14 Oct [PREMIUM] Country Updates (30 Sep-13 Oct)
Junta condemns foreign recognition of shadow government (11 Oct)
Myanmar’s military regime has condemned international actors for extending support to the National Unity Government (NUG) and its parliamentary committee, the Committee Representing Pyidaungsu Hluttaw (CRPH). The military seeks international recognition as the country’s rightful caretaker government but struggles against a competing claim by the NUG.
In a resolution adopted on 7 Oct, the European Parliament voted to support the NUG and CRPH as the legitimate representatives of Myanmar, becoming the first international legislative body to do so. In its resolution, the European Parliament condemned the military’s violence and human right abuses towards civilians and called for the immediate and unconditional release of President U Win Myint, State Counselor Daw Aung San Suu Kyi and all others arrested on unfounded accusations. It also called on ASEAN and its special envoy to engage with all parties involved including the NUG and civil society representatives. It further called on China and Russia to play a constructive role when scrutinizing the situation in Myanmar and urged EU countries to continue with targeted and robust sanctions.
Earlier last week, the French Senate also voted unanimously to recognize the NUG. If the French Parliament’s lower house approves the vote, France will become the first country to officially recognize Myanmar’s shadow government.
Junta could be barred from ASEAN Summit (4 Oct – ongoing)
ASEAN member states are disappointed at the lack of progress in Myanmar with regards to the five-point consensus. As such, some countries have expressed that ASEAN cannot act business as usual and should consider excluding the head of Myanmar’s military regime at their leaders’ summit later this month. Saifuddin Abdullah, Malaysia’s foreign minister, told the country’s parliament last week that if the military continued to ignore ASEAN’s attempt at conflict resolution, Malaysia would not support Min Aung Hlaing’s attendance at the summit.
Excluding a leader from the summit would be of significance as ASEAN has traditionally operated under the principle of consensus decision-making and quiet engagement rather than confrontation. Experts however, said that a tougher approach by ASEAN could force the generals into cooperation as the junta craves legitimacy and values ASEAN membership and cooperation.
UN fears “imminent attack” in Myanmar after army build-up (8 Oct – ongoing)
After the National Unity Government’s war call on 7 Sep, Myanmar’s military regime suffered its heaviest losses in a month since the coup, with over 1,500 soldiers killed. On 8 Oct, the United Nations human rights office raised concerns that the Myanmar military could be preparing an imminent attack aimed at civilians amid a build-up of heavy weapons and troops in areas of the country where the internet has also been shut down.
These areas include Chin State, Sagaing and Magwe regions, where the military has intensified attacks, including raids, violence, killings and burning of houses. The military has also deployed at least four battalions of reinforcements—around 3,000 soldiers—to conduct clearance operations. While the military have used heavy explosives, jet fighters and helicopters in recent clashes, civilian resistance fighters are mostly only armed with old-fashioned homemade hunting guns and homemade mines.
Malaysia resumes interstate travel and relaxes measures for international travel (11 Oct)
Having reached the target of vaccinating 90% of its adult population, Malaysia has ended its ban on interstate travel and relaxed restrictions on international travel for vaccinated residents. This marks a major milestone as the country pursues an “endemic” strategy towards COVID-19. In a televised address a day before the travel restrictions were eased, Prime Minister Ismail Sabri said pandemic restrictions would be progressively eased and vowed not to reimpose measures even if there is a surge in cases.
While overseas travel is now allowed, a 14-day quarantine is still required for anyone entering the country. Previously, residents could only leave the country for work or studies under the MyTravelPass scheme. Currently, borders are not open to foreign tourists. PM Sabri said multiple factors such as rate of infections, mortality rate and level of recovery in the respective countries will be considered before borders are reopened.
Malaysia plans to lift debt-to-GDP ratio in order to cushion economy (11 Oct)
Malaysia is on track to lift its debt ceiling to 65% of its GDP, from 60%, after clearing a key vote in parliament. This would be the second increase in a year, as the government seeks to disburse additional support to support the country’s economic recovery. The bill will be voted in the Senate, which is controlled by the ruling coalition, before being signed into law by the King.
The increase in the debt ceiling will allow the government an extra $10.8 billion for economic relief packages. Finance Minister Zafrul Abdul Aziz said the government plans to boost its Covid Fund to $26.4 billion, from $15.6 billion. He said the increase in stimulus would benefit the poorest 40% of the population, and the additional funds will be used to bolster Malaysia’s public health systems and provide relief to SMEs.
Reopening of Bali and Riau Islands (11-12 Oct)
Preparations are afoot for the reopening of Bali and Riau Islands on 14 October to international travellers from 18 countries. Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan had previously mentioned that China, United Arab Emirates, South Korea, Japan, and New Zealand comprise the list of eligible countries. Singapore remains excluded as it does not fulfil the World Health Organisation’s Covid-19 low positivity rate of below 5%. The final list of countries is said to be announced soon via a ministerial decree. The government has also lowered the mandatory quarantine period from 8 to 5 days. Travellers must be fully vaccinated, have sufficient health insurance that covers Covid-19 treatment, and pay for their own accommodation during the quarantine period. International tourists must also undergo PCR tests before departure and upon arrival to Indonesia, and download the country’s contact tracing app, PeduliLindungi.
In Bali, the state administration has designated 35 hotels for quarantine in three areas, Ubud, Nusa Dua, and Sanur. All three towns are noted as “green zones” or areas with low Covid-19 cases. Bali’s deputy governor targets that the reopening would attract between 1,000 and 1,500 visitors daily but actual numbers are likely to be lower considering the resumption of tourism is only at the initial stage. The success of Bali and Riau Islands reopening would serve as a model that can be emulated in other parts of Indonesia.
Newly-implemented tax overhaul law (7 Oct)
The Indonesian parliament recently approved a major tax reform bill which includes raising the value-added tax rate (VAT), enacting a new carbon tax law, and cancelling the previously proposed corporate tax cut. The VAT rate for the sale of all goods and services will be increased from the current 10% to 11% next April and to 12% by 2025. The corporate tax rate is being retained at 22%, although there were earlier plans to reduce the corporate tax to 20% next year. Individuals and entities buying goods that contain carbon or execute activities that produce carbon emissions must pay the carbon tax. The revenue garnered from the carbon tax can be utilised for measures to tackle climate change. The government also introduced a higher personal income tax of 35% for high-income individuals earning more than Rp 5 billion ($ 351,530). A new amnesty programme would also be relaunched next year from 1 January to 30 June.
The tax reform bill met with little resistance, passing in parliament under Jokowi’s overwhelming majority. The law is said to maximise revenue collection and improve tax compliance but some businesses and analysts have criticised the overhaul as being detrimental to the country’s fragile economy which is still reeling from the pandemic. However, the government made some concessions by gradually implementing the VAT rate over a few years, instead of enacting it at one go to cushion the impact of rising costs on consumers.
Thailand to reopen to vaccinated tourists from “low-risk” countries (11 Oct)
Thailand will lift its quarantine requirements for fully vaccinated tourists from “low-risk” countries from 1 Nov. There are at least ten countries on the list, including China, Germany, Singapore, the United Kingdom and the United States. More countries will be added to the list by 1 Dec. Tourists are required to show proof that they are Covid-19 free with a RT-PCR test result obtained before leaving their country of origin and take another Covid-19 test when they reach Thailand. Upon a negative result, they may travel to different areas freely like residents of Thailand.
Prime Minister Prayuth Chan-ocha acknowledged that the decision comes with a risk of more cases but that there is a need to reopen for business reasons. He said Thailand should live with the virus in the same way the country has lived with other diseases, with treatments and vaccinations. Notably, Thailand lost about US$50 billion in tourism revenue last year as foreign arrivals plunged 83% to 6.7 million, from a record 39.9 million two years ago. However, he cautioned that if a new and harmful variant emerges in the next few months, more measures have to be introduced to control the outbreak. In his announcement, the Prime Minister also said that Thailand currently administers more than 700,000 doses of Covid-19 vaccines per day on average, which is a significant increase from some 80,000 doses per day in May.
40% say Prayuth should quit as PM next year (10 Oct)
In a quarterly survey conducted by the National Institute of Development Administration in September, 17.5% of 2,018 respondents considered the incumbent Prime Minister Prayuth Chan-ocha, the most suitable choice to lead the country, down from 19.3% in June and 28.8% in March. Despite his falling popularity, the Palang Pracharat Party has offered to make Prayuth its prime ministerial candidate in a vote to be held by 2023. Reportedly, on 30 Sep, Deputy Prime Minister Prawit Wongsuwon threw his support behind Prayuth in a small gathering of senior party members. However, the exact date of the next election is undecided and the prospect of a formal nomination raises legal and strategic questions.
The latest constitution, enacted in 2017, bans any individual from serving as prime minister for more than eight years but the ruling coalition and the opposition disagree on its interpretation. PM Prayuth seized power in a military coup in May 2014 but officially became prime minister of the elected government in July 2019. The opposition insists his time as the country’s leader should be up as early as next year, as he has led the country in one way or another since 2014. However, the ruling coalition argues that Prayuth has plenty of time left to lead as the rule should only take effect from 2017, when the constitution was promulgated. In October, in a poll conducted by the National Institute of Development Administration, 40.73% of the respondents said Prayuth should declare he will remain in the position only until the end of August 2022; 38.37% said he should seek the Constitutional Court’s ruling on this matter as soon as possible; 15.03% said he need not do anything; and the remaining 5.87% had no comments. Going forward, Prayuth has asked Deputy Prime Minister Wissanu Kreangam, the cabinet’s legal expert, to come up with an official interpretation of the term-limit rule.
Vietnam factories face shortage of workers; IMF downgrades growth (3 Oct – ongoing)
The severe outbreak in Vietnam’s southern industrial heartland has caused many factory employees to move back to their home villages. The government has estimated about 2 million workers will have moved due to pandemic restrictions and factory shutdowns at the country’s epicenter. This has affected electronics, apparel and footwear companies that have significant production lines in Vietnam. The world’s biggest contract shoemaker, Pou Chen, supplies Adidas and Nike employs 56,000 people in Ho Chi Minh City.
However, there are signs that workers are returning ever since Ho Chi Minh eased restrictions on 1 October. Incentives including increased pay and arranged transportation have been introduced but may not be enough to attract workers back ahead of the holiday production season. Furthermore, anticipated log jams in supply chains may result in many companies unable to fulfill their production orders.
In its October world economic outlook, the IMF highlighted the disruption in supply chains as a major cause of the loss in global growth momentum. The fund predicts Vietnam will grow 3.8% this year versus earlier April estimates of 6.5% GDP growth.
Vietnam to open tourist destinations in December, full resumption targeted for June 2022 (6 Oct)
Vietnam is planning to welcome vaccinated visitors to key tourist destinations from December onwards. Ahead of that, the resort island of Phu Quoc still hopes to open in November, becoming the test bed for resuming tourism and emulating Thailand’s sandbox approach. The reopening of Phu Quoc has already been delayed by a month. Depending on these trials, authorities are targeting full opening by June 2022. Foreign arrivals to Vietnam plunged to 3.8 million last year from 18 million in 2019.
Vietnam’s low vaccination rate remains a challenge for the country’s reopening. However, there are more positive signals in the handling of the outbreak. Currently, 14% of Vietnam’s population is fully vaccinated compared to 1% in June. And as of 12 October, the Ministry of Health recorded its lowest daily Covid-19 tally in three months.