[PREMIUM] Country Updates (24 March-6 April)

Indonesia

• Jokowi’s rival in previous elections tops popularity poll
• Indonesian tech unicorn, GoTo, set to debut on Indonesia Stock Exchange
• Indonesia rejects Malaysia’s proposal for Malay to be ASEAN’s second language

According to a survey by Indikator held in February, 32.7% of respondents said they would vote for Defense Minister Prabowo Subianto. Prabowo stood against President Jokowi in the previous two presidential elections. 30.8% of respondents said they would vote for Central Java Governor Ganjar Pranowo, followed by 24.9% for Jakarta Governor Anies Baswedan. Indonesia is set to have its next Presidential elections in February 2024 and the question of who will be the next president is already front of mind. Jokowi has emphasised that he will adhere to the constitutional two-term limit.

Indonesia tech unicorn, GoTo, has raised US$1.1 billion in its initial public offerings, the largest in the world this year. The company, formed through a merger between ride-hailing app GoJek and e-commerce player Tokopedia, will debut on the Indonesia Stock Exchange on 11 April. It will be the fourth-most valuable company on the stock exchange. GoTo will be giving shares to 600,000 of its drivers, a first for a gig-economy company in Southeast Asia. GoTo, which has been incurring losses, is proceeding with its plan to list despite the volatility faced in the tech sector. Other ASEAN tech giants such as Grab, Sea and Bukalapak have seen their share prices tumble in the past few months.

Indonesia has rejected Malaysian Prime Minister Ismail Sabri’s proposal to use Malay as the second language for ASEAN-related meetings. Indonesia’s Minister of Education, Culture, Research and Technology Nadiem Makarim said Bahasa Indonesia is a better option, given the wider usage of the language. Ismail Sabri had announced Malaysia’s intention to propose Malay as a second language for ASEAN during his official visit to Indonesia earlier this month.

Sources: Bloomberg; Bloomberg (2); Straits Times; Washington Post; Jakarta Post; Straits Times (2)

Malaysia

• Malaysia reopens its land borders and eases travel restrictions
• World Bank trims Malaysia’s 2022 growth to 5.5%
• Malaysia proposes Malay as ASEAN’s second language

After more than 2 years of travel restrictions, Malaysia fully reopened its borders to international travellers on 1 April. More than 33,000 travellers cleared the land customs at Woodlands and Tuas checkpoints on the first day of the reopening. The land crossings were amongst the world’s busiest prior to the pandemic. Malaysia is expecting its tourism sector to pick up with the reopening. The Malaysian government is expecting tourist arrivals of 2 million, according to Tourism Minister Nancy Shukri

The World Bank is projecting Malaysia‘s economy to grow by 5.5%, bolstered by recovering domestic demand, reopening of borders and expansion in the exports sector. However, external pressures such as the war in Ukraine, financial tightening in the US and slowdown in China could depress growth to 4.8%. The World Bank’s estimates are largely in line with Malaysia’s central bank’s forecast. Bank Negara Malaysia trimmed its 2022 projections to 5.3-6.3% as a result of the Ukraine-Russia conflict and disruptions to supply chains.

Malaysia is proposing to make Malay the second language of ASEAN, in an effort to elevate the language at the international level. Prime Minister Ismail Sabri said Malay is already spoken in several ASEAN countries including Singapore, Southern Thailand and Southern Philippines. He said he will discuss the matter with his counterparts in other ASEAN countries. The proposal has been dismissed by Indonesia thus far.

Sources: Malay Mail; CNA; CNA (2); Malay Mail; Nikkei Asia

Myanmar

• China said it will back Myanmar “no matter how the situation changes”
• UN Envoy on Myanmar calls ASEAN to demonstrate goodwill in concrete terms
• Under new rules, local holders of foreign currency will have to convert them to Kyats

During a meeting on 1 April, Chinese Foreign Minister Wang Yi told his Myanmar counterpart, Wunna Maung Lwin, that China’s government will support Myanmar’s military government “no matter how the situation changes” in the country over the coming months and years, and wants to “deepen exchanges and cooperation.” Analysts say these remarks hint at Beijing’s assessment that the junta will prevail against the resistance. By throwing its support behind the military, China hopes for greater stability, especially to accelerate the China-Myanmar Economic Corridor. In response, Myanmar’s parallel civilian National Unity Government warned China that partnering the military regime would be rejected by Myanmar’s people and severely damage China’s international reputation.

In February, UN Envoy to Myanmar, Noeleen Heyzer, received furor from the Myanmar people when she commented that those defying the military must negotiate a power-sharing arrangement as a solution. In late March however, Heyzer met with Cambodian Prime Minister Hun Sen and the country’s ASEAN Special Envoy for Myanmar, Prak Sokhonn, where she urged PM Hun Sen to leverage his influence on Min Aung Hlaing to de-escalate violence and serve the greater interests of the people. During the meeting, she also said that ASEAN’s goodwill should be demonstrated in concrete terms. She also stressed the importance of a Myanmar-led process “reflective of the will of the people.”

Western sanctions and declining exports and investments have choked off the amount of US dollars flowing into Myanmar. As a result, the military has moved to tighten its control over movements of foreign currency, with the Central Bank of Myanmar’s notification for all banks and other holders of foreign currency to convert these deposits into the local kyat currency as of 5 April. Notably, foreign exchange earned must be deposited in accounts at licensed banks and exchanged for kyats within one working day and failure to comply will result in legal action. Analysts say the Central Bank’s move is an attempt to establish control over the remaining foreign exchange inside Myanmar, so as to prevent capital flight and to pay for vital imports.

Sources: The Irrawaddy (1), The Irrawaddy (2), The Diplomat (1), The Diplomat (2), The Diplomat (3), ABC News

Thailand

• International arrivals increase after Thailand eases restrictions
• Thailand’s growth forecast for this year affected by Ukraine war
• Thailand sees emergence of two new strains – “XE” and “XJ”

Since 1 April, those arriving in Thailand, under “Test and Go”, “sandbox” or other quarantine programs will not require a pre-arrival RT-PCR test. This relaxation in measures has seen the number of international arrivals doubling. While RT-PCR tests are still required upon arrival, results are now available in 3-4 hours and this also means many arrivals may not have to stay overnight at a hotel to wait for the results. However, tourists are still required to take a self-administered ART five days after arrival. While tourism numbers appear optimistic, they are still weak compared to pre-Covid days. The World Bank forecasts Thailand’s economy to only return to pre-pandemic levels by early 2023, where growth is expected to be at 4.3%. This week, the World Bank cut its 2022 growth forecast for Thailand to 2.9% from a previous forecast of 3.9%, due to spillover risks emerging from the Russia-Ukraine war.

So far, 17 different hybrid strains have been discovered, running from XA to XS with “X” denoting a strain that has mutated when a person becomes infected with two Omicron variants. Notably, on 3 April, Thailand reported its first case of Omicron XE, shortly after the World Health Organisation warned that XE could be the most transmissible strain of Covid-19 although its severity is still being investigated. Omicron XE was first detected in the United Kingdom in January this year.

Sources: Thai PBS, Bloomberg, CNA, Bangkok Post, Nation Thailand

Vietnam

• Vietnam expected to face power shortages
• Vietnam posts Q1 GDP growth of 5.03%
• World Bank cuts 2022 growth forecasts to 5.3%

State-run utility Vietnam Electricity (EVN) has warned of a power shortage from April onwards due to limited coal supplies. Several thermal power plants have had to cut down production with the pandemic disrupting the operations of local miners and with the rising global prices of fuel. Vietnam’s Ministry of Trade and Industry is arranging increased deliveries of coal including importing around five million tonnes of coal from Australia.

Vietnam’s GDP grew by 5.03% in the first quarter of 2022 signaling the economy is on track for recovery. Export turnover rose 14% from the previous year with the US as the largest export market. The manufacturing and construction sector grew 6.38% from a year earlier.

Although Vietnam has fully reopened to tourists from March 15, inflation pressures and geopolitical uncertainties including the situation in Ukraine may be headwinds to the country’s growth. Vietnam’s statistics office still expects an expansion of 6-6.5% this year but the World Bank cut 2022 growth forecasts to 5.3% from 5.5% in January. GDP growth came in at 2.6% last year, well below pre-covid norms of 7% growth annually.

Sources: VNExpress(1), VNExpress(2), CNA, Reuters, Nikkei Asian Review, VNExpress(3)