CARI Captures Issue 593: Singapore’s 2023 Budget includes more support measures and payouts

Budget for fiscal year 2023 to include more support measures and payouts
(14 February 2023) Singapore’s government announced its budget for fiscal year 2023, which includes more support measures and payouts to help households, workers, and businesses cope with the rising cost of living and higher sales tax. Singapore’s inflation rate in 2022 came in at 6.1% year-on-year, a significant jump from 2.3% in 2021. The total size of the Assurance Package program is expected to reach US$9.6 billion, with adult Singaporeans to receive between SG$700 and SG$2,250 over a five-year period. The government expects a budget deficit of about SG$0.35 billion, or 0.1% of GDP, for fiscal year 2023. Seeking to raise revenue, the Singaporean government raised the GST by a percentage point to 8% in January 2023, and reiterated that they intend to raise the sales tax again to 9% in January 2024. Overall, the government aims to raise revenue to SG$96.7 billion, up 7.1% year-on-year, while also lowering overall expenditure by 2.6%.

Malaysian government to focus on tackling costs of living and raising wages for workers
(15 February 2023) The Malaysian government under Prime Minister Anwar Ibrahim will focus on tackling high costs of living and raising wages for workers. According to Malaysia’s Economy Minister, the government plans to set a wage growth target for all workers and formulate the necessary policies to support them. This comes as the government projects growth for 2023 moderating to between 4% and 5%, after growing at the quickest pace in more than two decades in 2022 due to pent-up demand. Malaysia’s central bank projects inflation to remain elevated in 2023. Meanwhile, wages remain relatively low, having grown at an average increment of about US$31.9 a year between 2010 to 2019. The Malaysian government will table its 2023 budget to parliament on 24 February 2023.

Thailand’s government approves new US$9 tourist tax from June 2023 onwards
(15 February 2023) On 14 February, 2023, the Thai government announced that the cabinet had approved a new tourist tax to take effect on 01 June, 2023. Foreign travelers entering the country by air will be charged US$8.84, while those arriving by land or boat will pay US$19.13. Day travelers and transit passengers are exempted, as are children under 2 years old. The government is expected to collect US$113.19 million from the new tax in 2023, which will be used as accident insurance for tourists. Thailand aims to welcome 25 million tourists in 2023, up from the 11 million arrivals the country saw in 2022. Since the COVID-19 pandemic, the Tourism Authority of Thailand’s focus has shifted from increasing traveler volume to attracting long-stay and high-spending tourists.

Viet Nam at center of supply chain diversification shift by Japanese manufacturers
(14 February 2023) According to a recent survey of Japanese manufacturers by the Japan External Trade Organization, Viet Nam emerged as the top target for expansion as Japanese companies seek to diversify their supply chains away from China and into Southeast Asia. This is partly motivated by subsidies announced by the Japanese government in 2020 to shift production away from China. 60% of respondents in Viet Nam plan to expand in the country in the next year or two, higher than anywhere else included in the survey except India and Bangladesh. However, only 59.5% of respondents in Viet Nam expect a profit in 2022, lower than all but six countries. This has been attributed to Viet Nam still recovering from a factory lockdown in 2021 to stem the spread of COVID-19. Viet Nam is rising up the global value chain, with high-tech goods as a share of exports hitting 42% in 2020, up from 13% in 2010.

Indonesia’s trade balance in January 2023 settles at US$3.9 billion, lowest since May 2022
(15 February 2023) Indonesia’s trade balance in January 2023 settled at US$3.9 billion, its lowest since May 2022 but still beating expectations. Overall outbound shipments rose by 16.4% year-on-year, with export gains largely driven by robust oil & gas shipments. Meanwhile, imports managed to rise by only 1.3% year-on-year. Import growth was driven mainly by imported energy, with oil & gas imports up sharply by 30.4% year-on-year, offsetting the contraction in non-oil and gas imports. Indonesia’s trade surplus in 2023 is expected to be robust, although nowhere close to the record high of US$7.5 billion recorded in April 2022. This recent trade report comes amidst plans by the government to require certain exporters to keep a portion of their export earnings onshore in a bid to help boost the domestic supply of foreign currency.

Bank Indonesia opts to keep rates unchanged at 5.75%, bringing recent rate hike cycle to end
(16 February 2023) On 16 February, 2023, Bank Indonesia (BI) opted to keep its rates unchanged at 5.75%, bringing to an end a recent rate hike cycle. BI remained confident that its current policy stance will ensure core inflation remains within target. BI’s decision was attributed to moderating price pressures and the relative stability enjoyed by the rupiah. Headline inflation dipped to 5.3% year-on-year in January 2023, down from 5.5% in December 2022, while core inflation eased to 3.3%. Easing inflation for transportation and utilities has helped ease price pressures. Should inflation sustain its downward path, it is believed that BI can opt to remain dovish in the near term.

Cambodian and Singaporean conglomerates to jointly develop modern logistics complex in Phnom Penh
(16 February 2023) Cambodian logistics provider WorldBridge Group and Singaporean supply chain solutions company YCH Group will jointly build a modern logistics complex in Phnom Penh with support from the International Finance Corporation (IFC). The two firms signed a collaboration agreement with the IFC on 15 February, 2023, with the intention of developing a Cambodia SuperPort or the Phnom Penh Logistics Complex. The complex will help raise Cambodia’s competitiveness, improve supply chain efficiency, and reduce overall logistics costs. Logistics is considered a crucial sector for Cambodia to achieve its target of becoming an upper-middle-income country by 2030 and a high-income country by 2050, such as by facilitating manufacturing.

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Japan’s economy expands by 1.1% year-on-year in 2022, slowing from 2.1% growth in 2021
(14 February 2023) According to preliminary data by the Cabinet Office, Japan’s economy expanded by 1.1% year-on-year in 2022, slowing from 2.1% growth in 2021. Private demand increased 2.4% year-on-year as household consumption grew 2.2% in tandem with the easing of COVID-19 restrictions, while corporate capital investment expanded 1.8%. However, rising energy costs due to the Russian invasion of Ukraine and the yen’s depreciation saw higher import costs. While exports of goods and services increased 4.9%, imports in the same category expanded 7.9%, thus reducing net exports. This ultimately dragged down GDP growth. Quarterly GDP for the October-December period expanded 0.2% from the previous quarter in seasonally-adjusted terms, translating into annualized 0.6% growth. During the quarter, household spending increased 0.5%, while corporate capital investment and private housing investment contracted 0.5% and 0.1%, respectively.

South Korean bank shares slide amidst demands to share profits with society
(16 February 2023) South Korean bank shares have slid as investors responded to a call from the president to share more profits with society. Shares of KB Financial Group Inc and Shinhan Financial Group Co Ltd fell more than 1% on 16 February, 2023 after their American depositary receipts plunged more than 5% on 15 February, 2023 in New York. On 15 February, South Korean President Yoon Suk-yeol stated that lenders need to ‘voluntarily participate’ in sharing the pain of ‘vulnerable people’. This came after local media reported that major banks had paid hundreds of thousands of dollars to employees for early retirement in recent weeks. Data released by the government showed that banks’ combined net profit reached US$14.68 billion in 2022.

Australia’s employment rate falls for second straight month in January 2023
(16 February 2023) Australia’s employment rate fell for the second straight month in January 2023, while its unemployment rate jumped to an eight-month high of 3.7%. According to data by the Australian Bureau of Statistics, net employment fell 11,500 in January from December 2022, when they dropped a revised 19,900. Hours worked also dropped by 2.1% due to more workers than usual taking annual leave in January. Softness in the labor market could take some pressure off the Reserve Bank of Australia (RBA) in its current fight against inflation. The RBA predicts that the jobless rate will only edge up to 3.6% by June 2023 and 3.8% by end-2023. Full-time employment fell by 43,300 jobs in January, compared with an increase of 17,600 the previous month.

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