Asean’s busy election calendar

What should we expect for Asean in 2018? On the economic front, the overall picture remains unclear even though export growth is likely to continue on the back of improving global demand. But what is certain is that domestic politics will ultimately dominate the headlines. The election timeline for Asean is busy over the coming two years, starting with Cambodia in July, following a senate election late next month. Long-serving Prime Minister Hun Sen has effectively neutered the opposition with the arrest of Kem Sokha, leader of the Cambodian National Rescue Party, on dubious treason charges and the subsequent dissolution of the CNRP by a compliant Supreme Court. This has raised fears that Cambodia is becoming openly authoritarian.

Certainly, Cambodia’s democracy has never been fully free and open. Some say the unprecedented crackdown was a response to voter surveys showing the ruling Cambodian People’s Party was on course to lose to the CNRP. The Cambodian strongman, meanwhile, enjoys enthusiastic support from China as their relationship blossoms at the expense of ties with the US and the European Union.

US Senator Ted Cruz in October accused Hun Sen of “endangering the future not only of US-Cambodia relations, but of Cambodian democracy”. The EU cancelled US$8 million in funding for Cambodia’s election, but the amount pales beside the hundreds of millions in aid lavished on the country by Beijing. That’s in addition to direct investment worth a cumulative $11.2 billion as of 2016.

In Malaysia, elections must be held by August. Opinion polls suggest the Barisan Nasional (BN) coalition may have lost some support but BN chairman Najib Razak, who has been prime minister since April 2009, will likely face a splintered opposition and should nonetheless secure a majority of seats.

Despite an international investigation into the 1Malaysia Development Berhad (1MDB) scandal, involving hundreds of millions of dollars alleged to have been laundered for personal gain, Mr Najib will benefit from the formidable vote-getting and patronage machine of his United Malays National Organisation (Umno). The presence of former premier Mahathir Mohamad as the opposition standard-bearer may not be enough to break Umno’s grip. He is 92, after all.

In Thailand, the first election in seven years is expected to be held in November, barring any more surprises from the military. If and when the poll is held, many businesses may resume long-postponed investments, boosting what has consistently been one of the economy’s weakest points.

Meanwhile, over 130 million voters across 17 provinces in Indonesia will take part in regional elections in June, seen as a proxy for the presidential poll in April next year. The latter is expected to pit incumbent President Joko Widodo against former general Prabowo — the same match-up as in 2014. Investors worry about possible risks to policy continuity as Mr Widodo’s rival has criticised his economic policies, such as welcoming Chinese investments.

Businesses may be also be deferring investments in Indonesia due to uncertainty about tax liabilities, and while the official tax amnesty has ended, the government continues to offer incentives for businesses and individuals to declare assets and settle tax bills. But a notable acceleration in consumption is expected to lift overall growth to 5.2% from 5.1% last year.

Looking forward to 2019, a mid-term election in May will be the first electoral test for President Rodrigo Duterte who came to power in June 2016. The stakes are high as half of the senators are up for election. While the firebrand president has made progress on some reforms, a lot remains to be done before the mid-terms, particularly liberalising foreign direct investment (FDI). The Philippines lags most Asean economies in terms of FDI, but pushing through business-friendly reforms will “require significant political capital”, HSBC analysts wrote recently.

Don’t forget Myanmar, where domestic politics are no less controversial. Despite economic development from a very low base, Myanmar has become a single-issue country revolving around the persecution of the Rohingya Muslim minority in Rakhine state. With domestic politics in a mess, the Aung San Suu Kyi-led civilian government seems to be too busy to push key economic policies forward although some administrative reforms are on the cards.

Politics could be the card that trumps all others in 2018. Investors should take note as short-term gains from elections tend to give a boost to the economy. For example, election-related spending should be a driver of bread-and-butter spending for Malaysia, and possibly Thailand too. In the long term, political stability is important for us all.