CARI Captures Issue 545: COVID-19 pandemic pushes 4.7 million more people into extreme poverty in 2021
COVID-19 pandemic pushes 4.7 million more people into extreme poverty in 2021
(17 March 2022) The COVID-19 pandemic pushed 4.7 million more people into extreme poverty – defined as those living on less than US$1.90 per day – in 2021 as compared to 2020, and erased another 9.3 million jobs across the region. This is according to a report recently released by the Asian Development Bank (ADB). The pandemic has impacted the region’s labor market, leading to widespread unemployment, worsening inequality, and rising poverty levels. Although the ADB projects growth of 5.1% in 2022 due to higher vaccination rates, it warned that the new Omicron variant could cut growth by as much as 0.8%. The ADB noted that the region’s crucial tourism sector will gradually begin to recover this year as borders begin to reopen. The ADB also called upon Southeast Asian governments to invest more into their healthcare systems to ensure future resilience. It predicted that the region’s economic growth could increase by 1.5% if health spending in the region reaches about 5% of GDP, compared with 3% in 2021.
Government allows Malaysians to make another withdrawal from Employees Provident Fund
(16 March 2022) The Malaysian government announced that they will allow Malaysians to make a withdrawal of up to MYR 10,000 (US$2,383.13) from their savings at the Employees Provident Fund (EPF), a state-owned pension fund which manages the pension savings of private workers in Malaysia. The government had previously allowed the withdrawal of EPF contributions through three schemes, namely i-Lestari, i-Sinar and i-Citra, which amounted to US$24 billion being withdrawn, involving 7.34 million contributors since the COVID-19 pandemic hit the country two years ago. The government stated that further details concerning the withdrawal will be revealed by the EPF in the near future, as well as the necessary measures to address the issue of declining EPF members’ retirement funds. Malaysia’s Finance Minister had recently revealed that the EPF’s recently announced dividend rate of 6.1% should have been higher at 6.7% if there had been no outflows of savings by its members. He also cautioned that the EPF may be forced to dispose of more of its overseas investments and halt domestic investments to fund these withdrawals.
Number of expatriate white-collar workers in Singapore fall to lowest number in more than a decade
(16 March 2022) The number of expatriate white-collar workers in Singapore fell to its lowest number in more than a decade in the year ending December 2021. According to the Ministry of Manpower, the number of Employment Pass holders – a type of visa issued to foreign professionals, managers and executives earning at least US$3,300 per month – fell by 9% to 161,700. That is the lowest number since 2010, when there were 143,300 in the country. This has been attributed to both concerns by local Singaporeans that foreigners are taking their jobs, as well as restrictions on travel due to the pandemic. There has also been a drop in the number of technicians and laborers in the construction sector, causing delays in housing projects and other building projects. The total number of foreign workers in the city-state stood at 1.2 million at the end of 2021, well below the 1.43 million that Singapore hosted in 2019.
Government removes export volume restrictions on palm oil products, raises export levy instead
(17 March 2022) The Indonesian government recently announced they will remove export volume restrictions on palm oil products and raise its export levy instead. This was a surprise policy U-turn by the government just a week after it had further tightened its export curbs. Under the so-called domestic market obligation (DMO), the government had required companies to sell 30% of their planned export volume of palm oil products domestically, up from 20% imposed in January 2022. This had been to ensure local supply amidst soaring cooking oil prices. The Indonesian Trade Minister had recently announced that the policy had resulted in supply scarcity, and that the DMO would be withdrawn. Instead, the government will raise the ceiling of palm export tax and levy, from a combined maximum of US$375 per tonne to between US$575 to US$675 per tonne. Global prices of crude palm oil, which Indonesians uses for cooking oil, have surged to historic highs in 2022, amid rising demand and weak output from top producers Indonesia and Malaysia, plus Indonesia’s export limits.
Malaysia lifts ban on import of cattle and buffaloes from Thailand with immediate effect
(16 March 2022) On 16 March 2022, Malaysia lifted the ban on the import of cattle and buffaloes from Thailand with immediate effect. According to Malaysia’s Veterinary Services Department (DVS), the decision came following an agreement with the Thai Department of Livestock Development (DLD) on measures to control Lumpy Skin Disease (LSD). Malaysia had suspended the import of cattle and buffaloes from Thailand on 8 June 2021 after assessing the risk of LSD, which was reported to be contagious in more than 41 provinces in the country. The decision by DVS was made following several improvements in import rules and procedures, and also took into account mitigation measures that can be taken in Thailand to control the spread of LSD. The DVS stated it expects the supply of buffalo and cattle to remain sufficient ahead of the Hari Raya Aidilfitri celebration in May 2022.
Authorities mull four-day working week to reduce fuel costs on Filipino businesses and workers
(16 March 2022) In the face of rising energy costs, Filipino authorities have rejected calls by lawmakers and transport groups to suspend excise taxes on petroleum products, instead suggesting alternative solutions including more subsidies for affected sectors as well as a four-day working week. The government is expecting to collect US$2.5 billion in 2022 from excise taxes on fuel, and it is believed that suspending the excise tax would cut government revenue this year by 0.5% of GDP. A three-month wage subsidy has also been proposed by the labor department. The Finance Secretary also said that suspending the excise tax on fuel will increase this year’s deficit to 8.2% of GDP from a projected 7.7%, and the debt ratio to 61.4% of GDP from a 60.9% estimate.
Coal-fired power plants in Viet Nam face shortage of coal supplies due to COVID-19 disruptions
(17 March 2022) Coal-fired power plants in Viet Nam are currently facing a shortage of coal supplies as COVID-19 impacted the operations of local miners, as well as due to the high global cost of importing the fuel. In February 2022, power plants operated by state utility EVN only received 69% of coal agreed in contracts with state-run miners Vinacomin and Dong Bac. Vinacomin stated that its operations had been impacted by a shortage of miners due to the COVID-19 pandemic. The ongoing war in Ukraine has also pushed up prices for oil, gas and coal in international markets. The country’s coal imports in the first two months of 2022 fell 17.9% from a year earlier to 3.89 million tonnes, though the value more than doubled to US$859 million. Viet Nam’s Ministry of Industry and Trade has said Vietnam would limit its coal exports to 2 million tonnes in 2022.
Japan’s GDP contracts by 1.4% month-on-month in January 2022 due to spread of Omicron variant
(14 March 2022) Japan’s inflation-adjusted GDP fell by 1.4% month-on-month in January 2022 due to the spread of the Omicron variant, according to research by the Japan Center for Economic Research. It is Japan’s first contraction after expanding steadily for the final quarter of 2021. For the October-December quarter, Japan recorded annualized growth of 5.4%. The January contraction was mainly precipitated by sluggish household consumption, which fell 0.4% from December 2021, the first drop in four months. Disruptions in the supply chains also affected the manufacturing sector. However, corporate capital investment rose 0.6% in January, the fourth straight month of month-on-month growth. Private housing investment also grew 0.6% over the month. Exports of goods and services also contracted 2.3% while imports jumped by 3.4%.
South Korea becomes world’s biggest COVID-19 hotspot as daily cases top 400,000
(17 March 2022) South Korea has become the world’s biggest COVID-19 hotspot as daily cases topped 400,000. On 15 March a total of 400,741 infections were confirmed, up roughly 20% from a week prior. South Korea has also averaged 230 deaths a day in the past week while recording 1,244 cases with severe symptoms on 15 March — both at or near record highs. South Korea currently accounts for about 20% of new COVID-19 cases worldwide, more than any other country. The recent surge in cases is attributed to large-scale political rallies leading up to its presidential election on 9 March. Despite the increasing cases, the government has been easing curbs, in part responding to business owners. The government has stated that they believe the Omicron wave is at its peak and that infections will start to fall soon.
Unemployment rate falls to more than decade low as hiring exceeds expectations
(17 March 2022) Australia’s unemployment rate fell to a more than a decade low as hiring exceeded expectations in February 2022. Unemployment fell to 4%, a level unseen since August 2008, while labor-market participation hit a fresh record. This increase in employment was largely underpinned by a surge in full time positions. The stronger-than-expected data saw the Australian Dollar rise, while yields on benchmark three-year bonds also increased to 1.88%. The improving job market has emboldened hawks who predict that the Reserve Bank of Australia (RBA) will begin its tightening cycle as early as June 2022, although most believe it will start in August 2022. Inflationary pressure caused by the recent Russian invasion of Ukraine on global energy prices is likely to create more pressure on the RBA to begin raising rates.