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1621. Urban Amenities and Trade Resilience During the Covid-19 Pandemic in Malaysia

Author:
Cassey Lee
Publication Date:
11-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The main objective of this study is to empirically examine the role played by amenities in supporting growth and trade in Malaysia during the pandemic and post-pandemic recovery phases. The manufacturing sector has been an important factor in mitigating the negative impact of the pandemic. It has also been a positive driver of the country’s economic recovery. Transport, health and ICT-related amenities supported production, consumption, and trade activities during the pandemic and post-pandemic recovery periods.
Topic:
Trade, Cities, Resilience, COVID-19, and Amenities
Political Geography:
Malaysia, Asia, and Southeast Asia

1622. Enhancing Plastic Reuse and Recycling with a Full Life-Cycle Approach

Author:
Aulia Salsabella Suwarno and Ivana Suradja
Publication Date:
11-2024
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Plastic pollution poses both environmental and economic challenges for Southeast Asia, underscoring the urgent need for a transition to a circular plastics economy driven by reuse and recycling strategies. Although AMS have incorporated these strategies within their National Action Plans, they are struggling to achieve the scale necessary to counteract rising plastic waste. This policy brief identifies key barriers hindering the growth of plastic reuse and recycling initiatives in the region and provides targeted recommendations based on a full life-cycle approach. By adopting this approach, AMS can maximise the economic potential associated with effective plastic waste management and pollution mitigation.
Topic:
Environment, Pollution, Recycling, ASEAN, and Plastic
Political Geography:
Asia

1623. Strengthening ASEAN’s Cybersecurity: Collaborative Strategies for Enhanced Resilience and Regional Cooperation

Author:
Mahirah Mahusin and Hilmy Prilliadi
Publication Date:
11-2024
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
As ASEAN’s digital economy continues to expand, the region faces escalating cybersecurity risks with significant potential costs. This policy brief examines ASEAN’s current cybersecurity landscape, underscoring the need for enhanced cooperation and comprehensive strategies to address the rising threat of cyberattacks. The economic impact of cyberattacks in ASEAN is already substantial, affecting both public and private sectors. This brief reviews existing efforts such as the ASEAN Cybersecurity Cooperation Strategy 2021–2025 and the ASEAN Regional Computer Emergency Response Team (ASEAN CERT), recommending the establishment of a shared cybersecurity taxonomy, capacity-building initiatives, and legal framework updates to bolster cybersecurity. Key policy recommendations encourage robust multi-stakeholder collaboration at national and regional levels.
Topic:
Regional Cooperation, Cybersecurity, Regulation, Digital Economy, and ASEAN
Political Geography:
Asia

1624. Promoting Fair Competition in ASEAN’s Digital Economy: Strengthening Policies for a Level Playing Field

Author:
Mahirah Mahusin and Hilmy Prilliadi
Publication Date:
11-2024
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
ASEAN’s digital economy is growing rapidly, offering both significant opportunities and challenges. Ensuring a competitive digital market is essential for fostering innovation, reducing costs, and enhancing product quality and choice for consumers and businesses, particularly MSMEs. This policy brief assesses the current digital market competition landscape in ASEAN, emphasising the need for robust competition policies to mitigate anti-competitive behaviours and establish a level playing field. It discusses key initiatives like the ASEAN Competition Action Plan (ACAP) 2025 and the ASEAN Guidelines for Sharing Merger Cases, while examining the complexities of digital markets, including the influence of dominant platforms, algorithmic impacts, and data privacy considerations. Policy recommendations focus on aligning provisions in the ASEAN Digital Economy Framework Agreement (DEFA) with regional standards and international best practices, enhancing regulatory capabilities, fostering regional cooperation, and promoting consumer education and protection.
Topic:
Digital Economy, Innovation, ASEAN, Economic Competition, and Digital Marketplace
Political Geography:
Asia

1625. Global Minimum Tax: Policy Impact on Investment Promotion and Incentives in ASEAN Member States

Author:
Sufian Jusoh and Intan Murnira Ramli
Publication Date:
10-2024
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The Association of Southeast Asian Nations (ASEAN) Member States are some of the most important foreign direct investment destinations in the world. Investment in ASEAN Member States covers all four pillars of investment typology: natural resources, market-seeking, export oriented, and strategic assets. Key sectors – such as semiconductors, tourism, consumer products, e-commerce, banking, and commodities (e.g. nickel) – are expected to benefit from this trend. Many of the investors in ASEAN are multinational enterprises, and multinational enterprises earning €750 million or more in two of the four fiscal years, are now subject to the Global Minimum Tax (GMT) in more than 140 jurisdictions around the world. With the introduction of the GMT, ASEAN Member States must rethink their incentives and investment promotion strategies to maintain their competitive edge over other foreign direct investment destinations around the globe.
Topic:
Tax Systems, Investment, ASEAN, and Incentives
Political Geography:
Asia

1626. Empowering Micro Businesses in Southeast Asia: Addressing Challenges and Harnessing Opportunities for ASEAN Economic Integration

Author:
Haris Zuan, Muhammad Falik Abd Razak, and Intan Murnira Ramli
Publication Date:
09-2024
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Micro, small, and medium-sized enterprises (MSMEs) form the backbone of Southeast Asia’s private sector, with microbusinesses comprising a significant majority. However, many operate informally, posing challenges for state recognition and assistance, particularly when youth manage these enterprises. More available data are needed to prioritise microbusinesses within economic policy. Nonetheless, microenterprises stand to benefit significantly from the region’s robust digital, transportation, and cultural connectivity, making enhancements in these areas crucial for their success. To address these challenges, policy recommendations focus on empowering youth in the micro-economy through digital inclusion initiatives and greater participation in decision-making processes. Additionally, enhancing cross-border payment systems is essential for promoting innovation and digitalisation in payment systems. Standard harmonisation, the adoption of shared data frameworks, and regulatory frameworks are necessary for facilitating faster cross-border transactions and minimising disruptions in payment systems.
Topic:
Business, Regional Integration, ASEAN, Economic Integration, and Inclusion
Political Geography:
Asia

1627. Impacts of Trade Diversion from China in the United States Market on Wages in a Third Country: Evidence from Thailand

Author:
Kazunobu Hayakawa and Sasatra Sudsawasd
Publication Date:
09-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Since the latter half of the 2010s, China’s exports to the United States (US) have gradually decreased due to the US-China trade war and other factors, such as lockdown measures in China to combat COVID-19. This decrease has resulted in increasing exports from third countries, including Thailand, to the US market by substituting China’s exports, i.e. trade diversion. Against this backdrop, this study empirically investigates how the changes in exports to the US driven by the change in China’s exports to the US affect wages in Thailand. Especially, we examine the heterogeneous effects according to workers’ characteristics. To this end, we conduct regression analyses using individual-level quarterly data from the first quarter of 2017 to the second quarter of 2023. Our main finding is that the wage gap between low- and middle-skilled workers decreased, whilst the gap between middle- and high-skilled workers increased. Namely, the increased exports to the US caused ‘wage polarisation’ in Thailand. We also find that the increase in exports to the US contributed to expanding the wage gap by age but narrowing it by gender.
Topic:
Markets, Trade Wars, Exports, and Wages
Political Geography:
China, Asia, Thailand, and United States of America

1628. Does Economic Policy Uncertainty Impact Firm GVC Participation? Microdata Evidence from India

Author:
Ketan Reddy, Subash Sasidharan, and Shandre Mugan Thangavelu
Publication Date:
09-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
In this study, we examine the implications of economic policy uncertainty on global value chain (GVC) participation and the integration of Indian manufacturing firms using firm-level data. Using panel data from 2004 to 2021, we find that economic policy uncertainty (EPU) impedes GVC participation and firm integration. Further, we find that the impact of EPU on GVC participation operates through the financial constraint channel with highly leveraged and low-liquidity firms. Using survival analysis, we also highlight that higher EPU results in higher exit from GVCs and reduces entry into GVCs.
Topic:
Economic Policy, Manufacturing, Global Value Chains, and Microdata
Political Geography:
South Asia, India, and Asia

1629. Good Regulatory Practice in Indonesia

Author:
Ridha Aditya Nugraha, Eri Yoga Sidharta, Luki Safriana, Dian Ayu Aryani, and Vicia Sacharissa
Publication Date:
09-2024
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This policy brief discusses the implementation and impact of the Online Single Submission (OSS) system in Indonesia, developed under the auspices of the Indonesian Investment Coordinating Board or Ministry of Investment (BKPM), which has streamlined the business licensing process and improved regulatory quality. The OSS system serves as a centralised platform for businesses to register and acquire licenses, particularly benefiting micro, small, and medium-sized enterprises (MSMEs). The digital economy in Indonesia, especially the e-commerce sector, is experiencing significant growth, with projections indicating substantial increases in gross merchandise value (GMV). The OSS system has positively impacted Indonesia's regulatory quality and improved the perception of the government's competence in supporting the private sector's growth. This policy brief recommends enhancing the implementation of the OSS system, promoting public participation, facilitating interagency coordination, and conducting regular monitoring and evaluation to assess the impact of Good Regulatory Practices (GRP) as implemented within OSS system on e-commerce sector.
Topic:
Science and Technology, Regulation, Innovation, and Online Single Submission
Political Geography:
Indonesia, Asia, and Southeast Asia

1630. Policy Recommendation to Achieve a Carbon-Neutral Economy: The Case of Corporate Governance and Carbon Performance in Malaysia’s Smart Cities

Author:
Siti Indati Mustapa, Noor Raida Abd Rahman, Amar Hisham Jaaffar, Nor Salwati Othman, and Syarifah Mardhiah Syed Salim
Publication Date:
07-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study explores the role of corporate governance in carbon-intensive and non-carbon-intensive companies within Malaysian smart cities. The paper aims to understand the challenges and impacts of corporate governance on carbon and financial performance. In the first stage, carbon emissions data from 51 Bursa Malaysia-listed companies were analysed, revealing that corporate governance had no significant impact on carbon and financial performance. However, variations were noted in carbon-intensive industries. Liquidity emerged as a key factor positively affecting carbon performance, while firm size and market-to-book value were the main drivers of financial performance. In the second stage, a survey of 256 firms highlighted a high level of awareness regarding the significance of carbon reporting practices. Challenges included complexity regarding carbon reporting and knowledge limitations. The study advocates for the centralisation of carbon accounting standards, sharing best practices, and fostering of global collaboration to bolster effective climate action. These findings offer empirical evidence crucial for informing policymakers, companies, investors, and regulators alike. Future research could expand with larger samples, explore digital technology’s role in smart cities, and compare carbon reporting practices globally.
Topic:
Climate Change, Economy, Smart Cities, Carbon Emissions, Corporate Governance, and Energy
Political Geography:
Malaysia, Asia, and Southeast Asia

1631. City Amenities and Internal Migration: Evidence from Chinese Cities

Author:
Karma Wangdi and Shandre Mugan Thangavelu
Publication Date:
07-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper provides new empirical evidence of city amenities’ role in China’s internal migration using a unique city-level dataset. The results highlight the positive effects of city amenities such as education, public facilities, transportation, environment, and climate conditions in attracting migrant workers to cities. In our study, migrant workers are more likely to move to cities with better education, more public facilities, higher coverage of urban pensions, and a cooler climate with more precipitation. Moreover, they prefer to migrate and live in cities with larger service agglomeration and employment, higher average wages, more job opportunities, and lower house prices
Topic:
Development, Labor Issues, Cities, Internal Migration, and Amenities
Political Geography:
China and Asia

1632. Urban Amenities and Regional Performance: Case Study of Indonesia

Author:
Titik Anas, Widdi Mugijayani, Estiana Cahyawati, and Muhammad Ridho
Publication Date:
06-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The aim of this paper is to evaluate the importance of urban amenities to economic development using Indonesia as a case study. Indonesia has rich micro-level data on urban amenities, which we group in this paper into 12 categories, namely education, health, religious, and shopping facilities; accommodations; banks; historical sites; recreation sites; restaurants; public transportation stations; modern shopping facilities; and gas stations. Using panel data of 2007 and 2014, we test how urban amenities affect regional development, proxied by employment and population growth. We show that education and shopping facilities significantly affect the growth of employment and population. We also found that the effect of the availability of education facilities is stronger in the regions with industrial parks.
Topic:
Development, Globalization, Services, Productivity, and Amenities
Political Geography:
Indonesia, Asia, and Southeast Asia

1633. Carbon Capture Storage and Utilisation (CCUS) Development in Thailand

Author:
Twarath Sutabutr
Publication Date:
06-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Thailand is a developing country with a growing economy, which has led to increased energy consumption and carbon emissions. To tackle this issue, the Royal Thai Government has implemented several policies and initiatives to reduce the country’s carbon footprint and promote sustainable development. Carbon capture utilisation and storage (CCUS) has just become one of Thailand’s policies to help push a low-carbon agenda and to enable net-zero emissions in 2065. The Thailand National Committee on Climate Change Policy approved the establishment of the Greenhouse Gas Reduction Steering Committee, which initiated the technology applications for the country’s first CCUS. The committee’s mission is to accelerate the actions that can mitigate climate impacts by applying CCUS technology in the energy and industry sectors, leveraging the knowledge and experiences in the petroleum exploration and production industry. This first CCUS pilot project, originally initiated by a team in the PTT Group, is the Thailand CCUS HUB Project. This paper summarises the conceptual design and actions required to start implementing the project.
Topic:
Climate Change, Development, Carbon Emissions, and Carbon Capture
Political Geography:
Asia, Thailand, and Southeast Asia

1634. Regional Amenities, Services Offshoring, and Skilled Employment in the Republic of Korea

Author:
Ju Hyun Pyun
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study empirically examines the effect of services offshoring and regional amenities on the composition of skilled employment for services firms. Analysing Korean firm-level data spanning from 2006 to 2019, we find that services offshoring, characterised by the import of services intermediate inputs, correlates with an increase in the proportion of skilled workers within firms. Additionally, the effects of this shift are nuanced based on different skill levels: services offshoring leads to an increase in the share of permanent headquarters workers to total workers. However, it does not affect the share of high-end skilled workers, such as headquarters’ share of management and research and development (R&D) workers. Moreover, regional amenities promote the positive effect of services offshoring on permanent headquarters workers’ shares. Lastly, the positive effect of offshoring on demand for high-end skilled workers in headquarters is significantly greater for firms with higher R&D intensity.
Topic:
Employment, Human Capital, Services, Skilled Labor, Research and Development, and Offshoring
Political Geography:
Asia and South Korea

1635. Structural Transformation and Economic Resilience: The Case of Malaysia

Author:
Cassey Lee
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Exports have been a critical source for the resilience of the Malaysian economy during the COVID-19 pandemic and post-pandemic period. Long-term structural change in intersectoral production networks could have reduced this resilience. Stronger domestic intersectoral linkages and declining participation in backward global value chain participation are likely to reduce the impact of positive export shocks on the country’s economy. The services sector has become increasing important over time. Consumption in the services sector is clearly an important driver of growth. A positive export shock is enhanced by higher domestic intersectoral linkages in the services sector but not in manufacturing.
Topic:
Economy, Exports, Macroeconomics, Services, Resilience, and COVID-19
Political Geography:
Malaysia, Asia, and Southeast Asia

1636. Have Dynamic Spillovers and the Connectedness of Trade Policy Uncertainty Changed During the COVID-19 Pandemic and Sino–US Trade Frictions?

Author:
Chien-Chiang Lee and Farzan Yahya
Publication Date:
03-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
In this paper, we examine the spillover and connectedness between the trade policy uncertainty (TPU) of the United States (US), China, Japan, and the Republic of Korea (henceforth, Korea) under global geopolitical risk (GPR), infectious disease equity market volatility (EMVID), and GPR from North Korea (GPRNK) using a relatively novel time-varying parameter vector autoregression (TVP-VAR) approach. Additionally, method of moments quantile regression is utilised to estimate the asymmetric effect of GPR, GPRNK, and EMVID on TPU. Our findings suggest that there is a high total and directional spillover amongst underlying variables during Sino–US trade friction that further elevated during the coronavirus disease (COVID-19) pandemic period. The US is a net receiver of spillover from the TPU of all economies, while the Chinese TPU receives spillover from EMVID. The results further confirm that both the TPU of China (TPUCN) and the TPU of the US (TPUUS) are vulnerable to EMVID, but the effect is stronger for Chinese TPU in the higher quantiles. Although Japanese TPU is less vulnerable to GPR and EMVID, it is significantly exposed to GPRNK. Korean trade shows resiliency and immunity to pandemic-induced volatility and GPRNK.
Topic:
Trade Wars, Trade Policy, COVID-19, and Spillovers
Political Geography:
Japan, China, Asia, South Korea, and United States of America

1637. The Effect of COVID-19 on Firms’ Behaviour: The Case of Japan

Author:
Yuting Chen and Bin Ni
Publication Date:
03-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Since the onset of the coronavirus disease (COVID‐19) pandemic, social distancing practices and government‐mandated lockdowns have become the norm. These have cut off interaction amongst people, firms, and society, triggering an even larger decline in economic activity. In this study, we apply annual Japanese foreign affiliate data to quantify how COVID-19 has affected firms’ behaviour in various aspects. The estimation results show that both the revenue and purchasing behaviour of Japanese foreign affiliates were affected during COVID-19. This negative impact is mainly through the channel of stringent regulations imposed by host countries where affiliates are located. The general result we can derive from these findings is that COVID-19 negatively affects Japanese firms engaged in overseas activities. This leaves us with the question of when external shocks such as COVID-19 stand in the way of firms’ overseas activities, and what role the government should play to achieve a balance between safety and economic revival.
Topic:
Trade, COVID-19, Performance Evaluation, and Firms
Political Geography:
Japan and Asia

1638. COVID-19 and Firm Response: Evidence from China

Author:
Dongmin Kong, Chen Liu, and Mengxu Xiong
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper explores the effects of the coronavirus disease (COVID-19) pandemic on firm response. Using a novel COVID-19 sentiment index, our estimation shows that the pandemic significantly reduced the overseas revenue and profits of firms listed on the Chinese A-share market. Moreover, we observe that an increase in loans, and a drop in debt financing cost and trade credit, were prominent during the pandemic. We contend that reduced cash flows, which damaged firm operations; government support, which provided more financing channels; and increased default risks, which placed barriers on trade credit, are the plausible mechanisms through which the COVID-19 pandemic affects firm performance. Profit contraction was more pronounced for firms with a lower ratio of domestic content in exports and state-owned enterprises, while external financing was easier for firms subject to stringent financial constraints despite their lowered trade credit.
Topic:
Trade, COVID-19, and Firms
Political Geography:
China and Asia

1639. Quantitative Analysis of Optimal Investment Scale and Timing for Flood Control Measures by Multi-Regional Economic Growth Model: Case Studies in Viet Nam

Author:
Hiroaki Ishiwata, Masashi Sakamoto, Makoto Ikeda, and Venkatachalam Anbumozhi
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study aims to develop and utilise a multi-regional economic growth model that can take into account flood damage and investment in disaster risk reduction, and, through case studies in Viet Nam, quantitatively analyse the long-term effects of investment in disaster risk reduction on the national and local economy, as well as the optimal scale and timing of investments in flood protection, to gain a better overview of these factors. The results indicate that additional investment in disaster risk reduction could stimulate economic growth, and that the optimal range of the disaster risk reduction budget rate was around 0.3% to 0.5% of GDP, assuming a constant budget rate throughout the total 25-year calculation period. In the case of a variable disaster risk reduction budget rate, we observed that a variable budget rate that gradually reduces the disaster risk reduction budget rate from a higher level than the current rate could further promote economic growth than if the budget rate were fixed. In both cases, we verified that with excessive investment in disaster risk reduction, the high tax burden had the risk of reducing investment in production capital and lead to stagnating economic growth. By region, the long-term effects of investment in disaster risk reduction were most seen in the Central region, where the rate of flood damage is the highest.
Topic:
Economic Growth, Investment, Flood, and De-Risking
Political Geography:
Asia, Vietnam, and Southeast Asia

1640. Agricultural Production as a Coping Strategy during the Covid-19 Pandemic? Evidence from Rural Viet Nam

Author:
Hai-Anh Dang and Cuong Viet Nguyen
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
We examine the Covid-19 pandemic-induced negative effects on household welfare in rural Viet Nam. Analysing recent Viet Nam Household Living Standard Surveys spanning 2016–2021, we find robust evidence that lockdown measures resulted in a 3.9% reduction in per capita income and a 2.6 percentage-point increase in the headcount poverty rate of rural households. It also had severe effects on rural households’ wages and self-employed non-farm income, but rural households appeared to have relied on farm income to cope with the lockdowns. Each additional month under lockdown reduced wage income and non-farm income by 2.8% and 6.3% respectively but increased crop income by 9.5%, livestock income by 7.1%, and other farm income by 12.2%.
Topic:
Agriculture, Rural, COVID-19, and Production
Political Geography:
Asia, Vietnam, and Southeast Asia