2019 Global Risk Forecast - Asia-Pacific

Trade tensions between China and the U.S. will intensify, while the Taiwan Strait and South China Sea will remain strategic flashpoints. Pivotal elections include those in Australia, Indonesia, Hong Kong, Philippines, Thailand, Sri Lanka and India.  

Asia-Pacific -Five pivotal elections to closely monitor - Executive summary

Tensions between the world’s economic juggernauts – the U.S. and China — will intensify as both nations refuse to cede ground in the ongoing trade war. While the Taiwan Strait and the South China Sea remain strategic flashpoints in the region. Federal elections in Australia will likely see the country experience its fifth prime minister in seven years, while federal elections in Indonesia will likely see Joko Widodo hold onto power. Hong Kong will hold council elections in 2019, likely to cause friction between the pro-democracy and pro-Beijing camps. Philippines house of representatives elections will be a test of Duterte’s popularity and an indicator, while Thailand, Sri Lanka and India will also go to the polls for general elections. Terrorism in Indonesia threatens peace in the region, while domestic crime threatens the Philippines and Thailand remain prevalent in 2019.

Read more: Snapshot: How will the arrest of Huawei CFO impact foreign businesses in China?

North-east Asia and Oceania 

A federal election will be held in Australia before 18 May 2019 and is likely to be called by the leader of the Liberal Party-led coalition, and prime minister, Scott Morrison in early 2019, most likely in April. Australia had six prime ministers between 2008 and 2018, as Australians vote for a party (or a coalition of parties), so a leader can be replaced by the elected party at any time. Despite the merry-go-round in leadership, the country remains stable with 28 years of uninterrupted economic growth. Polling in the country indicates that the opposition Labor Party, led by the Bill Shorten, is likely to win the next election as the Australian public remain angry at the 2018 ousting of former prime minister Malcolm Turnbull, and are frustrated by a political scandal involving the former deputy prime minister and one of his female media advisers. The election of the Labor Party is likely to help reset Sino-Australia relations after a tumultuous time between the two countries during Turnbull’s leadership from 2015 to 2018.

Hong Kong, China’s Special Administrative Region, will hold district council elections in November 2019 for the sixth District Councils of Hong Kong. The elections will be held across all 18 District Council with 452 seats up for a vote out of total 470 seats. The 18 district councils are responsible for scrutinising government funding. Controversy surrounding the election have already began, with pro-democracy and localist candidates accusing the pro-establishment, sometimes referred to as pro-Beijing candidates, of gerrymandering through the redrawing of districts to favour pro-Beijing candidates. The council are traditionally dominated by pro-establishment, and it likely they will take the majority of seats across the city.

South-east Asia 

Thailand’s military-led government announced an election will be held on 24 February under rules intended to ensure the country’s armed forces’ leadership retain a high degree of control over the political process. Under the 2017 constitution, the military retains its political influencethrough its ability to appoint the legislature’s Senate, which is largely responsible for choosing the prime minister. As a result, the election outcome will see the formation of a government acceptable to the military and the royalist establishment it embodies, while denying the electorate a free choice as to how they wish to be governed. While this may ensure a degree of surface stability, it will also conceal a high degree of popular resentment towards the country’s political and economic elites. The absence of such democratic outlets could lead to increased labour unrest, student protests and a general atmosphere of sullen non-compliance. Any robust response by the authorities could increase the reputational risk for foreign companies, in addition to any physical disruption caused by more direct action.

Indonesia will hold presidential elections on 17 April that pit the incumbent Joko ‘Jokowi’ Widodo against former army general Prabowo Subianto. Prabowo, a son-in-law of the authoritarian former president Suharto, is widely viewed as representing the ‘old’ elite and status quo against Widodo emphasis of reformist and modernisation. The informal election campaign is already well under way, with both sides emphasising their strong Islamic credentials. The election will test the relative strength between the rural and often conservative Islamists and the urban, younger and better education electorate. While Widodo is seen as the likely victor, with such an outcome generally welcomed by foreign investors and many foreign governments, this cannot be assumed. An election for members of the People’s Consultative Assembly legislature takes place on the same day.

Attention will continue to focus on Duterte’s health and his often erratic and divisive policies and statements.  

Elections for the Philippine House of Representatives will be held on 13 May and will be viewed as a test of President Rodrigo Duterte’s support and popularity rather than representing any ideological divisions. However, given the ability of party ‘machines’ to deliver votes, such indicators will be subject to nuanced analysis rather than point towards a clear binary outcome. Attention instead will continue to focus on Duterte’s health and the extent to which his often erratic and divisive policies and statements erode his huge electoral base within the country’s often economic marginalised majority.

The divisions evident within the majority Singhalese community following the replacement of the incumbent prime minister by his political rival in late 2018 will continue to reverberate well into 2019 in Sri Lanka. A general election would almost certainly be accompanied by at least limited unrest between supporters to the contenders which would impact on the country’s key tourism sector. There is also the risk of more sustained violence involving opposing factions within the country’s security forces; such an outcome would cause exceptional economic harm and could lead to the involvement of foreign powers in an effort to restore order.

Read more: Election watch: Sri Lanka’s unsurprising surprise

South Asia

In India, Prime Minister Narendra Modi and his ruling Bharatiya Janata Party (BJP) are under serious threat of being dislodged by the main opposition Indian National Congress in the 2019 Lokh Sabha (legislative assembly) polls. Modi is losing his credentials as the champion of the poor, particularly as the economy cools, wages decline and joblessness worsens. Disillusionment with Modi’s economic agenda has been ratcheting up ‘anti-incumbency’ sentiment which is and will erode his support.

Read more: Assessing the political split between south and north India

His party has countered by propagandising divisive social and religious issues aimed at ginning up his right-wing base, which has led to an increasing risk of communal violence and unrest. Election-related civil unrest will remain the dominant risk to contend with, particularly in major urban centres where legislative seats will be hotly contested. Additionally, on-line disinformation campaigns and highly-charged Hindu nationalist propaganda on social media platforms such as Facebook, Twitter and WhatsApp, among others, by state and non-state actors (including political parties and private contractors) will amplify these risks leading up to the polls.