CARI Captures Issue 503: ASEAN nations being impacted by new wave of COVID-19

ASEAN nations being impacted by new wave of COVID-19

(15 May 2021) Much of Southeast Asia is being impacted by a new wave of COVID-19, with clusters having been found in areas particularly vulnerable to the spread of the virus, including hospitals, quarantine facilities and border crossings. New variants of COVID-19 which are more transmissible have also been blamed for the new outbreaks. In particular, new cases in Malaysia have more than tripled over the past month, while Thailand’s daily tally has jumped from 50 in early April to more than 2,000 a month later. Meanwhile, nearly 90% of Cambodia’s 20,000 odd recorded infections occurred since the start of April. Most countries’ outbreaks have been attributed to mass travel associated with religious or national holidays, as well as foreign travellers bringing the virus into their borders. While vaccination rates are rising within the region, with the exception of Singapore and Viet Nam less than 10% of the adult population in each country has received any COVID-19 vaccine doses.

Total imports from eight trading partners including US, Canada, and New Zealand fell 38% on the year in February 2021

(19 May 2021) According to data collected by Nikkei Asia, Myanmar’s imports from eight trading partners, including the United States, Canada, and New Zealand, fell 38% on the year in February 2021. Meanwhile, Myanmar’s exports to these eight trading partners fell by 9% within the same period. These eight trading partners make up roughly one-tenth of Myanmar's total trade. Trade with the United States fell the furthest, with American exports to Myanmar contracting by 60% and its imports falling by 12%. This has been attributed to Washington’s relatively quick imposition of sanctions on the country. Trade figures for March and April are expected to show sharper contractions. 

Malaysia preparing to offer handsome tax incentives to accelerate the electric vehicle industry in the country

(19 May 2021) The Malaysian government is preparing to offer ‘handsome’ tax incentives to accelerate electric vehicle development in the country in its soon-to-be-announced accelerated EV policy under the National Automotive Policy (NAP) 2020. Under the incentives plan, fixed incentives including excise duties, import duties and sales taxes will be offered to industry players and EV car users. Higher levels of incentives will be offered to companies bringing something ‘extraordinary’ into the country. Original equipment manufacturers (OEMs) will be able to enjoy fixed incentives as well as other special incentives customized for them. Among the benefits which EV car users can enjoy will include road taxes, green parking schemes, charging installations as well as toll rebates. It is hoped that this policy will be brought to the Cabinet by June 2021 for approval, before announcing it in July.

Indonesia’s Finance Minister proposes budget deficit of 4.51% to 4.85% of GDP for 2022

(20 May 2021) Indonesia’s Finance Minister Sri Mulyani Indrawati proposed a budget deficit of 4.51% to 4.85% of GDP for 2022, as well as new potential taxes to increase revenue amid improving economic conditions. This proposal was based on the assumption that the rupiah exchange rate would average 13,900 to 15,000 a dollar and the yield of the benchmark 10-year bond would be within the range of 6.32% to 7.72%. The Indonesian government is targeting between 5.2% to 5.8% GDP growth for 2022, while also targeting 2% to 4% inflation rate for the same year. Indonesia is expected to produce between 686,000 to 726,000 barrels per day in 2022, while gas lifting was projected to be between 1.031 million to 1.103 million barrels of oil equivalent per day.

The Philippines government slashes growth projections to between 6% and 7%

(18 May 2021) The Philippines’ Development Budget Coordination Committee slashed its growth projections for 2021 to between 6% and 7%. This is down from its previous estimates of 6.5% to 7.5% growth. It also lowered its growth projections for 2022 to between 7% and 9% growth, from 8% to 10% earlier. This downgrade came after the country’s first quarter GDP contracted by more than expected at 4.2%. This has been attributed to stricter COVID-19-related curbs introduced since late March 2021 in the capital and surrounding provinces. According to a survey of economists by Bloomberg News in May 2021, the Philippines economy will expand by 5.5% in 2021, 6.5% in 2022, and 6.1% in 2023.

Thailand to add workers in Bangkok and nine other provinces to the front of the vaccination queue

(20 May 2021) Thailand intends to add workers in Bangkok and nine other provinces with large economies to the front of the vaccination queue, in an effort to buttress the economy. Millions of workers under the social security program will be eligible for the vaccine alongside other priority groups including senior citizens and individuals with underlying conditions. Thailand has thus far only administered some 2.4 million shots, and its pace of vaccinations has been relatively slow due to the limited supply of vaccines. Thailand has slashed its growth projections for 2021, citing the delay in reopening borders to foreign tourists and slow pace of vaccination. The economy may expand between 1.5% and 2.5% in 2021, less than the 2.5%-3.5% forecast in February 2021.

Alibaba leading US$400 million investment deal into Vietnamese conglomerate Masan Group Corp.’s retail arm

(18 May 2021) Chinese tech giant Alibaba Group Holding Ltd and partners are investing some US$400 million into Vietnamese conglomerate Masan Group Corp.’s retail arm, thereby expanding Alibaba’s reach into the online groceries business in Southeast Asia. Alibaba and its partner Baring Private Equity Asia are leading a consortium that will take a 5.5% stake in The CrownX, which holds Masan’s interests in Masan Consumer Holdings and VinCommerce, while the conglomerate will own 80.2% of the firm following the investment. The CrownX is believed to have a pre-investment valuation of US$6.9 billion. As part of the deal, the Vietnamese retail firms will partner with Alibaba’s Southeast Asian unit Lazada to expand its digital business in the country.

RCEP Monitor

Japan’s economy contracted by annuanalized decline of 5.1% due to resurgent COVID-19 outbreaks
(18 May 2021) Japan’s economy contracted by 1.3% in the first quarter of 2021 from the preceding quarter, or at an annualized pace of 5.1%, as resurgent COVID outbreaks snapped the run of consecutive growth after two quarters. The result compares with the annualized decline of 4.6% forecasted by 37 economists from the Japan Center for Economic Research. This larger than expected contraction was blamed on the government’s declaration of a second state of emergency for the period of January 8 to March 21. Private consumption subsequently fell by 1.4% from the previous quarter. Other factors blamed included weaker winter bonuses and government consumption levels.

Major Australian beef exporter predicts that UK trade deal could increase beef exports by tenfold
(21 May 2021) Major Australian beef exporter Australian Agricultural Company (AACo) predicted that a UK-Australia trade deal based on full tariff liberalisation could see Australian beef exports to the UK expand by ‘tenfold’. Under the existing trade regime, Australian beef exporters face a blanket 12% tariff on beef products, with a surcharge of between GBP 1.40 and GBP 2.50 a kilo depending on the cut, and an annual lower tariff quota of 3,761 tonnes. The UK government hopes to conclude an agreement ahead of the G7 summit in Cornwall in June 2021. A July 2020 study conducted on a prospective UK-Australia trade deal projected a “full tariff liberalisation” deal would cause British exports to Australia to rise 7.3% alongside a 83.2% rise in Australian exports to the UK.

New Zealand’s government introduces big-spending budget on 20 May aimed at stimulating economy
(20 May 2021) New Zealand’s government introduced a big-spending budget on 20 May aimed at stimulating the COVID-19-hit economy. Among the measures introduced included a US$2.4 billion boost to family benefits which would help lift 33,000 children from poverty. Extra money was also allocated for health, public transport, and education. Extra money was also earmarked for climate change mitigation, including low carbon technologies. Government debt-to-GDP is expected to expand from 26.3% in 2020 to 48% in 2023. The New Zealand Treasury estimates GDP growth of 2.9% in the 12 months to June 2021, rising to 4.4% in 2023.  

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