Indonesia

Jokowi Inaugurated for Second Term (20 Oct)

 Indonesian President Joko Widodo “Jokowi” was sworn in for a second term on Sunday, 20 October. He had won 55.5% of the vote in the April election, 11% more than his opponent, Prabowo Subianto. At the inauguration ceremony attended by Singapore Prime Minister Lee Hsien Loong and other foreign dignitaries, Jokowi expressed his goal of increasing Indonesia’s gross domestic product (GDP) to reach US$7 trillion by the time of the country’s centenary in 2045. He also outlined five key areas that he intended to work on during his second term:

• Human resource development – By attracting and retaining top talents in science and technology.
• Infrastructure development – To improve connectivity between economic centres and tourist destinations across the archipelago.
• Simplify regulatory constraints – Including passing two new laws on job creation and empowering SMEs.
• Simplify the bureaucracy – By reducing the current five-structure level in ministries to just two, while creating more functional roles that demand competence.
• Transform the economy – From a resource-dependent economy to one with a competitive manufacturing sector and modern service sector.

Sources: The Jakarta Post, Jakarta Globe, Channel NewsAsia

Indonesia’s New ‘Onward Cabinet’ Revealed (21 Oct – Ongoing)

 The full line-up of Jokowi’s new Cabinet was released on Wednesday, 23 October. Over 40% of the Cabinet is made up of returning figures, including Finance Minister Sri Mulyani Indrawati and Industry Minister Airlangga Hartarto. Furthermore, the line-up included both non-partisan professionals and members of opposition parties. These include:

• Mahfud MD, a former Constitutional Court Chief Justice and once seen as Jokowi’s likely Vice Presidential candidate.
• Nadiem Makarim, founder of ride hailing app Gojek, which is valued at US$10 billion.
• Erick Thohir, media tycoon and Chairman of Jokowi’s re-election campaign team.
• Tito Karnavian, former National Police Chief.
• Prabowo Subianto, former Presidential candidate and Gerindra Party chairman.

Analysts view the new appointments as an exercise in compromise for Jokowi, in order to gain support from various political parties. A full list of the Cabinet members and their posts is available on our website.

Sources: The Jakarta Post, The Straits Times, The Straits Times, The Jakarta Post

New KPK Law Comes into Effect by Default (17 Oct)

 The controversial Corruption Eradication Commission Law (KPK) that sparked protests across Indonesia came into effect by default on Thursday, 17 October. The law, which introduces new provisions such as requiring the agency to obtain permits from an oversight body before conducting wiretapping and asset seizures, had not been signed by President Jokowi. However, Article 20 of the 1945 Constitution allows the law to pass by default within 30 days if it has been passed by a House plenary session. The new law can only be annulled by Jokowi or the Constitutional Court, and several economists have called on Jokowi to issue a regulation in lieu of law (Perppu) against it.

 Sources: Jakarta Globe, The Jakarta Post

Lawmakers Continue Push to Revive State Policy Guidelines (11 Oct – Ongoing)

 Indonesian lawmakers, led by former President Megawati Soekarnoputri, are pushing for amendments to the constitution that would reinstate a Suharto-era framework called the Broad Guidelines of State Policy, or GBHN. In the past, these rules governed the approval of five year plans. However, observers are concerned the People Consultative Assembly (MPR) would push to restore the related practice of indirect Presidential elections, effectively returning power to the traditional elites at the helm of the parties. Jokowi has publicly expressed his opposition to the move, but reports have noted that the top four parties in parliament – including Jokowi’s own, the Indonesian Democratic Party of Struggle (PDI-P) – support the amendment. Should the amendment pass, observers are predicting that it will have negative consequences for social unrest and the investment climate.

 Sources: The Straits Times, The Jakarta Post, Tempo.co

Indonesia-Korea Trade Talks Conclude, Deal Expected in November (16 Oct)

 Indonesian and South Korean Ministers signed a deal marking the conclusion of trade negotiations on Wednesday, 16 October. The delegations had been discussing the Indonesia-Korea Comprehensive Economic Partnership Agreement (IKCEPA), which was restarted in September 2018 during Jokowi’s visit to Seoul. South Korea was Indonesia’s 6^th biggest export destination in 2018, with a total export value of US$9.5 billion. While no timeline to sign the official deal has been publicised, Jakarta aims to do so by November.

 Sources: The Business Times, Nikkei Asian Review

Malaysia

Budget 2020 and Concerns (11 Oct – Ongoing)

 Malaysia’s Budget 2020 was unveiled by Finance Minister Lim Guan Eng on Friday, 11 October. With the theme of “Driving Growth and Equitable Outcomes Towards Shared Prosperity”, the Budget focused on issues such as a higher minimum wage, high speed internet infrastructure and attracting foreign investors. However, while Budget 2020 included a slightly smaller expenditure of US$71.0 billion compared to the US$75.5 billion allotted to Budget 2019, the deficit target was revised upwards from 3.0% to 3.2% on the back of lower government revenue. This has led some economists to voice concerns about fiscal discipline for future budgets.

Sources: Malaysiakini, The Star, Malay Mail

Budget 2020 also outlined the government’s plans to lower the minimum price at which foreigners are eligible to buy homes by 40% to US$143,000. The government explained that this was intended to address a US$1.99 billion surplus of unsold apartments in Malaysian cities. However, observers have said that this move might benefit foreign buyers over locals, and create a bubble if developers are spurred to build more expensive high-rise units while property owners raise prices in the secondary market. In response, Prime Minister Dr Mahathir Mohamad said that the lowering of the cap would not allow foreigners who bought the property to obtain Malaysian citizenship, and said that the price could be raised to the original limit in the future.

Sources: The Straits Times, The Star

Rumours Abound About Plot to Break Up the PH Government (13 Oct – Ongoing)

Rumours surfaced on the week of 14 October about a plot to create a Malay Unity government by breaking up the existing Pakatan Harapan (PH). Following the controversial Malay Dignity Congress on 6 October, United Malays National Organisation (UMNO) politician Hishammuddin Hussein wrote a letter to the New Straits Times, in which he called for a Malay unity government. He was careful to note that “Malay unity cannot come at the expense of the unity of all Malaysians”. Nonetheless, observers were surprised when a PH secretariat council statement on 15 October accused Hishammuddin of trying to create a government without the Democratic Action Party (DAP) and Parti Amanah Negara (Amanah). Parti Keadilan Rakyat (PKR) secretary general Saifuddin Nasution even said that his party had “circumstantial evidence” of attempts to hijack the coalition. Hishammuddin has dismissed these allegations, but speculation about the story behind them has continued to simmer.

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

India-Malaysia Trade Ties Sour, and MITI Moves to Avoid Sanctions (11 Oct – Ongoing)

 Trade ties between Malaysia and India soured following Prime Minister Dr Mahathir’s comments about the Kashmir region at the United Nations in September. Malaysia’s exports to India were valued at US$10.8 billion in 2018, US$1.65 billion of which was from palm oil. While no official policy response has been mooted yet by New Delhi, SCMP reported that Indian traders and refiners are shifting their palm oil demand to Indonesia. The Mumbai-based Solvent Extractors’ Association of India also told its members not to buy palm oil from Malaysia. Dr Mahathir has said that his government will work diplomatically to resolve any boycotts or similar policies, including increasing imports of items such as buffalo meat.

 Sources: Channel NewsAsia, The Straits Times, SCMP, Malay Mail, Free Malaysia Today

Ex-Dap Politician Slammed for BRI Comic Book (16 Oct – Ongoing)

 Former DAP member and Malaysia-China Business Council Chief Executive Hew Kuan Yau has come under fire for releasing a comic book titled ‘Belt and Road Initiative (BRI) for Win Winism’. The book, released to commemorate the 45^th anniversary of the establishment of diplomatic ties between China and Malaysia, offered a take on the historical context of the BRI and bilateral ties. It was distributed to schools, and a picture of Dr Mahathir apparently presenting a copy of the book to Chinse President Xi Jinping surfaced on social media.

However, the book was banned from distribution in schools following public criticism. The book’s reproduction of views held by the Communist Party of China led Dr Mahathir to emphasise that it is not Malaysia’s role to promote China’s BRI, and to state that the book had not been an official gift from the Malaysian government to Xi. Youth and Sports Minister Syed Saddiq Syed Abdul Rahman accused the book of labelling Malays who sympathise with China’s Uyghur population as “radicals”. Meanwhile, the DAP has been split in their response to the incident. 43 grassroots members signed a statement defending Hew, though another petition condemning the book has reportedly gained more than 50 signatures from grassroots members and leaders.

 Sources: Malay Mail, Malay Mail, The Edge Markets MY, The Star, Malaysiakini, New Straits Times, Malay Mail

Johor-Singapore RTS to Proceed, Details to Come Later (15 Oct)

 Malaysian Transport Minister Anthony Loke confirmed on 15 October that the rail line linking Johor Bahru and Singapore will proceed. The project, which would have had the capacity to ferry 10,000 passengers per hour between Woodlands North MRT in Singapore and Bukit Chagar in Johor Bahru, was suspended in April 2019. Prime Minister Dr Mahathir said on 17 October that his debt-laden government could not afford the project’s cost. However, following a brief extension to the deadline to decide the fate of the project in September, Minister Loke said that the government would announcement the resumption of the project once talks with Singapore Transport Minister Khaw Boon Wan are complete, likely at the end of October.

 Sources: The Straits Times, The Edge Markets MY

Myanmar

Myanmar economy set to grow 6.5% in 2019, 6.6% in 2020. (17 Oct)

 The World Bank’s annual East Asia and Pacific Economic Update has indicated that Myanmar’s economy is projected to expand by 6.5% in 2019. This is lower than the 6.8% expansion recorded in 2018. The World Bank’s update cites significant policy reform measures, like insurance industry liberalisation, visa-free entry policies and tax amnesties as promising developments which are due to bear fruit in coming years. It also highlighted vulnerability to natural disaster, high inflation and the persisting effects of the crisis in Rakhine state as threats to growth. The report’s projections nevertheless suggest a gradual uptick in growth, predicting an increase to 6.6% in 2020, 6.7% in 2021 and 6.8% in 2022.

Sources: Irrawaddy, Myanmar Times

VPower and CEEC awarded Myanmar emergency power tenders (23 Oct)

 VPower Group, which is listed in Hong Kong and partially owned by China’s CITIC Group, has announced that its consortium with Myanmar-based Zeya & Associates has been provisionally awarded four of five emergency power projects tendered by Myanmar’s Ministry of Electricity and Energy. It has been reported that the fifth project has been awarded to Beijing-based state-owned energy group China Energy Engineering Group (CEEC). These tenders were called in order to address urgent power shortages expected in the hot season in 2020. Industry experts have previously criticised these projects, due to their extremely short, 210-day implementation deadlines and heavy penalties – as well as the short duration of the contract, which lasts only five years. VPower has indicated that it will operate three of the projects, located in Kyaukpyu, Thanlyin and Taketa in Rakhine State, using imported LNG. Another project in Kyun Chaung, in Ayeyarwaddy region, would operate using gas supplied by the government. CEEC’s project in Ahlone Township in Yangon will also operate using gas provided by the Myanmar government.

Source: Myanmar Times, Myanmar Times

Japanese PM urges action on human right issues in Rakhine State, reiterates support (21 Oct)

 Japanese Prime Minister Shinzo Abe has urged Myanmar State Counsellor Aung San Suu Kyi to take appropriate measures to address alleged human rights violations in Rakhine State. This came during a visit by the State Counsellor to Japan’s capital Tokyo, where she attended the enthronement of the new Japanese Emperor Naruhito. Prime Minister Abe nevertheless assured the State Counsellor of Japan’s full support of both the public and private sectors in Myanmar, and reiterated its commitment in providing “maximum support” for the country’s efforts to improve conditions in Rakhine State. The two leaders also discussed ongoing development on the Thilawa Special Economic Zone. Aung San Suu Kyi also delivered the opening speech at the 2^nd Myanmar Investment Conference, which was organised by the Japan External Trade Organisation.

Sources: Irrawaddy, Myanmar Times

YSX to let Myanmar-based foreigners trade (18 Oct)

 The Securities and Exchange Commission of Myanmar (SECM) announced that the Yangon Stock Exchange would be allowing foreigners based in Myanmar to buy and sell stocks, in a move towards opening up trading to international markets. The SECM has sought the approval of the Attorney General’s Office, which is expected to arrive in December. Myanmar’s Ministry of Planning and Finance had announced it would be working to open up the stock market in July, and this is a first step in that direction. Myanmar’s Companies law allows for 35% foreign ownership in domestic companies. The Yangon Stock Exchange currently lists four companies: First Myanmar Investment Co. Ltd (FMI), Myanmar Thilawa SEZ Holdings Public Ltd (MTSH), Myanmar Citizens Bank Ltd (MCB), First Private Bank Ltd (FPB) and TMH Telecom Public Co. Ltd.

Source: Irrawaddy

Myanmar government backs minimum price for Rice (16 Oct)

 Myanmar’s Leading Committee for Farmers’ Rights Protection and Interests Promotion has announced that the government will be setting a basic reference price for paddy at MMK500,000 (US$326) per 100 baskets of monsoon paddy in 2019, and summer paddy in 2020. This price, also referred to as a ‘floor price’, is the minimum price at which paddy is to be purchased. A floor price was first set in 2018, and has been established again in response to a persistently down market. Rice exports have generally risen since 2010, with around half of the 3.58m tons exported heading to China. However, Chinese authorities consider most rice imports from Myanmar to be illegal, and a crackdown on illegal rice imports launched by Chinese authorities in 2018 has caused export volumes to fall significantly, by around 1 million tons. Farmers facing difficulty selling their harvest at the basic reference price have been advised to contact local representatives of the Myanmar Rice Federation.

Sources: Irrawaddy, Myanmar Times

Thailand

Thai budget passes first reading (19 Oct)

 Thailand’s House of Representatives has passed its 3.2 trillion baht (US$105.5bn) budget bill for the 2020 financial year in its first reading. The bill was approved by 251 votes for, and none against, due to the abstention of the 234 other Members of Parliament who were in attendance. The vote was called at the conclusion of a three-day debate, in which opposition parties questioned both the scale and allocation of the budget, emphasizing what was felt to be an outsized budget for defence, and a focus on questionably effective economic stimulus measures. In the aftermath of the vote, opposition parties stated that they will fight to scale back the defence budget during the second reading of the budget bill. Future Forward Party leader Thanathorn Juangroongruangkit has stated that FFP will shoot the budget bill down in its third reading in January 2020, if it falls short of the party’s expectations. The 2020 budget is set to be the largest in Thailand’s history – 200bn (US$6.6bn) baht higher than last year’s – with the education ministry being the single largest beneficiary of funding.

Sources: Straits Times, Bangkok Post, Bangkok Post, Bangkok Post

Thai Cabinet approves additional stimulus package (22 Oct)

 Thailand’s Cabinet has approved a further stimulus package valued at 5.8bn baht (US$191.4m), aimed at promoting consumption, reducing real estate transfer fees and issuing low-interest housing loans. This package comes months after the government rolled out a much larger 316bn baht (US$10.4bn) stimulus package. With the new stimulus, the government has announced that it seeks to hit its growth target of 3% in 2019. 2019 has thus far seen Thailand record its lowest growth rates in four years, as trade tensions and the seemingly uncontrolled appreciation of the Thai baht have depressed exports.

Sources: Reuters, Bangkok Post

Thai Airways at crisis point, risks closure (23 Oct)

 Thai Airways president, Sumeth Damrongchaitham, communicated to executives a need for cooperation among staff, while admitting that the carrier was in a crisis situation, and potentially faced the risk of closure. This marks the first admission by Mr Sumeth that the airline is facing serious trouble. During his announcement, he also noted plans to cut costs by reducing the salaries of managerial staff, and following a zero-inventory policy in its catering department. Transport Ministry sources had previously disclosed that Thai Airways had posted a loss of 6.44bn baht (US$212.4m) in H1 2019, which was expected to grow to 10bn baht (US$329.9m) by year-end. Thai Airways earlier announced that it expected its financial situation to improve due to growing passenger numbers, and expected an overall growth in passengers of around 8% in 2019. The Transport Ministry had previously communicated a directive demanding an overhaul to the carrier’s financial rehabilitation and business plans.

Sources: Bangkok Post, Bangkok Post, Bangkok Post, Bangkok Post

Transfer of manpower and budget to royal security command passes (17 Oct)

 An emergency decree transferring two army units to the direct command of Thailand’s King Maha Vajiralongkorn (Rama X) has passed through both the House of Representatives and the Senate. The House passed the decree by 374-70 votes, with the Future Forward Party in opposition to the motion on the grounds that it was the use of an executive decree by Thailand’s Prime Minister Prayut Chan-o-cha for a non-urgent matter. This marks the first public challenge of a legal procedure relating to royal affairs by lawmakers. The decree passed through the Senate unopposed. The decree in question transfers command of the Bangkok-based 1^st and 11^th Infantry Regiments from the military chain of command directly to the King’s Royal Security Command, which is tasked with planning and coordinating operations which protect the royal family and affiliated parties.

Sources: Bangkok Post, Bangkok Post, Reuters, Bangkok Post

Royal Consort stripped of titles, accused of disloyalty (21 Oct)

 Thailand’s Royal Palace announced that King Maha Vajiralongkorn (Rama X) had stripped Royal Consort Sineenat Wongvajirapakdi of her noble titles less than three months after she was appointed to the role. The former consort’s appointment closely followed the Thai King’s marriage to his queen and deputy head of his personal bodyguard, Suthida Tidjai. In announcing the King’s decision, the palace accused the former consort of ungratefulness and behaviour unbecoming of her title, asserting that she had been disobedient to the monarch and made numerous attempts to oppose the enthronement of the current queen. She is also accused of exploiting her title by giving commands in the name of the king, without his consent. Prior to her entitlement, Ms Sineenat held the rank of major-general in the King’s royal bodyguard unit, and received training as a pilot.

Sources: Bangkok Post, Bangkok Post, Channel NewsAsia