ASEAN Country Updates (1 Sep)

Sources: Our World in Data, Worldometer, Singapore’s Ministry of Health. *as of 31 Aug

Malaysia

Malaysia’s new Prime Minister and cabinet sworn-in ending weeks of political turmoil (16 Aug- 30 Aug)

After former Prime Minister Muhyiddin Yassin lost majority parliamentary support last month, political instability ensued as politicians across the board, notably opposition leader Anwar Ibrahim, UMNO president Zahid Hamidi and UMNO senior leader Tengku Razaleigh were reportedly vying for the premiership. The month-long political turmoil was finally resolved when then-Deputy Prime Minister Ismail Sabri managed to garner enough support, albeit only by four more seats than required, to secure the prime ministership. Although Malaysians are able to get temporary respite following Ismail Sabri’s ascendance, analysts estimate that the new government would continue to be weak, given the slim majority. A confidence vote is expected when parliament resumes in September.

Before announcing the cabinet line-up, PM Ismail Sabri convened a meeting with chiefs of the opposition coalition, Pakatan Harapan. The meeting was perceived by many as PM Ismail Sabri lending “an olive branch” to the opposition in an attempt to bridge political differences between the latter and ruling government, signalling that salient public interests like tackling the pandemic and restoring the economy takes precedence over everything else. Against the backdrop of “Malaysian Family”, PM Ismail Sabri also mooted for the opposition to join the National Recovery Council (NRC) and Special Committee on Covid-19 where the opposition could play a more proactive role as a check-and-balance entity in deliberating Covid-19 measures and economic recovery strategies.

PM Ismail Sabri’s new cabinet appointment has largely remained the same as his predecessor’s, with four senior ministers and finance minister being retained. Minister for Health and Minister for Science, Technology and Innovation (MOSTI) were swapped, hence Khairy Jamaluddin now helms the Health Ministry whilst Dato’ Seri Dr Adham Baba spearheads the  MOSTI. Despite Malaysians criticising PM Ismail Sabri for recycling the previously-failed cabinet ministers, it appears that PM’s line-up reflects the careful balancing he has to undertake to appease tensions within the coalition made up of his party, UMNO; Muhyiddin’s party, Bersatu and its allies.

Sources: CNA; SCMP; CNBC; Straits Times; Today; Malay Mail; CNA (2); CNA (3); Malaysia Kini

Malaysia’s 2021 fiscal deficit to hit financial crisis levels (31 Aug)

Malaysia’s 2021 fiscal deficit is expected to reach a level similar to the deficit recorded during the 2008 global financial crisis. According to the government’s pre-budget statement, the fiscal deficit is expected to reach 6.5 to 7%, higher than the initial projections of 5.4%. The finance ministry said that it was necessary to raise the ceiling for the debt to GDP ratio, given the country’s economic situation. The debt to GDP ratio stood at 56.8% in June, with the ceiling set at 60%. According to Finance Minister Tengku Zafrul Aziz, Malaysia’s 2022 budget is expected to be tabled in October. The budget will focus on the country’s recovery from the pandemic and introduce post-pandemic reforms.

Sources: Straits Times; Business Times; Bloomberg

Indonesia

Prolonged lockdown erodes Jokowi’s popularity (25 Aug)

Indonesian President Jokowi is experiencing a downward spiral in his public approval rating, as evident from the hashtag #BapakPresidenMenyerahlah or #MrPresidentJustGiveUp trending online. According to a survey done by Indikator Politik Indonesia, Jokowi’s popularity was steadily high in March 2020 soaring above 70% but in April this year, his rating dipped to 64% and eventually plunged to the current 59.3%. Jokowi’s approval rating would drop further if he fails to ease social restrictions or reopen the economy soon.

Jokowi’s declining popularity is largely attributed to his poor management of the pandemic as the government has been criticised for imposing restrictions belatedly and for the lacklustre testing and tracing effort. The pandemic has also impacted different socio-economic groups in varied ways. The higher income population are mainly concerned with the adverse health implications whilst the lower and middle group are worried about the detrimental economic effect precipitated by the pandemic. About 52% of respondents in another survey conducted by Indikator Politik claimed that the mobility restrictions (PPKM) implemented had negatively affected their economic status. Separately, more than half of the participants surveyed deem the economy to be “bad” or “very bad” and 72% of the respondents stated their income has dwindled.

Jokowi had also received major pushback from business elites close to him, compelling the President to maintain economic reopening despite rising cases. The possibility of Jokowi making a comeback is contingent upon the vaccination rate and the country’s economic rebound. Despite the government accelerating the country’s vaccine roll-out, only 12% of the population has been fully vaccinated so far. This falls short of the government’s target to inoculate 76.8% of the population by the end of the year. The rumour of Jokowi extending beyond his two terms has also been making its rounds and Jokowi has neither categorically denied nor confirmed the said possibility.

Sources: Bloomberg; Bloomberg (2); The Jakarta Post

Bank Indonesia to buy $30.5 bn in government bonds (24 Aug)

Bank Indonesia will purchase government bonds of up to $30.46 billion this year and next year to subsidise the government’s pandemic aid stimulus. This fiscal deficit financing scheme is not new and is similar to the deal BI had with the finance ministry last year. BI Governor Perry Warijyo said the surge in COVID-19 cases due to the Delta variant is the reason behind BI’s purchase of the bonds. Analysts have highlighted the scheme’s potentially adverse impact on inflation and on the currency.

Finance Minister Sri Mulyani Indrawati said the agreement will bring down the Indonesian government’s interest expense to roughly 2.2% of GDP in 2021, from an estimated 2.4%, which will provide greater fiscal space for other government spending. Both Warijyo and Finance Minister Sri Mulyani Indrawati emphasized that the debt monetization scheme will not jeopardise BI’s independence. Since the onset of the pandemic, BI has cut its benchmark interest rate to a record low of 3.50% and injected more than $57 billion into the system.

Sources: Nikkei Asia; Today Online; Bloomberg

Myanmar

Myanmar junta enacts genocide law (26 Aug) and vaccinations extended to Rohingya

The military regime in Myanmar has added a new genocide law to the country’s Penal Code. The new provisions have been published in junta-controlled newspapers and they threaten a death sentence for murders committed with the intent to destroy, in whole or in part, a national, ethnic, racial or religious group. For other crimes committed with a genocidal purpose, a life sentence may be imposed. Experts say the move is likely an attempt to ease international pressure on the regime, which currently faces a genocide charge at the International Court of Justice for its soldiers’ atrocities against the Rohingya Muslims.

The military also announced on 27 August that the country will extend Covid-19 vaccination to the Rohingya minority in Maungdaw and Buthidaung districts bordering Bangladesh. It is not clear if the campaign would be extended to Rohingya Muslims living in the camps in Rakhine State.

Sources: The Irrawaddy, Reuters

China reacts to COVID-19 spread at Myanmar border (27 Aug)

With the spread of the highly infectious Delta variant in Myanmar and the country now reporting more than 380,000 confirmed Covid-19 cases and over 14,700 deaths, this has become a major headache for Yunnan province, China’s gateway to Southeast Asia. Yunnan continues to see a string of imported cases, some of which were found to be the source of subsequent local infections.

Residents and government sources have reported that the Chinese authorities are evacuating thousands of those who live along the Chinese-Myanmar border, in an effort to prevent further spread of Covid-19. The aim of the move was to establish a zone that is unoccupied temporarily behind barbed wire fences and surveillance cameras. After evacuation, residents will be placed in quarantine for 14 days and undergo rigorous testing. According to a government official, the evacuation was a “last resort” to prevent local infections as the district was under lockdown since March, but local infections were still reported.

Sources: SCMP, CNA

Thailand

Thailand’s shift in strategy to learn to “live with Covid-19” (23 Aug)

Thailand will recognise the endemic nature of the virus and gradually transition into a new normal. Notably, the National Communicable Disease Committee has approved Thailand’s strategy shift to “learning to live with Covid-19”. On 1 Sep, Thailand will ease Covid-19 restrictions in Bangkok and other high-risk provinces, allowing for limited dine-in services and inter-provincial travel. This comes even as new cases in the country hover around 20,000 a day.

The country will now focus on containing infections to a level that the public-health system is able to cope with. It will also step up total vaccination coverage for vulnerable groups and increase efficiency and effectiveness of contact tracing.

Sources: Bloomberg, Straits Times, CNA

Daily nationwide protest set to start on 2 September (29 Aug-ongoing)

29 August saw the last of a series of car mob rallies where protesters drove in the streets of Bangkok in cars and motorcycles, demanding for Prime Minister Prayuth Chan-o-cha’s resignation. But this does not mark the end of protests.

Protest leaders announced that they will be organising a series of more conventional demonstrations every evening from 2 September onwards until Prime Minister Prayuth resigns. The demonstrations will be carried out at the same location in all provinces, and people are expected to attend after working hours. Since the start of July, 345 people have been arrested for protest-related offences. Meanwhile, 615 others are facing charges for their connection with the protests.

Sources: Bangkok Post; Bangkok Post (2)

Vietnam

Vietnam limits National Day festivities; receives foreign donations of vaccine and oxygen (24 Aug – ongoing)

Vietnam’s Prime Minister has instructed authorities to prevent gatherings, limit festivities and travelling during the upcoming National Day public holiday. More than 16,000 experts and medical workers together with tonnes of equipment have been sent to aid southern localities as their struggle with the latest outbreak continues. After approving a third Covid-19 relief package more than a week ago, Ho Chi Minh City authorities have proposed to add VND 9.247 trillion of financial aid for informal workers and low-income families.

Vietnam has received 210,000 AstraZeneca vaccines and 40,800 Moderna vaccines from the Czech Republic, while India has gifted Vietnam liquid medical oxygen and oxygen concentrators. Vietnamese experts recently acknowledged the phase 3 midterm results of home-grown vaccine Nanocovax. They have requested for more data on Nanocovax’s safety and effectiveness before granting the license for emergency use.

Source: VNExpress (1);  VGP News; VNExpress (2); Vietnam News

US VP Kamala Harris visits Vietnam in efforts to strengthen ties (24 Aug)

United States Vice-President Kamala Harris visited Vietnam’s capital from 24 to 26 August as part of her Southeast Asia trip to strengthen security and economic ties with strategic partners in the region. During the visit, she launched a Southeast Asia regional office of the Center for Disease Control and Prevention (CDC) in Hanoi. Financial and logistical support would be provided to aid Vietnam’s vaccine campaign as the country continues to face its worst outbreak thus far. The US also pledged to donate 1 million Pfizer vaccine doses to Vietnam. In a timely fashion, China donated 200,000 Sinopharm vaccine doses a day before Ms. Harris arrived, and later pledged 2 million doses while she was en-route to Hanoi.

The Vice President said she spoke to Vietnamese leaders privately about human rights issues although there was no visible outcome on their stance regarding political dissidents. Harris also reiterated how Vietnam’s economy is critical to the supply chains that America depends on.

Source: Bloomberg; Straits Times; The Diplomat