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Asian Economy: Overview, Growth & Development

Asia-Pacific Countries 2020
Vietnam’s economic hopes fade as covid-19 takes away business

Vietnamese officials have lowered expectations for their country’s normally fast-growing economy in 2020. The officials noted that weakness in the international economy has reduced demand for exports and international travel.

Vietnam’s $260 billion economy has grown 6 percent or more each year since 2012 because of an increase in manufactured exports. Vietnamese officials say the economy will grow just 2 percent in 2020. That is down from an earlier target of 2.5 percent. The Asian Development Bank estimates that the economy will expand at a rate of just 1.8 percent this year.

Experts say measures taken around the world to contain COVID-19 have reduced orders to Vietnamese factories that make shoes, clothing and furniture.

Stay-at-home rules in Western countries are keeping people away from physical stores. Business closures in those countries have left people out of work and less likely to buy non-essential goods.

Frederick Burke is a partner with the law office Baker McKenzie in Ho Chi Minh City. He told VOA, “The rule is that those light industrial goods are weak, the exports orders are down and there’s reports of a lot of unemployment in the factory sector in the [Vietnamese] provinces.”

Vietnamese factories that make electronic products still get orders from companies that sell overseas to people working or studying at home. However, most factories that make non-essential goods are failing, Burke said.

For example, one Vietnamese factory operated by a Taiwan-based company dismissed 150 workers earlier this year. That information comes from the nonprofit Business & Human Rights Resource Centre.

Vietnam has closed its borders to limit the spread of COVID-19. The border closure is stopping investors from making trips that would help them expand. They would normally travel to Vietnam from Japan, Singapore, South Korea and Taiwan to search for new places to manufacture goods.

US envoy says Thailand is a victim of its success

Thailand has been a victim of its own success in eliminating domestic Covid-19 infections and must find a way to balance the needs of the economy with virus prevention, the US ambassador to Thailand said while on a recent mission to the Eastern Economic Corridor (EEC).

“Ultimately it is up to Thailand on how to determine that balance, but there are costs on either side,” Michael DeSombre said during a press tour of three factories owned by US companies in the EEC last week. “If you keep the economy shut down, or in this case international travel shut down, it obviously affects certain people’s livelihoods, but if you open it up you certainly will have more infections.”

The same day as the EEC tour, US President Donald Trump tested positive for the coronavirus, and since then the bug has spread through the highest levels of the US government and military.

“The evidence over the last six months shows that the costs of a really extreme shutdown are generally worse than the benefits and it is better to keep the economy running,” Mr DeSombre said.

Indonesia: thousands protest against ‘omnibus law’ on jobs

Tens of thousands of Indonesians have protested for a third day against a controversial law that critics say will harm workers and the environment.

Rallies took place around the country. Hundreds were arrested in Jakarta. Hundreds more have been held in strikes and protests in other cities this week.

The so-called “omnibus” jobs creation bill became law on Monday.

The government says the changes are needed to help its economy which has been hit hard by the Covid-19 pandemic.

Demonstrations have gathered steam in the capital Jakarta and other cities such as Bandung on Wednesday and Thursday, after relatively peaceful protests earlier in the week.

Indonesian police detained at least 400 protesters, including some who were allegedly armed with molotov cocktails and sharp weapons.

The bill, which is over 1,000 pages long and amends 79 existing laws, was passed with the support of seven out of nine parties.

Coronavirus live: India’s active cases fall below 900,000 after a month

The number of active Covid-19 cases in the country has fallen below the nine lakh-mark for the first time in a month and it comprises merely 12.94 percent of the total caseload, the Union Health Ministry said on Friday.

The declining trend of the percentage of active cases is commensurately supported by the rising percentage of recovered cases. Recoveries in India have exceeded new cases for three continuous weeks, it said.

“Presently, the active cases stand at 8,93,592 and comprise merely 12.94 percent of the total positive cases of the country, demonstrating a steady falling percentage of the total cases,” the ministry said.

Coronavirus update: India on Friday registered over 70,496 new Covid-19 cases, taking the tally to 6,906,152 and the death toll reached 106,490. Delhi needs to be prepared for about 15,000 fresh cases of coronavirus per day taking into account the upcoming winter season-related respiratory problems, large influx of patients from outside and festive gatherings, a report drafted by the NCDC has warned.

Coronavirus vaccine update: World Health Organization has urged countries to plan for efficient roll-out of Covid-19 vaccines as soon as they are available. Recently, WHO Director-General Tedros Adhanom Ghebreyesus had said that we may have a vaccine for Covid-19 by the end of this year, without elaborating.

World coronavirus update: The global tally of coronavirus cases stands at 36,738,690. While 27,559,622 have recovered, 1,064,373 have died so far. The US, the worst-hit country, has 7,833,764 cases.

Russia’s business regulations are worse than the pandemic

European investors say Russia’s arduous regulations are a bigger barrier to doing business in the country than the coronavirus pandemic, a survey of foreign firms has found.

Almost seven in ten Association of European Businesses (AEB) members said regulations were a significant challenge to operating in Russia — the highest reading since the annual survey started in 2011. More than half said they do not expect the regulatory environment or problems with corruption to improve over the next few years.

Meanwhile, the coronavirus pandemic was cited by 57 percent of AEB members as the main obstacle, with most saying their sales had fallen as a result of the crisis. However, firms were hopeful that they could bounce back from the crisis relatively quickly, with more than eight in ten expecting their business to have recovered by the end of next year.

Despite an upbeat outlook on the economy over the medium-term, the survey revealed that few businesses have plans to increase their investment into Russia in the near future — a stated goal of President Vladimir Putin which firms say is at odds with a host of state policies designed to support domestic companies, such as Russia’s broad import substitution drive.

Japan to exempt business travelers and returnees from 14-day quarantine

Japan is set to conditionally exempt business travelers and returnees from the 14-day quarantine policy currently imposed on all overseas arrivals to stem the spread of the coronavirus, government sources said Wednesday.

Both Japanese citizens and foreign nationals with residence permits will be eligible for the exemption, with no restrictions on countries, the sources said.

With the 14-day quarantine policy a significant stumbling block for overseas business travel, Prime Minister Yoshihide Suga, who has placed importance on restarting economic activity, has pushed for the exemptions to move forward.

The government aims to draw up measures easing entry restrictions by the end of the month, the sources added.

Those eligible will be required to submit a detailed plan of their movements in the 14 days following entry into Japan, including accommodation and place of employment, they said.

Currently, people returning to Japan from overseas business trips are required to take polymerase chain reaction (PCR) tests for the coronavirus at airports. Those who test negative are allowed to enter the country, but they need to self-isolate at their homes or accommodation facilities for two weeks.

After the relaxation, people who are confirmed negative in PCR tests will not need to self-quarantine on condition that they submit activity plans and do not use public transportation for two weeks.

Given the anticipated burden on airport staff in handling paperwork and other inspection measures, the government plans to impose a daily limit on the number of people eligible for the exemption based on testing capacity at airports and other ports of entry.

Japan has already agreed to resume business travel with both Singapore and South Korea, under which travelers are exempted from the 14-day quarantine.

Tokyo also plans to ease a travel advisory for some of the 159 countries and regions placed at Level 3 amid the coronavirus pandemic, a warning that advises against all travel, the sources said.

The Foreign Ministry is considering lowering the advisory for some countries to Level 2, meaning that nonessential travel should be avoided.

No country is subject to the highest Level 4 advisory, which warns against travel and urges all Japanese nationals inside the country to evacuate.

China blurs lines between private and state business

This week’s revelation that a former Chinese government official worked in a key role at TikTok raises issues that reach far beyond the wildly popular short-video app itself. It helps to illuminate, more broadly, the changing status of private enterprises in China’s authoritarian state. This is of crucial importance: western businesses and governments have long treated private Chinese businesses more favourably than their state-owned cousins.

The disclosure by the Financial Times that Cai Zheng— who had worked in the Chinese embassy in Tehran — had been responsible for deciding what content to allow on TikTok came after repeated denials by ByteDance, the app’s Beijing-based owner, that the Chinese government has any influence over TikTok’s operations. The news coincides with ByteDance’s efforts to forge a deal with Oracle and Walmart to avoid a US ban on TikTok. President Donald Trump has painted TikTok as a threat to national security since its user data on American people could end up in the hands of China’s government.

Western partners have generally been more relaxed towards private-sector Chinese businesses than to their state counterparts. Partly that reflects the view that state-owned corporations may enjoy access to subsidies and funding that private competitors in the west cannot match. Private companies have also largely been seen as free agents driven, like their western counterparts, by the profit motive, not Chinese Communist party orders.As the TikTok case shows, this view is increasingly outdated. Recent CCP diktats along with legal provisions are making it much more difficult to tell private and state-owned enterprises apart. This has implications not only for western companies choosing Chinese partners but for trade pacts such as the EU-China bilateral investment treaty, under negotiation since 2013.

In September, China released a document called “Opinion on Strengthening the United Front Work of the Private Economy in the New Era”. The unwieldy title identified it unmistakably as a communist party brainchild. It called for the realisation of the CCP’s leadership over the private sector, requiring companies to conduct themselves in accordance with its policy objectives and ideologies.

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