29 May 2020

Key points

  • The resumption of normal business operations remains patchy across ASEAN markets. Vietnam and Thailand continue to experience the most positive conditions, followed by Malaysia and Singapore.
  • Indonesia – Jakarta’s lockdown is scheduled to be lifted from June 5, but the status of this reopening remains unclear as COVID-19 cases and deaths continue rising. International visitors must provide recent evidence of their COVID-19 negative status, and are quarantined for 14 days on arrival.
  • Malaysia – A PwC survey found 91% of Malaysian companies expect financial performance to worsen for 2020. Only 3% of respondents expect an increase in revenue while 10% foresee revenue shrinking by 50%. A study by research firm MIDF predicted ‘bounce-back demand’ to be limited as consumers reduce discretionary spending.
  • Philippines – Businesses in Metro Manila are slowly transitioning back to normal operations. Despite many businesses being allowed to operate at 50% capacity, most are opting to bring only 30% of their staff back as fears grow of another infection spike. Public transport is still suspended so many companies are providing shuttles.
  • Singapore – Singapore will take a three-phase approach to resuming activities when the circuit breaker (lockdown) concludes on June 2. Phase one will see economic activities that do not pose a high risk of transmission resume, including a staggered return to school. Social and entertainment activities will remain closed and citizens can only leave their home for essential activities and must continue to wear a mask.
  • Thailand – The night-time curfew is now 11pm to 4am and department stores, community malls, pools and sports centres can reopen, with social distancing measures. Restrictions on international transport remain until the end of June, as do some restrictions on inter-provincial movements.

Logistics and transport

  • Indonesia – One of Indonesia’s main state-owned port operators, Pelindo II, has reported a 5–8% decline in freight flows and remains uncertain about future goods flows.

Agribusiness and food

  • Malaysia – The Malaysian poultry industry is experiencing market distortion, with both low farm gate prices and high prices for consumers in some areas. Aggregate demand for chicken has dropped since March when the lockdown was enforced, leading to oversupply.
  • Myanmar – Rural households are reported to be experiencing reduced incomes and food security, amid the decline or collapse of major export markets for flowers, fruit and fresh vegetables in China, India and Thailand.
  • Thailand – A recent McKinsey survey of 5,000 shoppers reports 80% of consumers are conscious that exercise and healthy heating can improve immunity, and confirms a stronger focus on food safety. Changing consumer behaviour and high numbers of female workers are predicted to drive demand for convenience foods such as cereal, pasta, packet food, sauces, condiments and read-to-eat meals, as well as healthy snacking items, fruit and vegetables.
  • Vietnam – The Ministry of Industry and Trade announced strict compliance measures around rice exports to stop smuggling, amid food security concerns. The ministry has requested businesses keep reserves of at least 5% of total rice exports, and has encouraged the 20 largest rice exporters to cooperate with supermarkets to maintain food reserves.

Manufacturing

  • Indonesia – Indonesia’s largest steel producer, state-owned Krakatau Steel, reported a 20% year-on-year decline in steel demand in March 2020. It also forecasted a worst-case possibility of a 70% decline by May due to a massive slowdown in the automotive sector.
  • Malaysia – Malaysian automakers have fully resumed operations (sales, services, showrooms, spare parts). The Malaysia Automotive Association has revised its annual production forecast downwards from 607,000 units to 400,000 units.
  • Malaysia – The State of Selangor has formed an aerospace division – the Selangor Darul Ehsan Aerospace Industry Coordination Office or S-Daico – to accelerate the state’s recovery. Selangor is home to 60% of the 230 aerospace companies in Malaysia. S-Daico will be tasked with providing information, advisory services and investment opportunities to industry players.
  • Thailand – The number of vehicles produced in Thailand is reported to be down 84% in the year ended April 2020. Thailand’s industrial confidence index was 75.9 in April, the lowest in 11 years.
  • Vietnam – The Vietnam Steel Association reports steel production and consumption fell by 8.4% and 13.3% respectively year-on-year, for the first four months of 2020. The decline was due to reduced demand in sectors such as construction, infrastructure, automotive, motor bike production, and electronics.
  • Vietnam – Intel subsidiary Intel Products announced an investment of US$1 billion in Vietnam. Intel Products employs 5,000 workers in the country.

Infrastructure and resources

  • Thailand – Delays are expected across many of Thailand’s major infrastructure projects as the government continues to prioritise spending on combating the pandemic, according to the Thailand Development Research Institute (TDRI). TDRI predicts it may take up to three years for the economy to fully recover.
  • Vietnam Renewable energy developers are facing new challenges meeting an October 2021 project completion deadline, to qualify for higher feed-in tariffs. COVID-19 related delays to import and equipment deliveries are impacting established and proposed projects.

Health

  • Indonesia – Several major hospital chains including Siloam, Pondok Indah Hospital Group and Mitra Keluarga have launched teleconsultation services to move into the growing telemedicine market. Seekmi, a home services provider, has announced a partnership with e-commerce players Tokopedia and Lazada to provide disinfection services.
  • Malaysia – The Ministry of Health will introduce new regulations governing the marketing and advertising of medical devices and ventilators. The new regulations will apply from July 1, 2020.
  • Singapore – COVID-19 rapid test kits that have a one-hour processing time have been developed by Singapore’s Duke-NUS Medical School, in partnership with the Agency for Science, Technology and Research (A*STAR, a partner of CSIRO), and biotech firm GenScript Biotech. Known as cPass, the kits test for immunity against the virus and can help governments assess the true spread of the virus and the extent of public immunity. The kits will initially be made available to Singapore hospitals before being launched for export. Around 20 countries including Australia and New Zealand are evaluating cPass.

E-commerce

  • Indonesia – E-commerce platforms Bukalapak, Shopee and Gojek experienced increases of up to 100% for online Zakat al-Fitr payments in the lead up to the end of Ramadan. Zakat al-Fitr is a charity payment made a few days before the end of Ramadan, which this year has been increasingly fulfilled through digital service providers.
  • Vietnam Vietnamese consumers are shifting to e-commerce platforms for grocery shopping. Grab launched a new app – Grab Mart – in late March that enables consumers to buy groceries and have them home delivered. Grab Mart experienced a 91% increase in orders in its first week after launch.

Technology

  • Indonesia The Indonesian Government has announced it will impose a 10% value-added tax on digital goods and services including video games, music and movie streaming. This will impact tech giants such as Amazon, NetFlix, Spotify and Zoom which have large user bases in Indonesia. The new tax will be imposed from July 1, 2020.
  • Indonesia – At least 24 Indonesian startups have raised private-sector funding amid the disruption and economic downturn caused by COVID-19. The startups receiving funding are from industries such as logistics (RaRa), edtech (Zenius, Ruangguru), ride-hailing (Gojek) and insurtech (Qoala, PasarPolis).
  • Vietnam – The Vietnamese Government has pressed ahead with mobile money to decrease social contact and cash usage. In March, the Prime Minister asked the State Bank Vietnam to prepare a pilot plan for utilising mobile money. As of May 15, three major mobile network operators – Viettel, VNPT and MobiFone – have prepared pilot plans for mobile money for Vietnamese consumers.

Aviation

  • Philippines – Due to the pressure to repatriate Filipino citizens, the Ninoy Aquino International Airport has increased the number of passengers who can arrive in Manila from 400 to 600 per day until June 10.
  • Vietnam The Vietnamese Ministry of Transport has allowed airlines to restart all domestic flights, and lifted limits on numbers of flights and social distancing, from May 2020. The ministry also proposed tax reductions and tax deferrals for the aviation industry, as well as cutting 50% of aircraft landing and take-off and air traffic control fees for domestic flights.
  • Thailand – The Thai Government has scrapped a bailout offer to Thai Airways, announcing, it is selling its stake and the airline is filing for bankruptcy. As part of the rehabilitation plan, it is estimated that 6,000 of the 21,000 Thai Airways employees will be laid off.

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