2021/113 “Grave Failures in Policy and Communication in Indonesia during the COVID-19 Pandemic” by Yanuar Nugroho and Sofie Shinta Syarief
EXECUTIVE SUMMARY
- More than a year into the COVID-19 pandemic, the Indonesian government’s weak handling of the crisis has led to a catastrophic second wave.
- The magnitude of Indonesia’s current crisis seems to have stemmed from the government’s lack of political resolve to curb the pandemic and prioritise public health and safety over economic considerations, which in turn seems to be rooted in political and vested interests. This attitude was reflected in the government’s persistent reluctance to declare lockdowns and its failure to enact the Health Quarantine Law, which would have obligated the government to assist the livelihoods of those affected by quarantine.
- The state’s weak capacity to enforce and fund the required measures is probably a key factor underlying the government’s highly inadequate pandemic response. While calling for social discipline in observing safety measures, the state has fallen severely short on testing, tracing, treatment and vaccinations. Public health facilities have been overwhelmed.
- The crisis has also been exacerbated by the lack of clear and consistent policy communication, which has hampered the public’s ability to fully grasp the risks of contagion. The lack of accurate data has hindered effective decision-making. There is also poor coordination of policy implementation among agencies and between central and local authorities.
- Given the lack of transparency, and as infections and mortality numbers continue to rise, the government has a long way to go in winning back public trust in its ability to manage and eventually overcome the crisis.
* Yanuar Nugroho is Visiting Senior Fellow at ISEAS – Yusof Ishak Institute, Singapore. He was former Deputy Chief of Staff to the President of Indonesia 2015-2019. Sofie Shinta Syarief is an Indonesian journalist.
INTRODUCTION
One day after the first COVID-19 case in Indonesia was reported on 2 March 2020, an official spokesperson was appointed. The government then established the COVID-19 Response Task Force (Gugus Tugas) on 13 March 2020. On 31 March 2020, it declared COVID-19 a public health emergency, imposed stringent social restrictions,[1] and issued several fiscal policies to contain the pandemic and mitigate its impact on the national economy.[2] On 20 July 2020, the government set up an inter-ministerial committee (known as Komite Percepatan Penanganan COVID-19 dan PEN or KPCPEN) to handle the pandemic and lead the recovery of the national economy.[3] For this, the government allocated $46.7 billion in 2020. Of this amount, only 80% was disbursed. In 2021, the figure increased 2.68% to $47.9 billion.
Several measures were implemented to strike a balance between containing the pandemic while preserving the economy.[4] However, the pandemic curve has never shown signs of ever flattening, forming one continuous wave instead, and in Q2 2021, the second wave hit even more severely (Figure 1).
Daily new confirmed cases and deaths continue to surge—reaching the highest rates in Southeast Asia.[5] On 15 July 2021, total cases reached 2,726,803, with 70,192 deaths. The highest 56,757 new daily cases and 982 (highest so far was 2,069 recorded on 27 July 2021) new daily deaths were recorded on that date. Even with these record numbers, the true scale of Indonesia’s outbreak is likely much larger than the official numbers claim. This is due to severe under testing, as reflected in the positivity rate that has consistently remained above 20%.[6] Hospitals and healthcare facilities collapsed. They ran out of beds and could not take in new patients.[7] With nearly no oxygen support, critical patients were laid down in corridors or tents.[8] Exhausted, medical workers, too, became casualties. Some groups collaboratively built shelters at community levels[9] to help ease the burden of hospitals.
Under such dire circumstances, government policy seems nevertheless to keep sending mixed messages. Barely three months into the crisis, in June 2020, the government introduced the ‘New Normal’, i.e. lifting of the large-scale social restrictions.[10] This policy was criticised as it gave the illusion that the first peak of the pandemic had been reached and the curve had been flattened. In reality, it had not; Indonesia remained in the ‘first wave’ until the second wave hit. And even now, the message from the government is not clear, in terms of taking drastic measures such as a lockdown.
In hindsight, the root of the problem is quite fundamental: what has been driving the government’s COVID-19 policy has been political self-interest.[11] It has been this self-serving nature of Indonesian politics that has clouded the deliberation process and prevented hard decisions being made. In the case of the COVID-19 pandemic, arguably there has been no political will at all to implement the Health Quarantine Law (UU No 6/2018 Kekarantinaan Kesehatan) that would stipulate the government to impose a quarantine while ensuring the livelihood of people and livestock within the quarantined area. Instead, the government has chosen to create various euphemisms for public activity restrictions to avoid using the word ‘quarantine’ or ‘lockdown’, which many suspect are attempts to avoid the obligation to provide necessary social support.[12][13] Not only does this avoidance hinder optimum pandemic response,[14] it is also one of the main reasons for low public compliance,[15][16] and creates dissonance between the government’s obligations to the people and the public’s responsibility, especially when particular laws are only being used to punish those deemed violating public activity restrictions.[17]
There has been no clear vision and division of labour in the pandemic response from the central government right down to the sub-national and across ministries and state agencies. This explains the inconsistencies in the policies, which have resulted in mixed messages to the public. These mixed messages have, in turn, had serious political implications, bringing to question the effectiveness and competency of the government in managing the crisis and undermining public trust, creating a vicious cycle which has further hampered efforts to control the pandemic.[18]
COGNITIVE DISSONANCE, SELF INTEREST AND POLICY OPTIONS
The first and foremost problem with the Indonesian pandemic response was that the government downplayed the seriousness and potential risk of the coronavirus as it started to travel across borders. The false and at times also cavalier narratives continued even after Indonesia declared its first three COVID-19 cases,[19][20] sending mixed messages regarding the danger of the virus. In a press conference on 18 March 2020, the then-government spokesperson for COVID-19 response, Achmad Yurianto, implied that Indonesia was reluctant to perform COVID-19 tests as suggested by the WHO. This indicated that, as Indonesia was clearly in continuous communication with the WHO, the downplaying of the risk was not the result of lack of information or knowledge. Instead, the policies and statements made by the government showed a degree of cognitive dissonance and a denial of the looming health crisis.[21][22] Officials were regularly dismissing the seriousness of the issue[23][24]and ignoring the recommendations of health experts.[25][26]
The government’s reluctance to perform mass testing at the beginning of the pandemic generated unreliable data which created a false sense of security, since the government itself perceived COVID-19 as something that did not affect a large number of people.[27] This resulted in a vicious cycle of its own: inaccurate data were being used as the basis of health policies, and these policies did not work because the fundamentals were incorrect. Yet, the government did very little to ramp up tests to improve data accuracy, raising the cognitive dissonance even further. This, arguably, continues until today.
At the same time, it was clear that COVID-19 was having grave effects on the global economy,[28][29] including Indonesia. The travel sector—one of the economy’s most important drivers—faced a sudden blow with steep decline of incoming tourists since the start of 2020,[30] just several days after the WHO published its first acknowledgement of the disease outbreak on 5 January 2020[31] and even before Indonesia had declared its first case. And unlike the uncertainty around the COVID-19 public health data, the economic statistics were undeniable. It is within the context of this mental mindset that we observe the government having the tendency to prioritise economic recovery instead of seriously addressing the complicated challenges of public health management in a pandemic.
Consequently, policy and policy options would be poorly communicated. This is very unfortunate, because policy communication is important during the pandemic when people take in, process, and act on information differently than they would during normal times.[32] It affects risk communication, which is essential in building risk perception among the public, and is an integral part of emergency response. It also allows authorities and experts to really understand and address people’s concerns and needs so that they create and build trust. Failure to do so consequently undermines public trust towards authorities.[33] Yet the government’s early communication missteps continued and remain a consistent feature of the government’s risk communication to this day.
The following section provides a deeper examination of the deliberations and dynamics behind two key aspects of the government’s Covid-19 policy response, namely the avoidance of a hard lockdown; and efforts to “guilt-trip” the public into complying with safety measures.
COMMUNICATING OPTIONS, BUILDING RISK PERCEPTIONS
Case #1: Anything but a Lockdown
In February 2020, while countries around the world reported a surge of cases and began imposing restrictions on mobility, closing international borders, or ordering outright lockdowns,[34] Indonesia seemed determined to keep doing business as usual despite the looming threat of an outbreak. The tourism and travel industries were given a stimulus to offer discounts, social media influencers were paid to promote tourist destinations, and the country remained largely open to anyone.
Even as it acknowledged the first cases in early March 2020, the government continued to downplay the situation. But as cases rose exponentially, critics began calling for the government to quarantine regions that had registered a surge of cases, even to impose lockdowns. With the situation seemingly getting out of hand, President Widodo declared he was willing to take extraordinary measures to curb the pandemic, but short of a ‘lockdown’.[35]
As the central government weighed its policy options and considered different legal bases and scenarios to mitigate the impacts of the pandemic and curb the spread of the disease, some regions, such as DKI Jakarta and Tegal Regency, sought to impose the so-called ‘Large-Scale Social Restriction’ (Pembatasan Sosial Berskala Besar or PSBB) policy, which was provided under the newly passed Government Regulation 21/2020. Although the policy granted local authorities the power to impose measures to restrict mobility –such as limiting operating hours or closing business activities, schools, houses of worship– they were still required to submit their proposal[36] for approval to the Ministry of Health.
In the meantime, the outbreak continued unabated. The Health Quarantine Law was not put in motion and the Health Minister’s reluctance in approving sub-national requests for PSBB reflected the overall vacillation of the central government in imposing more stringent measures, seemingly, for fear of halting the economy,[37] concerns of public unrest and security, and unwillingness to bear the statutory costs associated with declaring a national ‘state of emergency’. Such a declaration – imposed by decree in the form of a Government Regulation in Lieu of Law (PERPPU)– would actually have centralised the power with the President as the highest bearer of authority during the emergency, streamlined coordination across all levels of the government and allowed for a more coherent nationwide strategy to control the pandemic. Instead, the government opted for the lesser ‘health emergency’ declaration, which placed the main responsibility for public health measures with sub-national governments.
The consequences were immediate and dire. What epidemiologists refer to as the golden opportunity to suppress and eliminate the pandemic early and with force was wasted. There was no coordination in implementation between agencies and government levels. The all-important surveillance was inadequate and epidemiological data was suppressed as regions and politicians sought to project an image of strength. Tensions flared between regions and the many ad hoc institutions intentionally established to fight the pandemic. Although political factionalism is beyond the scope of this paper, that has clearly played a role in making an already messy situation even more ugly.[38]
A year on, Indonesian officials still seem to struggle with the idea that restricting mobility, and its consistent enforcement, is the single most effective way to halt the pandemic.[39] Amidst the second wave, there remain inconsistencies in policymaking, such as confusing messages around mudik during Eid holidays[40] and official schemes to Work from Bali or Work from Jogja.[41]
As the infection and death rate kept rising, the stance of ‘never a lockdown’ was once again the go-to decision as the President delivered his speech on 23 June 2021.[42] It was evident that the President faced a dilemma,[43] as his preference had been to mitigate the economic impact by imposing a stricter implementation of the Public Activities Restriction (PPKM Darurat) to be effected from 3-20 July 2021, rather than a hard lockdown.
Case #2: Guilt Tripping the Public, Shifting the Blame
A key to combatting a raging pandemic is having a comprehensive government action plan and risk communication that allows people to understand the risks and adopt protective behaviours. Both the government and the public have their share of responsibility and must be equally committed to doing their part. While the latter must comply with health protocol to protect themselves and their family, which will protect their community and the public at large, the former is responsible for devising an effective strategy and system to curb the pandemic—based on accurate data.
No risk communication can be effectively built without accurate data. Unfortunately, even for something as unambiguous as death count, Indonesia lacks transparency. As of the last week of July 2021, there remain discrepancies between death numbers compiled by local and regional governments versus those from the central government, with at least 19,000 deaths unaccounted for in the national data.[44] In fact, some local and regional governments downplay the definition of COVID-19 deaths set by the WHO in order to lower or underreport death counts.[45]
The government has articulated the two aspects of its public health safety management approach with the acronym 3M and 3T: 3M is memakai masker (wearing a mask), mencuci tangan (washing hands), and menjaga jarak (social distancing); while 3T is testing, tracing, and treatment.[46] There has been a heavy emphasis on the public’s responsibility to adhere to 3M. To popularise the message, the government enlisted the help of musicians, artists and social media influencers to spread the message.[47] Advertorials have also been placed in news outlets, and many are paid to produce in-house stories for the campaign.[48] In early 2021, the 3M protocols were upgraded to 5M, adding menjauhi kerumunan (staying away from crowds) and membatasi mobilitas dan interaksi (limiting mobility and interaction).[49]
However, while the 5M campaign has been extensive, there has been very little from the government in terms of their own 3T responsibility, aside from daily announcements of official statistics.[50] The government has the legal obligation to inform the public on the methods and procedures of testing, tracing, and isolation. Yet, government communication on the 3T aspect has been lacking (Farizi and Harmawan, 2020). This poor communication has led to problems in the field, with communities becoming suspicious of contact tracers, and health workers being stigmatised, even violently attacked.[51][52][53] On this matter, the Ministry of Health downplayed the issue, saying that 3T efforts are not within the public domain.[54] A government advisor even described 3T as an individual’s responsibility to notify their surroundings if they are infected, asserting that this was the main problem with the lack of testing and tracing.[55] This reflects both fundamental lack of state capacity and fundamental complacency and desire to prioritise economic livelihoods instead of lives.
The Indonesian government has been struggling to meet WHO’s target of 40,000 tests per day. These testing numbers stagnated throughout the first half of 2021, even after the Ministry of Health approved in February 2021 the use of antigen tests as part of epidemiological surveillance under WHO guidelines.[56] One of the lowest test numbers was recorded on 30 April 2021, showing merely 26,939 PCR, 246 rapid molecular, and 24,479 antigen tests.[57] A significant rise only happened after the implementation of PPKM Darurat, with the highest record dated 22 July 2021, of 104,352 PCR and 124,350 antigen tests. A WHO and Ministry of Health survey showed that most cases were discovered through contact tracing, conducted mostly manually without a proper documentation system.[58] 95 per cent of primary healthcare facilities were only able to trace less than 20 contacts per case, and half of those could only manage less than 5 contacts traced for every positive case,[59] way below WHO’s benchmark of 30.
In light of Indonesia’s lack of testing, tracing and surveillance capacity, the government seems to be shifting the blame to the public. In a blatant display of irony and guilt-tripping, during the year-end holiday season as people travelled with barely any restrictions, the spokesperson of the COVID-19 Task Force said that people who were not complying with health protocols were digging their own graves,[60] which drew harsh public criticism.
Although vaccination has begun in earnest, testing, tracing, and treatment will continue to be key in combating COVID-19 (Kucharski et al., 2020; Peng et al., 2020; Salathe et al., 2020) until enough people are vaccinated to slow its spread, which may take another year at best. Thus, experts call on the government to ramp up its 3T capacity and communicate the process transparently and effectively to the public[61][62] because, quoting WHO Director-General, “…you cannot fight a fire blindfolded. And we cannot stop this pandemic if we don’t know who is infected”.[63]
CONCLUSION
No country can escape from this pandemic. But what makes the ‘fate’ of each of them different is perhaps their capacity to address it and save lives. Proper pandemic response is a direct outcome of high state capacity as well as clear and unambiguous policy communication. Yet, such can only be built and achieved when the policy options are clear – as an outcome of strong political will. Nevertheless, while such ‘logic’ may be insufficient or inadequate to really explain the response process, it may help us understand its complexity, particularly in the case of Indonesia.
The apparent inability of the Indonesian government to really curb the pandemic is not just a direct result of low and weak state capacity or poor policy communication. Beneath it, there is, very likely, a more fundamental problem: the lack of political will to go ‘all out’ in fighting the pandemic in the first place, due to the self-serving interest nature of the politics, and cognitive dissonance in understanding the real magnitude of the pandemic.
While the enactment of the Health Quarantine Law could have helped curb the pandemic at the early stage and perhaps avoided the social-economic and even political costs, it did not happen because there was no political will to do so. Politics in Indonesia today is strongly characterized by self-serving interests, paralyzing decision making, and rendering politicians unable to take a strong stance concerning the needs of the many in the long-term. Instead, they become shortsighted and merely focus on short-term political and economic gains. The government seems to have failed in understanding the paradox they themselves created in handling the pandemic: their reluctance to declare a health emergency and to enact health quarantines is the exact cause of the current socio-economic costs they have to bear.
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ISEAS Perspective 2021/113, 25 August 2021
ENDNOTES
[1] Government Regulation No. 21/2020 .
[2] Among others, Government Regulation in Lieu of Law No. 1/2020 on state financial policy and maintaining financial system stability to mitigate the COVID-19 pandemic and/or other threats to the national economy and/or financial system stability (31 March 2020), Government Regulation No. 23/2020 on the National Economic Recovery (Pemulihan Ekonomi Nasional or PEN) program (9 May 2020), and Presidential Regulation No. 72/2020 (24 June 2020). Government Regulation in Lieu of Law No. 1/2020 was then enacted as Law No. 2/2020 (16 May 2020).
[3] Presidential Regulation No. 82/2020 on the Committee for Handling COVID-19 and PEN.
[4] From large-scale social restrictions, mask wearing and hygiene campaigns, reallocation of the state budget for pandemic response, to distribution of social assistance.
[5] https://worldometers.info/coronavirus
[6] Indonesia is ranked 83rd out of 86 countries surveyed for overall tests per capita and 97th out of 100 countries for overall safety. Source: https://www.reuters.com/article/us-health-coronavirus-indonesia-insight/endless-first-wave-how-indonesia-failed-to-control-coronavirus-idUSKCN25G02J. For comparison, India and The Philippines are testing four times more per capita, while the US tests 30 times more. https://www.cnnindonesia.com/nasional/20210102161718-20-588745/kembali-rekor-positivity-rate-2-januari-capai-295-persen. According to WHO, figures above 5 percent show that an outbreak is not under control.
[7] See https://megapolitan.kompas.com/read/2021/06/21/17582471/ketika-rs-rujukan-COVID-19-di-jabodetabek-kolaps-dan-banyak-pasien?page=all
[8] See https://www.kompas.id/baca/metro/2021/06/22/rumah-sakit-penuh-tenda-darurat-didirikan-di-depan-rsud-kota-bekasi
[9] https://kumparan.com/tugujogja/uad-bangun-shelter-untuk-pasien-COVID-19-di-bantul-1v8PO2QmJAx
[10] In the effort to save the economy, President Joko ‘Jokowi’ Widodo urged the people to ‘make peace’ with the virus by adopting new habits, such as wearing masks, washing hands, and maintaining physical distancing. See https://nasional.kompas.com/read/2020/05/15/22185601/jokowi-kita-harus-hidup-berdampingan-dengan-COVID-19
[11] When explaining the 2020 sub-national Elections. See /articles-commentaries/iseas-perspective/iseas-perspective-2021-5-how-the-2020-pilkada-reflected-major-structural-flaws-in-indonesian-politics-by-yanuar-nugroho-yoes-c-kenawas-and-sofie-s-syarief/
[12] https://www.theguardian.com/global-development/2021/jul/22/struggling-for-work-and-food-indonesias-poorest-suffer-as-covid-crisis-deepens
[13] https://www.cnbcindonesia.com/news/20210724085837-4-263252/waspada-ri-ekonomi-tahun-ini-diramal-terseok-seok
[14] https://www.thejakartapost.com/academia/2021/07/22/cost-of-easing-lockdowns.html
[15] https://nasional.kompas.com/read/2021/07/19/18325421/pengamat-sebut-masyarakat-tak-patuhi-ppkm-karena-pemerintah-juga-tak-patuhi?page=all
[16] https://news.detik.com/berita/d-5646586/pemerintah-diminta-terapkan-uu-kekarantinaan-kesehatan-agar-ada-efek-jera
[17] https://nasional.tempo.co/read/1485316/apakah-uu-kekarantinaan-kesehatan-diterapkan-jika-ppkm-darurat-diperpanjang/full&view=ok
[18] https://www.economist.com/asia/2020/08/29/politics-is-spreading-COVID-19-in-indonesia-and-the-philippines
[19] https://news.detik.com/berita/d-4967416/ini-daftar-37-pernyataan-blunder-pemerintah-soal-corona-versi-lp3es
[20] Indonesian online news portal, Narasi, compiled all communication gaffes by the government which showed consistency in undermining the gravity of the pandemic. https://www.youtube.com/watch?v=3MSCDvbQye0
[21] https://nasional.tempo.co/read/1314620/terawan-sebut-kematian-karena-flu-lebih-tinggi-ketimbang-corona
[22] https://www.merdeka.com/peristiwa/sebelum-ada-pasien-positif-pemerintah-dinilai-remehkan-ancaman-virus-corona.html
[23] https://www.cnnindonesia.com/nasional/20200211195637-20-473740/menkes-tantang-harvard-buktikan-virus-corona-di-indonesia
[24] https://www.merdeka.com/uang/luhut-bantah-pemerintah-lamban-tangani-wabah-corona.html
[25] https://www.tribunnews.com/nasional/2021/07/05/laporCOVID-19-pemerintah-tak-dengar-masukan-para-ahli-soal-potensi-lonjakan-COVID-19
[26] https://www.abc.net.au/indonesian/2020-05-18/kebijakan-indonesia-terkait-corona-belum-miliki-bukti-sains/12242002
[27] https://finance.detik.com/berita-ekonomi-bisnis/d-4977999/luhut-heran-angka-kematian-corona-tak-sampai-500-orang
[28] https://hbr.org/2020/03/what-coronavirus-could-mean-for-the-global-economy
[29] https://edition.cnn.com/2020/02/24/business/coronavirus-global-economy/index.html
[30] https://kemenparekraf.go.id/statistik-wisatawan-mancanegara/Statistik-Kunjungan-Wisatawan-Mancanegara-2020
[31] https://www.who.int/emergencies/disease-outbreak-news/item/2020-DON229
[32] See (Covello et al., 2001; Glik, 2007).
[33] This also extends to key political elites and actors who can influence policymaking. Arguably, it is this failure to communicate the risks early and consistently that contributed to public views that the government had been slow and cumbersome in responding to the crisis (Nugroho and Negara, 2020).
[34] Such as in neighbouring Malaysia and Singapore, or in Hubei, China. See https://www.kompas.com/tren/read/2020/03/22/183000465/update-berikut-15-negara-yang-berlakukan-lockdown-akibat-virus-corona?page=all
[35] https://www.cnbcindonesia.com/news/20200331151741-4-148793/tak-mau-lockdown-jokowi-kita-tak-bisa-tiru-negara-lain
[36] The proposal must be accompanied with the requisite studies and data for justification.
[37] On March 31, when the PSBB Regulation was issued, President Widodo made it very clear that the national government was in control and that regions must not make big decisions “because the economy could stop.”
[38] See Max Lane’s analysis on this matter at /wp-content/uploads/2020/03/ISEAS_Perspective_2020_46.pdf
[39] In January 2021, as the public health system was on the verge of collapse, in one of his public addresses, President Widodo even asked citizens to be grateful that Indonesia had been successful in controlling the pandemic and, unlike other less successful countries, did not have to resort to the dreaded lockdown https://nasional.kompas.com/read/2021/01/08/15073801/jokowi-alhamdulillah-indonesia-tidak-sampai-lockdown
[40] After the weak enforcement to restrict mobility during Eid holidays, huge spikes of cases could be seen all over Java, especially in areas where the travellers were from (mainly Jakarta and its suburbs) or headed to (West, Central, and East Java), where countless family gatherings, outings, and religious events that attracted crowds happened. See https://en.tempo.co/read/1470785/COVID-19-cases-in-kudus-skyrocket-7-594-after-eid-holiday-53-4-national
[41] These are government schemes to get the civil service to to work from Bali or from Yogyakarta, and aimed at helping to revive local economy. See https://travel.kompas.com/read/2021/06/08/123930227/apa-itu-work-from-bali-ini-penjelasan-lengkapnya?page=all. Although currently the schemes are being postponed, the preparation for the programme is still ongoing. See https://www.youtube.com/watch?v=7VYvoE1SUBQ
[42] A tally of the government’s refusal for lockdown can be found here https://bisnis.tempo.co/read/1476528/penolakan-jokowi-soal-lockdown-dari-awal-pandemi-hingga-gelombang-baru-COVID-19/full&view=ok
[43] https://fulcrum.sg/to-lockdown-or-not-indonesias-dilemma-in-handling-the-COVID-19-second-wave/
[44] https://laporcovid19.org/post/lebih-dari-19-000-kematian-belum-tercatat
[45] https://www.cnnindonesia.com/nasional/20210723110456-20-671205/idi-jatim-soal-data-nol-kematian-COVID-19-coba-lihat-kuburan
[46] https://nasional.kompas.com/read/2020/11/14/16351771/tak-hanya-3m-upaya-3t-juga-penting-untuk-putus-penularan-COVID-19
[47] In October 2020, the government launched the ‘Ingat Pesan Ibu’ (Remember Mother’s Advice) campaign with Padi, one of the biggest rock bands in the country, who composed a song about a mother reminding her family to obey 3M protocols. See https://www.cnbcindonesia.com/news/20201001175054-8-191002/ingat-pesan-ibu-jadi-senjata-baru-satgas-COVID-19
[48] Case in point KompasTV. One author, Sofie Syarief, as an executive producer and news anchor of the station, experienced first-hand the various advertorial orders.
[49] https://kesehatan.kontan.co.id/news/mengenal-5m-untuk-pencegahan-COVID-19-dan-bedanya-dengan-3m
[50] Although no number can be quantitatively measured at this point regarding the proportion of 3M vs 3T campaign, the writers took the liberty of concluding thus by observing advertisements and ad-libs placed in KompasTV by governmental bodies.
[51] https://nasional.kompas.com/read/2020/07/18/19014101/pemerintah-sebut-135-tenaga-medis-diusir-karena-stigma-negatif
[52] https://regional.kompas.com/read/2021/07/06/125539478/video-viral-warga-di-jeneponto-usir-nakes-yang-akan-lakukan-pelacakan
[53] https://www.cnnindonesia.com/nasional/20200807072600-20-533086/kisah-tim-medis-covid-solo-dicaci-warga-dan-dikejar-anjing
[54] See the statement of the Director for Primary Healthcare of the Ministry of Health https://www.youtube.com/watch?v=vYyydWwnwLc
[55] https://covid19.go.id/p/berita/3m-dan-3t-untuk-putus-penularan-COVID-19
[56] https://sehatnegeriku.kemkes.go.id/baca/rilis-media/20210210/2036953/rapid-diagnostic-test-antigen-resmi-digunakan-untuk-penyelidikan-epidemiologi/
[57] https://laporcovid19.org/post/tes-COVID-19-indonesia-minim-dan-rentan-dikorupsi
[58] https://tirto.id/7-bulan-COVID-19-di-indonesia-who-tes-pcr-rendah-kematian-tinggi-f5vZ
[59] https://www.youtube.com/watch?v=vYyydWwnwLc&t=2252s
[60] https://www.kompas.tv/article/133104/tren-COVID-19-memburuk-wiku-adisasmito-masyarakat-seperti-menggali-kuburnya-sendiri
[61] https://tirto.id/masyarakat-harus-lakukan-3m-untuk-tekan-kasus-COVID-19-kata-dokter-f5xv
[62] https://nasional.kompas.com/read/2020/12/10/13154541/angka-kematian-COVID-19-tinggi-epidemiolog-pr-pemerintah-tingkatkan-testing?page=all
[63] https://www.who.int/director-general/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-COVID-19—16-march-2020
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2021/112 “Financial Inclusion and Consumer Finance in Vietnam: Challenges and Approaches to Credit Scoring” by Nicolas Lainez, Bui Thi Thu Doai, Trinh Phan Khanh, Le To Linh, To Thu Phuong, and Emmanuel Pannier
EXECUTIVE SUMMARY
- Consumer finance has grown rapidly in Vietnam despite millions of its citizens being unbanked.
- A key prerequisite for boosting consumer finance and financial inclusion is the application of credit scoring technologies in the lending process.
- Credit scoring technologies have expanded considerably in Vietnam, owing to the production of credit data, technological improvements, and the digitalization of the economy.
- Consumer lenders continue to face challenges in deploying credit scoring, in particular for verifying applicants’ identity and income data, and assessing creditworthiness.
- Lenders take variegated approaches to data verification and risk assessment, which involve statistical models, machine learning analytics and human discretion.
- The application of credit scoring in consumer finance raises important technical and policy issues related to effectiveness, miscalculation, data privacy, data protection and cyber security.
* Nicolas Lainez is Visiting Fellow at ISEAS – Yusof Ishak Institute. Trinh Phan Khanh lives in Hanoi and is a recent political science graduate specializing in international relations from Leiden University. Bui Thi Thu Doai lives in Hanoi and is studying towards a BA in Development and Economics at the London School of Economics. Tô Thu Phuong lives in Hanoi and holds a Bachelor in Human Rights and Political Science from Columbia University and Sciences-Po Paris. Le To Linh lives in West Virginia and is studying International Studies at Hollins University. Emmanuel Pannier is Research Fellow at the French National Institute for Sustainable Development and is based in Hanoi in the University of Social Sciences and Humanities.
INTRODUCTION
Financial inclusion and consumer finance are hot topics in Vietnam, with the government and the consumer finance industry seeking to include millions of unbanked citizens in financial markets and to facilitate access to consumer loans.
Credit scoring is a prerequisite for financial inclusion as it helps lenders determine borrowers’ creditworthiness – or the likelihood they will repay a loan – and standardize and enhance lending decisions. This scoring technology has expanded considerably in Vietnam in recent years, owing to the production of a broader variety of traditional and alternative data, a rising demand for enhanced computing ability brought by machine learning analytics, and the digitalization of the economy boosted by the Covid-19 pandemic. Consumer lenders increasingly use credit scoring to accept or reject loan applicants, determine loan pricing, and tailor financial products and recovery strategies. However, they encounter challenges when deploying this technology at scale due to a pervasive lack of knowledge where customers with no credit history are concerned.
This article describes the challenges lenders encounter in verifying personal and income data and assessing applicants’ creditworthiness, and the solutions they use to address these obstacles and gain competitiveness in a thriving consumer finance market.
Credit scoring has policy implications. It is essential for policy makers to understand the effectiveness and accuracy of this technology and to address possible errors and miscalculations in risk assessment and in the sanctioning of consumer credit. In addition, the production of traditional and alternative data for scoring purposes raises concerns about data privacy, protection and security. These issues can put borrowers at risk and hamper financial inclusion.
Data for this article comes from in-depth interviews conducted in-person and online with 36 informants from Hanoi and Ho Chi Minh City. The convenience sample comprises 14 bankers working for public banks, joint-stock commercial banks and financial companies, and 22 borrowers who took consumer loans, including twelve informants who purchased vehicles and electronic devices on instalment plans or obtained cash loans from FE Credit, the leading financial company in Vietnam.
KNOWING CUSTOMERS AND ASSESSING CREDIT RISK
Vietnam has been consolidating its financial sector within the last three decades, moving from centrally planned goals to an independent industry guided by local and global market forces[1]. Today, Vietnam’s banking sector comprises a broad mix of players: large state-owned banks such as BIDV, Vietcombank and Vietinbank; smaller joint-stock commercial banks including VPBank, PVCombank and Sacombank; foreign banks such as ANZ, Citibank and Shinhan Bank; and financial companies including FE Credit, Home Credit, HD Saison, and Shinhan Finance. These actors are boosting consumer finance and bombarding consumers with offers for secured and unsecured loans sent via SMS, phone calls, emails and social media[2]. This sector was virtually non-existent a decade ago. With an average annual growth rate of 20 per cent, it has grown steadily to account for 20.5 per cent of the total outstanding loans in the economy, 2.5 times higher than the figures in 2012.[3] However, it only accounts for 8.7 per cent of the total outstanding loans if housing loans are excluded, far behind Malaysia, Thailand and Indonesia, where consumer finance (excluding mortgage) accounts for 15 to 35 per cent of the total outstanding balance. Therefore, comparatively speaking, consumer finance still has much room for growth in Vietnam[4]. However, obstacles stand in the way of consumer lenders, including information asymmetry and sheer uncertainty.
Consumer lenders operate in a challenging environment marked by high financial exclusion. Today, between 61[5] to 70 per cent[6] of Vietnam’s 98 million population still have no bank accounts and credit history. This situation results from a long-standing lack of trust in the banking system after years of changes in government, and inflation bounds. Today, banks and financial companies strive to show transparency and change public attitudes, especially among young people.[7] They also entice new customers by offering high – yet volatile – interest rates for saving accounts, which the Covid-19 pandemics have brought close to zero, to support the economy.[8] Meanwhile, the preference for cash and gold transactions remains strong.[9] To curb these trends, the government has recently approved the national inclusive finance strategy to raise the percentage of adults with bank accounts to 80 per cent by 2025.[10] Meanwhile, financial exclusion remains a significant obstacle for consumer lenders and credit bureaus, including the Credit Information Center (CIC).[11] the national credit bureau under the State Bank, and the Vietnam Credit Information Joint Stock Company (PCB). Credit bureaus are expanding their activities and databases, but still lack credit data about tens of millions of citizens.
This lack of knowledge transpires in customer identification – or KYC for Know Your Customer – procedures, an issue rooted in administrative problems. To identify loan applicants, lenders require identification documentation such as an updated ID and household certificate. However, not all applicants can provide proper documentation. Many internal migrants cannot secure temporary residence or modify the address in their household certificate.[12] In addition, citizens can have multiple IDs with different numbers. The recent shift from IDs with nine digits to IDs with 12 digits has led to confusion and fraudulent use of loopholes. A senior officer from the CIC mentioned that “borrowers may try to conceal their information by using different papers to try and apply for different loans”. He pointed out the existence of a black market for genuine and counterfeit IDs, and the fact that lenders do not share information about fraudulent applicants for the Ministry of Public Security to press charges and for credit bureaus to flag them. As a result, identification fraud proliferates due to a lack of government agency coordination. The National Population Database in the Ministry of Public Security is currently building a unified database based on new identity cards with 12 digits, a chip, and a QR code. This system will significantly improve customer identification. Meanwhile, lenders and credit bureaus will continue to struggle to identify borrowers, exposing lenders to fraud risk.
To determine applicants’ creditworthiness, make credit appraisals, and to get to know their customers, lenders assess their income situation as well. Collecting and verifying labour and income data can be challenging as not all workers have contracts and records for their income, in particular informal workers. While big companies pay salaries through bank transfers, smaller companies mix bank and cash payments, and informal employers use cash payments only. The second and third scenarios are challenging for lenders. In addition, some applicants embellish their loan applications by manipulating data and forging certificates. For example, in order to secure a mortgage without having a recorded income, an informant deposited money in her bank account and asked a friend for help: “I called up my friend like: ‘sign me a labour contract, make me a salary table’. I crafted my own application: a salary table, with bonuses, a title, back then I said I was ‘Head of Sales’, which means I get a manager’s salary… So, I made up all of that, typed it up, printed it, estimated the amount of money, gave it to my friend who had it signed and stamped”. Another conundrum lenders face is worker’s unstable career paths and income, especially those of many informal workers who live day by day.[13] Financial companies target these risky customers whereas banks focus on smaller but growing groups of urban, highly-educated and middle-class workers who build linear and future-oriented careers.[14] Overall, high financial exclusion, administrative barriers, informality and precarity generate uncertainty, exacerbate risk and slow consumer finance growth. However, the under-development status of consumer finance in a country with a hundred million citizens offers excellent prospects for profit and expansion.
SOLUTIONS FOR KNOWING CUSTOMERS AND ASSESSING CREDIT RISK
For consumer finance to thrive and reach millions of banked and unbanked customers in Vietnam, consumer lenders race to improve know-your-customer (KYC) procedures, build customer knowledge, and standardize credit scoring tools. Scoring systems are not homogeneous across the banking industry. Most public and joint-stock commercial banks provide housing, car, credit card and a limited range of unsecured loans to low-risk customers with stable income positions. On the contrary, financial companies such as FE Credit take a riskier approach and offer instalment plans, cash and credit card loans to millions of unbanked, low-income and ‘at-risk’ consumers. Overall, depending on their size, status, risk appetite and business model, banks and financial companies use different tools to know their customers, assess their creditworthiness and mitigate risk through pricing.
Many banks use traditional economic data and regression models to rank applicants. The Bank for Investment and Development (BIDV), a large state-owned bank founded in 1957 and a major player in retail banking, is breaking into the consumer finance sector by providing home, car, overseas education, and instalment loans to low-risk customers. According to a branch office manager, BIDV offers unsecured loans and credit cards to known customers. The requirement is that the customer opens a salary-receiving account to monitor cash flows and to set up automatic monthly deductions. To generate risk scores, BIDV uses a three-page long table with over 50 lines. Variables include demographic data (age, marital status, number of children, education level, etc.), labour status, income and repayment capacity (spouse who may contribute to repayment, debt burden ratio, and whether income is transferred through a bank or not, etc.), standing loans (with BIDV and other lenders), financial situation (savings), credit and payment history with BIDV if relevant, and other lenders based on reports from the CIC.[15] All these data facilitate credit appraisal. BIDV’s scoring table is under permanent revision to match evolving policies from the State Bank and market conditions. Other public and joint-stock banks apply similar credit scoring systems based on a limited number of economic variables and regression models. These lenders have a moderate risk flavour, meaning they prioritize secured loans and choose customers with low-risk profiles.
Financial companies like FE Credit, the consumer finance branch of VPBank, holds a more aggressive and technologically-oriented approach. In 2010, FE Credit was the first credit institution to target risky yet lucrative segments ignored by banks, and to offer an array of financial products to the masses. In 2020, it held a database of 14 million customers and a consumer debt market share of 55 per cent, with a total outstanding loans value of VND66 trillion. FE Credit performs traditional KYC procedures based on paperwork and personification. It also checks through referees. As standard practice, it requires applicants to provide the details of two to three referees, preferably close relatives, friends and employers. This KYC verification procedure based on personal networks has shortcomings as applicants may provide fake referees.
FE Credit has a first-mover advantage. It asserts its dominance by investing in risk methods based on traditional and alternative data and machine learning analytics. It takes advantage of the recent introduction of digital technologies and high internet penetration rate to glean traditional and alternative data from consumers in order to assess risk.[16] FE Credit’s risk assessment model combines multiple scores that help draw intimate ‘customer portraits’. The in-house score is based on demographic data, ID documents, and labour and income data. Brokers provide additional data on taxable income, social insurance, phone number registration, and debt status with unofficial credit providers for verification purposes. While many banks purchase scoring models based on standard sets of variables from foreign providers like McKinsey, FE Credit has developed an in-house model based on insights from its Vietnamese customers. This model takes into account its customers’ unique characteristics including identification and fraud issues, labour precarity, and income instability. This in-house score determines the interest rate, ranging from 20 to 40 per cent per annum, which also depends on loans’ characteristics and package. It complements other data for appraisal, including the amount requested, down payment if relevant, the proportion of the loan relative to the good’s price, and the value of the debt contract.
FE Credit also relies on a vendor score based on behavioral data provided by Trusting Social, a fintech start-up based in Hanoi and Singapore. This firm gleans call/SMS metadata (when, where and how long), top-up data and value-added service transactions to determine borrowers’ income, mobility patterns, financial skills, consumption profile, social capital and life habits. In addition, FE credit uses two other risk scores that are new to Vietnam. The first is a fraud score to detect suspicious behaviour and fraudulent orders based, for instance, on fake identification. The second is a repayment score based on behavioural data about the customer’s interaction with the firm that helps in determining an optimal recovery strategy. To analyze data and generate scorecards, FE Credit uses machine learning analytics. This technology allows for adjusting the inputs (variables) to maximize the outputs (scores). The most predictive variables inform selections and decisions for each case.
Despite their popularity, not all banks use regression and machine-learning tools to rank applicants. A case in point is Shinhan Bank Vietnam, a subsidiary of Shinhan Bank Korea. This bank has recently entered the burgeoning consumer finance sector in Vietnam. It proposes housing, car and unsecured loans to qualified low-risk customers, and conducts credit appraisal based on four criteria: character, collateral, loan purpose, and financial situation including ‘bad debt’ history. As opposed to most consumer lenders, Shinhan Bank does not use credit scoring to assess applicants’ creditworthiness. According to a loan appraisal officer, its thorough appraisal process suffices to limit risk. However, Shinhan Bank plans to improve its risk management tools while keeping non-performing loans low.
Another case worth mentioning is Shinhan Finance, a small financial company tied to Shinhan Card Korea, which originated from the acquisition of Prudential Vietnam Finance in 2019. Shinhan Finance provides cash loans to workers who can prove their salary and who work for ‘red listed’ companies whose workers show low delinquency rates. Although it markets its unsecured credit offer as ‘salary-based loans’, it does not collateralize workers’ salaries. According to a credit support officer, Shinhan Finance’s philosophy is that, “if you don’t have enough money to live, how could you have money to repay loan interest?”. To apply for loans of up to 6-8 times their salary, workers must provide an ID, a household registration certificate and income proof. They must also agree to meet a loan officer for an interview. The lender requires referees for data verification. Like Shinhan Bank, Shinhan Finance does not use credit scoring to assess risk. It relies on appraisal based on the employer’s status, the applicant’s credit and ‘bad debt’ history with other banks and Shinhan Finance if relevant, and officers’ evaluation.
Shinhan thus seeks a reliable consumer base, which is likely to be unbanked, at the cost of having less market share. Altogether, whereas FE Credit leverages alternative data and machine-learning analytics to improve customer knowledge and risk prediction, and lend money to millions of unbanked consumers, Shinhan Finance challenges the standardization of statistically based and automated scoring systems by prioritizing income levels and human discretion to cater to a small customer base. The variety of risk assessment models and technologies shows that lenders go through an intense phase of experimentation, competition and adaptation to a relatively nascent environment.
CONCLUSION
This article described the variegated approaches to data verification and creditworthiness assessment that Vietnamese lenders adopt to address technical obstacles and position themselves in a rapidly expanding consumer finance market. It showed that this emerging sector is large and untapped enough to cater to diverse risk philosophies, technologies and procedures incorporating human discretion, regression models and cutting-edge machine learning analytics.
Credit scoring raises important technical issues in Vietnam. This technology has made substantial progress in turning radical uncertainty caused by high financial exclusion into calculable and priceable risk. However, credit scoring is subject to a permanent process of contestation and improvement[17] and its efficiency and accuracy are contingent upon available data and evolving political, economic and regulatory conditions.[18] Besides, the transfer of credit scoring technologies designed in rich countries like South Korea and Singapore to emerging economies like Vietnam raises technical challenges. Global standard models often rest on assumptions that do not apply to Vietnam, such as labour and income stability, data verification ease, and availability of credit history data.[19]
Credit scoring also raises a string of policy issues. Since the technology is imperfect and there is a lack of sufficiently large numbers of past observations for extrapolations about the future, we should expect lenders to make miscalculations and errors and for them to require adjustment and experience if they are to rank tens of millions of citizens who are new to consumer finance. The regulator has a key role to play. Vietnamese law requires creditors and regulators to continually assess and categorize debtors and loans in risk categories. However, it does not adequately protect borrowers from miscalculation and sensitive groups (the poor, women, ethnic and religious groups, etc.) from unfair discrimination and rejection. The advent of credit scoring based on alternative data and machine-learning analytics raises new concerns about opacity, algorithmic discrimination, and the loss of individual autonomy and privacy.[20] The current regulation on credit scoring is unprepared to deal with the challenges raised by machine-learning analytics. However, the State Bank is launching a pilot regulatory sandbox programme for five key fintech sectors, including machine learning-based credit scoring.[21] We can only hope that the regulator and consumer lenders realize the urgent need to update regulation on credit scoring and to find a balance between efficiency in risk prediction and consumer protection.
ISEAS Perspective 2021/112, 24 August 2021
ENDNOTES
[1] Jens Kovsted, John Rand, and Finn Tarp, From Monobank to Commercial Banking: Financial Sector Reforms in Vietnam (Singapore: NIAS Press, Institute of Southeast Asian Studies, 2004).
[2] In addition, digital lenders including peer-2-peer platforms provide microloans to consumers through easy-to-use apps.
[3] Van Luc Can, “Landscape Shift in Consumer Finance,” Vietnam Investment Review, March 30, 2021, https://vir.com.vn/landscape-shift-in-consumer-finance-83411.html.
[4] Ibid.
[5] Hai Yen Nguyen, “Fintech in Vietnam and Its Regulatory Approach,” in Regulating FinTech in Asia, ed. Mark Fenwick, Steven Van Uytsel, and Bi Ying, Perspectives in Law, Business and Innovation (Singapore: Springer, 2020), 124.
[6] World Bank, The Little Data Book on Financial Inclusion 2018 (Washington DC: World Bank, 2018), 160
[7] Allison Truitt, “Banking on the Middle Class in Ho Chi Minh City,” in The Reinvention of Distinction: Modernity and the Middle Class in Urban Vietnam, ed. Van Nguyen-Marshall, Lisa B. Welch Drummond, and Danièle Bélanger, ARI – Springer Asia Series (Dordrecht: Springer Netherlands, 2012), 129–41
[8] Vietnam+, “Deposit Interest Rate Proposed to Gradually Lower to 0 Percent,” Vietnam+, June 25, 2021, https://en.vietnamplus.vn/deposit-interest-rate-proposed-to-gradually-lower-to-0-percent/203622.vnp.
[9] Allison Truitt, “Banking on Gold in Vietnam,” Journal of Cultural Economy 14, no. 4 (July 4, 2021): 403–15
[10] VNA, “PM Ratifies National Financial Inclusion Strategy until 2025,” Vietnam Investment Review, February 3, 2020, https://www.vir.com.vn/pm-ratifies-national-financial-inclusion-strategy-until-2025-73554.html.
[11] The CIC gathers credit data from 30.8 million individuals with existing credit history and provides credit reports to consumer lenders.
[12] World Bank, VASS, Vietnam’s Household Registration System (Hanoi: Hong Duc Publishing House, 2016); see Nicolas Lainez et al., “‘Easy to Borrow, Hard to Repay’: Credit and Debt in Ho Chi Minh City’s Sex Industry,” Research Report no. 5 (Ho Chi Minh City: Alliance Anti-Trafic, 2020).
[13] Nicolas Lainez, “Treading Water: Street Sex Workers Negotiating Frantic Presents and Speculative Futures in the Mekong Delta, Vietnam,” Time & Society 28, no. 2 (2019): 804–27; Lainez et al., “‘Easy to Borrow, Hard to Repay’: Credit and Debt in Ho Chi Minh City’s Sex Industry.”
[14] Catherine Earl, Vietnam’s New Middle Classes: Gender, Career, City (Copenhagen: NIAS Press, 2014).
[15] The CIC separates Non-Performing-Loans (NPL) or ‘bad debt’ (nợ xấu) from borrowers into five groups: 1 (‘current’, debt is overdue less than ten days), 2 (‘special mentioned’, debt is unpaid from 10 to 90 days), 3 (‘sub-standard’, debt is overdue 91 to 180 days), 4 (‘doubtful’, debt is due from 181 to 360 days) and 5 (‘loss’, debt is overdue more than a year). Lenders reject borrowers from groups 3, 4 and 5, and may consider those in group 2, depending on their risk appetite. Credit blacklisting lasts for two years after the borrower has paid off an arrear.
[16] In 2016, Vietnam’s internet penetration rate had reached 52 per cent while smartphone ownership 72 and 53 per cent in urban and rural areas, respectively (Nguyen, Hai Yen. 2020. “Fintech in Vietnam and Its Regulatory Approach.” In Regulating FinTech in Asia, edited by Mark Fenwick, Steven Van Uytsel, and Bi Ying, 121. Singapore: Springer).
[17] Donncha Marron, “‘Lending by Numbers’: Credit Scoring and the Constitution of Risk within American Consumer Credit,” Economy and Society 36, no. 1 (February 2007): 103–33
[18] C. Zaloom, “How to Read the Future: The Yield Curve, Affect, and Financial Prediction,” Public Culture 21, no. 2 (April 1, 2009): 245–68.
[19] Dawn Burton, “Credit Scoring, Risk, and Consumer Lendingscapes in Emerging Markets,” Environment and Planning A: Economy and Space 44, no. 1 (January 2012): 111–24
[20] Nicolas Lainez, “The Prospects and Dangers of Algorithmic Credit Scoring in Vietnam: Regulating A Legal Blindspot,” Regional Economic Studies Working Series (Singapore: ISEAS, 2021), /category/articles-commentaries/iseas-economics-working-papers/.
[21] Linh Chi Dang and Mai Nhu Thuy Pham, “Vietnam’s Evolving Regulatory Framework for Fintech,” Perspective, no. 75 (June 7, 2021): 10.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2021/111 “The Role of Export Diversification in ASEAN’s Trade with China” by Phi Minh Hong
EXECUTIVE SUMMARY
- The participation of China and its suppliers in the Global Value Chains has shaped a new North-South model of trade where exports from a developing economy (China) to advanced economies are affected by the trade it has with other developing countries.
- Due to this pattern of trade, a real appreciation in the Renminbi (RMB) decreases China’s imports from its trading partners, instead of increasing imports, which is commonly accepted in conventional wisdom.
- For ASEAN, a real appreciation in the RMB by 1% decreases China’s imports from the region by 0.35%, whereas in its traditional trade with the US as importer, a stronger USD by 1% induces an increase by 1.06% in the US’s imports from ASEAN.
- China’s policy of product diversification along with a policy of commercial partnership and cooperation with its regional partners (particularly focused on standardising tariffs in Developing Asia) is part of a premeditated strategy of resilience in the face of the real appreciation of its currency.
- Export diversification by ASEAN economies has proven to affect the responsiveness of China’s imports from these countries to the change in the RMB. The more ASEAN economies diversify their exports, the more China’s imports from these countries (or their exports to China) become resilient to changes in the relative price.
* Phi Minh Hong is ASEAN Graduate Fellow at the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute and Lecturer, University of Rouen Normandie (France) and Foreign Trade University Hanoi (Vietnam).
INTRODUCTION
In the traditional trade model, the leading economy is an advanced country, and final goods are exported directly to it from developing economies. However, the growth of Global Value Chains (GVCs) has shaped a new model of North-South trade involving “Factory Asia”. This model is shaped by how the exports to advanced economies by a developing country—China—are based on South-South trade. In this pattern of trade, the effect of a change in the Chinese currency (the Renminbi, hereafter, RMB) on the exports of its suppliers deviates from popular thinking. In this regard, in addition to examining the impact of RMB fluctuations on China’s trade relations with ASEAN, this Perspective highlights the importance of export diversification carried in ASEAN economies in ensuring the resilience of China’s imports in the face of RMB fluctuations.
THE RMB AND ASEAN-CHINA TRADE
With growing participation in the GVCs, ASEAN, a part of “Factory Asia”, has become an important player in international trade. Indeed, ASEAN, as a group, is the US’s fourth largest trading partner (after Canada, Mexico and China) and the EU’s third largest trading partner outside Europe.[1] The most recent statistics point to ASEAN having surpassed the EU to become China’s largest trading partner in 2020.[2] China has in fact been ASEAN’s largest export market since 2009. That year, the value of ASEAN’s exports to China was US$195.7 billion, accounting for 14% of ASEAN’s total exports. The US was ASEAN’s second largest export destination in 2019, involving a value of US$182.6 billion which accounted for 13% of ASEAN’s total exports.[3]
China and the US are thus ASEAN’s two largest trading partners, but they follow two different patterns of North-South trade. In the traditional North-South trade pattern, ASEAN exports directly to the North (the US). The new North-South trade pattern, however, is based on South-South trade; which means that intermediate goods are exported from ASEAN to China to be processed and then exported to the rest of the world.
As shown in Figure 1, intermediate goods exports accounted for a large part of total exports from ASEAN to China (more than 80%) over the period 2012-2018. This ratio was about 55% of the exports from ASEAN to the US.
Despite their extensive exports of intermediate goods to China, export structures vary across countries depending on the processing category. Figure 2 depicts the shift in ASEAN countries’ bilateral exports to China broken down into processing and end-use categories.[4] During the period 2012-2018, there was a transition in intermediate goods exports from primary to processed goods from ASEAN economies. Some countries in the bloc recorded a significant increase in the share of exports of intermediate goods. Among them, the proportion of Vietnam’s intermediate products in overall exports increased the most, rising from 36.9% in 2012 to 72.8% in 2018 and the country accounted for the largest exports of processed intermediate goods in the bloc (39 billion USD in 2018). The second largest rise in the share of processed intermediate goods exports belonged to Cambodia, up 20% in the given period (from 22% to 42%). Although there were changes in the export structure of intermediate goods, Laos’ and Brunei’s shares of primary intermediate goods in exports remained the highest in the bloc (69.5% for Brunei, 62% for Laos). Their increasing reliance on intermediate goods implies that ASEAN countries, particularly developing economies, are deeply integrated into a complex subcontracting network. Hence, exports from those countries can be seen to be complementary to, rather than in competition with, those of China (Hooy et al., 2015).[5]
The new triangular trade structure, with China serving as an intermediary, may have repercussions on the factors affecting these participant countries’ export performance. One of them has been the impact of the Chinese currency on these economies’ exports. Through the GVCs, changes in the RMB, which affects China’s trade performance, also influence the trade performance of its suppliers.
A quick investigation gives us a broad picture of the bilateral real exchange rate and bilateral trade between China and ASEAN economies. Figure 3 depicts real RMB appreciation against the currencies of the region’s most advanced economies (Brunei, Singapore) and upper middle-income economies (Indonesia, Malaysia, The Philippines and Thailand).[6] The RMB has depreciated versus the Lao Kip but remains relatively constant against the Vietnamese Dong and the Cambodian Riel over this period. Since 2000, Vietnam’s exports to China have increased more steadily than those of other ASEAN economies (Figure 4), with the nation being the second largest exporter to China after Malaysia in 2019 (Figure 5). While bilateral exports from the least developed nations have been gradually increasing since 2010, bilateral export growth from more advanced economies appears to have been constrained.
Several studies show the conventional impact of a rising RMB on China’s exports, namely that a real appreciation in the currency implies a decrease in China’s exports. However, the impact on the import side is still being debated. From a theoretical standpoint, a strong domestic currency increases the country’s imports because of improved domestic purchasing power.
But since a large part of China’s imports is further processed into finished goods that are then exported, the conventional impact of a rising RMB on China’s imports may not be robust. Given that an appreciation of the RMB decreases China’s exports, since the latter contain value added of imported parts and components, China’s imports from its supply chain partners would decrease as well.
Phi and Tran (2020) in their work highlight the difference in the impact of importers’ exchange rates on their imports between the two North-South trade models mentioned above.[7] In the long run, while conventional wisdom persistently holds for the US (an appreciation in the real effective exchange rate of the US dollar increases the US’ imports), the reverse impact is reported in the case of China. This result coincides with previous studies that confirm this negative impact of the RMB’s appreciation on China’s imports, regardless of the fact that those imports are ordinary or processed (Garcia-Herrero and Koivu (2008), Cheung, Chinn and Fujii (2010)).[8]
For ASEAN alone, a quick regression following the work of Phi and Tran (2020) confirms the difference between the two patterns of trade. While the US’s imports from ASEAN respond highly to a change in the USD, there is only a slight change in China’s imports following a change in the RMB. Accordingly, a USD strengthened by 1% induces an increase of 1.06% in the US’s imports from ASEAN, whereas a real appreciation in the RMB by 1% decreases China’s imports from the region only by 0.35%. The latter result supports the finding of Hooy, Law and Chan (2015) on the negative impact of an appreciation of the RMB on ASEAN’s exports to China. The authors also divide disaggregated exports into categories based on usage (basic products, parts, and components) and technological levels (high-tech, medium-tech, low-tech, resource-based, primary products). According to their calculations, a positive reaction to RMB depreciation is mostly attributable to the dominance of ASEAN high-tech and medium-tech finished products exports, as well as low-tech and resource-based exports of parts and components to China. However, the degree to which ASEAN’s exports to China respond to a change in the RMB varies across disaggregated exports categories. For instance, the impact of the change in RMB value on medium-tech exports is lower than on high-tech exports. A depreciation of 1% of the RMB raises medium-tech exports by 0.66% and high-tech exports by 1.53%. At the same time, changes in the RMB appear to have little influence on ASEAN’s low-tech manufacturing, resource-based manufacturing and primary product exports.
WHEN EXPORT DIVERSIFICATION MATTERS
The results from Hooy et al. (2015) suggest that spreading suppliers’ exports across different categories of goods may affect the sensitivity of China’s imports to changes in the RMB. In other words, export diversification may affect China’s import price elasticities (the volume of imports’ response to the change in prices). As discussed above, imports from China which employ Asian-made parts and components decline as the real exchange rate rises. The impact of an RMB appreciation on Chinese commerce has been noticed in the context of GVCs. Currency appreciation diminishes China’s demand for imports from other Asian economies by decreasing China’s export production. As a result, an appreciation of the RMB might harm Asian producers of intermediate goods. Therefore, China’s policy of product diversification along with a policy of commercial partnership and cooperation with its regional partners (particularly focused on standardising tariffs in Developing Asia) is part of a premeditated strategy of resilience in the face of a real appreciation of its currency. For China’s partner economies, including ASEAN, the diversification of exports, especially bilateral exports to China, keeps these economies’ exports to China less volatile than the rate of change in the RMB. This is because each type of imported products has a different response to the change in the RMB: a high response to a real change in the RMB of high technology goods imported, for example, will be offset by the low one of medium- or low-tech manufacturing goods imported, as shown in Hooy et al. (2015)’s work.
This intuition is confirmed in the empirical analysis by Phi and Tran (2020). For lower- and middle-income countries in the Pacific Rim, including the developing ASEAN economies, China’s imports from them become less sensitive to changes in the RMB when they have a higher degree in either export diversification in destinations or bilateral export diversification with China. More specifically, the more China’s suppliers diversify their exports, the less China’s imports from those countries decrease following an appreciation of the RMB.
Most ASEAN countries maintain a high degree of export diversification, as reflected in the lower value of the Herfindhal-Hirschman index (hereafter, HHI).[9] From 1995 to 2019, the HHI of those countries ranged from 0.008 to 0.52 for products and from 0.046 to 0.45 for partners. Following the reasoning in Phi and Tran (2020), we replicate the effect of the change in the RMB on China’s imports response to the change in the RMB (China’s import price elasticities) in ASEAN countries for the given period; the results are illustrated in Figure 4. The blue areas correspond to the HHI range for ASEAN (Table A1).[10]
Overall, the response of ASEAN’s exports to a change in the RMB is minor, ranging from 0.2% to 0.4% (in absolute value) for 1% of change in the RMB. Besides, the more an ASEAN country diversifies its exports (either bilateral with China or global), the less their exports to China change following a change in the RMB. However, there is a turning point in HHI through which the effect direction would change from positive to negative. At this level of export diversification, ASEAN’s exports to China become the most “resilient” to the change in the RMB. For instance, for countries that have a bilateral HHI greater than 0.19, an appreciation in the RMB raises China’s imports from the country. This pattern follows the conventional wisdom discussed above. In most ASEAN economies (except Brunei and Laos) where the average bilateral HHI is lower than 0.19, a stronger RMB will slightly decrease ASEAN’s exports to China instead. For the HHI in products and in partners, the turning points are 0.21 and 0.38 respectively. In sum, the results highlight the importance of the export diversification strategies of ASEAN economies in making China’s imports from the region more resilient to changes in the relative price.
With the goal of promoting trade and economic growth throughout Asia and the Pacific, the Regional Comprehensive Economic Partnership (RCEP) assembles leaders from 16 countries, namely the 10 ASEAN countries as well as the six countries in the region that currently have bilateral FTAs with ASEAN. It has been argued that the RCEP will help China to consolidate its resilience in the face of a real appreciation of the RMB. Indeed, Phi and Tran (2020) find that trading with RCEP members lessens China’s import sensitivity to any change in the RER. When the Chinese currency appreciates by 1%, imports from RCEP members would decline by 0.113%, lower than imports from non-RCEP economies in the Pacific Rim area. As China plays an intermediate role in the Global Value Chains, the RCEP will make export flows from ASEAN developing economies to China and then to the final destinations smoother. On the other hand, the Covid-19 pandemic highlights the need for diversifying sourcing to help reduce supply chain volatility. This will be an opportunity for ASEAN countries to diversify not only their bilateral exports to China but also their exports to other RCEP member countries, and hence lower the impact of changes in the RMB on ASEAN’s exports.
Considering the US as an importer for comparison, we observe that the response of ASEAN’s exports to changes in the USD is higher than for China as importer, even with a higher degree of export diversification (or low HHI) of ASEAN economies (Figure 7). Spreading ASEAN’s exports across products when trading with the US helps to decrease the response of their exports to a change in the USD. However, neither ASEAN’s export diversification in products nor in partners has an impact on the US’s import price elasticities.
CONCLUSION
The expansion of product fragmentation trade in Asia has prompted a re-examination of the influence of China’s currency on the exports of its suppliers, especially from ASEAN member states (particularly the newer members) that have actively engaged in GVCs. Because a real RMB appreciation reduces Chinese exports, it lowers imports from ASEAN, rather than increase them, as conventional wisdom would suggest. When considering the United States as an importer, this effect is much smaller than the reaction of bilateral ASEAN exports to USD changes.
Besides, ASEAN’s export diversification policies have been shown to have impact on the responsiveness of their exports to RMB appreciation. Keeping a high degree of export diversification creates greater resilience to changes in relative prices for ASEAN countries’ exports to China.
ISEAS Perspective 2021/111, 20 August 2021
APPENDIX
ENDNOTES
[1] https://ustr.gov/countries-regions/southeast-asia-pacific/association-southeast-asian-nations-asean,
https://www.csis.org/analysis/us-southeast-asia-trade-relations-age-disruption,
https://ec.europa.eu/trade/policy/countries-and-regions/regions/asean/
[2] https://www.globaltimes.cn/page/202101/1212785.shtml
[3] https://ec.europa.eu/eurostat/statistics-explained/index.php?title=ASEAN-EU_-_international_trade_in_goods_statistics#ASEAN_countries_trade_in_goods_with_main_partners
[4] We use the BEC Rev. 5 classification to distinguish product categories.
[5] Hooy, C. W., Siong-Hook, L., & Tze-Haw, C. (2015). The impact of the Renminbi real exchange rate on ASEAN disaggregated exports to China. Economic Modelling, 47, 253-259.
[6] An increase in the bilateral RER indicates an appreciation in the Renminbi. In Figure 3, we excluded Myanmar’s currency for better scale. The RER of Myanmar kyat is represented in Figure A1. The kyat was devalued largely in 2012, when the foreign exchange rate reforms occurred. The official pegging of Myanmar’s currency to the special drawing right (SDR) was annulled in April 2012. The Central Bank of Myanmar then introduced a managed floating exchange rate system. The previous peg is the reason why the kyat was overvalued before 2012 (https://www.imf.org/external/pubs/ft/scr/2013/cr1313.pdf).
[7] Minh Hong, P., & Thi Anh-Dao, T. (2020). Should I stay or should I go? The role of the renminbi in trade partnerships in the Asia-Pacific region. Post-Communist Economies, 32(8), 1062-1088.
[8] Herrero, A. G., & Koivu, T. (2008). China’s exchange rate policy and Asian trade. Économie internationale, (4), 53-92.
Cheung, Y. W., Chinn, M. D., Fujii, E., & Frankel, J. (2010). 7. China’s Current Account and Exchange Rate (pp. 231-278). University of Chicago Press.
[9] /articles-commentaries/iseas-perspective/2021-80-the-importance-of-export-diversification-for-developing-asean-economies-by-phi-minh-hong/
[10] For bilateral export diversification, we represent the HHI range from 0.02 to 0.6 instead of from 0.02 to 1 because only in the case of Brunei does bilateral HHI approximate to 1 while other ASEAN economies have relatively low bilateral HHI.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2021/110 “The KPK Controversy Keeps Corruption a Central Issue in Public Consciousness” by Max Lane
EXECUTIVE SUMMARY
- While the COVID crisis continues to dominate political discourse in Indonesia, policies affecting the Corruption Eradication Commission (KPK) have kept corruption salient in public consciousness.
- There is growing public discontent and anger driven by the perception that the Indonesian political elites are colluding to weaken the KPK to promote their own vested interests. A controversial new law in 2020 converted KPK employees to civil servants, thus raising doubts about their autonomy in conducting corruption investigations. The appointment of a new KPK leadership was soon followed by the removal of 51 KPK officers, some of whom were pursuing prominent corruption cases.
- Scepticism over the government’s resolve to eradicate corruption was further stoked by the critical coverage of the KPK saga by Tempo magazine (and its affiliated newspaper) and the documentary film The End Game. Recent statements by a senior minister (Mahfud, Coordinating Minister for Politics and Security), who tried to rationalise the spread of corruption due to loss of central authority under democratic government, only served to add fuel to the public disenchantment.
- Public anger over endemic corruption is being aggravated by emerging signs of graft in the handling of the COVID crisis. There is an ongoing trial of a cabinet minister accused of corrupt mishandling of COVID welfare funds. There has also been public concern over alleged price gouging for COVID medicines and tests. Such developments will provide further impetus for social dissent, with corruption eradication as a key ideological plank for political opposition in the country. Reformasi Dikorupsi (Reformation is being corrupted) is now the battle-cry of dissident groups who are trying to revive the massive anger against corruption which had brought down the Soeharto regime.
* Max Lane is Visiting Senior Fellow at ISEAS – Yusof Ishak Institute. He is the author of several books on Indonesia including Decentralization and Its Discontents: An Essay on Class, Political Agency and National Perspective in Indonesian Politics (ISEAS 2014) and An Introduction to the Politics of the Indonesian Union Movement (ISEAS 2019) and the editor of Continuity and Change after Indonesia’s Reforms: Contributions to an Ongoing Assessment (ISEAS 2019).
Over the last three weeks, the surge in COVID cases, hospitalisations and deaths in Indonesia has dominated all media and political discussions. Prior to this, however, it was the issue of corruption, and the weakening of the Corruption Eradication Commission (KPK), that was the headline news and top issue on the country’s political agenda. For the time being, it has been overtaken by the COVID crisis, but it remains a central underlying issue of public concern.
Emblematic of this concern was the reception of the two-hour long documentary film, The End Game,[1] which analysed what it claimed was the death of the KPK as a serious organisation. There have been at least 3 million views of this documentary on YouTube over the last few weeks, and no doubt more views also through Instagram, Facebook and other media. It was made by the social issue-oriented NGO, Watchdoc Indonesia. The film maker, Dandhy Dwi Laksono, also claims that there have been hundreds of requests for permission to organise group-watching sessions.[2] This is probably an underestimation of its popularity, since many organisations and groups have organised such nobar (nontong bareng – watch together) just using the YouTube version.
In addition to Watchdoc’s The End Game, Indonesia’s premier news magazine, Tempo, and its newspaper Koran Tempo, have also critically covered developments regarding KPK. They have published an editorial on YouTube, campaigned through their social media platforms and articulated criticisms similar to those in The End Game.
In 2019 and 2020, there were several rounds of demonstrations and protests against the government, carried out under the slogan Reformasi Dikorupsi.[3] These were also provoked by the government’s and parliament’s moves regarding KPK. The primary issue was new legislation that was passed by parliament (DPR) almost without opposition and then signed into law by President Widodo. This legislation changed the character of the KPK by making all its staff civil servants and no longer independent contract staff. It also introduced changes requiring additional processes before wiretapping and raids on houses and offices can be carried out. This was criticised as for making it harder and slower for KPK to uncover and arrest corruptors. It was widely seen among civil society and among the public as a severe weakening of the KPK. The KPK has made thousands of arrests since its formation in 2003, including cabinet ministers, members of parliament and local officials.
The public dissatisfaction that was reflected in The End Game and Tempo (amongst others) was provoked by the announcement that over 70 staff members of KPK were being dismissed for failing a Tes Wawasan Kebangsaan (National Perspectives Test). The transfer of KPK staff to civil servant status meant that they all had to be tested in this way to qualify as civil servants. Many among those tested were investigators who had been previously involved in high-profile corruption investigations. This fact has given rise to suspicions that the test was used to weed out such people to weaken the KPK. This criticism has been made explicitly both in The End Game and in the Tempo editorial. It has been the cover story for several Tempo magazine and newspaper editions.
Suspicions rose as details of the test became public, with some of the dismissed staff describing their experiences publicly. Several are interviewed in The End Game. They describe how they were asked about their opinions in relation to some government decisions, their attitudes to various political organisations as well as their private life. They were asked to indicate, for example, the extent they agreed with such statements “I have a bleak future”, “I live to atone for past sins”, “Religion is the result of human thought”, “I believe in the unseen and the practice of teaching without questioning”, and “Homosexuals should be given corporal punishment”. They were also asked questions such as “Are all Chinese the same”, “Are all Japanese cruel” or religiously informed ones such as “Should blasphemers must be put to death”.[4]
The test required a written examination, essay writing and extended interviews by two people, who, it is claimed, did not reveal their names or where they came from. The candidates had to write essays on the most controversial topics such as the Free Papua Movement, the Indonesian Communist Party and the banned Islamic Defenders Front. This process involved mentioning the State Intelligence Body (BIN), National Counter Terrorist Body (BNPT), as well as the Army (TNI), which have been directly queried by critics from corruption monitoring bodies, such as Corruption Watch.[5]
The National Human Rights Commission (KomnasHam), a statutory body, has now written to BIN, BNPT and Army Intelligence to request dialogue over what they see as possible human rights violations in the conduct of the tests.[6]
As criticism of the use of the test to justify the sacking of 75 staff increased, President Widodo himself made a statement appealing for them not to be dismissed for failing the test.[7] [8] Despite this, 51 were still dismissed, including some key investigators. The refusal to accommodate the President’s request has only heightened suspicions.[9] The KPK leadership announced the dismissal of the 51 people – who were judged to be “beyond being able to be reformed” – was made 8 days after the President’s appeal.[10]
In fact, there had also been earlier criticism relating to the person unanimously selected by the DPR to be the current chairman of the KPK, South Sumatra Police Chief Insp. Gen. Firli Bahuri. When Bahuri was selected KPK Commissioner, Saut Situmorang and advisor Tsani Annafari resigned in protest because Bahuri himself had been subject to allegations of violating the KPK code of conduct in accepting 600 free tickets to a concert in Palembang, South Sumatra, in August 2019.[11] In the current wave of criticism, much is aimed at Bahiri, with Tempo magazine’s key cover carrying the words: Firli’s Dark Strategy (Siasat Gelap Firli), picturing him with other figures on a leash. That edition of Tempo also carried reports of possible involvement in graft.[12]
This controversy around the government’s and parliament’s policies towards the KPK has, of course, implications for the successful eradication or reduction of corruption in Indonesia. The extent to which current policies are shown to hinder or help any fight against corruption will be revealed only over coming months and years. There is little doubt, however, that civil society watchdogs and sections of the media will continue to investigate these questions. The extent to which KPK continues to apprehend corrupt officials, or not, and who will be apprehended will surely attract greater attention.
Corruption as a political issue is also showing itself to have deeper implications for future political trajectories in the country. Historically, the corruption issue was central to the opposition to President Suharto during the mid-1990s. The term “KKN” – standing for Corruption, Collusion, Nepotism – became a part of everybody’s political vocabulary, including at the mass level. At that time, the key focus was on President Suharto and his family and a group of businessmen close to the family and referred to as cronies.
More recently, as seen in the popularity of the slogan Reformasi Dikorupsi, protests against corruption now define public discontent. It has been key to the steady evolution of a social opposition.[13] This social opposition is located outside the electoral system. As noted earlier, there has been essential unanimity within parliament among all parties, including President Widodo’s sponsoring party, the PDIP, in relation to policies towards the KPK. The vote by DPR Commission 3, that looks after law, human rights and security, went for example unanimously for Bahuri to be made KPK Chairperson.[14] Criticisms have only ever been on minor issues.[15]
This unanimity across the political elite is visible alongside the obvious widespread corruption that exists. On average over 1,000 people a year are charged with corruption by the KPK or the police.[16] The police themselves claimed 1,400 arrests in 2020.[17] There is constant publicity around these arrests, especially when cabinet ministers, members of parliament or local district heads are involved. Surprise raids by KPK on offices and homes always attract media, including television coverage. While the KPK has been effective in making large numbers of arrests, the fact that there has been no real decline in arrests before the weakening of the KPK, has also underlined to the public that even after more than a decade of such arrests, corruption remains widespread. The impression that exists among the public is that it is endemic but that at the same time there is no political will inside the government or parliament to fight it – thus the popular phrase Reformasi Dikorupsi.
The growing gap between the political elite and the public on how to view corruption was also reinforced recently by statements from Mahfud M.D., the Coordinating Minister for Politics, Law and Security. Mahfud, who may also be interested in standing for President in 2024, made a statement on May 6 acknowledging that corruption was widespread. He linked this to democracy, arguing that under Suharto, corruption had been controlled and confined to the centre.[18] Since 1998, he explained, that centralised control of corruption had been lost and corruption had since then spread everywhere. At a later speech on 26 May, he stated: “Now in the name of perverted democracy, corruption is no longer committed in the executive but has expanded horizontally to legislative, judicial, audit, and vertically from the center to the regions.[19]” He is reported as saying that the extent of corruption today was “gila” (crazy),[20] a strong word in the Indonesian vocabulary.
Mahfud ‘s regular statements along these lines since May were clearly in recognition of what the prevailing public perceptions were and that it would be futile to try to assert that corruption was not widespread. His statements also try to identify the origins of the problem to be the shift from authoritarianism, where corruption could be controlled, to democracy – although “perverted democracy” – where, presumably, it could not be controlled.[21]
One statement by Mahfud, however, did stir some controversy, at least until he subsequently offered some clarification. On May 1, when he again acknowledged that corruption was widespread, he also said that he hoped: “that people would not be too disappointed with the government and see it as corrupt, or even oligarchic. We have also achieved some progress”.[22]” Tempo reported the statement under the headline “Indonesia has had progress despite much corruption.” Mahfud did hold out the prospect of no corruption at some point, explaining: “Even though [Indonesia’s wealth] has been managed corruptly, there has been much benefits for the people…. not to mention when later it is managed free from corruption.”
Mahfud’s statements were very widely reported in the media.
Mahfud, while not powerful in Widodo’s cabinet, does play the role of an intellectual justifier of policy. His making these frequent admissions emphasises the public perception regarding corruption being widespread. His statements must also be read as providing a justifying explanation to the public. The extent of corruption is because under the democracy that exists, there are no mechanisms for controlling the spread of the practice, he argues, adding at another seminar clarifying reports on his earlier comments that democracy can still be improved.[23] In any case, he adds, it has not held back progress all that much.
This outlook, to the extent it reflects a shared outlook within parliament and the government, contrasts with the sentiment summed up in the slogan Reformasi Dikorupsi. Reformasi – in English, perhaps ‘reformation’ or deep reform – summed up the hopes that prevailed in Indonesia in 1998 about the country’s future. “Reformation has been Corrupted” reflects a perception that those hopes have been ruined precisely by corruption.
In assessing Indonesian socio-political dynamics, especially the steady – if still slow – gap growing between the political elite and a public whose discontent is being articulated by civil society, the differences between the two outlooks on corruption are central.
In the immediate term, the COVID crisis is likely to be the focus of both elite and public attention. It should be noted, however, that while the KPK and the corruption issue may be receiving less front page attention and is not the subject of street demonstrations, articles and reports on the issue continue in the media. More recently, there was a case where corruption in the government’s handling of the Covid crisis was reported. Former Minister of Social Affairs, Juliari Peter Batubara, has been charged by KPK for corruption in December 2020 in relation to COVID welfare funds.[24] His trial is ongoing and already there are accusations that the amounts involved run into millions of dollars.[25] To date, this is the only serious case of corruption and the Covid crisis interacting. However, there have been reports reflecting concerns that there has been price gouging for medicines being used to treat Covid,[26] either within or without the medical system, as well as news about price wars over Covid tests, especially antigen tests.[27] An atmosphere of price gouging and similar practices is likely to intensify to spread the sense that profiting as presented in The End Game is dominant in policy decisions. The government has acted to set fixed prices for these medicines,[28] no doubt, but any deepening interaction or merging of the corruption issue and the Covid crisis will make corruption even more central in public consciousness than it already is. It is likely to become the defining issue in national politics, alongside internal elite rivalries.
ISEAS Perspective 2021/110, 18 August 2021
ENDNOTES
[1] https://www.youtube.com/watch?v=ebNa6TdMMmo
[4] See A’an Suryana, https://fulcrum.sg/when-busting-the-graft-busters-is-not-on and also Sofie Arjon Schütte, An administrative war at the KPK: employees versus leadershipI, for a detailed summary of this process, at https://indonesiaatmelbourne.unimelb.edu.au/an-administrative-war-at-the-kpk-employees-versus-leadership
[8] https://en.tempo.co/read/1463179/president-jokowi-weighs-in-on-controversial-kpk-civics-test-results
[11] https://jakartaglobe.id/news/house-approves-new-kpk-leadership
[12] https://majalah.tempo.co/edisi/2552/2021-06-19
[13] On the social opposition in Indonesia, see Max Lane, Protests Against the Omnibus Law and the Evolution of Indonesia’s Social Opposition at /articles-commentaries/iseas-perspective/2020-128-protests-against-the-omnibus-law-and-the-evolution-of-indonesias-social-opposition-by-max-lane and Max Lane, COVID-19’s Impact on Indonesia’s Social Opposition: The Examples of Labour Rights and the Papuan Question at /articles-commentaries/iseas-perspective/2020-85-covid-19s-impact-on-indonesias-social-opposition-the-examples-of-labour-rights-and-the-papuan-question-by-max-lane
[15] In particular Fadli Zon from Prabowo’s Gerindra Party. See https://www.tribunnews.com/nasional/2021/06/03/fadli-zon-soroti-pegawai-kpk-dilantik-bertepatan-di-hari-lahir-pancasila-singgung-polemik-twk
[20] https://www.youtube.com/watch?v=SxfYvk2JV7Y
[21] See also here https://www.liputan6.com/news/read/4575990/4-pernyataan-mahfud-md-terkait-praktik-korupsi-di-indonesia-saat-ini
[22] https://nasional.tempo.co/read/1458327/mahfud-md-indonesia-ada-kemajuan-meski-banyak-korupsi
[26] https://mediaindonesia.com/ekonomi/416601/kecam-harga-obat-covid-19-mahal-erick-menyakiti-rakyat
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2021/109 “Comparing Vietnamese Responses to Chinese and American Public Diplomacy Efforts on Social Media” by Dien Nguyen An Luong
EXECUTIVE SUMMARY
- In a bid to offer a counter narrative to Western media, China has cranked up its efforts to propagate its own views on various fronts abroad. Armed with ample resources and muscular capacity, Beijing has orchestrated a well-coordinated campaign to shape narratives on platforms such as Twitter, Facebook and YouTube. It also marshals different sophisticated methods such as the use of an army of fake accounts to amplify the narratives dictated at home.
- But where Vietnam is concerned, China has found it challenging to sway the local media and information landscape. Several factors account for this, including the entrenched anti-China sentiments within Vietnam, the ownership, control structure and censorship of the Vietnamese media, and characteristics of Vietnam’s social media landscape that are not conducive for China’s efforts to weaponize Twitter, which is otherwise its main platform for online messaging.
- Facebook has thus become the platform of choice for China to shape its online messaging and to conduct its public diplomacy engagement efforts in Vietnam
- In comparing Facebook posts by the Chinese embassy and consulate with the U.S. embassy and consulate over a seven-month period, several intriguing observations emerge. A key tenet of China’s public diplomacy efforts in Vietnam has been to peddle anti-America narratives. Meanwhile, the U.S. has been more inclined to highlight issues such as education and culture. Also, whenever Washington did trade verbal barbs with Beijing on social media, the former often prevailed, as Vietnamese public sentiments show.
- Findings from the comparative analysis of all those Facebook posts suggest that it would be a risky bet for China to continue dialling up its blistering anti-America indictment in Vietnamese cyberspace, even when it adopts a more engaging approach to communicate its messages. By and large, the Vietnamese public shows a tendency to appear more receptive to U.S. narratives.
* Dien Nguyen An Luong is Visiting Fellow with the Media, Technology and Society Programme at ISEAS – Yusof Ishak Institute. A journalist with significant experience as managing editor at Vietnam’s top newsrooms, his work has also appeared in the New York Times, the Washington Post, the Guardian, South China Morning Post, and other publications. The author would like to thank Ms Lee Sue-Ann and Dr Le Hong Hiep for their constructive comments and suggestions.
INTRODUCTION
As the U.S.-China rivalry for global public opinion heats up,[1] Beijing has constantly had to walk a very fine line between toughing out Western criticism and sprucing up a “credible, lovable and respectable” image.[2] That undertaking means China has to placate a nationalist domestic audience while avoiding estranging foreign supporters abroad.
In 2009, China reportedly began to pump billions of dollars into boosting its global state media presence.[3] The ultimate goal is to shape a narrative in foreign countries that benefits China. 2013 was considered a critical juncture as President Xi Jinping launched a multi-pronged campaign designed to “tell China’s story well” globally.[4] Xi has also since then stressed that China needs to “increase [its] soft power, give a good Chinese narrative, and better communicate China’s messages to the world.”[5]
But in recent years, China’s authoritarianism, its treatment of the Uyghurs, its crackdown on dissent in Hong Kong, and the Covid-19 pandemic have all combined to send global views of Beijing plummeting to unprecedented lows.[6] This is the context in which China has doubled down on its efforts to propagate its own version of the story on various fronts in a bid to offer a counter narrative to Western media. That was reiterated in a speech Xi made in early June where he stressed that China needed to build a “credible, lovable and respectable” image abroad, adding that the country was engaged in a “public opinion struggle.”[7]
As part of the state-orchestrated campaign to “tell China’s story well” to the world,[8] a bevy of Chinese diplomats, state media outlets and academics have become increasingly vocal and frequent in defending China’s policies in cyberspace. They have focused on excoriating the ills and double standards in the U.S. and its allies, and pushing back against what is perceived to be Western prejudices and stereotypes of their country. Such “Wolf Warrior” diplomacy, named after two Rambo-style Chinese box offices,[9] has drawn widespread ire for what critics call an abrasive, defiant and combative approach. The message is crystal clear, however: China is set to take up the gauntlet of standing up to the U.S.
But perhaps beset by hubris, China has blended its domestic and foreign propaganda policies even though the target audiences could not be more different. The blistering anti-America approach appears to be working well at home, but whether it sells abroad is another story. That question looms all the more large in Vietnam, where one poll after the next have shown that Washington is favoured over Beijing.[10] In that context, even though its criticism of the American agenda is not always utterly groundless, China’s messages risk being a hard sell in Vietnam.
This paper addresses these questions: How has Beijing propagated its narrative in a country where anti-China sentiments have not only permeated public discourse but are also deeply embedded in the Vietnamese psyche?[11] How receptive are social media-savvy Vietnamese netizens to China’s online messaging, compared with U.S. online messaging? What observations can we make of China and U.S. online public diplomacy strategies in winning over the hearts and minds of Vietnamese?
HOW CHINA SELLS
It is social media that has become China’s key battlefield for public opinion. Beijing’s propaganda machine has sought to make the most of Western media platforms, which are otherwise banned at home, to telegraph and amplify its official line on global affairs and current events to a broader international audience.[12] Such manipulation of online discourse has become more or less institutionalized with Twitter, Facebook and YouTube becoming China’s platforms of choice since 2017.[13] China’s global propaganda machine has functioned around this modus operandi: The party line dictated by the Ministry of Foreign Affairs and state media outlets is picked up and spread by Chinese diplomats and diplomatic missions around the world.
China has been able to deliver some results on both the mainstream media landscape and the cybersphere. Two surveys by the Brussels-based International Federation of Journalists attest to how China has significantly escalated its global media outreach. According to the first survey which was released in 2020, a total of 58 journalist unions polled from 58 different countries said the most widely reported form of Chinese outreach was journalistic exchanges and training schemes.[14] Those programmes were overwhelmingly described as “a positive experience.”
The other survey, released last May, also found journalist unions in more than half of 50 different countries confirming that coverage of China in their national media had been more positive since the start of the Covid-19 pandemic.[15] In other words, as the pandemic started to spread, China marshalled its existing media dissemination channels in developing countries to burnish its image as a reliable partner there. That mission has been accomplished apparently with a sleight of hand, however. According to the latest survey, besides propaganda, China has also sought to cultivate and shape its own narratives through the use of new tactics such as disinformation and misinformation. Many pro-China pundits have also raised hackles for allegedly resorting to conspiracy theories or disinformation to peddle Beijing-sanctioned narratives. To China and its cheerleaders, in the battle to massage public thinking, “relying on logic and facts does not always work.”[16]
Such dynamic came to the fore in cyberspace.A seven-month investigation by the Associated Press and the Oxford Internet Institute found thatan army of fake accounts have been most active in retweeting Chinese diplomats and state media to the tune of “thousands of times.”[17] In doing so, those accounts have played a crucial role in amplifying China’s propaganda to an audience that could reach the size of hundreds of millions. More importantly, they did so without necessarily divulging that the content is state-sponsored. According to the joint study, the investigation marked for the first time the large-scale inauthentic amplification that has “broadly driven engagement across official government and state media accounts.” Key issues that Beijing sought to highlight to sway public opinion included its core strategic interests such as Taiwan, Hong Kong and Xinjiang.
But against that backdrop, Beijing’s recipe for success elsewhere could risk turning out to be a debacle in Vietnam, where anti-China sentiments have percolated and been amplified in public discourse.
IS THE VIETNAM PUBLIC BUYING IT?
In fact, anti-China sentiments have thwarted Beijing’s repeated attempts to shape its narrative in Vietnam’s mainstream media, according to a 2020 study by the Washington-based Center for Naval Analysis.[18] The reasons: Anti-China sentiments, compounded by a “hostile media environment” that was fuelled chiefly by historical Sino-Vietnamese conflicts, contemporary grievances and a genuine lack of public interest in Chinese propaganda, have blunted the promotion of China’s narratives in Vietnam, according to key findings of the study. Vietnamese authorities sometimes even calibrated media coverage to exhibit a harder stance on China with regards to maritime territorial disputes, the study said.
Deep anti-China sentiments aside, another stumbling block to China’s efforts to shape the media environment in Vietnam is ironically the structural similarities between the two ideological allies. Internet censorship, strict media controls and ownership limitations have shut major avenues for Chinese companies to penetrate the Vietnamese market. Chinese-language editions have been subject to state control and censorship. Government policies and regulations have neutered China’s largesse, weaponized in many other countries to sway editorial decisions and agendas. Licensing requirements have also constrained the number of foreign journalists and media bureaus – Chinese included – in the country. In a nutshell, China’s playbook is more limited in Vietnam than elsewhere.
In the online sphere, while much of Beijing’s “Wolf Warrior” diplomacy has played out on Twitter,[19] Vietnam’s social media landscape has throttled China’s efforts to weaponize the platform to propagate its messages. Various statistics confirm that Facebook, Google’s YouTube and Zalo have been the most popular social media platforms in Vietnam.[20] (Zalo is Vietnam’s premier chatting app, launched in 2012 and currently boasting around 64 million users.[21) In that context, Facebook has become the only remaining platform available for China to shape its online messaging in Vietnam.
U.S.-CHINA RIVALRY FOR PUBLIC OPINION ONLINE
Like Chinese diplomats, the U.S. diplomatic corps has also turned to Facebook, which has between 60 to 70 million active users in Vietnam,[22] as the main venue for engaging with the Vietnamese public. This section examines the issues and key messages that the U.S. and China have telegraphed to the Vietnamese audience in the online sphere by analysing the contents of all posts on the Facebook pages of both diplomatic missions during the first seven months of this year. It also examines how receptive the Vietnamese public has been to such public diplomacy efforts by both superpowers. The topics of discussion are classified into five categories: Diplomacy & Politics, Economy & Trade, Education & Culture, Recruitment, and Vaccine Diplomacy.
An analysis of those Facebook posts and their public engagements suggests the following characteristics:
- Between January to July, the U.S. embassy and consulate had a total of 1,155 posts covering five topics, nearly double those on the Facebook pages of the Chinese embassy and consulate (601).
- China’s public diplomacy narratives in Vietnam have mostly peddled anti-America messages, focusing on reinforcing centrally directed messages from the Ministry of Foreign Affairs and state news outlets. Meanwhile, the U.S. employed a different tack, focusing less on U.S.-China tensions than on promoting a range of other issues with the Vietnamese. But when Washington did trade verbal barbs with Beijing on social media, the former often prevailed, going by Vietnamese public sentiments.
- The dominant theme the U.S. sought to highlight was Education & Culture, accounting for 68% of the total number of online posts. On the other hand, Diplomacy and Politics makes up the major chunk (64%) of the total number of China’s Facebook posts (Figure 1).
- But even though the U.S. generated the most content on Education & Culture issues, public eyeballs lay elsewhere. An analysis of the top three most-engaged posts during the seven-month period showed that Facebook posts by the U.S. that attracted the most attention belonged to the Diplomacy & Politics category. Interestingly, public engagements zeroed in on the very theme China sought to propagate its narratives on: the anti-American trope.
The focus on the Education & Culture theme crystalizes how the U.S. has sought to cash in on its soft power to win public hearts and minds in Vietnam, a move that dovetails with facts on the ground. One poll after the next has attested to the strong positive sentiments among Vietnamese toward the U.S. and its image – no matter who the U.S. president is. For instance, while – according to a 2017 Pew survey[23] – the image of the U.S. deteriorated sharply across the globe during the first year of the presidency of Donald Trump, popularity ratings only increased in Vietnam and Russia.
That positive perception has barely changed. The desire to live, study and settle down in the U.S. has remained palpable among ordinary Vietnamese. According to most recent data from the U.S. Student and Exchange Visitor Program, Vietnam had sent nearly 26,000 students to the U.S., ranked fifth among countries with the most students at American educational institutions.[24] This has enabled Vietnam to distinguish itself from Southeast Asian peers to be the top source of students in the region for the U.S.. Vietnamese, along with the Chinese and Indians,[25] have formed the biggest chunk of applicants for the EB-5 visa scheme, which offers foreign investors a fast path to a green card by investing at least $500,000 to finance a business employing at least 10 American workers. Meanwhile, Vietnamese megacities such as Hanoi or Ho Chi Minh are awash with Americano-philia: A get-together at Starbucks or an overnight queue just to get the latest iPhone version is considered emblems of chic Americanism and a tech-savvy lifestyle.
FIGURE 1. KEY THEMES PROMOTED ONLINE BY THE U.S. AND CHINA
That is the context to which U.S. online messaging hones in on how crucial a role education and culture can play in boosting bilateral ties. The “master narrative” comprises three key messages:
- The United States is a prosperous, democratic and modern country, buttressed by a developed economy and an advanced education system.
- The U.S. provides ample resources and opportunities for those who seek to hone their soft skills or further their studies in the States. America has always played an instrumental role in helping Vietnamese youth compare notes with their peers from all over the world on various fronts.
- Educational and cultural exchanges have proven to be and will always be a welcome and useful bridge between the U.S. and Vietnam.
But based on the analysis of the top three most engaged Facebook posts by the U.S. from January to July this year, it was the category of Diplomacy & Politics that attracted the most public attention. The engagements in the Education & Culture category even trailed behind Recruitment (Figure 2).
FIGURE 2. MOST ENGAGED FACEBOOK POSTS BY THE U.S.
While the contents on the Facebook pages of the U.S. embassy and consulate have been almost identical, that is not the case when it comes to how China has allocated its resources for online messaging. Since last year, the Chinese embassy has refrained from posting provocative statements that are vulnerable to popular backlash. Meanwhile, the Chinese consulate has made the most of satirical illustrations, parodies, memes and sarcastic language to practice “whataboutism” to serve a dual purpose: defend China’s official line and castigate the American agenda. Practically, “whataboutism” means “raising a supposedly analogous issue in response to a perceived hypocrisy or inconsistency.”[26] This tactic is part and parcel of a uniform bandwagon that Chinese officials have jumped on to deflect Western criticism.[27]
Several prominent issues in which Beijing looked to hammer home the party line and ramp up condemnation of the U.S. and its allies include: (i) China’s stance on the U.S. presidential election,[28] (ii) China seizing on the mob attack at the U.S. Capitol on January 6 to mock America’s support of global protest movements including those in Hong Kong in mid-2019,[29] and (iii) China bristling at U.S. criticism of its treatment of Uyghurs in Xinjiang.[30] The “master narrative” of those posts consists of three key messages:
- On the world stage, China is a more responsible and constructive player than the U.S., including in the fight against Covid-19.
- It is the U.S., not China, that has been the purveyor of most humanitarian disasters with its “aggressive wars” and military interventions over many decades.[31]
- America’s domestic and foreign policies are a travesty of what it has been trying to preach to the rest of the world about freedom, dignity and human rights.[32] The U.S. does not have the qualification to lecture China from a position of strength.[33] Neither do its allies.
The Diplomacy & Politics category also elicited the most online engagements from January to July. (Figure 3)
FIGURE 3. MOST ENGAGED FACEBOOK POSTS BY CHINA
Based on an analysis of the degree of public reactions to all Facebook posts by the U.S. and China during the January-July period, two key takeaways are distilled (Figure 4):
- The Chinese embassy incurred the most “Angry” emojis while its consulate had the most “Haha” ones, even though they both sought to propagate the same narratives. One possible explanation for this discrepancy perhaps lies in the fact that the online messaging employed by the Chinese consulate was more engaging to social media-savvy users.
- The U.S embassy and consulate attracted the most “Love” emojis, suggesting the public found their messages more appealing than those from their Chinese counterparts.
FIGURE 4. Public reactions to U.S. and China’s online messaging
When both countries seek to burnish their vaccine diplomacy campaigns on Vietnamese cyberspace, the U.S. beat China by a wide margin in terms of positive public reactions, emblematic of how the Vietnamese public prizes American vaccines over Chinese shots.[34] Such sentiments were reflected in an analysis of Facebook posts and their average engagements on vaccine diplomacy which were among the most engaged content from January to July (Figure 5).
FIGURE 5. PUBLIC SENTIMENTS ON U.S.-CHINA VACCINE DIPLOMACY
A BITTER PILL FOR CHINA
Findings from the comparative analysis of Facebook posts suggest that it would be a risky bet for China to continue dialling up its blistering anti-America indictment in Vietnamese cyberspace. Souring Sino-Vietnamese ties in recent years, fuelled chiefly by Beijing’s muscle-flexing moves in the South China Sea[35] and its damming of the Mekong River,[36] has exacerbated anti-China sentiments in Vietnam. This dynamic has whetted Vietnam’s appetite for closer defence and economic ties with the U.S..[37] Poll after poll have also corroborated that the Vietnamese public overwhelmingly favour Washington as a hedge against Beijing. In the State of Southeast Asia 2021 survey, published in February by Singapore’s ISEAS – Yusof Ishak Institute, Vietnamese – along with Filipinos – register the most palpable levels of distrust toward China in the region.[38] Those who distrust China think Beijing could wield its economic and military power to threaten their country’s interests and sovereignty. According to the same survey, Vietnamese are most leery of China’s growing strategic clout, yet most supportive of American influence in Southeast Asia.
Two waves of online backlash against China’s anti-America narrative in Vietnamese cyberspace last year are likely to have served as a bitter pill for Beijing to swallow.
In July 2020, the Facebook page of the Chinese embassy in Hanoi caused an online stir after posting a note from the Global Times editor Hu Xijin, sternly warning Vietnam not to side with the U.S. to contain China.[39] In the note, which appeared on the occasion of the 25th anniversary of U.S.-Vietnam bilateral ties, Hu minced no words in pointing to the U.S.’s “malicious intent” on pitching Hanoi against Beijing. The note also reminded the Vietnamese people of how the U.S. could pull the rug out from under Vietnam’s feet. In the wake of a public furor, the note was soon taken down.[40]
In what amounted to an ideological confrontation four months later,[41] the U.S. and China posted statements that accused each other of destabilizing the global order on the Facebook pages of their respective embassies.[42] What stood out was how the online community reacted to the diplomatic brickbat. In the comment sections of those Facebook posts, those who appeared to be Vietnamese Internet users overwhelmingly cheered on the U.S. statement while sneering at China’s response to it. This was reflected in the most-used keywords in all comments on both Facebook posts. Online reaction to the U.S. post centred on either pro-America or anti-China sentiments, such as “God bless America”, “Thank you, President Trump”, “China is the nightmare of the world” or “[China] robbed Vietnam of its islands.” Meanwhile, China-bashing comments dominated the online response to the Chinese statement, such as “No one believes in China”, “China is a hypocrite” or “China, shut up.”
A “LOVEABLE” CHINA IN VIETNAM? NOT SO FAST
China is unlikely to dial back its nationalistic rhetoric on foreign policy, for various reasons. Chief among them is that any effort to do so could be crippled by the nationalist fervour at home. In a speech that marked the centenary of the founding of the Chinese Communist Party on July 1, Xi Jinping reiterated that the country would not back down from any fight where China’s sovereignty and interests were threatened, warning against “foreign forces” that stand in the way.[43]
But as this study has shown, China might at some point wish to tone down its “chest-thumping” stance, as this seems to have been counter-productive at least where the Vietnamese audience is concerned. When it comes to the goal of making its image more “loveable” in Vietnam, it seems that Beijing still has a long way to go.
ISEAS Perspective 2021/109, 17 August 2021
ENDNOTES
[1] Teddy Ng and Laura Zhou, “US-China infowar escalates as America deploys task force in battle for power and influence”. South China Morning Post, 4 May 2021. https://www.scmp.com/news/china/military/article/3132184/us-china-infowar-escalates-america-deploys-task-force-battle
[2] “Xi Jinping calls for more ‘loveable’ image for China in bid to make friends”. BBC News, 2 June 2021. https://www.bbc.com/news/world-asia-china-57327177
[3] Danson Cheong, “The art of making China lovable”. The Straits Times, 21 June 2021. https://www.straitstimes.com/opinion/the-art-of-making-china-lovable
[4] J. Szczudlik, “‘Tell China’s Stories Well’: Implications for the Western Narrative,” Pol. Inst. Int. Aff. PISM, vol. 9, no. 169, p. 11, 2018.
[5] Wilson Center, “China’s Soft Power Campaign”, 2020. https://www.wilsoncenter.org/chinas-soft-power-campign
[6] Charissa Yong, “Global views of China remain negative, but Singapore an exception”. Straits Times, 1 July 2021. https://www.straitstimes.com/world/united-states/global-views-of-china-remain-negative-but-singapore-an-exception
[7] Xi Jinping calls for more ‘loveable’ image for China in bid to make friends”. BBC News, 2 June 2021. https://www.bbc.com/news/world-asia-china-57327177
[8] “China’s Xi urges state media to boost global influence”. Reuters, 19 February 2016. https://www.reuters.com/article/us-china-media-idUSKCN0VS1IF
[9] Katsuji Nakazawa, “China’s ‘wolf warriors’ take aim at G-7”. Nikkei Asia, 13 May 2021. https://asia.nikkei.com/Editor-s-Picks/China-up-close/Analysis-China-s-wolf-warriors-take-aim-at-G-7
[10] Mengzhen Xia and Dingding Chen, “China and the US: Who Has More Influence in Vietnam?”. The Diplomat, 21 May 2021. https://thediplomat.com/2021/05/china-and-the-us-who-has-more-influence-in-vietnam
[11] Charles Dunst, “Chinese aggression pushes Vietnam ever closer to Washington”. Nikkei Asia, 6 April 2021. https://asia.nikkei.com/Opinion/Chinese-aggression-pushes-Vietnam-ever-closer-to-Washington
[12] Z. A. Huang and R. Wang, “Building a Network to ‘Tell China Stories Well’: Chinese Diplomatic Communication Strategies on Twitter,” Int. J. Commun., vol. 13, p. 24, 2019
[13] Erika Kinetz, “Army of fake fans boosts China’s messaging on Twitter”. Associated Press, 29 May 2021. https://apnews.com/article/asia-pacific-china-europe-middle-east-government-and-politics-62b13895aa6665ae4d887dcc8d196dfc
[14] International Federation of Journalists, “Telling China’s Story: Reshaping The World’s Media”, 2020. https://www.ifj.org/fileadmin/user_upload/IFJ_ChinaReport_2020.pdf
[15] International Federation of Journalists, “The Covid-19 Story: Unmasking China’s Global Strategy”. 2021. https://www.ifj.org/fileadmin/user_upload/210512_IFJ_The_Covid_Story_Report_-_FINAL.pdf
[16] Danson Cheong, “The art of making China lovable”.
[17] Marcel Schliebs, Hannah Bailey, Jonathan Bright, Philip N. Howard. “China’s Public Diplomacy Operations: Understanding engagement and inauthentic amplification of PRC diplomats on Facebook and Twitter.” Working Paper 2021.1. Oxford, UK: Programme on Democracy and Technology, Oxford University, 2021. https://demtech.oii.ox.ac.uk/china-public-diplomacy-report.
[18] Ryan Loomis and Heidi Holz, “China’s Efforts to Shape the Information Environment in Vietnam”, Center for Naval Analysis (2020): 48. https://www.cna.org/CNA_files/PDF/IIM-2020- U-026222- Final.pdf
[19] Chun Han Wong and Chao Deng, “China’s ‘Wolf Warrior’ Diplomats Are Ready to Fight”. Wall Street Journal, 19 May 2020. https://www.wsj.com/articles/chinas-wolf-warrior-diplomats-are-ready-to-fight-11589896722
[20] Leading active social media platforms among Internet users in Vietnam as of 4th quarter of 2020. Statista, March 2021, https://www.statista.com/ statistics/941843/vietnam-leading-social-media-platforms
[21] Thảo Nguyên, “Zalo trở thành ứng dụng nhắn tin được yêu thích nhất Việt Nam” (Zalo becomes Vietnam’s Most Favorite Messaging App”. Thanh Nien, 4 June 2021. https://thanhnien.vn/cong-nghe/zalo-tro-thanh-ung-dung-nhan-tin-duoc-yeu-thich-nhat-viet-nam-1393656.html
[22] James Pearson, “How Vietnam’s ‘influencer’ army wages information warfare on Facebook”. Reuters, 9 July 2021. https://www.reuters.com/world/asia-pacific/how-vietnams-influencer-army-wages-information-warfare-facebook-2021-07-09
[23] Richard Wike, Bruce Stokes, Jacob Poushter And, Anell Fetterolf, “Trump Unpopular Worldwide, American Image Suffers”. Pew Research Center, 26 June 2017. https://www.pewresearch.org/global/2017/06/26/tarnished-american-brand
[24] Mark A Ashwill, “Will Vietnamese student numbers in the US recover post-COVID?”. University World News, 9 January 2021. https://www.universityworldnews.com/post.php?story=20210107143706792#:~:text=Over%20eight%20out%20of%2010,at%2031%2C613%20in%20March%202018.)
[25] “Investor Visa Groups Haggle Over Expiring Program’s Renewal”. Bloomberg Law, 18 June 2021. https://news.bloomberglaw.com/daily-labor-report/investor-visa-groups-haggle-over-expiring-programs-renewal
[26] Ben Yagoda, “One Cheer for Whataboutism”. New York Times, 19 July 2018. https://www.nytimes.com/2018/07/19/opinion/one-cheer-for-whataboutism.html
[27] Tsukasa Hadano, “‘Last G-7’: China revels in parody mocking US and allies”. Nikkei Asia, 16 June 201. https://asia.nikkei.com/Politics/International-relations/Last-G-7-China-revels-in-parody-mocking-US-and-allies
[28] “In China, bemusement and scorn over unresolved U.S. election”. Reuters, 4 November 2020.https://www.reuters.com/article/us-usa-election-china-reaction-idUSKBN27K1EF
[29] Amy Gunia, “China Has Reacted to the Storming of the U.S. Capitol by Comparing It to the Wrecking of Hong Kong’s Legislature”. TIME, 11 January 2021. https://time.com/5928446/china-reaction-capitol-hong-kong-legco
[30] Ken Moritsugu, “On Eid, Xinjiang imams defend China against US criticism”. Associated Press, 14 May 2021. https://apnews.com/article/china-government-and-politics-religion-3d8fa6aee61268d105610ebc92ed1b55
[31] Alex Lo, “Beijing reads Noam Chomsky”. South China Morning Post, 15 April 2021. https://www.scmp.com/comment/opinion/article/3129571/beijing-reads-noam-chomsky
[32] Bruce Shen, “Why Chinese feel free to dismiss America’s human rights concerns in Xinjiang”. South China Morning Post, 31 March 2021. https://www.scmp.com/comment/opinion/article/3127577/why-chinese-feel-free-dismiss-americas-human-rights-concerns
[33] Amber Wang, “Alaska summit: what message did public US-China spat send to observers?”. South China Morning Post, 20 March 2021. https://www.scmp.com/news/china/diplomacy/article/3126291/us-china-talks-what-message-did-their-public-spat-send
[34] Hoang Thi Ha, “Vietnam’s attitude towards Chinese vaccines is very telling”. Channel News Asia, 14 July 2021. https://www.channelnewsasia.com/news/commentary/vietnam-vaccine-pfizer-moderna-sinovac-sinopharm-us-china-covid-15210910
[35] Rahul Mishra, “China’s Self-Inflicted Wounds in the South China Sea”. The Diplomat, 21 July 2020. https://thediplomat.com/2020/07/chinas-self-inflicted-wounds-in-the-south-china-sea
[36] Catherine Wong and Maria Siow, “Mekong dam: China cuts river flow 50 per cent, is slammed for lack of warning”. South China Morning Post, 9 January 2021. https://www.scmp.com/news/china/diplomacy/article/3116989/mekong-dam-china-cuts-river-flow-50-cent-slammed-lack-warning
[37] Huynh Tam Sang, “Facing frenemy China, Vietnam shall edge closer to America”. Think China, 14 September 2020. https://www.thinkchina.sg/facing-frenemy-china-vietnam-shall-edge-closer-america
[38] Seah, S. et al., The State of Southeast Asia: 2021 (Singapore: ISEAS – Yusof Ishak Institute, 2021). /wp-content/uploads/2021/01/The-State-of-SEA-2021-v2.pdf
[39] “China threatens Vietnam of being ‘overthrown’ if sides with the US to contain Beijing”. Thoibao.de, 18 July 2020. https://thoibao.de/blog/2020/07/18/china-threatens-vietnam-of-being-overthrown-if-sides-with-the-us-to-contain-beijing
[40] https://twitter.com/ngaphambbc/status/1282920802573221888
[41] https://www.facebook.com/usembassyhanoi/posts/3997121293650036
[42] https://www.facebook.com/ChineseEmbassyinHanoi/posts/442447523818541
[43] “On Communist Party’s Centenary, Xi Jinping Warns Against Foreign Interference”. New York Times, 1 July 2021. https://www.nytimes.com/live/2021/06/30/world/china-communist-party-anniversary
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2021/108 “COVID-19’s Economic Impact on Tourism in Singapore” by Joey Erh
EXECUTIVE SUMMARY
- Prior to the pandemic, the tourism sector in Singapore had been steadily growing over the years. From 2007 to 2019, total international visitor arrivals and tourism receipts both grew annually at an average of 4.5% and 5.0% respectively.
- Amongst the five components of tourism receipts, the ‘Shopping’ component generates the highest total value added (VA), and so contributes the most to GDP. Individuals employed in the industries under the ‘Shopping’ component also enjoy the highest employee compensation coefficient.
- The GDP generated from all tourism receipts has remained relatively constant at around 4% over the years. However, since the pandemic, spending patterns have changed, resulting in a slight dip in the magnitude in VA captured per dollar of tourism receipt.
- Tourism from travel bubbles is not able to generate high VA such that it contributes significantly to GDP. They do however make a marked difference in industries that are highly tourist-oriented.
- To generate high VA from tourism, Singapore needs to implement travel bubbles with China, Indonesia, India, Australia, Malaysia and Japan. Unfortunately, such arrangements depend on the COVID-19 situation in both Singapore and these countries.
* Joey Erh is Research Officer with the Regional Economic Studies Programme at ISEAS – Yusof Ishak Institute. Her research interests include innovation of firms, labour and productivity and international economics.
INTRODUCTION
Singapore’s tourism industry has grown over the years and has become relatively sizeable. From 2007 to 2019, total international visitor arrivals and total tourism receipts both grew annually at an average of 4.5% and 5.0%, respectively. Within Southeast Asia, Singapore has the third highest amount in international tourism receipts, behind Thailand and Malaysia, amounting to US$20.4 billion in 2019 (World Bank, 2019). Globally, Singapore was the 25th most visited country in the world (by number of arrivals) and had the 22nd highest amount in international tourism receipts in 2019 (UNWTO, 2020).
Overall, there has been a steady growth in international arrivals and tourism receipts (Figure 1). However, the tourism industry was adversely affected in 2008-2009 due to the Great Financial Crisis; this downturn pales in comparison to the devastating impact of the COVID-19 pandemic; over the last three quarters, Singapore suffered a 43.2 – 99.5% decrease in number of visitors and 39.0 – 96.6% decrease in tourism receipts. For the sake of comparison, the largest decrease experienced during in Great Financial Crisis was for 2009 Q1 when international arrivals and tourist receipts fell by 13.6% and 18.2% year-on-year respectively. This is minuscule when compared to the recent decline.
Source: (DOS, 2021a; STB, 2021)
HOW TOURISM AFFECTS SINGAPORE’S ECONOMY
Tourism contributes to the Singapore economy by increasing the demand for goods and services through tourist receipts. It also contributes through the demand for inputs used to produce these goods and services. For example, when tourists stay at hotels, they use the amenities provided and also dine in hotel restaurants. Thus, tourists’ demand for accommodation in turn generates demand for electricity and housekeeping services (other industries not part of the accommodations industry) and hotel restaurant dining services (within the accommodations industry) (Figure 2).
The effect of economic activity generated by tourism shown here is a sum of two sources. The first source effect is directly generated by the final demand industry which it is from (Accommodations industry). The second is the total value indirectly generated by tourism; the sum of all the effects generated by all other industries outside of the final demand industry producing inputs for the final demand industry (all other industries excluding accommodations). A sum of both the direct and indirect effect expresses the total economic effect of tourism.
Singapore’s tourism receipts have been segregated into five categories: Accommodations; Food and Beverages; Shopping; Sightseeing, Entertainment and Gaming, and; Others. The first three categories correspond to the accommodations, Food and Beverages services and retail trade industries, respectively. The ‘Sightseeing, Entertainment and Gaming’[1] component includes “entrance fees to attractions and nightspots, expenditure on day-tours, leisure events as well as entertainment in the Integrated Resorts (IRs)” (STB, 2020). This leaves the ‘Others’[2] component, which comprises of “expenditure on airfares on Singapore-based carriers, port taxes, local transportation, business, medical, education-related items and expenditure by transit/transfer visitors” (STB, 2020).[3]
EFFECT OF TOURISM RECEIPTS BY COMPONENTS
(a) Value-Added (VA) Coefficient
Simply put, the value added (VA) generated is equivalent to the Gross Domestic Product (GDP) generated; a sum of the VA generated by all industries gives the GDP of Singapore. From a more technical perspective, value added is derived by subtracting the total cost of purchased inputs (e.g. intermediate and raw inputs from other industries) from the selling price. The VA coefficient captures the amount of VA generated for every $1000 of final goods purchased by tourists. A higher VA translates into a higher GDP.
Based on the data, tourists generate the greatest total VA by spending on the ‘Shopping’ component. The ‘shopping’ component also generates the greatest VA in indirect effects. On the other hand, spending on the ‘Others’ component generates the lowest total and indirect VA (Figure 3). In other words, it would be more beneficial for Singapore’s GDP if tourists were to spend more on the ‘Shopping’ component rather than on the ‘Others’ component.
Source: Author’s calculation based on (DOS, 2021b; STB, 2021)
This is a surprising find given that the industries under the ‘Shopping’ component are likely to have a high share of imports as inputs. Thus, a large share price paid for final goods by tourists is expected to be paid to imports instead of VA. One would expect the ‘SEG’ component to generate the highest total VA given that the primary inputs for this component are infrastructure and labour; infrastructure would likely have already been paid for from past investments.
(b) Employee Compensation Coefficient
To better understand the impact tourism has on the salary of employees, we take a deeper look into the employee compensation coefficient of the primary input requirement coefficients of final demand. The employee compensation coefficient indicates the amount paid to employees for every $1000 of final output purchased by tourists.
Source: Author’s calculation based on (DOS, 2021b; STB, 2021)
Similar to the trends in VA, the impact on employee salaries is the greatest when tourists spend on ‘Shopping’ while the lowest impact is from spending on the ‘Others’ component. (Figure 4). About $427 of $1000 spent by tourists on ‘shopping’ are paid as employee salaries, while only about $328 is paid to workers employed in the ‘Others’ category.
Looking at the number of employed individuals in industries that are related to tourism spending categories,[4] there appears to be a slight increasing trend across all industries from 2010 to 2019. However, from 2019 to 2020, the number of employed residents in the wholesale & retail trade, public administration & education services and accomodation & food services sectors have fallen slightly. While not all changes observed can be attributed only to the lack of tourism in Singapore, overall, there seems to be a decrease in employment in these sectors related to tourism spending categories. Assuming that the total amount paid to employee salaries in these sectors remain the same, salary per capita would have increased. However, the total amount paid to employee salaries is likely to have decreased given the lack of demand for their services and the poorer economic outlook; employee salary per capita would have either remained the same or decreased.
OVERALL EFFECT OF TOURISM
To understand the overall impact tourism has on Singapore, a tourism coefficient is calculated based on the major components of tourism receipts and corresponding industries from the 2017 input-output tables (DOS, 2021b).[5]
(a) Overall Value-added (VA) Coefficient
The overall VA coefficient provides an estimate of how much VA is generated for every $1000 spent by tourists, regardless of spending category. Over the last few years, the total VA generated has remained around $735 for every $1000 spent by tourists (Figure 6). However, it has dipped since the start of the pandemic in Q1 2020. The indirect and direct effects follow the same trend.
Source: Author’s calculation based on (DOS, 2021b; STB, 2021)
(b) Overall Value-Added (VA) Coefficient
Similarly, the employee compensation coefficient has been kept at around $397 for every $1000 spent by tourists over the last few years (Figure 7). This has dipped quite a bit since the start of the pandemic in Q1 2020.
Source: Author’s calculation based on (DOS, 2021b; STB, 2021)
(c) Reason for Change in Coefficient Magnitude
The change in coefficient magnitudes over the last few quarters for both VA and employee compensation can be explained by the change in tourists’ consumption pattern (Figure 8). A greater share of tourism receipts was spent on the ‘Others’ component from Q2 2020 onwards (after the pandemic started), while the share of tourism receipts for ‘Shopping’ and ‘Accommodations’ fell and remained low. The ‘Others’ component has the lowest VA and employee compensation coefficient. On the other hand, both ‘Shopping’ and ‘Accommodations’ have the highest and second highest coefficients for both VA and employee compensation. With a larger share of spending on the ‘Others’ component and lower share of spending on ‘Shopping’ and ‘Accommodations’, the magnitude of the overall coefficient is pushed downwards.
Source: (DOS, 2021a)
There are a few possible explanations for the drastic change in the consumption pattern. For Q2 2020, the share of tourist expenditure on ‘Shopping’ and ‘SEG’ fell because all retail shops and tourist attractions were closed with the implementation of the ‘Circuit Breaker’ (CB). At the same time, the entry and transit ban implemented in late March was partially lifted in early June; foreigners were allowed to transit in Singapore and ‘Fast Lane arrangements were made for essential business and official travel between Singapore and six Chinese municipalities. Thus, since transit passengers’ expenditure fall under the ‘Others’ component, the relative share of expenditure spent under the ‘Others’ component rose. With only Chinese visitors, who seem to spend a relatively lower share on ‘Accomodations’ (STB,2021), on official business entering Singapore, the relative share of spending on ‘Accommodations’ fell.
From Q3 2020, ‘Reciprocal Green Lane’ and ‘Air Travel Pass’ arrangements were made with several countries.[6] These helped to increase the number of tourists, resulting in an increase in total amount of tourism receipts quarter-on-quarter (59%) and the ‘SEG’ and ‘Accommodations’ shares of expenditure. The ‘Others’ component was likely to have remained as a dominant expenditure component as transit passengers might have formed the bulk of Singapore’s visitors. In addition, with the increased inconvenience of travelling (e.g. multiple tests, stay-home notices), individuals are likely to only travel to Singapore for activities that cannot be delayed, such as medical treatment, education, and business-related matters; expenditure for all these also fall under the ‘Others’ component.
(d) Tourism’s Contribution to GDP
By multiplying the tourism receipts with their respective VA multipliers, the total VA generated by tourism can be estimated. Prior to the pandemic, tourism’s contribution to GDP had been around 4% (Figure 9). To keep things simple, only direct and indirect effects were taken into consideration for the calculations. In reality, there are ‘induced’ effects on top of direct and indirect effects; induced effects capture the subsequent effects of purchases made by employees of the various industries increasing the impact magnitude of tourism spending. Thus, 4% is an underestimation of tourists’ contribution to the GDP. Based on past studies of the impact of tourism on Singapore’s GDP, incorporating the induced effects is likely to result in a significant jump in contribution (Khan et al., 1990).
The pandemic has resulted in the implementation of tight travel restrictions and lockdowns, resulting in a severe drop in the number of tourists visiting our shores. Naturally, the amount of tourism receipts decreased drastically, resulting in a significant drop in contribution to GDP.
Source: Author’s calculation based on (DOS, 2021b; STB, 2021)
THE IMPACT OF TRAVEL BUBBLES
To help restart the tourism sector, the Singapore government has relaxed travel restrictions for tourists from certain countries and has also been in discussions to implement quarantine-free ‘travel bubbles’ with countries that have relatively low numbers of COVID-19 cases.
Considering travel bubbles with several countries[7] and foreigners allowed to travel to Singapore via the ‘Air Travel Pass’, the following would be the estimated value-added generated from tourism (Figure 10). The calculations assume that the tourists’ spending patterns and amounts remained the same as in 2019; and the number of arrivals is equivalent to 5% of the number tourists that visited in 2019.
Source: Author’s calculation based on (DOS, 2021b; STB, 2021)
As can be assumed from the sheer volume of Chinese tourists, the estimated value-added generated from Chinese tourists is the highest amongst the selected countries. While the numbers seem relatively high, the sum of VA generated from these countries’ tourists add up to only 0.06% of Singapore’s 2020 GDP figures.
To generate the highest VA, the Singapore government would ideally have extended the travel bubble arrangement to China, Indonesia, India, Australia, Malaysia and Japan. These countries have historically recorded the highest number of visitors and tourism expenditures per capita.[8] However, such arrangements are conditional on these countries’ number of COVID-19 cases.
Tourism has always contributed a relatively small share of Singapore’s GDP. Implementing travel bubbles with these countries is unlikely to rejuvenate the economy significantly. However, doing so will help correct the uneven demand for output from various industries i.e., generate demand for tourist-oriented industries that do not fit locals’ preferences. As shown previously, after the Singaporean government implemented the ‘Air Travel Pass’ and ‘Reciprocal Green Lane’ arrangements with several countries in Q3 2020, expenditure share of the ‘SEG’ component rose. Although the magnitude of impact might be low overall, the impact on individuals and businesses that rely greatly on tourism will still be significant.
CAVEATS
There have been several assumptions made to derive the input-output tables,[9] one of which assumes that there is “no supply constraint” i.e. any required amount of input and labour can be provided to meet demand at the same fixed price. However, the pandemic has severely affected the availability of input and labour[10] for production;[11] supply chains have been disrupted while social distancing and travel restrictions have limited the movement and availability of labour for production. These changes are likely to have affected the price of inputs and labour, as demand and supply become imbalanced. In addition, consumption preferences and patterns were assumed to remain the same as before, an unlikely outcome after the pandemic.[12] Thus, the estimates made in this article are rough calculations, as the pandemic is likely to have changed the structure of the economy.
CONCLUSION
Amongst the five components of tourism receipts, ‘Shopping’ generates the highest VA (or GDP) per $1000 spent by tourists. The ‘Others’ component generates the lowest VA per $1000 spent.
For the overall tourism coefficients, the amount of VA generated per $1000 spent by tourists have remained somewhat constant over the years. However, in the last three quarters, due to the pandemic, consumption patterns of tourists have changed significantly. The reduction and increase in the relative amount tourists spent on shopping and the ‘others’ component respectively resulted in a slight dip for both coefficients.
Individuals employed in the industries under the shopping component seem to enjoy a significantly higher employee compensation coefficient compared to the rest. Unfortunately, because of the change in tourist consumption habits, the overall tourism employee compensation coefficient has had a slight dip in magnitude over the last three quarters.
Accounting for all the industries involved, tourism has usually contributed about 4% of Singapore’s GDP annually, but its contribution share has dropped significantly due to the pandemic. While travel bubbles with selected countries appear to generate a notable amount of VA, relative to Singapore’s GDP figures, this is very minute. However, travel bubbles are still able to make a consequential positive impact on individuals and businesses belonging to industries that are tourist oriented.
REFERENCES
DOS. (2019). Singapore Supply, Use and Input-Output Tables 2015.
DOS. (2021a). Singapore Department of Statistics (DOS) | Singstat Website. https://www.singstat.gov.sg/
DOS. (2021b). Singapore Supply, Use and Input-Output Tables 2017.
Khan, H., Seng, C. F., & Cheong, W. K. (1990). Tourism multiplier effects on Singapore.
Annals of Tourism Research, 17(3), 408–418. https://doi.org/10.1016/0160-7383(90)90006-D
Sharma, A., Adhikary, A., & Borah, S. B. (2020). COVID-19’s Impact on Supply Chain Decisions: Strategic Insights from NASDAQ 100 firms using Twitter Data. Journal of Business Research, 117, 443–449.
STB. (2020). Tourism Sector Performance Q3 2020 Report. https://www.stb.gov.sg/statistics-and-market-insights/Pages/statistics-Visitor-Arrivals.aspx
STB. (2021). Stan | Tourism Statistics. https://stan.stb.gov.sg/content/stan/en/tourism-statistics.html
Zwanka, R. J., & Buff, C. (2021). COVID-19 Generation: A Conceptual Framework of the Consumer Behavioral Shifts to be Caused by the COVID-19 Pandemic. Journal of International Consumer Marketing, 33(1), 58–67.
Annex 1
Annex 2
Singapore’s Visitor Profiles
Based on data for 2016-2019, most of Singapore’s visitors arrived from Southeast Asia (35.2%), followed by Greater China (18.7%), then Europe (11.0%). The top five countries that visitors arrived from were China (18.7%), Indonesia (16.5%), India (7.5%), Malaysia (6.6%) and Australia (6.1%).
Given the high volume of visitors from these countries, one would expect the tourism receipts from these countries to share the same ranks. However, other than the top three countries remaining the same, the fourth was Australia, followed by Japan; tourism receipts from Malaysia were ranked sixth. This is due to the varied expenditure amounts, consumption patterns and purposes of visit of tourists from different countries. Amongst the top six contributors of tourism receipts, Japanese tourists had the highest tourism receipts per capita, followed by India, China, Australia, Indonesia and Malaysia (Figure A). The low tourism receipt per capital of Malaysian tourists explains the relatively lower amount of total tourism receipts from Malaysia despite the high number of tourists visiting.
Source: Author’s calculation based on (STB, 2021)
Annex 3
Output Coefficient
The output coefficient reflects the amount of output that is generated for an industry to produce $1000 of final output purchased by tourists.
Shopping has the highest total output coefficient and highest indirect coefficient; the final demand generated by tourism receipts from shopping requires the highest amount of output from all other industries. It also requires the highest amount of output from all industries, inclusive of its own (total effect) (Figure B)
Source: Author’s calculation based on (DOS, 2021b; STB, 2021)
This is contrary to the ‘Others’ components which has the highest direct output coefficient, but lowest indirect effect. Industries involved in the ‘Others’ component of tourism receipts require the most amount of inputs from their own industries, and least amount of inputs from other industries.
However, unlike the output coefficient, the ‘shopping’ component is closely followed behind by the SEG and Accommodations components. Moreover, the Food and Beverages component, the second highest for the total output coefficient, fell to fourth for the total VA coefficient and is the last for direct VA coefficient (Figure C). It implies that despite the high total output generated, the Food and Beverages component supports upstream industries that have relatively lower value add compared to industries of the other components.
Source: Author’s calculation based on (DOS, 2021b; STB, 2021)
ISEAS Perspective 2021/108, 13 August 2021
ENDNOTES
[1] For the ‘sightseeing, entertainment and gaming’ component a weighted average of the related industries is taken. The industries are (1) travel agency, tour operator and reservation services, (2) Arts and entertainment (3) Recreation and sports. The weights are determined by the relative value of exports of goods and services of each industry to better reflect the consumption patterns of a foreigner.
[2] For the ‘others’ component a weighted average of the related industries is taken. The industries are (1) land transport (2) air transport (3) exhibitions, conventions, and other events (4) education and (5) health services. The weights are determined by the relative value of exports of goods and services of each industry to better reflect the consumption patterns of a foreigner.
[3] The correspondence table for the expenditure components and input-output industries can be found in Annex 1.
[4] The ‘Accommodation’ and ‘Food and Beverages’ components correspond to ‘Accommodation & Food services. The ‘SEG’ component corresponds to ‘Arts, Entertainment & Recreation’. The ‘Shopping’ component corresponds to ‘Wholesale & Retail Trade’. The ‘Others’ component corresponds to ‘Health & Social Services’, ‘Transportation & Storage’ and ‘Public Administration & Education Services’.
[5] The overall coefficients were calculated by summing up the total VA/employee compensation generated for each component, then dividing it by the total tourism receipts.
[6] Reciprocal green lane arrangements were made with Malaysia, South Korea and Japan. Air Travel Pass arrangements were made with Brunei and New Zealand.
[7] Brunei has been excluded as no data on tourism receipts per capita was available.
[8] View Annex 3 for Singapore’s visitors’ profile based on 2016 – 2019 data.
[9] Other assumptions include: “(1) All establishments classified in the same industry have the same production process and input requirements, (2) All industries have fixed input requirement proportion relative to output (3) allocation of demand to users depends on the product and not the industry selling the product (4) users always demand the same mix of products from an industry.” (DOS, 2019)
[10] See “Developers to share soaring labour costs as COVID restrictions bite, Singapore rules” at https://www.globalconstructionreview.com/news/developers-share-soaring-labour-costs-covid-restri/
[11] See (Sharma et al., 2020)
[12] See (Zwanka & Buff, 2021)
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2021/107 “Digital Islam in Indonesia: The Shift of Ritual and Religiosity during Covid-19” by Wahyudi Akmaliah and Ahmad Najib Burhani
EXECUTIVE SUMMARY
- Before the Covid-19 pandemic, the use of digital platforms in religious rituals was already becoming an increasingly common practice among Indonesian preachers to reach out to young audiences. During the pandemic, some Muslim organisations and individual preachers have speeded up the use of such platforms as a way to communicate with people and to continue with religious practices among the umma.
- Among religious rituals that have shifted online are the virtual tahlil (praying and remembering dead person), silaturahim (visiting each other) during Eid al-Fitr, haul (commemorating the death of someone), and tarawih (night prayer during Ramadan). These new modes of rituals were accepted without much controversy. Controversy, however, abounds regarding the online version of the Friday Prayer. This is particularly because in Islamic law, this ritual is wajib (mandatory) for male Muslims, while the previous ones are only mustahab (recommended).
- Notwithstanding the controversy, some progressive scholars from Muhammadiyah such as Wawan Gunawan Abdul Wahid and Usman Hamid, have put forth well-argued and well-substantiated legal arguments for the permissibility of virtual Friday prayers. Such arguments have served to address the conundrum facing pious Indonesian Muslims who desire to fulfil their religious obligations while keeping safe and healthy during a pandemic.
- Such innovative approaches to Islamic jurisprudence also illustrate progressive strands in Indonesian Islam not observed elsewhere in the Muslim world.
* Wahyudi Akmaliah is a PhD Student at the Malay Studies Department, National University of Singapore (NUS). Ahmad Najib Burhani is Visiting Senior Fellow at ISEAS – Yusof Ishak Institute and Research Professor at the Indonesian Institute of Sciences (LIPI), Jakarta. The authors wish to thank Lee Sue-Ann and Norshahril Saat for their comments and suggestions on this article.
INTRODUCTION
The requirements put in place to limit the spread of the Covid-19 virus, such as keeping physical distance, staying at home, and avoiding communal gatherings, have greatly affected Muslim practices that were previously conducted in mosques. Besides serving as a place for worship and religious rituals such as the five-daily prayer and the Friday Prayer, the mosque has been a space for strengthening a sense of brotherhood and solidarity.
Mainstream Muslim organisations in Indonesia, such as Muhammadiyah and Nahdlatul Ulama (NU), gave support to government policies by recommending to their followers to avoid organising religious gatherings and to observe rituals in the privacy of their homes.[1] This was considered justifiable and in line with the objectives of Islamic law (shari’a), known as maqasid al-shari’a; these consist of al-daruriyat al-khams—protecting the basic needs of every person such as protection of life, religion, reason, progeny, and property.[2] It was apparent to most that during the pandemic, houses of worship could be venues where the virus would spread easily.[3]
The recommendation issued by Islamic organisations such as Muhammadiyah, Nahdatul Ulama (NU), and MUI, for Muslims to temporarily avoid houses of worship during Covid-19, however, has however not been entirely followed. Some Muslims, specifically those in rural areas, continue to observe religious rituals in mosques due to inadequate understanding about the seriousness and dangers of Covid-19. Meanwhile, in urban areas, some Islamic groups continue to insist on praying in mosques for different reasons. One of these is Jamaah Tabligh, which advocates a fatalistic belief that God will protect them.[4] This group has been described as the “largest viral vector of Covid-19” or a “Super-Spreader, following their large gatherings in Malaysia and Indonesia during the first few months of the pandemic.[5]
This article discusses digital platforms as alternative means for Muslims to observe religious rituals during the Covid-19 pandemic. It addresses how Indonesian Muslim groups accept Islamic rituals being conducted on digital platforms, particularly the Friday Prayer, and puts the spotlight on the flexibility of Islamic law in allowing for adjustments in difficult times. It also reveals how Indonesians implement the concept of maqasid al-shari’a (objectives of sharia) in dealing with critical issues, and how they relocate the sacredness of physical spaces to digital space.
DIGITAL ISLAM AND RELIGIOUS PRACTICES
Covid-19 has forced various Muslim groups to adopt digital platforms in their religious activities. This had previously been popular only for specific purposes such as match-making and preaching activities by young or millennial preachers. The rise of new preachers such as Hanan Attaki, Abdul Shomad and Felix Siauw, for instance, has been mostly facilitated or mediated by digital platforms, i.e. YouTube, Facebook, Twitter, and Instagram. As elaborated by Suryana and Syafiqah, these three social media preachers are among the most influential and are followed by millions of followers. Hanan Attaki, for instance, has 8.5 million Instagram followers and 1.78 million YouTube subscribers, and Felix Siauw has 4.8 million Instagram followers and 3.3 million Twitter followers.[6] Now, with Covid-19, digital platforms have become the venue for the daily activities of diverse religious groups.
Currently, one of the most popular religious rituals using digital platforms is tahlilan—commemorating and praying for someone who has died. Although it is not mandatory in Islam, tahlilan is a strong tradition within Nahdlatul Ulama (NU). Literally, tahlilan is a form of dhikr (or chant) praising of God through repetitions of la ilaha illa Allah (There is no god, but Allah). It is conducted in the house of the deceased by a number of people, mostly family, friends, and neighbours, for seven days in a row. This ritual is then repeated during the 40th, 100th, and 1,000th day after the person’s death, usually attended by many people.
The pandemic has prohibited people from having communal meetings and religious gatherings to honour deceased relatives, family members and friends. Tahlilan online has therefore become the only option. No doubt, attending tahlilan online does not evoke the same degree of “efficacy” and solemnity (kekhusu’an), but at the level of showing sincere intention (niat tulus) and praying for someone who has lost his or her loved one, it is perhaps better than nothing. It may help comfort the family, reduce their sadness, and give tribute to the deceased, and establish a new model, to use Emile Durkheim’s term, for “collective effervescence” or togetherness in Indonesian Muslim society.
Islamic sermons during the Tarawih prayer organised by the IPV. Promoting women and human rights activists. Picture: Institute of Public Virtue.
The difficulty with going online for all rituals stem from the fact that certain rituals stipulate communal gatherings as a requirement. Friday Prayer, for example, cannot be changed into individual rituals with the same name as a “Friday Prayer”. In the Shafiite school of law, which is followed by most Indonesian Muslims, the Friday Prayer can only be conducted with at least 40 participants present. Therefore, a communal gathering is mandatory. It is not surprising therefore that the introduction of a virtual Friday Prayer by Wawan Gunawan Abdul Wahid, Senior Lecturer in Islamic Law, State Islamic University of Sunan Kalijaga, Yogyakarta, received much negative response. Some segments of Indonesian Muslims reject this practice and claim that there is no clear justification for this in Islamic law.
According to Ustadz Oni Sahroni, all four schools of Islamic law agree that the Friday Prayer must be observed in a certain physical place in the presence of an imam (who leads the prayer) and of makmum (followers of the Imam). As a member of the board of the Indonesian Council of Ulama Council (MUI) and an expert on Islamic jurisprudence with a PhD degree from al-Azhar University, Sahroni has strong authority to talk about this issue. For Sahroni, the Friday Prayer is not only a venue to maintain relationship with God, but also a significant means for establishing silaturahmi and strengthening Muslims’ solidarity, through shaking hands, giving each other hugs, or just saying hello to one another.[7] Rejection of a virtual Friday Prayer has also been expressed by Buya Yahya (Yahya Zainul Maarif), one of the most popular preachers in Indonesia. Without indulging in academic references, he has argued that such a practice is prohibited in Islamic jurisprudence.[8]
Another prominent imam opposed to the virtual Friday Prayer is Ahmad Zahro, Professor in Islamic jurisprudence at the State Islamic University of Sunan Ampel Surabaya, and imam from the National Mosque of Al-Akbar, Surabaya, East Java. He takes the view that the virtual Friday Prayer is unacceptable or unlawful based on the requirement for geographical proximity between imam and ma’mum. Friday Prayer should be conducted with the imam and makmum on the same premises. He argues that those who allow virtual Friday Prayers do not understand Islamic teaching.[9] Regrettably, he does not come up with any alternative ritual to replace the Friday Prayer during a pandemic.
A representative of Muhammadiyah and one of the members in the Muhammadiyah’s Council of Religious Affairs, Asep Shalahuddin, has also rejected the virtual Friday Prayer. For him, the virtual Friday Prayer violates Islamic regulations on conducting rituals, such as the integration of worshipers in one place physically. Since participants or the makmum’s location during online worship could be physically located anywhere, it causes a problem where the line of continuity between imam and makmum is concerned. Furthermore, there is no clear position on who is actually in front as imam and who is makmum (located behind the imam), thus failing the requirement for a straight line in prayer. Hence, he asserts that it is better to replace Friday Prayers with dzuhur prayer instead, rather than conducting Friday Prayers virtually. Replacing the Friday Prayer with Zuhur prayer does not violate classical standards and would be easy to implement during the pandemic.[10]
Flyers for some virtual Islamic rituals: Eid al-Fitr, Eid al-Adha, and Tahlilan.
Picture: Takmir Masjid Virtual Jum’atan Online, Puslitbang Bimas Agama dan Layanan Keagamaan Badan Litbang dan Diklat Kementerian Agama RI, one of Didi Kempot’s fans
THE JUM’ATAN VIRTUAL AND PROGRESSIVE ISLAM
The idea of holding a virtual Friday Prayer started when Wawan Gunawan Abdul Wahid and other young Muhammadiyah activists organised the Eid al-Fitr online on 24 May 2020. Following that event, the Friday Prayer was conducted on 29 May 2020.[11] Wawan Gunawan argues that the main reason for conducting a virtual Friday Prayer is to address the diverse demands on Islamic worship (at-tanawwu’ fil ibadah) in a time of crisis. Even though both Muhammadiyah and NU have recommended replacing the Friday Prayer with the Zuhur praying, many Muslims still desire to observe a Friday Prayer. From Wawan’s perspective, instituting a virtual Friday Prayer on digital platforms accommodates the desire of Muslims to observe Friday Prayers while at the same time prevent them from getting infected with Covid-19. This saves both soul and body (hifz an-nafs) and is consistent with the maqasid al-shari’a (the goals or objective in Sharia)in Islamic jurisprudence.[12]
Wawan then provides three reasons for the permissibility or lawfulness of conducting virtual Friday Prayers. Firstly, based on Muhammad’s story in one of the hadiths, it is permissible to use a house as a mosque. The mentioned hadith tells us that Allah has made the entire land on earth sacred space and made it possible or permitted for any space to be used as places for worship. Secondly, Wawan makes a comparison to the practice of marriage contracts (akad nikah) being carried out online. The marriage contract is a sacred agreement (mithaqan ghaliza) that involves more than one person. If a marriage contract can be done online, then the same argument can be used for Friday Prayers. Thirdly, to reconcile the issue of imam and makmum being in separate locations, the imam’s voice being projected over online platforms serves as bridge between leader and congregation. This argument is based on Ibnu Qudamah’s view from the Zahiri school, and Ahmad bin Hanbal. The Zahiri school argues that if the makmum and imam are physically separated by a river, as long as the imam’s voice can be heard from across the river, then the congregational prayer is valid.[13]
Virtual Friday Prayer with sermons from prominent figures or human rights. Picture: Institute of Public Virtue
Wawan’s argument is supported by Muhammad Abdul Darraz, one of Muhammadiyah’s young activists, specifically through a reference to al-Imam Abu al-Faydh Ahmad bin al-Shiddiq al-Ghumari (1901-1960). That Imam had given a fatwa for allowing Friday Prayers using radio. For Abu al-Faydh, the primary reason why that is allowed is the presence of the ability to listen to the imam’s voice. As long as the makmum follow what was said and conducted by the imam, then the prayer was valid. The technological invention in audio-visual form, specifically as radio and television, was able to mediate the voice in the congregational prayer. For Darraz, Abu al-Faydh’s fatwa can be used as a reference for the permissibility of Friday Prayers, and apply to the diverse digital platforms, the most popular of which at the moment is Zoom.[14]
Eight months after observing virtual Friday Prayers held within limited circles in Muhammadiyah’s cultural community, the Institute of Public Virtue (IPV), led by Usman Hamid, a prominent Human Rights activist, adopted Wawan’s idea. Usman began organising a virtual Friday Prayer from 5 March 2021 onward, preparing those who will be khatib and imam and providing robust internet connection. Two crucial additions were made: Publishing khatib’s sermons, and; supporting sign language for the hearing impaired. Due to Usman Hamid’s popularity and strong connections, participants from various backgrounds have joined the Friday Prayer, including women such as Binny Buchori, a prominent personality in Indonesian NGO work.
Most of the topics at Friday sermons organised by the IPV have been on democracy and human rights, framed within Islamic perspectives. This has attracted a diverse audience that includes journalists, academicians, Islamic intellectuals and activists. Indeed, many women have been attending, with the highest number of them, 23 women, showing up on 19 March 2021. The virtual Friday Prayer has also been attended by some Christians, as observers.
In combining Islam with human rights issues such as women rights, ecological disasters, rights of disabled people, the crime of corruption, and poverty, these virtual Friday Prayer sessions not only present a new platform for religious rituals, but also different perspectives on Islam. These have indeed become an alternative expression of public Islam amidst conservative religious expressions.[15] Even though only 100-300 people attend them, they have served to reintroduce to Indonesian Islam a progressive face that was massively popular during the 1990s and the early 2000s.[16]
CONCLUSION
Covid-19 has forced Indonesian Muslims to change the pattern of their religious rituals. The mosque, normally a place of religious meeting and gathering, has had to be avoided to prevent the disease spreading. Following the government’s regulations, the three Islamic major organisations (Muhammadiyah, NU, and MUI) have offered religious guidance on how to observe rituals during a pandemic. One way is through the use of digital platforms, as in the exercise of online tahlilan, tarawih virtual, and silaturahmi virtual. Controversy grows strongest in the context of a virtual Friday Prayer. Muhammadiyah, as the representative of modernist Islam, officially argues against it, perceiving virtual Friday Prayers to be invalid. This argument is indirectly supported by both NU and MUI.
Nevertheless, the extended lockdowns amidst the spread of the Covid-19 Delta variant has forced some Indonesian Muslims to join virtual rituals. The virtual Eid al-Adha on 20 July 2021, for instance, was phenomenally popular, and was attended by more than a thousand people, limited only by the Zoom platform’s meeting capacity. Reflecting this, we argue that virtual religious rituals have strong prospects of becoming an answer to the problem of maintaining religiosity while keeping physically safe and healthy. It is a way to contextualize religion during the Covid-19, and to observe religious obligation while keeping both soul and body (hifz al-nafs) safe, as required by the maqasid al-shari’a.
Wawan Gunawan and Usman Hamid of the IPV believe that Islamic jurisprudence needs to adjust to the pandemic. Gunawan, Hamid, and other Islamic groups believe that virtual Friday Prayers is a possibility, and is in fact a form of ijtihad and ikhtiar as endorsed by Prophet Muhammad. Interestingly, in the Middle East, such an innovative approach to religious practice would be hard to find, since religious authorities there still tend to insist on a traditional interpretation of Sharia.[17]
ISEAS Perspective 2021/107, 12 August 2021
ENDNOTES
[1] “NU dan Muhammadiyah Umat untuk Tidak Salat Jumat di Masjid”, Republika.co.id, 20 March 2020. https://www.republika.co.id/berita/q7h73k366/nu-dan-muhammmadiyah-imbau-umat-tidak-shalat-jumat-di-masjid (accessed 25 June 2021); “Fatwa Majelis Ulama Indonesia Nomor. 14 Tahun 2020 Tentang Penyelenggaraan Ibadah dalam Situasi Terjadi Wabah Covid-19”, Mui.or.id, 17 March 2020. https://mui.or.id/berita/27674/fatwa-penyelenggaraan-ibadah-dalam-situasi-terjadi-wabah-covid-19 (accessed 24 June 2021).
[2] To understand the five basic needs in Islamic law, see Muhammad Adil Khan Afridi, “Maqasid Al-Syariah and Preservation of Basic Rights Under the Theme Islam and Its Perspectives on Global and Local Contemporary Challenges”, Journal of Education and Social Sciences, Vol. 4 (5/2016): 274-285; Muhammad Abdullah Darraz, “Fatwa Ibadah di Masa Pandemi Covid-19: Menimbang Salat Jumat Secara Virtual”, in Farinia Fianta and Fahmi Syahirul Alim (eds.), Fatwa dan Pandemi Covid-19: Diskursus, Teori, dan Praktik”, Jakarta: ICIP, 2021), pp.166-179.
[3] “Klaster Covid-19 Di tempat Ibadah Naik: Ada Masjid dan Gereja”, Tempo.co, 16 August 2020. https://metro.tempo.co/read/1376271/klaster-covid-19-di-tempat-ibadah-naik-ada-masjid-dan-gereja (accessed 23 June 2021); “Covid-19: Tempat ibadah dibuka, ‘tentang kekhawatiran terkena Covid-19, ya kita berdoa saja”. bbc.com/Indonesia, 1 June 2020. https://www.bbc.com/indonesia/indonesia-52868562 (accessed 22 June 2021).
[4] “Tanpa Izin, Jamah Tabligh Tetap Gelar Ijtima Dunia di Gowa”, Republika.co.id, 18 March 2020. https://republika.co.id/berita/q7e4lx327/tanpa-izin-jamaah-tabligh-tetap-gelar-ijtima-dunia-di-gowa (accessed 23 June 2021); “73 Jamaah Tabligh Masjid Kebun Jeruk Positif Corona”, Tempo.co, 7 April 2020. https://metro.tempo.co/read/1329053/73-jamaah-tabligh-masjid-kebon-jeruk-positif-corona (accessed 23 June 2021).
[5] Ahmad Najib Burhani. “Comparing Tablighi Jamaat and Muhammadiyah Responses to COVID-19”, ISEAS Perspective, No. 75, 13 July 2020; Muhammad Adilin Sila, “Nurturing Religious Authority among Tablighi Jamaat in Indonesia”, in Norshahril Saat and Ahmad Najib Burhani (eds), New Santri: Challenges to Traditional Religious Authority in Indonesia (Singapore: ISEAS – Yusof Ishak, 2020).
[6] A’an Suryana and Nur Syafiqah Mohd Taufek, The Serious Social Impact of Non-Violent Extremism in Indonesia (Singapore: ISEAS – Yusof Ishak, 2021), p. 9.
[7] “ Sholat Jumat Berjamaah Secara Online – Ustadz Dr. Oni Sahroni, MA”, Muamalah Daily, 30 April 2020. https://www.youtube.com/watch?v=-x42clrWKNw (accessed 22 June 2021).
[8] “Bolehkah Tarawih Berjamaah Melalui Live Streaming atau Online?”, Buya Yahya, 8 May 2020. https://www.youtube.com/watch?v=SbBGcV_WiHs (accessed 22 June 2021).
[9] “Sholat Jum’at secara Online/Virtual: Prof Dr KH Ahmad Zahro MA al-Chafidz”, Azzahro Official, 19 April 2021. https://www.youtube.com/watch?v=WUDwUHyp7Gc (accessed 21 June 2021).
[10] Asep Shalahudin, “Fatwa tentang Shalat Jumat Online”, Pengajian Tarjih Edisi 119, 21 February 2021.
[11] “Ikhtiar Salat Jumat Online di Tengah Pandemi”, KompasTv.com, 19 February 2021. https://www.kompas.tv/article/148623/ikhtiar-salat-jumat-online-di-tengah-pandemi (accessed 29 June 2021).
[12] Wawan Gunawan Abdul Wahid, “Sekali Lagi, Tidak Ada Malah Shalat Jumat Secara Online”, Ibtimes.id, 4 May 2020. https://ibtimes.id/sekali-lagi-tidak-ada-masalah-shalat-jumat-secara-online (accessed 28 June 2021).
[13] Wawan Gunawan Abdul Wahid, “Sekali Lagi, Tidak Ada Masalah Shalat Jumat Secara Online”, Ibtimes.id, 4 May 2020. https://ibtimes.id/sekali-lagi-tidak-ada-masalah-shalat-jumat-secara-online (accessed 28 June 2021).
[14] Muhammad Abdullah Darraz, “Fatwa Ibadah di Masa Pandemi Covid-19: Menimbang Salat Jumat Secara Virtual”, in Farinia Fianta and Fahmi Syahirul Alim (eds.), Fatwa dan Pandemi Covid-19: Diskursus, Teori, dan Praktik”, Jakarta: ICIP, 2021), pp.166-179.
[15] “Masjid Terpapar Radikalisme, P3M: Tema Ujaran Kebencian Tertinggi”, Tempo.co, 22 November 2018. https://nasional.tempo.co/read/1148644/masjid-terpapar-radikalisme-p3m-tema-ujaran-kebencian-tertinggi (accessed 30 June 2021); “Riset PPIM: Tangkal Radikalisme, Sebarkan Buletin Moderat”, PPIM, 8 February 2021). https://ppim.uinjkt.ac.id/2021/02/08/riset-ppim-tangkal-radikalisme-sebarkan-buletin-jumat-moderat (accessed 30 June 2021); “Gaungkan Moderasi Beragama di Masjid Pemerintah, Kemenag Gelar Mudzakar Mudzakarah”, Kemenag, 30 March 2021. https://kemenag.go.id/read/gaungkan-moderasi-beragama-di-masjid-pemerintah-kemenag-gelar-mudzakarah-amdwq (accessed 30 June 2021).
[16] See Robert W Hefner, Civil Islam: Muslims and Democratization in Indonesia (New Jersey: Princeton University Press: 2000).
[17] “Arab Countries Are Adapting Ramadhan Traditions to Pandemic”, Deutsche Welle, 11 April 2021. https://www.dw.com/en/arab-countries-are-adapting-ramadan-traditions-to-pandemic/a-57146146 (accessed 27 July 2021).
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2021/106 “Saleable and Sustainable: Sabah Takes the Lead in Palm Oil Certification in Malaysia” by Lee Poh Onn
EXECUTIVE SUMMARY
- Malaysia’s export of oil palm to developed countries has increasingly been plagued with accusations of environmentally unsustainable practices and the threat of boycotts.
- Oil palm certification regimes have been introduced to address these concerns. Sabah has taken the lead on this front by adopting the mandatory Malaysian Sustainable Palm Oil (MSPO) certification standard as well as moving towards embracing the more internationally accepted Roundtable for Sustainable Palm Oil (RSPO) certification regime and making it mandatory by 2025.
- There were initial sensitivities in Sabah over the imposition of the Federal Government’s MSPO requirements, since land and agriculture are stipulated as state jurisdictions under the 1963 Malaysia Agreement. Eventually, the state reconciled this by casting MSPO certification as a first step towards achieving RSPO certification, which is actually a more stringent standard that has yet to be made mandatory in other parts of Malaysia.
- Despite the challenges of adopting the more rigorous and costlier RSPO requirements, Sabah expects to reap the benefits of wider market access and stronger branding for its palm oil and related products. There are indications that smallholders who moved early to be RSPO-compliant are now serving as role-models for their peers in adopting best practices, and this could encourage oil palm producers in other Malaysian states to follow Sabah’s example. This would in turn enhance Malaysia’s standing in the international oil palm market, especially since governments in Europe and North America are purchasing only RSPO-certified palm oil, in response to public pressure and activism.
* Lee Poh Onn is Senior Fellow and a member of the Malaysia Studies Programme at ISEAS – Yusof Ishak Institute.
INTRODUCTION[1]
Indonesia and Malaysia supply about 85 per cent of the world’s palm oil. Both countries have been battling accusations of unsustainable palm oil practices with governments and consumers in developed countries threatening to boycott the use of palm oil in food and biofuels. The expansion of oil palm plantations has often been linked to biodiversity loss, open burning and transboundary haze pollution in Southeast Asia. Certification has therefore been proposed to ensure that sustainability concerns are addressed.
Sabah in East Malaysia has taken the lead by not just pushing for the current compulsory Malaysian Sustainable Palm Oil (MSPO) certification standard but also moving towards making the Roundtable for Sustainable Palm Oil (RSPO) certification mandatory by 2025. It has already taken significant steps towards achieving RSPO certification. This step-wise certification process makes Sabah the first state in Malaysia to adopt both standards. While MSPO is rigorous in its own right, moving towards RSPO would be the way forward because of RSPO’s acceptability internationally. MSPO is less costly to implement, but RSPO goes beyond national dictates, and exercises greater stringency in some conservation measures.
This paper discusses the economics of oil palm in Malaysia and also in Sabah, and examines the background of MSPO and RSPO certification standards. The challenges of RSPO and MSPO certification in Sabah are also studied in detail. A conclusion follows.
THE EXPORT MARKETS
The importance of palm oil for Malaysia cannot be understated. In 2019, agriculture contributed 7.1 per cent to Malaysia’s GDP (constant 2015 prices of RM 101.5 billion). Palm oil contributed 37.5 per cent of the total agricultural output.[2] In terms of total GDP, palm oil contributed 2.7 per cent (constant 2015 prices) in 2019.[3] Sabah, which makes up 26 per cent of Malaysia’s total planted oil palm areas, produced about 24 per cent of Malaysia’s total output.[4] After Sarawak, Sabah is Malaysia’s second-largest palm oil-producing state, with a total planted area exceeding 1.54 million ha. Crude palm oil (CPO) production in Malaysia as a whole was 19.14 million tonnes in 2020.
According to the Sabah Socioeconomic Report 2019, agriculture contributed 16.1 per cent of Sabah’s GDP, amounting to RM 85.4 billion. 65.3 per cent of Sabah’s agricultural output came from palm oil.[5] In 2020, Sabah was not surprisingly the worst affected state in terms of a decline in palm oil output in terms of average Fresh Fruit Bunch (FFB) output. The decline was caused by the highest incidence of COVID cases reported at one time, the closure of oil palm estates and milling operations in six districts, from March to mid-April 2020,[6] and limitations placed on the capacity of plantations and mills.[7] Labour shortages also resulted in an output shortfall of about 20 per cent, caused by a freeze imposed on hiring foreign labour due to COVID-19.[8] Around 47 per cent of labour hired in Sabah (and also Sarawak) come from outside Malaysia.[9]
As much as 59 per cent of Malaysia’s palm oil are exported to seven markets (see Table 1). India and China are Malaysia’s largest palm oil export destinations,[10] the latter having been the second-largest export market since 2019. Presently, there are no certification requirements for export to these two countries.
Table 1: Palm Oil Export Markets: Top 7
| Country | Million Tonnes (% of Palm Oil Exports) |
| India | 2.75 (15.8 %) |
| China | 2.73 (15.7 %) |
| European Union (EU) | 1.94 (11.1 %) |
| Pakistan | 1 (5.8 %) |
| The Philippines | 0.69 (4 %) |
| Turkey | 0.62 (3.5 %) |
| USA | 0.54 (3.1%) |
| Rest of the World[11] | 16.73 (41 %) |
Source: Overview of the Malaysian Oil Palm Industry 2020, https://bepi.mpob.gov.my/images/overview/Overview_of_Industry_2020.pdf. Accessed 25 May 2021.
Palm oil provided 62.3 per cent (RM 45,656.33 million) of the total revenue; the other major component was palm oil-based oleochemicals which provided 22.4 per cent (RM 16,415.18 million) of revenue (see Table 2).
Table 2: Palm Oil Oleochemical Export: Top 5
| Country | Million Tonnes (% of Oleochemical Exports) |
| China | 0.55 (17.9 %) |
| European Union (EU) | 0.44 (14.3 %) |
| USA | 0.32 (10.4 %) |
| India | 0.21 (6.8 %) |
| Japan | 0.19 (6.1 %) |
| Rest of the World[12] | 3.1 (45%) |
Source: Overview of the Malaysian Oil Palm Industry 2020, https://bepi.mpob.gov.my/images/overview/Overview_of_Industry_2020.pdf. Accessed 25 May 2021.
TWO CERTIFICATION STANDARDS: MSPO AND RSPO
Governments in Europe and North America have committed to and purchased certified palm oil, partly in response to public pressure and activism. Retailers such as Walmart, Marks & Spencer, Unilever, Nestle, and many others, source only for certified palm oil.[13] Climate change and global warming concerns increasingly make sustainability the main calling card for market access to many developed countries. The treatment of labour also affects saleability.[14]
Malaysian Sustainable Palm Oil (MSPO) Certification
The MSPO standard is a national certification standard created by the Malaysian government. Beyond the Board of Trustees, a 38-member technical committee represents the various stakeholders. These stakeholders come from government, industry (upstream and downstream), smallholder organisations, environmental NGOs, civil societies, indigenous people organisations, worker unions and academia/research institutions.[15] The MSPO certification scheme was developed, managed and owned by the Malaysian Palm Oil Certification Council (MPOCC), an independent non-profit body incorporated in December 2014. Review on certification is carried out every five years to ensure relevance and effectiveness in meeting sustainability requirements. Independent smallholders, organised smallholders, plantations and all processing facilities are certified by MSPO following auditable sustainability standards accredited through third-party certification bodies.[16] While this bodes well for certification, the MPOCC is perceived as but a national certification board. The EU supports MSPO certification standards but sees it only as a first step towards eventual adoption of RSPO certification.[17]
The Malaysian Palm Oil Board (MPOB) is responsible for organising independent smallholders into Sustainable Palm Oil Clusters (SPOCs) and getting them ready for MSPO certification audits. MPOB also provides financial support to cover certification fees, training, chemical stores and personnel protection equipment (PPE)[18] to smallholders working towards achieving MSPO certification. The MPOB also has the function of licensing refineries, mills and plantations; regulating the buying and selling of FFB; research and development; and assisting growers and industry players.[19] In Sabah, the MPOB is the lead provider of support to smallholders. Producers can sell their FFB and receive inputs and technical support from the agency. Those not registered with MPOB in Malaysia (and Sabah) will have to sell their produce elsewhere, usually to non-legal channels or relatives,[20] which works against the drive to achieve sustainability for the whole sector. MPOB has also assisted local players in Sabah to obtain RSPO certification, as in the case of Sapi below.
In 2017, the Malaysian government announced that MSPO certification would be mandatory by 31 December 2019, a deadline subsequently extended to 2022 for smallholders. Medium and large estates which had not obtained MSPO certification by the end of 2019 would not have their licences renewed. Initially, a lower subsidy was offered for medium and large estates, with a 70 percent subsidy offered for small estates. After the change to the Pakatan Harapan government in May 2018, a full subsidy of the audit fee was provided by the MPOCC for small, medium and large estates.[21] By the end of 2020, 86.4 per cent of 5.87 million ha of planted areas had been MSPO certified, and 96.04 per cent of the total of 455 mills were rated MSPO-compliant across Malaysia. However, only 37.18 per cent of independent smallholders are MSPO-certified.[22]
Roundtable for Sustainable Palm Oil (RSPO) Certification
The Roundtable on Sustainable Palm Oil (RSPO) was founded by the World Wide Fund for Nature (WWF) in April 2004, while the RSPO certification system came into being in 2007.[23] RSPO is the only international multi-stakeholder organisation to focus exclusively on sustainable palm oil. With 4,800 members worldwide as of June 2020, the RSPO represents links along the entire palm oil supply chain, including producers, civil society, processors or traders, consumer goods manufacturers, retailers, banks/investors, and governments. Critics claim that the RSPO has insignificant representation from environmental and social NGOs. Although membership from palm oil producers, processors and manufacturers make up 95 per cent, in terms of the Board of Governors, environmental and social NGOs occupy 4 out of the 16 seats (25 per cent of total), which is significant and has influenced the stance of the organisation.[24] Given the public scrutiny of RSPO, the organisation is always on the lookout to address NGO concerns to maintain its credibility.[25]
CERTIFICATION CHALLENGES: SABAH TAKES THE LEAD
Bans on palm oil exports carry significant impacts on smallholders.[26] In Malaysia, 40 per cent of palm oil is produced by smallholders. There are an estimated 53,000 smallholders in Sabah, where palm oil provides between one third to half of their household income. Average holdings are from 3 to 7.3 ha, and smallholder median incomes are RM 1,500[27] to RM 2,220[28] per month, well below Sabah’s median income of RM 5,000 per month.[29] The RSPO defines smallholders as farmers planting in 50 hectares (ha) of land and below. In Malaysia, smallholders are farmers with lands under 40 ha. Smallholders can be further subdivided into organised and independent farmers.[30] Organised smallholders’ land accounts for 24 per cent of the total oil palm area while 14 per cent belongs to independent smallholders. Sabah and Sarawak are the main states where oil palm cultivation is still expanding.[31] Oil palm smallholders plant nearly one-quarter of accounted land areas in Sabah and Sarawak.
Sabah is the first state in Malaysia to plan for statewide RSPO certification across its plantations and smallholders, a feat which many other states have yet to follow and should perhaps emulate if they wish for wider market access. The Sabah state cabinet approved a multi-stakeholder proposal to move Sabah to a 100% RSPO-certified sustainable palm oil (CSPO) production process on 21 October 2015. This did not mean that there was no RSPO compliance before that; the issue was that those initial processes were not state-led. The Sabah Forestry Department (SFD) and the Natural Resources Office (NRO) under the Chief Minister’s Department were the government co-initiators of the proposal. This was logical as the SFD has been pioneering the sustainable forest management approach since 1997. In early 2016, the Jurisdiction Certification Steering Committee (JCSC) was established with government, industry, and civil society representation, co-chaired by the SFD and NRO. The RSPO and Forever Sabah act as non-voting technical advisors.
As the first move for Sabah to achieve state-led RSPO certification state-wide, especially for its smallholders, four districts – Telupid, Tongod, Beluran and Kinabatangan – were selected out of 23 by the JCSC to understand some of the challenges involved. Forever Sabah went to the ground in these districts to identify gaps between current indigenous practices and RSPO’s environmental, social and legal standards. Table 3 highlights some of these findings:
Table 3: Study of Smallholders in Telupid, Tongod, Beluran and Kinabatangan (TTBK)
| Malaysian Palm Oil Board (Federal Agency) 1. Has been providing extensive support to smallholders, 2. Strong Presence in TTBK | * 44% of smallholders in TTBK (16 of 20 villages) have been involved in some sort of MPOB programme (workshops and talks on oil palm management, including the use of fertiliser and agrochemicals). * Has helped improve the technical skills of smallholders (information sharing, and implemented a palm cropping programme with cropping and livestock management). * Targeted the transfer of sustainable technology and channelled government aid schemes through TUNAS officers as extension agents (e.g. to teach “Good Agricultural Practice” or GAP). GAP is the equivalent of RSPO’s “Best Management Practices”. |
| Smallholders 1. Present status, productivity and incomes can be improved | * 81% of total smallholder land is under oil palm, but yields are presently half the achievable compared to elsewhere (10 tFFB/ha/yr). * Past 15-20 years: oil palm has become the dominant land use for smallholders over large parts of Sabah. * Average of 2.98 ha for smallholders in TTBK. Sabah has an average holding of 6.4 ha/smallholder. * Incomes are low at about RM 1,500 in TTBK, below the RM 5,000 median income in Sabah. |
| Challenges 1. Poor access, poor agricultural support 2. Land tenure issues 3. Perception of RSPO 4. Violation of RSPO principles – open burning, HCV and Peat, and labour issues. | * Poor access to markets for Fresh Fruit Bunch (FFB). * Reliance on herbicides (not accepted by RSPO). * Fertilisers and extension services by MPOB were not increasing output, but those provided by Sabah Department of Agriculture have doubled FFB yields.Smallholders are grateful to MPOB but MPOB’s effectiveness can certainly be improved. * If productivity increases by 5%, Forever Sabah estimates that another RM 25 million can be generated per year. * 61% of smallholders in TTBK are growing oil palm on Land Application (LA) status, namely, for the land they have applied for but do not have a formal title to. Such titles are not acceptable to RSPO’s FPIC process; only about 36 per cent have land titles. MPOB has registered 63 per cent (including land other than that of LA status) of the users of this untitled land for palm oil production. Smallholders without titles (but LAs) have been successfully registered with the MPOB. * For RSPO, the Free Prior and Informed Consent (FPIC) process is essential for land legality. FPIC is better known as sumuku (in Kadazan-Dusun dialect) amongst the smallholders. * MPOB, although a Federal Agency, is viewed by smallholders as an official government agency, whereas RSPO is not. * Only 17 per cent have heard of RSPO, but two-thirds would like to become RSPO-certified. The main reservation is their financial situation and the costs involved in certification. Main gains in certification are to resolve land tenure issues, gain a secure Native Title on Land Application areas where they had already planted, and increase productivity. * Of 137 smallholders, 87 per cent use slash and burn to clear land, while some use existing cleared areas such as old paddy fields.Areas classified as High Conservation Value (HCV) cannot be cleared. 40% of interviewed have cleared HCV land. HCV is a categorisation of land, usually under forest cover requiring special management measures according to RSPO and Forest Stewardship Council. * 17% of the land used are on peat, also forbidden in RSPO; 50% of smallholders experience wildlife conflicts on their oil palm plantations. * 20 to 30 per cent of smallholders in TTBK hire illegal labour. |
Source: Adapted from Kenneth Wilson, et. al., op. cit. pp. 13 – 27; substantiated by Author’s fieldwork interviews in Sabah, 31 July to 3 August 2019.
With the mandate of MSPO certification set for the entire country by beginning 2022, Sabah is now working to integrate the MSPO process within the more criteria-extensive RSPO jurisdictional process. The Jurisdictional Approach in RSPO involves integrated landscape management that incorporates labour, land tenure, indigenous rights, and smallholder readiness into one holistic management plan. Sabah authorities see MSPO as providing the first step, with RSPO certification as the end goal. RSPO certification will be implemented through the Jurisdictional Certification of Sustainable Palm Oil (JCSPO) process by the JCSC.
What are some of the challenges in implementing MSPO in Sabah? Land and agriculture are state matters; the decision to use land cannot be determined by the Federal government and is protected by the Malaysia Agreement 1963. Therefore, when the MSPO was made mandatory, this was initially not well received in Sabah, which saw the management of its palm oil areas as a rightful state matter.[32] However, the Department of Agriculture in Sabah is understaffed, has never taken the lead, and lacks complete expertise to manage oil palm.[33] Agricultural support for oil palm production was therefore mainly provided by the MPOB.
MSPO certification was also perceived as a “top-down” approach arising from a federal body in Peninsular Malaysia; this was regarded with suspicion from segments of the community in Sabah. Smallholders have however viewed MPOB more positively as a national government initiative with the promise of funds and resources.[34]
In some quarters, it was felt that the MSPO certification process does not impose the same exacting standards as that of RSPO; notably the latter’s greater recognition of indigenous land rights (see FPIC under Challenges in Table 3) and its more stringent efforts on conservation in high biodiversity areas (see HCV under Challenges in Table 3).[35] Under RSPO, smallholders must have the formal land title to the oil palm areas they own, whereas this is not an explicit requirement under MSPO (see MPOB under “Challenges” in Table 3).[36] The move to see MSPO as a necessary and crucial first step complementing RSPO enables Sabah to avoid ‘disobeying’ federal directives, and allows it to prioritise its agricultural concerns on its terms by explicitly including RSPO in the certification process. The adoption of both certification standards is also not without justification. Interviews of 103 companies across Malaysia show that 70 per cent of them believe that both MSPO and RSPO should be made mandatory in Malaysia.[37] To date, about 26 per cent of Sabah-produced palm oil is RSPO-certified.
Importantly, consideration must however be given to the costs of implementing RSPO certification.
MSPO’s certification costs are less than RSPO as land assessment for and continual management of High Conservation Value (HCV) areas is not a prerequisite.[38] Repeated Environmental Impact Assessments (EIA) in existing MSPO-certified plantations are also not required.[39] RSPO costs include identification, preparation, setting-aside, and active management of High Conservation Value (HCV) areas within plantations, as well as SIA and an EIA. In the RSPO process, internal and external audits must be undertaken to verify and record the estate’s improved production, conservation standards, and corrective actions taken in its later years of operation. Companies must also demonstrate that they have a legitimate right to use the land and that the plantation or smallholder has the legal rights to plant in that area. Costs for certifying oil palm involving HCV, EIA and SIA (including initial land assessment and subsequent certification over 25 years) have been estimated to cost RM 851 million per year for a total area of 5,392,235 ha; costing RM 157.82 per ha per year for RSPO. There is the RSPO Independent Smallholder Fund (RISF), whose task is to help and support smallholders to improve their livelihood and practices towards achieving certification.[40] Presently, the uptake for certified oil palm is about 50 per cent. Hence, only 50 per cent of oil palm enjoy a price premium; this has to be increased to incentivise the production of certified oil palm.
What are the benefits of RSPO certification? A study of smallholders in Sabah (and Sarawak) who have completed certification[41] identified these to be in the form of spill-over effects to non-certified smallholders in Sapi (Sabah) and also in Keresa (Sarawak), and in the form of learning about good agricultural practices from their certified counterparts.[42] Non-RSPO farmers have gained from the close social relationship and connectedness of living in the same community with certified smallholders and the infrastructure provided by plantations nearby. Second, the mean income for certified households has been 10 per cent higher in Sapi and 25 per cent higher in Keresa, than for their non-RSPO counterparts.
Focusing on Sapi, it appears that 93 per cent of smallholders are aware of RSPO but with little idea of what it entails. The reasons smallholders apply for RSPO certification has been to gain the ability to sell their FFB at a premium price, improve their farm yield, manage their farms more efficiently, learn about sustainable farming and improve their household income.[43] Wild Asia Group Scheme (WAGS), in collaboration with Malaysian Palm Oil Board’s Smallholder Palm Oil Cluster (MPOB SPOC), organised and assisted these smallholders towards RSPO certification and good agricultural practices.[44] At the same time, Wilmar International Limited supported this initiative through its Sapi Palm Oil Mill in the area. In this set-up, the multi-stakeholder collaboration between smallholders, an NGO (WAGS), the government (MPOB), and an agribusiness group (Wilmar International) was one factor that ensured the success of certification in this area, serving as an example for others to follow.
By 2014, 23 smallholders in Sapi were already certified while 44 were waiting to be certified; they were incidentally among the first to be certified in Sabah. Farmers in this area had already stopped open burning and were clearing their land manually through slashing and using herbicide to prepare their land for planting. As per RSPO requirements and training from WAGS, farmers used less herbicide to clear the land than non-certified smallholders.
There was also better handling of chemical inputs among certified smallholders, resulting in the general belief that RSPO certification was beneficial to their natural environment. Although Sapi smallholders’ incomes were higher than those of non-certified smallholders, their output was however lower when compared to that of the latter.
Underinvestment in the use of fertilisers was identified as one possible cause and this arose from the inadequate extension services provided by WAGS. Continuous education and support should be provided to improve the effectiveness of RSPO certification on smallholders’ livelihoods. Certified mills could provide these extension services in exchange for a continuous supply of FFBs. Premium pricing of FFBs has attracted more smallholders to join RSPO. Certified mills (like Wilmar International and Sime Darby) are transparent in their grading, pricing and payment for FFBs and can continue to help in the certification process.
In Sabah, some millers have yet to support smallholders in the certification process and a significant percentage of smallholders are in conflict areas (with no formal land titles).[45] As such, RSPO cannot proceed with certifying such land areas.
CONCLUSION
Sabah has taken the lead in certifying palm oil by planning to adopt RSPO certification state-wide by 2025. This would help ensure market access globally and address developed countries’ sustainability concerns, especially those in the EU. Although India and China currently have no official certification requirements, they may eventually also move towards only accepting RSPO-certified palm oil due to pressure from their citizens and the need for these countries to have European and US market access for their final palm oil-based products.
Malaysia has already achieved near full MSPO certification for its plantations and medium-sized holdings. As such, progressing towards RSPO certification would put the country in a stronger position to continue to export palm oil globally into the future. Sabah can serve as a leading case study for other Malaysian states to emulate.
ISEAS Perspective 2021/106, 11 August 2021
ENDNOTES
[1] This is part of a series of Perspectives, written by Serina Rahman and myself to cover different aspects of oil palm in Sabah and in Malaysia. The first paper on this series by Serina Rahman, “Malaysian Independent Oil Palm Smallholders and their Struggle to Survive 2020” can be downloaded from this link: /articles-commentaries/iseas-perspective/2020-144-malaysian-independent-oil-palm-smallholders-and-their-struggle-to-survive-2020-by-serina-rahman.We are very grateful to various individuals from the Sabah Forest Department (Datuk Sam Mannan, Datuk Mashor Mohd Jaini, Mr Frederick Kugan), Forever Sabah (Ms Cynthia Ong, Ms Mega M Kumar, Ms Elisna Latik, Mr Rizlan Morsit, Mr Neville Yap), Wilmar International (Ms Perpetua George), Sime Darby Plantation Berhad (Mr Rashyid Redza), MPOCC (Mr Chew Jit Seng), RSPO (Ms Javin Tan), and an Independent Consultant (Ms Rosalie Corpuz) for speaking to us during our field work to Sabah, Peninsular Malaysia and Singapore. I wish to thank Serina Rahman and Francis Hutchinson for comments on an earlier version of this paper.
[2] Selected Agricultural Indicators, Malaysia, 2020, https://dosm.gov.my/v1/index.php?r=column/cthemeByCat&cat=72&bul_id=RXVKUVJ5TitHM0cwYWxlOHcxU3dKdz09&menu_id=Z0VTZGU1UHBUT1VJMFlpaXRRR0xpdz09. Accessed 25 May 2021.
[3] Between 2015 and 2019, palm oil contributed an average of 2.86 per cent for every year of total GDP at constant 2015 prices. Data on the contribution of the palm oil industry to the gross domestic product (GDP) of Malaysia from 2015 to 2019 can be found at https://www.statista.com/statistics/952996/malaysia-palm-oil-share-of-gdp. Accessed 25 May 2021.
[4] Overview of the Malaysian Oil Palm Industry 2020, https://bepi.mpob.gov.my/images/overview/Overview_of_Industry_2020.pdf. Accessed 25 May 2021. Sabah produces about 10 percent of the total output of palm oil in the world.
[5] “Sabah Makes Strides towards Sustainable Palm Oil Production”, 27 May 2021, The Borneo Post Online, https://www.theborneopost.com/2021/05/27/sabah-makes-strides-towards-sustainable-palm-oil-production. Accessed 28 May 2021.
[6] These were Tawau, Lahad Datu, Kinabatangan, Kalabakan, Semporna and Kunak which account for 70 to 75 per cent of Sabah’s output. See “Malaysia’s biggest palm oil state shuts some plantations due to virus”, The Straits Times, 24 March 2020, https://www.straitstimes.com/asia/se-asia/malaysias-biggest-palm-oil-state-shuts-some-plantations-due-to-virus. Accessed 25 May 2021.
[7] New guidelines introduced in October 2020 limiting plantation and mills to half capacity and capping operating hours to 6 am to 6 pm, also reduced output. Palm oil mills must operate for 18 hours during harvesting season to make a profit.
[8] Oil palm is dependent on foreign labour for harvesting, applying fertiliser and clearing overgrowth. See “Malaysia’s Palm Oil Yield to Continue Declining on Labor Shortage”, The Edge Malaysia Weekly, April 12, 2021 to April 18, 2021, https://www.theedgemarkets.com/article/malaysias-palm-oil-yield-continue-declining-labour-shortage. Accessed 25 May 2021.
[9] Azman Ismail, Siti Mashani Ahmad, Ali Zulhusni Ali Nordin, Nur Nadia Kamil, Ainul Shazwin Shahidan, Khairuman Hashim, Mohamad Arfan Johari, Shakir Alid and N Balu, “Labour Requirement in the Oil Palm Independent Smallholder Sector in Sabah and Sarawak, Malaysia”, Oil Palm Industry Economic Journal Vol. 18 (2) September 2018, p. 43.
[10] India maintained its leading position in 2020 and has been the leader for the seventh year since 2014. Palm oil exports to India fell by 37.7 per cent in 2020 due to restrictions imposed on imports of processed palm oil since January 2020. This arose because of a tiff between then-Malaysian Prime Minister Tun Mahathir Mohamad and the Indian government, when India was criticised over its handling of the Kashmir issue.
[11] Smaller percentages ( 3 per cent and below) go to countries such as Iran, Vietnam, Japan, Singapore, Saudi Arabia, South Korea, and Bangladesh.
[12] Smaller percentages (6 per cent and below) go to countries including South Korea, Singapore, UAE, Turkey, Indonesia, Philippines, Taiwan, Canada, Vietnam, Egypt and Iran among others.
[13] WWF Report (March 2012) Profitability and Sustainability in Palm Oil Production: Analysis of Incremental Financial Costs and Benefits of RSPO Compliance. USA: WWF-USA. https://wwfeu.awsassets.panda.org/downloads/profitability_and_sustainability_in_palm_oil_production__update_.pdf. Retrieved on 25 July 2020, p. 5.
[14] The recent account where major palm oil buyers have issued global ‘no buy orders’ for certain Malaysian oil palm plantations because of their alleged use of forced labour shows how oil palm exports can be derailed by new kinds of threats and how important it is to address environmental and social issues in the first place. See “Buyers shun Major Malaysian Palm Oil Producers after Forced Labour Allegations”, The Straits Times, 8 February 2021, https://www.straitstimes.com/asia/se-asia/buyers-shun-major-malaysian-palm-oil-producers-after-forced-labour-allegations. Accessed 9 February 2021.
[15] K. Sanath Kumaran, Chew Jit Seng, and Balu Nambiappan, “Moving Forward with mandatory MSPO Certitification Standards”, Oil Palm Industry Economic Journal Vol 21(10): March 2021, p. 2. For a list of the representative members on the technical committee (38 in total), please see Table 1, p. 5. The role of the technical committee is to develop, review and monitor the standards used under the MSPO certification scheme. The Board of Trustees have members who come from Peninsular Malaysia, Sabah and Sarawak.
[16] Ibid., p. 2.
[17] Author’s fieldwork interviews in Sabah, 31 July to 3 August 2019.
[18] This includes hand gloves, respirator, face shield and protective suits for personnel administering insecticides.
[19] Kenneth Wilson, et. al., op. cit., p. 66.
[20] Kenneth Wilson, et. al, op. cit, , p. 67, and also author’s fieldwork in Sabah, 31 July to 3 August 2019 and fieldwork in Kuala Lumpur, 23 to 24 September 2019.
[21] SMEs can also claim 50 per cent of preparation costs up to RM 10,000, which are limited to preparing the policy and systems documents.
[22] See K. Sanath Kumaran, et. al, op. cit., p. 11 for a detailed breakdown up to end 2019. 2020 figures were obtained from the newspaper article: “86.4 percent of Malaysia’s total licensed oil palm planted are MSPO-certified, says MPOB”, The Edge, 9 March 2021, https://www.theedgemarkets.com/article/864-malaysias-total-licensed-oil-palm-planted-area-mspocertified-says-mpob. Accessed 25 May 2020.
[23] See https://www.rspo.org/about for information on RSPO.
[24] See D Wignand, RSPO Certification – Implications for Smallholder Farmers. Term Paper Submitted for Environmental Management and Information Systems, Humbolt University Berlin, Winter Semester 2014/15. Biodiversity and nature conservation is one of the RSPO pillars.
[25] One of the primary mantras behind RSPO certification is its emphasis on sustainability and protection of the environment. Principle 2 of RSPO (commitment to applicable laws and regulations), Principle 4 (use of appropriate best practices by growers and millers), and Principle 5 (environmental responsibility and conservation of natural resources and biodiversity) ensure that both community and environmental concerns will be taken into account.
[26] A significant portion of Malaysian palm oil is produced by smallholders; and it is important that this segment participates in the globally certified sustainable palm oil given its size and ownership of oil palm land. Independent smallholders have limited access to agronomic knowledge, and less access to technology and appropriate inputs. Smallholders struggle with handling agricultural chemicals, grading fresh fruit bunching (FFB) or oil palm fruit, long-term financial planning and the availability of finance, and other certification procedures. These procedures to include standardised inventory methods and conservation guidelines are also very complex.
[27] Kenneth Wilson, Nicola Karen Abram, Philip Chin, Cynthia Ong, Elisna Latik, Hilary Herie Jitilon, Maslianah Ramlan, Norsuhazmil Bin Amat Nor, Chris Isham Kinsui, Mohd Dzulfikar Bin Rosli, Joannes Wasai, Megavani Kumar (2018) Smallholder Readiness for Roundtable on Sustainable Palm Oil (RSPO) Jurisdictional Certification of Palm Oil by 2025: Results from Field Studies in Sabah’s Telupid, Tongod, Beluran & Kinabatangan Districts. 2018, Kota Kinabalu, Sabah, Malaysia: Forever Sabah, pp. 14.
[28] Shaufique Fahmi Sidique, Tey Yeong Sheng, Marcel Djama, Che Ku Amir Rizal Che Ku Mohd, Diana Rose Sadili, and Syahaneem Mohamad Zainalabidin, The Impacts of RSPO on the Livelihood of Smallholders: Case Studies in East Malaysia. Kuala Lumpur: RSPO Secretariat Sdn Bhd, 2015, p. 39 and p. 59.
[29] Kenneth Wilson, et. al., op. cit., pp. 13-14.
[30] Organised smallholders have technical and market support from government agencies such as Federal Land Development Authority (FELDA), Federal Land Consolidation and Rehabilitation Authority (FELCRA) or Rubber Industry Smallholders Development Authority (RISDA), while independent smallholders enjoy no such privileges. See Serina Rahman, “Malaysian Independent Oil Palm Smallholders and their Struggle to Survive 2020”, ISEAS Perspective 2020/144, 17 December 2020, p. 1.
[31] Shaufique Fahmi Sidique, et. al., op. cit., pp. 2-3.
[32] Author’s fieldwork interviews in Sabah, 31 July to 3 August 2019.
[33] Author’s fieldwork interviews in Sabah, 31 July to 3 August 2019.
[34] Kenneth Wilson, et. al., op. cit., p. 19 and Author’s fieldwork interviews in Sabah, 31 July to 3 August 2019.
[35] Author’s fieldwork interviews in Sabah, 31 July to 3 August 2019.
[36] Author’s fieldwork interviews in Kuala Lumpur, 23 to 24 September 2019.
[37] Noorhayati Mansor, Wan Amalina Wan Abdullah, Asniati Bahari and Alif Falni Hassan Syukri, “Palm Oil Sustainability Certification and Firm Performance: Is There a Conflict Between RSPO and MSPO?”, Conference Paper presented at “The European Business and Management Conference 2016”, Brighton: United Kingdom, 2016.
[38] RSPO is a member of ISEAL but MSPO does not. For more information on iseal, please see https://www.isealalliance.org.
[39] Under MSPO, only new plantings exceeding 500 ha require an EIA.
[40] Author’s fieldwork interviews in Kuala Lumpur, 23 to 24 September 2019.
[41] A total of 76 and 100 smallholders were interviewed in Keresa and Sapi respectively.
[42] Keresa is located in the Bintulu district of Sarawak. Sapi is located in the Sandakan district. See Shaufique Fahmi Sidique, et; al., op. cit., p. 2.
[43] Ibid., p. 62.
[44] Ibid., p. 16.
[45] Author’s fieldwork interviews in Kuala Lumpur, 23 to 24 September 2019.
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2021/105 “Digital Convergence and Militant Crosspollination in Indonesia” by Quinton Temby
EXECUTIVE SUMMARY
- A social media analysis of salafi-jihadi and opposition Islamist chat groups indicates early but significant signs of crosspollination between both communities.
- This appears to be the result of a government crackdown that has forced Islamists to rely especially on Telegram, a platform that had traditionally been a haven for ISIS sympathisers. Digital convergence among militants on Telegram and similar platforms may emerge as a long-term trend.
- The co-mingling between jihadi and Islamist groups is facilitating the spread of anti-Chinese sentiment in jihadist networks and the normalisation of extremist memes in opposition Islamist networks. This is a significant development given that opposition Islamist groups such as the now-banned Front Pembela Islam (FPI) and Hizbut Tahrir Indonesia (HTI) have traditionally kept their distance from pro-ISIS and other jihadi groups, and exercised strict internal policing of their ideological boundaries.
- An increasingly common narrative in both Islamist and jihadists chats characterises the Jokowi government as a tyrannical un-Islamic regime controlled by Chinese interests.
- As the Indonesian government continues to crack down on both the violent jihadi and Islamist opposition groups and drive them into the virtual underground, there is a risk that the resultant cross-pollination of both groups could push non-violent opposition activists into violent extremism.
* Quinton Temby is Visiting Fellow in the Regional, Social and Cultural Studies Programme, ISEAS – Yusof Ishak Institute. He was formerly Visiting Fellow at the Department of Political and Social Change (PSC) at the Australian National University’s (ANU) Coral Bell School of Asia Pacific Affairs. He completed his PhD thesis on the rise of global jihadism in Southeast Asia at the ANU in 2017.
INTRODUCTION
There are early signs of crosspollination and convergence among Islamist opposition movements in Indonesia, based on an analysis of activity on the encrypted Telegram chat platform. The blurring of lines came in the midst of a government crackdown on Islamists and indicates that some actors may have been radicalised and have crossed into the violent extremism sphere since the banning of the Islamic Defenders Front (FPI) mass organization in December 2020.
At the start of President Jokowi’s second term, opposition Islamists such as the FPI and Hizbut Tahrir Indonesia (HTI) ran Telegram channels with around a hundred subscribers. By contrast, pro-ISIS militants ran channels with many hundreds. Now the ratio has reversed. Opposition Islamists run channels with tens of thousands of subscribers while ISIS militants have been suppressed into small channels of around one hundred members. As soon as pro-ISIS Telegram channels in Indonesia gain any critical mass, they are shut down by Telegram, presumably based on reporting by counter-terrorism authorities.
The effect of Telegram suppressing jihadi channels and the Indonesian government clamping down on opposition Islamist groups and driving them into the virtual sphere has created fertile ground for crosspollination between pro-ISIS and pro-FPI militants. Foreshadows of such crosspollination were seen in the Telegram chats that sprung up around the post-election violence of 2019. For the first time in Indonesia, groups emerged where pro-ISIS militants shared common cause with the conservative Islamist opposition activists. Both sides were galvanised by opposition to the government and the police. Typically, pro-ISIS militants would agitate against participating in street protests, while opposition activists bridled at ISIS sympathisers’ glorification of Syria war propaganda.
ANTI-CHINESE SENTIMENT AND DIGITAL CONVERGENCE
Since 2019, anti-Chinese or anti-China sentiment has emerged as a crossover issue for militants across the spectrum in Indonesia.[1] Such sentiment plays a role in militant circles in Indonesia similar to anti-Shia sentiment in the recent past, and serve as an early indicator of convergence among militants at the ideological level.
The current wave of anti-Chinese sentiment in Indonesia can be traced to the mass mobilisations that began in 2016 to protest against the alleged blasphemy of the then-governor of Jakarta, the Chinese-Christian Basuki Tjahaja Purnama (Ahok). Generally, pro-ISIS militants rejected the protests as unacceptable participation in the democratic process. While the FPI was focused on bringing down Ahok, Jemaah Islamiyah was sending members to train in Syria, and Jamaah Anshorut Daulah (JAD) was seeking to import the war from Syria.
Yet the Ahok case created a small overlap of interest between salafi-jihadist and Islamist militants. The case of the 31 March 2021 police headquarters shooter, Zakiah Aini, is a recent example. Zakiah Aini’s last testament indicated that anti-Ahok sentiment had blended with her pro-ISIS agenda. In her hand-written document, she singled out Ahok for criticism, the only Indonesian politician mentioned. Her testament began by advising her family not to use banks (the charging of interest being against Islam), and to not associate with the government which, per salafi-jihadi ideology, is considered an oppressive un-Islamic (thogut) regime. She then implored her older sister “to not celebrate the kafir Ahok.”
While Zakiah Aini did not elaborate on her mention of Ahok, Ahok-related controversy was one element of the media backdrop prior to the police headquarters attack. ISEAS data shows that in the three months leading up to the attack, Ahok was the subject of considerable social media chatter in relation to multiple controversies (see Figure 1).
In late February, a political survey agency made news with a poll highlighting Ahok’s potential to be a presidential candidate in 2024—an unlikely prospect but a spectre that continues to haunt the imaginations of opposition Islamists.[2] Flooding after heavy rain in Jakarta, also in February, reignited an old debate about how to fix drainage in the capital, a discussion which inevitably dredges up Ahok’s controversial policy as governor of evicting and demolishing “slum” (kawasan kumuh) areas, which are common along waterways. In 2016, Ian Wilson argued the policy was “one of the most aggressive campaigns of evictions and forced displacements in the modern history of the city.” The evictions made perfect recruitment propaganda for FPI at the time, given its base among the urban poor.[3]
The highest profile the Ahok story gained prior to the attack was a controversy in which the former governor was identified as having attended a party held by Raffi Ahmad, an Indonesian celebrity with over 50 million followers on Instagram, despite pandemic restrictions on public gatherings. FPI and its allies led the online criticism of the event, claiming a double standard on the part of the authorities, where FPI leader Muhammad Rizieq Shihab was being prosecuted for holding events in violation of public health regulations while Ahok enjoyed a free pass.[4] The controversy served as fodder for anti-Ahok memes on Islamist Telegram chats featuring photographs of the party Ahok attended (see Figure 2).
Cluster analysis of social media mentions of “Ahok” in the months prior to the attack on the police headquarters shows the relative salience of these three story themes (see Figure 3). Among the largest clusters, the flooding issue is representing by the “banjir” (flood), “Anies Baswedan” (Ahok’s gubernatorial rival) and “Gubernur DKI” clusters. Both “Raffi Ahmad” and “Rizieq Shihab” are represented. Among the smaller clusters that began to grow following the attack are “surat wasiat” (last testament) and “Mabes Polri” (National Police Headquarters).
There is no direct evidence that Zakiah Aini was motivated by conscious anti-Chinese prejudice, but the correlation of her attack, her letter mentioning Ahok, and the social media data suggest that she may have been influenced by Islamist memes not normally associated with ISIS sympathisers.
The mention of Ahok in Zakiah’s letter received little media coverage, but such mentions, especially among violent extremists, should be tracked as they may serve as early albeit weak indicators of the blurring of the traditional boundaries between Islamist groups in Indonesia, hinting at a broader trend. In 2016, pro-ISIS militants were largely dismissive of the anti-Ahok protests. But now in 2021, Ahok has served as a powerful anti-Chinese meme in Indonesia and has been subsumed into a broader anti-Chinese and anti-Jokowi critique led by opposition Islamists, which is also found on pro-ISIS Telegram chat groups.
One factor that contributed to the blurring of boundaries between the opposition Islamists and the militant jihadis occurred in 2019 during the post-election violence when restrictions on social media uploads drove oppositionists to the Telegram platform where they encountered pro-ISIS militants. At that point, conversations on the Telegram platform saw ISIS sympathisers and oppositionists often clashing over ideological issues. For instance, the non-ISIS militants had strong differences with the pro-ISIS militants over the means of resistance and objected to the posting of war propaganda from Syria. The banning of FPI in late 2020 served to further drive militants together on Telegram. Islamist opposition chats proliferated in number and subscribers grew rapidly following the physical crackdown on FPI (see Figure 4). Since then, FPI, ISIS, and other groups appear to be having more online contact with each other than they did in the past. Telegram has seen the emergence of small chat groups that are pro-ISIS but that masquerade as general Islamist opposition groups, attracting a small but blended subscriber base. With the online radicalisation of lone wolves like Zakiah Aini, in a context of Telegram-based convergence, the crosspollination of militant memes is worthy of further research.
MAINSTREAMING OF MILITANT MEMES
There are signs that militant crosspollination is also occurring at the level of memes and concepts, with the mainstreaming of terms and anti-government memes among FPI, PKS, and other Islamist groups that previously were common only among salafi-jihadists. Arabic terms such as “zalim” (“tyrannical,” in reference to the Jokowi government), “thogut” (un-Islamic oppressor), and “firaun” (pharaoh), for example, have become common among opposition Islamists, especially since the crackdown on the FPI and the killing of six members of former FPI leader Muhammad Rizieq Shihab’s security detail in a shootout with police on 7 December 2020. Until very recently, in Indonesia, thogut (also transliterated as thaghut) was deployed primarily by militants of Jemaah Islamiyah and ISIS to refer to the Indonesian government or leadership. According to their salafi-jihadi worldview, ISIS followers conceive of themselves as “helpers of the (Islamic) state” (anshor daulah) and of the police and government officials as “helpers of the thogut” (anshor thogut).
Thogut is rare in vernacular Indonesian, making it a useful index for the spread of a radical meme across social media platforms. Zakiah Aini used the term in her last testament, a fact noted by Indonesian reporting. Given the rarity of its appearance in the media, it is not surprising that Google searches for the two main spellings of thogut spiked in late March/early April, as shown by Google Trends data (see Figure 5).
Cluster analysis of ISEAS data on mentions of “thogut” on Indonesian social media reveals how the term is now associated with both ISIS and FPI militants. “Negara Thogut” (Thogut State) is the largest cluster of social media chatter. Other major clusters associated with the term reflect the police headquarters shooting incident (“Polisi,” “Surat Wasiat”) while others relate to the FPI (“Rizieq Shihab”, “HRS”, “Habib Rizieq”).
The epithet most commonly used by FPI sympathisers for the Indonesian government is zalim (meaning oppressive or unjust). But the growing use of thogut is a signal of the diffusion of delegitimizing and extremist language from salafi-jihadism into more mainstream Islamist contexts. A striking example of the use of the term in a mainstream context could be found following the police headquarters attack on Reddit, a web forum that is often the birthplace of new internet memes. An Indonesian user created a meme depicting Zakiah Aini, the police headquarters shooter, in the style of an album cover, under the title “Diss Track Album for Ahok and the Thogut Government” (see Figure 7).
Another increasingly popular meme reflects the radicalisation of rhetoric in the wake of the crackdown. Opposition activists now commonly characterise President Jokowi as a “pharoah” (fir’aun), a word uncommon in Indonesian parlance but which appears in the Qur’an in reference to the battle between Moses (Musa) and the Pharaoh of Egypt. The term is often used by salafi-jihadists (along with zalim and thogut) but it is also a common trope used by mainstream Islamists against a leader perceived as unjust and illegitimate. The growing popularity of the “fir’aun” imagery reflects the rapid deterioration of relations between the government and the Islamist opposition in Indonesia. Although the term is still too rare to show up in social media analytics, it is another early signal of radicalisation, and is used to great visual effect in pro-FPI memes on Telegram (see Figure 8).
CONCLUSION
Early signals from social media analysis suggest that extremist rhetoric against the Jokowi government is becoming more common in Islamist circles, partly through a process of crosspollination with salafi-jihadist ideas in shared online spaces. Opposition Islamists increasingly describe the Jokowi government as a tyrannical un-Islamic regime controlled by Chinese interests. Crosspollination is occurring among opposition Islamists as previously mainstream actors get pushed off open platforms and into deep web platforms and closed chat groups, such as those found on the Telegram app. This trend can be seen in the spread of anti-Chinese sentiment in salafi-jihadist circles and in the spread of violent extremist terms in opposition Islamist circles. On Telegram, several groups have emerged which blend jihadist (pro-ISIS) and opposition Islamist (pro-FPI) propaganda.
Although the adoption of more radical anti-government memes by Indonesian Islamists may appear to vindicate the banning of FPI, it can also be argued that the government’s suppression policy risks pushing non-violent opposition activists into violent extremism. The risk might be raised especially if government actions are seen as indiscriminate, and mainstream forums for dissent are seen as blocked. With the post-9/11-style violent extremism of groups like ISIS in decline, the increasingly militant views of mainstream opposition Islamists are more significant than ever.
ISEAS Perspective 2021/105, 10 August 2021
ENDNOTES
[1] Quinton Temby, “Disinformation, Violence, and Anti-Chinese Sentiment in Indonesia’s 2019 Elections”, ISEAS Perspective, September 2, 2019, ISEAS – Yusof Ishak Institute.
[2] “Survei LSI, Ahok Masuk Daftar Calon Presiden 2024”, Kompas, February 23, 2021,
[3] Ian Wilson, “Making Enemies Out of Friends”, New Mandala, November 3, 2016, https://www.newmandala.org/making-enemies-friends/
[4] “Kapolda Metro Ditantang Tersangkakan Raffi Ahmad hingga Ahok”, Gelora, January 16, 2021, https://www.gelora.co/2021/01/kapolda-metro-ditantang-tersangkakan.html
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2021/104 “Thaksin to Return to Thailand? An Old Dream or New Hope for National Reconciliation?” by Termsak Chalermpalanupap
EXECUTIVE SUMMARY
- Former Thai Prime Minister Thaksin Shinawatra is once again talking about ending his self-imposed exile overseas and returning to Thailand “soon!”
- He marked his seventy-second birthday at the end of July, and may just be musing over a fading dream after nearly 13 years away from his homeland.
- This is not the first time that he has talked about an imminent triumphant home-coming. Does he really have some secret deal up his sleeve? Or is he putting on a confident face to boost the sagging morale of his followers in Phuea Thai, the main opposition party?
- Some observers speculate that Thaksin might have brokered a deal for Phuea Thai to collaborate with Phalang Pracharat, the lead party in the government coalition, after Thailand’s next general election.
- Should such as thing happen, the Phuea Thai leadership, as part of a new governing coalition, could initiate a public petition for a grand national reconciliation and a pardon for all “victims of politics” – including Thaksin and his youngest sister, former Prime Minister Yingluck.
- Thaksin can request a royal pardon, but may first have to return to the country to begin serving a combined jail term of 10 years resulting from three convictions.
*Termsak Chalermpalanupap is Visiting Fellow in the Thailand Studies Programme, ISEAS –Yusof Ishak Institute.
INTRODUCTION
Former Thai Prime Minister Thaksin Shinawatra has dropped a new bombshell from his exile hideout in Dubai. He is returning home, coming through the “front door, not the back door, soon!”
Calling himself “Tony Woodsome” on social media, Thaksin revealed his intention during his bimonthly CARE Talk on Clubhouse on 13 July. “I definitely am returning. I will say when later. And, for sure, I am going through the front door, not the back door … When it’s time, I will not hide anything”, he said.[1]
Thaksin’s claim that his home-coming is impending adds to the pressure on Prime Minister General Prayut Chan-ocha. On the day that Thaksin made that claim, General Prayut was just ending a 14-day self-quarantine. On 1 July, during the launch of the “Phuket Sandbox” initiative to reopen the tourist island to international visitors, the prime minister came into contact with a business leader who turned out to have been infected with the COVID-19 virus. Fortunately, he subsequently tested negative for coronavirus.
What must particularly upset General Prayut was Thaksin’s criticism of his administration’s alleged failure to cope with the “third wave” of COVID-19 infections striking the country.[2] Thaksin, who contracted COVID-19 earlier this year, even offered in his CARE Talk “to work from Dubai” if General Prayut just called him to ask for help.[3]
During the talk, Thaksin looked well-informed, cheerful and confident. Does he really have some secret deal up his sleeve? Whatever the case, Thaksin’s words triggered much speculation in the Thai media.
YET ANOTHER RERUN OF A FADING DREAM
Sceptics point out that this is not the first time that Thaksin has said that he will “return home”. After he was toppled in the coup of 19 September 2006, Thaksin sought sanctuary in the United Kingdom, where he even bought the Manchester City football club. He travelled the world, reportedly with Montenegrin and Nicaraguan passports, after his Thai passport was cancelled.
On 28 February 2008, Thaksin returned to a media frenzy in Thailand, where a large crowd of cheering supporters welcomed him at Suvarnabhumi International Airport outside of Bangkok. Photos showing him kissing the ground soon after disembarkation were splashed on the front pages of Thai newspapers.
Thaksin was confident that he had the upper hand in his contest with his political enemies. Then-Prime Minister Samak Sundaravej was after all, leader of Phalang Prachachon, a successor party to Thaksin’s dissolved Thai Rak Thai Party. The party had edged out the Democrat Party of incumbent Prime Minister Abhisit Vejjajiva in the general election held on 23 December 2007.[4]
Following his return to Thailand, however, Thaksin and his wife Potjaman were tried on charges relating to the latter’s attempt to bid for a plot of government’s land. While serving as prime minister, Thaksin had signed a letter of consent for his wife to enter the bidding process. The prosecutors argued that that act constituted a conflict of interest, because the bidding was conducted by an ad hoc official body under the supervision of the Bank of Thailand, over which Thaksin had oversight power in his capacity as head of government.[5]
With the verdict initially scheduled to come down on 11 August 2008, Thaksin and his wife received government permission to leave the country to attend the opening ceremony of the Beijing Olympics. Departing in late July, they travelled to Britain instead of China. When the court did finally announce a guilty verdict against Thaksin on 21 October and sentenced him to a two-year jail term, he was in London with his wife, whom the court acquitted. Thaksin has remained in exile overseas, mostly in Dubai, ever since. In November 2008, he suddenly divorced his wife after 32 years of marriage.
During the Red Shirts’ protest rallies against the Abhisit Vejjajiva administration in 2009-2010, Thaksin occasionally appeared live on large screens at protest sites to voice support for his followers. During one such live video call on 30 March 2009, Thaksin made a daring promise. “Should there be gunfire, if soldiers start shooting at people, I will return immediately to personally lead my brothers into Bangkok …”.[6]
Eventually, the Red Shirts’ protests did escalate to culminate in the “Bloody Black May” crackdown of 7-19 May 2010, and at least 87 people were killed — eight of them policemen or soldiers. But Thaksin never returned to lead his followers.
Now, after nearly 13 years in exile, does Thaksin really mean what he says this time? Or is he just toying with his fading dream as he turned 72 years old on 26 July?
TRYING TO BOOST THE MORALE OF PHUEA THAI?
Even though the Phuea Thai (PT) Party won the largest number of House seats, 136 out of 500, in Thailand’s 2019 general election, it was overtaken by the Phalang Pracharat Party (PPP) with its 116 seats in the race to set up a new government coalition.[7] After that setback, PT fell into decline with no prospects of returning to power, as when it led the coalition government of Thaksin’s sister, Prime Minister Yingluck Shinawatra, from August 2011 until the May 2014 coup.
Dissent and breakaways have weakened the party. Former Transport Minister Chadchart Sitthipun, PT’s No. 2 nominee for the premiership in the 2019 general election, left in November 2019 to pursue the Bangkok governorship as an independent candidate.[8]
A more serious setback to PT came when Sudarat Keyuraphan resigned from the party in November 2020 under acrimonious circumstances.[9] She was the party’s No.1 nominee for the premiership, and a potential new leader of the party. She held the public health and agriculture posts in two Thaksin cabinets between February 2001 and September 2006.
Sudarat lost out in a power struggle within PT in early October 2020. The rather uninspiring Sompong Amornvivat was re-elected party leader unopposed, while Prasert Chanruangthong, a veteran MP from Nakhon Ratchasima in Northeast Thailand, replaced Anudith Nakornthap as PT’s secretary-general. Anudith is a Bangkok MP and a close ally of Sudarat, whose political stronghold is in the Thai capital.
Sudarat founded and now leads a new party, called “Thai Sang Thai” or “Thais build Thailand”. She will undoubtedly try to persuade former colleagues in PT to join this party.
The sudden recent defection from PT of one of Thaksin’s lieutenants, Ruerng-grai Leekitwattana, did in fact hit the headlines. But instead of joining Sudarat’s party, he joined the PPP. His immediate reward was an assignment as one of the PPP’s representatives on the ad hoc House committee responsible for the second reading of the draft budget bill for the 2022 fiscal year.
Ruerng-grai also disclosed that “a highly influential elder” had given him a new Mercedes Benz S560 sedan, valued at about 5 million baht, as his birthday gift. He proudly showed off the new car on his Facebook page and bragged in a live TV interview that he had actually mentioned to his benefactor his wish to receive 10 to 30 million baht in cash, but was instead given the sedan.[10]
Undoubtedly, Ruerng-grai was trying to entice former PT colleagues to defect to the PPP. But his seemingly careless ploy might backfire, because PT will now demand that the National Anti-Corruption Commission investigate whether Ruerng-grai had admitted to asking for and accepting a bribe.
“Sucking” MPs from PT is one of the key tactics of the PPP’s new secretary-general, Captain Thammanat Prompao, in his mission to ensure that the PPP is the largest party in parliament after the next general election.
Another of Thammanat’s tactics is to erode PT’s domination in the Northeast. He organised the PPP’s recent party leadership meeting in Khon Kaen, the second largest Northeastern province after Nakhon Ratchasima, in order to highlight the PPP’s plan to make electoral inroads into this populous but poor region. In the last general election, the PPP won only 11 of the 116 House seats in the Northeast’s 20 provinces; PT won 84.
With Thammanat as its campaign manager, the PPP did manage to wrestle a House seat from PT in a December 2019 by-election in Khon Kaen. Thammanat and the PPP have potent means of getting experienced politicians from other parties to join their ranks.[11] Professional politicians in the Northeast can win elections in their strongholds regardless of party affiliation. Hence, they may join the party that offers them the best “deal”, and later defect to another party when the grass there appears greener. This is part of the vicious cycle of Thailand’s money politics.
The growing challenges facing the PPP must be a cause for real concern to Thaksin, who himself followed a similar playbook in building up his Thai Rak Thai Party from scratch in the late 1990s and early 2000s; he wooed into his new party veterans from other parties, including all 36 MPs of the New Aspiration Party of former Prime Minister General Chavalit Yongchaiyudh after the general election in 2001.
During the 2011 general election campaign, Thaksin played a decisive role in helping PT topple the incumbent Democrat Party with the battle cry: “Thaksin thinks, Yingluck delivers!”[12] But now Thaksin’s hands are virtually tied. The current political party law forbids outsiders from influencing or interfering in the internal affairs of political parties. The most that Thaksin can try to do in order to boost the sagging morale of PT members now is to put on a confident face and promise yet again an imminent triumphant return to Thailand.
A SECRET DEAL WITH PHALANG PRACHARAT?
Non-partisan political observers would not immediately dismiss Thaksin’s brave words as empty boasting. Thaksin has money, political clout, connections in high places, charisma and the will to succeed.[13]
It seems probable that he has made a secret deal with General Prawit Wongsuwan, leader of the PPP and a deputy premier, for PT to collaborate with the PPP after the next general election. In October 2004, when Thaksin was premier, he chose to promote General Prawit to head the Royal Thai Army, even though the general was not the most senior candidate.[14] Further, Thaksin has seldom criticised General Prawit or Captain Thammanat, even though the latter was imprisoned in Australia in the mid-1990s on charges related to drug smuggling cases.[15]
PT and the PPP share a common interest in amending the 2017 Constitution to change Thailand’s electoral system by replacing single-ballot voting with two-ballot voting. Voters would again cast one ballot to elect a candidate to represent their constituency and another for a party; votes collected by parties would determine the allocation of party-list House seats. This system tends to advantage large parties, and small parties may not get any share of the party-list seats.[16]
The PPP has been at odds with its three main partners in the current coalition — Bhumjaithai, the Democrats, and the Chat Thai Phattana — over delays in amending the 2017 Constitution. The three parties teamed up to support one another’s proposed constitutional amendments and withheld their support for the PPP’s proposals. In the end, only the Democrat Party’s proposal to change the voting system passed its first reading.
As the pandemic has worsened, working relations among General Prayut, Bhumjaithai Party leader and Health Minister Anutin Charnvirakul, and Democrat Party leader and Commerce Minister Jurin Laksanawisit have become more difficult. On 27 April, Prayut issued an order transferring all administrative powers under 31 laws to himself, in order to make his “single command” more effective in coping with the “third wave” of the COVID-10 crisis. This decision apparently reflected his dissatisfaction with his ministers’ performance.
General Prayut has also threatened to sack ministers who had criticised him behind his back, and to punish their parties by reducing their quotas of ministerial posts. Tensions inside the cabinet flared up on 20 July. During a video-conference meeting, the prime minister abruptly gave his startled ministers a piece of his mind. While going over written questions from the media about calls for his immediate resignation to take responsibility for failing to prevent the “third wave” of COVID-19 infections, he reportedly blurted out, “Look at these questions … What can I say? … I am not working here alone. Every one of us [in the cabinet] has to help. I think this is not the time to politicise the pandemic… I will continue working. I will not desert you. But if you want to desert me, let it be…”[17]
Should General Prayut suddenly call it quits, then General Prawit could be his successor. The 76-year-old PPP leader has never dismissed this possibility completely. General Prawit knows many of the 250 senators and should be able to get their support if and when he wants the premiership.[18] At the same time, Prayut’s stepping down would open up the possibility of a PPP-PT deal to form a new government. This might be what Thaksin has been scheming in recent months.
A NEW GENERAL AMNESTY?
Should PT become part of a new coalition government, it could launch a petition campaign for legislation on a new general amnesty for all “victims of politics” – including not only Thaksin and Yingluck, but also arrested or imprisoned protest leaders from all sides.
Under the 2017 Constitution, Thai voters have the right to take the initiative as part of direct democracy to propose a draft bill for consideration, so long as it does not concern fiscal matters. Section 133 of the charter stipulates that such a proposal needs the support of just 10,000 voters.[19]
During the wee hours of 1 November 2013, Yingluck’s PT-led coalition government, which had firm majority control of the House, rammed through a controversial draft general amnesty bill that would have benefited Thaksin. MP Suthep Thaugsuban, a deputy leader of the Democrat Party, quit the House in disgust and started a protest movement known later as the People’s Democratic Reform Committee (PDRC). The PDRC’s protracted protests, involving massive chaos in Bangkok and sporadic violence, eventually led to the coup of 22 May 2014. The coup leader was General Prayut, who was the Army chief at that time.
Today, public sentiments towards the military are turning negative, partly because of its continuing implicit backing for Prime Minister General Prayut, who is concurrently the defence minister. Public outcry against alleged wasteful military spending recently prompted the Royal Thai Navy to withdraw its requests for new funds to pay for two more Chinese submarines.[20] Not least to counter these sentiments, the military has been providing assistance to victims of COVID-19, including setting up emergency field hospitals. Military leaders would welcome other opportunities to improve the armed forces’ image and reputation. It is highly likely that most of them would support and welcome national reconciliation as fostered by a general amnesty.
A DIRECT PARDON FOR THAKSIN?
Another possibility for Thaksin is to return to Thailand and accept his sentences amounting to ten years of imprisonment.[21] Beyond the charges leading to those sentences, Thaksin has also been implicated in the allegedly massive corruption in the Yingluck administration’s troubled programme to buy paddy at a high guaranteed price. Yingluck’s Minister of Commerce, Boonsong Teriyaphirom, was convicted and sentenced to 48 years of imprisonment for his role in that programme. Yingluck herself was also found guilty of dereliction of duty, and sentenced to five years for failing to stop the massive corruption. One study has estimated that the losses due to corruption in the programme amounted to 540 billion baht.[22]
Yingluck secretly fled Thailand on 23 August 2017, just one day before a ruling on her case was due. On 27 September 2017, a guilty verdict was read and Yingluck, was sentenced in absentia to five years of imprisonment.
Under Section 179 of the 2017 Constitution, the king has the prerogative to grant a pardon, but such a pardon can be requested only after a person has actually been imprisoned and all of his or her appeals have been exhausted. A pardon can either end or shorten a convict’s imprisonment, but it will not bring about the return of confiscated assets.
Thaksin lost about 46 billion baht in confiscated assets after he was found guilty of tax evasion in selling his family’s shares in Shin Corporation to Singapore’s Temasek Holding in early 2006. But, facing possible guilty verdicts, both Thaksin and Yingluck fled. While each was found guilty, neither has gone to prison.
In order to qualify for a royal pardon, Thaksin must first go to jail in Thailand. In fact he has never been officially barred from returning to the country. But a jail term of 10 years awaits him, should he return.
He was convicted for what are considered “serious offences”. On 5 September 2015, his police rank of lieutenant colonel was revoked, under an order of General Prayut in his capacity then as the head of the National Council for Peace and Order junta.[23]
CONCLUSION
Thailand urgently needs a grand national conciliation to end political bickering, or at least to set aside differences and conflicting interests for the time being. Undoubtedly Thaksin can play a significant role in ending this miserable situation, but does he really want to do so, and can he really help bring about genuine national reconciliation?
Some deal may have been arranged for him and Yingluck to return to Thailand. But at what price? Perhaps the government can return the money confiscated from Thaksin, and he can use the money to buy mRNA vaccines as his home-coming present to Thailand—a win-win move for all.
Many questions remain, and there are as yet no clear answers. And so people continue to follow “Uncle Tony Woodsome” on his Clubhouse talks, hoping to hear something interesting before anyone else.
ISEAS Perspective 2021/104, 6 August 2021
ENDNOTES
[1] “ล็อกดาวน์แล้วยังไงต่อ?” [Lockdown and what’s next?], Voice TV, 13 July 2021 (https://www.youtube.com/watch?v=edWtwARwBQs&t=2308s, accessed 18 July 2021). CARE is a social movement organised by a group of senior Phuea Thai Party veterans led by Phumtham Wechayachai, a former acting party leader who is now an adviser to the leader of the parliamentary opposition, Sompong Amornwiwat. Thaksin’s family owns the Voice TV, whose webcasting of Thaksin’s talk on 13 July registered more than 725,000 views.
[2] Based on the daily update of 22 July 2021, Thailand’s Centre for Administration of the COVID-19 Situation reported a new record high of 13,655 new cases of infection and 87 deaths. This brought the toll in the “third wave” since 1 April 2021 to 424,269 cases and 3,603 deaths. Thailand ranked fifty-fifth among the countries worst affected by the pandemic. From early 2020 until the end of March 2021, before the onset of the “third wave”, Thailand saw only 28,863 infection cases and 94 deaths. Details are available at the Centre’s Facebook page (www.Facebook.com/informationcovid19, accessed 22 July 2021).
[3] “ล็อกดาวน์ แล้วยังไงต่อ?” [Lockdown and what’s next?], op cit.
[4] In the general election held on 23 December 2007, the Phalang Prachachon Party polled 12.338 million votes, or about 41.08 per cent of the total, and won altogether 233 seats (199 constituency seats plus 34 party-list seats) in the 480-member House of Representatives. It teamed up with Chat Thai, Phuea Phaendin and three small parties to form a coalition government. The Democrat Party polled 12.148 million votes, or about 40.45 per cent, but won only 164 House seats (33 of them party-list seats). Samak Sundaravej assumed the premiership with the votes of 310 MPs, beating Abhisit leader of the Democrat Party who received only 163 votes. The full report on the official outcome of the 2007 general election is available at the website of the Office of the Election Commission (https://www.ect.go.th/ect_th/download/article/article_20170509150020.pdf, accessed 19 July 2021).
[5] One day during the months-long trial, Thaksin’s lawyer Pichit Chuern-barn and his two assistants left a sealed paper bag containing 2 million baht in cash inside one office inside the Criminal Court. Pichit and his assistants were subsequently found guilty of contempt of court in what the judges considered as attempted bribery. They were each jailed for six months; “คุก 6 เดือน ทนาย แม้ว ไม่รอลงอาญา คดีถุงขนม 2 ล้าน ละเมิดอำนาจศาล” [Six months of immediate imprisonment on contempt of court for Thaksin’s lawyer in the case involving a bag containing 2 million baht cash], Prachathai, 26 June 2008 (www.prachathai.com/journal/2008/06/17184, accessed 19 July 2021”.
[6] “‘ทักษิณ’ จะกลับบ้าน!?” [Thaksin to return home!?], Manager Online, 2 July 2021 (www.mgronline.com/politics/detail/9640000063993, accessed 19 July 2021).
[7] The PPP-led coalition of 19 parties, with a slim majority of only 254 MPs in the 500-member House, won the premiership for General Prayut Chan-ocha with 500 votes, 249 of them from senators. Only one senator, Senate President Dr Pornpetch Wichitcholchai abstained. The PT-led opposition’s nominee for the premiership, Thanathorn Juangroongruerngkit, leader of the Future Forward Party, received only 244 votes, all from members of seven opposition parties and none from senators. Under the current constitution’s transitory provisions, the 250 senators chosen during General Prayut’s previous military regime shall take part in the selection of the prime minister during their five-year non-renewable term ending in May 2024.
[8] See the author’s “Major Parties Lacking Candidates with a Winning Chance in Bangkok’s Gubernatorial Election,” ISEAS Perspective, 22 June 2021 (/articles-commentaries/iseas-perspective/2021-84-major-parties-lacking-candidates-with-a-winning-chance-in-bangkoks-gubernatorial-election-by-termsak-chalermpalanupap, accessed 20 July 2021).
[9] “คุณหญิงสุดารัตน์ เปิด 3 เหตุผล ลาออกจากพรรคเพื่อไทย ทุกตำแหน่ง” [Khunying Sudarat discloses three reasons for her resignation from all positions in the Phuea Thai Party], Prachachat, 30 November 2020 (www.prachachat.net/politics/news-565204, accessed 20 July 2021). “Khunying” is an honorific title conferred by the king in recognition of outstanding social contributions on the part of Thai women Thaksin’s wife, Khunying Potjaman, has a similar title.
[10] Inside Thailand, 19 July 2021 (www.youtube.com/watch?V=v_lzXIGBIEY, accessed 19 July 2021).
[11] In the Khon Kaen by-election, the PPP’s candidate was Dr Somsak Khun-ngern, a former member of the executive committee of Thaksin’s dissolved Thai Rak Thai Party. Somsak was at first going to be the Phuea Thai Party’s candidate, but he changed his mind and joined the PPP and won a coveted House seat from a Northeastern province for the PPP.
[12] That was “ทักษิณคิด ยิ่งลักษณ์ทำ!” PT won 265 House seats, 61 of them party-list seats, in the 2011 general election, beating the incumbent government party the Democrats, who won only 159 seats including 44 party-list seats. PT led in the formation of a coalition of six parties, with a combined strength of 300 MPs in the 500-member House, and made Thaksin’s 44-year-old sister and political newcomer Yingluck Shinawatra the first female prime minister of Thailand. She concurrently held the portfolio of defence minister, a first in Thailand too.
[13] Thaksin was the first elected civilian Thai premier who served a full four-year term (February 2001 – March 2005). His Thai Rak Thai Party won a landslide victory over the Democrat Party in the general election of 6 February 2005, sweeping 377 seats in the 500-member House, leaving the Democrat Party in the dust with just 96 seats. Not long after having been toppled in a coup on 19 September 2006, Thaksin rebuilt his political fortunes through the Phalang Prachachon and PT, putting in power three prime ministers — Samak Sundaravej, Somchai Wongsawat and Yingluck — through his “remote control” manoeuvring from his base in Dubai. Thaksin might also have played a part in persuading the king’s elder sister former Princess Ubolratana to accept the nomination of the Thai Raksa Chat Party to be its candidate for the premiership in the 2019 general election. The new party was an offshoot of the Phuea Thai Party, setup to attract younger voters. But the controversial “princess gambit” failed because King Vajiralongkorn quickly and officially rebuked his elder sister for inappropriately attempting to enter national politics and exposing the royal family to the risk of public criticism. See the author’s article on “The Princess Gambit Debacle in Thailand” in the ISEAS Commentary, 13 February 2019 (/media/commentaries/the-princess-gambit-debacle-in-thailand-by-termsak-chalermpalanupap, accessed 21 July 2021).
[14] To clear the way for General Prawit’s promotion to head the Army in October 2004, Thaksin had to move his cousin, incumbent Army chief General Chaisith Shinawatra, out of the way by sending him to head the powerless post of Supreme Commander of the Armed Forces. Thaksin wanted to win support of General Prawit’s “Eastern Tigers” faction of the Army, which was reputed to be under Queen Sirikit’s patronage. Thaksin later chose to promote General Sonthi Boonyaratglin, a Muslim, to the post of Army chief on 1 October 2005. Succeeding General Prawit, who had retired, General Sonthi eventually led the coup on 19 September 2006 to oust Thaksin.
[15] The Constitutional Court on 5 May 2021 ruled that the conviction of Captain Thammanat by a New South Wales court in 1994 did not disqualify him from holding public office in Thailand. Apart from Thammanat, at least two other PPP senior party executives, Energy Minister Suriya Juangroongruangkit and Justice Minister Somsak Thepsutin, also formerly served Thaksin in Thai Rak Thai Party-led governments.
[16] In the existing one-ballot voting system, 12 micro-parties each won one party-list House seat. Eleven of them joined the ruling coalition and helped it edge out the PT-led opposition with 254 votes against 246 in the 500-member House. These micro-parties face imminent extinction because the number of party-list House seats will be reduced from 150 to 100 as part of the proposed return to the two-ballot voting system in which the number of election constituencies will be increased from 350 to 400.
[17] “จะทิ้งผมก็ตามใจ! ‘บิ๊กตู่’ โพล่งกลาง ครม. เอือมพรรคร่วมเล่นโควิดการเมือง” [Let it be if you want to desert me! “Big Tu” bursts out in a cabinet meeting, fed up with ruling coalition partners’ politicising the COVID-19 pandemic], Thai Post Online, 20 July 2021 (www.thaipost.net/main/detail/110488, accessed 21 July 2021). “Big Tu” is the nickname of General Prayut.
[18] All 250 senators can join their counterparts in the House of Representatives in voting to select a prime minister. In the selection of a new prime minister on 6 June 2019, 249 senators voted for General Prayut and helped him win the premiership with a total of 500 votes, 251 of them from MPs of the 19 parties in the PPP-led coalition. Of the 250 senators, 194 were hand-picked in 2018 by a secretive search committee headed by General Prawit Wongsuwan in his capacity as the deputy head of the National Council for Peace and Order junta; 50 came from 10 major professions and were chosen by their peers; and six are holders of the following posts who are members of the Senate on an ex officio basis: the Defence Permanent Secretary, the Supreme Commander of the Armed Forces, the Army Commander, the Air Force Commander, the Navy Commander, and the National Police Chief.
[19] Ordinarily, a draft bill has to pass both the House and the Senate before it is submitted to the king for his approval and signature. However, if such a general amnesty bill is also going to include absolving those arrested or imprisoned for lèse majesté, it may run into strong objection in the Senate, which is known as a formidable stronghold of conservatives and royalists. But without letting off the hook those who have violated the lèse majesté law (Criminal Code Section 112, which specifies jail terms ranging from 3 to 15 years), there can be no social harmony and healing in the Thai nation.
[20] See the author’s “To Deter Malaysia: Thai Navy’s Submarine Acquisition Faces New Opposition,” ISEAS Perspective, 9 September 2020 (/wp-content/uploads/2020/09/ISEAS_Perspective_2020_101.pdf, accessed 20 July 2021).
[21] “บทสรุปรื้อ 5 คดี ‘ทักษิณ’ – ศาลฎีกาสั่งคุกรวม 10 ปี – เหลือคดีข้าวจีทูจีใน ป.ป.ช.?” [Summary of five cases against ‘Thaksin’ – Supreme Court has handed down altogether 10 years of jail – still one more case concerning a G-to-G rice deal in the National Anti-Corruption Commission?], Isra News, 31 July 2020 (www.isranews.org/article/isranews-scoop/90809-israwwnews-56.html, accessed 22 July 2021).The combined sentence of 10 years from three convictions included two years from a case of attempting to introduce online two-digit and three-digit numbers betting to compete with the existing highly lucrative government-owned lottery; three years for unlawfully arranging a loan of four billion baht from the government’s Export-Import Bank for the Government of Myanmar to buy satellite equipment from Shin Satellite Corps, which was setup by Thaksin’s family; and 5 years for conflict of interest in changing telecommunication policy to benefit Shin Corporation, which was also a business firm setup by Thaksin’s family.
[22] Thailand Development Research Institute, “การทุจริตกรณีการศึกษา โครงการรับจำนำข้าวทุกเม็ด”[Case study: Programme to accept every grain of rice for pawning], February 2016 (www.tdri.or.th/wp-content/uploads/2015/08 โครงการรับจำนำข้าวทุกเม็ด _ Finalpaper, accessed 22 July 2021). Technically, farmers pawned their paddy with the government at a guaranteed price higher than the prevailing market price, but no farmers actually repaid the money they received to retrieve their paddy.
[23] “คำสั่งหัวหน้าคณะรักษาความสงบแห่งชาติ ที่ ๒๖/๒๕๕๘” [Order of the Head of the National Council for Peace and Order, 26/2015], Royal Gazette, 5 September 2015 (www.ratchakitcha.soc.go.th/DATA/PDF/2558/E/207/1.PDF, accessed 22 July 2021).
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