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  • BoT sees mild impact of new COVID-19 wave on the economy
    The Bank of Thailand (BoT) does not see the new wave of COVID-19 infections as having as much of an impact on the economy as the first wave, as fewer businesses have had to be suspended.

    BANGKOK (NNT) – Despite a new and wider wave of COVID-19 infections in the country, the Bank of Thailand (BoT) has assessed that the economic impact of the situation will not be as severe as the first wave as the effects of the virus are not as pronounced, and public health preparations, including plans for vaccination, are in place.

    Senior Director of Macroeconomics for the BoT Chayawadee Chai-anant explained this week that the central bank does not see the new wave of COVID-19 infections as having as much of an impact on the economy as the first wave, as fewer businesses have had to be suspended and the general public is better prepared.

    She added that state measures this time around are also less strict, and should allow the export sector to continue on its growth trajectory. If controls during the first half of the year prove effective, tourism is expected to recover in the latter half.

    The BoT foresees however, that recovery will differ depending on the area, as 28 provinces are under strict controls. The 28 being tightly maintained account for half of the nation’s economic activity.

    Businesses expected to grow more fragile due to a loss of revenue are those in the service sector as well as the tourism industry, which is already financially weak. An estimated 4.7 million laborers, mostly independents, in red zones are expected to be hard hit by the situation.

    The bank believes urgent help is needed for workers and fragile businesses and has been issuing measures alongside the state.

    Information and Source
    Reporter : Praphorn Praphornkul
    Rewriter : Rodney McNeil
    National News Bureau & Public Relations : http://thainews.prd.go.th

    18 January 2021
  • Leverage from Forex Brokers & How Beginners Can Benefit from It
    In this post, we will tell you what to look for when choosing a broker in order not to fall into a financial trap and how to benefit from dealing with such companies.

    Recent statistics show that the number of people willing to invest in the stock market is steadily growing from year to year.

    The booming financial literacy of the people and the growing interest in investments give rise to an increasing need for high-quality brokerage services.

    In their fight for clients, stock market operators are developing their services, trying to attract clients with favorable tariff conditions, advanced services, and a team of true trading gurus.

    In this post, we will tell you what to look for when choosing a broker in order not to fall into a financial trap and how to benefit from dealing with such companies.

    Brokerage Services: What Is It in Simple Words?

    A broker is an obligatory intermediary between a trader (investor) and an exchange. Its main function is to conclude transactions for the purchase and sale of a currency, securities, or any other assets on behalf of the client for a commission. Working with brokers for forex-leverage is associated with different benefits.

    What Are the Advantages of Using Brokerage Services?

    You should consider the choice of a broker carefully. The probability of making profitable transactions largely depends on the quality of the services. Therefore, when choosing a broker, pay attention to the following specs:

    • it should be a high-quality trading platform with great opportunities;
    • there should be a wide range of financial instruments;
    • you should find convenient ways to add funds to your account and withdraw the money earned;
    • you should test and approve the operational work of the system;
    • the company should provide good customer support service that will help resolve any issue (especially important at the initial stage);
    • a broker should use modern technologies: a functional personal account, software, mobile applications, etc.;
    • you should get detailed reporting on activities;
    • a company should run profitable promotions and offers for regular customers and novice investors.

    Any brokerage firm has its own strengths and weaknesses. When choosing an intermediary, you need to focus on those features that are important to you. Certain disadvantages can be a decisive factor in favour of opting for another broker:

    • high commission for a transaction and a large starting amount of entry;
    • hidden fees and additional commissions;
    • weak technical toolset (for example, with some brokers, transactions may freeze for several hours, orders are slowly processed, etc.).

    How to Determine Which Brokerage Service Is Right for You?

    Of course, when choosing a broker, it is, first of all, crucial to check the availability of a license, evaluate the rating, and study the reviews. But to understand what kind of brokerage services you need, it is essential to assess your capabilities and determine a strategy correctly. Having a clear idea of ​​what you need makes it much easier to navigate among the various options and promotional offers.

    Doing Things Right

    Brokers are different, and their range of services is wide. Do not rush to focus only on promotional offers. To determine an intermediary who will provide you with all the conditions for successful trading on the exchange, you first need to assess your capabilities and desires.

    Only afterward you will be able to choose a brokerage company with a package of services and tariffs that will be convenient and beneficial for you.

    18 January 2021
  • COVID-19 brings first consumer confidence drop in 3 months
    Consumer confidence in December 2020 was measured at 50.1 points, down from 52.4 the previous month. Economic confidence was also down to 43.5 from 45.6 points.

    BANGKOK (NNT) – Concerns linked to the new wave of COVID-19 infections has weighed on both daily life and business, resulting in the first drop in the Consumer Confidence Index in 3 months.

    Consumer confidence in December 2020 was measured at 50.1 points, down from 52.4 the previous month. Economic confidence was also down to 43.5 from 45.6 points.

    Employment confidence dropped from 50 points to 47.5 and confidence in future revenue prospects retracted from 61.6 to 59.2. The downtrend was seen across the board in all regions of the country and in all instances was attributed to the new bout of COVID-19 infections.

    President of the Economic and Business Forecasting Center of the University of the Thai Chamber of Commerce, Thanawat Polwichai surmised that if the situation persists for more than three months, the economy will grow in only a 0.9 to 2.8 range with a worst-case scenario being a contraction of 0.3 percent.

    He said government economic stimulus is needed pointing to the co-pay scheme, while mentioning that if the situation improves in three months, recovery could be seen as soon as Quarter 2.

    The president said a private sector suggestion to widen eligibility for the co-pay scheme and increase its cap from 3,500 to 5,000 baht per person would spur circulation, projecting the state needs to inject 200 to 300 billion baht into the economy to keep it afloat, or 400 to 600 billion baht to trigger growth.

    He said further loans by the state are not yet needed, especially if economic stimulus can be pulled off soon as to trigger tax payments.

    Information and Source
    Reporter : Praphorn Praphornkul
    Rewriter : Rodney McNeil
    National News Bureau & Public Relations : http://thainews.prd.go.th

    14 January 2021
  • Wish you were here: how the pandemic harmed tourism-dependent economies
    Before COVID-19, travel and tourism had become one of the most important sectors in the world economy, accounting for 10 percent of global GDP and more than 320 million jobs worldwide.

    In 1950, at the dawn of the jet age, just 25 million people took foreign trips. By 2019, that number had reached 1.5 billion, and the travel and tourism sector had grown to almost too-big-to-fail proportions for many economies.

    The global pandemic, the first of its scale in a new era of interconnectedness, has put 100 million jobs at risk, many in micro, small, and medium-sized enterprises that employ a high share of women, who represent 54 percent of the tourism workforce, according to the United Nations World Tourism Organization (UNWTO).

    Tourism-dependent countries will likely feel the negative impacts of the crisis for much longer than other economies. Contact-intensive services key to the tourism and travel sectors are disproportionately affected by the pandemic and will continue to struggle until people feel safe to travel en masse again.

    “There is no way we can grow our way out of this hole we are in,” Irwin LaRocque, secretary-general of the Caribbean Community (CARICOM), said at a virtual event in September.

    From the white sand beaches of the Caribbean, Seychelles, Mauritius, and the Pacific to the back streets of Bangkok, to Africa’s sweeping national parks, countries are grappling with how to lure back visitors while avoiding new outbreaks of infection.

    The solutions range from wooing the ultrarich who can quarantine on their yachts to inviting people to stay for periods of up to a year and work virtually while enjoying a tropical view.

    Tourism receipts worldwide are not expected to recover to 2019 levels until 2023

    Thailand’s deserted beach. Surin beach in Phuket. Photo : Khaosod

    In the first half of this year, tourist arrivals fell globally by more than 65 percent, with a near halt since April—compared with 8 percent during the global financial crisis and 17 percent amid the SARS epidemic of 2003, according to ongoing IMF research on tourism in a post-pandemic world.

    The October World Economic Outlook projected the global economy would contract by 4.4 percent in 2020. The shock in tourism-dependent economies will be far worse. Real GDP among African countries dependent on tourism will shrink by 12 percent. Among tourism-dependent Caribbean nations, the decline will also reach 12 percent. Pacific island nations such as Fiji could see real GDP shrink by a staggering 21 percent in 2020.

    Nor is the economic hit limited to the most tourism-dependent countries. In the United States, Hawaii saw one in every six jobs vanish by August. In Florida, where tourism accounts for up to 15 percent of the state’s revenue, officials said it will take up to three years for the industry to recover.

    Among G20 countries, the hospitality and travel sectors make up 10 percent of employment and 9.5 percent of GDP on average, with the GDP share reaching 14 percent or more in Italy, Mexico, and Spain. A six-month disruption to activity could directly reduce GDP between 2.5 percent and 3.5 percent across all G20 countries, according to a recent IMF paper.

    Tourists at Suvarnabhumi airport
    Thailand, a “Covid star” in 2020 with almost zero local transmissions, is battling second-wave surge in 2021
    Tourists at Suvarnabhumi airport

    Managing the revenue gap

    In Barbados and Seychelles, as in many other tourism-dependent nations, the pandemic brought the industry to a virtual standstill.

    After successfully halting local transmission of the virus, the authorities reopened their island countries for international tourists in July. Still, arrivals in August were down almost 90 percent relative to previous years, drying up a vital stream of government revenue.

    Barbados had gone into the crisis with good economic fundamentals, as a result of an IMF-supported economic reform program that helped stabilize debt, build reserves, and consolidate its fiscal position just before the crisis struck. The IMF augmented its Extended Fund Facility program by about $90 million, or about 2 percent of GDP, to help finance the emerging fiscal deficit as a result of plummeting revenues from tourism-related activity and increasing COVID-related expenditures.

    “The longer this lasts, the more difficult it gets to maintain,” says Kevin Greenidge, senior technical advisor to Barbados Prime Minister Mia Mottley.

    “What we don’t want to do is operate policy-wise in a manner that will jeopardize the gains in terms of the fundamentals that we have made.”

    On the other side of the world, Seychelles, a country that entered the crisis from a similar position of strength, will still be challenged to return to medium-term fiscal sustainability without significant support. Just before the crisis struck, the government had rebuilt international reserves and consolidated its fiscal positions. Even so, the ongoing pandemic struck the Indian Ocean island nation very hard as tourism revenues fell while COVID-related expenditures increased.

    “It is too early to determine whether the crisis represents a permanent shock and how it will shape the tourism industry going forward,” says Boriana Yontcheva, the IMF’s mission chief to Seychelles. “Given the large uncertainties surrounding the recovery of the sector, innovative structural policies will be necessary to adapt to the new normal.”It is too early to determine whether the crisis represents a permanent shock.

    All over the world, tourism-dependent economies are working to finance a broad range of policy measures to soften the impact of plummeting tourism revenues on households and businesses. Cash transfers, grants, tax relief, payroll support, and loan guarantees have been deployed. Banks have also halted loan repayments in some cases. Some countries have focused support on informal workers, who tend to be concentrated in the tourism sector and are highly vulnerable.

    An analysis of the tourism industry by McKinsey & Company says that multiyear recovery of tourism demand to 2019 levels will require experimenting with new financing mechanisms.

    The consulting firm analyzed stimulus packages across 24 economies totaling $100 billion in direct aid to the tourism industry and $300 billion in aid across other sectors with significant involvement in tourism. Most direct stimulus was in the form of grants, debt relief, and aid to small and medium-sized enterprises and airlines.

    The firm recommends new ways to support the industry, including revenue-sharing mechanisms among hotels that compete for the same market segment, such as a stretch of beachfront, and government-backed equity funds for tourism-related businesses.

    Development challenge

    The crisis has crystallized the importance of tourism as a development pathway for many countries to decrease poverty and improve their economies. In sub-Saharan Africa, the development of tourism has been a key driver in closing the gap between poor and rich countries, with tourism-dependent countries averaging real per capita GDP growth of 2.4 percent between 1990 and 2019—significantly faster than non-tourism-dependent countries in the region, according to IMF staff.

    Smaller, tourism-dependent nations are in many ways locked into their economic destinies. Among small island nations, there are few, if any, alternative sectors to which they can shift labor and capital.

    Seychelles, for example, has benefited from increases in tuna exports during the COVID-19 period, which have somewhat offset tourism losses, but these additional earnings remain a fraction of tourism receipts. The government is also carrying out a plan to pay wages to displaced tourism-sector workers while offering opportunities for retraining.

    Meanwhile, the government in Barbados is trying to maintain social spending and reprioritize capital spending to create jobs, at least temporarily, in nontourism sectors such as agriculture and infrastructure development.

    The Caribbean Hotel and Tourism Association has projected that as many as 60 percent of the 30,000 new hotel rooms that were in the planning or construction phase throughout the Caribbean region will not be completed as a result of the crisis.

    Still, the crisis is being viewed as an opportunity to improve the industry in the medium and long term through greater digitalization and environmental sustainability. The UNWTO has encouraged support for worker training in order to build digital skills for harnessing the value of big data, data analytics, and artificial intelligence. Recovery should be leveraged to improve the industry’s efficient use of energy and water, waste management, and sustainable sourcing of food.

    “In a sector that employs 1 in 10 people globally, harnessing innovation and digitalization, embracing local values, and creating decent jobs for all—especially for youth, women, and the most vulnerable groups in our societies—could be at the forefront of tourism’s recovery,” says UNWTO Secretary-General Zurab Pololikashvili.

    Adjusting to a new normal

    As the immediate impact of lockdowns and containment measures eased during the second half of 2020, countries started looking for a balance.

    Thailand, Seychelles, and other countries approved programs that would admit tourists from “lower-risk” countries with special quarantine requirements. Fiji has created “blue lanes” that will allow seafaring visitors to arrive on yachts and quarantine at sea before they unleash “the immense economic impact they carry aboard,”

    Prime Minister Frank Bainimarama declared on Twitter. St. Lucia requires a negative COVID-19 test no more than seven days before arrival. Australia created a “travel bubble” that will eliminate quarantine requirements for travelers from New Zealand. CARICOM countries have also created a “regional travel bubble” that eliminates testing and quarantine for people traveling from countries within the bubble.

    In a new era of remote work, countries and territories such as Barbados, Estonia, Georgia, Antigua and Barbuda, Aruba, and the Cayman Islands offer new long-term permits, lasting up to 12 months in some places, to entice foreign visitors to bring their virtual offices with them while spending in local economies.

    Japan, which had seen its international arrivals triple from 2013 to 2018, started lifting border closures for travelers from certain countries at the end of October. To accommodate a post-pandemic tourism rebound, an IMF Working Paper recommends that the government continue a trend of relaxing visa requirements, draw visitors away from urban centers to less populated regions of the country, and complement a tourism comeback with improvements to labor resources and tourism infrastructure.

    The World Tourism and Travel Council in a report on the future of the industry said the pandemic has shifted travelers’ focus to domestic trips or nature and outdoor destinations. Travel will largely be “kickstarted by the less risk averse travelers and early adopters, from adventure travelers and backpackers to surfers and mountain climbers,” the report says.

    Leisure travel will lead the comeback in the tourism and travel sector. Business travel, a crucial source of revenue for hotels and airlines, could see a permanent shift or may come back only in phases based on proximity, reason for travel, and sector.

    In the end, the return of tourism will likely hinge on what will be a deeply personal decision for many people as they weigh the risk of falling ill against the necessity of travel. The private sector backed by some tourism-dependent nations is developing global protocols for various travel industries, including a call for more rapid testing at airports to boost confidence in traveling.

    “The fact is people do not feel comfortable traveling. We have not put in the necessary protocols to give them that comfort,” St. Lucia Prime Minister Allen Chastanet said at a September virtual event. “After 9/11, the TSA [Transportation Security Administration] and other security agencies around the world did a fantastic job of developing protocols that regained the public’s confidence to travel, and sadly with this pandemic we haven’t done that.”

    ADAM BEHSUDI is on the staff of Finance & Development.

    13 January 2021
  • How Asia Pacific can turn COVID crisis into an opportunity
    Bold policies needed to boost economic recovery and improve social stability

    Like Hydra, the many-headed monster of Greek myth, COVID-19 is proving hard to suppress even a year after the first case was confirmed in Wuhan.

    For the East Asia and Pacific region, the disease has delivered a triple shock: the pandemic itself, the economic impact of containment measures, and reverberations from the global recession brought on by the crisis.

    But the longer-term impact of COVID on the region will depend less on the virus than on policy decisions and how governments respond.

    Due to this combination of domestic and external shocks, the region is expected to grow by less than 1% in 2020, the lowest rate since 1967. Poverty in the region is projected to increase for the first time in 20 years.

    What is worse, COVID could have a lasting impact on inclusive longer-term growth. Rising indebtedness along with increased uncertainty is likely to inhibit public and private investment, as well as pose a risk to economic stability.

    Sickness, food insecurity, job losses, and school closures could lead to the erosion of human capital and earning losses that last a lifetime. 

    The disruption of trade and global value chains could hurt productivity by leading to a less efficient allocation of resources across sectors and companies, and by dampening the diffusion of technology.

    Left unremedied, the consequences of the pandemic could reduce regional growth over the next decade by 1 percentage point per year. Again, the poor would be worst hit because of their lower level of access to hospitals, schools, jobs, and finance.

    If containment and relief efforts today are informed by their impact on recovery and growth tomorrow, governments can avoid lasting negative outcomes.

    Victoria Kwakwa, Regional Vice President, East Asia and Pacific, World Bank

    But none of this is a forgone conclusion. If containment and relief efforts today are informed by their impact on recovery and growth tomorrow, governments can avoid lasting negative outcomes.  A few priorities stand out.

    First, building the capacity to test, trace, and isolate cases of the virus will remain critical not just until the arrival of a vaccine but throughout the prolonged period during which it is being deployed. New research shows that testing-based strategies can magnify the impact of a vaccine.

    In parallel, preparing to distribute the vaccine efficiently and fairly would not only facilitate economic recovery but contribute to social stability. 

    Fiscal reforms could allow greater spending on relief without sacrificing public investment. Governments in the region raise relatively little revenue, only 18% of gross domestic product – a third less than that in other emerging markets.

    Widening the tax base with more progressive taxation of income and profits and less wasteful spending on regressive energy subsidies, in some cases over 2% of GDP, could make recovery both inclusive and sustainable.

    Social protection programs have remained too timid and scaling them up has proved difficult. Investment in the infrastructure of delivery can help.

    People sit in long lines as they wait to file complaints for not yet receiving the 5,000 Thai baht (150 USD) financial assistance for those whose income is impacted by the COVID-19 coronavirus outbreak, as others (front) file their documents, in front of the Public Relations Department in Bangkok on May 7, 2020. (Photo by Lillian SUWANRUMPHA / AFP)

     For example, in Malaysia, a universal national ID system, wide mobile phone coverage, and high financial inclusion have allowed government assistance to reach more than 10 million beneficiaries or one-third of the total population.

    Assistance to companies must be linked to objective criteria related not just to past performance or current pain but the potential to thrive in the future.  Otherwise, the risk of moral hazard looms large, and with it the prospect of delaying the necessary adjustment of economic structures.

    Equal access to the digital technologies

    Governments should act to ensure equal access for small businesses and the poor to the digital technologies that have become essential since the onset of the pandemic. 

    These technologies have mitigated the negative effects of school closures on student learning, improved access to health services, and bridged producers and consumers through e-commerce and home delivery during lockdowns. Such benefits need to be spread widely and equitably.

    Deepening trade reform and cooperation, especially in services sectors – such as finance, transport, and communications – would enhance productivity and help people take advantage of new opportunities.

    The recent Regional Comprehensive Economic Partnership is a welcome initial step – though its effects would be larger if integration were deeper.

    The recovery needs to be resilient and sustainable. Tomorrow’s economies should become more, rather than less, resilient to climate change and natural disasters.

    Victoria Kwakwa, Regional Vice President, East Asia and Pacific, World Bank

    The recovery needs to be resilient and sustainable.

     Tomorrow’s economies should become more, rather than less, resilient to climate change and natural disasters.  Over the last decade, the region has met its energy needs through a scale-up in coal power generation, while the degradation of the natural environment – including critical forests, rivers, and oceans – has continued.

    Investments in cleaner energy and green and blue natural assets will be key to tomorrow’s employment and economic opportunities, as well as producing local health and global climate benefits. In this context, the announcements by China, South Korea, and Japan to achieve carbon neutrality by mid-century, and the Philippines’ moratorium on new coal-fired power plants, are inspiring and could encourage more countries to move in this direction.

    East Asia entered the COVID pandemic first and is likely to be the first region to recover this year. Just as Hydra was defeated with courage and ingenuity, the region can turn this crisis to its long-term advantage by adopting bold and imaginative policies today.

    This blog post was originally published as an op-ed by Nikkei Asia on December 30, 2020.  

    12 January 2021
  • Asia’s supply chains to be tested by COVID-19 vaccine delivery
    The global logistics company DHL estimates that global vaccine coverage will take around 200,000 pallet shipments and 15 million deliveries in cooling boxes as well as 15,000 flights.

    The enormous logistical challenge of vaccine distribution will be aided by trade and supply chain finance guarantees.

    COVID-19 vaccines are being developed and approved for use around the world.  It is an effort of historic proportions, but viable vaccines are only the first step toward taming the virus.

    Enormous quantities of the vaccines will need to be produced and delivered

    The vaccines approved already in some jurisdictions, and many of the candidates likely to be approved going forward, are injectable products that need to be kept cold.

    One of the first vaccines that has already received approval in Canada and the United Kingdom must be kept at minus 70 degrees Celsius (-94 Fahrenheit), for example.

    The vaccines will need to get to people in places that lack a proper transport infrastructure and where basic refrigeration may be hard to find.

    As Patrick Osewe, Chief of Health Sector Group at ADB, has pointed out, a “cold chain” to keep the vaccine at appropriate temperature from production to inoculation will have to be established.

    Stockpiles of vaccine-related goods need to be built–things like syringes, glass vials, refrigerated containers to move and store the vaccine, and the list goes on.

    The difficulty in getting these items where they need to go, so people can be quickly vaccinated, is compounded by the ongoing global economic uncertainty.

    In a world fraught with risk and widespread ratings downgrades, trade and supply chain finance guarantees could play a role in mitigating the risks that may impede the sale of vaccines to some developing countries.

    The sheer scale of the logistical challenge is daunting

    The global logistics company DHL estimates that global vaccine coverage will take around 200,000 pallet shipments and 15 million deliveries in cooling boxes as well as 15,000 flights.

    The vaccine will most likely need to travel by air, since most container ships are not equipped to carry and keep cool such delicate cargo.

    The logistics surrounding the supply lines for pandemic-fighting gear such as masks and ventilators got a thorough workout at the beginning of the pandemic and the experience was less than ideal. Those were products which were already in production with established supply lines that did not need refrigeration.

    That experience earlier this year serves up lessons that can be used for the next challenge. The logistics surrounding vaccine supply lines will no doubt be even harder.

    This time, the situation is different in one important way

    We know the size of the challenge that awaits. That’s why planning is already well advanced to sort out what will be needed when the vaccines are ready for delivery.

    To take one example, UNICEF, the United Nation’s Children’s Fund, plans to have a billion syringes stockpiled in the countries where they will be most needed in 2021. It says it will have half of that already in its warehouses around the world by the end of this year.

    If we want mass vaccination, we need supply chains that are up to the task of delivering the vaccines to people who need it most.

    Much more work is needed.

    We need to be able to shed light on the problems in global supply chains in the early stages of distribution and address the problems quickly. During the onset of the pandemic, it became clear then that a major source of the difficulties was that supply chains for critical goods were opaque. Everyone could see goods were not getting where they were needed but where exactly blockages were happening was mostly a mystery.

    In response, ADB’s Trade and Supply Chain Finance Program developed a supply chain mapping tool as a way for anyone to find out who makes what in the supply chains for 19 products involved in fighting the pandemic. Soon, the supply lines for vaccines will be included in the tool as well.

    In addition to mapping the supply chain for vaccine related equipment like syringes, and vials, we’re now trying to devise a way to map out the distribution chain for vaccines to identify any impediments, including for cold transportation and storage, to getting the job done. 

    To make the trade in these critical products run smoother in developing economies our Trade and Supply Chain Finance Program has made available a $500-million Vaccine Import Facility to purchase vaccines and related equipment. The facility provides guarantees to support the purchase of these items, and AAA-guarantees available through the program’s vaccine import facility will mitigate payment risks and facilitate import.

    The beauty of supply chain support is that it can compound so easily, making it ideally suited to the current challenge of removing bottlenecks in the supply of life-saving vaccine. Through risk-sharing with partner banks, the $500 million facility could be leveraged to $1 billion. 

    The production and distribution of vaccines won’t be easy, but it needs to be done. If we want a new normal that is closer to our old normal, mass vaccination is the only choice. And if we want mass vaccination, we need supply chains that are up to the task of delivering the vaccines to people who need it most.

    11 January 2021
  • Covid-19: the Latest on Southeast Asia
    As 2021 dawns, the coronavirus pandemic continues to develop in Southeast Asia. Many countries are preparing to receive their first vaccine shipments, and a few have already started distributing them.

    As 2021 dawns, the coronavirus pandemic continues to develop in Southeast Asia. Many countries are preparing to receive their first vaccine shipments, and a few have already started distributing them.

    New outbreak in Thailand

    But in the meantime, the virus is rebounding in many parts of the region. In Thailand, a new oubreak has nearly doubled the country’s case total in the past month.

    The first evidence of community transmission occurred when a Thai worker at a seafood market in Samut Sakhon province tested positive. Soon migrant workers at the same seafood market, many of whom had left neighbouring Myanmar after a serious outbreak started there in September, were testing positive at a high rate. Anti-Myanmar sentiment has intensified online in recent weeks as many Thais blame migrants for the surge in cases.

    The outbreak in Thailand has also precipitated an exodus of non-Myanmar migrant workers to their countries of origin. Cambodia has seen a small increase in cases due to several of these returning migrant workers testing positive. Cambodian Prime Minister Hun Sen has since tightened border restrictions and prevented more Cambodian migrants from traveling to Thailand.

    So far, few new cases have been reported in Cambodia. But if efforts to keep the coronavirus out of the country fail, Cambodia’s weak healthcare system could be quickly overrun.

    Thailand’s northern neighbor Laos has tightened movement control measures and increased inspections of Thai fish imports. Laos reportedly began vaccinating frontline officials, including medical workers, in late November. It remains unclear which vaccine the Lao government is using, but it plans to continue vaccinating medical workers through January.

    Growing number of cases in Indonesia

    The growth of cases in Indonesia has only accelerated over the holidays. Indonesia has locked down its borders, banning all incoming travelers as a new, potentially more contagious variant of Covid-19 spreads from the United Kingdom.

    The densely populated island of Java, which also contains the country’s capital, accounts for the majority of cases nationwide. Hospitalizations have far surpassed capacity on the island, and so has space in cemeteries, some of which have resorted to doubling up on graves. Meanwhile, Indonesia has begun distributing the Chinese-made Sinovac vaccine and will begin officially vaccinating the public on January 13. The Indonesian government is also finalizing deals to secure Pfizer and AstraZeneca vaccines.

    More cases in Malaysia

    Cases in Malaysia have also accelerated of late. The government has not issued any major updates to its movement control measures after loosening regulations throughout December. Prime Minister Muhyiddin Yassin has taken action to acquire vaccines. Two weeks ago, his government signed a deal for 6.4 million doses of AstraZeneca’s vaccine. Muhyiddin also says he is in talks with Chinese and Russian manufacturers to secure more doses.

    Cases have come down in the Philippines

    New daily cases have come down in the Philippines over the past few weeks, as the government extended various states of quarantine in December and restricted inbound travel, including from the United Kingdom, the United States, and 20 other countries. Singapore has also halted travel from the UK while strengthening quarantine measures for those traveling from South Korea, where cases are surging.

    For more details on recent developments, visit our Tracker online.

    8 January 2021
  • Thailand’s slow economic recovery
    The speed of economic recovery in Thailand has been slower than neighbouring countries such as Malaysia, Vietnam and China, especially in terms of industrial and service output.

    Thailand’s economic performance in the third quarter of 2020 showed promising signs of recovery amid the ongoing COVID-19 pandemic.

    The contraction in GDP fell to 6.4 per cent year-on-year, down from 12 per cent in the second quarter. Signs of recovery in key industries such as electronics and appliances, the automotive sector and plastics are bright spots.

    The speed of economic recovery in Thailand has been slower than neighbouring countries such as Malaysia, Vietnam and China, especially in terms of industrial and service output.

    Part of the reason is the inadequacy of Thailand’s policies during lockdown, particularly its tax measures and special loan initiatives to help vulnerable firms maintain cash flow and reduce costs of production.

    There was also no clear policy geared directly at retaining employment in industries such as tourism that were hit hard by COVID-19.

    Tax measures meant to support firms were mostly limited to tax payment deferral for three months and an acceleration of tax refunds, whereas others such as Malaysia, China, South Korea and Japan offered tax cuts. South Korea allowed tax payment deferral for nine months; Japan offered it for almost a year.

    Singapore, Malaysia and Vietnam all offered wage subsidies to small and medium-sized enterprises (SMEs) to help retain employees.

    Thailand’s policy was limited to reducing the contribution rate to the Social Security Fund (SSF), extending the duration of contribution form submissions and providing special funds for employment training. Fortunately, workers registered with the SSF, independent labourers, vulnerable persons and low-income earners did receive financial assistance from the government, though payments were delayed.

    Soft loans from the Central bank

    The central bank offered 500 billion baht (US$16.7 billion) in soft loans as part of a 1.9 trillion baht (US$63.4 billion) budget (around 14 per cent of GDP) for providing remedies, stimulating the economy and enhancing production potential in several sectors.

    The accessibility of these loans has been questioned — as of November 2020, only 25 per cent of them have been taken. Conditions regarding eligibility for borrowing, loan duration, speed of the loan approval process and surety conditions for the loans remain under debate.

    After completely lifting its lockdown in July 2020, the government introduced a series of more targeted measures to stimulate the economy. For example, the central bank extended debt relief measures for SMEs that began in April 2020, but only for specific firms that cannot repay loans to financial institutions. These targeted measures will end on 30 June 2021.

    Around 25 billion baht (US$835 million) has been allocated to support tourism and related industries. The ‘We Travel Together’ stimulus package launched in July 2020 and ending in April 2021 will see the government partly subsidise some tourist expenses including hotel accommodation, airfares and other tourist activities. Measures such as these will likely support economic recovery.

    In October, the government offered an unconditional co-payment to 10 million Thai citizens to purchase day-to-day goods, excluding alcohol and tobacco, in the hope of stimulating private consumption. Under the scheme, the government subsidises half the cost of purchases with a maximum daily co-payment of 150 baht (US$5) per day, totalling 3000 baht (US$100) per person, for up to three months.

    The scheme was extremely popular, and in December Cabinet expanded it to cover another 5 million people and raised the total subsidy to 3500 baht (US$117) per person. The original 10 million people also received an additional 500 baht (US$17) each.

    Without any income conditions, equal access to the scheme was problematic and many applicants complained about losing their opportunity to benefit from the scheme. To what extent the scheme will stimulate consumption is yet to be seen since the subsidies last up to three months. Rather than stimulating the economy as expected, the scheme may just be palliative.

    Although a series of measures have been implemented, some key aspects of Thailand’s economic performance look grim.

    Thailand needs more employment stimulus policies

    The number of unemployed persons jumped to more than 800,000 in October 2020 from only 370,000 in 2019, while the share of private investment in GDP in the third quarter of 2020 fell to its lowest level (14 per cent) since 2003. Household debt reached 83.8 per cent of GDP in October, the highest level in 18 years.

    To resolve these challenges, Thailand needs more employment stimulus policies, a proper debt-restructuring program and medium to long-term growth stimulus measures. The Thai government has prepared a 400 billion baht (US$13.3 billion) budget to enhance production potential and competitiveness in several sectors. But the draft budget accounted for only 17 per cent of this figure and listed only three industries: agriculture, tourism and textiles. Projects concerning the digital economy, the ‘green’ economy and logistics are inadequate.

    In pushing these projects ahead, the Thai government needs to further develop the country’s human capital in the current climate of digital transformation.

    Policy overlap and coordination failures across institutions need to be resolved. Infrastructure including e-governance, investment in 5G, and affordable and reliable broadband in remote areas should be prioritised. The proper handling of the pandemic, including testing, tracing and vaccine handling, and the country’s recent political challenges are also key in moving the economy forward in 2021.

    Author: Juthathip Jongwanich, Thammasat University

    Juthathip Jongwanich is Associate Professor at the Faculty of Economics and the International Competitiveness Research Cluster, Thammasat University.

    This article is part of an EAF special feature series on 2020 in review and the year ahead.

    7 January 2021