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|An ASEAN-EU Ministerial Conference on the coronavirus took place online on March 20|
As of last Saturday’s afternoon, the ongoing pandemic has hit all nations in Southeast Asia. Globally, it has left more than 275,000 people infected and costing more than 11,400 people their lives.
Many regional economies have taken drastic support solutions to spur on the performance of their enterprises and people’s livelihoods, valued at billions of US dollars.
On March 18, Singapore’s National Trades Union Congress (NTUC) announced that a one-time payment of up to $300 will be given to about 108,000 workers whose income has been impacted by the coronavirus outbreak.
Accordingly, existing union members with dependents living in the same household will receive $300 while $100 are reserved for those without dependents in the same household. New union members after March 1 will receive a smaller sum of $200 for those with dependents in the same household and $50 for those without.
The NTUC said that over the years, normally those with dependents in Singapore must have initially earned $3,400 or less monthly, while those without dependents must have earned $1,500 or less. The health crisis has made these people’s earnings fall by at least 30 per cent.
Meanwhile, one month earlier, Singapore’s government also announced a $4 billion package that would be used for keeping workers in jobs and supporting enterprises and sectors directly affected by the disease. In addition, $800 million would be set aside to support front-line agencies fighting the outbreak.
Furthermore, businesses will have their income tax for 2020 reduced and might profit from other measures to increase their cash flow.
Businesses in the tourism industry will receive short-term bridging loans until they can consolidate their long-term financial capacity or pay off their current debts. Besides this, they will also be given a 30 per cent reduction of real estate tax for 2020.
In aviation, businesses will be able to pay reduced parking and landing fees, as well as receiving assisted ground handling and reduced rental fees of shops at Changi Airport.
The country’s economy is expected to shrink by 0.8 per cent in the first quarter due to the pandemic while its full year growth could shrink by 0.6 per cent. Along with Singapore, other ASEAN member states are also racing to support their business communities.
With over 1,000 positive cases by March 21, Malaysia is the region’s biggest outbreak sufferer.
On March 17, Malaysia imposed a ban on all public activities nationwide, as well as blocked many public places, and ordered the immediate closure of the border from March 18-31, right after the nation had seen its first two deaths and the number of confirmed patients skyrocketing by 120 to 673.
One day earlier, Muhyiddin Yassin, who has been the Malaysian Prime Minister for only a few weeks, rolled out the stimulus package of cash handouts for workers forced to take unpaid leave combined with discounts on electricity tariffs for tourism and other industries.
The premier has also sought to largely maintain his predecessor’s policies, including keeping a $4.7 billion stimulus package to minimise the impact of the disease, promote centralised economic growth, and enhance quality investment.
Besides that, in order to support the most impacted businesses, Malaysia allowed those in tourism to pay their monthly income tax by installments for six months from April to September this year.
During the same period, businesses affected by the crisis can revise their estimated profits for 2020 with respect to monthly income tax payments without penalty.
Hotels, travel agents, airlines, and shopping and conference centres will receive a 15 per cent discount on their monthly electricity bills.
Hotels will further be exempted from the 6 per cent service tax until August. Malaysia’s central bank will provide a special relief programme worth $480 million, which is meant as a working capital for small- and medium-sized enterprises (SMEs) with a lending rate of 3.75 per cent.
Malaysia’s government requires all banks to provide financial relief, including restructuring and extending loans to businesses and individuals affected by the COVID-19 epidemic.
Registered taxi drivers, bus drivers, and tour guides as well as cyclo drivers will also receive a stimulus package of $145 from the government.
On March 13, Indonesia announced a 120 trillion rupiah ($8.1 billion) stimulus package to support Southeast Asia’s biggest economy over the next few months.
The stimulus, representing 0.8 per cent of the nation’s GDP, includes measures such as exempting some workers in manufacturing from income tax and giving manufacturers a discount on corporate tax payments.
The government is also exempting companies in 19 manufacturing sectors from paying import taxes, while giving them a 30 per cent corporate tax discount. Refunds for VAT would be made easier for companies, especially for exporters, to help manage cash flows.
Indonesia also announced that it will provide at least $744 million to support workers, airlines, hotels, tourists, and local authorities at key tourism destinations to deal with corona-related damages.
Indonesia’s economic growth is forecasted to slow down by 4.7 per cent this year if the virus outbreak continues to slow China’s and the global growth. Last year, the country’s economy grew by 5.02 per cent on-year.
As the closest country to China, the previous epicentre of the disease, Vietnam’s economy soon saw huge impacts of the virus to its economy. Very quickly, the country’s government had implemented different solutions to support its business community.
First, the government issued a VND30 trillion ($1.3 billion) fiscal support package to help businesses cope with the coronavirus pandemic through measures such as tax breaks, delayed tax payments, and an acceleration of state spending on infrastructure projects. The package is part of the government’s VND250 trillion ($10.87 billion) preferential credit package for enterprises and establishments affected by the pandemic outbreak.
Meanwhile, the credit support package will cover lending rate reduction and debt payment rescheduling for struggling firms conducted by commercial banks.
For the transport sector, the government assigned the Ministry of Transport to direct and guide business units to cut administrative procedures immediately, as well as reduce costs in logistics, aviation, road, and rail services.
With more than 50 positive cases by March 21, Cambodia remains relatively calm while still implementing policies to stimulate its tourism. Moreover, since late February, the kingdom issued regulations to support businesses hit by the coronavirus outbreak as well as the partial withdrawal of Everything but Arms status by the EU.
The regulations provide tax breaks and holidays for the country’s manufacturing, tourism, agriculture, and property industries, which are key industries to Cambodia’s economy, especially the garment and footwear sectors, which accounted for 80 per cent of the country’s exports.
Meanwhile, hotels and guesthouses located in the Siem Reap province will be exempted from paying tax from February to May.
The government will also suspend the 4 per cent stamp duty tax on the transfer of residential properties from February to next January. To support the agricultural sector, the government is allocating $50 million in the form of low-interest loans to help SMEs.
As one of the five biggest economies in the ASEAN, Thailand is also witnessing severe impacts from the global health crisis. So far, Thailand’s government has implemented financial and fiscal relief measures to help its companies, especially SMEs in the travel and tourism sector.
Tourism accounts for 12 per cent of the country’s GDP, one of the worst affected sectors due to a 44 per cent decline in visitors in February.
On March 10, the Thai cabinet also approved a package of 11 relief measures. Accordingly, the government will low interest loans for up to 150 billion Baht ($4.6 billion) and reduce withholding tax from 3 per cent to 1.5 per cent. Besides this, SMEs can participate in low-interest credit measures and businesses can disseminate VAT refunds to domestic entrepreneurs within 15 days after filing the form.
According to estimates by the Kasikorn Research Centre in Thailand, the COVID-19 disease is expected to cause a huge damage valued at least $2.4-3.4 billion to all ASEAN economies.
On March 19, Prime Minister Nguyen Xuan Phuc sent a letter to the leaders of ASEAN countries and New Zealand about delaying the 36th ASEAN Summit and the ASEAN-New Zealand Leaders’ Conference (expected on April 8-9 in Danang) until the end of June.
In the letter, the PM explained that Vietnam has actively and well prepared for the 36th ASEAN Summit. However, Vietnam believes that the adjustment of the meeting time is necessary as the COVID-19 pandemic remains increasingly widespread in the region.
That same day Deputy Minister of Foreign Affairs Nguyen Quoc Dung reaffirmed that the ASEAN needs to continue promoting co-operation and integration, promoting the cohesive and responsive spirit of the ASEAN Community. In return, the ambassadors expressed appreciation for the preparation and effective response and decision of Vietnam as the ASEAN President for 2020. The ambassadors vowed to continue working closely with Vietnam to prepare for the 36th ASEAN Summit.