Indonesia

Jokowi Prepares for New Cabinet (4 – 17 Jul)

 Second-term President Joko Widodo “Jokowi” has started reshaping his cabinet lineup behind closed doors. Tempo.co, quoting officials such as Indonesian Employers Association Deputy Shinta Kamdani, suggested that GoJek CEO Nadiem Makarim could be among those considered for a seat in the new cabinet. The Jakarta Post also noted that some current ministers, such as Energy and Mineral Resources Minister Ignasius Jonan, might not be included in the new lineup. Reports have also emerged of tensions within the victorious Jokowi coalition over seat allocations, and frustration that parties from Prabowo Subianto’s camp are being offered seats as well.

Sources: Tempo.co, The Jakarta Post, The Jakarta Post, Bloomberg

Gerindra, PKS to Remain in Opposition (6 – 17 Jul)

 Prabowo coalition members Gerindra and PKS have said they prefer to remain in the opposition in parliament, according to senior leaders from both parties. In June, President Jokowi had been previously reported as offering Gerindra, the third largest party in parliament with 78 seats, a place in his government. However, Gerindra leaders maintained that their role as a “critical and constructive opposition” is more vital.

Vice Presidential Candidate, Sandiaga Uno has also commented over his future. Describing his life as a “one-way ticket”, he said that he will not return to his post as Jakarta Deputy Governor or to business. He would, however, continue to work with Prabowo to be “constructive partners” to the government from the outside.

Sources: Jakarta Globe, Antara News, The Straits Times

Jokowi 2.0 Promises to Focus on Reforms, Human Resource Development (12, 14 Jul)

 In an interview with Bloomberg, President Jokowi vowed to carry out a series of reforms to attract foreign investors, including lowering corporate taxes from 25 to 20%, easing labour laws and lifting curbs on foreign ownership. He also noted that he has “no burden” since this is his last term, leaving him with “nothing to lose”. However, the Tax Office had earlier cautioned that it does not have enough time to realise the tax reduction this year, especially since it can only be deliberated and approved after new legislators are sworn in come October.

Jokowi also laid out his vision for his second term during a speech on 14 July, Sunday. This was his first speech since being re-elected. Aside from promising to continue his focus on developing infrastructure, he announced that the government would make human resource development its flagship programme.

Sources: Bloomberg, Jakarta Globe, The Straits Times

Jokowi-Prabowo Reconciliation Meeting Draws Praise, Flak (13 Jul)

After weeks of speculation, President Jokowi and Prabowo Subianto met in person for the first time since the April election on 13 July, Saturday at a Jakarta MRT station. The two spoke warmly of each other, with Prabowo offering his belated congratulations to Jokowi for his electoral victory. The business community and related observers welcomed the meeting, with Finance Minister Sri Mulyani Indrawati expressing that she was “relieved and very happy”. However, Gerindra was quick to note that Prabowo had not struck a deal with Jokowi during the brief meeting. Members of the 212 Alumni association also criticised the meeting, claiming that Prabowo has started to follow people who had “betrayed the Islamic society”.

Sources: The Straits Times, Jakarta Globe, Antara News, The Jakarta Post

Amid Slimmer Trade Surplus, Economists Warn of Economic Slowdown (16 Jul)

 Indonesia posted a US$200 million trade surplus in June, as exports fell 8.98% year on year to US$11.78 billion. However, observers such as Bank Central Asia (BCA) chief economist David Sumual noted that imports of crucial raw and auxiliary materials had fallen by 7.7% year on year for the first half of 2019. This could reflect slower production and less investment, which would in turn signal a slowdown on exports. Economists warned that economic growth in the second quarter could perform below expectations of 5%.

Sources: Business Times, Jakarta Globe, The Jakarta Post

Indonesia Drafting VAT Rules for Online Products (16 Jul)

 A top Indonesian tax official told Reuters that his office is aiming to implement a value added tax (VAT) on online products and offshore services. Authorities are targeting more revenue from Indonesia’s booming digital market, on top of 10% VAT levies that apply to businesses with a turnover of over US$344,000. The rules would have to be freshly drafted, though no indication was given as to how long this process might take.

Sources: Business Times

Malaysia

Mahathir’s ‘Malay Party’ Comment: Storm in a Teacup, or Ulterior Motive? (5 – 8 Jul)

 Prime Minister Dr Mahathir Mohamad surprised observers with a call for all Malay parties to join his party, Parti Pribumi Bersatu Malaysia (PPBM). He said that he wanted to strengthen Malays as a political force, and dismissed the possibility of objections from other Pakatan Harapan parties, saying that “[it] is their problem. We have no connection with other parties”. The Premier later clarified that his coalition will not accept new component parties, though members of other parties are free to join any of the existing four component parties.

The announcement and its sudden reversal had observers speculating that Dr Mahathir may have had an ulterior motive. Some posit that it was meant as a distraction from having to talk about succession issues, especially amid the sex video scandal around Economic Affairs Minister Azmin Ali. Others suggest that Dr Mahathir was “testing the waters” of political alignments, and that the announcement was a power play to remind potential rivals that he still has the upper hand in terms of political positioning.

Sources: Free Malaysia Today, Channel NewsAsia, The Star, The Straits Times

Najib Appointed Chairman of BN Advisory Board, Triggering Backlash (11 – 17 Jul)

 Former-Prime Minister Najib Razak made headlines on 11 July when he was appointed Chairman of Barisan Nasional’s (BN) advisory board, with United Malays National Organisation (UMNO) President Ahmad Zahid Hamidi saying that Najib’s popularity would help the party in future elections. This appointment came as the former-premier faces a slew of 42 charges, and owes US$410 million in additional tax assessments to the inland revenue board. Nazri Aziz and Khairy Jamaluddin spoke out against the appointment, arguing that it was not in line with the party’s interests. Observers have cautioned that the party may be heading for a split if concerns about the issue are not addressed.

Sources: The Straits Times, The Edge Markets MY, Today Online, Free Malaysia Today, Malay Mail

Sex Video Scandal: Relative Silence Broken by Arrests, IGP Announcements (13 – 17 Jul)

 For the past two weeks, coverage of the sex video scandal involving Economic Affairs Minister Azmin Ali fell relatively silent as observers awaited the results of the police investigation into the authenticity of the video. While the investigation is still ongoing, the Inspector General of the Police (IGP) Hamid Bador announced on 13 July, Saturday, that the mastermind behind the video had been identified amid evidence of a conspiracy to “topple someone”. Former Santubong Parti Keadlian Rakyat (PKR) Youth leader Haziq Aziz was arrested along with 5 other individuals on 14 July under the Communications and Multimedia Act of 1998 for the distribution of pornographic materials. Further, the IGP said on 16 July that the police were widening their investigation of the scandal, including the possible involvement of a state assemblyman. Three men, including Farhash Wafa Salvador Rizal Mubarak, who is the political secretary to PKR President Anwar Ibrahim, were arrested on the same day to assist investigation.

Sources: Malay Mail, Free Malaysia Today, The Star, The Star

PAC Finds GST Refunds Not ‘Robbed’ (15 Jul)

 The Public Accounts Committee (PAC) revealed that their investigation into the BN government’s treatment of goods and service tax refunds found that no funds had been “robbed”, contradicting Finance Minister Lim Guan Eng’s remarks from mid-2018. Instead, PAC Chairman Noraini Ahmad noted that the BN government had overestimated new GST collections by 65%. The former government had also flouted legal provisions by transferring refund payments into an inappropriate account and failing to transfer adequate funds to the GST refund pool.

Nonetheless, Federal Opposition Leader Ismail Sabri Yaakob sought to refer Lim to the Rights and Privileges Committee for misleading parliament. Khairy Jamaluddin also launched a police report against Lim for his accusations. Lim has continued to defend his statement, and Attorney General Tommy Thomas said that channeling the funds to the government’s consolidated revenue account was a breach of fundamental trust law principles and trust accounting requirements. However, he stopped short of discussing criminal liability for the action.

Sources: The Straits Times, Free Malaysia Today (2018), Malay Mail, The Star, Free Malaysia Today, New Straits Times

Malaysia Seizes US$243 million Held by Chinese Company for Incomplete Projects (14 Jul)

 The Straits Times reported on 14 July that Malaysian authorities had seized more than US$243 million from the HSBC account of China Petroleum Pipeline Engineering (CPP), a state-owned company. The move came against a dispute involving two pipelines on the west coast of peninsular Malaysia and Sabah respectively, both of which were suspended by Dr Mahathir last July. While Finance Minister Lim Guan Eng said that he had not given the order to seize the funds, Dr Mahathir explained that the government was “entitled” to get the money back, since 80% of the project cost had been paid for while only 13% of the work had been completed.

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

Search for Pasir Gudang’s Source of Pollution Continues as Unrest Mounts (4 – 17 Jul)

 Pasir Gudang in Johor has been gripped by a pollution case since late June, when students in local schools were hospitalised due to breathing difficulties and vomiting. This is the second pollution case in Johor this year, with the first being the Sungai Kim Kim case in March. In this case, authorities have inspected more than 255 factories, and are moving to shut some down starting on the week of 15 July. However, they have been unable to determine the source of the pollution, stirring public unrest. 160 victims of this pollution case as well as an earlier one in Sungai Kim Kim are planning to file a lawsuit against state authorities on 17 July.

Sources: Malay Mail, Malaysiakini, The Straits Times, Malay Mail, The Straits Times

Bids Continue as the Fate of Malaysia Airlines Hangs in the Balance (9 – 15 Jul)

 Discussions about the fate of Malaysia Airlines (MAS) are ongoing, with the notion of selling the airline gaining momentum after Dr Mahathir conceded that the government could no longer continue to bail it out. On 9 July, Dr Mahathir noted that four separate offers by local entities had been made to take over the struggling airline. The Edge Markets MY also reported on 15 July that Najah Air Sdn Bhd, a group of businessmen led by AirAsia Group Bhd co-founder and former chairman Pahamin Ab Rajab, were seeking to raise US$243 million to buy over the airline. However, while the initial article quoted a source that Westar Group was intending to team up with Najah Air for the bid, a company official later clarified that his company has not made any such bid.

Sources: Channel NewsAsia, Malay Mail, The Edge Markets MY (with update)

Myanmar

US imposes sanctions on Tatmadaw chief and other top officers (17 Jul)

The US has announced sanctions on Tatmadaw chief Senior General Min Aung Hlaing, and banned him from visiting the United States, on account of their roles in the ongoing crisis in Rakhine state. These new US sanctions also extend to Min Aung Hlaing’s deputy, Soe Win, and senior commanders Than Oo and Aung Aung, and their families. This action is the strongest taken by the US since its political opening in 2011. In announcing these sanctions, US Secretary of State Mike Pompeo repeated his predecessor Rex Tillerson’s assertion that the Tatmadaw’s actions in Rakhine state amounted to “ethnic cleansing”. Other State Department officials expressed hope that these measures would help Myanmar’s civilian leadership extend greater control over the Tatmadaw.

Sources: Frontier Myanmar, Channel NewsAsia, Reuters

Arakan Army supporters deported from Singapore, arrested in Myanmar (10-15 Jul)

Six ethnic Rakhine, including the brother of Arakan Army chief Brigadier-General Tun Myat Naing, were detained and later deported from Singapore at the request of the Myanmar government. They have since been arrested by Myanmar police since arriving back in Myanmar. Singapore’s Ministry of Home Affairs issued a statement indicating that they had used Singapore as a base to solicit support, raise funds for armed violence against the Myanmar government. All six men were members of the Arakan-Association Singapore, and mobilised Myanmar nationals in Singapore in support of the Arakan Army and the United League of Arakan.

Sources: Myanmar Times, Irrawaddy, Straits Times, Channel NewsAsia, Irrawaddy

Constitution reform committee returns 3,765 recommendations (15 Jul)

The Charter Amendment Committee of the Union Parliament has put forward a report recommending 3,765 modifications to Myanmar’s Constitution. This is the culmination of an effort begun earlier in the year to jump-start long-stalled efforts at constitutional reform. The Charter Amendment Committee is composed of 45 members from 14 political parties as well as independent candidates and Tatmadaw-appointed individuals. As per present Constitutional stipulations, passing any of the recommendations that have been made will require a 75% majority, meaning that the Tatmadaw has an effective veto on any motions, given that it controls 25% of the parliament. The Tatmadaw has previously indicated it is open to constitutional reform, as long as it does not harm the ‘essence’ of the constitution.

Sources: Myanmar Times, Irrawaddy

Monsoon rains bring widespread flooding across Myanmar (11 Jul)

Over 23,000 have been seriously affected by widespread flooding across Myanmar this July, brought about by monsoon rains that have caused major rivers including the Ayeyarwady to burst their banks. The country’s northernmost Kachin state has been the most affected by floods, with nearly 15,000 people in Myitkyina, Paletwa, Hkamti, Katha being displaced or otherwise affected. Flooding in Rakhine state has also forced 16,000 refugees from ongoing fighting between the Tatmadaw and Arakan Army to relocate elsewhere. Rohingya camps in Cox’s Bazar in Bangladesh have also been negatively affected, with flash floods and landslides killing several refugees and leaving thousands of others without shelter.

Sources: Myanmar Times, Myanmar Times, Frontier Myanmar, Reuters

Japan-Myanmar discussions on Hanthawaddy Airport resume (9 Jul)

Officials at the Ministry of Transport and Communications announced that work will begin on the long-delayed Japan-backed Hanthawaddy Airport project in 2020. The project is located near the town of Bago, northeast of Yangon, and is intended to cater to expected rises in air traffic projected to exceed Yangon International Airport’s limited capacities. Japan has committed to providing Official Development Assistance loans for the entirety of the project’s cost, as long as Japanese companies build and operate the airport. The project stalled since its inception in 2012, when a South Korean consortium won the first project tender. A Japan-Singapore consortium won a second project bid in 2014, which also stalled.

Sources: Irrawaddy, Airport Technology, Myanmar Times

UNESCO declares Bagan a World Heritage Site (6 Jul)

After more than twenty years of campaigning on the part of the Myanmar government, UNESCO finally declared the ancient city of Bagan a World Heritage Site. Bagan is Myanmar’s second World Heritage Site, after the ancient cities of Pyu, north of Mandalay.  Myanmar first nominated Bagan for World Heritage status in 1995, but this bid was denied on the grounds that the military government had refused to take experts’ suggestions on the restoration of historical sites into consideration. According to documents sent to UNESCO regarding the Myanmar government’s plans for the site moving forward, hotels and resorts currently situated within Bagan’s boundaries would be forced to cease operations by 2028.

Sources: Irrawaddy, Channel NewsAsia, Frontier Myanmar

Thailand

Thailand swears its new Cabinet in (16 Jul)

Thailand has sworn its new cabinet, more than three months after Thailand’s General Elections in March. Prior to this, Prime Minister Prayut Chan-o-cha formally stepped down as head of the National Committee for Peace and Order (NCPO), returning Thailand to a state of democracy with constitutional monarchy after five years of junta rule. PM Prayut’s cabinet lineup has been criticised for rewarding loyalists and being symbolic of the horse-trading that has defined the Thai political landscape since his Phalang Pracharat party emerged from the elections with a majority backed by a fragile coalition. The swearing in was followed by a meeting at which the need to prepare a policy statement and draft a budget were noted as immediate priorities for the new government.

Sources: Bangkok Post, Thaiger, Thaiger, The Nation, South China Morning Post

Thailand attempting to staunch growth of the Baht (14 Jul)

Thailand is putting in place measures to control the strength of the Thai Baht, which currently stands as the world’s best performing currency after having risen 7% against the USD since last November. Measures it has taken thus far include limiting the auction size of short-term bonds and adjusting down the number of Baht accounts held by foreign investors. The Baht’s strength reportedly derives from a strong current account surplus, high foreign exchange reserves and booming tourism. However, the Baht’s strength is making Thai exports less attractive, with tourism also potentially suffering. DPM Somkid Jatusripitak said the Bank of Thailand has been charged with taming the Baht’s growth independently, and has a free hand on regulatory measures.

Sources: Thaiger, Bangkok Post, Nikkei Asian Review, Thai PBS

Sompong Amorngvivat named Pheu Thai’s new leader (12 Jul)

Thailand’s opposition Pheu Thai Party has elected party grandee and Chiang Mai MP Sompong Amorngvivat its new leader, replacing Pol Lt-Gen Wirote Pao-in, who resigned along with his executive committee. Sompong was a member of the divisive Thaksin Shinawatra’s Thai Rak Thai party since its founding and was an uncontested nomination for the leadership of Pheu Thai. He assumes Pheu Thai’s highest role with the urgent mandate of tabling a no-confidence motion against Prime Minister Prayut Chan-o-cha curing the current parliamentary session. This development was immediately followed by rumours that Thaksin is planning to form an entirely new party – Pheu Dharma – to offset Pheu Thai’s potential loss of ground to Thanathorn Juangroongruangkit’s Future Forward Party (FFP).

Sources: Thaiger, The Nation,Thai PBS, Bangkok Post

NCPO lifts orders on media controls and martial courts, retains right to detain (9 Jul)

Prime Minister Prayut Chan-o-cha’s final act as Chairman of the National Council for Peace and Order (NCPO) is to revoke around 67 orders the council issued after the coup in 2014. Several of these NCPO orders pertain to media controls and the purview of military courts. A total of 511 NCPO orders were issued after the coup, of which a majority have now been rescinded. A number of these laws will remain in place, which empower the military to arbitrary detain individuals without charge. NCPO orders bypass any civil laws. The Opposition FFP’s secretary-general Piyabutr Saengkanokkul has called for the NCPO to rescind all its remaining orders.

Sources: Bangkok Post, Thaiger, Thaiger, Bangkok Post

World Bank warns that post-election uncertainties will impact GDP projections (8 Jul)

The World Bank’s Thailand Economic Monitor highlights political risk amidst Thailand’s uncertain post-election situation as a significant factor affecting GDP projections. The World Bank nevertheless maintained its forecast for Thailand’s economic growth at 3.5% while predicting that growth would gradually increase to 3.6% in 2020 and 3.7% in 2021. Policy continuity and the successful implementation of Eastern Economic Corridor projects were highlighted as key aspects which would contribute to stability moving forward.

Sources: Thaiger, Bangkok Post

FFP submits evidence pertaining, ask for Thanathorn to be reinstated. (8 Jul)

The legal team of Thanathorn Juangroongruangkit’s FFP has submitted further evidence and clarification regarding ongoing investigations into Mr Thanathorn’s possible ownership of media company shares. They have alongside this called for his reinstatement as an MP, after he was suspended from his position when Thailand’s Constitutional Court decided to consider the case against him. Candidates for political office are not allowed to hold shares in media companies, under Thailand’s constitution. Mr Thanathorn and his FFP have reiterated that ownership of the media shares he is accused of holding were transferred from his custody before he became an MP candidate.

Sources: Thai PBS, Thaiger, Bangkok Post