Captures has widened its scope to include news related to all the members of the Regional Comprehensive Economic Partnership (RCEP) agreement which was signed towards the end of 2020. Besides the ASEAN Member States, this includes Australia, New Zealand, China, Japan, and South Korea. The other weekly newsletters under CARI, China-ASEAN Monitor and Mekong Monitor will also be consolidated into the Captures newsletter. We hope this new version of Captures will serve you better and look forward to providing a curation of stories relevant to ASEAN and its trading partners.

INDONESIA, AUSTRALIA
Australian Prime Minister visits Indonesia in first international visit since reelection  
(15 May 2025) On 15 May, Australian Prime Minister Anthony Albanese met with Indonesian President Prabowo Subianto in Jakarta to discuss defence cooperation, trade, and economic ties during his first international visit since re-election. Albanese emphasised Indonesia as an “indispensable partner,” reflecting Canberra’s priority on strengthening bilateral relations. Talks included reinforcing defence ties, following a previous agreement on maritime security, counter-terrorism, and disaster response. Indonesia committed to completing the ratification of the defence agreement and expressed interest in expanding cooperation in the sector. Discussions also covered trade, investment, food security, energy transition, and critical minerals, with Prabowo inviting Australia to increase its economic participation in Indonesia amid global economic uncertainty. Albanese highlighted Australia’s aim to deepen economic ties with Southeast Asia to diversify export markets and reduce reliance on China. Besides Indonesia, Albanese intends to visit Malaysia in late May to attend the ASEAN Summit. He will also likely visit Singapore this year to celebrate the 60th anniversary of Australia-Singapore diplomatic ties.

VIET NAM, THAILAND
Viet Nam and Thailand elevate relations to comprehensive strategic partnership 
(16 May 2025) Viet Nam and Thailand elevated their diplomatic relations to a comprehensive strategic partnership during Thai Prime Minister Paetongtarn Shinawatra’s visit to Hanoi, with an aim of boosting bilateral trade to USD 25 billion. Thailand remains Viet Nam’s largest trading partner in ASEAN, with 2024 trade reaching USD 20.2 billion, a 6% increase from the previous year. Thai companies have over 750 projects in Vietnam, totalling USD 14 billion in investments. In the first quarter of 2025, Thailand ranked 7th among foreign investors in Vietnam, with USD 436 million in pledged investments, nearly doubling last year’s total of USD 225 million. Defence and security cooperation has expanded, including naval and air force training and joint patrols. Both nations also committed to collaboration in logistics and supply chains, with Thailand exploring routes to transport goods to China through Vietnam.

INDONESIA
Export levy on crude palm oil increased from 7.5% to 10% 
(14 May 2025) Indonesia raised its export levy on crude palm oil from 7.5% to 10%, effective 17 May, to fund its biodiesel programme and replanting initiatives, according to a regulation issued by the finance ministry. Levies on other palm oil products also increased, including crude palm olein from 6% to 9.5%, refined bleached and deodorised palm olein from 4.5% to 7.5%, and biodiesel from 3% to 4.75%. Revenue from the levies will support Indonesia’s plantation fund management agency (BPDP), primarily funding the expanded biodiesel blending programme, which raised palm-based biodiesel content in gasoil to 40% in January. Only half of this year’s biodiesel allocation will be subsidised due to higher palm oil prices. The levy hike is anticipated to elevate palm oil prices as exporters pass on costs to buyers, who also face separate export taxes payable to Indonesia’s customs department.

THE PHILIPPINES
Philippine sovereign bonds expected to rally over coming months  
(15 May 2025) Philippine sovereign bonds are expected to rally in the coming months as slowing economic growth and easing inflation create conditions for potential interest-rate cuts. The yield on 10-year sovereign bonds, currently at 6.2%, may drop to 5.5% this year, which would create capital gains for bondholders. The central bank chief indicated that 75 basis points of rate cuts are possible in 2025 following weaker-than-expected first-quarter growth. An Asia sovereign strategist at Robeco stated that Bangko Sentral ng Pilipinas’s focus on easing monetary policy supports this outlook, with rice prices, accounting for 10% of the consumer price index, playing a significant role. Philippine local currency bonds have been among Asia’s top performers this month, benefiting from the nation’s lower exposure to global trade disruptions and a favourable US levy compared to regional peers. The peso has strengthened by 3.6% this year, enhancing bond attractiveness. A chief economist at Rizal Commercial noted that the combination of controlled inflation and a strong peso supports further bond market gains.

THE PHILIPPINES
The Philippines is exploring renewable energy exports to Taiwan and other countries
(15 May 2025) The Philippines is exploring renewable energy exports to Taiwan and other countries, leveraging anticipated surplus capacity. Discussions are ongoing between Manila and Taipei, with talks also involving Southeast Asian nations under the ASEAN power grid initiative. For non-ASEAN members like Taiwan, further regional frameworks would be required. The Philippines aims to raise the share of renewables in its energy mix to 35% by 2030 and 50% by 2040. Taiwan’s Economic Minister Kuo Jyh-huei stated that importing green energy from the Philippines could lower costs for Taiwanese manufacturers, maintaining prices below NTD 5 (USD 17 cents) per kWh. Additionally, the Philippines’ Department of Energy plans to award contracts for two gas exploration projects in the Sulu Sea and one in Palawan this year, while exploration for oil and gas continues in other regions amid stalled talks with China over joint development in the South China Sea.

MALAYSIA, SINGAPORE
Malaysia enhancing Malaysia My Second Home (MM2H) programme to attract Singaporeans   
(15 May 2025) Malaysia’s Tourism, Arts and Culture Ministry is enhancing its Malaysia My Second Home (MM2H) programme to improve transparency, simplify processes, and increase policy flexibility. The revamped programme now includes Platinum, Gold, and Silver tiers aimed at high-net-worth individuals, families, retirees, and digital nomads, offering benefits such as premium living, quality healthcare, education, safety, and ASEAN connectivity. During his working visit, the government launched the “Maybank Premier MM2H – Your Gateway to Malaysia” event in collaboration with Maybank Singapore, encouraging Singaporeans to consider Malaysia as a strategic base due to its cost-effective living, infrastructure, and regional market access. The event saw over 200 participants, reflecting strong interest in MM2H among Singaporeans. In 2024, Malaysia recorded 18.86 million visitors from Singapore, a 27.2% increase from 2023, with tourism receipts rising 29.5% to RM27.94 billion. Singapore ranked third in MM2H applications in Q1 2025, behind Taiwan and China. The collaboration with Maybank Singapore aims to provide seamless financial advisory services and onboarding support for Singaporean participants exploring MM2H.

MALAYSIA
Economy grows by 4.4% in Q1 2025, driven by household spending and export growth   
(16 May 2025) Malaysia’s economy grew by 4.4% in Q1 2025, driven by sustained household spending, a 9.7% increase in overall investment, and continued export growth supported by electrical and electronic products and tourism, despite a decline in mining exports. This matches the projection made by the statistics department in April and is an improvement from the 4.2% growth in Q1 2024. However, Bank Negara Malaysia warned that tariffs introduced by US President Donald Trump are expected to negatively impact Malaysian exports, potentially pushing economic growth below the initial 2025 forecast of 4.5% to 5.5%, with a revised forecast to be released soon. They noted that 32% of Malaysia’s exports to the US, including semiconductors, are tariff-exempt, and Malaysia’s exports are generally inelastic. Headline inflation eased to 1.5% in Q1 2025, while core inflation rose slightly to 1.9%. The ringgit appreciated by 0.8% against the US dollar, with a 0.01% increase in its nominal effective exchange rate.

RCEP Monitor

JAPAN
Yields in Japan’s USD 7.8 trillion government debt market surge rapidly  
(16 May 2025) Yields in Japan’s USD 7.8 trillion government debt market have surged rapidly, with 30-year yields nearing record highs and doubling the benchmark 10-year rate, signalling a significant shift driven by the Bank of Japan’s (BOJ) reduced bond purchases and subdued demand from local life insurers. The steepening yield curve has broad implications for monetary and fiscal policy, raising borrowing costs for the government, which holds the largest debt load among major economies, and increasing potential costs for corporate loans and mortgages. The BOJ is expected to address its bond-purchasing strategy on 17 June, amid pressures to control inflation without stalling economic growth. Prime Minister Shigeru Ishiba faces challenges in balancing fiscal policy ahead of Upper House elections and long-term defence spending. Key strategists highlight market concerns over inflation expectations and fiscal sustainability. Super-long yields, such as the 40-year rate now at a record 3.47%, are attracting foreign investors like Vanguard and RBC BlueBay, though their market share remains small. The spread between Japan’s 10- and 30-year bond yields has widened by 50 basis points since April, outpacing other major markets. Despite some views that super-long yields may stabilise, a shortfall in demand persists, with foreign investments unable to fully compensate for domestic insurer inactivity. Net supply has been concentrated in longer maturities, sustaining upward pressure. Analysts indicate the BOJ’s challenge lies in managing long-term rates without destabilising the broader economy.

NEW ZEALAND
Government to allocate additional NZD 577 million to expand movie production incentives scheme
(16 May 2025)  New Zealand will allocate an additional NZD 577 million (USD 339 million) in its upcoming federal budget to expand the International Screen Production Rebate scheme, following U.S. President Donald Trump’s announcement of 100% tariffs on films produced outside the United States. The rebate programme, established in 2014, provides a 20% cash rebate for production costs exceeding NZD 15 million for feature films and NZD 4 million for television shows. New Zealand’s Finance Minister stated that the move aims to solidify New Zealand’s position as a prime location for international film productions, despite broader government spending cuts due to shrinking tax revenues. The country’s film sector employs approximately 24,000 people, contributing NZD 3.5 billion annually, with a third of its revenue stemming from U.S. projects. The Finance Minister acknowledged that Australia, Canada, and the United Kingdom offer more competitive incentives but emphasised the necessity of maintaining New Zealand’s scheme to secure offshore investment.

CHINA
Chinese property market showing signs of stabilisation due to low rates and affordable prices  
(12 May 2025) China’s property market is showing signs of stabilisation as low rates and affordable properties support prices and purchases, according to S&P Global Ratings, which projects a 1% drop in primary home prices and a 2% decline in primary sales volume for 2025, compared to a 17% sales drop in 2024. Government measures, including a quarter-point interest rate cut by the People’s Bank of China (PBOC), lowering the five-year rate for first-time homebuyers to 2.6%, are aimed at boosting buyer interest and completing stalled projects. The PBOC reported that CYN 6.7 trillion (USD 926 billion) in loans were approved for “white list” housing projects covering 16 million units. Inventory levels improved, with tier-one cities at 12.6 months and tier-two cities at 18.1 months as of January, down from 20-25 months in late 2024. March marked the 22nd consecutive monthly decline in new-home prices, though the rate of decline narrowed, with prices falling 0.1% from February and 5% year-over-year. Second-hand home prices also saw smaller drops, with a 0.2% monthly decline and 7.3% annual drop. A total of 24 cities reported month-to-month price increases for new homes, up from 18 in February. HSBC highlighted that low rates and improved affordability would further drive market stabilisation, with China Overseas Land & Investment issuing two tranches of onshore bonds with historically low coupons of 1.8% and 2.37% for five- and 10-year tenors. HSBC also noted a CYN 220 billion increase in the quarterly mortgage balance, signalling stronger credit flows into the property sector.