Weekly Update
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07 June, 2021 ASEAN WEEKLY UPDATE • GMS countries mull welcoming vaccinated visitors Five of the six Greater Mekong Subregion (GMS) countries – Cambodia, China, Laos, Thailand and Vietnam – are willing to welcome tourists fully-vaccinated against Covid-19 to their shores amid the pandemic, in an effort to kick-start a recovery in the tourism market dampened by Covid-19. The commitment was conveyed on May 27 during the 47th meeting of the tourism working group, comprised of representatives of GMS countries and Metro Manila-based Asian Development Bank. Myanmar seemingly took no part in the meeting. At the meeting, Ministry of Tourism director-general for Tourism Development and International Cooperation Sieng Neak shared Cambodia’s key strategies, as outlined in the 2021-2025 three-phased national tourism roadmap – approved by Prime Minister Hun Sen on April 1, and ministerial plans to allow fully- vaccinated international tourists to enter the Kingdom with little or no quarantine stay. Source: The Phnom Penh Post, 28 May, 2021, CAMBODIA • Phnom Penh-Sihanoukville expressway 51% complete The construction of the nearly $2 billion Phnom Penh-Sihanoukville Expressway is 51.35 per cent complete and is expected to be finished in 2023, according to Ministry of Public Works and Transport secretary of state Vasim Sorya. Invested in by Cambodian PPSHV Expressway Co Ltd, the first expressway in Cambodia will boast a total length of 190.3km and stretch from Samrong Krom commune in Phnom Penh’s Por Sen Chey district to Sihanoukville’s Commune III. Prime Minister Hun Sen broke ground on the road on March 22, 2019. At a width of 24.5m with two lanes on either side, the road will be developed on a build-operate-transfer (BOT) basis. This project will help boost the freight and trade sector [by providing faster connectivity to] the deep- sea port in Sihanoukville.” At the same time, a more than $219 million road improvement project for National Road 3 linking Phnom Penh to Kampot town is 98.04 per cent complete, and the dispute resolution process attached to the project – including compensating families affected by the construction – was closed at the end of last month. Involving more than 134km of road, the project broke ground on May 7, 2018. Source: The Phnom Penh Post, 02 June, 2021; CAMBODIA • Cashless payments catching on in South-east Asia: Visa survey Going cashless is gaining ground in South-east Asia, according to Visa's latest study on consumer payment methods and attitudes. In markets where cashless adoption had a head start, such as Malaysia, Singapore and Thailand, consumers reckon that the pandemic has accelerated the transition towards cashless methods by at least three to five years. The growth of digital payment methods came as Covid-19 upended traditional consumer habits. Now, 46 per cent of consumers use card payment methods, while 63 per cent use contactless payment. Nearly two- thirds of consumers in the region attempted to go cashless in 2020, with Vietnam (84 per cent), Thailand (82 per cent) and the Philippines (79 per cent) blazing ahead. On average, consumers who tried to go cashless were able to do so for more than a week (9.9 days). Consumers from Cambodia and the Philippines topped the region with 12 days, while the shortest run (5.7 days) was from consumers in Myanmar. Across the region, cash is the preferred payment method for 45 per cent of consumers. Online card use and e-wallets are the most popular modes of cashless payment, at 11 per cent each, followed by contactless cards (10 per cent). Source: The Business Times, 03 June 2021, ASEAN • Indonesia factory activity hits record high for 3rd month in row Indonesia’s Purchasing Managers’ Index (PMI) rose to a record high for the third consecutive month in May, compelling manufacturers to hire new workers for the first time since the pandemic struck the country. Business consultancy IHS Markit wrote in a press release on Wednesday that Indonesia’s PMI reached 55.3 in May, up from 54.6 in April, the highest reading ever recorded since the company started measuring the PMI in April 2011. The PMI gauges factory activity based on a monthly survey of 400 local manufacturers. A PMI above 50 indicates expansion, while a PMI below 50 indicates contraction. “Companies signaled robust demand and output improvements, while the first increase in employment in 15 months was also an encouraging sign,” said IHS Markit economics associate director Jingyi Pan Source: TheJakartaPost, 03 June, 2021, INDONESIA • ADB backs more subsidies to avert long-term damage to PHL labor market The Philippines needs to support its labor market by incentivizing hiring and introducing unemployment insurance to prevent long-term damage to the work force, Asian Development Bank (ADB) officials said in a blog post. “The pandemic could create long-lasting effects on employment. Put simply, this temporary large shock to the economy might produce a persistently lower employment rate even after the economy has started to grow again. This phenomenon is known as hysteresis in employment,” ADB country director Kelly Bird, country specialist Maria Cristina Lozano-Astray, and senior economist Teresa Mendoza said in a blog post Friday. They said 1.7 million jobs were lost in the formal sector between January 2020 and January 2021, while employment in the informal sector increased by 435,000. “The early evidence from other countries suggests that policies should support workers’ labor market transitions as well as enterprises,” they added. Source: BussinessWorld, 04 June, 2021, PHILIPPINES • ASEAN, EU seal world's first bloc-to-bloc air transport pact ASEAN and the European Union (EU) have negotiated the world's first bloc-to-bloc air transport agreement, liberalising air transport by giving airlines of both regions greater opportunities to operate passenger and cargo services, Singapore's Ministry of Transport (MOT) announced on Friday. Negotiations for the Asean-EU Comprehensive Air Transport Agreement (AE CATA) were completed at the Extraordinary ASEAN-EU Senior Transport Officials Meeting, held virtually on June 2. "The AE CATA will enhance air connectivity between Asean and Europe and facilitate people-to-people and business exchanges. This will help support economic development in both regions as we work towards recovery from the Covid-19 pandemic," MOT said. Under the agreement, Asean and EU airlines will be able to fly any number of services between both regions. In addition, airlines will be able to fly up to 14 weekly passenger services, as well as any number of cargo services, via and beyond to any third country. Source: The Business Times, 04 June 2021, ASEAN • Rocked by third wave of virus, Thailand hopes fresh stimulus can boost consumption THE ongoing coronavirus pandemic and the slow vaccination process has already prompted several downgrades in the growth forecasts of Thailand's tourism-dependent economy this year. Even the government's planning agency - the National Economic and Social Development Council - last month downgraded its gross domestic product (GDP) growth forecast for 2021 to between 1.5 and 2.5 per cent, from 2.5 to 3.5 per cent previously. Tourism accounted for nearly 20 per cent of Thailand's GDP in the pre-Covid era, but without foreign arrivals and spending, economic growth is on track to be the lowest in South-east Asia, according to Moody's Analytics. "(Recovery) will be slow because of the high dependence on travel and tourism, and probably its inability to open up until maybe the end of the year," said Steve Cochrane, the chief Asia-Pacific economist at Moody's Analytics. Source: The Business Times, 04 June 2021, ASEAN • Laos Vientiane Saysettha Development Zone Low-carbon Demonstration Area Cooperation Project: the Launch Ceremony of the first batch of aid delivery has been held successfully On June 4, 2021, the launch ceremony of the first batch of aid materials for the Vientiane Saysettha Development Zone Low-carbon Demonstration Area Cooperation Project, was successfully held in Yangzhou of China’s Jiangsu Province. For this time, it is prepared to deliver 2,000 sets of LED street lamps and five sets of environmental monitoring equipment to support Laos in coping with the climate change issue. The equipment has been produced and will be immediately transported to the Demonstration Zone. Covering an area of 11.5 square kilometers, Saysettha Development Zone （hereinafter referred to as SDZ） is located in Vientiane, the capital of Laos. It is invested and developed by Yunnan Construction and Investment Group and Vientiane Capital Authority. The development zone is a key cooperation project between the government of China and Laos. It is also recognized as a state-level overseas economic and trade cooperation zone of China and a special economic zone of Laos, respectively. Source: Vieniane Times, 05 June, 2021; LAOS • ‘Just because we can, doesn’t mean we should’: Finance minister justifies banks not giving blanket moratorium during MCO 3.0 Malaysia should not reintroduce a blanket moratorium or a freeze in loan repayments for all borrowers under the current total lockdown, as it is unnecessary and would not make financial sense when the government needs to ensure sufficient financial resources for the long fight against the Covid-19 pandemic, the finance minister argued today. Finance Minister Datuk Seri Tengku Zafrul Aziz wrote a lengthy statement to explain why it is not the best or most responsible move now for banks to suspend loan repayments for all borrowers instead of just those who need it, arguing that at least 80 per cent of borrowers in Malaysia do not need this and can continue repaying loans. He said that borrowers in Malaysia that still need help repaying their loans currently can take up such help from banks — in the form of a three-month moratorium or a six-month reduction in loan repayments by half.