With the Delta variant wave that once gripped ASEAN countries finally receding, the region envisages an uptick in its economy. Since July this year, the pandemic saw no end in sight as cases soared to unprecedented highs, with slow vaccination rates and overburdened healthcare infrastructures exacerbating the COVID-19 situation in many countries. Countries like Indonesia and Malaysia were amongst the worst hit in ASEAN. Malaysia saw daily cases almost exceeding the 25,000-mark whilst Indonesia was, at one point in time, the epicentre of the virus outbreak, with daily infections surpassing 40,000. However, with vaccination rates picking up across the board and cases declining sharply, ASEAN countries are easing social mobility restrictions to kickstart tourism and travel. As countries transition from adopting a zero COVID-19 approach to an endemic strategy, there remain significant stumbling blocks and potholes on the road to economic recovery.
On 26 October 2021, the Singapore Institute of International Affairs (SIIA) organised the webinar, “ASEAN and the Pandemic: Pressing Forward” to discuss where the region is at in terms of the pandemic. The webinar also featured the SIIA’s new report titled “ASEAN: From Crisis Mode to Endemic Approach”, which examines the economic and political situation facing five key economies. The webinar was moderated by Associate Professor Simon Tay, Chairman of the SIIA, and joined by speakers, Ms Lee Chen Chen, Associate Director and Senior Fellow of SIIA, and Dr Steve Cochrane, Chief APAC Economist from Moody’s Analytics.
ASEAN Still on an Upward Trend
The SIIA’s latest report featured extensive socio-political and economic analyses on four ASEAN key economies, notably Indonesia, Vietnam, Malaysia and Thailand to glean growth opportunities and risks that lie ahead for the region. These economies were narrowed down as the focal point of study as collectively, they make up more than 70 per cent of ASEAN’s gross domestic product (GDP). Despite the Delta variant hampering ASEAN’s economic progress in 2021, the region’s export capabilities remain resilient and robust in meeting global demands. As the COVID-19 situation further stabilises this year, external demands from Western markets have risen, revving up the global supply chains between ASEAN and Western countries. The price for commodities like palm oil and coal have also increased, thus boosting government revenue. ASEAN remains a region of attractiveness for foreign investors as in the coming months, the region can expect to see optimistic business growth and new development projects which will, in turn, create more job opportunities. However, Dr Cochrane stressed that investment numbers are ultimately contingent upon how well the region manages the pandemic, and how deftly ASEAN countries rebound from the economic slump. Another essential factor of drawing in foreign direct investment is to ensure that the policymakers communicate policies clearly and effectively to foreign investors. Clear communication is pertinent in ensuring stability and helps to bolster investors’ confidence in the government and region as a whole.
Socio-political challenges to Watch
Apart from the economic prospects of the region as elaborated by Dr Cochrane, Ms Lee touched on the socio-political hurdles unique to each ASEAN country and how such countries can circumvent said problems. Although the rate of vaccination has accelerated, countries like Indonesia and Vietnam still face debilitating issues like vaccine hesitancy and logistical problems. These countries are grappling with vaccine distribution issues as it takes a longer period of time to inoculate their respective populations, which are larger in size, and to deliver vaccines to remote areas.
Out of the four countries, Vietnam emerged as the most politically stable country as evident from the recent leadership transition from the former Prime Minister (PM) to the current PM Pham Minh Chinh which occurred smoothly. It is speculated that the new PM would largely retain major policies enacted by his predecessors, specifically anti-corruption measures, economic reforms and stimulus for businesses and industries to flourish, and many others. The new PM had also been appointed as the head of a new national task force that oversees the country’s pandemic response.
On the contrary, for Malaysia and Thailand, political instability remains of paramount concern. Although Malaysia has seen landmark progress in terms of striking a bipartisanship pact known as the Memorandum of Understanding (MOU) between the ruling coalition and opposition bloc, Pakatan Harapan, the viability of MOU has yet to be tested in relation to passing major governmental plans like the Budget 2022 and so on. More recently, Malaysia’s political landscape is evidently becoming more fragmented than ever, as we witness an escalation of infighting amongst UMNO members which led to the downfall of UMNO’s chief minister in Malacca’s legislative state assembly. In Thailand, the youths are increasingly disaffected with the government’s perpetuation of elitism and botched handling of the pandemic. Thai youths are taking to the streets to demand for more democratic representation and to protest against the government’s poor management of the health crisis.
ASEAN – Still a Silver Lining
Although there are many challenges to surmount, there are still silver linings that ASEAN countries can find solace in. As the vaccination rate picks up significantly, and both leisure and business travel set to resume, the region can expect an economic revival in the coming months. To ensure that the region remains versatile and resilient in facing future crises, ASEAN countries must leverage on emerging opportunities expedited by the pandemic, specifically digital economy and green technology. This can be done through upskilling and training employees to better equip them with the necessary skill sets, and green financing respectively. The act of delicately treading between preserving lives and safeguarding livelihoods remains an uphill task but countries that can successfully balance the two will fare better than others.
