rate of 4.2%, the economy managed only 3.6% due to lower output of commodities such as palm oil coupled with a fall in exports amid the US-China trade war. This brought the annual growth rate for 2019 to 4.3%, lower than the government forecast of 4.7%. Malaysia’s central bank had already cut its interest rates by 25 basis points to 2.75% in January. Analysts are predicting a strong possibility for a second cut in early March, particularly in response to the ongoing COVID-19 outbreak.

Sources: The Straits Times, The Edge Markets MY, The Business Times

Malaysia to Use its Own Security Standards to Choose 5G Partners (17 Feb)

Malaysian Communications Minister Gobind Singh Deo said that his country will use its own security standards in choosing partners for a planned US$5.22 billion nationwide 5G rollout in the third quarter of 2020. While the United States has been on a global campaign to convince countries to exclude China’s Huawei from their national 5G plans, Malaysia has continued to work with the Chinese telecommunications company. Huawei has already signed a 5G deal with Malaysian mobile network operator Maxis and preliminary agreements with Celcom and Telekom Malaysia. Alongside competitors such as Finland’s Nokia and Sweden’s Ericsson, it is poised to compete for spectrum tenders that will be issued in April 2020. In turn, this 5G rollout is expected to focus on nine industries: agriculture, education, entertainment, healthcare, manufacturing, oil and gas, smart cities, smart transportation and tourism.

Sources: Channel NewsAsia, The Edge Markets MY

Myanmar

Bulk of Military Lawmakers Register for Debate on Constitutional Amendment (18 Feb)

Nearly all military-appointed (Tatmadaw) MPs have registered to join an upcoming parliamentary debate on amending Myanmar’s Constitution. 164 out of 166 of the Tatmadaw will participate in the debate, alongside 69 from the ruling National League of Democracy (NLD) party and 49 from ethnic parties. The military has previously called the process to amend the bills unconstitutional. The bills include 142 proposed constitutional amendments that need the support of more than 75% of parliament. The military has constitutionally been allotted 25% of seats which is an effective veto for the group. The proposals hope to tackle this by amending Article 436 – to change the requirement for approving a charter amendment from more than 75 per cent of Parliament to “two-thirds of elected representatives.” Other proposals include removing Article 20(c), which states that “the commander-in-chief is the supreme commander of all armed forces” and repealing Article 59(f), which effectively bars State Counselor Daw Aung San Suu Kyi, the de facto leader of the current government, from becoming president. The exact date for the debate has yet to be set.

Sources: Irrawaddy, Myanmar Now

First Phase of Kyaukpyu Deep Seaport to Cost US$1.3 billion (14-17 Feb)

Myanmar’s Union Minister for Commerce and chair of Myanmar Special Economic Zones Central Working Body, Dr Than Myint has said that the first phase of the Kyaukpyu Deep Seaport project is expected to cost around US$1.3 billion. The project will be developed with the contribution of 70 per cent by the China International Trust and Investment Corporation Consortium (CITIC) and 30 per cent by Myanmar-Kyaukpyu Special Economic Zone Holdings Groups of Company composed of 42 local private companies from Myanmar. Myanmar authorities have said they will compensate residents in western Rakhine State for giving up land in the construction of the Kyaukpyu Special Economic Zone. The plan for the Kyaukpyu SEZ allots 600 acres for a deep seaport, almost 2,500 acres for an industrial zone, and more than 1,200 acres for residential housing initiatives. The Kyaukpyu Special Economic Zone is seen as an important asset in the China-Myanmar Economic Corridor (CMEC). Myanmar in 2018 renegotiated the Kyaukpyu deep-sea port project down to US$1.3 billion from $7.3 billion to avoid taking on too much debt. The agreements on Kyaukpyu were signed as part of President Xi’s visit to Myanmar in January.

Sources: Eleven Myanmar, The Union Journal, Radio Free Asia

Berjaya Land Subsidiary Enters Concession Agreement with Government of Yangon Region (7 Feb)

Berjaya Land Bhd’s (BLand) subsidiary BDS Smart City Co Ltd (BDS) will undertake a housing and mixed project on a 183-acre land with a gross development value of US$746.08 million in Yangon, Myanmar. The public housing and mixed development project will include affordable housing, medium-range apartments, high-end condominiums, commercial units, hospitals, schools and community centres. BLand said the project is expected to be developed in three phases, over a period of nine years and automatically be extended for additional one year thereafter. BDS will own exclusive rights to the land for 50 years, extendable for two additional terms of 10 years each.

Sources: New Straits Times, The Edge Markets, Irrawaddy

Thailand

Mass Shooting Sparks Scrutiny of Army Businesses in Thailand (8 Feb – Ongoing)

Thailand was rocked by a deadly shooting in Nakhon Ratchasima on 8 February that left 30 dead, including the shooter, and 58 injured. The shooter, Sergeant Major Jakrapanth Thomma, was reportedly enraged by a dispute over a business scheme with his commanding officer. After killing the officer and his mother-in-law, he went on a rampage through his army camp, a Buddhist temple and a shopping centre before being killed by security forces on 9 February.

As Thailand comes to terms with the tragedy, scrutiny has turned from the details of the shooting to the business dealings of military personnel. Thai military officers are said to supplement their modest salaries through real estate deals, and it was reported that as many as 20 other members of Jakrapanth’s unit complained about the same scheme that he was involved in. Army Chief General Apirat Kongsompong promised to bring back transparency and accountability to the army, and outlined steps such as signing a memorandum of understanding (MOU) between the army and the finance ministry to better manage military commercial and welfare schemes.

Sources: Bangkok Post, Channel NewsAsia, SCMP, Bangkok Post

Senate Passes Thai Budget after House Revote (14 Feb)

The Thai Budget for 2020 was finally passed by the Senate on 14 February, Friday. The Constitutional Court had ruled that the Budget Bill had to undergo its second and third readings again, following allegations of voting irregularities during the initial process. The House of Representatives thus redid the readings, though opposition members of parliament boycotted the session. This contributed to the House’s failure to meet quorum during the reading of section six of the bill, but it was eventually passed. The Budget Bill was then presented to the Senate on 14 February, where it was passed within an hour with a unanimous 215-0. The Bill is expected to be sent to Prime Minister Prayuth Chan-Ocha next week, who will then forward it to King Maha Vajiralongkorn for his royal endorsement.

Sources: The Straits Times, Bangkok Post, Bangkok Post

Thailand Logs 2.4% GDP Growth, Lowest in Five Years (17 Feb)

 Thailand recorded its weakest economic growth numbers in five years in 2019 as the economy grew by 2.4%, hindered by factors such as the US-China trade war, the strong baht and softening domestic demand. The delayed release of Thailand’s 2020 budget also hindered investments into the country, with the government only expected to start spending on budget items in May 2020. The Office of the National Economic and Social Development Council (NESDC) predicted that the Thai economy could decelerate even further in 2020 due to COVID-19’s impact on trade and tourism. While the Bank of Thailand had lowered their growth forecast for 2020 from 3.3% to 2.8%, the NESDC lowered it to 2.5% (Assuming the outbreak peaks by April) or 1.5% (Assuming it lasts until June).

Sources: Bangkok Post, Nikkei Asian Review

Vietnam

Vietnam May Miss 2020 GDP Growth Targets Due to COVID-19 (13 Feb)

Vietnam’s Ministry of Planning and Investment has warned that the COVID-19 outbreak would exact a heavy toll on the country’s economy. Vietnam’s GDP could be dragged down to 5.96 per cent this year compared to this year’s growth rate target of 6.8 per cent. The ministry said if the outbreak is contained within the first quarter this year, 2020’s GDP growth target will be 6.25 per cent. Vietnam’s border trade with China is expected to be negatively impacted, along with the plummeting number of tourists and disrupted supply chains. Measures under consideration are the need for a more robust restructuring of the economy and considering options such as stimulus packages, accelerating disbursement and lowering interest rates and fees. The government also plans to prioritise expanding exports and imports to other international markets.

Sources: Vietnam News, VNExpress

Vietnam looks to more than double power generation capacity by 2030 (19 Feb)

Vietnam has new guidelines for a national energy development strategy that will more than double its power generation capacity over the next decade. In order to support a fast-growing economy, it aims to boost capacity to 125-130 gigawatts (GW) by 2030, from about 54 GW now. The country is expected to face a power crunch with the Ministry of Industry and Trade predicting electricity consumption to exceed supply by 6.6 billion kWh in 2021, and 15 billion kWh in 2023. Vietnam expects to generate more electricity from coal and oil this year to bridge an expected gap in hydropower output. Yet, authorities hope to raise the proportion of renewable energy to 15% to 20% by 2030.

Vietnam’s government has partnered up with the World Bank to find ways to boost the portfolio of solar energy through competitive bidding mechanisms. At the same time, the Vietnam Business Forum (VBF) which is on-going policy dialogue channel between the Government of Vietnam and the business community, will roll out the second phase of its Made in Vietnam Energy Plan (MVEP 2.0). The plan will draw in energy specialists from the private sector and prioritise investment in domestic renewable energy, natural gas, battery storage and energy efficiency. Vietnam has plans to develop infrastructure to be able to import 8 billion cubic metres of liquefied natural gas annually by 2030.

Sources: Reuters, Vietnam Plus, Smart Energy