Asian Insider July 17: Sinking feeling on trade

Asian Insider brings you insights into a fast-changing region from our network of correspondents.

In today’s Insider: Royal divorce in Malaysia, China to renew Taiwan overtures, and a looming currency war.

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SINGAPORE TRADE COLLAPSE

Geopolitical tensions and a slowing China are taking their toll on Asia. Trade-driven Singapore's exports fell by double digits for the fourth straight month, with shipments in the key electronics sector sinking by nearly a third. Business Correspondent Seow Bei Yi says non-oil domestic exports performed worse than expected, slumping 17.3 per cent in June compared to a year ago, following a downwardly revised 16.3 per cent fall in May.

This is the biggest year-on-year drop since shipments sank 33.2 per cent in February 2013.

It is also sharply below analysts' expectations of a 9.6 per cent drop, according to a consensus of forecasts in a Bloomberg poll. CIMB Private Banking economist Song Seng Wun noted it was last week’s flash figures for Singapore’s second quarter growth – which came in almost flat at 0.1 per cent –that signaled both trade and manufacturing numbers were going to be markedly worse than expected in June. DBS senior economist Irvin Seah said: “It’s that familiar sinking feeling again.”

The dismal trade numbers come in the wake of news that Singapore's economic growth in the second quarter slumped to its worst showing in a decade. Growth slowed to 0.1 per cent in the second quarter. Still, says Bei Yi, Deputy Prime Minister Heng Swee Keat has put out word that a full-year recession is not on the cards at this point.

TRIPLE ‘TALAK’ FOR RUSSIAN BEAUTY

The former Malaysian King, Sultan Muhammad V of Kelantan has divorced Russian ex-beauty queen Oksana Voevodina, according to Malaysian media reports - an apparent abrupt end to the whirlwind romance that has enraptured and befuddled Malaysia in equal parts. The divorce was registered on July 1, the New Straits Times reported on Wednesday, adding that its sources said a copy of the couple's divorce certificate making its rounds on social media was genuine.

The certificate, which bears the Kelantan state crest and is marked as the copy of the wife, indicates that the divorce was done through the utterance of the word "talak" three times - the most severe and irreversible form of divorce in Islam. The date of the divorce was listed as June 22 and it was marked as taking place in Singapore.

This comes barely two months after the couple's son was born. Russian-born Ms Voevodina started an Instagram account last month. The verified account has some 360,000 followers and several posts include pictures of her with Sultan Muhammad V, along with long captions about her life and how the couple met.

CHINA-TAIWAN: EXPECT RENEWED ARDOUR

Taiwan's 2020 presidential election will be hotly contested and difficult to predict. But one thing is almost certain: Whoever wins will have to deal with the island's giant neighbour China and try to fend off intensified reunification overtures, says Benjamin Kang Lim, veteran China watcher.

Chinese President Xi Jinping is determined to kick off "political talks" with Taiwan and push for reunification during his watch, two sources familiar with the Chinese leadership's thinking told Ben. And with China having scrapped the two-term limit on the presidency, Xi could rule indefinitely, if he so chose.

Beijing has claimed sovereignty over Taiwan since 1949, when Chiang Kai-shek's KMT, or Nationalist, troops fled to the island after losing the civil war on the mainland to Mao Zedong's communist forces. The self-ruled island is scheduled to hold its presidential election on Jan 11 next year, with incumbent Tsai Ing-wen of the ruling Democratic Progressive Party (DPP) running for re-election against Mr Han Kuo-yu of the island's main opposition Kuomintang (KMT) and possibly Taipei Mayor Ko Wen-je, who may run as an independent.

PRUDENTIAL SUES FORMER STAR AGENT

Life insurer Prudential Assurance Company Singapore is suing former agency leader Peter Tan Shou Yi for up to S$2.5 billion after 244 of its agents jumped ship to join him at rival firm Aviva, leaving 70,000 policies without agents as a result. The time frames were taken in view of a Pegasus Agreement that Tan signed with Prudential just a year before the mass defection. It contained projections of his and his agents' performance for at least 10 years, suggesting Prudential's losses were unlikely to be limited to a short period of time, the High Court heard. Tan joined Prudential as an agent in 1997, rising through the ranks to become a group agency manager in 2006.

Prudential's lawyers also said in their submissions to the court that Mr Tan compelled agents to sign non-disclosure agreements, travel to Guangzhou from May 26 to 29, 2016, to discuss the defection, and warned them not to inform Prudential of the move. They said he held at least 12 meetings with agents.

Tan contends that the regulatory and commercial landscape made Aviva's model more attractive and that was decisive in causing the defection. He also is counter-claiming that Prudential terminated his service in an invalid manner, causing him loss and damage.

MALAYSIA’S YOUTH VOTE

Malaysia’s ruling coalition fulfilled one of its key election pledges and proved its reformist credentials on Tuesday when Malaysia's lawmakers agreed to lower the voting age from 21 to 18. Prime Minister Mahathir Mohamad says the total number of voters will swell by 50 per cent from the 2018 polls, to nearly 22.7 million in 2023. 

This historic move, however, was supported en masse in Parliament by the opposition, including former ruling party Umno, which had ignored calls to do the same before it ceded its six-decade grip on power to the Pakatan Harapan coalition in May 2018.

The opposition's rationale could be as simple as not wanting to alienate young and first-time voters by choosing to deny them the ballot, as they are set to make up more than half the electorate when the nation next goes to the polls. But, says our Malaysia bureau chief Shannon Teoh, these millions of new voters could also create more uncertainty for the ruling coalition.

CURRENCY WAR

Could the trade war morph into a currency war? Very possible, says Associate Editor Vikram Khanna in his Economic Affairs column. Already on the Trump administration's radar, the issue of currency manipulation could soon start to loom even larger, he believes, now that the world's biggest central banks are adopting looser monetary policies.

To preserve their competitiveness, counter the impact of the US-China trade war and prevent inflows of hot money, the central banks of emerging economies, including in Asia, have also started cutting their interest rates. Since May, India, Malaysia and the Philippines have already done so, as has Australia. Indonesia, Thailand and South Korea may follow suit. 

As a result, says Vikram, the worry is that more nations could come under the spotlight that the US shines on countries' currency policies.

OTHER DEVELOPMENTS:

Malaysia’s sex scandal steams on. An aide to Parti Keadilan Rakyat (PKR) president Anwar Ibrahim was one of the three men arrested on Tuesday night in relation to the circulation of the gay sex video implicating Economic Affairs Minister Azmin Ali last month.

Official and legal sources told The Straits Times that the party's Perak state chief Farhash Wafa Salvador Rizal Mubarak was picked up along with two others near Johor Baru, adjoining Singapore.

Rius Vernandes, an Indonesian YouTube personality, says he had been sued by national airline Garuda over a social media posting about a hand-written business-class menu. The popular vlogger posted an Instagram video showing the menu written on a piece of notebook paper on Saturday with the caption: “The menu is still being printed, sir.”  DPA reports that the post went viral and prompted Indonesian social media users to mock the airline. Garuda said the handwritten menu was made by a cabin crew member for personal use and not intended to be handed out to passengers. 

Visa Inc said on Wednesday that it has invested an unspecified sum in Indonesia's Gojek as part of the ride-hailing company's ongoing Series F fund-raising round. The two companies will work together to provide more options for cashless payments for consumers across Indonesia and South-east Asia, the US payment processor said. Last week, it was reported that Siam Commercial Bank (SCB), the Thai lender that counts King Maha Vajiralongkorn as its biggest shareholder, had invested an undisclosed amount in Gojek, the country’s first unicorn.

The Philippines and the United States have agreed to step up efforts to fight violent extremism in the South-east Asian nation following the first suicide attack carried out by a Filipino militant last month, says Raul Dancel. On June 28, Norman Lasuca, 23, who ran away from home four years ago because of the beatings he received from his father and later joined the Abu Sayyaf extremist group, set off one of two bombs that exploded inside a temporary camp of a special army counter-terrorism unit on Jolo island. Three soldiers who were manning the camp's gate were killed, along with three civilians standing nearby.

Stay with us on www.straitstimes.com for the latest on Asia, and the world. 

Meanwhile, seize the day!

Ravi