CARI Captures Issue 537: Taiwan seeking to deepen economic ties with Southeast Asia as part of “New Southbound Policy”
ASEAN, TAIWAN
Taiwan seeking to deepen economic ties with Southeast Asia as part of “New Southbound Policy”
(18 January 2022) Taiwanese President Tsai Ing-wen is seeking to expand economic ties with Southeast Asia as part of the “New Southbound Policy” (NSP), which seeks to reduce Taiwan’s trade dependence on China by focusing on Southeast Asia, South Asia, and Australasia. The NSP was launched in 2016, and is composed of four elements, including economic and trade cooperation, talent exchanges, resource sharing and regional connectivity. In the first 11 months of 2021, 37% of Taiwan’s total foreign direct investment went to Southeast Asia, compared with around 33% for China. In recent years, partnerships between Taiwan and Southeast Asian countries have developed in fields including agriculture, health care, tourism, education and other fields. Mutual understanding has also been fostered through the presence of Southeast Asian workers in Taiwan – there were an estimated 675,672 foreign workers in Taiwan as of the end of November 2021, mostly found in industries such as manufacturing and social care. Most foreign workers come from Indonesia, Vietnam, the Philippines and Thailand.
MALAYSIA
Malaysian civil aviation regulator approves two new airlines in 2021
(17 January 2022) Malaysia’s civil aviation industry regulator Mavcom granted approval for an air service licence (ASL) for two new airlines in 2021. These two airlines include ultra-low cost carrier MYAirline Sdn Bhd and SKS Airways Sdn Bhd. MYAirline was granted conditional approval for an ASL by the commission on 22 December, 2021. The license is valid for 12 months from 01 January to 31 December, 2022. SKS Airways was also granted an ASL on 22 December, which lasts for three years from 01 January, 2022 to 31 December, 2024. MYAirline plans to build an airline business in Malaysia and compete with Air Asia for dominance. It is reportedly a good time to build a new airline business as leasing rates for aircraft are super cheap right now, while retrenched pilots and air crews can also be hired at reasonable rates. Meanwhile, SKS Airways will focus on domestic short-range flights to island-based and coastal resorts from major cities within Peninsular Malaysia.
MALAYSIA
Palm oil prices climb to record high due to contracting supply in Malaysia
(21 January 2022) Palm oil prices in Malaysia climbed to a record high and headed for its longest streak of weekly gains since July 2021 due to contracting supply in Malaysia. Futures for palm oil for April 2022 jumped by as much as 1.3% to MYR 5,256 (US$1,256) a ton, an intraday all-time high, before trading at MYR 5,244 ringgit by 2:42 PM in Kuala Lumpur. Prices have advanced 5.8% this week, a fifth straight weekly gain for the most-active contract. Palm oil supply is expected to remain tight in the first quarter of 2022, as the country faces ongoing labor shortages. Output is expected to drop by 18% in the first 20 days of January from a month earlier. Palm oil prices are also benefiting from an overall rally in vegetable oils prices. Crude palm oil production fell by 11.3% month-on-month to 1.45 million tons in December 2021, the smallest since March and the biggest drop in 11 months due to labor-related issues and floods in some key-growing areas. Production is expected to recover in the longer term.
INDONESIA
Indonesia announces new capital to be built in Borneo to be called Nusantara
(19 January 2022) Indonesia has announced that its new capital, to be built on the island of Borneo, will be called “Nusantara”, which means Archipelago in Bahasa Indonesia. This announcement came as its parliament approved a bill to relocate the capital from Jakarta, which is both overcrowded and sinking rapidly. The capital will be built in the province of East Kalimantan, which is mineral rich and home to a population of only 3.7 million people. The move of the capital will cost the country an estimated US$32.4 billion, and will be one of the biggest infrastructure projects ever undertaken by its government. Critics have argued that the move of the capital may have negative environmental impacts on the jungle-rich island of Borneo. Indigenous groups have also voiced their concerns.
INDONESIA
Indonesian e-commerce firm PT Bukalapak.com loses more than half its value since IPO in August 2021
(19 January 2022) Indonesian e-commerce firm PT Bukalapak.com has lost more than half its value since raising US$1.5 billion in Indonesia’s biggest public offering. Shares closed at a record low IDR 352 on 18 January, 2022, pushing its market value below US$2.6 billion. That’s a decrease of 66% from the US$7.6 billion market capitalization recorded on its first trading day in August 2021. Concerns have been raised that Bukalapak’s IPO flop bodes poorly for upcoming tech listings that are expected to propel the Indonesian stock market to another year of record deals. This includes the planned listings of tech start-up GoTo Group and e-commerce platform Blibli, which both plan to go public in 2022. According to one observer, investors plan to focus on tech companies that will be able to report positive earnings within three to six months after their IPO. As well, the flop of Bukalapak.com’s IPO may be due to specific challenges facing the company, including its chief executive officer recently leaving to join the public sector.
SINGAPORE
Cryptocurrency ATMs halted in Singapore after authorities clamp down on marketing
(19 January 2022) Cryptocurrency ATMs have halted operations in Singapore after being requested by the Monetary Authority of Singapore (MAS), which seeks to limit consumer marketing of cryptocurrencies. Singapore’s biggest operator of the ATMs, Daenerys & Co., ceased its services to comply with an MAS request. The five machines, mostly located in malls around Singapore, offered people a convenient way to buy tokens like Bitcoin and Ether using fiat currency. The MAS claimed that such services could encourage consumers to trade ‘on impulse’, which they believe could be dangerous given the volatile nature of cryptocurrencies. Bitcoin has recently dropped by some 40% from a peak in November 2021. Regulators in other countries such as the UK and Spain have also sought to clamp down on the consumer marketing of cryptocurrencies.
THAILAND
Thailand to resume quarantine-free travel for vaccinated arrivals from 01 February onwards
(20 January 2022) Thailand will resume its quarantine-free travel programme for vaccinated individuals from 01 February onwards, with the scheme having been suspended only a month ago after only seven weeks due to fears of the Omnicron variant. Under the “Test & Go” quarantine waiver, visitors are required to to test on arrival and again five days later, while agreeing to have their whereabouts tracked. Authorities also extended the hours restaurants are allowed to serve alcohol to 11 PM from 9 PM. Thailand’s government has also agreed to expand its other quarantine-waiver programme, the “Sandbox”, to include popular eastern beach destinations Pattaya and Koh Chang. The programme, which requires vaccinated tourists to stay in one location for a week, is currently operating in Phuket and Koh Samui.
RCEP Monitor
NEW ZEALAND
New Zealand rules out lockdown measures in case of community-transmission of Omnicron variant
(20 January 2022) New Zealand ruled out imposing lockdown measures in the event of a community-transmission of the Omnicron variant of COVID-19. Although the country remains free of the variant within the community, many cases have been reported at quarantine facilities at the border. Within 24 to 48 hours of Omnicron being detected in the community, a “red” traffic light setting would be imposed which would include mask mandates and limits to public gatherings. About 93% of New Zealand’s population over the age of 12 are fully vaccinated and about 20% have had booster shots. The country’s borders have remained closed to foreigners since March 2020, and plans for a phased reopening have been pushed from mid-January 2022 to the end of February. Arrivals to the country currently have to apply for a place at state-managed quarantine facilities.
JAPAN
Japanese imports and exports hit record highs in terms of value in December 2021
(20 January 2022) Japan’s exports and imports hit record highs in December 2021 by value denominated in yen, amid easing supply chain bottlenecks and inflationary pressures. A persistent semiconductor shortage remains an issue (including for the automaker Toyota), alongside uncertainties caused by the Omnicron variant of COVID-19. Yen-denominated exports and imports hit records of JPY 7,881.4 billion (US$69 billion) and JPY 8,463.8 billion (US$74.15 billion) respectively, the biggest since comparable data became available in January 1979. By volume, exports in December 2021 rose by 17.5% from a year earlier, according to data by the Ministry of Finance. Japan recorded a trade deficit of US$5.09 billion in December 2022, while for the full year of 2021 it recorded a trade deficit of JPY 1,472.2 billion yen (US$12.90 billion), the first in two years and following a JPY 388.3 billion (US$3.40 billion) surplus in 2020, amid higher fuel import costs.
AUSTRALIA
Australia’s unemployment rate drops to lowest point in 13 years in December 2021
(20 January 2022) Australia’s unemployment rate dropped to its lowest point in 13 years in December 2021, as the economy benefited from a post-lockdown boom in late 2021. The economy added 64,800 jobs in December, lowering the unemployment rate to 4.2% from a previously reported 4.6% in November. This was according to data released by the Australian Bureau of Statistics, which captured data from the period of 28 November – 11 December 2021. National figures were boosted by the recovery in New South Wales and Victoria, with employment in these two states increasing by 32,000 and 25,000 people between November and December. The economic recovery was aided by huge fiscal stimulus by states and the federal government, household savings topping $200 billion, and record-low official interests rates. However, the Omnicron variant has disrupted supply chains and prevented thousands from being able to work. Westpac bank has brought forward its timing of when it expects the central bank to first start raising interest rates, from a previous expectation of it happening in February 2023 to now occurring in August 2022.