ASEAN
Manufacturing output in ASEAN rises for second month running
(5 January 2021) ASEAN’s headline Purchasing Managers’ Index (PMI) posts above the 50.0 mark in December 2020 at 50.8, the first time it has done so since February 2020, according to IHS Markit. The latest PMI reading hints at the beginning of a recovery from the economic fallout caused by COVID-19. Factory production increased for the second straight month, supported by a strong upturn in new orders since August 2018. Improved conditions also boosted business confidence at the end of the fourth quarter, the highest since before the onset of the pandemic in January 2020. Singapore saw the fastest improvement in manufacturing conditions (55.0), while Vietnam also recorded an improvement (51.7). Growth was sustained in Indonesia (51.3) and Thailand (50.8). The Philippines registered a third successive monthly deterioration in conditions (49.2) while Malaysia recorded a similar mild downturn (49.1). Myanmar again saw a softer rate of contraction in December (44.7)

THAILAND
Thai central bank panel says growth may fall below forecast
(7 January 2021) Thailand’s 2021 GDP growth could drop below the 3.2% baseline projection from probable lower inbound arrivals amid uncertainties over COVID-19 vaccine efficacy and reduced fiscal stimulus, according to the Bank of Thailand’s Monetary Policy Committee’s (MPC) edited minutes. The MPC has been maintaining the 0.5% policy interest rate, following three rate cuts undertaken in early 2020. The projected number of 2021 foreign tourist arrivals has been revised down to 5.5 million from an earlier projection of 9.0 million following the recent COVID-19 outbreak. Public expenditure, one of the main drivers sustaining Thailand’s economy in 2019, is also expected to be revised down, driven mainly by the lower-than-expected fiscal year 2021 annual budget and the carryover budget as well as a reduction and postponement of state-owned enterprise investment, according to the minutes.

SINGAPORE
Singapore records worst annual contraction in its history
(4 January 2020) Singapore’s economy suffered its worst ever annual contraction in 2020 as the COVID-19 pandemic pummelled the city-state’s vital trade and tourism sectors, official data showed on 4 January. However, the 5.8% contraction was not as bad as feared, official forecasts had predicted a fall of up to 6.5%. The softer contraction has been attributed to the resumption of economic activity due to the easing of curbs. Singapore plunged into its first recession since the 2008 global financial crisis in the second quarter of 2020 when the government closed most workplaces as part of drastic measures to contain infections. In the fourth quarter of 2020, the economy shrank 3.8% year-on-year, less than expected, according to preliminary growth data released by the trade ministry. A regional economist expects a rebound of around 6.0% for 2021.

INDONESIA
Indonesia to begin COVID-19 mass inoculation on 13 January
(5 January 2021) Indonesia will begin its nationwide COVID-19 mass vaccination programme on 13 January, said health minister Budi Gunadi Sadikin on 5 January. The programme will be launched in Jakarta, with President Joko Widodo set to be given the first shot while vaccinations in other regions will start in the following two days. The government has previously said 1.3 million frontline workers are due to be among the first to receive the vaccines made by China’s Sinovac Biotech. Budi has said previously that Indonesia must inoculate 181.5 million people, or roughly 67% of the population, to reach herd immunity. The vaccine will be administered for free across the archipelago, with the rollout expected to take 15 months.

VIETNAM
Vietnam proposes suspending all flights from countries with new COVID-19 variant
(4 January 2021) Vietnam has proposed suspending or limiting incoming flights from at least 34 countries and territories that have detected cases of the new COVID-19 variant first found in the UK, the government announced on 4 January. The country’s health ministry did not, however, say which countries would be subject to the ban. The proposal has been submitted to the prime minister and is awaiting approval after Vietnam confirmed its first imported case of the new COVID-19 variant on 2 January. The new variant includes a genetic mutation that could result in the virus spreading more easily between people. Due to the emergence of the new variant, which scientists have said is 40%-70% more transmissible than the original one, over 40 countries have applied similar bans.

CAMBODIA 
Cambodia saw the opening of 221 factories, closure of 100 in 2020
(7 January 2021) New factory openings in Cambodia totalled 221 while 100 factories closed down from COVID-19 related factors in 2020, according to the Ministry of Industry, Science, Technology and Innovation. The total number of factories in the country at the end of 2020 was 1,853. These factories employed 900,000 local workers, said the ministry’s Secretary of State Heng Sokkong. In 2020, 178 new investment projects (mostly in the garment and textile sector) with an investment capital of US$4.15 billion were approved by the Council for the Development of Cambodia. The factories opened ranged from garments to high-technology-equipped factories manufacturing solar panels and electronic components. Meanwhile, factory closures in 2020 were mainly garment manufacturers and sub-contractors supplying semi-finished products.

LAOS, THAILAND 
Construction of fifth Lao-Thai bridge begins
(6 January 2021) Construction work on a fifth bridge linking Laos and Thailand across the Mekong River has begun after an agreement was signed in December 2020. The bridge will take 36 months to complete and will connect Bolikhamxay province in Laos to Thailand’s northeastern province of Bueng Kan. The total cost of construction is estimated at US$130.3 million, of which Laos will be responsible for around US$46.13 million. Upon completion in 2023, the bridge will enable Bolikhamxay to become another regional trade hub and transit route for Laos, Thailand and Vietnam over a distance of just 150 km. The bridge is part of the Greater Mekong Sub-region and Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) initiative among Laos, Cambodia, Myanmar, Vietnam and Thailand.

RCEP Monitor

CHINA
China’s 2021 growth forecasted to reach 7.9%
(7 January 2021) China will continue to lead the world’s economic recovery in 2021, driven by the sustained expansion of industrial production and exports, economists said on 6 January. The comments followed the World Bank’s updated projection for China’s 2021 economic growth, which is set to accelerate to 7.9%, an increase of 1 percentage point from its forecast in June 2020. In a report published on 5 January, the bank said China’s faster recovery was based on the release of pent-up demand and a quicker-than-expected resumption of production and exports. It noted however that stronger economic performance in China was “an exception” amid the global slowdown, while disruptions due to the COVID-19 pandemic in most other emerging-market and developing countries were more severe than it had previously envisioned.

SOUTH KOREA
South Korea’s exports record highest expansion in 26 months
(1 January 2021) South Korea’s exports grew 12.6% year-on-year in December 2020, its sharpest growth since October 2018. The fastest expansion pace in 26 months was attributed to robust chip demand and improved global demand, providing additional signals that the recovery is on track despite resurgences in COVID-19 infections. Government data showed exports posted a 22.5% growth since October 2018. The rate of growth was higher than forecasted as analysts had expected a 5.6% jump from 2019, and was much higher than the 4.1% growth in November 2020. Overseas sales of semiconductors surged 30% from a year earlier, marking the sharpest expansion since August 2018, driving the overall exports recovery. Other major items such as mobile devices, displays and computers also soared 39.8%, 28.0% and 14.7% year-on-year.

AUSTRALIA
Australian national carrier reopens ticket sales for international flights from July 2021
(5 January 2021) Qantas Airways Ltd. has started taking bookings for international flights from 1 July with the view that by then, COVID-19 vaccinations will have begun to curb the spread of the virus and travel demand will pick up. Ticket sales for Japan, Hong Kong and Singapore, which had been set to start in March 2021, have been pushed back to July, while other destinations like London have been brought forward from October 2021, Australia’s national carrier said 5 January. New Zealand is the only overseas destination to which Qantas is currently flying. Australia has yet to authorise a COVID-19 jab and doesn’t plan to offer a shot until March. The country cancelled a local vaccine development in December 2020 after trials showed it could interfere with HIV diagnoses.