Indonesia

Proposed Changes to Criminal Code and KPK Spur Concerns (28 Aug – 11 Sep)

National legislators in Indonesia are expected to vote on a new penal code on 24 September, replacing the current code inherited from its Dutch colonial rulers. If the law is approved, it will be enforced after a transition period of three years. Critics have voiced concerns about statutes under the law, including one that criminalises insults against the executive, legislative and judicial branches of the government, and another that criminalises homelessness as a disruption of public order. Nonetheless, given that Jokowi’s coalition holds roughly 60% of the 575 seats in parliament and that opposition party Gerindra is expected to support the code, its passage is considered very likely by observers.

Sources: Jakarta Globe, SCMP, Channel NewsAsia

On a related note, a bill containing proposed changes to the Corruption Eradication Commission (KPK) was submitted to President Joko Widodo “Jokowi” on Monday, 9 September. The bill had been unanimously approved during the House plenary session on Thursday, 5 September. However, critics have argued that the proposed changes, including adding the need for approval from an appointed oversight council to conduct wiretapping and removing the KPK’s ability to recruit its own investigators, would weaken the organisation. The bill also comes shortly after the selection of controversial candidates for KPK leadership posts, with one having been investigated for ethics breaches while previously at the KPK.

 Sources: The Jakarta Post (Premium), The Jakarta Post (Premium)

Tax Overhaul – Lower Corporate Income Rates, More Taxes for Tech Firms (3 Sep)

Finance Minister Sri Mulyani Indrawati said on Tuesday, 3 September, that Indonesia plans to cut corporate income taxes from the current 25% to 20% from 2021, addressing one of President Jokowi’s campaign promises. Companies listing their shares may also be subjected to a lower rate of 17% for five years, especially for those that are new to the bourse. At present, it is unclear when the bill will be submitted to parliament for approval. However, the cuts could have an adverse effect on Indonesia’s fiscal health, given that it is projected to result in a US$6.11 billion loss in state revenue.

Aside from corporate income tax, Sri Mulyani said that she would also propose to remove income tax on dividends obtained from onshore or offshore investments, especially if the money is reinvested within the country. Another proposed change to the tax laws involves a bill to make tech firms with a “significant economic presence” in Indonesia pay value-added tax even if they do not have a physical office in the country.

 Sources: Bloomberg, The Jakarta Post, Reuters

Early Rollout of the Nickel Export Ban Spreads Concern about Policy Flip-Flops (30 Aug)

Indonesian officials announced on Friday, 30 August that the government will ban exports of nickel ore, used in stainless steel and batteries, from 2020. This is two years ahead of the initially announced date of 2022. The move is aimed at increasing Indonesia’s export revenue by shipping value-added intermediate products overseas, and reducing its current account deficit. Nickel prices surged by 8% to their highest level in four years following the announcement, while China’s nickel ore market was projected to flip to a deficit in 2020 as its other major supplier, the Philippines, cut back on its nickel exports. The move has been criticised by some Indonesian miners and industry players, who pointed to the lack of a notice period for the ban. They also pointed out that a similar ban had been implemented in 2014 and reversed in 2017, suggesting a lack of consistency in government policies.

 Sources: The Straits Times, FT, Shanghai Metals Market, Channel NewsAsia

While Unrest in Papua Subsides, Other Questions Surface (29 Aug – 11 Sep)

The protests in Papua are abating after weeks of violence. Sparked by a racist incident involving Papuan students in Java, the clashes led to buildings being set on fire and at least two civilian casualties as protestors and military forces clashed. However, many issues remain to be addressed. While on a visit to the province on 10 September, President Jokowi promised to complete the development of a broadband network and provide more employment opportunities for Papuans. However, some observers have suggested that efforts involving infrastructure proposals have failed to resonate with Papuans due to doubts over benefits. A report from Indonesia’s Audit Agency also revealed a long list of irregularities in Papua’s 2017 annual spending, placing pressure on Governor Lukas Enembe and suggesting that corruption is another significant problem that must be addressed by Jakarta.

 Sources: The Guardian, Nikkei Asian Review, The Jakarta Post, The Straits Times

Announcement of Capital Relocation Draws Mixed Reactions (2 Sep)

Indonesians are reportedly split over President Jokowi’s plan to move the administrative capital to East Kalimantan province, following his official announcement on 26 August. Jokowi will need to obtain parliamentary approval for the relocation first before work can proceed. In the meantime, a nationwide survey by KedaiKopi found that while 35.6% supported the move, 39.8% opposed it, including some 95.7% of Jakarta residents. Environmentalists have raised concerns that the move would severely strain the local forests, and destroy natural habitats for endangered animals such as orang-utans. Residents of Kalimantan, 48% of whom supported the move while 29% opposed it, have also raised questions about how the move will affect their livelihoods and way of life.

 Sources: Nikkei Asian Review, The Straits Times, The Guardian

Malaysia

More Rumours About Cabinet Positions (29 Aug, 4 Sep)

Following rumours about a cabinet reshuffle, Prime Minister Dr Mahathir Mohamad said on Thursday, 29 August that there is no vacancy in his cabinet at the moment. This was in line with his statement in the previous week that no new ministers were being considered. Dr Mahathir also said that he has no plans to bring Parti Keadilan Rakyat (PKR) President Anwar Ibrahim on board at the moment, prompting the latter to clarify that he had never offered himself to be a member of the cabinet. Nonetheless, rumours continue to gather about potential changes in cabinet positions. Home Minister Muhyiddin Yassin was tipped to be replaced by Domestic Trade and Consumer Affairs Minister Saifuddin Nasution by Utusan Malaysia on 4 September. Finance Minister Lim Guan Eng was also tipped to be on the verge of a portfolio change.

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

Non-Muslim Boycott Gains Momentum (21 Aug – 11 Sep)

A campaign for Malay-Muslims to only buy products manufactured by or sold in shops owned by fellow Muslims has been gaining traction on social media. While the campaign can trace its roots to April 2019, it received a second wind amid the Khat controversy. Malay rights activist Mohd Nor Izzat Mohd Johari explained that he had used the campaign as a way for local Malay-Muslims to divert their anger against anti-Khat protestors in Jerantut, Pahang. The Islamic Consumers Association of Malaysia also asked the Islamic Development Department on 23 August to issue halal certificates in the native language of the product’s manufacturers, ostensibly to identify their ethnicity and make them easier to target for boycotts.

Both Parti Islam Se-Malaysia (PAS) and the United Malays National Organisation (UMNO) have denied that they back the boycott. PAS, however, has defended the campaign to an extent, with Deputy President Ibrahim Tuan Man telling the Pakatan Harapan government to “respect the choice of Muslim consumers”. Meanwhile, the government has been criticised for only issuing an official statement regarding the boycott on 5 September, weeks after it started. With no end in sight to the campaign, observers are cautioning that this could have significant implications for racial ties in Malaysia.

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

Huge Rally Expected to Celebrate PAS-UMNO Agreement (2 – 11 Sep)

A crowd of over 10,000 people is expected at the Himpunan Penyatuan Ummah (Malay unity assembly) on 14 September, Friday, as UMNO and PAS formalise their cooperation at the former’s Putra World Trade Centre headquarters. The two parties came together to contest several by-elections in the aftermath of the 14^th General Election, going on to win three of eight (Cameron Highlands, Semenyih and Rantau). While UMNO President Ahmad Zahid Hamidi has said that this is not a political coalition, the two parties will be signing a charter and a memorandum of understanding to underpin their long term cooperation. Observers are noting that of the two parties, PAS is expected to be the more dominant partner due to UMNO’s internal funding and unity problems.

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

Looking to Enhance Ties, Singapore FM Visits Kedah and Penang (29 – 30 Aug)

Singaporean Minister for Foreign Affairs Dr Vivian Balakrishnan visited the Malaysian states of Kedah and Penang from 29-30 August. Through meetings with younger politicians such as Kedah Chief Minister Mukhriz Mahathir and Permatan Pauh MP Nurul Izzah Anwar, Dr Balakrishnan emphasised the need to develop personal ties to support the larger bilateral relationship between Singapore and Malaysia. While in Kedah, he discussed how Singapore could collaborate with the state in areas such as agriculture, tourism and technology. Likewise, he said that there are ways to promote an exchange of ideas between Penang and Singapore by leveraging their “common history”. Looking ahead, Dr Balakrishnan said that he is considering future visits to states such as Kelantan, Terengganu, Pahang, Johor, Sabah and Sarawak.

 Sources: MFA Press Release, Channel NewsAsia, The Straits Times

Sex Video Scandal – Burst of Interest as New Videos Emerge (5 Sep)

The sex video scandal afflicting Economic Affairs Minister Azmin Ali was thrust back into the public spotlight. Media attention had been directed away from the scandal following Inspector-General of Police Abdul Hamid Bador’s statement on 18 July that the police could not conclusively identify the men in the video. However, parties such as UMNO supreme council member Lokman Noor Adam and the NGO Pertubuhan Bangkit dan Gerak Padu Selangor had been attempting to force the government to take action against Azmin, claiming to have proof from overseas experts that he was featured in the videos. In addition, the release of six new video clips on Thursday, 5 September could also spark a fresh wave of scrutiny and speculation.

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

Myanmar

Myanmar and South Korea sign 10 MOUs on trade and investment (5 Sep)

Myanmar and South Korea signed five Memorandums of Understanding (MOUs) during the Myanmar-Korea Business Forum in Yangon, which was attended by both State Counsellor Aung San Suu Kyi and South Korean President Moon Jae-in. This follows on from the first leg of the South Korean leader’s visit to Myanmar, in which he signed another five MOUs and a framework agreement, while visiting Naypyidaw. These MOUs pertain to financial, trade and investment cooperation and major infrastructure projects such as the Korea-Myanmar Friendship Bridge and the Korea-Myanmar Industrial Complex. A Korea Desk in Myanmar will also be set up as a single-window entry point to aid incoming Korean investors on any administrative issues, and Korea has committed to providing Myanmar with a US$1bn loan for economic development cooperation through to 2022. Myanmar is reportedly a focus area of the South Korean ‘New Southern Policy’, which aims to offset its economic reliance on China, Japan and the USA by firming up relationships in Southeast Asia.

Sources: Irrawaddy, Irrawaddy, Myanmar Times

Northern Alliance announces month-long ceasefire amidst flagging border trade (4 Sep – Ongoing)

Myanmar’s Northern Alliance of Ethnic Armed Organisations announced they would cease offensives against Tatmadaw military installations for a month as a trust-building exercise. The Northern Alliance is comprised of the Ta’ang National Liberation Army, the Myanmar National Democratic Alliance Army, the Kachin Independence Organisation and the Arakan Army, and has been engaged in renewed fighting with Tatmadaw forces over the past weeks. This announcement follows a meeting between Northern Alliance members and representatives of the government’s National Reconciliation and Peace Center at Kengtung in Shan State, where the safety of Northern Alliance representatives was reportedly guaranteed by China. This declaration has nevertheless been followed by further attacks on goods-carrying vehicles on the Mandalay-Muse highway, which the Northern Alliance has disavowed. Observers have suggested that these flare-ups may affect the viability of China-Myanmar Economic Corridor infrastructure projects.

Sources: Irrawaddy, Myanmar Times, Frontier Myanmar, Irrawaddy, Radio Free Asia

Internet access restored in some parts of Rakhine and Chin states (2 Sep)

Internet access has been restored in five townships in Rakhine and Chin states, approximately two months after it was shut down, according to local residents. The Rakhine townships of Maungdaw, Buthidaung, Rathedaung and Myebon, and the Chin township of Paletwa have regained internet access. Ponnagyun, Kyauktaw, Mrauk-U and Minbya in Rakhine state remain under the internet blackout. Residents previously reported having to either travel to the border of Bangladesh or the south of Rakhine state, to gain access to the internet. Myanmar’s Ministry of Transport and Communications imposed a shutdown on internet access in nine townships earlier this year, citing security concerns and the general public interest. Telecoms operator Telenor later issued a statement reflecting its concerns about the blackout’s effects on the humanitarian situation in Rakhine state. Telenor has since issued a statement indicating that the resumption of service was a positive development, further stating that it will continue lobbying for the full resumption of services across the remaining four townships.

Sources: Irrawaddy, Myanmar Times

Tatmadaw to conduct court martial for Rakhine mass graves (2 Sep)

The Myanmar Army has announced that it will undertake court martial proceedings against soldiers implicated in the deaths of 19 suspected members of the Arakan Rohingya Salvation Army (ARSA). The soldiers are accused of failing to follow the rules of engagement during escalating conflicts with ARSA, with the office of Tatmadaw Senior General Min Aung Hlaing asserting that soldiers had “weakness in following instructions”. Such incidents reportedly resulted in mass graves reportedly containing hundreds of Rohingya bodies at the town of Gudar Pyin near Rakhine State’s Buthidaung township, which were publicised by an Associated Press report published in February 2018. Myanmar’s government claimed at the time that only 19 terrorists had been killed and buried, and the Rakhine State government announced plans to sue the AP, which did not move forward. A court of inquiry set up to assess the allegations later found that there were grounds to believe them valid. The Tatmadaw has denied that these actions are related to the Associated Press report.

Sources: Reuters, Irrawaddy, Myanmar Times

Myanmar navy to join US-led exercises in South China Sea (27 Aug)

Myanmar navy frigate F-12 – known locally as Kyan Sitt Thar warship – departed Yangon to join the ASEAN-US Maritime Exercise (AUMX) in the Gulf of Thailand. The Myanmar navy’s participation in this event occurs despite ongoing US sanctions against top figures in Myanmar’s military, including its commander-in-chief Senor General Min Aung Hlaing. A spokesman for the Senior General stated that Myanmar was invited as a part of ASEAN, and that sanctions imposed were personal, with the exercise being instead reflective of regional coordination between ASEAN and the US. The AUMX is a US-led exercise intended to strengthen ties between the US and ASEAN militaries with the specific goal of counterbalancing China’s military influence in the region, especially in the South China Sea. It is co-led by the US and Royal Thai navies.

Sources: Channel NewsAsia, Irrawaddy, Channel NewsAsia

Thailand

Another micro-party withdraws from Thailand’s ruling coalition (10 Sep)

The Prachatham Thai Party (PTP) announced its withdrawal from Thailand’s ruling coalition in response to an insulting comment made by the Palang Pracharat (PPRP)-appointed coalition coordinator and deputy agriculture minister Thammanat Prompao. Being in charge of negotiating with the 10 micro-parties in the ruling coalition which each control a single vote, Mr Thammanat had likened himself to a “monkey-keeper” who had to keep feeding the parties under him “bananas.” These comments followed an earlier flare-up by the PTP, which was disappointed at the lack of cabinet representation from the 10 micro-parties. PTP leader Pichet Sathirachawal later stated that his party’s executives had voted unanimously to leave the coalition and never re-join it, citing their desire to retain their “dignity and honour.” Another micro-party, the Thai Civilised Party, had also withdrawn from the ruling coalition in the middle of August. These developments have eliminated the ruling coalition’s slim parliamentary majority, and it now holds only 249 of the 500 seats in Thailand’s house of representatives.

Sources: Straits Times, Bangkok Post, Thai PBS World

Thailand greenlights relocation package for shifting firms (11 Sep)

Thailand’s cabinet has greenlit a relocation package of incentives designed to encourage foreign companies shifting production away from China to set up shop in Thailand instead. This measure is stated to allow Thailand to better compete with Vietnam, which is viewed as a premier destination for manufacturers seeking reprieve from the Sino-American trade dispute. The relocation package will include significant tax breaks, including corporate tax deductions of 250% for five years for investment projects worth 1bn Baht (US$32.7m) by 2021 – up from the existing rate of 200%. Operators employing highly skilled personnel in advanced technology will furthermore be allowed to claim their payment as expenses, to deduct from taxable income in 2019-2020 at a rate of 150%. Thailand’s Board of Investment noted that it is aiming to attract 100 companies – mainly from China. It has also approved an allocation of 10bn Baht (US$327.7m) from Thailand’s Competitiveness Fund, to support the establishing of an academy for advanced technology.

Sources: Reuters, Bangkok Post

Opposition debate on PM Prayut’s oath-taking gaffe set for Sep 18 (4 Sep)

Thailand’s House Speaker Chuan Leekpai announced that a debate would be held at the request of Thailand’s opposition, regarding PM Prayut Chan-o-cha’s incomplete oath recital on the 18^th of September, a day before parliament was due to go into recess. The opposition had requested two days of debate, after demands to have the Prime Minister appear before the house to answer queries went unanswered. PM Prayut later stated that his actions with regards to taking the oath were in compliance with the constitution. Responding to later accusations that the government was attempting to artificially restrict the time available to discuss the issue, DPM Prawit Wongsuwan stated that it was not a sensitive issue and did not demand the time which the opposition had requested. Chief government whip Wirach Ratanasate later informed MPs that since the session was to be held openly, MPs would not be protected by customary parliamentary immunity. PM Prayut is accused of failing to recite lines in the cabinet oath-taking ceremony which require oath-takers to uphold and abide by the constitution.

Sources: Thai PBS, Thai PBS, Bangkok Post, Bangkok Post

Drought eases as tropical storms bring floods in Thailand’s northeast (31 Aug – 3 Sep)

A crippling drought in Thailand’s northeast has eased with the arrival of tropical storms Podul and Kajiki, which brought with them torrential rains that have caused widespread flooding. The two storms have flooded 32 provinces since Podul made landfall on 29 August, with flooding thus far claiming 28 lives and damaging 370,749 households. Many rural roads – up to 52 in all – in affected areas have been rendered utterly impassable. Tropical storm Kajiki brought further rains in early September, but did not have as direct an impact as its predecessor, and moved into Vietnam instead. Populations in affected areas have been told to expect further rainfall in coming weeks. These storms bring relief to areas stricken by historic droughts over the past few months, but have been little relief to populations who have been displaced. It has also been noted that water reserves in key dams and reservoirs remain extremely low despite the storms, because of low rainfall prior to their arrival. These supply issues are likely to affect the farming sector adversely in coming years, as water supplies are not expected to recover until at least 2020.

Sources: Bangkok Post, Bangkok Post

Thailand to acquire 120 Armoured vehicles from the US (28 Aug)

Thailand is due to receive a batch of US-made armoured infantry carrier vehicles next month, signalling warming ties between the two countries following the official end of military rule in July. Thai army chief Apirat Kongsompong stated that Thailand would be receiving 70 Stryker infantry carriers by the end of the year under the US Foreign Military Sales program, with a further 50 due in a following set of shipments. While Mr Apirat did not confirm a value on the deal, the US State Department had in July confirmed that it had approved a government-to-government Foreign Military Sale for Stryker vehicles at an estimated cost of US$175m. Relations between Thailand and the US cooled after the coup in 2014, whereupon Thailand began to more readily source military materiel from China to replace aging US equipment.

Sources: Bangkok Post, Bloomberg