CARI Captures Issue 549: 78% of Middle Eastern companies view Malaysia as top ASEAN market for expansion
78% of Middle Eastern companies view Malaysia as top ASEAN market for expansion
(12 April 2022) According to a survey recently commissioned by Standard Chartered entitled ‘Borderless Business: Middle East-ASEAN Corridor’, 78% of Middle Eastern companies view Malaysia as their top ASEAN market for expansion. This is followed by Singapore (69%) and Indonesia (67%). Greater participation of Middle Eastern companies in Southeast Asia has been enabled by multiple regional and country-level alliances. In particular, the report said the ASEAN-GCC Joint Vision has served as the foundation for pursuing closer economic and cultural cooperation between the regions. The report noted that key growth sectors in Malaysia attractive to Middle Eastern companies include refining and petrochemicals, renewable energy, and retail and consumer goods. Not only has Malaysia established integrated petrochemical zones, it has also emerged as a major hub for solar photovoltaic (PV) production and is a key market for halal goods.
ASEAN nations to utilize economic recovery momentum to push for financial stability and integration
(11 April 2022) ASEAN nations agreed to utilize economic recovery momentum to push for financial stability and integration during the 8th Joint Meeting of the ASEAN Finance Ministers and Central Bank Governors (AFMGM). It is believed that greater financial integration would mitigate economic risks and challenges during the post-COVID-19 era, including from climate change, digital disruptions, and geopolitical tensions. Among the priority areas identified was encouraging further integration in the regional financial services sector. The ASEAN member states also welcomed the resolution of the study on ASEAN member states entitled Financial Landscape Toward Furthering ASEAN Banking Integration in the Digital Era. They also welcomed the Cross-Border QR Code Payment Linkages initiative and the issuance of ASEAN Taxonomy Version 1. There was also support for the ASEAN central bank initiative to strengthen the sustainable finance agenda through the formation of two work streams under the Senior Level Committee Task Force (SLC-TF).
Indonesian sovereign wealth fund agrees to invest US$2.7 billion in toll roads on Java and Sumatra
(14 April 2022) The Indonesia Investment Authority, a sovereign wealth fund, has agreed to provide around US$2.7 billion to invest in toll roads on the islands of Java and Sumatra. The deals are with Hutama Karya, the Indonesian state-owned construction company that is building the Trans-Sumatra toll road, and Waskita Toll Road, which is developing the Trans-Java toll road and is a subsidiary of another state builder. Indonesian President Joko Widodo stated that the agreements are expected to help domestic and international investors gain trust in the way the fund, also known as the INA, manages its money. As part of Joko Widodo’s mass infrastructure program, Indonesian state contractors have been accumulating massive amounts of debts. Some of these companies are now seeking to divest some of their assets. Apart from turnpikes, the INA plans to invest in geothermal infrastructure, ports, and the health care sector.
Malaysia expected to hire nearly 180,000 migrant workers over the next six weeks to ease labor-crunch
(14 April 2022) Malaysia is expected to hire nearly 180,000 migrant workers over the next six weeks in order to ease a pandemic-driven labor crunch, which has choked its key plantation and manufacturing industries. Malaysia froze the hiring of foreign workers in the past two years to stem the spread of COVID-19, leading to an acute labor shortage, especially in the economically crucial palm oil plantation sector. Although various business associations had urged the freeze to be lifted sooner, the government first ensured that locals didn’t want those jobs. Reportedly, many locals shunned those types of jobs, preferring to work as e-hailing drivers due to the higher income. There are only about 1.17 million registered foreign workers in Malaysia, down from 1.7 million before the outbreak of COVID-19. As of 7 April, the Ministry of Human Resources has received 519,937 applications from employers across various industries.
Singapore’s GDP growth slows to 3.4% year-on-year in first quarter of 2022
(14 April 2022) According to Singapore’s Ministry of Trade and Industry (MTI), Singapore’s economy grew 3.4% year-on-year in the first quarter of 2022. This is a slowdown from the 6.1% growth recorded in the previous quarter. On a quarter-on-quarter seasonally adjusted basis, Singapore’s GDP grew 0.4% in the first quarter, slower than the 2.3% recorded in the preceding quarter. The slowdown in the first quarter was largely due to the manufacturing sector coming off a high base, as the sector failed to grow at the same pace observed over the last two years due to Singapore facing capacity constraints. Moving forward, the easing of COVID-19 restrictions will support economic activity in the coming quarters. However, Singapore will be vulnerable to slowdowns in economic activity in either the United States or China. Authorities project growth of between 3% to 5% in 2022, and preliminary GDP estimates for the first quarter of 2022 will be released by MTI in May.
Fintech company Voyager Innovations reaches unicorn status after raising US$210 million in latest funding round
(12 April 2022) Philippine fintech company Voyager Innovations stated it had reached unicorn status after raising US$210 million in their latest funding round. The company’s valuation had reached US$1.4 billion following the latest funding round, which was led by new investor SIG Venture Capital. Existing shareholders U.S. fund KKR, Chinese tech titan Tencent, World Bank affiliate IFC and PLDT, the Philippines’ largest telecom, also participated. The company operates a payments app called Paymaya, which serves some 47 million users. The company said it will use the fresh funds to launch Maya Bank, a new digital bank that targets consumers and small enterprises. The company said it will also continue to expand Paymaya’s products and services, including cryptocurrency, micro-investments and insurance. With one of Southeast Asia’s largest unbanked populations, there is fierce competition among the Philippines’ upcoming digital banks to provide financial services to millions of Filipinos who traditionally lack access to them.
Viet Nam plans to raise minimum wage by 6% from July 2022 to help workers deal with impact of COVID-19
(12 April 2022) Viet Nam plans to raise its minimum wage by 6% from July 2022 onwards to help workers weather the impact of COVID-19. Under the plan, the minimum monthly wage would be raised to between US$142.00 and US$204.47. This will be the first minimum wage hike in two years, as a large proportion of the population is facing hardships due to the COVID-19 pandemic. In response, Viet Nam’s Chamber of Commerce and Industry, which represents businesses in the country, said firms would try to increase their productivity to help fund the wage hike. Viet Nam recorded GDP growth of 5.03% in the first quarter of 2022, beating the 4.72% expansion recorded in the first quarter of 2021 but down from the 5.22% recorded in the fourth quarter.
Japan expected to announce strongest annual inflation since 1992 outside tax hike years
(15 April 2022) The Bank of Japan (BOJ) is widely expected to announce Japan’s strongest annual inflation since 1992 outside tax hike years. Surveyed economists predict key consumer prices to grow by 1.8% in the year that started in April, compared with the BOJ’s current forecast of 1.1%. This is fueling expectations that the BOJ will have to upgrade its quarterly projections for price gains well beyond the 1.2% level that marks the strongest price gains in 30 years after excluding the impact of sales tax increases in 1997, 2014 and 2019. The BOJ will release its forecasts on April 28 after a two-day policy meeting. Despite the upgrade of its inflation target, the BOJ is expected to maintain with its stance that the economy needs stimulus. The BOJ fears that any tightening of policy will weigh negatively on the economy by causing a “considerable” negative impact on corporate profits, employment and wages.
South Korea ramps up fight against rising inflation with surprise rate hike
(15 April 2022) South Korea’s central bank ramped up its fight against rampant inflation with a surprise rate hike. On 14 April, the central bank raised its benchmark rate to the highest since August 2019, with an increase of a quarter of a percentage point to 1.5%. The central bank warned that price growth is likely to top 4% for a while, up from its February forecast of 3.1%. The Bank of Korea now projects South Korea’s economic growth to be below the February forecast of 3%. At the same time, inflation in South Korea is expected to hold at decade-highs as Russia’s invasion of Ukraine causes a spike in global commodity prices. Most analysts see South Korea’s policy rate reaching 2% by the end of 2022.
NEW ZEALAND, SINGAPORE
New Zealand Prime Minister Jacinda Ardern to visit Singapore as part of trade mission
(12 April 2022) New Zealand’s Prime Minister Jacinda Ardern will visit Singapore as part of a trade mission later in April 2022. This will be her first official overseas engagement since the start of the COVID-19 pandemic, and she will be accompanied by the Minister for Trade and Export Growth Damien O’Connor and as well as business leaders in the dairy, food and beverage, healthcare, aviation, tourism, supply chain and energy sectors. The trade mission will leave New Zealand on 18 April. Singapore has been identified as one of New Zealand’s closest and most important strategic economic partners. The delegates are expected to use the trip to sign partnerships and memorandums of understanding that strengthen bilateral collaboration and innovation. Singapore is New Zealand’s fifth-largest trading partner with US$4.47 billion in two-way trade in the year ended December 2021.