Indonesia

PT Garuda Shaken Up Following Harley Davidson Scandal (5 – 13 Dec)

 Indonesia’s flag carrier PT Garuda Indonesia came under public scrutiny following revelations of a smuggling case on one of its new Airbus jets. Parts for a Harley Davidson motorcycle and two high-end Brompton folding bicycles were discovered in the cargo hold despite the manifest alleging that the hold was empty, which could have allowed smugglers to evade taxes of up to US$38,000-107,300. Chief Executive Officer Ari Askhara was sacked on 5 December in response to this scandal, while several of the company’s directors were suspended. The actions taken by State-Owned Enterprise Minister Erick Thohir were applauded by the public, and are seen as promising signs of his efforts to eradicate lobbying, horse-trading and illicit deal-making in the 115 SOEs under his purview.

 Sources: Today Online, Jakarta Globe, SCMP, The Straits Times

Indonesia Files WTO Lawsuit Against the EU Over Palm Oil (16 Dec)

 Indonesian officials filed a lawsuit against the European Union (EU) with the World Trade Organisation’s (WTO) Dispute Settlement Body on 9 December, arguing that the bloc’s palm oil policy is discriminatory. The EU had concluded in March 2019 that palm oil cultivation leads to excessive deforestation, and opted to remove its classification as a biofuel and phase out its use in transport fuel between 2023 and 2030. The EU also imposed five-year tariffs on Indonesian biodiesel imports to counter alleged subsidies for fuel producers on 9 December. The consultation phase between the two parties will last 60 days, and the EU can request that the WTO set up an adjudication panel if no solution is found.

 Sources: Bloomberg (via Bangkok Post), Nikkei Asian Review, The Jakarta Post

Worsening Economic Data Raises Questions about Indonesia’s Future Growth Amid Trade Tensions (17 Dec)

 Indonesia’s economic growth slowed to a two-year low of 5.02% in the third quarter of 2019 amid global economic uncertainty, compared to 5.17% during the same period in 2018. This is far below the 5.3% target included in the 2019 state budget, and Indonesia is on track to slump to a growth rate of roughly 5.0% for 2019. Moody’s Investor Service also predicted a gloomy growth outlook of 4.7% for 2020 on the weak commodity prices, though the World Bank offered a more optimistic forecast of 5.1%. Both institutions remained wary of potential escalations in trade tensions, noting their adverse effect on Indonesia’s economic prospects.

 Sources: The Jakarta Post, Antara News, The Jakarta Post

Malaysia

As PKR Splinters, Anwar Faces a New Scandal (4 Dec – Ongoing)

 Parti Keadilan Rakyat (PKR) launched its annual Congress in Melaka on 5 December amid weeks of political unrest. While questions had arisen as to whether Deputy President Azmin Ali would be present at the Congress, a last-minute meeting between him and President Anwar Ibrahim secured his attendance. However, this truce did not last for long, and Azmin and his supporters left the Congress on Saturday, 7 December after alleged personal attacks during speeches by other delegates. Instead, Azmin and his supporters reconvened at the Renaissance Hotel in Kuala Lumpur with nearly half of PKR’s central leadership. While the purpose of the meeting was reportedly to discuss the Shared Prosperity Vision 2030, the fact that it was held at the same place where PKR was founded in 1999 was a key takeaway for observers. Among the speakers, the PKR Wanita Chief Haniza Mohamed Talha told attendees that reformists must not be subservient to any single politician, especially one who refuses to accommodate differing views.

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

Anwar was also rocked by an accusation that he had sexually assaulted a former male aide, Muhammed Yusoff Rawther, in September 2018. This is the third time that Anwar has been accused of indecent acts by former male employees, and he has been imprisoned for nearly a decade on sodomy and corruption charges. Anwar has denied the accusations, and has pledged to cooperate with the police in the course of their investigations.

Sources: SCMP, The Star, Free Malaysia Today

Dr Mahathir’s Handover Details Remain Unclear (10 Dec – Ongoing)

 Prime Minister Dr Mahathir Mohamad reiterated his promise to hand over power to Anwar Ibrahim on Tuesday, 10 December, saying that he will “do [his] part of the promise”. However, he did not specify when the change would occur. On the one hand, he noted that the handover is unlikely to occur before the Asia-Pacific Economic Cooperation (APEC) Summit in November 2020, arguing that doing so would be “disruptive”. A few days later, Dr Mahathir also said that he would step down “once [he had] resolved some of the major problems that have been left by the previous government”, and if a leadership candidate has been named by the coalition. Whether he was referring to Anwar or some other unnamed politician in this case remains unclear.

Sources: SCMP, New Straits Times

Infrastructure: Bandar Malaysia Revived, KL-Singapore HSR to Go Ahead (17 Dec)

 Bandar Malaysia, a large-scale infrastructure project linked to the 1Malaysia Development Berhad (1MDB) scandal, was revived as the Malaysian government signed a deal with a China-backed consortium to continue its development. It had previously been cancelled by former Prime Minister Najib Razak in 2017. Now, local developer Iskandar Waterfront Holdings (IWH) and China Railway Engineering Corporation (CREC) will develop the US$34 billion central transport hub, which will also include housing and park space. The consortium owns a 60% stake in Bandar Malaysia Sdn Bhd (The project’s master developer) with a 60:40 split between IWH and CREC.

At the signing ceremony for the deal, Dr Mahathir also announced that the 350 km long Kuala Lumpur-Singapore rail link, which will terminate at Bandar Malaysia, will also go ahead. The project was initially expected to be completed in 2026, but its US$26.6 billion price tag was seen as too expensive by the PH government, and the project was suspended in September 2018. Dr Mahathir noted that some adjustments would be made to lower the cost of the project, with one suggestion being a cap on the speed of the train.

Sources: Bloomberg, SCMP, The Edge Markets MY, New Straits Times

Thailand

EC Bid to Dissolve FFP Leads to Biggest Protest Since Coup (11 Dec – 14 Dec)

 Thailand’s Election Commission ruled on Wednesday, 11 December that Future Forward Party (FFP) leader Thanathorn Juangroongruangkit had violated election laws by loaning US$6.3 million to his party, and said that it will forward the case to the Constitutional Court. Should the party be found in breach of the political funding election law by the Court, it could be dissolved, and its executive members banned from politics. This case follows the Court ruling in November when Thanathorn was disqualified from serving as a member of parliament due to him technically holding shares in a media company during the election.

In response, Thanathorn took to social media on Friday, 13 December, calling for a “flash mob” protest at the BTS skywalk above Pathumwan Intersection for the following day. Despite the short notice, over 3,000 protestors showed up for the protest, making it the biggest such gathering since the 2014 coup. Pro-government parties expressed their opposition to the protest, and noted that FFP could have violated laws concerning public assembly and sedition, which would create another legal case for the besieged party.

Sources: Khaosod English, SCMP, The Straits Times, Khaosod English, Bangkok Post

Pheu Thai to Table No-Confidence Motion Against Government in January (18 Dec)

 Pheu Thai politician Chalerm Ubumrung announced on Tuesday, 17 Dec that his party will table a no-confidence motion against the government in early January 2020. The motion will target four ministers for censure (Prime Minister and Defence Minister Prayut Chan-ocha, Deputy Prime Ministers Wissanu Krea-ngam and Somkid Jatusripitak, and Foreign Affairs Minister Dom Pramudwinai) with the possibility of more being added later. Chalerm said that his party was spurred by observations of corruption in the government, failures in handling economic policy and other issues. While he admitted that the censure motion is likely to be defeated given the ruling coalition’s parliamentary majority, the debate is expected to exert more pressure on the government.

Sources: Bangkok Post

Central Bank Likely to Keep Rate at All-Time Low in December (17-18 Dec)

 The Bank of Thailand is likely to leave its benchmark interest rate at a record low of 1.25% for the remainder of 2019, following two cuts of 25 basis points each in November and August. Bank of Thailand Governor Veerathai Santiprabhhob said that the rate could not be cut much further, and economists expect the Bank to follow this view for now. However, the Bank is predicted to resume cutting the benchmark rate in the first quarter of 2020, spurred by disappointing growth numbers and lower-than-expected rates of inflation. The rising value of the baht, which decreases the competitiveness of Thailand’s exports and affects its vital tourism sector, could also provide another impetus for a rate cut early next year.

Sources: Bangkok Post, Today Online

Myanmar

Aung San Suu Kyi Argues Against Genocide Charges (10 Dec – Ongoing)

State Counsellor Aung San Suu Kyi delivered her long anticipated remarks at The Hague in defence of the Myanmar government and the Tatmadaw’s military operations in Rakhine state. The case was brought forward by The Gambia and accused Myanmar for violating the UN’S Genocide Convention. Daw Aung San Suu Kyi argued against the charge and said “genocidal intent cannot be the only hypothesis”. However, she admitted that the usage of disproportionate force cannot be ruled out. Supporters of Daw Aung San Suu Kyi had travelled to The Hague to voice solidarity with their leader. Protesters championing human rights accused the State Counsellor of being silent on the Rohingya issue. The ICJ will be requesting more information from Myanmar and The Gambia through the month as the 17-judge panel deliberates the case.

 Sources: Eleven Myanmar, Myanmar Times, Irrawaddy

Over 50 percent of Myanmar Receiving Access to Electricity (13 Dec)

More than 5.4 million households in Myanmar, or 50 percent of the nation, now have access to electricity as of December 2019. Back in 2016 when the NLD government came into power, nationwide electrification stood at 34 percent. Those living in Myanmar have had to endure frequent blackouts as the country struggles to counter a severe power shortage. Efforts are being made to further develop the power supply sector with a budget of over K600 billion approved for the current 2019-2020 fiscal year. The Ministry of Energy and Electricity aims for nationwide electrification to hit 55 percent in 2021-2022, 75 percent in 2025-2026, and 100 percent in 2030. Loans have been sought from World Bank, JICA, ADB, FFW and other organizations.

 Sources: Myanmar Times, Eleven Myanmar

US Tightens Sanctions on Myanmar Military Chiefs (11 Dec)

The US announced sanctions against senior commanders in Myanmar’s Military on Human Rights Day, December 10. Those sanctioned include the commander-in-chief of the military, Sr. Gen. Min Aung Hlaing and his deputy Soe Win. Two other subordinates were also targeted who had led the elite army divisions deployed in Rakhine. Their assets in foreign bank accounts have been frozen or restricted from transfer within the international banking system. The U.S Treasury Department published a statement saying that Myanmar’s military forces had committed “serious human rights abuse” under Min Aung Hlaing’s command. Earlier in July, the Trump administration had already banned senior military officials in Myanmar from traveling to the United States.

 Sources: Reuters, Myanmar Times, Irrawaddy

Vietnam

Strong GDP Growth Expected for Vietnam in 2019: World Bank (17 Dec)

The World Bank expects Vietnam’s economy to expand by 6.8 percent this year as the country benefits from a continued trade surplus and declining public debt. Exports are estimated to have increased by about 8 percent this year, nearly four times faster than the world average. Private consumption has also become an increasingly important contributor to GDP with the growth of the middle-income class. However, the report also highlighted the challenges in the finance sector as severe obstacles remain for firms to gain access to credit. The World Bank forecasts Vietnam’s GDP growth to be around 6.5 percent over the next few years, barring any external shocks.

 Sources: VNExpress, Nhan Dan, Vietnam News

Maersk Expands in Vietnam to Meet Growing Logistics Needs (12 Dec)

A.P. Moller-Maersk has opened a new logistics centre in Bac Ninh, Vietnam to address the high demand in the market. The automated facility will offer end-to-end solutions in North Vietnam that has seen continuous growth in electronics, automotive and retail segments. It will be located at the Vietnam Singapore Industrial Park (VSIP). Vietnam has experienced significant growth in trade volumes and is expected to be ranked the fourth biggest export/import country by 2023. The main worry has been whether the country’s infrastructure has the capacity to match its current trade growth trajectory.

 Sources: The Load Star, Maritime Executive

Two Hydropower Projects Snapped Up in Vietnam (17 Dec)

Nexif Energy has acquired a 94 percent stake in Song Giang Hydropower which owns two hydropower plants in south central Khanh Hoa Province, Vietnam. The two plants are expected to produce enough power to supply 74,000 households. Electricity demand in Vietnam is growing 10-12% annually, creating opportunities for investment in electricity generation, transmission and distribution infrastructure. Nexif Energy is a Singaporean-Australian company formed by combining Singapore’s Nexif and Australian private equity firm Denham Capital. Vietnam aims to boost its power output produced by renewable energy to about 23% by 2030. The country is now the leader in Southeast Asia’s solar photovoltaic (PV) market and has the largest installed capacity in the region.

 Sources: VNExpress, VietnamNews, DealStreetAsia