Indonesia

Jokowi Meets Business Leaders to Discuss Leveraging the Trade War (12 June)

President Joko Widodo “Jokowi” met with industry leaders to ask for policy suggestions on how to help Indonesia benefit the most from the trade war. Indonesia has already begun to feel the effects of trade tensions, with its Q1 exports to the US and China falling 5.2 and 11% respectively from Q1 2018. In contrast, Vietnam’s exports to China slid by 5%, but its exports to the US rose by 25% over the same period. The suggestions for the session included reducing red tape and doubling down on raising the country’s competitiveness.

 Sources: Jakarta Globe

Former Minister: Jokowi Only has a Small Window to Lock in Reforms Amid Trade War (12 June)

Speaking during an interview on 11 June, Former-Finance Minister Chatib Basri said that President Jokowi only has a narrow window to insulate Indonesia from escalating trade uncertainty and slowing global demand. He specified that Jokowi must act “in the next two years or even next couple of months” to effect his reform plans, before his coalition members begin to manoeuvre to secure their legacy and prospects. He also maintained that Indonesia would need to undergo an overhauling of its labour laws in order attract foreign firms from China. Failing which, Basri predicted that Indonesia would begin to stagnate with economic growth rates of 5%.

 Sources: The Jakarta Post

Ratings Bump Leaves Indonesia More Attractive to Foreign Investment (16 June)

S&P Global Ratings increased Indonesia’s sovereign credit rating to BBB from BBB-, based on expectations of strong economic prospects and incumbent President Jokowi’s commitment to structural reform. As a result, all three major ratings agencies are rating Indonesia as BBB. The ratings revision is expected to attract more foreign investment after inflows fell 8.8% year on year in 2018.

 Sources: Nikkei Asian Review, Reuters

Jokowi Extends Olive Branch to Prabowo with Offer of Cabinet Position (14 June)

In an interview with the Jakarta Post (premium article), President Jokowi said that he is open to allowing Gerindra Party members to join his new cabinet, reasoning that he cannot develop a huge country like Indonesia on his own. Jokowi’s political parties already control 349 of the 575 seats in the House (60.7%), and the additional of Gerindra with its 78 seats would strengthen his political position. Two of Prabowo’s coalition partners, the Democrats and the National Awakening Party (PAN), have also started warming ties with Jokowi.

 Sources: The Jakarta Post, The Straits Times

Indonesia’s Constitutional Court begins hearing on election dispute (18 June)

Indonesia’s Constitutional Court commenced the legal case brought by presidential candidate Prabowo Subianto to contest the election results on 18 June. The official results said that incumbent President Jokowi had won the election with 55.5% of the vote, but Prabowo’s coalition alleges that “structural, systematic and massive” fraud skewed the outcome. In fact, Prabowo alleges that his side won with 52% of the vote, a more modest figure than his initial claims of 62%. While his camp’s earlier calls for “people power” contributed to the violent Jakarta riots on 21 and 22 May, Prabowo called for his supporters to practice restraint, saying that his team “[believes] in the judges”.

 Sources: The Straits Times, Jakarta Globe, Nikkei Asian Review

 In terms of allegations, Prabowo’s lawyers have expanded the original 24 May suit with several new allegations, including irregularities in Jokowi’s campaign fund report and alleged violations of election law by Vice President Ma’ruf Amin. The lawyers also issued a list of 15 proposals to the Court, including the disqualification of Jokowi-Ma’ruf due to election offences and the instatement of Prabowo and Sandiaga Uno as the elected President and Vice President. Jokowi’s lawyers pushed back against the accusations during the first day of the hearing, calling them vague and baseless.

The final verdict is due by 28 June.

 Sources: Jakarta Globe, The Straits Times

Malaysia

New Gay Sex Scandal Takes PKR, and Malaysia, by Storm (12-19 June)

Malaysia’s political landscape entered a fresh period of tumult on 12 June as Economic Affairs Minister Azmin Ali was implicated in engaging in gay sex, with a video released of the alleged act. The accuser, Muhammad Haziq Abdul Aziz, was the Principal Private Secretary to the Deputy Primary Industries Minister, and asserted that Azmin is “unfit to be a leader” in a confession published on Facebook. He was later suspended from his duties and arrested by the police for questioning on 14 June, though he has since been released on bail. Malaysia’s police chief told the South China Morning Post that the investigations into the videos are expected to be completed “next week or the week after”.

The matter has wide implications for the recurring question of whether Dr Anwar will succeed Dr Mahathir. Azim, while a deputy president in the Parti Keadilan Rakyat (PKR) led by Anwar, is seen as being supported by Mahathir Mohamad. There is speculation about the source of the leaked video, with suspicion that it was released by PKR President Anwar Ibrahim to see off his rival. Azmin himself added fuel to the fire with a statement on Tuesday, 18 June, that he is “convinced” that the video was an inside job from within PKR. Regardless of its source, the scandal is likely to heighten tensions between Azmin and Anwar’s factions, and opens the possibility for greater political unrest in the PKR, which is the biggest party in Parliament with 50 seats.

 Sources: Malay Mail, Today Online, Free Malaysia Today, SCMP, The Star, The Straits Times

Graft Accusation Against Azmin Ali Met with Denials by Implicated Company and Bank (12 June)

Alongside the sex video scandal, Minister Azmin was also implicated in a graft accusation allegedly involving a fund transfer from UEM group to his private Maybank account. The screengrab of the alleged transfer document, which was circulated online, was picked up by United Malays National Organisation (UMNO) Supreme Council Member Lokman Noor Adam in a report to the Malaysian Anti-Corruption Commission (MACC). However, both Maybank and UEM Group have denied the validity of the document. A Maybank spokesman pointed out that the account number indicated in the document is invalid, while UEM Group denied that it had a Maybank account at the particular branch.

 Sources: The Sun Daily, Malay Mail, The Straits Times

Malaysia’s Finance Minister says Trade War Benefits Will Be Fleeting (15 June)

Finance Minister Lim Guan Eng said that the US-China trade war has benefitted Malaysia through business relocations and trade diversions. Penang, for instance, experienced a 1,360% surge in investments during Q1 2019 when compared to Q1 2018, benefitting from investments from companies such as U.S. semiconductor company Micron Technology Inc. However, Lim emphasised that a trade war “benefits nobody”, and that a global economic slowdown could reverse all of these positive developments.

 Sources: New Straits Times, The Edge Markets MY

Myanmar

Myanmar’s budget deficit due to hit 7tn Kyat (US$4.57bn) for FY2019-2020 (19 June)

 President Win Myint has announced that Myanmar’s budget deficit is due to reach 7tn Kyat (US$4.57bn) in the coming fiscal year, in the wake of increasing public spending. The President emphasized the need to spend on areas that would bring “immediate benefits” to Myanmar’s public, including electrification, road and bridge construction, health care, education and social security. This announcement comes after President Win Myint met chief ministers of Myanmar’s regions and states to encourage them to spend more on these areas within their constituencies. Shortly after this meeting, the Yangon regional government withdrew proposals for 16bn Kyats worth of infrastructure projects – a move widely seen to facilitate the channeling of resources away from traditionally prioritised urban areas.

Sources: Myanmar Times, Irawaddy

Demand for energy in Myanmar higher than expected causing longer blackouts (18 June)

 Myanmar’s Ministry of Electricity and Energy has stated that electricity demand has risen by 19% since last year – higher than the anticipated 15%. Lower rainfall has also caused Myanmar’s hydroelectric dams to perform less efficiently and six hydroelectric power plants stopped generating power. The Yangon Electricity Supply Corporation (YESC) had issued a statement on 13 June, warning of longer power cuts in Yangon. The YESC introduced rotating power cuts to Yangon’s power grid in April, to offset shortfalls in electricity supply. Daily power cuts increased from two hours to six hours. The Ministry of Electricity and Energy said the government is planning to upgrade five hydroelectric plants.

Source: Myanmar Times, Myanmar Times,

IFC becomes first to take up stake in a Myanmar bank

The International Finance Corporation (IFC) has become the first foreign stakeholder in a Myanmar bank. The IFC converted a 2014 loan into equity to hold a 5% stake in Yoma Bank. Yoma Bank is Myanmar’s fourth largest private lender by assets. In early 2019, the Central Bank of Myanmar permitted foreign institutions and investors to have up to a 35% stake in local banks. The IFC has also provided a convertible loan of $7 million to Myanmar Oriental Bank, back in 2017.

Sources: Myanmar Times, Deal Street Asia

World Bank declares Myanmar’s economic outlook positive (18 June)

 The World Bank’s lead economist has projected that Myanmar’s economic growth will accelerate to 6.7% in FY2020-2021. Myanmar’s GDP grew by 6.2% in FY 2017-2018. This acceleration of growth is attributed to higher productivity in liberalising economic sectors, including the retail, wholesale and insurance sectors. Governmental efforts at economic restructuring are also credited with helping to push critical reforms through. The forthcoming implementation of major megaprojects such as those associated with the China-Myanmar Economic Corridor, and growing investment in the transport, energy and manufacturing sectors are further factors driving this trend.

Source: Myanmar Times, Irrawaddy

Myanmar nationalist group holds annual meeting (17 June)

Myanmar’s leading group of nationalist buddhist monks railed against Aung San Suu Kyi and the Rohingyas in their annual meeting. The Buddha Dhamma Parahita Foundation, formerly known as Ma Ba Tha, also condemned sedition charges against prominent monk, U Wirathu. U Wirathu is evading arrest under the sedition act for insulting Daw Aung San Suu Kyi. The commander of Yangon’s military command, Major General Thet Pone, also attended the meeting and personally donated 30 million kyats (about US$19,600) to the group.

Sources: Channel NewsAsia, The Irrawaddy, Myanmar Times

ASSK and President Win Myint to contest 2020 General Elections (10 June)

The ruling National League for Democracy (NLD) announced that President U Win Myint and State Counselor Daw Aung San Suu Kyi will run in Myanmar’s next general election. In reference to them, the NLD’s spokesperson said that the country needs people of high caliber. The Union Election Commission (UEC) says it is working to ensure a smooth voting process with an expected addition of 5 million new eligible voters. According to the UEC, the next election is scheduled to be held in November 2020.

Sources: The Irrawaddy, Myanmar Times

Thailand

Prayuth Government Threatened by Shareholding Investigation into 41 MPs (12 Jun)

The new government of Prime Minister Prayuth Chan-ocha is facing uncertainty as 41 of its MPs are accused of breaching rules on media shareholdings. Election rules prohibit owners and shareholders of media and/or publishing firms from applying to become MPs. Of the 41 accused, 26 are from Phalang Pracharat, 11 are from the Democrat Party, and Bhumjaithai, the Action Coalition for Thailand, Chartpattana and Prachaphiwat have 1 each. If successful, the investigation could eliminate the government’s majority in the lower House, reducing its presence to 213.

Sources: Bangkok Post, The Nation

EEC – Momentum and Obstacles Ahead (13 Jun)

In an interview with Xinhua, Kanit Sangsuban from the Eastern Economic Corridor (EEC) Office said that EEC projects would face no post-election obstacles, and noted that the cabinet has already approved a development deal for Ma Ta Phut Port, worth US$1.8 billion. The passage of the EEC Act in 2018 also offers a legal impetus for the development of the US$54 billion corridor, which is expected to be completed in 2021. However, The Nation also pointed out that the development of the EEC would face a series of structural challenges. These include a shortage of skilled labour and opposition from local communities.

Sources: Xinhua, The Nation

Foreign Investors Hesitation and Economic Weakness Amid Uncertainty (14 Jun)

Bloomberg reported that political uncertainty is deterring investors from Thailand’s economy, with many businesses in a “wait-and-see mode”. US$20 billion of spending on transport and logistics projects have reportedly been delayed due to delays in the formation of the government. The uncertainty is also affecting other areas of the economy, with consumer confidence reported to have dropped to its lowest level in 19 months in May 2019, and Q1 growth languishing at 2.8%, its worst performance since 2014. The Bank of Thailand also voted to keep its benchmark rate unchanged at 1.75% on 8 May, citing “heightened political uncertainties”.

Sources: Bloomberg (via South China Morning Post, The Japan News)

PM Prayuth Continues to Utilise Section 44 (14 Jun)

The Nikkei Asian Review reported that PM Prayuth Chan-ocha has continued to use the sweeping powers of Section 44 of the Interim Constitution even after the March election. The law, which has been used more than 190 times since the May 2014 coup, may remain in force until a new government to succeed the junta formally takes over. According to Deputy Prime Minister Wissanu Krea-ngam, the cabinet will only start functioning after the ASEAN summit on 21-23 June. In the meantime, there are concerns that Section 44 will be used to suppress criticism of the new government.

Sources: Nikkei Asian Review

PM Prayuth: Cabinet Not ideal, but Finalised (19 Jun)

Prime Minister Prayuth told reporters that the composition of the 35 cabinet ministers has been finalised pending royal endorsement this month. He admitted that the choices may not be perfect due to some of the candidates with poor public images. However, he maintained that his legal team will check their qualifications, and that he will retain the prerogative to reshuffle the cabinet if they prove unqualified.

Sources: Bangkok Post