CARI Captures Issue 521: Low vaccination rates are hurting Southeast Asia’s economy


Low vaccination rates are hurting Southeast Asia’s economy

(22 September 2021) The Asian Development Bank (ADB) downgraded its growth projections for Southeast Asia (including Timor-Leste) from 4.4% to 3.1% for 2021 and 5.1% to 5.0% for 2022 as it expects the region to “recover at a much slower pace than projected” due to lockdowns and restrictions caused by recurring COVID-19 outbreaks and uneven vaccination rollouts. Thailand, Indonesia, Malaysia and Vietnam are expected to be the hardest hit due to the pandemic, while Myanmar’s outlook was downgraded from a 9% contraction to an 18.4% contraction due to its political climate. Singapore is the only country to receive an upgrade as it has fully vaccinated 75% of its population.

Privatized vaccination schemes gain traction in Southeast Asia

(20 September 2021) ASEAN governments have been turning to the private sector to supplement national vaccine supply and distribution efforts following the COVAX program’s failure to secure adequate vaccines for developing countries. Indonesia’s private vaccination scheme, which was launched in February 2021, received over 10 million employee registrations from over 22,000 companies within three months. Most of these private schemes, which focuses on on-site employees and their immediate families, are utilizing Sinopharm vaccines since—according to the Philippines’ vaccine czar—Pfizer, Sinovac, and Sputnik V prioritize government orders while Moderna, Johnson & Johnson, and AstraZeneca do not accept private vaccine orders.

Southeast Asia-focused private equity funds raise US$1 billion in H1 2021

(17 September 2021) ASEAN-focused private equity funds raised US$1 billion in dry powder in the first half of the year, up from US$1 billion raised in all of 2020 and US$1.3 billion in 2019, according to a recent DealStreetAsia report. Asia Partner’s debut US$384 million fund and Mekong Capital’s US$246 million fifth fund accounted for the bulk of the sum. Another 28 ASEAN-focused private equity funds are currently in the market to raise US$6.8 billion, with Navis Capital Partners leading the way in the second half of the year with its US$900 million eighth fund and US$450 million continuation fund.

Inclusivity and sustainability among Indonesia’s G20 presidency priorities

(23 September 2021) Indonesia’s priorities when it assumes the G20 presidency in 2022 will include inclusiveness, a sustainable green economy, climate resilience, and “vulnerable groups that must be prioritized”, according to Indonesian President Joko Widodo’s recorded statement to the UN General Assembly. The premier called for countries to work together to reorganize global health security resources to better facilitate funding and vaccines, and establish a standardized global health protocol for travel. He also stressed that “concerns on the marginalization of women and violence in Afghanistan, Palestine’s elusive independence, and the political crisis in Myanmar must be our common agenda.”

Ooredoo and CK Hutchison join forces in US$6 billion telco merger

(20 September 2021) Qatar’s Ooredoo and Hong Kong’s CK Hutchison have agreed to merge their respective Indonesian telecommunications businesses—Indosat and Hutchison 3 Indonesia—in a US$6 billion deal to form Indosat Ooredoo Hutchison. The deal, which is expected to close by year-end, would make the new entity the second-largest telecommunications operator in the country with annual revenue of around US$3 billion and cost savings of approximately US$300 to US$400 million to be realized over three to five years. Ooredoo Hutchison Asia will retain a controlling 65.6% stake in the merged entity and will remain listed on the Indonesian Stock Exchange.

PTT and Foxconn to begin manufacturing electric vehicles by 2024

(20 September 2021) Taiwanese electronics contract manufacturer Foxconn and Thai state-owned oil company PTT have formed a joint venture to produce electric cars in Thailand as part of the country’s hopes to become an electric vehicle hub. According to Foxconn, production is expected to commence in two to three years with initial output of 50,000 vehicles per year and 150,000 vehicles per year later on. The Eastern Economic Corridor (EEC) is said to be a potential location for the planned production plant, which will house “the entire electric vehicle value chain” from research to battery production and vehicle assembly.

Domestic capital market totalled US$813 billion in 2020
(21 September 2021) Malaysia’s domestic capital market grew from approximately US$574 billion (RM2 trillion) in 2011 to US$813 billion (RM3.4 trillion) in 2020 with over 900 listed companies and the third-largest bond market in Asia, according to the Securities Commission Malaysia’s Capital Market Masterplan 3 (CMP3) launched this week. The CMP3 outlined six key pillars for the 2021 to 2025 period which include Sustainable and Responsible Investment, Islamic Capital Market, as well as greater use of regulatory technology and supervisory technology. The country’s domestic economy expanded at an average rate of 5.1% annually from 2011 to 2019 before contracting by 5.6% in 2020.

RCEP Monitor

ASEAN countries aim to ratify RCEP by the end of 2021

(21 September 2021) Malaysia aims to ratify the Regional Comprehensive Economic Partnership (RCEP) by mid-December, Vietnam aims to do so before November, while the Philippines hopes to do the same by the end of the year according to the countries’ respective trade leaders. Cambodia, Thailand, Singapore, Japan and China have ratified the agreement so far. The RCEP will come into force 60 days after at least six countries within ASEAN and three outside ASEAN have submitted the instruments of ratification to the ASEAN Secretariat. ASEAN Member States aim to bring the RCEP into force on 1 January 2022.

Cambodia ratifies RCEP and bilateral free trade agreement with China

(21 September 2021) The Cambodian Senate passed two bills on September 20 authorizing the ratification of the RCEP and the Cambodia-China Free Trade Agreement (CCFTA). The government expects the RCEP to expand its GDP by an additional 2%, grow exports by an extra 7.3%, increase investments by another 23.4%, and signal Cambodia’s support for a “multilateral free trade system based on legal principles”. The CCFTA is expected to expand Cambodia’s agricultural export market as well as increase jobs, investments and knowledge sharing with China while providing greater clarity on bilateral trade rules and customs.

China files formal application to join the CPTPP

(21 September 2021) China submitted its application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) last week following the United Kingdom’s application to the same in February. According to CPTPP procedures, members will decide “whether to commence the accession process with the aspirant economy within a reasonable period” once a formal application has been made. Malaysia and Singapore responded warmly to China’s announcement, while New Zealand, Japan, Mexico, and Australia stressed the need to ensure that prospective candidates are committed to meeting the standards stipulated in the agreement. China’s announcement was followed by Taiwan’s, which submitted its application to join the CPTPP this week.

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