Indonesia

NasDem Demurs as Jokowi Finalises Selection of His New Cabinet (14-17 Aug)

 President Joko Widodo “Jokowi” announced on Wednesday, 14 August that he had finalised the selection of his new cabinet. While the full list of ministers would only be announced after the start of his second term on 20 October, he confirmed that the number of ministries in his cabinet would be maintained at 34. New names (the Ministry of Investment and the Ministry of Industry and International Trade) would be given to two old ministries, while he said that 55% of the cabinet members would be professionals, and the remainder from political parties. Popular ministers such as Finance Minister, Sri Mulyani Indrawati, are expected to stay on, though it is unclear what post she will be given.

Meanwhile, the National Democratic Party (NasDem) expressed their unhappiness with aspects of the arrangement. Jokowi had said that the attorney general post would be given to a professional rather than a party appointee, suggesting that the incumbent Muhammad Prasetyo, who is a NasDem member, is likely to be replaced. NasDem also spoke up when Indonesia Democratic Party of Struggle (PDI-P) chairwoman Megawati Soekarnoputri met Gerindra Party leader Prabowo Subianto, and hinted that the latter’s party would be given seats in the cabinet. In turn, NasDem has apparently begun to hedge their bets for the 2024 election, with chairman Surya Paloh meeting Jakarta Governor Anies Baswedan on the day of the Megawati-Prabowo meeting and stating his “intention” to support Anies in 2024 should he decide to run.

Sources: Jakarta Globe, SCMP, The Jakarta Post, The Jakarta Post

Indonesia Selects East Kalimantan for US$32.8b Capital Relocation (26 Aug)

 President Jokowi announced on Monday, 27 August that Indonesia will build its new capital city in East Kalimantan, between the districts of North Penajam Paser and Kutai Kartanegara. The move will relocate the capital some 1,400 km away from its current location in Java, and is estimated to cost around US$32.8 billion. 19% of the cost will be sourced from the state budget, and the balance will come from public-private partnership (PPP) schemes and direct investments from private and public companies. Through this relocation, Jokowi explained that he aims to alleviate the burden placed on Jakarta’s infrastructure, while also diverting economic activity away from the island of Java. Planning Minister Bambang Brodjonegoro said that construction of the new city is expected to begin in 2021, and offices will begin to move there from 2024. Before that, the House of Representatives will have to pass legislation supporting the move by 2020.

 Sources: Jakarta Globe, The Straits Times, Antara, Jakarta Globe, SCMP

Economic Developments: Budget 2020, Taxes and a Surprise Rate Cut (16, 22 Aug)

 President Jokowi revealed details of his administration’s 2020 state budget proposal on 16 August, Friday. Compared to 2018, the proposal increased revenue to US$156 billion (+13%) and expenditure to US$178 billion (+10%). Jokowi noted that the budget would focus on five main aspects: human resource development, infrastructure improvement, reinforcement of social protection, regional autonomy and anticipation of global uncertainty. He also forecasted the Indonesian economy to grow at 5.3% in 2019-2020, and that the fiscal deficit would be cut to 1.76% of GDP from roughly 1.93% currently.

 Sources: The Edge Markets, The Jakarta Post, Bloomberg, Nikkei Asian Review

The Indonesian E-commerce market is expected to reach US$50 billion by 2025. The Indonesian tax office had been entertaining the idea of imposing taxes on the sellers – however, they announced on 19 August that they would temporarily shelve the plans as to avoid “[spooking] the sellers” in the growing sector. The tax office also said that a second tax amnesty is unlikely, rationalising that too many amnesties would erode the credibility of such programmes.

 Sources: Jakarta Globe, Jakarta Globe

Indonesia’s central bank surprised observers with a cut to its policy rate on Thursday, 22 August, bringing the benchmark rate to 5.5%. The cut, which was the second in two months, was described as a move to pre-empt a possible global slowdown and safeguard Indonesia’s growth momentum. Finance Minister Sri Mulyani said in a Bloomberg interview that the central bank still has room to cut rates further if external pressure persists. The bank had raised its benchmark rate by a combined 175 basis points in 2018 to shore up the rupiah amid US Federal Reserve monetary tightening and global uncertainty.

 Sources: Nikkei Asian Review, Bloomberg

Racist Treatment Sparks Riots in West Papua (19-28 Aug)

 Indonesia’s Papua region saw violent riots break out in several of its cities that left 1 dead and several other injured. The riots were triggered by allegations that Papuan students had been the subject of racist abuse in Java, and more riots are expected over the next week. While President Jokowi has attempted to boost the region’s economy with infrastructure projects such as the 4,330 km long Trans Papua Road, the projects are seen to benefit Indonesians more than local Papuans. Furthermore, the government’s decision to block cellular services in the region to maintain stability was roundly criticised by activists, and the Institute for Criminal Justice Reform is crafting a legal case against the Communications and Information Ministry on the issue.

 Sources: SCMP, The Guardian, The Jakarta Post, Tempo.co

Murmurs of Concern as PDI-P Proposes State Policy Guidelines (16 Aug)

 Analysts and members of the executive have expressed concern about the proposed reinstatement of State Policy Guidelines (GBHN). PDI-P, in conjunction with parties such as Gerindra, recently proposed reinstating the People’s Consultative Assembly (MPR, or the Indonesian parliament) as the highest governing body in the land. This would allow them to exercise control over the shape of government programmes, and change the balance of power between the legislature and the executive branch. President Jokowi and Vice President Jusuf Kalla have expressed their opposition to this plan, noting that it might even allow the MPR to appoint the President.

 Sources: The Straits Times, Jakarta Globe, Indonesia at Melbourne, The Jakarta Post

Malaysia

Dr M: No New Ministers, But Portfolio Changes Possible (21-22 Aug)

 Rumours about an impending cabinet reshuffle flared up on 22 August after reports that Prime Minister Dr Mahathir Mohamad had discussed shuffling portfolios of existing ministers during a cabinet meeting the previous day. Malaysian Chinese media such as Sin Chew Daily and Oriental Daily speculated that Former-United Malays National Organisation (UMNO) supreme council member Mustapa Mohamed would likely be appointed as a minister again, having joined Dr Mahathir’s Parti Pribumi Bersatu Malaysia (PPBM) in October 2018. There was even talk that he would replace Economic Affairs Minister Azmin Ali, who would be moved to the education portfolio. Subsequently, Finance Minister Lim Guan Eng and Housing, Local Government Minister Zuraida Kamaruddin and Dr Mahathir denied that a cabinet reshuffle was in the wings, and that new ministers were being considered. However, Dr Mahathir did mention that there may be “slight changes” to some portfolios “if there is a necessity”.

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

Zakir Naik Stirs Controversy, But Allowed to Remain in Malaysia While Investigation Continues (16-28 Aug)

 Indian-Muslim preacher Zakir Naik was the subject of a public outcry, the latest in a string of controversial statements made since fleeing from India and gaining permanent residency in Malaysia in 2017. In early August 2019, he had said that ethnic Indians placed more trust in the government of Indian Prime Minister Narendra Modi than Dr Mahathir, and that Chinese Malaysians calling for his deportation should “go back” first, given that they were “old guests” in Malaysia. When criticised, he maintained that his remarks were taken out of context, and denied any wrongdoing. Yet, Dr Mahathir noted that Zakir had overstepped his boundaries by touching on racial politics, and the preacher was arrested for questioning and barred from delivering public talks in all Malaysian states by 20 August.

Sources: The Straits Times, The Star, Malay Mail

However, Dr Mahathir announced on 23 August that Putrajaya would not send Zakir back to India despite public pressure, given concerns that his life might be at risk. The next day, Youth and Sports Minister Syed Saddiq Syed Abdul Rahman attracted harsh public criticism when he hosted Zakir at his home for dinner and said that he accepted his apology on 24 August, making an apparent about-face from his earlier stance on deportation. Parti Keadilan Rakyat (PKR) president Anwar Ibrahim also said that he agrees with Dr Mahathir’s decision to allow Zakir to remain, and called the organiser of a planned rally to protest against the preacher to request that it be cancelled. Nonetheless, Home Minister Muhyiddin Yassin said that Zakir is still under investigation, and that no one is above the law if they are shown to have committed wrongdoings.

Sources: Today Online, Malaysiakini, Malay Mail, Free Malaysia Today

Government: No Bailout if Third National Car Project Fails (15 Aug)

 Malaysia’s International Trade and Industry Minister Darell Leiking said that the government would not bail out the third national car project if it fails. These remarks were sparked by concerns after the anchor company, DreamEDGE Sdn Bhd, was reported to have been majority-owned by the government-controlled Malaysian Industry-Government Group for High Technology. Leiking maintains that the project will be wholly privately funded, and that the first model prototype of the car, likely a hybrid sedan, will be released as early as March 2020.

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

Dr M Confirms that Talks for a Second Samurai Bond are Ongoing (26 Aug)

 Dr Mahathir said on Monday, 26 August that Malaysia is negotiating a second Japanese government-backed “samurai” yen bond. The first bond was worth US$1.9 billion and issued with a rate of 0.65%, but Dr Mahathir said that Japan had agreed to issuing a lower interest rate this time. Proceeds from the first bond issuance will be used to fund infrastructure projects such as schools and hospitals, and the second issuance is expected to repay debts as well.

Sources: Nikkei Asian Review, New Straits Times

Start of 1MDB Trial Moved to 28 Aug to Allow for Completion of SRC Hearing (27-28 Aug)

 The 1Malaysia Development Bhd trial of Former-Prime Minister Najib Razak was scheduled to begin on Monday, 26 August, but was postponed to allow for the conclusion of the SRC International Sdb Bhd corruption trial on 27 August. In all, Najib faces 42 criminal charges, including seven in the SRC trial (three for criminal breach of trust, one for abuse of power and three for money laundering) which began in April, and 25 under the 1MDB trial (21 charges of money laundering and four for abuse of power). The decision on the SRC trial will be delivered on 11 November, 2019.

Sources: Reuters, Malay Mail, The Edge Markets MY, SCMP

Myanmar

Second attempted failed Rohingya repatriation effort falls through (22 Aug)

A second attempt to repatriate Rohingya to Myanmar from refugee camps in Bangladesh has fallen through. None of the 3,450 Rohingya cleared to return by the Myanmar government turned up to board buses that would have shuttled them to the border. Rohingya representatives stated that they would not return until they receive promises regarding safety, citizenship, and property rights. Following this, Myanmar blamed Bangladesh for failing to distribute appropriate paperwork. Approximately 200,000 Rohingya subsequently demonstrated at the heart of a Refugee camp to commemorate the two-year anniversary of the Tatmadaw’s crackdown in Northern Rakhine State. China and Japan were involved in attempting to move negotiations on repatriation forward and Myanmar had previously sent a high-level delegation to meet with Rohingya leaders in late July.

Sources: Irrawaddy, Frontier Myanmar, Frontier Myanmar, Straits Times

Clashes in Myanmar’s Northeast see 15 dead, Sino-Myanmar trade disrupted (15 Aug – Ongoing)

 The Northern Alliance of Ethnic Armed Organisations (EAO)s launched a coordinated assault on several military and police installations which left 15 dead. The attacks also caused significant disruption on the Pyin Oo Lwin-Thibaw section of the Yangon-Mandalay-Muse road, causing trade to be suspended. Several bridges have also been destroyed along the Sino-Myanmar trade route, causing cross-border trade to come to a standstill. The violence has also displaced thousands, who have headed to larger cities like Lashio for refuge. The attacks were launched by the Ta’ang National Liberation Army, Arakan Army, and Myanmar National Democratic Alliance Army, all of which are part of the Northern Alliance. China’s Special Envoy for Asian Affairs Sun Guoxiang met representatives from all three ethnic groups to urge more peaceful conduct.

Sources: Irrawaddy, Irrawaddy, Myanmar Times, Myanmar Times

Thai and Indian consortiums to supply and distribute electricity for New Yangon City (21 Aug)

 The New Yangon Development Company (NYDC) announced that it had selected a Thai and Indian consortium to supply and distribute electricity and natural gas for the New Yangon City Project. The Thai Consortium, comprised of Thailand’s PTT, PTTEP and Global Power Synergy Company, will focus on supplying and delivering electricity. Natural gas supply and delivery would be handled by the Indian consortium, comprising Indraprastha Gas Limited and Gail Consortium. Expressions of Interest were sought in February for infrastructure projects within the New Yangon City Project, and the two consortiums have been selected from a total of 45 other tenders submitted. The two consortiums will be asked to conduct preliminary work and feasibility studies, before participating in a Swiss challenge that will see them attempt to match a subsequent wave of bids from competing companies.

Sources: Myanmar Times, Irrawaddy

US and Japan vow to support ‘responsible investment’ in Myanmar (20 Aug)

 The US and Japanese embassies issued a joint statement professing to support the promotion of responsible, ethnical and high-quality investment into Myanmar at the Myanmar-Japan-U.S. Forum on Fostering Responsible Investment, which was held in Yangon. In attendance at the forum were State Counsellor Aung San Suu Kyi, US Ambassador Scott Marciel and Japanese Ambassador Ichiro Maruyama. Ambassador Scott Marciel noted that the Thilawa SEZ has proven an attractive prospect for US businesses, and reflected that American investors had remained alert to economic reforms being undertaken by Myanmar’s government. Approved Foreign Direct Investment into Myanmar has risen significantly in 2019. There has been no US investment from January to June 2019.

Sources: Myanmar Times, Irrawaddy

Facebook shuts down more than 200 Myanmar-based groups, pages and accounts (22 Aug)

 Facebook has announced that it has taken down a network of 89 Facebook accounts, 107 Facebook pages, 15 Facebook groups, and five Instagram accounts for partaking in what it has called “coordinated inauthentic behaviour.” The statement it released noted that approximately 900,000 accounts followed one or more of these pages, approximately 67,000 accounts had joined at least one of the groups and approximately 400 people followed one or more of the Instagram accounts. The accounts and pages taken down reportedly participated in activity that was linked to the Myanmar military. It was not about the content they posted but the coordinated nature of their activities. Facebook has faced accusations in the past that it has not done enough to address the spread of misinformation and hate-speech in Myanmar, and has taken down networks of Myanmar-based accounts and pages thrice in the past.

Sources: Frontier Myanmar, CNN, Reuters

Thailand

Thailand announces US$10bn stimulus package (16 Aug)

 Thailand’s Finance Minister announced a 316bn baht (US$10.2bn) stimulus package aimed at supporting farmers and lower-income earners amidst economic pressures brought about by the trade war. 109bn baht (US$3.6bn) will be funded from the government’s budget, while the rest will be loaned from government-run financial institutions. The package includes 57bn Baht (US$1.9bn) in agricultural subsidies, welfare and benefits for low income earners, as well as a 1500 Baht (US$49) handout to all domestic tourists. Thailand’s economy has suffered recently due to falling imports and flagging tourist numbers, brought about by the Sino-American trade war, and the seemingly interminable strengthening of the Baht. The stimulus package is aimed at averting a slide in growth to below 3 percent in 2019.

Sources: Bangkok Post, Straits Times, Nikkei Asian Review, Financial Times

PM Prayut seeks ceremonial audience with King, receives signed blessing (27 Aug)

 Thailand’s PM Prayut Chan-o-cha received a signed blessing from King Rama X after requesting a ceremonial audience with an image of the king, before which cabinet members performed gestures of reverence. The blessing restates well wishes delivered by the king to the cabinet during the oath swearing ceremony which recently attracted public attention, after PM Prayut was reportedly failed to fully recite his oath. Cabinet ministers have denied any relationship between the incident and this ceremony, but it is widely speculated to be an attempt by PM Prayut to shore up his administration’s legitimacy amidst claims that his failure was unconstitutional. The Thai government’s ombudsman was called to rule on the matter of PM Prayut’s oath-taking, but has deferred judgement on the matter to the constitutional court.

Sources: Thai PBS, Thai PBS, Thai PBS, Thai PBS

Thai Airways executives asked to take remuneration cuts amidst crisis conditions (19 Aug)

 Thai Airways president Sumet Damrongchaitham asked executives to cut meeting allowances and remuneration voluntarily in the spirit of helping the organisation address its ongoing crisis. Thai Airways’ huge and mounting debt crisis has entered the public spotlight as of late, after it was revealed that the company had accumulated nearly 100bn Baht (US$3.27bn) in debt. Its president had previously cited external crises like the strong baht and the Sino-American trade war as having seriously affected margins. It is reported that sources at Thailand’s Transport Ministry have revealed that the airline’s debt crisis put it at serious risk of bankruptcy, with combined total debt amounting to about 245bn Baht (US$8bn). Thai Airways had earlier proposed purchasing a new fleet of planes at around 156bn baht (US$5.1bn), which if allowed would make it the most indebted airline in the world.

Sources: Thai PBS, Bangkok Post, Bangkok Post

Visa fee waivers for Chinese and Indian visitors waived, full visa waiver rejected (20 Aug)

 Thailand’s cabinet has decided to extend a policy waiving visa fees for Chinese and Indian visitors, but elected to reject a proposal by Tourism and Sports minister Phiphat Ratchakitprakarn to waive visa requirements entirely for them. DPM Prawit Wongsuwon noted that Minister Phiphat’s proposal was rejected on the grounds of security concerns, as it would make entry into Thailand too easy and be open to abuse by those seeking to flee hardship and settle illegally. Visa applications normally cost 2000 Baht (US$65.3), but will continue to be waived until April 2020 for citizens of several countries, including China and India.

Sources: Bangkok Post, Thaiger

Thailand second quarter growth rate lowest in almost 5 years (19 Aug)

 Thailand’s GDP grew 2.3 percent in Q2 2019 compared to the same period a year earlier – the slowest rate since the economy expanded 1.1 percent in Q3 2014. This economic weakness has been attributed primarily to a slowdown in exports, which normally contribute to more than 40 percent of the Thai economy. The Sino-American trade war and the untameable strength of the Baht are notable factors affecting the country’s economy. The disruption of global value chains within which Thailand has previously been a key link, and the dampening of economic competitiveness resulting from the Baht’s strength have hurt Thailand significantly. Commentators have noted that this will make it difficult for Thailand’s government to follow through in implementing key political promises, such as the raising of the country’s minimum wage.

Sources: Nikkei Asian Review, Thai PBS, Financial Times, Reuters