CARI Captures Issue 589: Net asset management inflows to Singapore, 2016 – 2021 (S$ Billion)
SINGAPORE
Geopolitical tensions increases attractiveness of Singapore as investment hub for wealthy Chinese
(15 January 2023) Geopolitical tensions have seen an increasing number of wealthy Chinese move their capital and businesses to Singapore, owing to the city-states’ neutral status. The number of Chinese family funds in Singapore has jumped from a handful a few years ago to an estimated 600 today. As well, some 500 Chinese businesses have registered in the city in 2022, hoping to use Singapore to expand into other Asian markets. In response to the influx of Chinese capital, many of the largest US, European, and Japanese investment banks have begun to shift more of their senior staff to Singapore from Hong Kong. A record S$448 billion ($339 billion) in asset management inflows was recorded in 2021, 15.7% higher than in 2020, according to the latest data from the Monetary Authority of Singapore.
MALAYSIA
Workers expected to see salary adjustments and increments of between 3% and 20% in 2023
(17 January 2023) Workers in Malaysia are expected to see salary adjustments and increments of between 3% and 20% in 2023, depending on the industry, with high-growth industries such as technology and manufacturing more likely to see major changes in salary structure. This was according to human resource service provider Randstad’s 2023 Job Market and Salary Trends Report. While salaries and careers had stagnated during the COVID-19 pandemic, the rise in the cost of living and inflation in Malaysia had forced companies to reevaluate and recheck their salary scales to keep existing talent and attract new ones. The report noted that skills and talent development are particularly needed in three industries – technology, manufacturing, and construction. It was noted that companies may shift operations to Malaysia as part of their business transformation and restructuring, which will create new job opportunities for local talent.
MALAYSIA
Malaysia’s tourism sector struggles to draw back tourists compared to other ASEAN countries
(16 January 2023) Malaysia’s tourism sector is struggling to draw back tourists compared to other ASEAN countries. Malaysia opened its borders to tourists back in April 2022, before subsequently dropping all vaccination and PCR-test requirements in August. In 2022 alone, Malaysia welcomed about 3 million visitors, up from 134,728 visitors in 2021. The intake in 2022 was just around 12% of the number of visitors to Malaysia in 2019. In comparison, Thailand, Singapore and Indonesia — which welcomed 10 million, 4.6 million, and 4.6 million international visitors, respectively — saw arrivals return to about one-quarter of pre-pandemic levels. As well, Viet Nam welcomed 3.6 million international visitors, which is about one-fifth of its intake in 2019. Malaysia’s relatively sluggish tourism rebound has been attributed to poor cost competitiveness as well as country’s reputation for Islamic conservatism.
INDONESIA
Indonesia to break ground on US$2.7 billion housing project in new capital in Q2 2023
(18 January 2023) Indonesia is expected to begin construction on a US$2.7 billion housing project in the new capital on Borneo in the second quarter of 2023. The housing project will house the thousands of civil servants expected to move to the new capital, named Nusantara. Authorities have already begun constructing much of the basic infrastructure in the area, with an aim to start relocating some government administration and civil servants in 2024. Authorities are currently in negotiation with three private developers for the housing project, including a consortium of China’s CCFG Corp and Risjadson Brunsfield Nusantara (CCFG-RBN), South Korean firm Korea Land and Housing Corp and local developer PT Summarecon Agung.
INDONESIA
Indonesia will not import fossil fuels from 2045 onwards, to be replaced with palm oil
(18 January 2023) Indonesia will not import fossil fuel from 2045 onwards, as it will have developed palm oil as an alternative fuel by then. The Indonesian government is currently researching the potential of palm oil, as it believes that Indonesia will be able to produce around 100 million tons of palm oil by 2045. At least 30% of palm oil production will be used for the food industry, while the remaining 70% will be used to manufacture ethanol. The development of alternative fuels has been identified as one of the five green pillars of the Indonesian government, alongside decarbonization of the electricity sector, the utilization of low-carbon transportation, the development of green industry, and the strengthening of carbon sink. The government has put a moratorium on oil palm plantation permits, which will have encourage greater productivity of existing plantations.
THAILAND, SRI LANKA
Thailand vows to complete FTA negotiations with Sri Lanka by the beginning of 2024
(18 January 2023) Thailand has vowed to complete FTA negotiations with Sri Lanka by the beginning of 2024. According to the director-general of Thailand’s Trade Negotiations Department, during the third round of FTA talks held on 09 – 10 January, 2023 in Colombo, the two countries agreed on a timeframe to conclude the negotiations by the beginning of 2024. The third round was supposed to have been held in 2018, but was put off for four years due to the COVID-19 pandemic and the restructuring of Sri Lanka’s negotiations-related agencies. The third round focused on rules on bilateral trade in goods and services, rules of origin, investment, customs procedures, and trade facilitation. Sri Lanka currently ranks as Thailand’s fourth-largest trading partner in South Asia. In the first 11 months of 2022, bilateral trade between the two countries tallied at US$334 million.
SINGAPORE, MALAYSIA
Johor Bahru-Singapore Rapid Transit System (RTS) Link to be operational by end-2026
(17 January 2023) The Johor Bahru-Singapore Rapid Transit System (RTS) Link is on track to be completed by end-2026. At a meeting of the foreign ministers of Singapore and Malaysia on 16 January, 2023, they noted the ‘good progress’ of the rail link project, and ‘looked forward’ to the commencement of passenger services by end-2026. The 4km rail shuttle service will connect Woodlands in Singapore to Bukit Chagar in Johor Bahru in five minutes. It will be able to serve up to 10,000 passengers per hour in each direction. Despite the change in government in Malaysia in November 2022, the rail link project was unaffected, and as of December was reportedly more than 20% completed. The project received approval from Malaysia back in 2019.
RCEP Monitor
CHINA
China’s economy expanded by 3% in 2022, among weakest growth in decades
(17 January 2023) China’s economy expanded by 3% in 2022, representing one of its weakest annual performances in decades. China’s economy had been impacted by zero-COVID-19 policies, faltering overseas demand, and a downturn in its key property market. Annual growth was well off the official target of 5.5%. Apart from 2.2% growth in 2020, 2022’s numbers are China’s weakest annual growth since 1976. For the October-December period, the economy grew 2.9% year-on-year, slowing from 3.9% in the third quarter. According to some analysts, lingering COVID-19 outbreaks and a surging death toll will continue to weigh on growth before picking up in the second half of 2023. A Nikkei economist poll forecast that China’s GDP will expand 4.7% in 2023.
JAPAN
Large Japanese firms expected to offer largest pay hikes in 26 years
(16 January 2023) According to estimates by the Japan Economic Research Center (JERC), large Japanese firms are expected to offer the largest pay hikes in 26 years, supporting the government’s aim to achieve sustainable wage growth and stoke economic growth led by the private sector. Large firms are projected to offer pay rises of 2.85% on average for the financial year starting in April 2023. Should these be realized, these would be the fastest pay rises since 1997. With Japan’s inflation above the Bank of Japan’s official target of 2%, policymakers have called for accompanying wage growth. JERC’s forecast for big firms to offer pay hikes of 2.85% comprises a 1.08% rise in base salaries and a 1.78% increase in additional salary based on seniority.
NEW ZEALAND
Business confidence in New Zealand slumps to lowest since 1970s in Q4 2022
(17 January 2023) Business confidence in New Zealand slumped to its lowest reading since the 1970s in the fourth quarter of 2022. A net 33% of firms expect weaker trading in the first three months of 2023, while a net 70% of firms expect the economy to deteriorate over the next 12 months. Expectations for profits, hiring, and investments have also tumbled. Businesses are very concerned about the future state of demand, and are expected to ease back on investment and headcount in response. Investors are gambling that the Reserve Bank of New Zealand (RBNZ) will follow November’s record rate hike with another 75 basis-point move in February, before cutting rates in the second half of 2023. The RBNZ raised the Official Cash Rate to 4.25% in November 2022 and projected the benchmark would need to reach 5.5% to quell inflation.