The word of the year for 2020, according to Collin's Dictionary, was “lockdown”. Cambridge Dictionary opted for “quarantine”. Oxford decided there were too many choices to even pick one at all. In the trade world, the best choice for 2020 may have been “disruption”. This paper considers three different sources of tension in trade that created significant disruption: a continuing collapse of the global trading system, the stressors caused by the unfolding US-China trade war, and the impact of the COVID-19 pandemic with its associated lockdowns and quarantines.

A Creaking Trading System

Heading into 2020, there were already significant signs of trade and economic distress building up in the system. The primary institution for managing global trade issues has been the World Trade Organization (WTO). Created in 1995 out of the post–World War II institution, the General Agreement on Tariffs and Trade (GATT), the WTO had been struggling to make progress on a variety of fronts.

The GATT/WTO system was built on creating a more liberal and open trading regime based on sets of negotiations among members. Each of these exercises, called a “round”, broadened and deepened the levels of commitment among members. This included creating sets of trade rules that included goods, services and intellectual property rights along with country-specific commitments.

The rulebook at the WTO is legally binding with an institutional structure called the dispute settlement system to manage conflict between member governments. Heading into 2020, however, at least two important stressors had appeared in the WTO regime.

First, the rulebook itself had not been fully updated since 1995. Other than a relatively modest addition to handle customs or border procedures more consistently, the 164 members in the WTO have been unable to agree on a comprehensive set of new rules. The Doha Development Round was launched in 2001 and never reached fruition. It has now been a quarter of a century since the last round was completed. Not every trade rule requires updating or adjustment, but the world has seen some significant unanticipated changes in all this time. An inability to manage updated rules has left governments trying to interpret existing rules for new situations, which is not ideal.

After his inauguration to a second term in October 2019, Indonesian president Joko Widodo (or “Jokowi”) had looked forward to consolidating his political and economic legacy. Politically, his rule was stable. Jokowi commanded high approval ratings in the electorate and a large majority in the Indonesian legislature, and the turmoil associated with the large-scale Islamist mass protests in 2016 and 2017 had died down. Some of the president's former opponents had joined his government (his rival in the 2019 elections, Prabowo Subianto, became Jokowi's defence minister), while others kept a low profile or were even in long-term foreign exile (the leader of the 2016–17 demonstrations, Rizieq Shihab, resided in Saudi Arabia to escape legal investigations at home). Economically, Jokowi wanted to continue his vast infrastructure projects, make Indonesian businesses more competitive, and move the nation's capital from the overcrowded Jakarta to a remote location in East Kalimantan. His second term, the president hoped, would stand in clear contrast to that of his predecessor Susilo Bambang Yudhoyono, which had been widely criticized as a missed opportunity.

Of course, 2020 did not turn out the way Jokowi, or anyone else for that matter, had expected. From January, the world's news cycle was dominated by COVID-19, fundamentally changing political and economic trajectories. Jokowi's annoyance with this massive interruption of his second-term plans was palpable. At the start, he tried to ignore the issue and project a business-as-usual attitude, hoping that the virus would spare Indonesia. Indeed, he initially viewed the outbreak as an economic opportunity for Indonesia as it could—or so he claimed—absorb tourism flows from countries badly affected by the pandemic. Once Indonesia reported its first cases in early March, Jokowi realized that action was needed, but he was adamant to limit such action so as not to damage the economy. As a result, many epidemiologists criticized Jokowi for his soft approach, which led Indonesia to record the highest death and infection numbers in Southeast Asia. However, despite the fact that most of Indonesia's Southeast Asian neighbours did significantly better in containing the virus, Jokowi largely succeeded in keeping Indonesia out of the international COVID-19 headlines. To no small extent this was because of the massive outbreaks in the United States, Europe and parts of Latin America, which overshadowed Indonesia's own poor record.

On 30 December 2019, speaking at the virtual year-end national conference between the central and local governments, the secretary-general of the Communist Party of Vietnam (CPV) and president of Vietnam, Nguyen Phu Trong, set the scene for the country in 2020:

Unforeseen in Trong's vision were the ramifications of the coronavirus pandemic, known as COVID-19. Though COVID-19 had significant adverse impacts on both domestic politics and foreign relations during the year, Vietnam's effective response to the pandemic not only earned credit for the Vietnamese government overseas but also intensified the CPV's legitimacy at home. At the same government function on 28 December 2020, almost one year later, Trong was able to define 2020 as “more successful than 2019 and the most successful year in the past five years”. Trong singled out achievements on the following five fronts:

Cambodia currently finds itself caught between Beijing and Washington in a geopolitical tug of war. Strategic competition in the Indo-Pacific has intensified since the election of Donald Trump in 2016. The United States has confronted China over perceived unfair trading practices and intellectual property theft, human rights abuses in Xinjiang and Hong Kong, and aggressive behaviour in the South China Sea and Mekong region, and in October 2020 it ordered the Chinese consulate in Houston to close over concerns about economic espionage. China has responded in kind, through increasing tariffs on American products, expelling American journalists and revoking visa exemptions for US diplomatic passport holders in Hong Kong and Macau.

Central to the Indo-Pacific, Southeast Asia finds itself as the primary theatre of US-China strategic rivalry. Positioned within this context, Cambodia appears to be caught in the middle of tensions between Washington and Beijing as it seeks to balance relations without compromising its interests. Both the United States and China are crucial to Cambodia's development and, of course, the Cambodian ruling elite's maintenance of power. Chinese investment and development assistance have contributed significantly to Cambodia's national development, albeit with some reputational risks associated with Beijing's generosity. Meanwhile, Washington has tended to prioritize investment in Cambodia's civil society organizations, with an emphasis on addressing governance, corruption and human rights issues—much to the annoyance of the Cambodian government.

For small authoritarian states like Cambodia, regime survival is a key driver of foreign policy towards great and regional powers. In the wake of increasing geopolitical rivalry between the United States and China, Cambodia increasingly finds its foreign policy shaped by the power play between these two superpowers. This chapter explores Cambodia's contemporary foreign policy in the context of US-China great power rivalry. First, it proceeds by providing a brief overview of how Sino-Cambodia and US-Cambodia relations have developed over recent decades and key events leading to 2020. A review of Phnom Penh's foreign policy to date shows that Cambodia has steadily disengaged from Washington and moved closer to Beijing on a number of key issues; nowhere more so than in the realms of economics and defence.

As with the rest of Southeast Asia and the world, the coronavirus outbreak took the entire Philippines by surprise in early 2020. But the response by the Philippine government was quite distinct compared to those of its neighbours. It placed the entire country in a highly-securitized lockdown—one of the longest and strictest in the world. The series of harsh lockdowns has also been coupled with an order from the president for security officers to use lethal force against violators—“shoot them dead!”, as Philippine president Rodrigo Duterte commanded in April 2020. Yet, close to the end of the year it had become clear that the harsh measures taken by the government had failed to keep the outbreak from turning into a full-blown economic, health, political and social crisis. Along with close to 475,000 confirmed cases and more than 9,200 casualties of the coronavirus recorded by year's end, hunger and poverty among Filipino families and the loss of jobs and economic opportunities reached historical highs. A record 7.6 million Filipino households experienced involuntary hunger, a strikingly high 7.2 million Filipinos were jobless and the economy contracted at an unprecedented rate of 9.5 per cent, making it the worst in Southeast Asia. The COVID-19 pandemic has become a most complex and challenging crisis all over the world, but even more so for the national administration in the Philippines.

But rather than being a curse for the populist Duterte, the pandemic turned out to be a gift. Despite leading one of the worst-managed responses in the region to the outbreak, the crisis gave Duterte an opportunity to renew the public mandate for his illiberal agenda. The series of spectacular failures by his administration in curbing the spread of the virus did not dent his popularity. At the height of the pandemic, a 50 per cent spike in the number of casualties from the administration's brutal war on drugs was recorded, and Duterte's assaults on democracy and human rights worsened. By September 2020, public trust and support for Duterte's performance was at a record-high 91 per cent. This is his highest rating so far, and this remarkably high score sets him apart from all the past presidents in the post-authoritarian years. Duterte is now the most powerful and popular Philippine president since the country's return to democracy in 1986.

EXECUTIVE SUMMARY

• • The rise of religious extremism in public discourses is a cause for concern for government officials and moderate Muslims.

• • While a substantial body of research on violent extremism is available, the issue of non-violent extremism remains neglected by scholars.

• • Although exposure and subscription to non-violent extremism do not automatically lead to violence, it still needs to be curbed because it can fan hatred that in turn can lead to physical violence and repression of human rights. Non-violent extremism also boosts polarization in the community.

• • Given this potential impact, the government needs to pay more attention to the dissemination of non-violent extremist public discourses, especially on social media. It could work together with influential religious organizations which possess immense religious authority and legitimacy.

What a difference a week makes in politics! The year 2020 saw the collapse of the Pakatan Harapan (PH) government in less than a week—from 23 to 28 February—in what has been dubbed the Sheraton Move. The PH government began the year with persistent political splits caused by the unfulfilled transition of the premiership from Mahathir Mohamad to Anwar Ibrahim before it was deposed in the Sheraton Move. The new coalition of Perikatan Nasional (PN), led by Muhyiddin Yassin, has held on to power despite many forecasts of its impending collapse and multiple political manoeuvrings to bring this about on the assumption its precarious grip on the federal government is thought to be a majority of two parliamentarians in the House of Representatives (Dewan Rakyat). The Muafakat Nasional (MN), an alliance between the United Malays National Organisation (UMNO) and Parti Islam Se-Malaysia (PAS), that backs the PN had proven its mettle in by-elections in 2019 and continued to stabilize in 2020, winning yet another by-election in Sabah and, most crucially, helping the ruling coalition win the Sabah state election in September.

The peculiar, unprecedented, political development in Malaysia in 2020 was the establishment of a ruling coalition that has within it three other coalitions; namely, the MN, Gabungan Parti Sarawak (GPS) and Gabungan Rakyat Sabah (GRS). (The latter two are groupings of state-based parties in Sarawak and Sabah, respectively.) In terms of developments for the Opposition, the PH Plus parties have continued to unravel after Mahathir's reluctance to concede a leadership change to Anwar broke up the original coalition. Elite feuding and factionalism within Parti Keadilan Rakyat (PKR) was sparked by the Azmin Ali camp versus the Anwaristas. The PKR was previously led by Rafizi Ramli, who took leave of politics after being defeated for the post of deputy leader by Azmin Ali. Simmering differences between the Anwaristas and the Azmin camp had vitiated PKR solidarity for most of its tenure in the PH ruling coalition. The factional in-fighting peaked in July 2019 when a series of sex tapes surfaced that alleged Azmin Ali's involvement in a gay relationship. Anwar's calls for Azmin to resign if the allegations were true was met with Azmin's retort that Anwar should “look at the man in the mirror.”

In January 2020, when Thailand reported the first COVID-19 case outside China, the country was predicted to be among the worst hit by the pandemic. In November, the head of the WHO praised Thailand as an “excellent example” of containing the virus. The death toll was sixty. Almost no deaths or domestic transmissions had occurred since June. The economic and social impact, however, was brutal, and the future prospects are uncertain. This article has four parts. The first summarizes the course of the pandemic. A lockdown over March to June choked off domestic transmissions, and a fortress strategy of closed borders prevented a subsequent wave. In the second part, we attribute this relative success in controlling the virus to the public health system developed over four decades by activism within the medical community. In the third part, we describe the economic impact. The lockdown was severe because around half of the workforce remains in the informal sector with little social protection, and because the fortress strategy inflicted severe pain on an economy highly dependent on exports, foreign investment and tourism. Recovery over the second half of the year was partial and patchy. The final section looks at prospects for the future. As the global recovery will be slow, the tourist industry and parts of manufacturing will suffer permanent damage. Thailand's outward-dependent economic model, which has been faltering for several years, is due for a makeover.

The Course of the Pandemic in 2020

The first case of COVID-19 outside China, a woman from Wuhan, was identified in Thailand on 12 January 2020; the first Thai case, a woman returning from Wuhan, was found ten days later; the first local transmission, a Bangkok taxi-driver, on 30 January; and the first death involved a retail worker exposed to Chinese tourists who was hospitalized on 16 February and died two weeks later. At this early stage, Thailand was predicted to be among the countries worst hit by the virus because of the large number of Chinese tourists—eleven million in 2019. Yet, as cases accumulated slowly, reaching forty-two at the end of February, economic analysts predicted only a short-term hit on the tourism industry, shaving less than 1 per cent of annual GDP growth, and a recovery by the end of the year. Both predictions proved to be spectacularly wrong.

INTRODUCTION

The dissemination of extreme religious discourse remains a cause for concern among government officials and moderate Muslims in Indonesia. On 3 December 2020, Minister of Religious Affairs Fachrul Razi warned religious teachers across Indonesia that extreme religious ideas could reach students via three “doors”: teachers, the school curriculum, and extracurricular religious activities. He called for teachers to exercise extra vigilance and be more active in guiding students so that they do not fall victim to religious extremists’ agendas via those “doors”. Two weeks later, Central Java Governor Ganjar Pranowo sat with academics and ulama (Islamic religious scholars) to discuss pressing issues facing the nation. Following the meeting, they issued a statement saying that they would jointly fight against “radical contents in social media”.

Muhammad Bukhari Muslim of Syarif Hidayatullah State Islamic University (UIN Jakarta) argues that in comparison to the moderate ulama, Indonesia's conservative figures and groups have the upper hand in promoting their extreme religious views. They appear more convincing and possess better social media skills as compared to the moderate ulama, and therefore, have better access to Muslims who are increasingly turning to social media to study Islam. Alexander Arifianto (2020, p. 11) explains that new information and technologies (such as social media)—which are spurred by various government regimes that had been promoting freedom of expression since 1998—have opened up access for conservative ulama to disseminate their views. These conservative views have challenged and eroded the religious authority of moderate ulama from mainstream Muslim organizations.

The first part of this article looks at non-violent extremism discourses that appear on the social media accounts of the eleven most popular preachers in Indonesia. Social media have increasingly played an important role in shaping people's minds. A 2017 national survey jointly carried out by Pusat Pengkajian Islam dan Masyarakat (PPIM) UIN Syarif Hidayatullah and UNDP Indonesia, shows that social media was the most popular site for university and school students studying Islam, followed by religious texts, television, and offline religious events such as Majelis Taklim (Saputra 2018, p. 31). The survey found that exposure to content on social media boosts religious extremism among students rather than enlightens them.

Despite the odds, the elected coalition government headed by former army chief turned prime minister Prayut Chan-ocha managed to endure the year, including surviving a censure debate and no confidence motions against six senior ministers (including Prayut) in February 2020. In December 2020 the judiciary also cleared a legal challenge filed against Prayut for an alleged conflict of interest, thus dashing the hopes of his opponents for his removal as prime minister.

While the March 2019 elections formally dissolved the junta that had ruled since the 2014 coup, it was held under conditions that ensured that Prayut and the military would be able to retain power for the foreseeable future. The junta, for instance, introduced the 2017 constitution, which allowed the ex-general to be named as the prime ministerial candidate for the military-affiliated Palang Pracharat party despite Prayut not being a member of any of the political parties contesting in the 2019 election. The 2017 charter also created the Senate, an upper legislative chamber of 250 members, all of whom are appointed by the junta. Significantly, the senators are involved in the selection of the prime minister, which meant that Prayut only needed to secure 126 votes in the 500-member lower house to emerge as the prime minister. In fact, Palang Pracharat ended up with only 116 out of 500 seats in the House of Representatives, second to the Shinawatra-allied Pheu Thai party, which secured 136 seats. This made it necessary for Palang Pracharat to cobble together a governing coalition of 19 political parties, including a number of micro-parties, or political parties with a single parliamentary seat each. The final post-election tally provided the Prayut government with a slim initial majority of 254 votes in the lower house.

This razor-thin margin caused significant trouble for Prayut. The weakness and fragility of his coalition government were exposed time and again, with some members of Parliament (MPs) in the coalition reserving their right to vote against the government, or even in favour of the opposition. Given the rifts in the coalition, the government has had to employ several tactical manoeuvres to get its way in Parliament.

The COVID-19 pandemic is a human tragedy on a massive scale with profound implications for the economy. Malaysia detected the first case of COVID-19 on 25 January 2020. The number of total cases remained relatively low for around one and a half months until a spike in cases occurred linked to a Tablighi Jamaat religious gathering that took place from 27 February to 1 March in Sri Petaling, a suburb of Kuala Lumpur. On 16 March 2020, the Perikatan Nasional (PN) government announced a “Movement Control Order” (MCO) to contain the spread of the virus. The financial difficulties affecting Malaysians have been generated mainly by the shutdown of economic activity from the MCO rather than from the spread of infections. As the health situation improved, the conditional MCO (CMCO) came into force on 4 May 2020, with relaxed restrictions and standard operating procedures to guide the reopening of critical sectors. The further relaxation of measures under the recovery MCO (RMCO) subsequently took effect from 10 June until 31 December. But as the year drew to a close, Malaysia was fighting a third wave of infections, which began in September 2020 with cases from Sabah, Kedah and Selangor. At the same time, Malaysia's political crisis has further compounded its health and economic challenges.

This chapter argues that Malaysia's political crisis has had both positive and negative implications for the government's fight against COVID-19. The PN government's need for popular support led to undivided attention on managing the crisis. But the good work done in the earlier months quickly unravelled as Malaysia struggled to cope with mounting cases towards the end of the year. First, the chapter will provide background on how the health crisis led to the imposition of restriction measures that then gave rise to Malaysia's economic woes. Second, it will explain why the conduct of politics has complicated how the PN government could respond to the crisis. Third, it will evaluate the government's health and economic responses to COVID-19 amid the political crisis.

COVID-19 Public Health Measures

The pandemic-related public health measures Malaysia undertook in March 2020 were initially disorganized and delayed on account of the political manoeuvrings involved in ousting the former Pakatan Harapan (PH) governing coalition—in what became known as the “Sheraton Move”.

The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.

THE EDITORS

Series Chairman:

Series Editor:

Editorial Committee:

At the end of 2019, a pandemic caught the world unprepared. The SARS-CoV-2 virus began spreading in Wuhan, China, before exploiting the interconnectedness that lies at the heart of the globalized economy. To halt the spread of COVID-19, many countries began closing their borders and restricting movements within. The integrity of global value chains (GVCs), which was already strained by the US-China trade war, took further blows when countries went into isolation. Multinational enterprises are beginning to rethink their dependence on China and governments are calling their corporations to return home (reshore) or move nearby (nearshore). With Southeast Asia potentially receiving the bulk of nearshoring in Asia, Indonesia is pushing for the biggest regulatory reform since the 1998 Asian financial crisis in order to benefit from this trend.

This chapter begins with an overview of the push for reshoring spurred on by the pandemic. It will then continue with an overview of Indonesia's economic condition and GVC participation prior to and during the pandemic. The section after this will highlight Indonesia's complex regulatory system, which deters foreign investors, and the reform efforts leading up to one of the most controversial pieces of legislation in the past twenty years: the Omnibus Law on Job Creation. This is then followed with several sections analysing the law, focusing on two parts of the law that try to balance large investment with small businesses through a budding GVC model. Finally, a brief consideration of potential complications that could undermine the investment and GVC goals of the law is presented.

Global Value Chains: The Unravelling

GVCs drive approximately half of global trade and their activities have boosted foreign direct investment (FDI) since 1990. Led by multinational enterprises, they depend on open borders and lean production methods to keep their production costs low. With international transport heavily restricted in 2020, some GVCs faced difficulty in securing the necessary flow of materials and were forced to stop or reduce their activities. Furloughing and retrenchment soon followed, causing demand to contract as well. It is estimated that this combined supply and demand shock will shrink international trade by 13–32 per cent and FDI by 30–40 per cent in 2020 and 2021.

Like the rest of the region, Myanmar was under partial lockdown in 2020 as a measure designed to stop the spread of COVID-19. However, it was also an election year in a country that was experiencing continuing (and in some cases expanding) armed conflict, reeling from the aftermath of a mass migration of Muslim Rohingya from the northern Rakhine State and burdened with an economy that displayed few signs of growth. The lockdown of Yangon since 20 September 2020 has disrupted both the economic centre of the country as well as campaigning for the election. Conditions were far from ideal to conduct the third ever general election to be held under the army-drafted constitution of 2008, but the National League for Democracy (NLD) government insisted that the hustings proceed as scheduled despite calls for a postponement by several opposition parties.

The 2020 Election Campaign

The general election was contested by ninety-three political parties, which accounted for 6,742 candidates collectively. This was rounded up by a further 281 candidates who ran as independents in the election. With the usual campaign rallies and parades cancelled because of lockdown measures, Facebook became a central source of information for many voters during the run-up to polling day on 8 November. Both the NLD and the Union Solidarity and Development Party (USDP), which was formerly the ruling party and now the leading opposition party, relied heavily on Facebook, while other political parties, such as the People's Pioneer Party (PPP) (led by former NLD leader Daw Thet Thet Khine) and the Union Betterment Party (UBP) (led by former general Thura U Shwe Mann, who was the third-most senior in the junta), invested sums of money on their Facebook information campaigns.

The election was surrounded by controversy as many claimed that “democracy” under the NLD and its leader, Daw Aung San Suu Kyi (who wields real power as State Counsellor, a position she was anointed to after being constitutionally disqualified from holding the presidency), were becoming increasingly authoritarian since their electoral victory in 2015. Certainly, there were grounds for complaint, including the disenfranchisement of persons who are of the so-called Rohingya ethnicity. Some 730,000 of the Rohingyas had fled to neighbouring Bangladesh in 2017 following military reprisals after the Arakan Rohingya Salvation Army (ARSA) had attacked police stations in the northern Rakhine State.