INASIA

Weekly Insights and Analysis

2019: The Year Ahead in Asia

January 2, 2019

By The Asia Foundation

Happy New Year, and welcome to the first edition of InAsia for 2019. In our last issue we looked at some of our top stories from the year just ended, stories that chronicled the successes and failures, the triumphs, and the tribulations of 2018 through the eyes of our experts in Asia. This week, we invite you to look ahead with us to a still-young 2019, as The Asia Foundation’s country representatives offer their predictions of the stories that will dominate the news from Asia in the coming year. Here, to kick off 2019, are perspectives from our 18 offices in Asia. —John Rieger, editor, InAsia 

Afghanistan
Whether from a political, security, or economic perspective, 2019 promises to be a challenging year for Afghanistan. Parliamentary elections in October were marred by concerns over mismanagement, fraud, insecurity, and disenfranchisement. Lessons learned from these elections must be applied to the coming presidential elections, to be held in 2019, if a credible and acceptable process and outcome are to be achieved. On the security front, Afghanistan needs an inclusive, transparent, and Afghan-led peace process to ensure meaningful progress in peace negotiations with the Taliban. And economically, a combination of immediate, quick-impact employment programs and longer-term economic development initiatives, involving incentives for new investors and retention strategies for existing businesses, are among the country’s most pressing priorities. —Abdullah Ahmadzai, country representative

Bangladesh DhakaBangladesh
The resilience of the Bangladeshi people will continue to be on display in 2019 as the nation tackles the ongoing Rohingya refugee crisis, the implementation of the Sustainable Development Goals, and progress towards an inclusive and sustainable graduation to developed-country status. —Sara Taylor, country representative

Cambodia
After a relatively turbulent year, in 2019 Cambodia’s government commences its sixth mandate, setting the direction for the next five years. Cambodian youth remain hopeful and dynamic, as evident particularly in the nation’s vibrant entrepreneurship and flourishing technology ecosystem. For Cambodia to move in a positive direction, the country will need to diversify its economy and balance relationships with the wider international marketplace and community. —Meloney Lindberg, country representative

China
2019 will be a year of several important anniversaries for China. The People’s Republic will celebrate its 70th birthday, reflecting with pride on the stunning economic growth of the past four decades but facing mounting pressure to create a more equitable society and provide better health, education, and social protection to all, especially the vulnerable and disadvantaged among the population. 2019 will also mark the 40th anniversary of diplomatic relations with the United States, at a moment when the bilateral relationship has arguably deteriorated to an all-time low. Whether the two countries will find a middle ground on trade and resolve the Huawei CFO extradition issue in early 2019 will have significant bearing on the trajectory of bilateral relations for the rest of the year. —Ji Hongbo, country representative

India
The recent breakdown of various international trade alliances (the disruption of NAFTA, the U.S.-China tariff wars, the paralysis of the WTO) has created an opportunity for growing economies like India to play a greater role in the global and regional economic and political arenas. However, India will need political maturity and economic prowess to exploit these opportunities and attract business and investment to its shores. Despite pressures from higher oil prices, a depreciating currency, and the general decline of a decade-long bull market, the OECD projects that India’s GDP will grow at an average annual rate of 7.5 percent in 2019 and 2020. But these projections can only materialize with the support of significant structural reforms to aid business investment and exports. These reforms include the new Insolvency and Bankruptcy Code, smoother implementation of the comprehensive indirect tax on goods and services—the GST—better roads and electricity, and bank recapitalization. For any of these reforms to substantially aid economic growth, however, they will need to be backed by transparent governance and a nonpartisan political climate that gives investors the confidence to invest. India is poised for national elections in early 2019, and political leaders need to abandon populist campaign agendas to harness the global opportunities that are knocking at India’s door. The myopia underpinning partisan and nonsecular politics must be replaced with a more inclusive, equitable, and global economic and social perspective. —Nandita Baruah, country representative

Indonesia
In 2019, 185 million Indonesians will exercise their constitutional right to vote, electing a president, a vice president, and members of the national legislature. Identity politics have become increasingly prominent in Indonesia’s social and political discourse in the last decade, sowing division between majority and minority communities. Democracy is increasingly framed as majoritarian rule, and surveys have shown that political and social intolerance are on the rise. While promoters of democracy encourage voters to cast their ballots based on programmatic proposals from the parties and candidates, louder messages, amplified by social media, emphasize the primordial ties of religion and ethnicity. The work to protect democratic values of inclusion has never been as crucial as it is right now in the world’s most populous Muslim country. How politicians campaign, and how the public responds to their messages, will be an important clue to Indonesia’s direction in 2019 and beyond. —Sandra Hamid, country representative

Korea
In 2019, the third year of the Moon Jae-In administration, South Korea stands at a social, economic, and foreign-policy crossroads. The sense of a narrowing window of opportunity could persuade South Korea, North Korea, and the United States to compromise on the nuclear issue, despite prevailing skepticism and the growing tension between U.S. pressure and the South’s desire to seize the last chance in a generation to engage the North. South Korea also faces the challenge—and opportunity—to align its development assistance with global trends, which have shifted from top-down, government-focused official development assistance (ODA) to the bottom-up, partnership-friendly and public-private approaches of the Sustainable Development Goals (SDGs). The shift from an ODA to an SDG mindset could be tested in the Moon administration’s new “Southern Policy,” directed towards ASEAN countries and India. Economically, South Korea is wrestling with the structural implications of reorienting its economy from manufacturing to services, while the Chaebols continue to act as both enablers of and obstacles to growth. They will be tested in the new year as the global economy slows down. The economy is showing early signs of stress, including declining employment figures and residential property construction orders for the past two years. The economic risk is compounded by growing household debt, as interest rates will face pressure to rise. Meanwhile, changing demographics remain a source of anxiety as South Korea’s population ages, stoking intergenerational tensions over jobs, public benefits, and other resources. —Kwang Kim, country representative

Laos
Infrastructure boomed in Laos in 2018, with the Lao-China railway reaching 20 percent completion and deals struck for two expressways—the first ever in Laos—and a national “backbone” power transmission line. These are all important pieces of the connectivity puzzle, assets that will help Laos to achieve its stated goals of being “land-linked” and the “battery of Asia.” However, 2018 also brought a tragic reminder of the risks of large-scale infrastructure development, in the form of the Xe Pian Xe Namnoy dam collapse. Going forward, Laos must seek a balanced path that addresses key infrastructure needs while protecting the critical ecosystems that are so inextricably linked to Lao culture and livelihoods. —Nancy Kim, country representative

Malaysia
Following the unprecedented result of the nation’s 14th general election in May, Malaysia experienced a change of regime for the first time in 60 years. In this new era, now famously dubbed New Malaysia, Malaysians will be closely following the ruling coalition’s progress in fulfilling their campaign promises, especially the promise of structural political and economic reforms. As the government further articulates the content and strategies of the New Malaysia agenda, the nation’s 2019 wish list includes greater rule of law and a thriving and robust economy backed by a just society. The new government’s success or failure in this project could largely determine whether Malaysia will be able to consolidate its recent democratic gains. —Herizal Hazri, country representative

Mongolia
Mongolia enters 2019 still reeling from a major corruption scandal, involving misuse of the national small and medium enterprise fund, and wracked by political infighting within the ruling Mongolian People’s Party. These two factors make it likely that government instability will persist until the 2020 elections. 2018 was a year of continued economic recovery, and Mongolia has been effectively implementing an International Monetary Fund package since 2017, so the economic outlook for 2019 remains positive for now. However, an uncertain outlook for the Chinese economy, on which Mongolia remains heavily dependent, and limited progress on key reforms due to government fragility and a divided parliament put the economic recovery of the last two years at risk. Preparations will soon begin for the critical 2020 national elections, and major sources of public dissatisfaction will dominate the national discourse in 2019, including the extreme air pollution in Ulaanbaatar and other cities and the public’s growing frustration with corruption. —Mark Koenig, country representative

Myanmar
Put simply, 2018 was a difficult year for Myanmar. The fallout from the Rohingya crisis has increased as the UN and assorted parliaments and governments have labelled it genocide and applied targeted sanctions. While humanitarian access and diplomatic dialogue have improved, the situation on the ground remains dire, with Rohingya refugees in Bangladesh refusing to leave. Domestically, the NLD government of Aung San Suu Kyi faces growing criticism over the lack of movement in the peace process and the slow pace of reforms, particularly economic ones. As the country struggles both domestically and internationally, many wonder if Myanmar’s historic effort to reform and democratize is being lost in transition. Nevertheless, Aung San Suu Kyi and her party remain popular overall. If she can secure greater international involvement in resolving the Rohingya crisis—for instance, through the UN and ASEAN—encourage greater economic growth, and catalyze some high-profile reforms, such as to the banking sector and local public administration, both international support and Myanmar public opinion will likely be reinvigorated. —Matthew Arnold, country representative

Nepal local elections

Bidya Sundar Shakya after being elected the Mayor of Kathmandu in the first phase of Nepal’s local elections.

Nepal
Power sharing and self-rule will again be the center of attention in 2019, as Nepal’s three tiers of government continue to flesh out their working relationships. The crucial aspect to watch will be the provincial governments, as they work to demonstrate their still undefined political and administrative worth to both the 753 local governments and the federal government. While the provincial governments will be the front lines of these developments, the greatest gains are likely to be had at the local level. Hopes are high in municipalities across Nepal, as local authorities with new powers under the 2015 constitution feel pressure to deliver on last year’s campaign promises of inclusive democratic governance and economic growth, both central to the historic grievances of exclusion that fueled Nepal’s decade-long internal conflict. Mid-March is the constitutional deadline for revision of hundreds of federal laws that will set a new legal framework for the country, but antagonisms between elected politicians and the bureaucratic leadership that has managed the country over two decades of instability will remain a challenge. —Meghan Nalbo, country representative

Pakistan
With a newly elected government firmly in place after July general elections, economic stabilization, inclusive growth, and good governance will remain Naya (new) Pakistan’s priorities for 2019. —Sofia Shakil, country representative

The Philippines
Global headlines on the Philippines in 2019 will likely be dominated by President Duterte, his continuing war on drugs, and a plebiscite in January and February over new regional autonomy and a path to peace for conflict-affected areas of Mindanao. Domestic headlines will be dominated by a nonstop “festival of democracy” for the midterm elections on May 13, when more than 18,000 elected positions will be up for grabs. Support for democracy remains high: registrations of new voters surpassed expectations, adding 2.5 million people to the voter rolls for a total of more than 60 million, of whom 70–75 percent are expected to turn out. Among the key economic challenges for the year ahead are curbing the currently high rate of inflation, creating jobs, and delivering on infrastructure promises, alongside maintaining consistency in economic leadership amidst the expected postelection changes in the Cabinet. —Sam Chittick, country representative

Sri Lanka
Sri Lanka is just emerging from a constitutional crisis that destabilized the country for over 50 days. On October 26, citing irreconcilable differences and the national interest, President Maithripala Sirisena sacked the prime minister and unilaterally appointed former president Mahinda Rajapaksa in his place. The resulting crisis provoked unprecedented public protests and resistance, until a definitive decision by the Supreme Court compelled the quarreling political leaders to adhere to constitutional norms. As Sri Lanka now struggles to hold together the fractured pieces of its 71-year-old democracy, 2019 will be a crucial year. There is no doubt that the power struggle at the top will continue unabated, particularly since provincial, parliamentary, and presidential elections are due in the next two years. The United National Party, its government reinstated by the court, has one last chance to demonstrate its commitment to the good-governance, accountability, and anticorruption agenda it was elected on. The president and the reinstated prime minister will need to find a way to work together. Most importantly, Sri Lanka has emerged from the crisis fundamentally changed. A newly activated electorate with high expectations is poised to demand change and will no longer tolerate the parochial interests of the political elite. The future of Sri Lanka will thus hinge on the ability of this spontaneously mobilized electorate to remain steadfast in defense of their democratic rights. —Dinesha de Silva, country representative

Thailand
Thailand is about to take center stage in world affairs once again. As ASEAN chair in 2019, Thailand is likely to preside over increasingly complex regional relations as the centrifugal force of the U.S.-China rivalry puts pressure on the 10-member bloc. Negotiations over the critical Regional Comprehensive Economic Partnership trading bloc and the South China Sea Code of Conduct could come to fruition during Thailand’s tenure. The chance of a refugee or regional security crisis is also high. Thailand has been preparing for this moment for a decade, and it has a talented and capable group of diplomats and officials who will be keeping the agenda on track. The big question, of course, will be the political leadership. Nearly five years after a military coup, Thailand will have an election on February 24. While the election itself is likely to be relatively smooth, the critical moment will be in the two or three months after the election, as three major political factions try to cobble together a majority coalition. If it can emerge from this test with a widely accepted and stable government, this will be a breakthrough year for Thailand after nearly 15 years of political instability and uncertainty. —Thomas Parks, country representative

Timor-Leste
2019 is looking to be a crucial year politically and economically for Timor-Leste. Historic early elections in 2018 led to a political impasse between the coalition AMP government and the FRETILIN opposition. At stake are the appointments of eight ministers still waiting to take office, and a cabinet reshuffle is possible early in the year. Another critical area to watch will be the final shape of the 2019 budget, currently the largest ever proposed. It includes a partial buyout of the $50 billion Greater Sunrise Gas Field and a plan to buy more in 2020, for a 56 percent stake in the joint development. Underlying all of this is the urgent need to continue diversifying the economy, raise educational standards, and decentralize service delivery to better reach the 40 percent of Timorese still living in poverty. —Todd Wassel, country representative

Vietnam
Vietnam conducts energy planning by matching short- and long-term demand projections with available technologies and energy sources. As we enter 2019, the declining cost of renewable energy, which can now compete with coal, and the equally declining cost of grid-connected battery storage, which can now compete with gas as a means of meeting peak demand, have unhinged this planning process. Reaching out to these new technologies carries risks, but not doing so could leave the country with stranded assets, security risks, and increasing sovereign debt. As planning for Power Development Plan VIII moves forward, an array of domestic and international pressures weigh on Vietnam’s leadership. Finding a compromise that balances Vietnam’s energy needs with its commitments to reduce greenhouse gas emissions will not be easy. No one will be satisfied. But that, unfortunately, is the only available course of action. —Michael DiGregorio, country representative

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About our blog, InAsia

InAsia is a weekly in-depth, in-country resource for readers who want to stay abreast of significant events and issues shaping Asia\’s development, hosted by The Asia Foundation. Drawing on the first-hand insight of over 70 renowned experts in over 20 countries, InAsia delivers concentrated analysis on issues affecting each region of Asia, as well as Foundation-produced reports and polls.

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