Southeast Asia has been affected by fires and droughts caused by El Niño

The heat that has swept across Southeast Asia in recent weeks heralds the return of El Niño, as governments across the region prepare to battle water shortages, forest fires and smog clouds.

In a region that is a leading producer of palm oil, rice, coffee beans and other commodities, rising temperatures could threaten agricultural production, while pressure on water and electricity supplies could hurt a fast-growing manufacturing industry.

„El Niño is here,” Twikorita Karnawati, head of Indonesia’s climate and meteorology agency PMKG, told reporters in Jakarta in early June. “The peak of El Niño . . . Almost all are predicted to occur in September. . .[all]Regions of Indonesia.”

Seven Indonesian provinces – mostly palm oil-producing areas on the islands of Sumatra and Borneo – are under emergency warnings amid growing concerns about forest and peatland fires in the coming months due to impending drought caused by El Niño.

“Naturally, welding is very easy [fire] Hotspots. So extra care is needed,” said Karnavathi.

El Niño is a climate pattern originating in the Pacific Ocean characterized by above-average sea surface temperatures. It usually brings warmer and drier conditions to Southeast Asia, in contrast to the wetter and cooler weather from La Nina.

After three years of La Nina until early 2023, El Niño returns. After a weak start in June, it is expected to strengthen in the next few months, Karnavati said.

He said there could be a repeat of 2019, when a moderate El Niño contributed to land and forest fires in Southeast Asia’s biggest economy, with losses reaching $5.2bn, according to World Bank estimates.

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The fire crossed national borders and caused a thick haze, disrupting hundreds of flights at home and in neighboring Singapore and Malaysia, as well as causing respiratory problems for millions of people.

Authorities in Singapore have warned residents since June that fire hotspots could increase, and are coordinating plans to mitigate the risk of haze returning from Indonesia and Malaysia.

“The public is also advised to take steps to ensure they have enough . . . Masks and air purifiers are in good working order,” the Singapore Meteorological Department said in late May.

El Niño could threaten production in Vietnam’s vital coffee sector, with a report warning production could drop by up to 20% by 2023 © Brent Lewin/Bloomberg

Warmer weather driven by El Nino is expected to drag on harvests of crops such as palm oil in Indonesia and Malaysia, the world’s two biggest producers of products ranging from chocolate to soap. This will affect corn production in the Philippines as well as rice farming in countries such as Thailand and Vietnam.

The impact won’t be immediate, according to an executive at Indonesian palm oil producer Astra Agro Lestari, who said lower harvests could be seen two years after El Niño begins.

But the Malaysian Palm Oil Board said in May that El Niño could reduce the country’s crude palm oil output by 3 million tonnes in 2023. The country produced 18.45 million tonnes of the commodity last year.

In Vietnam, the National Center for Hydro-Meteorological Prediction predicts „large-scale” continuation of heat waves and droughts, salt water intrusion and water shortages in the first few months of 2024 due to El Niño.

The Vietnam Coffee and Cocoa Association cited a report warning that coffee production could drop by up to 20 percent by 2023. Vietnam is a leading exporter of robusta varieties such as coffee beans and rice.

In Thailand, the world’s second largest exporter of rice and sugar, temperatures soared to 43C in April.

The Office of the Sugarcane and Sugar Board of Thailand predicts that domestic sugarcane production will fall from 94 million tonnes in 2022 to 70-80 million tonnes this year. The Bangkok-based Khasicorn Research Center, meanwhile, estimated rice production to fall 6 percent to 25 million. tons.

In fact, the country’s agriculture ministry has asked farmers not to plant paddy during the off-season to save water for other crops, industry and tourism.

In the Philippines, local rice production could decline by about 1.8 percent and yellow corn by 1 percent in 2023, preliminary estimates show. Although the economic impact may be minimal, the country’s central bank considers El Niño’s impact on food and energy prices. The upside risks to inflation, which has eased but remains above the government’s target.

Shodaro Kumagai, an economist at the Japan Research Institute, wrote in a recent report that agriculture accounts for the largest share of GDP in Asia’s emerging economies. „Therefore, a decline in agricultural production and consequent inflation is expected to exert strong downward pressure on the economy,” he wrote.

El Niño is expected to affect hydropower generation, as well as increase energy demand as businesses and homes increase their air conditioning.

Water shortages have already affected hydropower generation in Vietnam, causing power outages across the economy. In early June, Pak Jiang province — home to Samsung and Apple suppliers — planned district-by-hour brownouts, although major manufacturers were said to be able to resume some production.

State utility Electricity Vietnam has announced a „national electricity saving movement”, urging the government and home austerity and businesses to limit the use of heavy machinery during peak hours and use renewable energy on site.

In Thailand, large industrial estates – particularly along the well-promoted Eastern Economic Corridor – are preparing for El Nino by filling their private water storage facilities to ensure supplies to tenants.

There are fears that the drought may last longer than expected. “What the government can do now is save rainfall [as possible] In rainy season [through around October]” said an official of the Irrigation Department of the Thai government.

In June, Malaysia’s National Disaster Management Agency warned that cloud seeding — an approach to artificially producing rain — could deplete water levels in major dams in the northern part of Peninsular Malaysia.

From this article Nikki Asia, a global publication with a unique Asian perspective on politics, economics, business and international affairs. Our own reporters and external commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of the 300 largest and fastest-growing listed companies from 11 economies outside Japan.

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That region includes Penang, home to much of Malaysia’s semiconductor industry, which relies on large amounts of water.

Philippine President Ferdinand Marcos Jr. in a vlog last month stressed the importance of conserving water in the face of El Niño, particularly in places like homes, car washes, golf courses and swimming pools.

“We can all help. We can all do something,” Marcos said.

Economist Kumagai suggested that introducing wastewater recycling facilities in industries and expanding agricultural insurance programs could be important measures to mitigate the economic fallout of El Niño.

„These approaches are necessary not only for El Niño but also for La Niña and other risks caused by climate change. The progress of these efforts will determine the medium and long-term economic growth rates of Asian countries,” he said.

Additional reporting by Cliff Venzon in Manila, Ismi Tamayanti in Jakarta, Norman Koh in Kuala Lumpur and Subasa Suruka in Singapore

A version of this article Originally published by Nikkei Asia. ©2023 Nikkei Inc. All rights reserved.

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