ASEAN'S NEXT MOVE

To capitalise on this, the SIIA report said Indonesia must improve its information technology (IT) infrastructure. Southeast Asia’s largest economy ranked 112th out of 138 countries in the Speedtest Global Index for fixed broadband speed as of October 2021. Singapore and Thailand were first and second respectively.

Underdeveloped digital infrastructure and increasing protectionism prevent Indonesia from reaching its full potential in the digital economy, the report said. Relative to Asean, Indonesia continues to lag in 5G technology to fully support the wide and deep penetration of the internet.

Dr Cochrane of Moody’s said that linking the digital economy across Asean will continue to be a high priority in terms of digitisation of financial services.

Infrastructure will be critical to keeping the momentum going, he said. “Every country in Asean had active infrastructure development plans. That is really key in creating potential for very long-term productivity that there’s going to be global competition for foreign direct investment going forward.

“There can’t be any letup or any hesitation in continuing infrastructure development plans. Fortunately, most of the region has pretty good fiscal space so they have an ability to finance these kinds of projects,” he pointed out.

Finally, this is a real opportunity for the region to think about investment in green technology and decarbonisation. These are also areas where there will be a lot of competition and opportunities to prove capabilities in terms of investment and innovation in green infrastructure, added Dr Cochrane.

SIIA’s Ms Lee agreed, saying that there is also a real opportunity for a green reset.

“We are already seeing it within the financial sector and within the governments,” she said. “I’m really pleased to see the government even last year announced the Singapore Green Plan 2030.”

The state investment arm Temasek recently committed to reducing net carbon emissions of businesses its portfolio to half the 2010 levels by 2030. It also aims to reach net zero emissions by 2050.

“I think that is going to have repercussions on a lot of sectors, not just in Singapore but also across the region,” she said.

EYE ON POLITICS

The pandemic has placed considerable social and political stresses on Asean countries. Malaysia and Thailand are potentially in more challenging situations. In both, intense and divisive political confrontation between incumbent governments and opposition forces was on the rise even before the lockdowns of 2020.

Confidence in government was further shaken as a result of the surge of infections this year. Voices of dissent have intensified, criticising authorities’ alleged poor handling of the pandemic.

“The countries really being watched in terms of political stability or instability are Malaysia and Thailand,” said Ms Lee. “Malaysia as we know just had a sudden change in political leadership in the last couple of months.”

The opposition and the current government in Malaysia have reached an agreement under which the former will support the latter in Parliament on key votes.

“We do not anticipate things to change much, and we can expect to see a bit of more sort of the policy flip-flopping as a result of infighting among the government,” said Ms Lee.

Thailand is another country to watch because there are challenges to Prime Minister Prayut Chan-o-cha’s leadership — including from within the party that originally backed him for the top job. “At the same time, there are challenges externally among the public, young Thais who are very disenchanted with what they see as a corrupted government that does not have political legitimacy to rule the country.”

In Indonesia, the approval rating of President Joko Widodo has been on the decline, partly from the perception that his administration has botched the management of the pandemic. “Notably, the government has been criticised for its belated public health measures, lacklustre testing and contact tracing efforts, as well as initial delays in vaccination programmes,” the SIIA report said.

One-party Vietnam, on the other hand, is seen as one of the most politically stable countries in Asean despite changes in key posts since the start of 2021.

“What really stands in Vietnam’s favour is obviously politics,” said Ms Lee. “The country just announced a new political leadership with the

national assembly election in the middle of this year and Prime Minister Pham (Minh Chin) is also the head of the national task force that oversees the

pandemic response.

“In that category, Vietnam should have the political leadership to steer the country through the current Delta wave.”

The SIIA report, however, noted that beyond the domestic agenda, leadership in Vietnam will face pressures from growing tensions between the United States and China.

“The stated policy (of the Vietnamese government) is to engage both sides and not to choose between them. Notably, however, ties with the US in recent years have grown, both in economic and in political and security relationships,” it said.

“With China, there are further complications. The two countries have competing claims to parts of the South China Sea and yet maintain strong ties, especially through their ruling Communist parties, and share a long border with many flows of trade and people.”

Dr Cochrane said the success of governments in keeping the economy going, as well as communication of policy, will be among the factors that local people as well as foreign investors will keep an eye on.

“They will look for policymakers who can be very clear in terms of communicating the policy so we all know what we face because there will be difficulties again. There will be another Covid-alike coming through somehow, somewhere,” he said.

“My expectation is that policymakers throughout the region will do better in handling it because we’ve got a lot of experience of it with each subsequent wave, along with the learning curve of policymakers in the region,” he concluded.