COVID-19 Outbreak
More Stimulus Packages Announced (25, 28 Feb)
The government of Indonesian President Joko Widodo “Jokowi” released the details of a US$742.6 million COVID-19 stimulus package on 25 February. To boost tourism, the budget included measures such as providing airlines and travel agencies with financial support to offer discounts on tickets, hiring social media influencers to convince tourists to visit Indonesia, and waiving hotel and restaurant taxes for hotels and restaurants at ten tourist destinations. The budget also included measures to improve the purchasing power of Indonesians and minimise the impact of COVID-19 on the economy. These included expanding Jokowi’s unemployment benefits program, increasing the amount of social benefit payouts for low-income families and offering additional subsidies for first-time homebuyers.
The Indonesian stimulus package was smaller than those pushed by Singapore and Malaysia, but Coordinating Minister for Economic Affairs Airlangga Hartarto said that the government is working toward implementing a second stimulus package.
Sources: Reuters, Jakarta Globe, The Straits Times
Then-interim Prime Minister Dr Mahathir Mohamad announced the details of Malaysia’s US$4.75 billion on 28 February, Friday. The package included substantial steps to address the economic impact of COVID-19, including deferments of monthly income tax for the tourism sector, increasing social welfare payments and creating a Special Relief Facility worth US$473 million. In contrast to other stimulus packages, it also focused heavily on accelerating public investment projects to boost business confidence. Hence, projects such as opening 1,400MW of solar power generation for bidding and continuing the National Fiberisation and Connectivity Plan were revealed as part of the announcement.
The stimulus package drew mixed reviews from observers. Some praised the government’s move to reduce the Employees Provident Fund contribution rate from 11% to 7%, which could open up US$2.4 billion for domestic consumption. However, others expressed concerns about the fiscal deficit, which was expected to widen to 3.4% of the country’s gross domestic product due to the increased expenditures.
Sources: The Edge Markets MY, New Straits Times, Malay Mail
Scare in Malaysia After Reports of Patient in Close Contact with ex-Ministers (1 Mar)
It was reported on 1 March, Sunday, that a senior member of sovereign wealth fund Khazanah Naisonal Berhad had been diagnosed with COVID-19 – but not before he attended an event organised by the Ministry of Entrepreneur Development on 27 February. During the event, he came into close contact with Redzuan Yusof, the former Entrepreneur Development Minister, and his Deputy, Dr Hatta Ramli. Malaysia’s Health Director-General Dr Noor Hisham Abdullah announced that the two former minister had not tested positive for the virus, but advised that certain senior officials in the ministry be quarantined for 14 days.
Sources: The Straits Times
Indonesia Confirms its First Two Cases of COVID-19 (2 Mar)
Indonesian President Joko Widodo “Jokowi” announced on 2 March, Monday, that two Indonesians had tested positive for COVID-19, making them the first two confirmed cases in the country. The pair, a mother and daughter, were reportedly infected while dancing with a Japanese woman at a Jakarta dance club on 14 February. The Japanese woman later tested positive for the virus on 27 February in Malaysia. Indonesian Health Minister Terawan Agus Putranto said that the government would now focus on tracking down individuals who recently came in close contact with the identified COVID-19 patients.
Sources: The Jakarta Post
Indonesia
Omnibus Bill Updates: Big Hopes, Bigger Concerns (19 Feb – Ongoing)
More details about President Jokowi’s touted omnibus bills were revealed over the past fortnight. Of the four that have been announced, two (taxation and job creation) are in Parliament, while the other two (on small and medium enterprises and the new capital city) are being drafted. Coordinating Minister for Maritime Investment Affairs Luhut Pandjaitan expressed his hope that the bills, which would allow the central government to overrule local governments in certain areas, would boost investments into Indonesia. Coordinating Economic Minister Airlangga Hartarto also said that the job creation bill could create three million new manufacturing jobs, and bring Indonesia closer to its target of attracting US$87 billion in projected investments.
Sources: Nikkei Asian Review, The Jakarta Post
However, concerns are growing about the terms of the bills, particularly the one on job creation. Labour Unions have protested against items such as the revamping of severance payments, while environmentalists have questioned the proposal to only require environmental impact assessments for businesses with “important effects on the environment, social, economic and culture”. Some have also raised concerns that Article 170 would allow the government to revoke laws by issuing government regulations (PP) as opposed to passing a new law in Parliament. Coordinating Political, Legal and Security Affairs Minister Mahfud M.D. played down these concerns, claiming that they were the result of a “typo” that can be fixed in Parliament.
Sources: The Jakarta Post, Mongabay, The Jakarta Post
New Capital: More Investors, Ahok Considered to Lead Special Agency (25 Feb – Ongoing)
Coordinating Minister for Maritime Affairs and Investment Luhut Pandjaitan told reporters that US asset manager Blackrock expressed interest in joining a fund for Indonesia’s new capital city. The size of the fund, planned by SoftBank Group Chief Masayoshi Son and Former-British Prime Minister Tony Blair, was not disclosed, though Luhut said it would be “very adequate” to cover the US$33 billion cost of building the new capital. The fund would also be separate from the one that was proposed by Abu Dhabi, which would be used to fund other infrastructure projects in Indonesia. Reports also emerged of Jokowi planning a trip to the US to discuss investment in the new capital city, among other topics. Meanwhile, Luhut announced that US infrastructure firm Aecom and Japanese architecture and urban design consulting firm Nikken Sekkei had also signed up to the project as consultants.
On the topic of leadership for the project, rumours were circulating that Former-Jakarta Governor Basuki Tjahaja Purnama “Ahok” was among the four candidates shortlisted to lead the special authority agency that would oversee construction, investment licensing and the relocation process. Ahok was released from jail in January 2019 after serving a sentence for blasphemy, and was recently appointed as the Chief Commissioner of state-run oil company Pertamina.
Sources: Nikkei Asian Review, Jakarta Globe, Jakarta Globe
Indonesia Cuts Rates, Unveils New Stability Measures (20 Feb, 2 Mar)
Bank Indonesia cuts its key interest rate by 25 basis points to 4.75% on 20 February, Thursday. The move was seen as a response to growing concerns about the impact of COVID-19 on Indonesia’s economy, with the Bank reducing its projected gross domestic product (GDP) growth range from 5.1-5.5% to 5.0-5.4%. Subsequently, the central bank announced on Monday, 2 March that it would increase market intervention, cut reserve requirements by 400 basis points to 4% for foreign currencies and relax rules for domestic non-deliverable forward transactions to support the rupiah and bonds. Indonesia’s stock exchange also suspended all short selling until further notice on 2 March, reasoning that they wanted to prevent further instability.
Sources: Nikkei Asian Review, Reuters
Malaysia
A Brief Explainer of Malaysia’s Change of Government (21 Feb – Ongoing)
A drastic political shift occurred in Malaysia over the past fortnight as the ruling Pakatan Harapan (PH) government crumbled, replaced instead by Perikatan Nasional (PN). The internal coup took place over roughly seven days, and involved shifting allegiances and stances before an intervention by the King, or Agong. Here is an overview of what happened:
- 23 February (Sun): Rumours about a potential government realignment erupted on Sunday, when reports emerged of then-Prime Minister Dr Mahathir Mohamad’s Parti Pribumi Bersatu Malaysia (PPBM) and then-Parti Keadilan Rakyat (PKR) Deputy President Azmin Ali holding a series of meetings with opposition members. The grouping even met with the Agong, with reports that a new government could be announced during the evening press conference. Yet, with the group apparently failing to convince the Agong that they held a majority, the day ended without an announcement.
- 24 February (Mon): Tensions boiled over as PPBM exited the PH coalition along with 11 PKR MPs led by Azmin, while Dr Mahathir resigned as Prime Minister and PPBM Chairman after PH lost its parliamentary majority. Yet another twist occurred when PH leaders, including PKR President Anwar Ibrahim, announced their support for Dr Mahathir to remain as Prime Minister following a meeting at his home, and said they were convinced he was not involved in the attempted coup. The Agong appointed Dr Mahathir as Interim Prime Minister, but also dissolved all Cabinet appointments, effectively ending the PH government.
- Several accounts have emerged over the past week attempting to explain the tumult of 23-24 February. Some, including the Sarawak Report, alleged that Dr Mahathir had been misled by Azmin about Anwar’s plans to pressure him to confirm a handover date, prompting the Former Prime Minister to greenlight a move to shore up support. The reason Dr Mahathir resigned, such reports alleged, is that he was taken aback by the proposal to work with the United Malays National Organisation (UMNO) at the organisational level, and ultimately refused to do so.
- Others speculated that Dr Mahathir had been cognisant of the plot the entire time, and that he was looking to make Azmin a scapegoat when the plotters failed to present a majority to the Agong. Dr Mahathir’s resignation was then a power move that allowed him to ignore the outlined handover plan.
- 25 – 28 February (Tue-Fri): Regardless of intent, events continued to unfold at a rapid pace. The Agong conducted one-on-one interviews with the remaining 221 MPs (other than Dr Mahathir) to determine who they wanted as the next Prime Minister. Meanwhile, Dr Mahathir pushed for the creation of a unity government, including both the remnants of PH and opposition parties. Few, however, shared his views. All 92 remaining members of PH, despite backing Dr Mahathir on Monday, backed Anwar as the next Prime Minister, and UMNO and Parti Islam Se-Malaysia (PAS) called for a snap election.
- Following a meeting with the Agong, Dr Mahathir claimed on Thursday that he had been told to convene a meeting of Parliament on 2 March to allow MPs to vote on their choices for the next Prime Minister – only for Speaker of Parliament Mohamad Ariff Mohamad Yusof to dismiss his call on Friday. The Agong, however, said that he indeed did not have the confidence that any MP had majority support to form a new government. He instead called for a second round of meetings with the party heads.
- 29 February (Sat): By Saturday morning, the battle lines had changed again. PN, which included UMNO, PAS, PPBM, the Malaysian Chinese Association (MCA) and Malaysian Indian Congress (MIC), now backed PPBM President Muhyiddin Yassin as Prime Minister, giving him 96 votes. The 92 PH remnants, despite affirming support for Anwar on Friday evening, threw their support behind Dr Mahathir on Saturday morning. Yet, the Agong announced his decision to appoint Muhyiddin as Prime Minister on Saturday afternoon, ending one aspect of the political uncertainty but raising further questions about stability and policy direction.
Sources: The Straits Times, Malay Mail (25 Feb), Sarawak Report, Free Malaysia Today, Bloomberg, Channel NewsAsia
What’s Next for Malaysian Politics? (1 Mar – Ongoing)
Even as the dust settles, many questions remain about Malaysia’s political future.
Dr Mahathir’s Plans: While Dr Mahathir is no longer Prime Minister, he is not out of the political picture. The veteran politician is still a commanding presence in PH, and announced plans on 1 March to challenge the PN government with a vote of no confidence when Parliament reconvenes. However, the date for the next parliamentary session was pushed from 9 March to 18 May, according to Speaker Ariff Yusof.
Sources: The Edge Markets MY, Malay Mail, Channel NewsAsia, The Straits Times
The New Cabinet: The new Prime Minister Muhyiddin Yassin spent his first day in office meeting with the Chief Secretary to the Government and various agency heads. He is expected to form his Cabinet over the next few weeks, and claimed that he would appoint Cabinet members with a clean track record in response to fears that he might choose scandal-ridden leaders from UMNO. Observers will be keenly watching for developments on this front.
Sources: SCMP, The Star, The Edge Markets MY
State Governments Turning to PN: After PPBM exited PH, certain state governments lost their majority. Johor was the first government to fall on 28 February to a combination of UMNO and PPBM, followed by the Melaka state assembly on 2 March with the aid of defectors from PKR and the Democratic Action Party (DAP). Perak and Kedah’s fates were undecided as of 3 March, even though both incumbent Chief Ministers are from PPBM. Perak’s Ahmad Faizal Azumu might have to compete with an assemblyman from Perak UMNO for his position, while Mukhriz Mahathir’s fate would hinge on the support of five PPBM assemblymen. Should these fall as well, PH would be left with three states on the peninsula (Selangor, Penang and Negeri Sembilan).
Sources: Malay Mail, The Straits Times, The Star
Future of PPBM: PPBM gained another 11 MPs with the addition of Azmin’s PKR faction, bringing its total seats to 37. Within PN, this leaves it second to UMNO (38) in terms of size. However, there are questions about the future of three seats (Dr Mahathir, his son Mukhriz, and Youth Chief Syed Saddiq Abdul Rahman) after the latter two openly supported Dr Mahathir for the Prime Ministership and questioned the legitimacy of Muhyiddin’s endorsement as Prime Minister candidate. Muhyiddin had declared himself PPBM Chairman on 29 February, asserting that Dr Mahathir’s resignation still stood despite him being accepted back into the party two days prior. PPBM disciplinary board chief Megat Najmuddin Megat Khas said that his team was prepared to investigate Mukhriz and Syed Saddiq if there was any report lodged against them.
Sources: Malaysiakini, Malay Mail, Malay Mail, The Star
1MDB Trials: The return of UMNO and the shock resignation of Former Attorney General Tommy Thomas led to concerns about the future of corruption trials involving Former Prime Minister Najib Razak, his wife Rosmah Mansor and UMNO President Ahmad Zahid Hamidi. Both Najib and Zahid have said that they intend to clear their name in court, though they maintain that the charges brought against them are politically motivated. Muhyiddin has also said that fighting corruption will be a priority for his government. The future direction of the trials, however, will likely depend on the new Attorney General.
Sources: Malay Mail, Malay Mail, The Straits Times, The Straits Times, The Straits Times
Bank Negara Malaysia Cuts Rates to a Nine-Year Low (3 Mar)
Bank Negara Malaysia cut its overnight policy rate 25 basis points to 2.5% on 3 March, Monday. This was the central bank’s second rate cut since the start of 2020, and brought the overnight policy rate to its lowest since March 2011. Bank Negara Malaysia explained in a statement that the move was meant to create a “more accommodative monetary environment” to boost first quarter growth in the face of COVID-19. Economists quoted by The Business Times noted that there was room for further rate cuts depending on Malaysia’s growth outlook.
Sources: Nikkei Asian Review, The Business Times
Myanmar
Myanmar Launches Online Portal for Development Projects: “Project Bank” (26 Feb)
A centralized online platform for development projects in Myanmar was launched on 26 February 2020. The long awaited “Project Bank” is a publicly-accessible site that will detail all the infrastructure projects in Myanmar and prioritise them according to socioeconomic returns. The initiative stems from the Myanmar Sustainable Development Plan (MSDP) for 2018-2030. Details of each major investment project will be made available on the site including cost, financing plans, project timelines and the implementing government agency. Project Bank aims to increase public-private partnerships and opportunities for the private sector to invest in national development objectives. A total of 58 projects are currently listed, including include road, railway, port, airport, electricity, urban development, industrial estate development as well as agricultural development projects. The National Economic Coordination Committee (NECC) screens the projects to ensure that they align with the goals of the MSDP.
Sources: Irrawaddy, Myanmar Times, Project Bank
No Reported Coronavirus Cases in Myanmar Although Health Ministry Warns of Possible Outbreak (24 Feb – Ongoing)
Myanmar still had no reported COVID-19 infected cases, although the health ministry has advised against mass gatherings to mitigate risks of a local outbreak. Authorities have quarantined suspect cases but so far the tests have all been negative. On 2 March, the Myanmar government cancelled a four-day stopover of a tourist cruise ship in Yangon as part of precautionary measures. The ship had last stopped at Phukhet, Thailand.
And initial impact assessment of the overall COVID-19 situation shows Myanmar’s tourism revenue would likely be halved this year. According to the Ministry of Health, losses will also spill over into transportation, rentals and restaurants. The closure of Myanmar’s border crossings with China has also hit the agriculture, aquaculture and seafood sectors. Farm labourers working for Chinese employers have also been affected as they miss out on pay. In this period, the Myanmar government announced it had donated 200 tons of rice to China as part of humanitarian assistance.
Sources: Irrawaddy, Myanmar Times, Frontier Myanmar, Mizzima
President U Win Myint Visits India; 10 deals signed (26-29 Feb)
Myanmar President U Win Myint paid a state visit to India in the last week of February in a sign of warming ties between the two nations. Deals were signed on enhancing cooperation on bilateral energy, trade, development, defense and maritime security and combating terrorism and violent extremism.
Some of the notable agreements include:
- Cooperation for Prevention of Trafficking in Persons, Rescue, Recovery, Repatriation and Re-Integration of Victims of Trafficking
- Agreement regarding Indian Grant Assistance for implementation of Quick Impact Projects (QIP)
- Project Agreement between Rakhine State Government and the Embassy of India in Yangon for distribution of electricity by solar power in five townships of Rakhine State
People to people ties will also get a boost with a Manipur-Mandalay bus service expected to be launched on 7 April. India is Myanmar’s fifth largest trading partner and has committed US$25 million grant assistance to Myanmar over a period of five years. A joint statement from the visit showed how India wants to engage with Myanmar under its ‘Act East’ and ‘Neighbourhood First’ policies. Myanmar’s relationship with India is often viewed as a counterweight to Myanmar-China ties such that Yangon is not beholden too much to one country.
Sources: Myanmar Times, Irrawaddy, Economic Times, Asia Times
Thailand
Dissolution of Future Forward Sparks Fury Among Youth Supporters (21 Feb – Ongoing)
Thailand’s Constitutional Court dissolved the Future Forward Party (FFP) on 21 February, Friday, and banned 16 of its executives (including 11 MPs) from participating in politics for 10 years. The FFP, which clinched 6.3 million votes in the 2019 election and was the third biggest party in Parliament, was found guilty of accepting a US$6 million baht “donation” from its leader Thanathorn Juangroongruangkit, with the Court dismissing his argument that the amount was a loan. The remaining 64 MPs from the party were given 60 days to join or form another party, but nine of them have joined the Bhumjaithai Party.
Since the dissolution, students organised daily flash mobs to protest the court decision, with some even demanding the resignation of Prime Minister Prayuth Chan-ocha. Most were attended by several hundred demonstrators, and more are planned in the coming weeks as unrest continues to simmer. Police have said that students are free to exercise their right to assembly, but have sternly warned against making any reference to the monarchy during the protests.
Sources: Bangkok Post, The Economist, Nikkei Asian Review, Reuters, Bangkok Post
Censure Debate to Continue into Second Week (24 Feb – Ongoing)
Thailand’s first censure debate and no-confidence motion is slated to continue beyond the country’s Parliament (Note: Former-FFP members participated as independent lawmakers). The debate, which targeted Prime Minister Prayuth and five other ministers, was conducted from 24 – 27 February, and all six ministers survived the no-confidence votes on 28 February. Yet, the FFP criticised the Pheu Thai Party for poor timekeeping that allowed Deputy Prime Minister Prawit Wongsuwon and Interior Minister Anupong Paojinda to evade many questions, prompting the latter party to apologise. The opposition has also expressed its intention to extend the censure debate to nationwide mobile forums, where they aim to “expose the government’s mismanagement of the country” to the public.
Sources: The Straits Times, Bangkok Post, Bangkok Post, Bangkok Post
Great Wall Motors Fills in After GM Retreat (17 Feb – Ongoing)
Following General Motors’ (GM’s) 16 February announcement that it would cease its Thai market operation and sell its Rayong plants, Chinese car maker Great Wall Motors moved to fill in the gap. Weak sales in Thailand and Oceania had led GM to shift its regional focus to a smaller subset of markets, including China (>40% of global sales volumes) and South Korea. As the new owners of the Rayong plants, Great Wall plans to double the number of vehicles (pickups, sports utility vehicles and electric vehicles) made per year to 100,000 by 2022, 50% of which will be for export. Great Wall is not the only Chinese car maker to have entered the Thai market, with Shanghai-based SAIC Motor having entered a joint venture with Thai conglomerate Charoen Pokphand Group in 2012 to produce cars for both local sales and exports.
Sources: Reuters, Nikkei Asian Review, Bangkok Post
Vietnam
Vietnam PM Pledges Maximum Assistance Amid COVID-19 (3 March – Ongoing)
Prime Minister Nguyen Xuan Phuc called for the maximum possible assistance towards production and business activities amid the COVID-19 epidemic. PM Phuc noted the slowdown in the tourism and aviation and urged ministries and agencies to provide specific solutions for hard hit sectors. The government will immediately implement credit support packages worth at least 30 trillion VND (nearly 1.3 billion USD) to support enterprises and the people. Factories in the country are facing closure as Vietnam relies on China for its raw materials, especially in the textile, footwear and electronics sectors.
Vietnam’s central bank has also stepped in to support businesses. The State Bank of Vietnam ordered commercial banks to eliminate, cut or delay interest payments on loans to companies facing losses due to the coronavirus outbreak. The order applies to all payments due Jan. 23 to March 30.
Sources: Vietnam Plus, VN Express, Reuters, Quartz
Vietnam Sees Drop in FDI for Jan-Feb (27 Feb)
Vietnam experienced a decline in Foreign Direct Investment (FDI) in the first two months of 2020. FDI pledges for Jan-Feb came in at $6.47 billion down 23.6 percent compared to last year. The Ministry of Planning and Investment’s Foreign Investment Agency attributed the fall to the Lunar new Year holiday and the impact of the coronavirus. Electricity production attracted the highest proportion of pledged capital followed by the manufacturing and processing sector.
Singapore was the largest foreign investor with $4.12 billion for Jan-Feb. This accounts for 64 per cent of the country’s total FDI. Mainland China came next with $720 million, making up 11 per cent of the total. South Korea ranked third with $425 million or 7 per cent, followed by Hong Kong, Taiwan and Japan.
Sources: Vietnam News, VN Express
Samsung Begins Construction of US$220 Million R&D Centre in Hanoi (2 March)
Samsung Electronics has started building a US$220 million research and development centre in Vietnam. The South Korean conglemerate that has invested over $17 billion into Vietnam has said the centre will bring about 2000-3000 jobs.The centre is expected to be the largest of its kind in Southeast Asia and will focus research on artificial intelligence, internet of things, big data and 5G. It is likely to become one of Samsung’s primary R&D bases. Construction of the center in Hanoi is expected to be completed by end 2022
Sources: Reuters, VN Express