PHNOM PENH – Tax And Spend has rarely been part of the Southeast Asian governance lexicon. And judging by the region’s dismal tax-to-gross domestic product (GDP) ratios, it doesn’t look like that will be changing anytime soon. Newly published revenue statistics compiled by the Paris-based Organisation for Economic Co-operation and Development (OECD) show that the five biggest Southeast Asian economies have ratios of half or less than the 2017 OECD average of 34.2%, though most countries in the region showed small increases in revenues compared with the previous year. The OECD defines the tax-to-GDP ratio as “total tax revenue, including social security contributions, as a percentage of GDP”. While more prosperous countries in Southeast Asia’s vicinity such as Australia, Japan and New Zealand all come in around the 30% mark, Southeast Asia’s own numbers were much lower, with Indonesia at 11.5%, Malaysia on 13.6 and Singapore only slightly above on 14.1. This last number in particular seems surprisingly low given that Singapore’s economy more resembles higher-tax Western counterparts than its neighbours in Southeast Asia.
PHNOM PENH – Cambodia appears to be the latest beneficiary of the US-China trade war, joining the already exhaustively profiled Vietnam among the countries enjoying increased exports to the US as tariffed Chinese goods open the door for other cheap suppliers. Latest US government data show annual imports from Cambodia rising significantly since the start of the year, with the US$1.8 billion registered from January-May a roughly 20% increase on the same period last year. Like Vietnam, Cambodia has duty-free access to American markets under the Generalized System of Preferences, a trade program designed to promote economic growth in the developing world. Trade represented 125% of Cambodia’s gross domestic product (GDP) in 2017, according to the World Bank. In 2018, the bulk of Cambodia’s goods exports to the US were clothing and footwear, with the Office of the US Trade Representative listing the top four sectors as knit apparel ($1.8 billion), woven apparel ($628 million), leather products ($390 million), and footwear ($329 million). Cambodia’s 2018 trade surplus with the US was $3.4 billion — which, though relatively-small compared with Vietnam’s near-$40 billion for the same year — will continue to rise this year as Cambodia’s exports to the US surge. Parsing the numbers for a direct trade war link is not as clear-cut as it may seem, however, with both Vietnam – where trade represented 188% of GDP in 2018 – and Cambodia expanding their commerce with the US since before the start of the tariff war.
KUALA LUMPUR — New economic data shows that foreign remittances sent to Asian countries hit US$300 billion for the first time last year, underscoring the ever-rising importance overseas work for the region’s laborers despite world-beating economic growth rates. Freshly released World Bank statistics put the total amount of remittances for 2018 to countries in South Asia, Central Asia, Southeast Asia, East Asia and the Pacific at $299.6 billion, a sum that does not include what are believed to be substantial informal flows of money sent home by regional migrants. Globally and in Asia, remittance figures are growing year by year, despite heady 6-7% gross domestic product (GDP) growth in countries such as the Philippines, a nation which has around 10 million of its citizens working abroad across various vocations. The 2018 amount of regional remittances was around $25 billion greater than in 2017 and $125 billion more than in 2008. Worldwide, remittance flows now account for more than foreign direct investment to middle and low income countries excluding China, the World Bank data shows.
BANGKOK — More than a month after parliamentary elections, the 38 million Thais who voted still waiting for results, with the prospect of a handover to a civilian government diminishing by the day in a country ruled by the army since a 2014 coup. The complicated vote was based on mix of 350 constituency seats to be decided on simple first-past-the-post contest, with 150 more seats won in a party-list system. The latter seats are to be allocated using a complicated formula that even the election commission is, it seems, struggling to get to grips with. The commission said on Thursday that it would announce the party list seat winners after the constituency seats, but then backtracked and said all the results would be ready on time. The original final deadline for the results to be announced was May 9 – but given that the election was postponed several times since the army seized power five years ago, before finally taking place on March 24th, it will be no surprise if results are not announced as scheduled either.
KUALA LUMPUR — The spread of online political rumors, false content and hoaxes has fact-checkers working overtime ahead of elections in Thailand, India, Indonesia and the Philippines. In February, a video first seen last year resurfaced on social media of Grace Poe, a Philippine politician, allegedly backing the blocking of Facebook in the country, where freedom of speech is ingrained in the constitution and the number of social media users is 76 million, much higher than the 61.8 million people who are registered to vote. But the video, which was posted by an account supporting President Rodrigo Duterte, who defeated Poe and other candidates in 2016 presidential elections, excluded some vital comments by the senator, who will defend her seat in May’s midterm elections. “Can you block a particular company like Facebook from being accessed in the Philippines? I know they do this in China,” Poe was shown saying in the video, which had omitted the preceding comments to the question she posed: “Not that we’re going to do this — I’ll be the first to disagree if they do.” The misleading video was flagged by Vera Files, a fact-checking organization that is part of an elections-focused collaboration called Tsek.ph and which includes some of the Philippines’ main newspapers, television stations and media academics.
SINGAPORE — Candidates running in a slew of elections across Asia this year are taking to Twitter and other social media platforms to share slogans, pitch policies, rankle rivals and rouse crowds ahead of campaign rallies. For the last decade or so, elections have typically been depicted as social media-driven contests where the hashtag outranks the hustings when it comes to canvassing votes, particularly from smartphone-dependent millennials. While social media environments differ depending on the country, the importance of Twitter and Facebook might be overstated. Although some Asian candidates boast a huge social media presence, many of their followers appear to be fake or dormant, and the proportion of those who engage with posts is relatively low. Thailand, Indonesia, India are all holding general or presidential elections in the first half of this year, Australia is likely to vote in May, around the time the Philippines holds midterm polls. The three Southeast Asian countries are among the world’s five most internet-addicted, according to We Are Social’s 2019 global survey. Using the online Twitter analysis tool Sparktoro, which works by taking a representative sample of followers — along the lines of an opinion survey — it appears Indonesian President Joko Widodo has over 5.1 million fake followers. That equates to more than 47% of his total follower base.
BANGKOK — The arrest last week of a high-profile journalist in the Philippines and a gag order against a Thai television station are the latest reminders that Southeast Asia’s press freedoms rest on the whims of governments. But after investors poured a record $145 billion into the region last year, there is little reason to think they will be deterred by the latest clampdowns. Last year’s inflow, recently reported by the United Nations Conference on Trade and Development, included an unprecedented sum for Vietnam, a one-party communist state. As usual, around half of the money went via Singapore, which has been ruled by the People’s Action Party since independence in 1965 and where reporting is stymied by prolific use of the courts against foreign critics of the ruling elites. “In general, if we compare to other factors — political stability, infrastructure, predictability of rules — [press freedom] is not a decisive factor” in investment moves, said Miha Hribernik, head of Asia politics research at Verisk Maplecoft. Nonetheless, a free press can at least inform business decisions, according to Ebb Hinchliffe, Executive Director of American Chamber of Commerce of the Philippines, and John D. Forbes, Senior Adviser to the chamber. “A responsible free press is more useful and important than a censored one for the purpose of being informed,” they said in an email.
JAKARTA — Southeast Asia is bucking the global trend of falling direct foreign investment, as the low-cost fast-growing region solidifies its position as an attractive location for multinationals. James Dyson’s recent decision to relocate the headquarters of his eponymous technology business to Singapore is not about Brexit, the company said. Rather, the British tycoon said he is looking to a region that continues to exhibit solid growth — “future proofing” as his chief executive termed it. The move follows an October announcement that Dyson — famous for its vacuum cleaners — will make electric vehicles in Singapore, citing the city-state’s proximity to “high-growth markets” in emerging Asia, where annual gross domestic product could grow by 6.1% between now and 2023, according to the Organization for Economic Cooperation and Development. Asia received a third of global investment in 2018 and accounted for nearly all the year’s investment growth, according to the United Nations Conference on Trade and Development. This is despite global foreign direct investment (FDI) declining 19% in 2018. Japanese retailer Aeon opened a second large mall in Cambodia in June as part of its regional expansion plans, which this year will include new shopping centers in Hanoi and Bogor, Indonesia. “As for South East countries, generally speaking, they have been showing rapid economic growth and will keep their pace in future, too,” an Aeon Asia spokesperson said.
KUALA LUMPUR — Malaysia is on track to achieving high-income status, according to the World Bank, while many of its Southeast Asian neighbors face the prospect of being caught in a middle-income trap. “Malaysia is well on its way to cross the threshold into high-income and developed country status over the coming years,” Victoria Kwakwa, the World Bank vice-president for East Asia and Pacific, said this month after meeting Prime Minister Mahathir Mohamad. Malaysia’s gross national income per capita has grown from $1,980 in 1981, when Mahathir first became prime minister, to $9,650 in 2017. Even so, the country still has some way to go to reach the World Bank’s developed country benchmark of $12,055. “As long as the country does not face growth stagnation, it is inching toward the high income level as defined by the World Bank,” said Yeah Kim Leng, Professor of Economics at Sunway University Business School in Kuala Lumpur. “Hence, it’s a question of when, give or take a couple of years, as long as it is able to sustain its current growth momentum.”
SINGAPORE — “Yes, hello, fruits?” Shouting above the din, vendor Sini Mohamad leans forward into a conga line of office workers edging between dozens of lavishly provisioned stalls in Singapore’s Tekka Market. It is lunchtime, and crowds throng the market as dozens of hawker stalls dish out noodles, rice and curries. Most ignore Mohamad’s appeals. But he keeps at it, alongside stallholders selling meat, fish, vegetables and spices. The lunchtime crowd offers a fleeting chance for butchers and grocers to persuade passers-by to do a bit of grocery shopping before they head back to work, their palettes whetted by the aromas of spices and herbs clinging to the steamy market air.