JAKARTA: Indonesian authorities said on Monday (Jul 24) the number of areas where a wildfire could occur has doubled over the past week due to dry weather, raising concerns over widespread forest fires even before the country hits peak dry season. The number of ‘hotspots’ recorded between Jul 17 andContinue Reading
Earlier on Monday, Mr Lee was hosted to breakfast by Deputy Prime Minister and Finance Minister Lawrence Wong.
Mr Wong and Mr Lee affirmed the “warm and friendly” ties between Singapore and Hong Kong. They also exchanged views on cooperation across a wide range of areas, both bilaterally and in multilateral fora.
“As international financial centres, Singapore and Hong Kong enjoy close cooperation on fintech, information sharing, as well as supervisory and regulatory matters,” MFA said.
“With Singapore and Hong Kong playing complementary roles in their respective regions, both sides stand to benefit from further deepening collaboration, including in Southeast Asia and the Guangdong-Hong Kong-Macao Greater Bay Area.”
Singapore is the first leg of a week-long ASEAN trip for the Hong Kong chief executive.
He will also visit Malaysia and Indonesia, accompanied by top government officials and leaders from the finance, investment, business, legal, innovation and technology and logistics sectors, reported the South China Morning Post.
The world faces escalating natural disasters, yet nowhere is the threat more immediate than in Asia and the Pacific. Ours is a region where climate change-induced disasters are becoming more frequent and intense.
Since 1970, 2 million people have lost their lives to disasters. Tragically, but all too predictably, the poorest in the least-developed countries are worst-affected. They will find themselves in the eye of the storm as temperatures rise, new disaster hotspots appear and existing risks increase. Unless we fundamentally change our approach to building resilience to disaster risk, temperature rises of 1.5°C or 2°C will make adaptation to the threat of disasters unfeasible. Disaster risk could soon outpace resilience in Asia and the Pacific.
It is worth pondering what this would mean. The grim tally of disaster-related deaths would inevitably rise, as would the annual cost of disaster-related losses, forecast to increase to almost $1 trillion, or 3% of regional GDP, under 2°C warming up from $924 billion today, or 2.9% of regional GDP. The deadly combination of disasters and extreme weather would undermine productivity and imperil sustainable development.
In the poorest parts of our region, such as the Pacific small island developing states, disasters would become a major driver of inequality.
Losses would be particularly devastating in the agriculture and energy sectors, disrupting food systems and undermining food security as well as jeopardizing energy supply and production. Environmental degradation and biodiversity loss would be remorseless, leading to climate change-driven extinctions and further increasing disaster risk.
To avoid this exponential growth of disaster risk, there is a narrow window of opportunity to increase resilience and protect hard-won development gains. To seize it, bold decisions are needed to deliver transformative adaptation. They can no longer be postponed.
This week, the UN Economic and Social Commission for Asia and the Pacific (ESCAP) is convening top policymakers, experts and academics from across the region on 25-27 July to discuss transformative adaptation policies and actions at ESCAP’s Committee on Disaster Risk Reduction. The Asia-Pacific Disaster Report 2023 will also be launched at the Committee.
The stakeholders drawn to this meeting will consider key questions such as prioritizing greater investment in early warning systems.
Expanding coverage in least developed countries is the most effective way to reduce the number of people killed. Early warning systems can shield people living in multi-hazard hotspots and reduce disaster losses everywhere by up to 60%. They provide a tenfold return on investment. To protect food systems and reduce the exposure of the energy infrastructure – the backbone of our economies – sector-specific coverage is needed.
Investments at the local level to improve communities’ response to early warning alerts, delivered through expanded global satellite data use and embedded in comprehensive risk management policies, must all be part of our approach.
Only transformative adaptation can deliver the systemic change needed to leave no one behind.
Armida Salsiah Alisjahbana
Nature-based solutions should be at the heart of adaptation strategies. They support the sustainable management, protection and restoration of degraded environments while reducing disaster risk. The evidence is unequivocal: preserving functional ecosystems in good ecological condition strengthens disaster risk reduction. This means preserving wetlands, flood plains and forests to guard against natural hazards, and mangroves and coral reefs to reduce coastal flooding.
Forest restoration and sustainable agriculture are essential. In our urban centers, nature-based solutions can mitigate urban flooding and contribute to future urban resilience, including by reducing heat island effects.
Beyond these priorities, only transformative adaptation can deliver the systemic change needed to leave no one behind in multi-hazard risk hotspots. Such change will cut across policy areas. It means aligning social protection and climate change interventions to enable poor and climate-vulnerable households to adapt and protect their assets and livelihoods.
Disaster risk reduction and climate change adaptation must become complementary to make food and energy systems more resilient, particularly in disaster-prone arid areas and coastlines. Technologies such as the ‘Internet of Things’ and artificial intelligence can improve the accuracy of real-time weather predictions as well as how disaster warnings are communicated.
Yet to make this happen, disaster risk financing needs to be dramatically increased, with financing mechanisms scaled up. In a constrained fiscal context, we must remember that investments made upstream are far more cost-effective than spending after a disaster.
The current level of adaptation finance falls well short of the $144.74 billion needed for transformative adaptation. We must tap innovative financing mechanisms to close the gap. Thematic bonds, debt for adaptation and ecosystem adaptation finance can help attract private investment, reduce risk and create new markets. These instruments should complement official development assistance, while digital technologies improve the efficiency, transparency and accessibility of adaptation financing.
Now is the time to work together, to build on innovation and scientific breakthroughs to accelerate transformative adaptation across the region.
A regional strategy that supports early warnings for all is needed to strengthen cooperation through the well-established United Nations mechanisms and in partnership with subregional intergovernmental organizations. At ESCAP, we stand ready to support this process every step of the way because sharing best practices and pooling resources can improve our region’s collective resilience and response to climate-related hazards.
The 2030 Agenda for Sustainable Development can only be achieved if we ensure disaster resilience is never outpaced by disaster risk. Let us seize the moment and protect our future in Asia and the Pacific.
Armida Salsiah Alisjahbana is the under-secretary-general of the UN and executive secretary of the UN Economic and Social Commission for Asia and the Pacific (ESCAP).
With several ESG-backed initiatives in recent years, the Philippines-based conglomerate Ayala has solidified its commitment to sustainability. Operating across verticals including energy, finance, infrastructure, and real estate, Ayala has committed to net zero greenhouse emissions by 2050. The conglomerate’s energy wing ACEN recently created the world’s first energy transition mechanism (ETM) in November 2022, backed by BPI and RCBC.
On the social front, Ayala’s GCash app and BPI’s BanKo have played pivotal roles in financial inclusion for unbanked Filipinos and small to medium size enterprises. BPI and Globe are currently reviewing their framework to consciously focus on these areas.
When it comes to governance, Ayala’s boards are working towards an appropriate level of diversity and independence. This involves maintaining high standards when it comes to transparency and disclosure.
The 190-year-old company’s social and sustainability initiatives have a long history. Albert de Larrazabal, CFO at Ayala Corporation said, “We have always aligned ourselves to national interest and had very high standards of governance and stewardship. As we must be mindful of the ecosystems we operate under, ESG in various forms has always been part of our value proposition.”
Ayala’s approach to ESG
Today, ESG-based financing is a priority for Ayala. Apart from ACEN’s implementation of the world’s first ETM, Ayala has issued a social bond with the IFC in support of its cancer hospital. Larrazabal said, “We are looking to do KPI-linked social and ESG financing, which incorporates targets into the commercial terms and conditions of the loan.”
Even during the M&A process, the conglomerate is mindful of integrating new acquisitions into its ESG framework. Ayala has also taken steps to ensure that ESG is a priority that is ingrained at the highest levels of the organisation, leveraging its membership with the World Business Council for Sustainable Development (WBCSD). The conglomerate’s board has received training which ensures they can play an active role in tracking and monitoring developments in the ESG space.
Corporates making public commitments to sustainability draw a lot of attention, not all of it positive. Asked how Ayala approaches concerns about greenwashing, Larrazabal said, “Sometimes it happens inadvertently because of incorrect measurements. That’s why we brought in South Pole. We have taken steps to ensure we are on the right track by committing to independent verification, to give people a degree of reassurance.”
Building a model for the APAC region
While the need for sustainable leaders is strongly felt across APAC, many countries in the region have a minimal contribution to emissions — the Philippines emits half the global average on a per capita basis. Larrazabal said, “Between 80% to 88% of our emissions — depending on individual businesses — are scope 3.” These emissions are defined as the result of activities from assets not owned or controlled by a reporting organisation, but which are a part of its value chain. Larrazabal said, “Our scope 3 is somebody else’s scope 1 and scope 2. We need an environment that enables, incentivises, and if that fails, penalises those who disregard scope 1 and 2.”
Many emerging markets grapple with issues similar to those facing the Philippines — adopting renewable energy, while meeting the demands of a growing population and economy. As a result, ETM-like arrangements may be embraced to a greater extent. Asked for his advice on managing such a transaction, Eric Francia, president and CEO at ACEN said, “It is important for investors to reconsider their position on coal, so long as the principles are well understood. One may be investing in a coal plant, but for a good purpose, which is enabling its early retirement.”
Offering a financial perspective on the ETM, TG Limcaoco, president and CEO Bank of Philippine Islands added, “We provided lending and brought in other institutions. We took reduced rates of returns for equity and debt exposure, which allowed us to shorten the life of the plant by 10 to 15 years. It is a big win for everyone involved.”
For more on Ayala’s adoption of ESG and a deeper insight into the world’s first ever ETM, please watch the accompanying video.
¬ Haymarket Media Limited. All rights reserved.
Hello Globe readers,
Today marks the last day of Cambodia’s election campaign, which meant rallies of thousands organised by the ruling Cambodia’s People Party (CPP) motored through Phnom Penh.
But many young Cambodians are concerned about the lack of fair competition in a system long dominated by Prime Minister Hun Sen and his party. After election officials forbade the main opposition Candlelight Party to run due to a paperwork requirement, only a scattering of minor opposition parties are left to compete with the CPP.
Just over the border, Thailand has yet to select its next prime minister after the opposition Move Forward Party leader Pita Limjaroenrat was ruled out for the second time in a row. Citizens have been mobilising and gearing up in nationwide protests.
This week, the Globe also published the Khmer version of Govi Snell and Anton L. Delgado’s feature on farmers clashing with the few remaining wild elephants in Vietnam, causing major concerns among environmentalists.
Conservationists across the region are also worried about the growing threats of illegal wildlife trade and deforestation in the Annamite mountains, where newly discovered species are already heading towards extinction.
Lastly for the stories, six decades after Singapore’s failed prison experiment that resulted in a deadly riot, film director Tom St. John Gray spoke in an interview about the process of uncovering the truth behind this riot and sharing it in a CNA documentary titled “Riot Island.”
Finally, for some Globe news, today’s newsletter marks four years of Sightlines. For long-time readers, thanks for following — for newcomers, welcome aboard! We’ve been publishing deep-dives from around the region since 2007 and hope to do so for much, much longer yet. Hit this link if you’d like to subscribe and join our mission!
That’s all for today, may you have a wonderful weekend and enjoy the features below.
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To vote or not to vote. That’s the dilemma young Cambodian voters are facing ahead of the upcoming election on 23 July.
“I must go, but it’s not coming from my willingness,” said Nget Phorn, 24, a Buddhist monk and a member of the non-governmental organisation Youth for Social Development and Democracy (YSDD). “Although there is no big opposition party like it used to be, we don’t want any villagers [neighbours] to observe and say, ‘Why isn’t this guy going to vote?’”
With almost two-thirds of its citizens younger than 30, Cambodia is one of the most youthful countries in Asia. Most of its population has seen only one person in power – Prime Minister Hun Sen, who has ruled the country for 38 years and is now preparing a dynastic transfer to his eldest son, military commander Hun Manet.
As the public readies for the general elections, a carefully curated contest in which the ruling Cambodian People’s Party (CPP) is expected to win a landslide victory against a tightly monitored opposition, young and first-time voters who spoke with the Globe showed little enthusiasm. More than a dozen young people said they felt social pressure to cast their vote for their ideal political leader, even as they felt they didn’t really have a choice.
The Cambodian government has long fostered the development of large, officially sanctioned youth groups that can make up a reliable bloc of fresh-faced CPP support. Politically conscious youths outside that system said they had their own motivations for voting, such as a new law barring non-voters from running for office in the future, but were otherwise uninspired.
“I think with the 2023 election, nothing will change except for the power transfer from father to son,” said Kuy Chetra, a 22-year-old student and YSDD member. “Also, in the upcoming seventh mandate of the national election, there is no policy for youth. So the question is, why do we go voting if there is no policy for the youth?”
In May, the National Election Committee disqualified the main opposition Candlelight Party over a paperwork requirement. The party had won about 22% of the popular vote in the 2022 nation-wide commune elections, in which voters select local representatives. Though this year’s ballot will feature 17 other minor parties, these groups collectively garnered less than 5% of the vote last year.
Weeks after rejecting Candlelight, the National Assembly approved an amendment to the election law to prohibit citizens from spoiling their ballot or encouraging others to boycott the vote. Rushed through to prevent opposition supporters from making a silent protest against the disqualification, the law has already been used to arrest four Candlelight officials.
Ahead of the elections, students told Globe that representatives of the CPP held short lectures in university classrooms ‘teaching’ the students how to tick the right box on the ballot. A student in school on a government scholarship, who asked to speak anonymously for fear of losing their funding, said they felt increased pressure to side with the ruling party lest they be stripped of their financial support.
A different Royal Phnom Penh University international relations student, who also asked for their name to be withheld for fear of repercussions, said they didn’t plan on voting.
“This election is not fair,” the student said. “We are pressured to vote for someone we haven’t really chosen. And even if I voted for some minor opposition party, there would be no chance for them to have enough seats in parliament to make any real difference.”
The abrupt removal of Candlelight from this year’s ballot sparked global chastisement over the fairness of the upcoming elections and an outcry from local civil society. Though he intended to vote, Phorn, the young monk, saw little promise in the number of parties on the ballot.
“There are many parties participating in this election but their power isn’t balanced enough to compete [with the ruling party],” he said. “I want to see the competition between two [or more] parties, and an open atmosphere for people to fully exercise their rights to vote and choose their leader.”
Still, partly because of dedication to their social duty to choose their leaders or otherwise due to community pressure, most of the interviewed students decided to vote despite concerns about the atmosphere of political pressure.
Groups similar to YSDD burgeoned after the UN-administered 1993 election but have been increasingly marginalised in the process of governance. Youth participation in Cambodian politics has instead been structured through a top-down system of organisations that officially deny any partisan agenda but have served as a pipeline for the ruling elite.
“Historically, big youth movements have always been linked to the government while other smaller movements have had little influence or impact [after 1993],” said Astrid Norén-Nilsson, a researcher of Cambodian politics and senior lecturer at Lund University in Sweden.
These main groups include the Union of Youth Federations of Cambodia (UYFC), the Cambodian Red Cross and Cambodia Scouts. All are registered non-governmental organisations but are linked to the Ministry of Education, Youth and Sport, said Norén-Nilsson, and have long been seen as unofficial youth wings of the CPP.
The UYFC had an estimated 120,000 members as of 2018 and is led by Hun Many, a son of the prime minister and a CPP lawmaker.
Though these groups have deeper origins, the government has pushed their expansion since the early 2010s, Norén-Nilsson explained.
“The Ministry of Education has a quota for each group and sent the list out to the schools to recruit enough young people to join each organisation,” she said. “Some of those people have become very important in a really short time, such as in ministries. These groups have been a stepping platform [for the youths] to launch their career in politics.”
However, many young Cambodians prefer to keep their distance from partisan politics.
For first-year law student Ream Sreypichrothana, 19, this is her first time voting. She is now seeking answers to her long-standing questions about the election process.
“I always wondered why there was a single party only and there was no main opposition,” she said. “I am particularly interested to see how the 2023 election will turn out. I am aware that the [Candlelight Party] could not join the competition. This atmosphere is not acceptable for youths.”
Sreypichrothana, a member of another group, the Youth Resource Development Programme (YRDP), believes young people can exert their influence in a democratic way by actively engaging in social issues, caring about each other and working collectively to demand their rights.
“We must train ourselves and think critically and have a positive influence on society. By actively participating in social affairs, following news, and speaking the truth without fear, the influence of youth will spread to the next generation,” she said.
After discussing with her peers sitting around a table, she resolved to go to vote despite there being “no free and fair election”.
While some young people might decide against formally casting their votes, many have their own political strategy of going online to engage with social issues, according to Ou Virak, founder and president of local independent think-tank Future Forum.
“They are active while also being cryptic, indicating they are indeed participating in the political process and they are willing to have a say in their country’s political decisions,” said Virak, who’s been working with young adults for a decade.
“The fact that they don’t turn out to vote formally doesn’t mean they don’t participate in the political process,” he added. “If they are not taking it on the streets, it doesn’t mean they are not shaping their future or have no interest in a change.”
Some young people may choose an optimistic approach to the vote itself. Soung Pichchanbormey, 21, is looking on this brighter side.
“I did hear about the complaints. But I believe we can still have a choice,” she said. “There are 18 parties. We need to look into the policy of each party and just go with the one we are interested in.”
Pichchanbormey believed that even a few representatives of small opposition parties in Parliament could make a difference.
“There will be a dialogue and small parties can participate in political decisions for our country,” she said, adding that small changes are the key to long-term developments.
On Friday, the light blue shirts of the ruling Cambodian People’s Party (CPP) flooded downtown Phnom Penh in a kilometres-long motorcade marking the end of the official election campaign season.
The rally ushered in an all-but-assured victory for Cambodia’s long-time Prime Minister Hun Sen in the 23 July national elections.
Hun Sen, who has ruled the country since 1985 and has spent close to four decades consolidating power, was noticeably absent. His eldest son and chosen successor, military commander Hun Manet, headlined the event.
“Today is our victorious day. Be ready to roll out the landslide motorcade for the political campaign across the capital,” said Manet, kicking off the rally in Phnom Penh. “We are fully committed to the policy of Samdech Techo [Lord] Hun Sen, who is the president of the party and has high accountability for the faith, future of the country and the people.”
Hundreds of motorbikes and dozens of cars rallied on Koh Pich, a neighbourhood in southern Phnom Penh also known as Diamond Island, in the early morning of 21 July. Southeast Asia Globe followed the motorcade as supporters drove into the heart of the capital.
In the past few months, the election campaign trail has been littered with crackdowns on rival political parties, prominent opposition leaders and independent news outlets. These ruling party tactics were honed in the lead-up to the most recent national elections in 2018, after the former opposition Cambodia National Rescue Party (CNRP) was forcibly dissolved the year prior.
This year, it was the Candlelight Party – a reconstituted version of the earlier opposition – that was snuffed out before the ballot. The party won about 22% of the popular vote in last year’s commune elections, a national contest in which Cambodians select local leadership, and was seen as the sole viable contender for this year’s poll. However, the National Election Committee disqualified the party in May on a paperwork requirement, knocking it out before the campaign season.
Candlelight officials declined to comment on the election when reached on Friday. A day earlier, party President Teav Vannol told Japanese media that “excluding the Candlelight Party is like killing democracy in our country.”
With opposition swept aside, Hun Sen has been relentlessly outspoken about the need for Cambodians to vote. Meanwhile, the CPP-dominated National Assembly has passed laws barring non-voters from running for office in the future, as well as criminalising calls to boycott the election.
The week before the election, police arrested four Candlelight members and accused them of urging others to spoil their ballots in protest. Authorities also convicted in absentia 17 members of the former CNRP – including long-time opposition leader Sam Rainsy – who are already living in exile after the court-ordered dissolution of their party and subsequent mass criminal trials of its members and supporters.
“Cambodians are thirsting for democracy and change. Hun Manet will simply be a continuation of a family dynasty,” said Rainsy, speaking to a reporter from Paris. “Regardless of which party they support, Cambodians are being denied their right to cast their vote in a free, fair and competitive election.”
There may be 18 parties listed on Sunday’s vote, but the 70-year-old Hun Sen is expected to mark a landslide victory. The CPP plans to form a new government in August. While Hun Sen has yet to announce when he will officially transfer his title to his son, he has hinted it could be within a month of elections.
Rainsy was dismissive of the planned transmission, saying the lack of a viable opposition in the election means the heir apparent Manet “will not have a democratic mandate to govern” when he eventually takes office.
Hun Sen has said publicly that he intends to play an active role in statecraft after his son takes over. Though the transition in the top office will be the first of its kind in modern Cambodian history, it is unclear how much governance within the Kingdom will change.
Mat Rodrath left his home in the Muslim section of the capital’s Chroy Changvar district at 5 a.m. to join the city-wide motorcade. Rodrath lauded Manet’s education at the U.S. Military Academy at West Point, saying he’s the most qualified for premiership among the ruling party’s younger echelon.
The 40-year-old supporter also echoed Hun Sen’s long-time political stumping point, his “Win-Win Policy”, which ended the civil war with the Khmer Rouge with a mass amnesty programme. The prime minister had started his career as a young cadre of the communist movement but defected to Vietnam to escape its later purges. He returned to Cambodia with the 1979 Vietnamese invasion, a response to border incursions by the virulently xenophobic Khmer Rouge, and rose through the ranks of the single-party state established under the subsequent Vietnamese occupation.
When the Vietnamese military left Cambodia in 1989, the government led by Hun Sen in Phnom Penh shouldered the fight against the remaining communist insurgency. His faction’s eventual victory in that conflict has been key to the political currency of the CPP and his own personal brand. Though this legacy might be less salient to young Cambodians, Hun Sen and his supporters have long pointed to the spectre of conflict, both in the past and in an imagined future, when promoting CPP rule.
“My parents went through the war for three years, eight months and twenty days,” said Rodrath, as rain swept Phnom Penh, dousing him and thousands of other supporters. “I’ve come to support [the party] because I don’t want war.”
In a speech earlier in the afternoon, Mr Tharman reiterated that Singapore is a multiracial nation built on two spaces – on the cultures and languages of the different races, and a common, neutral space where each community has to make some compromises.
However, he added that there is a need for a third space, where Singaporeans participate in each other’s cultures.
“That third space needs to be developed. It is not a melting point, it is learning another culture and taking it very seriously,” he said. “Whether it is art or dance or music or even language, you have to take seriously the other cultures.”
Last month, Mr Tharman announced his intention to run for the Singapore presidency. President Halimah Yacob’s six-year term expires on Sep 13 and she has said she will not stand for re-election.
The Elections Department has said that the Presidential Election may be held at any time from Jun 13, and if it has not been held by the expiration of the term of the incumbent President, it should be held shortly after.
A total of three candidates – former GIC chief investment officer Ng Kok Song, businessman George Goh, and Mr Tharman have announced their bids for the presidency.
Mr Tharman noted that with the world becoming more “turbulent”, the region around Singapore will become more important in the next 5 to 10 years.
Southeast Asia is a region where there is an “openness” to trade and investment, and a “desire to grow” by making use of markets abroad and by inviting investments into their own countries, he added.
“This is a big advantage because it is not true in many other parts of the world,” he said. “So we will have to place more emphasis on the region around us in the years to come.”
SINGAPORE – Prime Minister Anwar Ibrahim began his tenure with a pledge to enact structural reforms and boost investor confidence in Malaysia. But after eight months on the job, the veteran politician is finding it hard to pull the Southeast Asian nation out of a years-long economic funk.
The local stock market saw foreign outflows of 4.19 billion ringgit (US$920 million) in the first half of 2023, with a benchmark gauge that is among the worst global performers so far this year. The Malaysian ringgit has likewise tumbled, making it among the worst performers in Asia’s currency markets.
On the other hand, Malaysia’s economy grew above market expectations at 5.6% in the first quarter of the year, during which approved foreign direct investment (FDI) reportedly rose 60% year-on-year to 71.4 billion ringgit.
Inflation moderated to a one-year low with the consumer price index coming in at 2.8% in May compared to last year, its slowest monthly pace in 2023.
Yet cost-of-living pressures and political dissatisfaction persists, with economic headwinds and external cyclical factors weighing on the government ahead of state elections in August that are seen as an early referendum on Anwar’s “unity” government, a multi-party alliance that sits uneasily with the long-rivaled political camps’ grassroots support bases.
The ringgit’s worrisome performance is a key watchpoint as analysts say that unfavorable exchange rate fluctuations risk deterring foreign investors due to a lack of confidence in earning lucrative returns when the national currency is too weak, which raises the cost of repatriating profits back to home markets.
The cost of servicing external debt in foreign currencies, especially US dollars, also increases as the ringgit wanes, compressing the profit margins and exacerbating credit risks of US dollar-leveraged firms. Malaysia has a relatively high foreign currency-denominated debt exposure compared to some of its regional peers, with data showing only 33% of total debt being ringgit-denominated as of 2022.
Anwar’s administration also contends with a fiscal deficit that is among the widest in Southeast Asia and a national debt that has ballooned to 1.5 trillion ringgit ($329 billion), exceeding 80% of gross domestic product (GDP) when liabilities are included.
In 2018, the then-PH-led government said government debt and liabilities exceeded 1 trillion ringgit, higher than what jailed former premier Najib Razak’s administration had previously disclosed.
Household debt is also among the highest in the region as a result of heavy borrowing by Malaysian citizens, accounting for 81% of the country’s nominal GDP in December 2022, compared with the ratio of nearly 89% in the previous year, according to Bank Negara Malaysia (BNM), the central bank. By comparison, household debt to GDP stood at 47% in 2000.
The Malaysian ringgit is down approximately 10.61% against the US dollar from early January, when it traded at 4.24 before falling to a low of 4.69 in late June. As a historical benchmark, the ringgit weakened to 4.88 during the 1997-98 Asian financial crisis and traded at 4.74 ahead of last November’s general election before recovering by year-end.
The national currency has gradually recovered since mid-July, due mainly to cooler US inflation data, and was trading at 4.55, or approximately 3.41% lower against the dollar in the year to date, at the time of publication.
Analysts are of two minds on whether the ringgit will rebound, with some seeing the government’s perceived lack of a clear economic strategy as a key factor.
Carmelo Ferlito, an economist and chief executive officer of Kuala Lumpur-based think tank Center for Market Education, told Asia Times that he sees “the lack of a comprehensive economic strategy which would include mainly pro-market reforms” as a factor behind the depreciation, saying that authorities fluctuate “between pro-market stances and a heavy desire to control the economy.”
Ferlito attributed lower-than-expected economic growth in China, Malaysia’s top trading partner, and continued strength of the US dollar as the “preferred reserve of value in periods of uncertainty, despite all the talk about de-dollarization,” as other factors driving the ringgit’s slump while also pinning blame on the Anwar-led government’s failure to address structural economic issues.
“So far, contrasting signals have been sent. The desire of attracting FDI is not matched by consistent policies in this direction. Price controls are still in place, labor regulations are still restrictive, and getting a bank account is becoming more complicated. In general, a comprehensive economic strategy is yet to be seen. The lack of vision will keep on playing against the ringgit,” he said.
While Anwar’s focus has so far been on consolidating the government’s finances, plugging leakages and tightening rules for more transparent state procurement contracts, Ferlito voiced hopes that after upcoming state polls, “the government may become braver in addressing structural issues and start to remove price controls, subsidies, red tape and labor limitations.”
Some observers believe that politics have contributed to the ringgit’s recent weakness, which on July 12 hit a record low of 3.49 against neighboring Singapore’s national dollar. A poor performance by the Pakatan Harapan-led (PH) ruling alliance at August state elections, analysts and economists argue, could further impact investor sentiment and political stability.
Politics aside, economic headwinds are a serious challenge with the ongoing global slowdown sharply affecting Malaysia’s export performance, which plummeted 18.9% year-on-year in June, marking the fourth straight month of contraction. The country is a major exporter of electrical and electronic products, as well as petroleum products, rubber, palm oil and its derivatives.
Previous periods of ringgit weakness were generally a boon for Malaysian exports but sluggish growth in China and monetary policy tightening in advanced economies has darkened the global trade outlook. BNM forecasts GDP growth of 4% to 5% this year, falling well short of the two decade-high 8.7% seen in 2022 coming out of the Covid-19 pandemic.
The central bank said in late June that it would intervene in the foreign exchange market to stabilize the ringgit, citing what it called “excessive” losses. BNM said the currency’s depreciation is not reflective of economic fundamentals and that the value of the ringgit will continue to be market-determined.
Re-pegging the ringgit to the US dollar has also been ruled out, with Malaysian Deputy Finance Minister Ahmad Maslan saying last month that doing so would inhibit independent monetary policy-making. The government’s aim is to implement structural policies to boost competitiveness and attract inflows of foreign investment to support the ringgit, he said.
“The depreciation of the ringgit bodes ill for the economy and even society,” said Mohd Shahidan Shaari, a senior business lecturer at the Universiti Malaysia Perlis, in a recent commentary. “If there is no government intervention to curb any further depreciation, one US dollar might be exchanged for five ringgit in the future, which can have numerous detrimental impacts.
“Therefore, closing the barn door before the horse bolts is of utmost importance. One possible measure the government might consider is fixing the exchange rate. By fixing the exchange rate, the government can stabilize the value of the currency and provide certainty for economic actors, including businesses and investors,” he added.
BNM opted to maintain its overnight policy rate at 3% earlier this month after it unexpectedly raised rates in May for the fifth time since last year. Analysts see any near-term policy changes as unlikely with headline inflation having eased in recent months, though some argue that further depreciation of the ringgit could cause BNM to raise rates again.
“Bank Negara can continue to raise interest rates to attract investors into the ringgit. However, as long as rates are elevated in the US, Europe and the UK, many investors will not come back into the ringgit to help it appreciate,” said Mayra Rodriguez Valladares, a financial risk consultant at MRV Associate and former foreign exchange analyst from the Federal Reserve Bank of New York.
“It is very challenging for one central bank alone to influence foreign exchange rates. In fact, no central bank wants to deplete its foreign exchange reserves defending its currency. The lessons from the Asian financial crisis of 1997 are important to remember,” she told Asia Times. “Central banks cannot go against foreign exchange traders; this is a market that is about $8 trillion a day.”
Follow Nile Bowie on Twitter at @NileBowie
In Thailand, public resentment after the failure last week of Move Forward Party leader Pita Limjaroenrat’s premiership bid due a lack of support in the national Senate is boiling into an unprecedented challenge to the legitimacy of the military-appointed body.
The 250-member upper house of the parliament is seen as a key bastion of the conservative establishment opposed to Pita and his progressive party. In the 13 July vote, senators made a muted show of rejection – while 34 voted directly against Pita, 159 abstained while 43 either didn’t vote or failed to show up to the session altogether.
Move Forward emerged as the surprise victor in the May election, winning more than 14 million votes. The flat refusal to seat Pita, who is facing a raft of legal challenges, is seen by many Thais as a direct refutation of the will of the people. This has led to growing street protests – including a rally last week of 500 cars and motorbikes parading through the streets of Bangkok – and online campaigns attempting to expose senators for misbehaviours ranging from shady financial dealings to extramarital affairs.
Amidst the public challenges to the Senate, Move Forward has pressed to amend the constitution in order to exclude the senators from participating in the prime minister selection process altogether. Political analysts expect such mobilisations to increase as the elected opposition struggles against conservative headwinds to form a new government, but also thought it unlikely for such demonstrations to change minds in the military-backed Senate.
Demonstrations against institutions perceived to be authoritarian are not new in Thailand, but this is the first time such protests have been targeted squarely at the unelected upper house, said Napon Jatusripitak, a visiting fellow at the ISEAS-Yusof Ishak Institute.
“As far as I know there haven’t been any significant protests against the Senate acting as the representative of the bureaucracy or the establishment,” he said. “I think this is a very new phenomenon, and it has been brought to light only because the Senate has been voting directly against the popular view.”
Fear of precisely this kind of public backlash was likely what drove the majority of senators to abstain on 13 July rather than vote against Pita, noted Termsak Chalermpalanupap, who is also with ISEAS–Yusof Ishak as a coordinator of the Thai studies programme.
“Some of them didn’t want to be seen opposing Pita openly, because there are costs,” Termsak said.
Many senators justified their decision to abstain as based on personal conviction that the Senate should not be involved in selecting the prime minister, said Ken Mathis Lohatepanont, a PhD researcher at the University of Michigan in the U.S.
“They have argued that they are abstaining because they do not want to participate in the selection of the prime minister, in accordance with calls that the Senate ‘turn off the switch’ and refrain from exercising this power,” he stated. “Of course, this doesn’t actually make life easier for Pita because the constitution requires 375 affirmative votes; abstentions do not help Pita get over the line.”
In response to such statements from senators, the Move Forward Party has offered the lawmakers an opportunity to put that rhetoric into action. On 14 July, just a day after failing in their first attempt at the premiership, the party submitted a draft amendment to the constitution to remove Section 272 – the item that empowers the Senate to participate in the prime minister selection process.
In the public realm, attempts by senators to insulate themselves from criticism have proven ineffective so far. For much of the Thai public, there appears to be no difference between a non-vote or abstention and an explicit rejection of Pita’s premiership bid.
Online protestors have begun to dig into the senators’ histories, looking to unearth past activities seen as immoral or even criminal in order to publicly shame them. They have also taken to Twitter with the hashtag #ธุรกิจสว, or “Senator’s business”, to call for boycotts of businesses linked to senators and their families. Within hours of the 13 July vote, the campaign was already the top trending hashtag on Thai Twitter.
Some senators have attempted to fight back against the online pressure campaign, calling it a “witch hunt” and threatening online critics with defamation charges. However, these attempts are unlikely to dissuade online criticism, said James Buchanan, an independent analyst of Thai politics.
“[Once] these things go viral on Twitter and Facebook,” he said, “although they might try, it’s not going to do anything to stop the tide of criticism.”
While the Senate may be powerless to stem the wave of public outrage their votes have unleashed, the Thai public and Move Forward are likely equally powerless to change outcomes in the upper house, according to Napon.
“I don’t see protests as playing a significant role in shaping the Senate’s vote choice, since they have already demonstrated their stance on 13 July,” he said.
This impotence of public pressure to impact the Senate’s voting behaviour was on full display during the 19 July vote to determine whether Pita would be allowed to repeatedly submit himself as a candidate for prime minister, which he lost by even more votes than his initial premiership bid.
The Move Forward Party’s attempt to amend Section 272 of the constitution has equally slim chances of succeeding without the support of other parties in its embattled coalition, observed Termsak.
“Pheu Thai already said it is not supporting [the amendment], and that this is the Move Forward Party’s own initiative taken without consultation in the eight-party coalition,” he said, noting that Move Forward’s coalition partners would likely abstain if the amendment came to a vote.
The chances of Move Forward finding enough votes for their constitutional amendment in the Senate are also low, despite the stated positions and past voting records of many senators on the issue.
“In the past, [during] the first attempt to amend this constitution, this particular provision, there were 56 senators who supported the idea [of revoking Section 272],” said Termsak, though he thought it was unlikely these senators would vote the same way at this time.
In the end, it may be pressure on the senators from their peers, rather than from the public or from elected members of parliament, that plays the more significant role in determining how senators vote in the future, he added.
“[There’s] a lot of pressure among their peers, among senators,” Termsak said. “These senators have their own very tight-knit connections, and they depend on each other for patronage, and that is a very valuable patronage connection [they] must try to preserve.”