CARI Captures Issue 688: Startup funding in Southeast Asia in 2024 drops to USD 4.56 billion, a 42% year-on-year decline


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.



ASEAN
Startup funding in Southeast Asia in 2024 drops to USD 4.56 billion, a 42% year-on-year decline
(22 January 2025) Southeast Asia’s startup funding in 2024 dropped to USD 4.56 billion, a 42% decline from 2023 and just 20% of its 2021 peak of USD 23.4 billion, according to DealStreetAsia. The number of deals decreased by 10% to 633, with late-stage funding rounds experiencing a 72% drop in value to USD 1.23 billion across 21 deals, marking the first time in six years late-stage funding was eclipsed by early-stage investments. Singapore accounted for 68% of regional funding, followed by Indonesia (9.6%) and the Philippines (9.4%). Financial services, including fintech and digital banking, dominated large fundraisers, with Atome securing USD 300 million in debt financing, the largest deal of 2024. The only unicorn minted was Tyme Group, which raised USD 250 million, led by Nubank, at a USD 1.5 billion valuation. Investors cited macroeconomic pressures, higher U.S. interest rates, a strong dollar, and geopolitical uncertainties under Donald Trump’s presidency as key factors for reduced activity. Early-stage deals are expected to dominate while local investors await improved exit conditions.

THAILAND
Thailand signs trade agreement with European Free Trade Association
(23 January 2025) Thailand will sign its first trade agreement with European countries on Thursday in Davos, partnering with the European Free Trade Association (EFTA), comprising Iceland, Liechtenstein, Norway, and Switzerland. In 2023, EFTA imported USD 1.8 billion worth of goods and services from Thailand and exported USD 1.4 billion. Negotiations for the agreement began in 2005, stalled due to political instability in Thailand, and concluded in November 2024. The pact will reduce or eliminate customs duties on industrial and seafood products, streamline trade procedures, and enhance transparency. The Thai government aims to use the agreement to expand export markets and attract foreign investment amid trade uncertainties linked to U.S. tariffs under the Trump administration. Key Thai exports to EFTA include electronics-making machinery, mechanical appliances, vehicle components, and clock parts. Thailand’s Commerce Minister emphasised the need for structural reforms to boost high-tech exports and attract investment. Thailand is negotiating additional trade agreements with the EU, South Korea, Bhutan, the UAE, and Canada. However, the EU deal remains stalled due to differences over standards in government procurement, intellectual property, and labour protections.

SINGAPORE
Monetary Authority of Singapore eases monetary policy for first time since 2020
(24 January 2025) Singapore’s central bank, the Monetary Authority of Singapore (MAS), has eased monetary policy for the first time since 2020, citing heightened global trade policy uncertainties and moderating inflation. The MAS announced it would reduce the rate of the Singapore dollar’s appreciation against a basket of trading partner currencies, effectively lowering borrowing costs in Singapore’s trade-dependent economy. This decision follows December core inflation data showing a 1.8% year-on-year increase, the second consecutive month below 2%. The MAS also revised its 2025 inflation forecast to 1–2%, down from the previous 1.5–2.5% range. Singapore’s GDP growth is projected to decline from 4% in 2024 to 1–3% in 2025, reflecting external economic uncertainties. The MAS, which manages monetary policy through exchange rate adjustments rather than domestic interest rates, noted that imports account for 40% of Singapore’s consumer spending and gross trade exceeds 300% of GDP. The Singapore dollar initially weakened following the announcement but later traded at SGD 1.3526 per US dollar.

SINGAPORE, MALAYSIA
Malaysia and Singapore announce Johor-Singapore Special Economic Zone to enhance economic collaboration
(21 January 2025) Malaysia and Singapore have announced the Johor-Singapore Special Economic Zone (JSSEZ) to enhance economic collaboration amid rising US-China tensions and global trade fragmentation. Modelled after China’s Shenzhen economic zone, the JSSEZ aims to add USD 26 billion annually to Malaysia’s GDP by 2030, creating 20,000 skilled jobs and attracting 50 new projects. Malaysia is offering a 5% corporate tax rate for 15 years to attract investments in artificial intelligence, quantum computing, and high-end manufacturing. Johor, which has already attracted over USD 25 billion in data centre investments from companies like Nvidia, Microsoft, and ByteDance, will provide land, water, energy, and labour, while Singapore will leverage its global financial and logistics networks. The initiative reflects Malaysia’s strategy to integrate more closely with Singapore and diversify economic risks from geopolitical uncertainties. Bilateral plans include collaboration on green energy, infrastructure, cross-border electricity trading, and transport links. Malaysia’s Economy Minister emphasised the zone’s potential to function as an economic unit, combining Johor’s resources with Singapore’s global connectivity.

SINGAPORE
Private residential property prices rise by 2.3% in Q4 2024 
(24 January 2025) Singapore’s private residential property prices rose by 2.3% in Q4 2024, matching earlier estimates, with a full-year increase of 3.9%, according to the Urban Redevelopment Authority (URA). Developers sold 6,469 new units in 2024, slightly up from 6,421 in 2023, driven by new project launches and lower mortgage rates, as the three-month Singapore overnight rate averaged 2.92%, the lowest since November 2022. Rents for private homes remained flat in Q4, contributing to a 1.9% annual decline, the first drop since 2020. Prices for second-hand public housing apartments increased for the 19th consecutive quarter, with a 9.7% annual rise, the highest since 2022. Strong demand at private residential launches in early 2025 has prompted analysts, including those from Citigroup and Barclays, to predict potential new cooling measures, possibly announced during the annual budget on 18 February. Approximately 27,300 private units are expected to be completed between 2025 and 2027, but supply constraints continue to sustain elevated prices. Singapore’s National Development Minister indicated the government is open to new curbs but emphasised patience to allow existing measures to take effect.

INDONESIA
Indonesia considering reducing nickel ore production quotas to stabilize prices
(21 January 2025) Indonesia is considering reducing nickel ore production quotas to stabilise prices amidst a global surplus, according to its Ministry of Energy and Mineral Resources. Nickel prices have declined by approximately 40% over the past two years to around USD 16,000 per tonne, pressuring domestic producers and causing mine closures outside Indonesia. While specific figures were not disclosed, media reports suggest the 2024 quota could be set at 150-200 million tonnes, down from an estimated 270 million tonnes in 2023. Indonesia, which accounts for 57% of global refined nickel production, produced 2.02 million tonnes last year, with output expected to rise to 2.38 million tonnes in 2024, according to Benchmark Mineral Intelligence (BMI). Analysts warn that significant quota cuts could lead to domestic ore shortages, increased smelter costs, and greater reliance on imports, particularly from the Philippines. Macquarie estimates last year’s global nickel market surplus at 200,000 tonnes, predicting a smaller 60,000-tonne surplus in 2024, partly due to anticipated quota reductions and recovering EV battery demand. A sharp quota cut to 150 million tonnes would remove 35% of global supply, but such a drastic move is considered unlikely due to its potential impact on government revenue and the economy.

VIET NAM
Viet Nam’s economy projected to grow by 6.5% in 2025 
(23 January 2025) Viet Nam’s economy is projected to grow by 6.5% in 2025, according to the Asean+3 Macroeconomic Research Office (AMRO), aligning with Viet Nam’s target range of 6.5% to 8% but below the 7.09% growth recorded in 2024. Inflation is forecast to reach 3.5%, within the target range of 3% to 4.5%. Vietnam’s growth is attributed to strong export performance, with 2024 exports rising 14.3% to USD 405.53 billion and imports increasing 16.7% to USD 380.76 billion, resulting in a trade surplus of nearly USD 25 billion for the ninth consecutive year. Key growth drivers include diversified trade relationships, competitive labour markets, and investments in high-tech manufacturing and digitalisation. Vietnam’s growth outpaces regional peers such as the Philippines (6.3%), Indonesia (5.1%), and Thailand (3.1%), with Asean+3 regional growth forecast at 4.2% for 2025. However, the Plus-3 economies (China, Japan, South Korea) face slower growth of 4.0% due to rising trade barriers, including higher US tariffs on Chinese goods, which could reduce Asean’s growth by 0.1 percentage points. AMRO highlighted the risks of escalating trade tensions and their impact on external demand in the region.


RCEP Monitor


SOUTH KOREA
Financial Services Commission announces stricter delisting rules to improve stock market quality
(21 January 2025) South Korea’s Financial Services Commission (FSC) announced stricter delisting rules to improve stock market quality. The market capitalisation requirement for Kospi-listed companies will rise from KRW 5 billion to KRW 20 billion in 2026 and KRW 50 billion in 2028, while the improvement period following a delisting warning will be halved. Firms with a market cap under KRW 100 billion will face increased revenue thresholds, reaching at least KRW 30 billion by 2029. IPO regulations will also tighten, requiring 40% of shares to be allocated to institutional investors with lock-up periods by 2026. Additional restrictions on institutional investor participation in book-building will take effect in April and July 2025. Currently, 62 Kospi and 137 Kosdaq firms, representing 7%-8% of each market, fail to meet the new standards. Over the past decade, no firms were delisted under the existing thresholds, which the FSC criticised for inefficiencies in capital allocation and eroding market trust. Despite increased listings, South Korea’s MSCI index gains remain low at 3.8% compared to over 65% growth in the U.S., Japan, and Taiwan, highlighting the need for these structural reforms.

AUSTRALIA
IPOs start slowly in 2025 due to concerns over US protectionist policies
(22 January 2025) Australian initial public offerings (IPOs) have started slowly in 2025, with only four companies planning to list on the ASX in the first quarter, according to HLB Mann Judd. This follows USD 2.4 billion raised in IPOs in 2024, exceeding the combined totals of 2022 and 2023 but below the USD 5.9 billion annual average recorded before 2020. A corporate advisory partner at HLB attributed the sluggish start to concerns over US protectionist policies under the Trump administration, particularly tariffs and their impact on electric vehicle demand and commodity prices. These policies are expected to have a greater influence on market activity than Australia’s federal election in May. The Chinese economy’s vulnerability to US tariffs is also cited as a factor potentially affecting Australian IPO activity. Prospective issuers are reportedly cautious, with some deals in 2024 scrapped for not meeting listing requirements. HLB anticipates limited improvement in IPO activity until later in the year. 

JAPAN
Bank of Japan raises interest rates by 0.25 percentage points to 0.5% 
(23 January 2025) The Bank of Japan raised interest rates by 0.25 percentage points to 0.5% on 24 January, marking its highest level since 2008 and the third increase within a year, as inflation remains above the 2% target for 33 consecutive months. Core consumer prices rose 3% in December, while base pay has reached post-1990s highs, with 2023’s spring labour negotiations producing the largest wage increases since 1991. The central bank’s monetary tightening aims to embed inflation, address inefficiencies, and stimulate productive economic growth, though inflation has outpaced wage growth, straining household budgets. Japan’s gross domestic product, adjusted for inflation, has grown only 25% since 1994, with the IMF projecting 1.1% growth in 2025 following a 0.2% contraction in 2024. While private consumption has recovered in recent quarters, spending remains weak after prolonged stagnation.

15 participating countries

20 chapters

2.2 billion

US$26.2 trillion

28%

ASEAN member states, Australia, China, Japan, South Korea, New Zealand trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement combined population, 30% world’s population combined GDP, 30% global GDP global trade (based on 2019 figures)

CARI Captures Issue 687: ASEAN economies struggle with influx of cheap Chinese imports


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.



ASEAN, CHINA
ASEAN economies struggle with influx of cheap Chinese imports
(14 January 2025) China’s exports grew 7.1% year-on-year in 2024 to a record CNY 25.45 trillion (USD 3.47 trillion), driven by rising shipments to Southeast Asia, which accounted for 16% of total exports, according to Chinese customs data. Exports to ASEAN surged 18.9% year-on-year in December, with the bloc becoming China’s largest export market in 2023 at USD 523.7 billion. The influx of Chinese goods, including a CNY 1 trillion export value of electric vehicles, lithium batteries, and solar panels, has pressured Southeast Asian industries, causing factory closures and job losses, such as 50,000 layoffs in Indonesia’s textile sector and 2,000 Thai factory closures between mid-2023 and mid-2024. In response, ASEAN nations have enacted measures like anti-dumping tariffs and taxes on low-cost imports; for example, Vietnam extended duties on Chinese aluminium products, while Thailand proposed a 30.9% tariff on Chinese steel. Analysts highlight challenges to ASEAN coordination due to differing economic conditions, while noting potential benefits from deeper economic ties with China, including technology transfers and infrastructure development, contingent on careful management and policy alignment.

MALAYSIA, UK
Malaysia and UK leveraging membership of CPTPP to strengthen trade and investment ties  
(16 January 2025) Malaysia and the United Kingdom are leveraging their membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to strengthen trade and investment ties. Malaysian Prime Minister Datuk Seri Anwar Ibrahim highlighted the significance of the UK’s entry into the CPTPP and Malaysia’s ratification in October 2024, which eliminates tariffs on member countries’ products. Speaking at the launch of YTL Group’s GBP 4 billion Brabazon New Town development in Bristol, Anwar commended YTL, Malaysia’s largest investor in the UK, for its contributions. The Brabazon project will include 6,500 sustainable homes, three schools, a large urban park, and essential services within a 15-minute radius. YTL, which entered the UK market in 2002 with the acquisition of Wessex Water, plans to invest an additional GBP 4 billion in the UK over five years. Anwar emphasised the importance of international frameworks like the CPTPP in expanding Malaysia’s global trade footprint.

THAILAND
Thailand’s SEC evaluating approval of Bitcoin ETF’s for listing on local exchanges
(15 January 2025) Thailand’s Securities and Exchange Commission (SEC) is evaluating the approval of Bitcoin exchange-traded funds (ETFs) for listing on local exchanges, allowing individual and institutional investors direct access to the cryptocurrency. Currently, Thai investors can only access overseas Bitcoin ETFs through funds such as One Asset Management’s offering launched in June 2024. The SEC Secretary-General highlighted the need to adapt to global cryptocurrency adoption trends, proposing enhanced investor protections. Binance and other digital-asset firms have identified Thailand as a key growth market amid eased restrictions. Thaksin Shinawatra, associated with the ruling Pheu Thai Party, has advocated issuing stablecoins backed by government bonds and developing a Bitcoin transaction sandbox in Phuket for tourism-related services. The SEC is also considering allowing highly-rated local firms to issue stablecoins backed by corporate bonds to enhance access to debt markets. As of November 2024, Thailand had approximately 270,000 active crypto trading accounts, with Bitcoin reaching a record high of USD 108,315 in December, though activity remains below pandemic-era peaks.

THAILAND
Thaksin Shinawatra proposes regulatory reforms to restore confidence in stock market
(13 January 2025) Thaksin Shinawatra, the de facto leader of Thailand’s ruling party, proposed regulatory reforms and incentives to restore confidence in Thailand’s USD 490 billion stock market, which has seen USD 9.6 billion in foreign outflows over two years due to scandals, sluggish economic performance, and political uncertainties. He urged stricter enforcement of regulations by the SEC and Stock Exchange of Thailand to combat fraud and criticised slow responses to corporate scandals involving firms like Stark Corp. and More Return Pcl. Thaksin recommended introducing tax incentives for long-term equity investors, reviewing high-frequency trading, and creating stablecoins backed by government bonds. Proposals included opening a carbon credit trading venue, reducing electricity tariffs to THB 3.70 baht per unit, and offering 99-year leases for a sea reclamation project to protect Bangkok. Thaksin projected GDP growth rates of over 3% in 2025, 4% in 2026, and 5% in 2027, citing plans for infrastructure development to attract foreign investment. Additional initiatives include setting a flat 20-baht commuter fare for Bangkok’s electric trains by October and evaluating tax reforms to enhance competitiveness.

INDONESIA, MALAYSIA, SINGAPORE
Johor-Singapore Special Economic Zone to potentially outcompete Indonesian SEZs 
(14 January 2025) Malaysia and Singapore’s agreement to develop the Johor-Singapore Special Economic Zone (JS-SEZ) is raising concerns in Indonesia over its potential to outcompete Indonesian SEZs for high-value investments. While corporate tax rates in Malaysia currently range from 15% to 24%, the JS-SEZ is expected to offer special tax rates of 5% for 15 years for companies in advanced sectors like AI, aerospace manufacturing, and medical devices. Indonesia’s corporate tax rate stands at 20%, but its SEZs provide up to 20 years of tax holidays and other allowances. Analysts warn that Indonesia faces challenges, including high costs, complex bureaucracy, limited green energy, insufficient infrastructure, and a lack of skilled labour, which have hindered its SEZs’ competitiveness. Indonesia’s SEZs, which have generated USD 15.7 billion in investment since 2012, face logistical barriers and limited realisation in several zones. Comparatively, Malaysia’s streamlined processes and favourable tax policies are seen as more attractive. Indonesia’s special economic adviser noted that global tech giants, including Apple, Alphabet, and Microsoft, have prioritised investments in Malaysia and Vietnam, while Indonesia has struggled to attract similar interest. Suggestions to enhance Indonesia’s SEZs include simplifying permit processes, improving port capacity, increasing green energy supply, and expanding vocational training to enhance workforce skills.

THE PHILIPPINES
Philippines’ bond bourse approves framework for trading forward contracts
(13 January 2025) The Philippine Securities and Exchange Commission approved PDS Group’s framework for trading government bond forward contracts, marking a key step in capital market development. Operated by Philippine Dealing & Exchange Corp. (PDEx), the non-deliverable contracts will allow participants to hedge interest-rate risks, with settlement via a bilateral netting system rather than central clearing. Trading will begin next month in PHP 50-million (USD 853,000) lots, offering the first peso interest-rate hedge akin to bond futures. This initiative complements the recently launched peso interest rate swap facility by the Bankers Association of the Philippines and aims to address growing hedging needs in one of Asia’s fastest-growing economies. Bangko Sentral ng Pilipinas (BSP) had earlier expanded permissible derivatives to include forward contracts. The PDS President emphasised the comprehensive framework now in place to support the market’s development.

VIET NAM
Viet Nam orders banks to withhold taxes for global tech platforms
(17 January 2025) Viet Nam has directed banks to withhold taxes for Agoda, Airbnb, Booking.com, and PayPal, as outlined in a General Tax Department letter dated 31 December. The order applies to 100 domestic and foreign banks, requiring them to deduct and declare tax obligations when processing payments through these platforms. The targeted companies, incorporated in low-tax jurisdictions such as Singapore, the Netherlands, and Ireland, have operated in Viet Nam for over a decade, generating revenues of up to tens of millions of dollars without registering for tax purposes. This measure is part of Vietnam’s broader efforts to tax global digital service providers and e-commerce platforms, complementing its participation in the OECD’s global minimum tax initiative. Authorities are also considering expanding taxation to include low-cost imports purchased via platforms like Shein. The four companies did not respond to requests for comment.


RCEP Monitor


CHINA

China’s population decreases by 1.39 million in 2024, third consecutive year of decline 
(17 January 2025) China’s population decreased by 1.39 million in 2024, reaching 1.408 billion, marking the third consecutive year of decline, according to the National Statistics Bureau. Births rose slightly to 9.54 million, 520,000 more than in 2023, attributed to delayed childbearing during the COVID-19 pandemic and the Year of the Dragon’s perceived auspiciousness. Despite this increase, it remains the second-lowest birth figure since 1949. Demographer He Yafu predicts a further decline in 2025. Bloomberg Intelligence projects the population may shrink to 1.36 billion by 2035, though efforts to encourage higher birth rates could delay this. In October, authorities pledged support for families with multiple children, including measures for housing, healthcare, and employment. Meanwhile, an ageing population and reduced workforce pose risks to economic growth and strain the pension system. In response, China announced plans to gradually raise the retirement age, the first adjustment since 1978, despite public opposition. 

CHINA
Shanghai and Guangdong reduce 2025 economic growth targets in response to Trump
(15 January 2025) China’s key exporting regions, Shanghai and Guangdong, have reduced their 2025 economic growth targets to approximately 5%, reflecting external challenges, including potential trade policies under US President-elect Donald Trump. Shanghai, which reported a 2024 GDP exceeding CNY 5 trillion and total trade of CNY 4.27 trillion, highlighted pressures on its export-reliant economy, with foreign direct investment falling from USD 24.1 billion in 2023 to USD 17.5 billion in 2024. The city aims to stabilise foreign trade and boost emerging industries like artificial intelligence and biomedicine, with R&D spending accounting for 4.4% of GDP. Guangdong, China’s largest provincial economy with a 2024 GDP exceeding CNY 14 trillion, plans to expand exports of electronics, smart appliances, and electric vehicles while diversifying markets beyond Europe and the US. Despite a 9.8% increase in trade volume to over CNY 9 trillion, Guangdong’s GDP growth lagged at 3.4% in the first three quarters of 2024, impacted by the property market slump. Both regions prioritise local consumption, technological investment, and foreign investment to mitigate external risks.

CHINA
China’s central bank outlines shift in country’s economic growth model
(13 January 2025) China’s central bank governor outlined a shift in the country’s economic growth model, moving away from a focus on investment towards prioritising consumption. This change comes amid concerns over insufficient domestic demand, particularly in consumption, and deflationary pressures. The governor highlighted that macroeconomic policy should now support both consumption and investment, with a stronger emphasis on the former. Measures to increase residents’ income, enhance subsidies, and improve social security will be introduced to stimulate consumption. While China met its 2024 growth target of around 5%, the outlook remains uncertain, especially with the looming threat of higher US tariffs. At a recent policy meeting, officials pledged to prioritise consumption, though the measures introduced so far, such as consumer trade-in programmes and increased subsidies, suggest incremental changes rather than a complete overhaul of the investment-heavy policy. Household spending accounts for just 45% of GDP, far below the OECD average. In his speech at the Asian Financial Forum, the governor also sought to reassure investors, noting improvements in housing sales and reduced risks from local government debt. The People’s Bank of China continues to support the yuan, using various tools, including interest rates and capital controls, to stabilise the currency.

15 participating countries

20 chapters

2.2 billion

US$26.2 trillion

28%

ASEAN member states, Australia, China, Japan, South Korea, New Zealand trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement combined population, 30% world’s population combined GDP, 30% global GDP global trade (based on 2019 figures)

CARI Captures Issue 686: Indian outbound tourism to Southeast Asia rises to 3.75 million in 2023


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.


 

ASEAN, INDIA
Indian outbound tourism to Southeast Asia rises to 3.75 million in 2023
(7 January 2025) Indian outbound tourism to Southeast Asia has surged, with visitor numbers rising from 31,100 in 2021 to 3.75 million in 2023, according to the World Travel and Tourism Council (WTTC). While Indian travel to Sri Lanka and France grew five- and twelve-fold, respectively, during the same period, Southeast Asia saw significantly higher visitor numbers, supported by affordable luxury, convenient visa policies, and expanded flight connections. Spending by Indian travellers abroad reached USD 33 billion in 2023, placing India 10th globally in outbound tourism expenditure. Destinations like Thailand, Indonesia, and Viet Nam attract Indian tourists with competitive pricing compared to Western countries, with direct flights from India increasing 20% in 2024. Southeast Asia also appeals for weddings, with costs often undercutting domestic Indian destinations. Initiatives such as visa-free entry in Thailand and Malaysia and joint ASEAN-India tourism activities further boost travel. Oyo and airlines including Singapore Airlines and VietJet have expanded operations to cater to this market, reflecting growing demand.

THAILAND
Thai government’s plan to reduce electricity prices welcomed by industry leaders
(10 January 2025) The Thai government’s plan to reduce electricity prices from THB 4.15 to THB 3.70 per unit has been welcomed by industry leaders and households as a measure to lower living costs and enhance economic competitiveness. Prime Minister Paetongtarn Shinawatra announced discussions to eliminate unnecessary costs to achieve the price target, initially proposed by former Prime Minister Thaksin Shinawatra. Federation of Thai Industries (FTI) Chairman Kriengkrai Thiennukul highlighted that the reduction would alleviate high production costs compared to regional competitors like Viet Nam and Indonesia, strengthening Thailand’s export and investment appeal. Thai Chamber of Commerce (TCC) Chairman Sanan Angubolkul estimated annual savings of THB 100 billion for households, boosting consumer spending and business profitability. The Electricity Generating Authority of Thailand (EGAT) may require subsidies to support this adjustment, adding to its existing liabilities of over THB 100 billion. At THB 4.15, Thailand’s electricity cost ranks fifth highest in ASEAN, below Singapore (THB 12.30) but above nations like Vietnam (THB 2.69) and Indonesia (THB 2.59).

THAILAND
Inflation rate rises to 1.23% in December 2024, marking return to BOT target range
(6 January 2025) Thailand’s inflation rate rose to 1.23% in December 2024, marking its return to the Bank of Thailand’s (BOT) 1%-3% target range for the first time since May. Core inflation stood at 0.79%, with consumer prices falling 0.18% month-on-month. Full-year inflation averaged 0.4%. The Trade Policy and Strategy Office projects inflation exceeding 1% in Q1 2025 due to higher diesel and food prices, with minimal impact from the recent minimum wage hike. Despite government calls for further rate cuts to boost the economy, BOT maintained its policy rate at 2.25% in December, citing the need for policy space amid global uncertainties. BOT forecasts inflation to average 1.1% in 2025 and economic growth to rise to 2.9% from 2.7% in 2024. Assistant Governor Sakkapop Panyanukul emphasised a robust monetary policy stance to address challenges. The rate panel will next meet on 26 February 2025.

MALAYSIA, SINGAPORE
Johor-Singapore Special Economic Zone (JS-SEZ) signed into law
(8 January 2025) The Johor-Singapore Special Economic Zone (JS-SEZ) agreement, signed during the 11th Malaysia-Singapore Leaders’ Retreat on 7 January, aims to create 20,000 skilled jobs and facilitate the expansion of 50 projects within five years and 100 projects in a decade. The initiative spans the Iskandar Development Region and Pengerang, focusing on 11 sectors, including manufacturing, logistics, and renewable energy. Malaysia will offer tax incentives, a special corporate tax rate, and establish the Invest Malaysia Facilitation Centre – Johor as a one-stop investment hub. Early measures include passport-free QR code clearance at checkpoints and enhanced movement of goods and labour. In 2023, Singapore accounted for 23.2% of Malaysia’s FDI, totalling MYR 43.7 billion, with Johor receiving MYR 31 billion. Singaporean businesses expressed interest, highlighting benefits for logistics, transportation, and manufacturing sectors. Industry leaders called for detailed infrastructure timelines and policy rollouts to maximise benefits. The JS-SEZ is expected to strengthen regional economic integration and attract global investments by leveraging Johor and Singapore’s complementary strengths.

INDONESIA
Indonesia formally joins BRICS as full member, expanding group to 11 nations
(7 January 2025) Indonesia has formally joined BRICS as a full member, expanding the group to include 11 nations. Brazil, which holds the BRICS presidency in 2025, confirmed Indonesia’s entry following unanimous approval by member states, as part of an expansion strategy endorsed at the 2023 Johannesburg summit. Indonesia’s accession was delayed until after its presidential election in 2024, with President Prabowo Subianto assuming office in October. Brazil highlighted Indonesia’s alignment with BRICS goals, including support for global governance reforms and fostering cooperation within the Global South. The group now comprises Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, the United Arab Emirates, and Indonesia.

INDONESIA
Indonesian e-commerce firm Bukalapak announces end of selling physical goods on its marketplace
(8 January 2025) Bukalapak, an Indonesian e-commerce firm, announced it will cease selling physical goods on its marketplace and focus exclusively on virtual products, such as mobile phone credits and streaming vouchers. Customers have until 9 February to place final orders for physical items. The decision follows intense competition from market leaders Shopee, owned by Sea, and Tokopedia, now 75.01% owned by ByteDance’s TikTok. Bukalapak, which raised USD 1.5 billion in its 2021 IPO, has seen its shares decline significantly from an initial IDR 1,060 to IDR 117, a 4.1% drop as of Wednesday. The company reported a loss of IDR 593.23 billion (USD 36.62 million) for the first nine months of 2024. Bukalapak stated its commitment to supporting sellers during the transition to a virtual product-focused platform.

MYANMAR
Military junta implements rolling blackouts in Yangon and Naypyidaw 
(6 January 2025) Myanmar’s military government has implemented rolling blackouts in Yangon and Naypyidaw to manage electricity demand and avoid grid collapse, providing only eight hours of power daily on a rotating schedule starting 5 January. Yangon’s over 40 townships are divided into three groups, each receiving electricity in two four-hour intervals, though actual supply often falls short. The Ministry of Electricity reported a significant gap between the 4,400 MW daily demand and the 1,701 MW produced on 5 January, citing damaged power lines, natural disasters, and low gas quotas. Nationwide electricity production has declined by at least one-third since the 2021 coup, with Yangon alone consuming slightly over half of the national supply. Naypyidaw, previously exempt from power outages, is also experiencing blackouts. The junta leader pledged in January 2023 to achieve sufficient electricity supply by 2025, but challenges persist, including rising costs of solar power equipment, which limits its viability as an alternative energy source.

RCEP Monitor


CHINA
China’s CPI rises 0.1% year-on-year in December 2024, marking fourth consecutive month of deceleration
(9 January 2025) China’s consumer price index (CPI) rose 0.1% year-on-year in December 2024, marking the fourth consecutive month of deceleration and a full-year increase of 0.2%, significantly below the earlier forecast of 1.1%. Core CPI, excluding food and fuel, rose 0.4%, the highest since July, while producer prices declined by 2.3%, continuing 27 months of factory deflation. The National Bureau of Statistics attributed the decline to commodity price fluctuations and seasonal industry slowdowns. The GDP deflator — a broader measure of economy-wide prices — is expected to decline for the seventh consecutive quarter, extending into 2025, marking the longest streak since the 1960s. Government measures to counteract deflation include expanding subsidies for consumer products and industrial equipment upgrades. President Xi Jinping’s administration has prioritised boosting consumption and domestic demand through public spending and monetary easing in 2025. Economists expect prolonged challenges, with the People’s Bank of China likely to pursue further monetary easing, including interest rate cuts and reducing banks’ reserve requirements, to support economic growth while managing yuan depreciation pressures.

HONG KONG
Hang Seng Index declines 0.4%, marking 3.1% weekly drop
(10 January 2025) The Hang Seng Index declined 0.4% to 19,155.66, marking a 3.1% weekly drop, the largest since 15 November, with Hong Kong’s stock market losing USD 118 billion in capitalisation. Key declines included Li Ning (-4.6%), Lenovo Group (-4.1%), and China Life Insurance (-3.9%), while Tencent rose 0.3%. US-China tensions, including blacklisting Chinese firms like Tencent and Contemporary Amperex, contributed to sell-offs. China’s persistent deflation and the central bank’s decision to refrain from further government bond purchases to manage yuan depreciation added to market concerns. Four IPOs launched, with Suzhou Sepax Technologies (+377%) and Juneway Electronic (+268%) performing strongly, while Bloks Group rose 50% and Numans Health Foods dropped 19%. Regional markets also faced declines, with Japan’s Nikkei 225 down 0.9% and Australia’s S&P/ASX 200 falling 0.5%.

AUSTRALIA
Retail sales increases by 0.8% in November 2024, below forecast
(9 January 2025) Australian retail sales increased by 0.8% in November 2024, below the forecasted 1% rise, following a revised 0.5% gain in October, according to the Australian Bureau of Statistics. Sales grew 3% year-on-year, with department stores leading monthly gains at 1.8%, followed by clothing and food at 1.6%, and cafes, restaurants, and takeaways at 1.5%. The data, coupled with weak underlying inflation, has increased market expectations of a Reserve Bank of Australia (RBA) interest rate cut in February, with money markets pricing a 70% likelihood. The RBA’s December minutes indicated cautious optimism on inflation nearing target levels, but uncertainty persists about household spending. Consumer sentiment remains a concern for Prime Minister Anthony Albanese’s government ahead of the May 2025 election, amid high borrowing costs and cost-of-living pressures. The ABS plans to replace retail sales data with a broader household consumption report from mid-2025, with the first release scheduled for Friday.

15 participating countries

20 chapters

2.2 billion

US$26.2 trillion

28%

ASEAN member states, Australia, China, Japan, South Korea, New Zealand trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement combined population, 30% world’s population combined GDP, 30% global GDP global trade (based on 2019 figures)

CARI Captures Issue 685: Global tech firms invest billions into digital infrastructure in ASEAN


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.



ASEAN
Global tech firms invest billions into digital infrastructure in ASEAN
(02 January 2025) Tech firms from all over the world are pouring billions of dollars into digital infrastructure in Southeast Asia, driven by the rise of the region’s middle class and concurrent demand for digital services. The broader regional market remains underserved by available data capacity, with analysis by Maybank finding the region 55% to 70% underpenetrated in data centre supply compared to the likes of China, South Korea, and Japan. Different countries are offering various incentives to attract investments. While Thailand is offering corporate tax reductions and fast internet, Vietnam is offering financial incentives in the research and development space, land rental exemptions, and preferential credit. Singapore is framing itself as a start-up incubator hub, while Malaysia has its own raft of grants and incentives. Indonesia, on the other hand, is focusing on talent development in technology sectors. However, ASEAN governments also face challenges, such as how to properly regulate AI as well as properly develop the necessary digital talent to meet skills demand. 

SINGAPORE
Resale public housing prices in Singapore increase by 9.6% in 2024 
(02 January 2025) Resale public housing prices in Singapore increased by 9.6% in 2024, nearly double the 4.9% rise in 2023, according to preliminary government data. Resale transactions rose by 8% year-on-year, driven by strong demand and tight supply. The number of newly eligible flats for resale fell to 11,952 in 2024 from 30,920 in 2022, exacerbating market pressure. In August 2024, the government reduced the loan-to-valuation limit for resale flats from 80% to 75% and introduced higher grants for first-time buyers, further fuelling demand. Sales of resale flats exceeding SGD 1 million (USD 735,000) continued, prompting government warnings for buyers to “exercise prudence.” It has been noted that the market’s tightness and increased grants contributed to the price surge, and that further cooling measures may follow if high-value sales and transaction volumes rise in early 2025. These developments come ahead of Singapore’s 2025 general election, where housing affordability remains a critical issue.

MALAYSIA
GDP growth forecasted to moderate to 4.9% in 2025, slightly above official target range
(02 January 2025) Malaysia’s GDP growth is forecasted to moderate to 4.9% in 2025, slightly above the official target range of 4.5% to 5.5%, with domestic demand driving growth, supported by stable labour markets, civil service pay increases of 7% to 15%, and adjustments to the minimum wage. Public investment is expected to remain stable, underpinned by the MYR 25 billion GEAR-UP programme and MYR 120 billion in domestic direct investments over five years by government-linked entities. Infrastructure projects and private investment will benefit from favourable financing and ongoing approved investments. The unemployment rate is projected to decrease to 3.2%, with the gig economy expanding, representing 18.5% of the workforce as of October 2024. Bank Negara Malaysia is expected to maintain the Overnight Policy Rate at 3.00%, limiting monetary flexibility due to domestic price pressures. Residential property transactions rose by 6.1% in number and 10.4% in value year-on-year for H1 2024, while overhang units fell to 21,968 by September.

INDONESIA
Bank Indonesia intervenes in foreign exchange market to stabilise rupiah
(02 January 2025) Bank Indonesia intervened in the foreign exchange market on 2 January 2025 to stabilise the rupiah amid limited domestic supply caused by New Year holidays. The rupiah, which depreciated by 1% against the US dollar, faced pressure from global factors, including economic policy sentiment related to US President-elect Donald Trump and divergent growth trajectories in the US, Europe, and China. Indonesia’s annual inflation rate for December 2024 was 1.57%, marginally up from 1.55% in November and near the Reuters poll estimate of 1.60%. Core inflation remained steady at 2.26%, aligning closely with the 2.28% forecast. Bank Indonesia has maintained an inflation target of 1.5% to 3.5% for 2024 and 2025. Despite inflation nearing the lower bound of the target range, the central bank paused rate cuts following its September reduction, citing currency volatility and global market conditions as primary concerns.

INDONESIA
Indonesia’s planned VAT increase to be limited to luxury goods and services
(03 January 2025) On 1 January 2025, Indonesian President Prabowo Subianto announced that Indonesia’s planned VAT increase from 11% to 12% would be limited to luxury goods and services instead of applying broadly. This decision covers items such as vehicles with engines exceeding 4 litres, properties valued above IDR 30 billion, and luxury recreational vehicles, which already incur a luxury tax of 10% to 200%. The Ministry of Finance had set a 2025 state revenue target of IDR 2.189 quadrillion, with IDR 609 trillion expected from VAT, but it is unclear if this assumed the higher rate. Economists questioned the reliance on VAT for revenue, suggesting alternatives like progressive taxes on natural resources or the super-wealthy. Businesses had largely adjusted systems for the 12% rate before the announcement, causing operational challenges, though the decision was welcomed by consumers and retailers, who faced inflationary pressures and declining purchasing power. The change reflects Indonesia’s broader fiscal challenges, with VAT contributing 28% of government revenue and a tax-to-GDP ratio of 12.1% in 2022, significantly below regional and OECD averages.

THE PHILIPPINES
Central bank revises 2024 current account deficit projection to USD 10.4 billion
(03 January 2025) The Philippine central bank revised its 2024 current account deficit projection to USD 10.4 billion (2.2% of GDP), up from the earlier estimate of USD 6.8 billion, citing geopolitical shocks and potential changes in US trade policies. The 2024 deficit remains below the USD 11.8 billion (2.7% of GDP) recorded in 2023. For 2025, the current account deficit is expected to widen further to USD 12.1 billion (2.4% of GDP). Despite the growing deficit, the balance of payments (BOP) is projected to remain in surplus, with forecasts of USD 3.5 billion for 2024 and USD 2.1 billion for 2025, supported by financial account inflows. The central bank noted potential for global trade recovery in 2025, driven by moderating inflation and improved business activity.

THAILAND
Thai Chamber of Commerce estimates THB 160 billion economic loss from Trump’s trade policies
(01 January 2025) The Thai Chamber of Commerce (TCC) estimates a potential THB 160-billion economic loss for Thailand due to anticipated US trade policies under President-elect Donald Trump, including increased tariffs on imports. The TCC President highlighted risks to Thai exports with a surplus in the US market, such as hard-disk drives, semiconductors, tyres, air conditioners, and solar cells, alongside challenges in manufacturing, construction, and agriculture sectors. Trump’s proposed 60% import tariff on Chinese goods may cause an influx of Chinese products into Thailand, adversely affecting local industries but potentially encouraging foreign investment through production base relocation. TCC recommends diversifying trade and investment to India and forming partnerships with Vietnam. The Federation of Thai Industries (FTI) warned of possible US targeting of Thailand for its trade surplus, baht appreciation, and volatility in investments due to a proposed corporate tax reduction in the US from 21% to 15%. Concerns were raised about US withdrawal from multilateral frameworks, such as the Paris Agreement and Indo-Pacific Economic Framework, and its impact on Thailand. Both TCC and FTI emphasised the importance of proactive measures, public-private collaboration, and maintaining domestic industry competitiveness while attracting foreign investment.


RCEP Monitor


JAPAN
Average size of homes in Japan decline to 30-year low due to rising construction costs 
(03 January 2025) The average size of homes in Japan has declined to a 30-year low, with the total floor area now averaging 92 square metres, a 3 square metre reduction since 2003. Rising construction costs are a primary driver of this trend, as builders opt for smaller homes to maintain affordable sticker prices, resulting in a “stealth price hike.” The shrinkage is evident in both single-family homes and multi-dwelling units, with the latter averaging around 50 square metres, below the 55 square metres considered necessary for comfortable living. Since 2024, house sizes have continued to decrease, exacerbated by rising construction costs (currently 30% higher than 2015 levels) and increasing land prices in popular areas. Demand for larger homes is waning, partly due to the rise in one-person households, which now make up 38% of the total. However, many of these individuals still report issues with inadequate space. The trend has made it more difficult for younger people to enter the housing market, with high property prices and limited options for spacious units in convenient locations. Analysts warn that the downsizing of homes could contribute to a further decline in the birth rate, as small living spaces may discourage couples from having larger families.

JAPAN
78% of major Japanese firms expect moderate growth in Japan’s economy in 2025 
(03 January 2025) A recent Kyodo News survey of 114 major Japanese firms, conducted from late November to mid-December, reveals that 78% expect moderate growth in Japan’s economy in 2025, up from 73% a year earlier. The primary reasons cited for this optimism include a recovery in consumer spending (88%) and rising wages (81%). However, 16% anticipate the economy will remain flat, and 2% foresee a moderate contraction, with concerns over rising prices. Wage growth, particularly outpacing inflation, is deemed crucial for sustaining economic growth, and 46% of companies are planning or considering pay hikes in 2025. In terms of global risks, 13% of firms expressed concerns over the potential negative impact of a second Trump presidency, primarily citing concerns over tariffs (65%), energy and environmental policies (50%), and economic security policies related to China (46%).

CHINA
People’s Bank of China plans to reduce interest rates in 2025, with focus on interest rate adjustments
(03 January 2025) The People’s Bank of China (PBoC) plans to reduce interest rates in 2025, shifting towards a more conventional monetary policy aligned with the US Federal Reserve and the European Central Bank. The current rate of 1.5% is expected to be cut at an appropriate time next year, with a focus on interest rate adjustments rather than quantitative targets for loan growth, which have been phased out. The central bank aims to improve market-oriented interest rate formation and transmission, moving away from guidance that previously steered credit towards high-growth sectors. This reform is seen as crucial due to collapsing credit demand, particularly following the property market slowdown and concerns over excessive lending. However, the PBoC faces challenges in implementing this shift, as the government still prefers using credit expansion to support key sectors. In 2024, the central bank made significant cuts to key rates, including the seven-day reverse repo and five-year rates, as part of a broader stimulus package. The PBoC is also moving towards risk-based pricing of loans, but the transition may cause confusion in the market. Despite these efforts, the PBoC lacks some components of a fully developed interest rate-based system, such as regular public policy meetings.

15 participating countries

20 chapters

2.2 billion

US$26.2 trillion

28%

ASEAN member states, Australia, China, Japan, South Korea, New Zealand trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement combined population, 30% world’s population combined GDP, 30% global GDP global trade (based on 2019 figures)

CARI Captures Issue 684: A Look Back at 2024


For the final Captures of 2024, we will be collating the ten best articles of this year. These articles summarize the major issues, trends, and events that affected ASEAN in 2024. We will be returning to our usual Captures starting in January. 

We hope our readers had a very Merry Christmas, and we also hope they have a restful New Years ahead.


 

  1. SOUTHEAST ASIA FACES POTENTIAL ECONOMIC CHALLENGES FROM TRUMP PRESIDENCY
    (21 November 2024) Southeast Asia faces potential economic challenges from Donald Trump’s proposed tariffs, including a 60% duty on Chinese imports and up to 20% on imports from other regions. Five of the six largest ASEAN economies have trade surpluses with the U.S., with Vietnam particularly exposed due to its role as a manufacturing hub for firms bypassing previous tariffs. Thailand’s economy could suffer a USD 4.6 billion impact, while nearly 40% of Cambodian exports rely on U.S. markets. However, the region benefited from trade diversion during Trump’s first term, attracting investment and manufacturing relocation from China, Japan, South Korea, and the U.S. Analysts suggest opportunities for Southeast Asia to capitalise on trade substitution, as well as to tighten their anti-dumping measures against Chinese goods. Electric vehicle manufacturing and intra-ASEAN trade could provide economic buffers to Trump’s tariff plans. Currency devaluation, including declines in the Thai baht and Malaysian ringgit, and global monetary shifts may further complicate the region’s economic landscape. Governments are urged to diversify trade relations, support local firms in accessing U.S. markets, and improve trade facilitation to build resilience.
  2. SOUTHEAST ASIAN INTEREST RATES DIVERGING AFTER US FEDERAL RESERVE SLASHES RATES
    (16 October 2024) Interest rate paths in Southeast Asia are diverging after the U.S. Federal Reserve cut rates last month, with export-driven economies like Thailand and Malaysia expected to hold off on easing until 2025, while domestic demand-driven economies like Indonesia and the Philippines are moving towards further cuts. Indonesia, with a 5% GDP growth rate but weakening household consumption, has already cut its rate to 6% and may lower it again this year. Inflation has slowed to 1.84%, suggesting economic lethargy. Analysts predict the Philippines will also cut its key policy rate to 6% in response to easing inflation. Meanwhile, Malaysia and Thailand, both with current account surpluses and appreciating currencies, are under less pressure to reduce rates soon. Thailand’s central bank, focused on managing household debt, is resisting calls for a rate cut despite public pressure. The Malaysian central bank has held its rate at 3% and is expected to do so through 2025.
  3. LAO PDR FACING SEVERE ECONOMIC DOWNTURN MARKED BY ESCALATING INFLATION
    (09 September 2024) Lao PDR is facing a severe economic downturn marked by escalating inflation, a sharply depreciating currency, and high levels of external debt. Inflation in August 2024 stood at 24.3%, continuing a 28-month streak of double-digit rates, though down from a peak of 41.3% in February 2023. The kip has lost over half its value against the dollar and Thai baht in three years, exacerbating the impact on purchasing power and commodity costs. The IMF reported Lao PDR had the highest inflation rate among Southeast Asian countries at the end of 2023, surpassing even Myanmar. The central bank’s monetary tightening, with rates reaching 10.5%, has not stabilised the currency. Laos’ debt repayments surged to USD 950 million in 2023, with total government debt at 115% of GDP. A significant portion of this debt is linked to a USD 6 billion railway project financed largely by China. Experts suggest Lao PDR should renegotiate its debt and potentially seek IMF assistance, as the current economic model, reliant on foreign investment in natural resources, is contributing to instability.
  4. SOUTHEAST ASIAN COUNTRIES RAISE BARRIERS AGAINST CHEAP CHINESE IMPORTS
    (31 July 2024) Kurniadi Eka Mulyana, a 26-year-old worker in Bandung, West Java, was laid off in March due to declining sales at his textile factory, attributed to competition from TikTok Shop’s Chinese imports. This year, 49,000 workers in Indonesia’s textile, garment, and footwear sectors have been laid off across Banten, West Java, and Central Java. In response, Indonesian Trade Minister Zulkifli Hasan proposed up to 200% duties on imported fabrics and other goods. Southeast Asian countries, including Malaysia and Thailand, are also raising barriers against cheap Chinese imports. Thailand imposed a 7% VAT on low-value imports, and Malaysia added a 10% sales tax on online purchases under MYR 500. Southeast Asia’s trade deficit with China is widening, with Malaysia’s deficit growing from USD 3.1 billion in 2020 to USD 14.2 billion in 2023, and Thailand’s from USD 20 billion to USD 36.6 billion. Indonesia posted a USD 5 billion non-oil and gas trade deficit with China in the first half of 2024. China is redirecting exports to Southeast Asia due to Western trade tensions, impacting local industries like Thailand’s steel sector, where domestic production fell by 497,000 tonnes last year.
  5. SOUTHEAST ASIA’S IPO MARKET SEES 71% DECLINE IN MARKET CAPITALIZATION IN FIRST HALF OF 2024
    (08 July 2024) In the first half of 2024, Southeast Asia’s IPO market saw a significant decline, with market capitalization dropping 71% to US$5.8 billion. The region recorded 67 IPOs, down 21.2% from the previous year, raising US$1.38 billion, a 59.4% decrease. Only one large IPO exceeded US$1 billion in market capitalization and raised over US$200 million, compared to three large IPOs the previous year. This decline continues a downward trend that began in late 2022, influenced by geopolitical instability and high interest rates. Indonesia experienced the steepest drop, with market capitalization of listings falling 92.2% to US$1.22 billion and the IPO proceeds raised down 89.1% to US$248 million. Despite this, there is cautious optimism for improvement post-2024, with potential for AI-related IPOs and a return of REIT listings as interest rates decrease.
  6. CHINESE TECH SUPPLIERS EXPAND PRESENCE IN ASEAN AMID GEOPOLITICAL TENSIONS
    (31 May 2024) Chinese tech suppliers are increasing their presence in Southeast Asia, where Taiwanese and other rivals have long been helping the likes of Google and Apple expand production. For instance, Google has selected Chinese supplier Goertek to produce Pixel watches in Vietnam starting in 2025, a role previously held exclusively by Taiwanese companies. Additionally, BYD is bidding to manufacture Pixel phones in Southeast Asia, though no decision has been made yet. The strategic shift is driven by business considerations such as quality, service, and competitive pricing. The presence of Chinese suppliers in Vietnam has grown significantly, with 37% of Apple’s suppliers in the country being Chinese. Political tensions and economic slowdowns in China are also pushing Chinese companies to seek growth opportunities abroad. Investments by Chinese and Hong Kong firms in Southeast Asia surpassed those from Singapore in 2023, reflecting a systematic diversification effort by Chinese suppliers. The expanding supply chain in Southeast Asia may draw increased scrutiny from the U.S., particularly concerning trade practices and the growing trade surplus with the region.
  7. GREEN TRANSITION IN ASEAN COUNTRIES FACE HURDLES DUE TO GREENFLATION CONCERNS
    (25 March 2024) Several ASEAN countries are facing hurdles in their renewable energy transitions, largely due to concerns over ‘greenflation’. Greenflation occurs when fossil fuels are discarded in favour of more expensive low-carbon technologies. For instance, Indonesia recently trimmed its future targets for renewable portions in the country’s primary energy mix. The cuts in the country’s renewables targets were attributed to concerns over burdening the poor with expensive R&D and energy transition costs. In neighboring Malaysia, government officials have warned that a weaker ringgit will make it more expensive to import technologies, equipment, and expertise needed for large-scale decarbonization projects. In Viet Nam, meanwhile, coal imports soared 217% year-on-year in January 2024 year on year, despite Vietnam being Southeast Asia’s leader in terms of solar and wind power capacity.
  8. SOUTHEAST ASIAN MARKETS POISED FOR TURNAROUND IN 2024 ON BACK OF CHEAP VALUATIONS
    (22 January 2024) Southeast Asian markets are poised for a turnaround in 2024 on the back of cheap valuations and potentially high economic growth. This follows sluggish growth for said markets in 2023. According to research by Maybank Investment Banking Group, improving growth, rising exports, a pick up in manufacturing, and a better-than-expected outlook by Taiwan Semiconductor Manufacturing Company last week all mean that Southeast Asia markets are poised for a better year. The MSCI Southeast Asia Index dropped a little over 3% in 2023, compared with the more than 20% rise in the broader MSCI World Index. It was noted that even a potential US recession will not dampen optimism for Southeast Asian markets, with certain countries such as Indonesia, Malaysia, and Thailand strongly driven by domestic consumption. Meanwhile, other economies in the region are placed to benefit from their growing presence in the chips and electric vehicle industries.
  9. PRABOWO SUBIANTO ON TRACK TO WIN INDONESIAN PRESIDENTIAL ELECTION BASED ON QUICK COUNT OF RESULTS
    (14 February 2024) Former army general Prabowo Subianto is on track to win Indonesia’s presidential election held on 14 February, 2024, based on a quick count of the final results. As of 8 p.m. Jakarta time, the pollsters’ quick counts, based on about 90% of votes counted at sample polling stations, indicate Prabowo winning 57% to 59% of the total vote. In comparison, former Jakarta Govenor Anies Baswedan secured 24% to 26% of the total vote, while former Central Java Governor Ganjar Pranowo secured 16% to 17%. To win the presidential election, a candidate must gain the majority of total votes and more than 20% in at least half of the 38 provinces. If a candidate is unable to secure this, a second round is held on 26 June. The General Elections Commission has until 20 March to announce the final results.
  10. LAO PDR FRAMES THE THEME OF ITS 2024 ASEAN CHAIRMANSHIP AS ‘ENHANCING CONNECTIVITY AND RESILIENCE’

    (21 December 2023) Lao PDR has framed the theme of its 2024 ASEAN Chairmanship as ‘Enhancing Connectivity and Resilience’. At the Chairmanship handover ceremony in September 2023, Lao PDR’s Prime Minister Sonexay Siphandone highlighted that Vientiene would focus on further consolidating the ASEAN Community including enhancing connectivity and economic integration, narrowing the development gap, advancing digital transformation, promoting people-to-people-exchanges, as well as promoting climate resilience and health development. In preparation for its Chairmanship, Laotian authorities have started work on the necessary infrastructure including improving roads and airports, meeting venues, communication and internet facilities, tourism destinations, and accommodation. ASEAN Dialogue Partners have also offered their support, such as through the provision of vehicles and IT systems, capacity building, and English language training.

CARI Captures Issue 683: 31 people killed, 125,000 displaced by monsoon flooding in Malaysia and Thailand


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.



THAILAND
31 people killed, 125,000 displaced by monsoon flooding in Malaysia and Thailand 
(03 December 2024) Monsoon rains in Thailand and Malaysia have caused severe flooding, killing 31 people and displacing over 125,000. In Thailand, 25 deaths were reported, and more than 300,000 households were affected. Authorities have sheltered 34,354 evacuees in 491 centres, with a budget of THB 50 million (GPB 1.45 million) allocated per affected province and THB 9,000 (GPB 260) payments provided to impacted families. Pattani, Narathiwat, Songkhla, and Yala are the worst-hit provinces. Malaysia reported six fatalities and damages valued at USD 224 million, with 91,000 people still displaced. Kelantan and Terengganu were the most affected areas. Thai and Malaysian officials anticipate further heavy rainfall this week, preparing shelters, evacuation plans, and rescue measures. Prime Minister Anwar Ibrahim indicated readiness for additional monsoon surges.

MALAYSIA
Malaysia to position itself as regional hub for EV production and innovation
(04 December 2024) Malaysia aims to position itself as a regional hub for electric vehicle (EV) production and innovation, leveraging opportunities in the mobility industry to integrate local manufacturers and SMEs into the global supply chain, according to Deputy Prime Minister Datuk Seri Fadillah Yusof. Speaking at the Kuala Lumpur International Mobility Show (KLIMS) 2024, he highlighted the National Investment Aspirations as a strategic initiative to attract high-quality investments and enhance local industry capabilities. Malaysia’s Transport Minister also attended the event, themed “Beyond Mobility,” which showcases advancements in automotive technology and supports Malaysia’s regional collaboration through the Asean Power Grid initiative. The KLIMS 2024 chairman stated that the automotive sector contributes 4% of GDP and employs over 700,000 people, with total industry volume reaching a record 799,731 units in 2023, and projected to exceed 800,000 units this year. The exhibition facilitates collaboration among global and local players, promoting smarter, sustainable transportation and strengthening Malaysia’s leadership in Southeast Asia’s automotive industry.

VIET NAM
Viet Nam’s coffee supply constrained due to delayed harvesting
(04 December 2024) Viet Nam’s coffee supply is currently constrained due to delayed harvesting caused by heavy rains and farmers withholding beans in anticipation of higher prices, according to the chairman of the Vietnam Coffee and Cocoa Association (Vicofa). The harvest has been delayed by about 15 days due to rains, with supply expected to normalise from late December as farmers prepare to sell more ahead of the Lunar New Year holidays in January. Domestic coffee prices, which have risen significantly alongside robusta futures in London due to supply concerns, are higher than during the previous harvest when similar hoarding behaviour occurred. Vicofa projects Vietnam’s 2024-25 coffee harvest to yield approximately 28 million bags, up from 26.7 million bags in 2023-24. Robusta, primarily used in instant drinks and espressos, remains the focus of these supply dynamics.

THAILAND
Headline inflation rises by 0.95% in November 202, reaching three-month high
(04 December 2024) Thailand’s headline inflation rose by 0.95% in November 2024, reaching a three-month high, driven by increased diesel prices and higher costs of food and beverages, according to the Trade Policy and Strategy Office (TPSO). The consumer price index (CPI) for November stood at 108.47, up from 107.45 in the same month last year. Average headline inflation from January to November was 0.32% higher year-on-year. The TPSO Director-General attributed the inflation rise to elevated diesel prices and higher fruit costs. The Commerce Ministry forecasts December inflation to increase by 0.3–1.3%, with a median estimate of 0.8%, citing anticipated economic growth, higher diesel prices, and increased consumer spending driven by the government’s THB 10,000 handouts.

INDONESIA
Apple to invest USD 1 billion in manufacturing plant in Indonesia  
(05 December 2024) Apple plans to invest USD 1 billion in a manufacturing plant in Indonesia to produce components for smartphones and other products, according to Indonesia’s Investment Minister. This follows Indonesia’s ban on the iPhone 16 due to Apple’s failure to meet a requirement for 40% local content in domestically sold phones, a threshold the government plans to increase. The Investment Minister confirmed the investment discussions are ongoing and expects a formal commitment and announcement within a week. Last week, the government rejected Apple’s USD 100 million proposal for an accessory and component plant, deeming it insufficient to address the iPhone 16 ban. Apple currently has no manufacturing facilities in Indonesia but has operated application developer academies in the country since 2018 as part of its local content strategy.

THE PHILIPPINES
The Philippines’ inflation rose to 2.5% year-on-year in November
(05 December 2024) Philippine inflation rose to 2.5% year-on-year in November, aligning with the central bank’s 2.2%–3% forecast range, as reported by the Philippine Statistics Authority. Core inflation, excluding volatile food and energy prices, also increased to 2.5%, marking its first acceleration since March 2023. Food price increases, particularly outside rice, drove the overall rise, though rice inflation eased to 5.1% from 9.6% in October. Bangko Sentral ng Pilipinas (BSP) stated the trend aligns with its expectation of inflation moving toward the lower end of the 2%–4% annual target. The BSP has cut rates by 50 basis points since August and will assess whether to continue easing or pause at its 19 December meeting, considering both price pressures and economic growth. The BSP Governor indicated that slower-than-expected growth might support further easing, while peso depreciation against the dollar could argue for maintaining the current rate.

SINGAPORE
Singapore stock benchmark rises by as much as 1%, nearing October 2007 record high
(05 December 2024) Singapore’s Straits Times Index (STI) rose by as much as 1%, nearing a record high last set in October 2007, driven by renewed investor confidence in banking stocks. DBS Group Holdings Ltd gained up to 2.4% in morning trading, reflecting a broader rally that has pushed the STI up 18.4% year-to-date, making it Southeast Asia’s best-performing stock market. Analysts attribute the gains to banks’ ability to maintain profitability despite narrowing net interest margins, supported by stable dividend payouts, loan growth, and wealth management inflows. The Monetary Authority of Singapore’s unchanged policy stance in October and expectations of eventual easing have further boosted sentiment. A government-led initiative to increase stock market liquidity, with a task force action plan due by mid-2025, has added to market optimism. Analysts from Morgan Stanley and Goldman Sachs have forecast favourable conditions for Singapore stocks, citing expected earnings growth and market reforms.


RCEP Monitor


JAPAN
Job postings targeting Japanese talent decline in seven major Asian economie
(4 December 2024) Job postings targeting Japanese white-collar workers in seven major Asian economies declined by 16% year-on-year in Q3 2023, falling to 69% of the peak seen in Q1 2023, according to JAC Recruitment. Vietnam experienced the largest drop at 36%, followed by Thailand (22%) and Singapore (40%), where the COMPASS framework has tightened visa requirements. South Korea recorded a 59% decline, attributed to high local youth unemployment and increased availability of Korean talent fluent in Japanese. Conversely, job postings for Japanese workers rose by 30% in Indonesia, driven by energy and construction, and by 29% in India, where Japanese companies are expanding across multiple sectors. Thailand, home to 72,000 Japanese residents as of October 2023, saw decreased hiring due to economic slowdowns in key industries. Staffing agencies report medium- to long-term growth potential for Japanese talent in Asia as companies cultivate local teams and adjust hiring strategies post-COVID-19. Rising wages in Asia and stable Japanese demand for overseas experience continue to influence the market, with exchange rates having minimal impact on long-term employment trends.

JAPAN
Bank of Japan reduces holdings of 10-year government bonds to enhance market liquidity
(04 December 2024) The Bank of Japan (BOJ) reduced its holdings of 10-year government bonds maturing in March 2032 to JPY 8.03 trillion as of 29 November 2023, from JPY 8.23 trillion on 20 November, aiming to enhance market liquidity. These bonds, crucial as the cheapest-to-deliver securities for March 10-year bond futures, are heavily used in hedging and arbitrage trading. The BOJ, which holds over 80% of four tranches of futures-linked notes maturing in 2031 and 2032, also conducted repurchase agreement operations where participants requested reductions in their repurchase amounts for the first time since April 2023. Market participants, including Resona Asset Management Co., noted that this move alleviated concerns about bond scarcity and could improve market functioning. The BOJ plans to reduce monthly bond purchases by JPY 400 billion each quarter through March 2026, as part of its roadmap amid inflation above the 2% target.

AUSTRALIA
Annual growth rate in Q3 2023 slowest since late 2020  
(04 December 2024) Australia’s GDP grew by 0.3% in Q3 2023, below the forecasted 0.4%, marking an annual growth rate of 0.8%, the slowest since late 2020. Public sector spending, driven by record public investment, added 0.6 percentage points to growth, while household spending contributed nothing, despite a 1.5% rise in disposable income. The savings rate increased to 3.2%, reflecting cautious consumer behaviour despite tax cuts and slowing inflation. GDP per capita declined by 0.3%, the seventh consecutive quarterly drop. The Australian dollar fell 0.7% to USD 0.6442, with markets pricing in a 96% likelihood of a rate cut in April 2024. Inflation indicators showed the GDP chain price index down to 2.4%, and real unit labour cost growth slowed to 1.6%. Productivity fell 0.5%, raising concerns for the Reserve Bank of Australia’s forecast for inflation to return to its 2%-3% target by 2026.

15 participating countries

20 chapters

2.2 billion

US$26.2 trillion

28%

ASEAN member states, Australia, China, Japan, South Korea, New Zealand trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement combined population, 30% world’s population combined GDP, 30% global GDP global trade (based on 2019 figures)

CARI Captures Issue 682: Thailand’s 2024 auto production revised downwards to 1.5 million units


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.



THAILAND
Thailand’s 2024 auto production revised downwards to 1.5 million units
(26 November 2024) The Federation of Thai Industries (FTI) has revised down Thailand’s 2024 auto production forecast to 1.5 million units, a 12% reduction from its earlier estimate of 1.7 million and a 21% decrease from the initial 1.9 million projection. This marks an 18% year-on-year decline, the steepest drop since 2020. A key factor driving the reduction is a stagnating domestic market, with the forecast for vehicles built for domestic sale lowered by 100,000 units to 450,000. Tightened auto loan approval criteria, in response to the Bank of Thailand’s concerns over high household debt (around 90% of GDP), have led to loan rejections for many low- to middle-income earners. Exports, accounting for roughly half of production, have also been downgraded by 100,000 units to 1.05 million due to weaker demand in Southeast Asia and the Middle East. The FTI expressed hope for economic recovery in 2025 but acknowledged uncertainty surrounding the resolution of household debt issues. Thailand’s auto industry faces additional challenges, with automakers like Isuzu, Honda, Nissan, and Suzuki scaling back production or exiting the market. In October, total production dropped 25%, with domestic production falling by 52% and export production down by 7%.

THAILAND
ADB secure USD 820 million financing package for 12 renewable energy projects in Thailand 
(29 November 2024) The Asian Development Bank (ADB) and Gulf Renewable Energy Company Limited have secured a USD 820 million financing package to support the development of 12 renewable energy projects in Thailand. These projects include eight ground-mounted solar photovoltaic (PV) plants with a contracted capacity of 393 MW and four solar PV plants with battery energy storage, providing 256 MW of generation capacity and 396 MWh of storage. The financing package, arranged by ADB, includes USD 260 million from ADB’s ordinary capital resources and USD 529 million in parallel loans from institutions such as the Asian Infrastructure Investment Bank, DEG, the Export-Import Bank of China, and KEXIM Global (Singapore). An additional USD 31.35 million in concessional finance is being provided by the Clean Technology Fund. These initiatives align with Thailand’s goal to increase renewable energy generation to 50% by 2037 under its 5-gigawatt renewable energy feed-in-tariff programme, which aims to double installed wind and solar capacity by 2030.

INDONESIA
Jakarta Composite Index declines by approximately 10% from 2023 peak  
(29 November 2024) Indonesia’s Jakarta Composite Index (JCI) has declined by approximately 10% from its 2023 peak, marking a technical correction. The index fell as much as 1.3% to its lowest level since 6 August, with PT Alamtri Resources Indonesia and PT Bank Mandiri Persero contributing significantly to the drop. Foreign investors sold a net USD 52.9 million in equities on Thursday, marking the 16th consecutive day of outflows as the strengthening US dollar reduced the attractiveness of emerging-market assets. Indonesia’s GDP growth for Q3 2023 was the slowest in a year, and corporate profit growth also softened, exacerbating market concerns. The rupiah has weakened by 1% against the dollar in November. JPMorgan analyst Henry Wibowo attributed the decline to foreign fund outflows and currency pressures. Under new President Prabowo Subianto, the government is preparing measures to boost purchasing power following factory closures and job losses.

INDONESIA
Indonesia rejects Apple’s USD 100 million investment proposal to lift iPhone 16 sales ban
(25 November 2024) The Indonesian Ministry of Industry has rejected Apple’s USD 100 million investment proposal aimed at lifting a sales ban on the iPhone 16, citing dissatisfaction with its scope and non-compliance with local manufacturing requirements. Apple still owes USD 10 million from a prior USD 107 million investment pledge for 2023, which was intended to fulfil the mandate for 35% locally produced components in electronic devices. The ministry compared Apple’s proposal to investments by other smartphone manufacturers with local production facilities and deemed it inadequate in terms of added value, state revenue, and job creation. Apple has relied on its Apple Academy centres to meet localisation rules but would need to submit new proposals every three years to continue this approach. The ministry is summoning Apple to address the unpaid investment and discuss extending commitments through 2026, while urging the company to consider building local manufacturing facilities to align with fairness principles and eliminate recurring negotiations. Revisions to local content calculation rules are also under consideration to reflect evolving industry dynamics. Apple has not commented on the matter.

VIET NAM, CANADA
Canada opens Export Development Canada (EDC) branch in Ho Chi Minh City 
(28 November 2024) Export Development Canada (EDC) has opened a branch in Ho Chi Minh City, Viet Nam, to provide financing and consulting services as part of Canada’s efforts to reduce trade reliance on the U.S., which accounted for 57.4% of Canadian exports in 2023. This move comes amid growing trade tensions, including U.S. President-elect Donald Trump’s proposed tariffs on Canada, Mexico, and China. The EDC signed memoranda with Viet Nam’s FPT and Masan, aiming to enhance Canadian exports and investment opportunities. In 2023, Canada imported CAD 13 billion (USD 9 billion) in goods from Viet Nam, over 15 times its exports to the country, which mainly comprise farm products and machinery. Viet Nam, in turn, exports electronics, apparel, and footwear to Canada but underutilises tariff reductions under the CPTPP, which Canada plans to address. The new office will work with EDC’s nine other regional offices and focus on clean technology, renewable energy, infrastructure, and manufacturing. Vietnam’s exports to the U.S. and China represented 27.5% and 19.9% of its total exports in 2023, respectively. The EDC aims to facilitate broader collaboration between Canadian and Vietnamese businesses, signalling Vietnam’s potential as a key market.

MALAYSIA
Malaysian air cargo operator hopes to capitalize on growing cross-border e-commerce between China and ASEAN
(28 November 2024) Teleport, a Malaysian air cargo operator, has opened an office in Shenzhen to capitalise on the growing demand for cross-border e-commerce between China and Southeast Asia. With over 40 staff based in China, the company is targeting faster delivery times, aiming to reduce the standard five-day delivery process to next-day delivery. Teleport collaborates with major Chinese logistics firms, including SF Airlines, DHL, and Nippon Express, and partners with e-commerce platforms like TikTok Shop, Shopee, and Temu. It forecasts a USD 3.8 billion freight market value for trade between China and Southeast Asia’s top five e-commerce markets by 2025, supported by international e-commerce growth from USD 194 billion in 2023 to over USD 330 billion by 2025. Teleport currently ships over 81,000 parcels daily from China to Southeast Asia, contributing to a 35% year-on-year revenue increase in Q2 2023 to MYR 225 million (USD 47.5 million). Expansion plans include the Middle East, India, and potentially Europe and South America, despite challenges such as fluctuating demand and geopolitical risks. The company emphasises transparency and operational flexibility to maintain service reliability.

THE PHILIPPINES
S&P revises the Philippines’ credit outlook from stable to positive
(26 November 2024) S&P Global Ratings revised the Philippines’ credit outlook from stable to positive while maintaining its long-term foreign currency debt rating at BBB+, citing fiscal reforms, improved infrastructure, and a stronger policy environment. The revision suggests a potential upgrade to an “A-” rating within 24 months, contingent on narrowing current account deficits and faster fiscal consolidation. This could lower borrowing costs and enhance the country’s investment appeal. The Philippines, currently rated Baa2 by Moody’s and BBB by Fitch, remains one of Asia’s fastest-growing economies, with projected GDP growth of 5.5% in 2023, ahead of Indonesia and China but below Viet Nam’s 7.4%. The Bangko Sentral ng Pilipinas highlighted the country’s robust foreign reserves as a buffer against global economic risks. S&P warned the outlook could revert to stable if economic recovery weakens or fiscal and debt positions deteriorate. Third-quarter growth slowed to 5.2% due to reduced government spending and declining exports.


RCEP Monitor


AUSTRALIA
Australia enacts one of the world’s strictest tax disclosure laws for multinational companies
(28 November 2024) Australia has enacted a tax disclosure law requiring multinationals with annual revenues exceeding AUD 1 billion, including at least AUD 10 million in Australian revenue, to report profits and revenues in 41 jurisdictions associated with tax incentives or secrecy. The law aims to curb profit shifting by publishing financial details, affecting nearly 900 US companies, 180 Japanese, 161 Chinese, and 111 French firms. Exemptions apply only for national security, legal, or commercially sensitive concerns. The legislation excludes some low-tax territories like Cyprus, Ireland, and Luxembourg due to international agreements but is considered more comprehensive than the EU’s regime. The law aligns with the Global Reporting Initiative standard, mandating disclosure of third-party sales and intragroup transactions without adopting a five-year publication delay permitted by EU rules. Additionally, Australia’s parliament approved Reserve Bank of Australia reforms, establishing a monetary policy board to oversee interest rates. This legislation follows a Labour-Greens agreement to overcome initial opposition. The EU Tax Observatory and other groups view the law as a critical step toward global tax transparency despite gaps.

SOUTH KOREA
Bank of Korea lowers benchmark interest rate by 0.25 percentage points to 3%  
(28 November 2024) The Bank of Korea (BoK) lowered its benchmark interest rate by 0.25 percentage points to 3%, marking a second consecutive cut, citing increased economic risks linked to Donald Trump’s re-election and Republican control of Congress. The BoK revised its 2024 GDP growth forecast to 2.2% from 2.4% and projected 2025 growth at 1.9%, down from 2.1%. The BOK’s Governor highlighted concerns over Trump’s proposed tariffs, including a 25% tariff on Canadian and Mexican goods and 10% on Chinese products, which threaten South Korea’s export-driven economy. South Korea’s trade surplus with the US reached USD 28.7 billion in the first half of 2024, potentially exceeding last year’s USD 44.4 billion record. The Federation of Korean Industries reported profit declines in 12 of 17 sectors for Q3, amid increased competition from Chinese exports. Economists anticipate prolonged export weakness, compounded by potential US inflationary pressures and Federal Reserve rate hikes, which could further strengthen the dollar against the South Korean won. A weaker won is expected to raise import costs, particularly for oil, adding inflationary pressure while limiting the BoK’s flexibility to ease monetary policy further.

NEW ZEALAND
Reserve Bank of New Zealand cuts benchmark interest rate by 50 basis points 
(26 November 2024) The Reserve Bank of New Zealand (RBNZ) cut its benchmark interest rate by 50 basis points to 4.25%, marking its third consecutive reduction in an effort to support the country’s struggling economy. This follows 50-basis-point cuts in October and a 25-basis-point cut in August. New Zealand’s GDP contracted by 0.2% in the June 2024 quarter compared to the previous quarter and was down 0.2% year-on-year, marking four consecutive quarters of contraction. Inflation has moderated, standing at 2.2% in the September 2024 quarter, within the RBNZ’s target range of 1%-3%, down from a peak of 7.3% in 2022. The bank indicated that additional rate cuts could occur in early 2025, potentially in smaller 25-basis-point increments, to further stimulate investment and spending. Economic growth is projected to recover in 2025, although employment growth is expected to remain weak until mid-2025.

15 participating countries

20 chapters

2.2 billion

US$26.2 trillion

28%

ASEAN member states, Australia, China, Japan, South Korea, New Zealand trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement combined population, 30% world’s population combined GDP, 30% global GDP global trade (based on 2019 figures)

CARI Captures Issue 681: Southeast Asia faces potential economic challenges from Trump presidency


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.



ASEAN
Southeast Asia faces potential economic challenges from Trump presidency
(21 November 2024) Southeast Asia faces potential economic challenges from Donald Trump’s proposed tariffs, including a 60% duty on Chinese imports and up to 20% on imports from other regions. Five of the six largest ASEAN economies have trade surpluses with the U.S., with Vietnam particularly exposed due to its role as a manufacturing hub for firms bypassing previous tariffs. Thailand’s economy could suffer a USD 4.6 billion impact, while nearly 40% of Cambodian exports rely on U.S. markets. However, the region benefited from trade diversion during Trump’s first term, attracting investment and manufacturing relocation from China, Japan, South Korea, and the U.S. Analysts suggest opportunities for Southeast Asia to capitalise on trade substitution, as well as to tighten their antidumping measures against Chinese goods. Electric vehicle manufacturing and intra-ASEAN trade could provide economic buffers to Trump’s tariff plans. Currency devaluation, including declines in the Thai baht and Malaysian ringgit, and global monetary shifts may further complicate the region’s economic landscape. Governments are urged to diversify trade relations, support local firms in accessing U.S. markets, and improve trade facilitation to build resilience.

INDONESIA
Apple proposes USD 100 million investment in Indonesia to resume iPhone 16 sales
(20 November 2024) Apple has proposed a USD 100 million investment in Indonesia to resume sales of its iPhone 16 series, following a sales ban due to the company’s failure to meet an earlier pledge. In April, Apple committed to investing IDR 1.7 trillion rupiah (USD 107 million) in local initiatives, including funding Apple Developer Academies to meet Indonesia’s “local content” requirements for market access. The Indonesian government is demanding that Apple complete the remaining IDR 300 billion of this pledge before sales can resume. Apple’s initial USD 10 million proposal to manufacture accessories and components locally was rejected by the government. Indonesia’s policy mandates that electronic handsets must contain at least 35% locally made parts or meet equivalent requirements, such as developing domestic software or establishing innovation centres. Apple has chosen to meet these criteria by setting up Apple Academies in three locations in Indonesia. The company sold 2.61 million units of mobile phones in Indonesia last year, generating an estimated IDR 30 trillion in income. A similar policy will be applied to Alphabet’s Google Pixel 9, which is also banned under the same local content rules.

MALAYSIA, VIET NAM
Malaysia and Viet Nam to enhance cooperation in renewable energy and digital technologies
(21 November 2024) Malaysia and Viet Nam have agreed to enhance cooperation in renewable energy and other strategic areas following a meeting between Malaysian Prime Minister Anwar Ibrahim and Vietnam’s General Secretary of the Communist Party, To Lam, during his three-day official visit to Malaysia. Malaysia’s Petronas and Vietnam’s PetroVietnam signed a memorandum of understanding to collaborate on decarbonisation and sustainable energy solutions. Malaysia plans to facilitate further cooperation with Vietnam in defence, maritime, and digital technology. Vietnam intends to expand collaboration in halal industry development, mutual investments, green economy innovation, education, sports, and tourism. Anwar noted that Malaysian investments in Vietnam exceed USD 13 billion across 700 projects and described the visit as pivotal in elevating ties to a “comprehensive strategic partnership.”

SINGAPORE
Genting Singapore’s casino license renewed for shortened two-year period
(20 November 2024) Singapore’s Gambling Regulatory Authority has renewed Genting Singapore Ltd.’s casino license for a shortened two-year period, citing “unsatisfactory” tourism performance at Resorts World Sentosa. The licence renewal, which typically lasts three years, will begin on 06 February, with the next evaluation scheduled for 2026. The evaluation, covering the period from January 2021 to December 2023, coincided with the global COVID-19 pandemic, during which Genting faced significant challenges. Resorts World Sentosa, which features over 550 gaming tables and 2,400 slot machines, is one of only two casinos in Singapore. Genting has started a USD 5 billion waterfront expansion, including 700 new hotel rooms, a Minions-themed area at Universal Studios Singapore, and an expanded aquarium. Genting emphasised its ongoing transformation to enhance the visitor experience. Meanwhile, its rival, Marina Bay Sands, is seeking a SGD 12 billion (USD 9 billion) loan to fund a new fourth tower and a 15,000-seat entertainment arena. Marina Bay Sands is also preparing to renew its casino licence, which expires in April.

THE PHILIPPINES
Philippines Stock Exchange anticipates raising up to USD 2.4 billion in 2024
(21 November 2024) The Philippine Stock Exchange (PSE) anticipates raising PHP 120–140 billion (USD 2.4 billion) in capital in 2024, significantly higher than the expected PHP 80 billion for 2023. At least six companies, including a gaming firm in Clark Freeport Zone, Okada Manila’s operator, and a water concessionaire, plan to go public next year, compared to three listings in 2023. The PSE is also preparing to launch depositary receipts in 2024 and collaborating with the Taiwan Stock Exchange to offer derivatives products by 2026, aiming to enhance liquidity and valuations. Monzon noted that further rate cuts by Bangko Sentral ng Pilipinas (BSP), including a potential 25 basis points reduction in December, could drive the stock index above 7,000 by year-end, with analysts projecting levels of 8,000–8,600 in 2024. The BSP Governor stated that rate decisions will depend on inflation trends, with a pause possible if price pressures emerge. The PSE also plans to ease listing rules, lower friction costs, and introduce derivatives to attract both domestic and foreign investors.

THE PHILIPPINES, CAMBODIA
The Philippines and Cambodia to sign double taxation agreement in February 2025
(20 November 2024) The Philippines will sign a double taxation agreement (DTA) with Cambodia in February 2025, delayed from its initial October 2023 timeline at Cambodia’s request. The agreement aims to mitigate double taxation on income earned by citizens and businesses operating between the two countries, reducing trade barriers and encouraging cross-border economic activity. Negotiations for the agreement began in 2018 in Manila and progressed in 2019 in Siem Reap. The Department of Finance (DOF) emphasized that such agreements protect tax rights while facilitating trade and investment, enhancing the competitiveness of Filipino exports in Cambodia. Talks are also ongoing with Lao PDR for a similar deal, while the Philippines plans to renegotiate DTAs with Indonesia, Malaysia, and Singapore. Philexport is currently reviewing the potential impact of these measures, with its vice president noted that easing tax burdens and eliminating trade barriers are beneficial for exporters in principle.

THAILAND
Thai government to distribute THB 10,000 to 4 million senior citizens
(19 November 2024) The Thai government will distribute THB 10,000 (USD 289) in cash to 4 million senior citizens each by late January 2024, allocating THB 40 billion as part of the second phase of its stimulus programme. This phase follows an earlier distribution of THB 10,000 to over 14 million welfare card holders and individuals with disabilities in September 2023. The initiative, originally proposed as a blockchain-based digital cash handout for all Thais aged 16 and above, has been scaled back due to budgetary and technical constraints. The government allocated THB 180 billion for the programme in this fiscal year, with THB 140 billion set aside for a digital rollout in the third phase, scheduled for Q2 2025. Additionally, the government approved a three-year moratorium on household debts under one year old, totalling THB 1.3 trillion, in coordination with the Ministry of Finance, the Bank of Thailand, and the Thai Bankers’ Association.


RCEP Monitor


JAPAN
Japan Inc reports record profits for first half for fourth consecutive year
(21 November 2024) For the April-September half, Japan’s publicly traded companies reported record profits for the fourth consecutive year, with a combined net profit of approximately JPY 27.2 trillion (USD 175 billion), marking a 15% year-on-year increase. Nonmanufacturing sectors, accounting for 60% of total profits, drove this growth, particularly in finance and transportation. The finance sector saw a 36% profit increase among Japan’s three megabanks, which reached a combined JPY 2.55 trillion, aided by higher domestic interest rates and gains from securities sales. Brokerage profits surged 95%, while insurers saw a 160% rise. In contrast, manufacturers faced a downturn, with the automotive sector suffering the largest profit drop of JPY 1.2 trillion due to competition from affordable electric vehicles and a price war in the U.S. With the yen currently at 155 to the dollar and ongoing global uncertainties, including the potential impact of a new U.S. administration, Japan’s companies are relying on substantial cash reserves – JPY 114 trillion yen – to manage future challenges, acquisitions, and restructuring efforts. 

AUSTRALIA
Sovereign wealth fund Future Fund to allocate more investments towards domestic assets
(20 November 2024) Australia’s government has issued a new mandate requiring its AUD 230 billion (USD 150 billion) sovereign wealth fund Future Fund to allocate more investments towards domestic housing, energy transition, and infrastructure projects. Withdrawals from the fund will be deferred until at least 2032-33, by which time its value is projected to reach AUD 380 billion. The fund’s primary objective to maximise returns remains unchanged, with a benchmark target of 4-5% above inflation. The Future Fund returned 11.9% in the year to 30 September, with 40% of its portfolio in equities and 10% in infrastructure and timberland. Private investments represent over 40% of its assets. Australian officials emphasised the alignment of the directive with structural economic shifts and opportunities, such as the global net-zero transition. The Future Fund Chair noted that the government’s priorities are consistent with the fund’s strategy, which seeks increased local currency exposure and inflation resilience.

NEW ZEALAND
Treasury indicates it will revise its economic and fiscal forecasts downwards
(21 November 2024) New Zealand’s Treasury indicated it would likely revise its economic and fiscal forecasts downwards due to a prolonged slowdown in productivity. The Treasury Chief Economic Adviser stated that economic growth, previously expected to resume in the second half of 2024, is now anticipated to begin later, as recent data shows weaker-than-expected growth. This slower growth results in a smaller economy and reduced tax revenue, complicating efforts to balance the budget. The government had already reported a larger-than-expected budget deficit for 2023-24, exacerbated by lower growth, but remains committed to curbing public spending to achieve a surplus. Productivity has fallen back to pre-pandemic levels, with manufacturing and service sectors showing contractionary activity. The Treasury’s updated economic and fiscal outlook is due on 17 December. The Reserve Bank of New Zealand, which cut interest rates in August and again in October, is expected to reduce rates further in the coming week.

15 participating countries

20 chapters

2.2 billion

US$26.2 trillion

28%

ASEAN member states, Australia, China, Japan, South Korea, New Zealand trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement combined population, 30% world’s population combined GDP, 30% global GDP global trade (based on 2019 figures)

CARI Captures Issue 680: Southeast Asian economies preparing for impact of Trump tariffs


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.

ASEAN
Southeast Asian economies preparing for impact of Trump tariffs
(11 August 2024) Southeast Asian leaders, including Philippine President Ferdinand Marcos Jr., Malaysian Prime Minister Anwar Ibrahim, and Cambodian Premier Hun Manet, congratulated Donald Trump on his presidential win and expressed hope for continued US support for regional stability and economic growth. Concerns over potential US trade tariffs, specifically Trump’s proposed 10%-20% blanket tariffs on imports and a 60% tariff on Chinese imports, have Southeast Asian countries preparing for economic impacts, given their reliance on the US market. Analysts note Vietnam, as the largest Southeast Asian exporter to the US, could be significantly affected, especially with its trade surplus reaching EUR 96 billion last year. It should be recalled that the previous Trump administration had nearly sanctioned Vietnam for currency manipulation. Oxford Economics estimates that proposed tariffs may reduce exports from “non-China Asia” by 3%, with poorer economies facing greater declines. Some Southeast Asian nations could see investment inflows if companies divest from China in response to new tariffs, as occurred after 2018, benefiting countries like Vietnam and Malaysia.

INDONESIA
Middle class contracts to 47.8 million in 2023 due to COVID-19 and sluggish trade
(15 November 2024) Indonesia’s middle class has contracted significantly, with the Central Bureau of Statistics reporting a decrease from 57.3 million people in 2019 to 47.8 million in 2023, while the “aspiring middle class” grew from 128.85 million to 137.5 million over the same period. Economists cite the COVID-19 pandemic’s aftermath, limited social assistance for middle-class individuals, and Indonesia’s dependency on trade with countries experiencing economic slowdowns as contributing factors. Policy specialists have highlighted that middle-class citizens primarily support tax revenues but receive minimal social benefits, which are typically linked to formal employment. Additionally, the country’s reliance on international trade has been strained by reduced demand from key partners like the US, China, and Japan. Researchers also attribute further middle-class challenges to deindustrialisation, which has shifted the labour force from manufacturing to lower-paid, informal service jobs lacking social security. Newly inaugurated President Prabowo Subianto has promised economic reforms, including GDP growth of 8% and poverty reduction. 

THAILAND
Thai cabinet approves new holidays in 2025 to boost tourism and support economy
(12 November 2024) Thailand’s cabinet has approved two new holidays in 2025 — 2 June and 11 August — to encourage extended travel on long weekends, aiming to boost tourism and support the economy. The cabinet also declared 2 January, 2026, a holiday, extending the New Year’s break to five days. With these additions, public holidays in 2025 will total 21 days. A deputy government spokeswoman noted that the holidays align with Prime Minister Paetongtarn Shinawatra’s plan to make 2025 a “year of tourism and sports.” Tourism, which comprises 12% of Thailand’s GDP and accounts for nearly 20% of jobs, is central to Thailand’s economy, and the additional holidays are expected to strengthen its post-pandemic recovery. Thailand has already welcomed approximately 30 million tourists in 2023, on track to reach a target of 36.7 million by year-end. Recent forecasts from online platform Agoda suggest that foreign tourist arrivals in 2024 may surpass the pre-pandemic record of nearly 40 million in 2019, which generated USD 60 billion (MYR 266.1 billion) in revenue.

MALAYSIA, UNITED STATES
Malaysia removed from US currency manipulation watch in final report under Biden
(15 November 2024) The U.S. Treasury Department’s latest semi-annual currency report, covering the year to June 30, concluded that no major U.S. trading partners manipulated their currency. Key countries monitored include China, Japan, South Korea, Taiwan, Singapore, Viet Nam, and Germany, while Malaysia was removed, and South Korea was newly added for its significant global current account surplus and trade deficit with the U.S. China remains on the monitoring list due to its substantial U.S. trade surplus and lack of transparency in foreign exchange practices. China’s export volume growth, despite declining prices, reflects weak domestic demand and heavy reliance on foreign demand, with net exports contributing 43% to China’s real growth in Q3 2024. Japan’s presence on the monitoring list is due to its USD 65 billion U.S. trade surplus and a rise in its global current account surplus to 4.2% of GDP. Japan’s recent yen-support interventions were noted as transparent but advised to be exceptional without prior consultations. The report marks President Biden’s last Treasury review before currency oversight shifts to the incoming Trump administration, which has pledged 60% tariffs on Chinese goods and 10%-20% tariffs on other imports.

MALAYSIA
Cross-border renewable energy auction for Singapore to start by year-end
(13 November 2024) Malaysia’s Deputy Prime Minister announced that the cross-border renewable energy auction for Singapore’s energy importer, facilitated by Energy Exchange Malaysia, will start by year-end. As part of a broader ASEAN grid integration, this initiative aims to enhance regional energy security and stimulate economic cooperation in renewable energy trade. Malaysia also plans to phase out coal-fired power gradually, with no new coal plants, aligning with the International Energy Agency’s recommendations to mitigate global warming. By 2035, Malaysia targets a 20% increase in grid flexibility to support renewable integration, alongside investments in smart grids and energy storage systems. Under the National Energy Transition Roadmap, Malaysia aims to elevate renewable energy’s share in its power capacity to 70% by 2050 from the current 28%. Additionally, Malaysia is set to restructure water services in collaboration with the National Water Services Commission and aims to achieve 98% rural clean water access and a 31% non-revenue water rate by 2025.

THAILAND
Baht drops over 1% amid investor concerns over independence of central bank
(12 November 2024) Thailand’s baht dropped over 1% to 34.739 per dollar, the largest decline among Asian currencies, amid investor concerns over potential government influence on the central bank’s independence. The market responded to news that Kittiratt Na-Ranong, a former finance minister known for criticising the central bank’s tight monetary policy, is set to become the Bank of Thailand’s (BOT) new chairman. This anticipated appointment has raised investor caution, especially given the government’s continued push for rate cuts. The baht has fallen more than 7% this quarter, marking Asia’s weakest performance, partly due to Thailand’s exposure to Trump’s expected trade tariffs, which could pressure the economy further. Although the BOT chairman does not set policy, Kittiratt’s role in appointing members to the Monetary Policy Committee and evaluating the governor has raised market expectations for potential rate cuts in 2024.

CAMBODIA, VIET NAM
Cambodia overtakes Sri Lanka in apparels exports  
(13 November 2024) Sri Lanka’s apparel export industry is facing stagnation, with projections of USD 5 billion in export value for 2024, falling behind competitors like Cambodia, which earned nearly USD 9 billion from textiles in 2024’s first three quarters, a 25% increase from 2023. Cambodia’s apparel industry, bolstered by FTA access and modernisation initiatives, has seen substantial growth, making it the sixth-largest garment exporter to the US and Europe. Other Southeast Asian nations, including Vietnam, have also increased apparel exports by leveraging FTAs and advanced manufacturing technologies. The region’s growing focus on sustainability, with eco-friendly practices and renewable energy adoption, is positioning Southeast Asia as a competitive and responsible apparel production hub.


RCEP Monitor


CHINA
Trade surplus projected to reach nearly USD 1 trillion by year-end
(12 November 2024) China’s trade surplus is projected to reach nearly USD 1 trillion by year-end, with the goods trade surplus already reaching a record USD 785 billion in the first ten months of 2024, up almost 16% from the previous year. China’s strong export volume, driven by falling export prices and weak domestic demand, has led to significant trade imbalances globally, including a 4.4% increase in the U.S. surplus, a 9.6% increase with the EU, and a 36% increase with ASEAN countries. The yuan-denominated trade surplus represented 5.2% of China’s GDP in the first nine months, the highest since 2015. Countries globally, from South America to Europe, have imposed tariffs on Chinese goods, with the incoming U.S. administration under Trump likely to pursue further tariffs. Foreign companies are reducing investments in China, with foreign direct investment liabilities declining in the first nine months, potentially marking China’s first annual FDI outflow since 1990. In response, China’s State Council announced increased financial support for companies to stabilise trade, employment, and economic growth. Additionally, India’s central bank has expressed readiness to let the rupee weaken should China allow the yuan to fall further, potentially escalating a currency rivalry.

CHINA
China planning on slashing homebuying taxes to spur housing market
(12 November 2024) China is preparing a proposal to reduce deed taxes for homebuyers in major cities, including Beijing and Shanghai, to as low as 1%, down from up to 3%, as part of a fiscal strategy to revitalise its weakened housing market. This measure aligns with plans for more “forceful” fiscal policies in 2024, in addition to a CYN 10 trillion debt swap initiative for local governments. The tax cut proposal also suggests removing the distinction between ordinary and luxury homes, which would lower upgrade costs for buyers. This initiative, if enacted, would reduce purchasing costs and stimulate property sales, especially in top-tier cities. The move has already influenced markets, with the Bloomberg Intelligence gauge of developers’ shares rising slightly before resuming losses. China’s property sector, suffering from years of downturns, has seen billions in lost household wealth, contributing to deflationary pressure. Recent policies have aimed to support the property market, such as reducing borrowing costs, easing purchasing restrictions, and doubling the loan quota for unfinished projects to four trillion yuan. October saw a rise in residential property sales, though mainly in state-backed projects and existing homes.

AUSTRALIA
Employment growth slows in October with net jobs rising by 15,900 
(15 November 2024) Australia’s employment growth slowed in October, with net jobs rising by 15,900 compared to a revised increase of 61,300 in September, which was below market expectations of a 25,000 rise. However, annual job growth remained strong at 2.7%, driven primarily by full-time positions. The unemployment rate held steady at 4.1%, and the participation rate slightly decreased to 67.1%. The data led National Australia Bank to revise its forecast for the Reserve Bank of Australia’s (RBA) first rate cut to May, from February. Despite this, other major banks still anticipate a rate cut in February. The RBA’s current cash rate remains at 4.35%, and analysts suggest that with inflation still above target, a near-term rate cut is unlikely. Inflation was 2.8% in Q3, largely due to government rebates, while underlying inflation remained at 3.5%. The likelihood of a rate cut in December or February is seen as low, with markets indicating only a 10% chance in December and 28% in February. The labour market remains tight, with hours worked increasing and underemployment dropping to 6.2%.

15 participating countries

20 chapters

2.2 billion

US$26.2 trillion

28%

ASEAN member states, Australia, China, Japan, South Korea, New Zealand trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement combined population, 30% world’s population combined GDP, 30% global GDP global trade (based on 2019 figures)

CARI Captures Issue 679: Philippines economy grows by 5.2% year-on-year in Q3 2024, marking slowest expansion in five quarters


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.

THE PHILIPPINES
Economy grows by 5.2% year-on-year in Q3 2024, marking slowest expansion in five quarters
(07 November 2024) The Philippine economy grew by 5.2% year-on-year in Q3 2024, down from a revised 6.4% growth in Q2, marking the slowest expansion in five quarters. Household consumption rose by 5.1%, supported by central bank rate cuts in August and October, although declining exports and agricultural output moderated overall growth. Exports of goods and services declined by 1.0%, while imports increased by 6.4%, resulting in a “deep contraction” in net exports. The National Economic and Development Authority Secretary attributed export declines to inventory adjustments in the electronics sector, particularly semiconductors. Agriculture contracted by 2.8%, impacted by El Nino and seven typhoons, including Typhoon Yagi. Government expenditures grew by 5%, slower than the prior quarter’s 10.7% due to climate-related disruptions. President Ferdinand Marcos Jr. is targeting upper-middle-income status for the Philippines by the end of his term, requiring at least 6.5% growth in Q4 to meet the government’s 6-7% annual GDP target. HSBC noted easing inflation, central bank rate cuts, and reduced “revenge spending” as factors influencing Q3 consumption.

THE PHILIPPINES
Authorities begin clearing debris in northern regions following Typhoon Yinxing’s landfall
(08 November 2024) On 08 November, Philippine authorities began clearing uprooted trees and debris in northern regions as Typhoon Yinxing moved out to sea after making landfall the previous night with winds reaching 175 km/h. Nearly 30,000 residents had evacuated to government shelters before the storm, which fortunately caused no casualties despite significant damage. The typhoon brought 242.6 mm of rain and uprooted trees, knocked down power lines, and caused soil erosion. Cagayan province’s disaster chief reported minor landslides without fatalities. In Pamplona, strong winds tore roofs from homes, and shelter-seeking residents in Santa Ana faced additional challenges as high winds shattered windows. By 8 AM on 08 November, Typhoon Yinxing was moving across the South China Sea, while clean-up operations were underway, including power restoration and road clearing. This is the third major storm to impact the Philippines in a month, following Storm Trami and Super Typhoon Kong-rey, which collectively resulted in 158 fatalities. Climate research indicates storms in the Asia-Pacific are forming closer to coastlines, strengthening rapidly, and persisting longer on land due to climate change.

MALAYSIA
Sarawak state targets quadrupling renewable energy capacity by 2035
(08 November 2024) The state of Sarawak has set a target to quadruple its renewable energy generation capacity to 15 GW by 2035, up from its current 5.7 GW, with 62% of existing capacity derived from hydropower. Sarawak’s surplus energy is exported through the Borneo Grid to Indonesia and Brunei, and discussions are ongoing to supply up to 1 GW of renewable power to Singapore by 2031, involving a 700-km undersea cable project with Sembcorp Industries. The Baleh Dam, a 1.3 GW hydropower facility, is set to come online in 2027, while a collaboration with Abu Dhabi’s Masdar and Petronas subsidiary Gentari aims to develop a 1 GW floating solar project at the Murum Hydroelectric Plant. The CEO of the Asian Strategy and Leadership Institute views the 15 GW goal as ambitious but achievable, though he notes challenges related to local energy stability, environmental impacts of hydropower, talent development, and investment. Sarawak is also exploring power supply to Johor, driven by industrial and data centre demands. Sarawak Energy, now the first Southeast Asian global patron of the World Energy Council, is focusing on partnerships to support regional energy needs and climate objectives.

MALAYSIA
Malaysia’s central bank maintains overnight policy rate at 3.00% in final policy meeting of 2024
(06 November 2024) Bank Negara Malaysia (BNM) maintained its overnight policy rate at 3.00% in its final policy meeting of 2024, consistent with market expectations and a steady economic outlook. This rate has held since May 2023, with economists forecasting it will remain stable until at least 2026. BNM noted continued economic strength, supported by resilient domestic spending and increased exports. Inflation rates, both headline and core, have averaged 1.8% year-to-date, with 2025 inflation projected to stay manageable due to easing global costs and stable domestic demand. However, BNM highlighted that the inflation outlook may be influenced by government policies, particularly as Malaysia phases out blanket subsidies on items like diesel, electricity, and chicken, with further fuel subsidy cuts expected by mid-2025. In October’s budget, the government raised its 2024 economic growth forecast to 4.8%-5.3%, up from 4%-5%. Preliminary estimates for Q3 show annual growth at 5.3%, down from Q2’s 5.9%.

INDONESIA
Indonesia aims to increase palm oil production to support growing biofuel demand
(07 November 2024) Indonesia aims to increase palm oil production to support its growing biofuel demand and President Prabowo Subianto’s food security objectives. The country launched a mandatory B35 biodiesel program in early 2023, requiring a 35% palm oil blend, and plans to increase this to 40% in 2025 to reduce carbon emissions and oil imports. While Indonesia produces approximately 60% of the world’s palm oil, efforts to boost productivity will focus on expanding a smallholder replanting programme, improving farming practices, and introducing higher-yielding crop varieties. Since 2017, around 360,000 hectares have been replanted under the programme, though this remains below the target of 180,000 hectares annually. It is estimated that 2024 production will remain around 50 million tonnes, with output unlikely to increase substantially in the short term due to replanting delays; newly planted trees require about three years to mature. The USDA forecasts a 3% production increase to 47 million tonnes in 2024-25, partly driven by recovery from 2023’s El Niño conditions, despite longstanding moratoriums on new land clearance to prevent deforestation. 

VIET NAM
Viet Nam sets dong’s reference rate at historic low amidst strengthening US Dollar
(07 November 2024) The State Bank of Vietnam (SBV) set the dong’s reference rate at a historic low of VND 24,283 per dollar on Thursday, amid pressure from a strengthening U.S. dollar. The dong traded at 25,402 per dollar, close to its all-time low, reflecting a more than 4% decline this year, its weakest performance since 2015. Analysts suggest that the SBV may permit a gradual depreciation of the dong but is prepared to intervene to avoid excessive weakening. The SBV sets the daily reference rate based on a basket of eight currencies, allowing a 5% trading band. The depreciation trend follows regional central banks’ adjustments to a strong dollar, with other currencies such as South Korea’s won also reaching multi-year lows. SSI Securities Corp. highlighted that this situation may push the SBV to enhance foreign exchange reserves and increase flexibility in exchange rate policies to support market depth.

VIET NAM, BRUNEI DARUSSALAM
Viet Nam and Brunei Darussalam collaborating to strengthen tourism cooperation
(08 November 2024) The Vietnamese Embassy in Brunei Darussalam held a workshop on 06 November to strengthen tourism cooperation with Brunei and the BIMP-EAGA region post-COVID-19. The Vietnamese Ambassador highlighted rising demand for sustainable and Halal tourism, noting opportunities for Viet Nam and Brunei to tap into the nearly 400 million people within BIMP-EAGA. Vu expects tourism growth in 2025, supported by cultural events in Viet Nam that are expected to attract Muslim tourists from the region. He underscored the eco-tourism potential in Brunei, Borneo, and BIMP-EAGA countries, as well as the impact of Indonesia’s capital relocation to Nusantara on tourism appeal. With existing direct flights between Brunei and Viet Nam, both countries serve as gateways connecting the Mekong region and BIMP-EAGA. The Embassy aims to collaborate with partners to promote tourism across these regions, including new travel routes. Representatives from Brunei and Malaysia expressed interest in closer tourism ties, acknowledging Viet Nam’s recent e-visa introduction, enhanced air links, and expanded Halal services. Brunei’s Tourism Department Acting Director, called Viet Nam a key market, with plans to promote Brunei’s cultural and Islamic tourism through social media influencers. In 2024, Brunei welcomed 4,000 Vietnamese tourists, and its national airline facilitated travel for over 12,000 passengers on six weekly flights between Brunei and Ho Chi Minh City.


RCEP Monitor


SOUTH KOREA
Korean government revises approach to regulating dominant online platforms
(08 November 2024) South Korea’s government has revised its approach to regulating dominant online platforms, shifting from the proposed Platform Competition Promotion Act (PCPA) to amendments in the existing Monopoly Regulation and Fair Trade Act. The PCPA, criticised by the United States for potentially benefiting Chinese companies, was aimed at platforms with over 60% market share and annual local revenues exceeding KRW 4 trillion (USD 2.9 billion), such as Naver, Kakao, and Baemin. The amendments will still enable scrutiny of dominant platforms but focus on interventions for specific abuses rather than broad preemptive controls. However, the changes have drawn mixed reactions. Industry groups, like the Digital Economy Research Institute, warn of stifled innovation, while advocates such as People’s Solidarity for Participatory Democracy argue that the adjustments lack the power to curb monopolistic practices effectively. The Korea Fair Trade Commission (KFTC) recently fined Kakao T KRW 72.4 billion for abusing market power in the taxi-hailing sector, where it holds a 96% share, a record penalty intended to address anti-competitive behaviour. Meanwhile, Democratic Party legislators have threatened to revive the PCPA if voluntary negotiations between platforms like Coupang and Baemin and small business owners stall, reflecting ongoing tensions.

CHINA
Chinese spending on chipmaking equipment projected to exceed USD 40 billion in 2023
(07 November 2024) China’s spending on chipmaking equipment is projected to exceed USD 40 billion in 2023 but is expected to fall below this level in 2024 due to earlier advance purchases spurred by U.S.-China tensions, according to SEMI. In 2025, the market is anticipated to contract further by 5-10%, driven by declining equipment utilisation rates at Chinese semiconductor plants. ASML Holding, which recorded 50% of its recent quarterly sales in China, forecasts this share to decrease to 20% in 2025, leading the company to lower revenue expectations. SEMI also estimates a 4% annual decline in China’s chipmaking equipment spending from 2023 to 2027, contrasting with projected annual growth of 22% in the Americas, 19% in Europe and the Middle East, and 18% in Japan. Despite this downturn, China will remain the world’s largest chipmaking equipment market, with expected spending of USD 144.4 billion between 2024 and 2027, outpacing South Korea’s USD 108 billion and Taiwan’s USD 103.2 billion. China’s government aims to boost domestic self-sufficiency in semiconductors, with a 2023 self-sufficiency rate of 23%, supporting local suppliers like Naura Technology Group and AMEC, which are increasing technological capabilities. Semiconductor Manufacturing International Corp. (SMIC) and other local chipmakers are expanding procurement of domestic equipment, in part due to state direction.

CHINA
Chinese exports rose by 12.7% year-on-year to USD 309.06 billion, fastest increase since March 2023
(06 November 2024) In October, China’s exports rose by 12.7% year-on-year to USD 309.06 billion, marking the fastest increase since March 2023 and surpassing analysts’ forecast of 5.2%. This significant growth, compared to 2.4% in September, is attributed to delayed shipments due to improved weather, price discounts, and seasonal demand. Imports, however, dropped by 2.3%, missing the forecasted decline of 1.5%. Export gains included an 8.1% rise to the U.S., a 12.7% increase to the EU, and a 15.8% rise to ASEAN nations, while imports from these regions fell over 6%. Exports to Russia surged nearly 27%. Chinese car exports grew 11%, despite tariffs from the U.S. and EU. Economists expect export strength to continue into early next year as businesses anticipate possible trade conflicts with the U.S. Fiscal stimulus measures, including rate cuts and relaxed property purchase rules, have been implemented to counter weak domestic demand, and further stimulus details are expected after China’s parliament meeting concludes. Factory activity also showed slight improvement in October, with the purchasing managers’ index reaching 50.1, a positive shift from September’s 49.8.

15 participating countries

20 chapters

2.2 billion

US$26.2 trillion

28%

ASEAN member states, Australia, China, Japan, South Korea, New Zealand trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement combined population, 30% world’s population combined GDP, 30% global GDP global trade (based on 2019 figures)