[Premium] Country Briefing Recap (01/2019) Elections and Global Uncertainty in 2019

April 2019 | As a number of you have asked about events such as the Thai elections, the SIIA convened a corporate briefing on 28 March to discuss political and economic developments in ASEAN. The contents were based on the findings of our new country updates service, in which we chronicle developments in the four key economies on a fortnightly basis. Drawing on my visits to engage key stakeholders in the region, I have set these updates in the context of established and emerging trends in order to explain the lay of the land.

After this inaugural briefing, the SIIA aims to offer similar events once every six months. The updates will also be extended to cover areas such as the digital economy and sustainability. In the meantime, I am happy to share with you some of the key insights from the March briefing with you as our member and friend.

Thailand

1. Phalang Pracharat Performs Well: The heated Thai election season came to a climax on 24 March, with the pro-junta Phalang Pracharat gathering the largest share of votes. Under the 2017 constitution, this entitles the party to a significant top-up of party list seats, with an unofficial tally suggesting a total of 118 seats. In conjunction with 250 military-appointed senators, this places pro-junta forces at close to a simple majority in both houses of parliament. Phalang Pracharat’s candidate, incumbent Prime Minister Prayuth Chan-ocha, is thus in prime position to be re-elected.

2. Anti-Junta Parties Form a Coalition, Raising Risk of Unrest: Pheu Thai won the most seats (137), though it fell short of initial estimates. What surprises and concerns is that it has claimed to form a coalition with six other parties that boasts a parliamentary majority of 255 seats. The longevity of this coalition is questionable. Key members such as Pheu Thai and Future Forward are facing legal threats, and others might merely be seeking short-term gain. Still, the anti-junta coalition could make things difficult for the new Prayuth government. The temptation therefore is to use the Election Commission to persecute and fracture the anti-junta coalition. This, however, would in turn increase the risk of social unrest.

3. Economic Prospects – Stable in Long Term: Looking ahead, short of a spike in social unrest, Thai economic policy is expected to remain stable. The ability of both pro and anti-junta parties to deliver on their election promises is unclear due to the prospect of parliamentary gridlock. Instead, stability is expected to be maintained by ongoing initiatives such as the Eastern Economic Corridor and the 20-year national strategy.

Indonesia

1. Intensification of Identity Politics in an Election Year: Election imperatives are stimulating religious and nationalist sentiments. Islamic groups are mobilising against incumbent President Joko Widodo “Jokowi” on issues such as his support for Former-Governor Basuki Purnama “Ahok”. The incumbent has sought to address this by burnishing his own Islamic credentials. Ma’ruf Amin, former leader of the largest Islamic group in Indonesia, Nahdlatul Ulama, was chosen as Jokowi’s Vice Presidential candidate. The incumbent’s camp is also debunking fake news items that question his piousness.

2. Greater Influence of Domestic Issues in International Affairs: Meanwhile, domestic concerns have manifested in Indonesia’s external relations. The conclusion of a comprehensive economic partnership agreement with Australia was delayed following the latter’s decision to move their Israeli embassy to Jerusalem in 2018. The EU’s Renewable Energy Directive II plan, which could label palm oil as unsustainable and phase out its use in biofuels by 2030, triggered calls for a boycott of EU goods and to bring the EU before the World Trade Organisation. The particular nature of these diplomatic developments hints at the sensitivities of Indonesian domestic politics, particularly during an important election year.

3. Infrastructure and Jokowi’s Electability: The economy is expected to be a key factor in the upcoming elections. Jokowi has been unable to fulfil his pledge for 7 percent annual growth. He has instead focused on infrastructure achievements such as the newly opened Jakarta Mass Rapid Transit system. In turn, Prabowo Subianto has criticised Jokowi’s infrastructure projects for increasing Indonesia’s debt and bringing in more Chinese workers. At present, most polls show that Jokowi continues to enjoy a double digit margin of electability over Prabowo, but the gap is narrowing. Some in Jokowi’s camp remain comfortable with this trend. Many, however, hesitate to take it for granted. Prabowo’s camp may yet gain momentum following a scandal, as the last days of the 2014 election demonstrated.

4. Post-Election Concerns for Both Outcomes: Should Jokowi win, a major concern will be how he handles increasing religiosity in politics. The Indonesian political landscape has oscillated between post-election liberalism and pre-election conservatism. However, the balance is shifting towards a more conservative type of Islam. On the flipside, a Prabowo victory would mean a shift in Indonesia’s economic policy towards a more insular model. In which case, observers will have to closely monitor how the new President goes about reforming the economy and Indonesia’s institutions.

Malaysia

1. Disappointment in PH Rising: The euphoria surrounding the victory of Pakatan Harapan (PH) has faded amid broken promises and integrity concerns. Coalition management has been messier than feared, especially regarding the succession of Prime Minister Dr Mahathir Mohamad. There are concerns that Dr Mahathir has instigated an intra-party rivalry between Parti Keadilan Rakyat (PKR) President Anwar Ibrahim and Economic Affairs Minister Azmin Ali. Further, Dr Mahathir is rejigging the balance of power in PH. The absorption of former members of the United Malays National Organisation (UMNO) has padded his party’s ranks. The threat of a cabinet reshuffle is also keeping complaints in check. For the public, such developments have led to increasing comparisons between PH and Barisan Nasional (BN). While small for now, a failure to address these concerns will hurt PH.

2. Re-Emergence of UMNO: While UMNO haemorrhaged members following the 14^th General Election, it was given a convenient rallying point by PH’s stand on the International Convention on the Elimination of Racial Discrimination (ICERD). Not only did this allow UMNO to explore a partnership with Parti Islam Se-Malaysia (PAS), but the partnership also led them to by-election victories in Cameron Highlands and Semenyih. Former-Prime Minister Najib Razak has also reinvented himself through social media, his “bossku” persona casting him in a more relatable light. There is a danger that Najib will mobilise his social media followers to pressure the current government as his trial looms, while continuing to push identity politics to draw support for his party.

Myanmar

1. Push for Investment: The Myanmar government is striving to lessen red tape for investors. State Councillor Aung San Suu Kyi has also been actively promoting investments into Myanmar. Not only was an inaugural government-led Myanmar Investment Conference held in January, a similar investment fair was held in Rakhine state the following month. Such efforts show Myanmar’s need for foreign investment, and the State Councillor’s desire to use investments as a tool for peace.

2. Rakhine Crisis Looms Large, But Asian Investors Remain: Efforts to attract investments have been overshadowed by the Rohingya issue. Increasing complaints from legislative bodies in the EU and the US have fuelled concerns about the application of more stringent sanctions. The Myanmar government is opening investigations into the state and seeking to resolve the refugee issue with Bangladesh. However, it is unclear whether these efforts will be enough to assuage western concerns. Should sanctions rise, the investment environment in Myanmar could return to being populated by China, Japan, Singapore and other Asian countries while omitting western participants.

3. Electioneering for 2020 Already Underway: Political activity for the 2020 has implicitly begun. Aung San Suu Kyi herself has begun touring Myanmar’s ethnic states, and the National League for Democracy (NLD) is building its political war chest. These efforts are likely in recognition that the party’s popularity is waning in the face of more unified ethnic parties and military-friendly opposition. The NLD’s economic policies have also been criticised as slow and unfocused. Yet, the NLD is still expected to win the come election. These efforts are instead aimed at boosting their numbers to prevent any electoral upsets.

I hope this is of interest to you. I would be happy to hear your views.