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July 17, 2020

ASIA: Weekly politics update

BY Tobias Harris, Bob Herrera-Lim, Gabriel Wildau

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( 8 mins)

Below is the weekly update of political developments across East Asia. Please do not hesitate to contact us if you want to discuss any of the countries mentioned in more detail.

JAPAN: Abe government under pressure to suspend tourism campaign as cases rise

Japan reported 622 new Covid-19 cases nationwide on Thursday, 16 July, the first time the total has been above 600 since 11 April. That figure included 286 new cases in Tokyo, the capital’s largest single-day total thus far. Tokyo’s neighboring prefectures and Osaka and its hinterlands also reported sizable increases, signaling that the steady increase of new cases has continued unabated. The latest figures have forced the Abe administration – already facing criticism from Tokyo Governor Yuriko Koike and other prefectural governors for prioritizing reopening the economy even as case numbers have risen – to reconsider its plans to roll out its “Go To Travel” domestic tourism campaign on 22 July. However, instead of pausing the start of the campaign, the administration instead announced that it would exclude visitors to and from Tokyo from the program and has continued to insist that the outbreak is under control due to low rates of hospitalization and only 11 deaths nationwide thus far in July. Instead, government officials have called for travelers to continue to respect the “three C’s”: avoiding closed spaces, crowds, and close-contact settings.

Politically, this decision is unlikely to end pressure on the government to reconsider the campaign. Both opposition and ruling coalition lawmakers raised critical questions about the tourism campaign in a closed hearing of the upper house of the Diet on Thursday. While the decision to exclude Tokyo caught Koike by surprise – and may have been intended as a blow against her by the national government – other governors, including Osaka Governor Hirofumi Yoshimura, have called upon the Abe government to consider a wider-reaching suspension of the program in light of the risk that it could result in a larger nationwide outbreak.

CHINA: US actions on Hong Kong are less than meets the eye

US President Donald Trump signed the Hong Kong Autonomy Act into law and issued an executive order revoking Hong Kong’s distinct status under US law on 14 July. The actions mark a further deterioration of US-China relations, but the practical impact on the business environment from both the law and the executive order will be modest. This limited impact reflects the lack of attractive policy options available to Washington as it seeks ways to impose costs on Beijing without inflicting collateral damage to US interests.

Before the latest moves, the administration had already announced its intention to sanction individual Chinese officials deemed responsible for imposing the National Security Law on Hong Kong and to apply export controls that cover mainland China to Hong Kong. The new law empowers – but does not require – Trump to add “secondary sanctions” on banks that do business with sanctioned individuals. The exact effect of the executive order depends on pending follow-up actions by various US agencies but is likely to include the equalization of customs tariffs between the mainland to Hong Kong. In addition, the executive order withdraws the US from its bilateral extradition and reciprocal tax treaties with Hong Kong and cancels scientific and academic exchanges, including the Fulbright Scholarship. The order allows for the possibility of sanctioning Chinese companies, as well as individuals, but it remains unclear if the administration will actually take this step. Presumptive Democratic nominee Joe Biden has already suggested sanctioning companies. Chinese companies that are directly involved with law enforcement in Hong Kong’s – for example, through sales of equipment or technology to the Hong Kong police – would be most likely to face sanctions.

China’s foreign ministry criticized the US actions and promised retaliation but did not announce specific measures. On 13 July, in response to separate US sanctions on four Chinese officials allegedly involved in repression of Uighurs in Xinjiang, China announced sanctions on three Republican lawmakers who have been vocal critics of China. Further sanctions on US officials are likely in response to the US moves on Hong Kong.

SOUTH KOREA: Moon’s support falls amidst political and policy challenges

President Moon Jae-in’s approval ratings have reached their lowest level since last October, with disapproval surpassing approval for the first time since November. His Democratic Party of Korea’s (DPK) support has fallen as well, marking an end to the honeymoon both enjoyed after the DPK’s victory in April’s National Assembly elections. The polling slump reflects that Moon increasingly faces trouble on all fronts. While the suicide of Seoul Mayor Park Won-soon, the day after a former secretary had filed a sexual harassment complaint, meant the loss of one of the most powerful and popular progressive politicians in the country (and a likely contender to succeed Moon), it has also led to an uncomfortable conversation about sexual misconduct in the ranks of the DPK. The Park affair follows the resignation and imprisonment of a DPK governor in 2018 and the resignation of Busan’s mayor earlier this year. The slump may also reflect disapproval of Moon’s response to rising housing prices.

Facing growing dissatisfaction with his government, Moon used his address Thursday marking the start of the new National Assembly regular session to realize a Korean New Deal, a program that – with KRW 114tn (USD 94.6bn) in public investment envisioned over the next five years – will be the centerpiece of Moon’s final two years in office. The program wants to use public investment in green technology and information technology, as well as reforms to the social safety net, to encourage a new growth model.

PHILIPPINES: A challenging year ahead for students as enrollment numbers down by 27%

The government’s decision to require remote learning for the foreseeable future appears to have significantly discouraged families and students from returning to school, as the Department of Education has reported that overall enrollment in both public and private schools, from elementary to college levels, is down 27% from last year. The enrollment period for the coming school year that starts on 24 August ended on Wednesday, with a total of 20.2 million students having signed up, compared to 27.7 million last year. The number may still increase slightly in the coming weeks, as the department will allow late registration until September for the public school system, if students have the chance to complete 80% of school days. This means that the economic effects of the pandemic will propagate well beyond this year as up to a quarter of the country’s student population will eventually graduate later than their cohort.

The education department has not provided a formal reason, but the cause is likely families’ apprehension that they are unlikely to have either the physical devices – laptops, tablets or even smartphones – or the internet connections that will be needed. The department reported that only about 1% shifted from private to public schools, indicating that those set to skip the school year will likely be from lower-income families who are already in the public school system and unable to cope with the technological or financial needs for remote learning, primarily in the rural areas and in the slums of the capital.

Even those returning to school are likely to face challenging conditions, because of the limited ability of the public and private sector to invest in the technology, equipment, educational material, and consumables needed for a combination of limited online learning and remote student work. President Rodrigo Duterte has ordered that in-person classes are not allowed until a vaccine is available. Whether the government will stick to this directive through the whole school year remains unclear, however, as the criteria for a change of policy, other than Duterte’s pronouncement, has not been disclosed by the department.

THAILAND: Bevy of economic appointments in August/September

Thailand’s economic team resigned earlier than expected, which will likely lead to a cabinet reshuffle early in August. As expected, Somkid Jatusripitak (deputy prime minister) Uttama Savanayana (finance), Sontirat Sontijirawong (energy) and Suvit Maesincee (higher education, science, research and innovation) quit following the leadership change in the People’s State Power Party (PPRP), which leads the government coalition. Kobsak Pootrakul (deputy secretary general of the prime minister) also resigned. Looming on the horizon is the appointment in September of a new governor of the Bank of Thailand after Veerathai Santiprabhob said he would not seek another five-year term as chief of the central bank.

Many names are likely to crop up in terms of who will lead economic policy formulation for Prayuth – rumors include Kasikornbank president Preedee Daochai (who is also Thai Bankers’ Association president) as the next finance minister and former state oil and gas company CEO Pailin Chuchottaworn as energy minister. For Prayuth, the balancing act is to have enough technocrats in key positions to maintain the credibility of economic policymaking while allocating seats to key PPRP factions and coalition partners to avoid another round of infighting.

However, many of the names being speculated on in Thailand as possibly filling the other vacancies include advisers of Prayuth who were formerly with PTT, Siam Cement, and Thai Airways, which may be an indication that politicians will not fully get their way. While this may help reduce apprehension within the business community, it would signal that the political peace arising from the removal of Somkid is a weak one. Therefore, the overall effect of the reshuffle on policymaking and internal politics will not be clear until the appointments are made.

MALAYSIA: Is five decades of politics over?

( 6 mins) The political dynamics that had kept Malaysian politics stable since the 1970s have been unravelling gradually over the past decade. The return of a United Malays National Organization (UMNO) politician to the prime ministership is

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