Another one bites the dust: Jakarta governor darling benched; Malaysia’s digibanks falter

This week in Asean: 

• Indonesia: Debuts 40-year local-currency bonds
• Myanmar: Sembcorp power plant back in business
• Thailand: Green light for Western Digital; red for cheap Chinese imports

Dear BT reader,

The lore in Indonesia continues. 

Recall last week’s deep dive into the outroar across Jakarta and other major cities over controversial proposed changes to an election law that would have paved the way for President Joko Widodo’s youngest son to run in November’s regional elections and block former Jakarta governor Anies Baswedan’s reelection bid. This piece by our Indonesia correspondent Elisa Valenta is a good recap of how the rupiah and equities were affected, as well as a glimpse at the economy ahead. 

This week, the story unfolds further. After Parliament’s post-protest U-turn left the law untouched, Anies was expected to be nominated. Shockingly, Indonesia’s largest political party on Wednesday (Aug 28) anointed a Cabinet minister instead as its pick for Jakarta governor – a highly coveted position even with Nusantara’s takeover as Indonesia’s capital. With no parties left to back Anies, the vocal Jokowi critic has effectively been given the boot. 

In another damp squib moment, Malaysia’s digital banks – which were granted licences to operate in April 2022 to much fanfare – are not living up to the hype, with only three of the five having begun operations, reports our local correspondent Tan Ai Leng. She speaks with the banks, industry players and businesses to find out why. 

Vietnam had its own washout last week as well. Norwegian state-controlled energy giant Equinor exited the country, closing its Hanoi office and cancelling plans to invest in the country’s offshore wind sector, in a second blow to Vietnam’s renewable energy ambitions. Last year, Danish offshore wind company Orsted also paused market development activities there. While the country’s new regulations on direct power purchase agreements for renewable energy are generating much buzz, industry players urge caution, reports our Vietnam correspondent Jamille Tran. 

I’m ending off today’s newsletter with a lighter read for you to unwind to – one that caravan enthusiasts will find particularly entertaining. More individuals in Malaysia are living out of their vehicles, reports Ai Leng – some in embrace of a nomadic lifestyle trend, and others to save money. Her feature piece on the topic is part of our Brunch series – BT’s signature weekend long-read that offers readers an in-depth look at a topic of the week. 

To our readers from Malaysia and Vietnam, happy Independence Day in advance! Aug 31 marks the 67th anniversary of the federation’s independence from British rule, while Sep 2 commemorates the 79th anniversary of the republic’s independence from French rule. 

Let me know what you think of this week’s newsletter. We’ve got a firm lineup of stories this week from our correspondents, so do keep scrolling for more. Have a good weekend.

Trending

What’s happening: The parent company of national carrier Malaysia Airlines intends to cut its flight capacity by 20 per cent this year for domestic flights and routes in South-east Asia, among other regions. This comes amid a shortage of planes, labour and parts, which has left Malaysia Aviation Group with fewer aircraft than scheduled to be delivered.

What you should know: For months now, the global aviation sector has been plagued with a shortage of parts that left manufacturers like Airbus and Boeing struggling to meet their orders, and other regional carriers, such as Vietnam Airlines, increasing flight hours of their fleets and mulling over acquiring Chinese planes.

Asean in brief

• South-east Asian currencies hit fresh highs against US dollar post-Powell speech; strength set to last till year-end The ringgit has led the charge trading at an 18-month high while the Singapore dollar hit a decade-high, and the baht and rupiah erased year-to-date losses against the greenback. Read more
• Fierce competition, narrow offerings stymie Malaysia’s digibank sector Of the five digital banks granted licences by Malaysia’s central bank in April 2022, only three have begun operations, while the other two have yet to launch their services. Read more
• Vietnam’s move to source renewables directly a big boost to energy independence Vietnam’s new regulations on direct power purchase agreements for renewable energy are generating a buzz among industrial parks but industry players urge caution. Read more
• Chinese EV makers outpace Tesla in South-east Asia’s electric car race Despite being an early entrant into South-east Asia, Tesla is being outmanoeuvred by its nimble Chinese competitors. Read more
• As regional M&As spike, Singapore’s business valuation body sees benefit of standardised practices across countries The Institute of Valuers and Appraisers, Singapore is looking to roll out its Chartered Valuer and Appraiser programme to markets in South-east Asia, in a bid to standardise valuation practices across the region. Read more
• Asean members’ complementarity creates opportunities for collaboration: DPM Gan While economies today have become more competitive, limiting the scope for collaboration, Asean remains a bright spot due to its members’ similarities and numerous areas of complementarity. Read more
• Thai exports post fastest growth in 28 months in July Thai exports grew at their fastest rate in 28 months in July as demand rose in key markets and the commerce ministry maintained its forecast for a small increase in shipments in 2024. Read more
• Party of Thailand’s new PM drops military-backed party from coalition government The Pheu Thai Party will drop the army-backed Palang Pracharat Party from its coalition when it forms the next government, signalling fissures in an awkward alliance with its bitter rivals in the military. Read more
• New Chinese F&B wave hits Singapore and rest of South-east Asia There’s a new wave of food and beverage chains flowing out of China, and it’s all about Sichuan hot pot, braised chicken rice and pickle fish soup – as well as mainstays like bubble tea. Read more