CARI Captures Issue 596: Malaysia signals interest in reviving Kuala Lumpur-Singapore High-Speed Rail

Malaysian government considers reviving Kuala Lumpur-Singapore High-Speed Rail project
(08 March 2023) The Malaysian government has signaled its interest in reviving the Kuala Lumpur-Singapore High Speed Rail (HSR) project. On 08 March, 2023, the Malaysian Transport Minister Anthony Loke stated that while the government has not yet decided to revive the project, it also has no intention to shelve it. He stated that the government is willing to hear proposals from the private sector, as long as it is not funded by the government. He stated that many parties are keen to pursue the project, and that authorities are open to new funding mechanisms and implementation models. The HSR project was first announced by Malaysia and Singapore in 2013, and its estimated cost was US$15 billion. Following a change of government in 2018, Malaysia subsequently requested that the project be suspended. On 01 January, 2021, both parties agreed to terminate the project.

Indonesian government approves new list of tax holidays for businesses investing in new capital Nusantara
(09 March 2023) Indonesia’s government has approved a new regulation that offers incentives for businesses investing into the country’s planned new capital Nusantara, including tax holidays of up to 30 years and 95 years of land use permits. Among the specific incentives included in the new regulation include a 100% exemption from corporate income tax for local and foreign companies if they are registered as taxpayers in Indonesia and invest in several priority areas in Nusantara. Companies investing in the top two priority sectors — infrastructure and public services — will be able to apply for a 30-year tax holiday if they begin investing between now and 2030, with eligible investments including projects in renewable energy, toll roads, ports and airports, public transports, industrial parks, health care and education. Banks, insurers, and Islamic finance companies will be eligible for a 100% tax exemption for business units set up in Nusantara for up to 25 years if they invest between 2023 and 2035, and for 20 years for the period between 2036 and 2045. Meanwhile, the new regulations also offers exemption from personal income tax for Nusantara-based employees.

Thai government offers tax breaks for companies issuing digital tokens for investments
(07 March 2023) On 07 March, 2023, Thailand’s cabinet agreed to waive corporate income tax and value-added tax for companies that issue digital tokens for investment. Companies will have access to alternative ways of raising capital through investment tokens as well as traditional methods such as debentures. According to estimates by officials, there will be US$3.71 billion worth of investment token offerings over the next two years. After Thailand’s Securities Exchange Commission began regulating digital assets, cryptocurrencies have gained popularity in Thailand in recent years. In 2022, the government relaxed tax rules in crypto trading to promote industry development. However, regulators have also banned the usage of digital assets as a means of payment, due to concerns it may impact Thailand’s financial stability and overall economy.

Core inflation rises by 7.8% year-on-year in February 2023, its fastest pace since March 1999
(07 March 2023) Core inflation in the Philippines rose by 7.8% year-on-year in February 2023, its fastest pace since March 1999. This was a slight rise from the 7.4% rise recorded in January 2023. Core inflation does not include volatile food and energy costs. Meanwhile, headline inflation rose by 8.6% year-on-year in February, a slight drop from the 8.7% recorded in January. On a month-by-month basis, there was no change in price growth. The slight drop in headline inflation was attributed to transport, which posted a 9% rise in February compared to 11% in January. The Philippines’ central bank sees inflation staying above the 2% to 4% target until the early fourth quarter of 2023.

Viet Nam looking to purchase its first LNG shipment after drop in prices
(09 March 2023) Viet Nam is looking to purchase its first LNG shipment following a rapid drop in spot prices. State-owned company PetroVietnam Gas JSC is in discussions with suppliers about procuring an LNG shipment for this summer to be sent to the Thi Vai terminal. The company is seeking government approval before releasing a tender to purchase a shipment. Previous LNG import plans from Viet Nam to Hong Kong were delayed after the global energy crisis in 2022 made shipments too expensive and scarce. LNG imports is expected to help Viet Nam curb its dependence on coal, which made up nearly half of its power mix in 2021, and thereby reduce emissions. Although Viet Nam has finished construction on its first LNG import terminal, operations have yet to begin.

Private sector economists raise 2023 growth projections for Singapore to 1.9%
(10 March 2023) In the latest quarterly survey by the Monetary Authority of Singapore (MAS), private sector economists have raised their 2023 growth projections for Singapore to a median of 1.9%, a slight increase from the 1.8% growth projected back in December 2022.  MAS themselves project growth between 0.5% to 2.5% for 2023. The median forecast in the survey for Consumer Price Index-All Items, also referred to as headline inflation, for 2023 was 5%, a decrease from 5.2% in December. However, the projection for core inflation, which excludes accommodation and private transport costs, was raised to 4.1% from 4% previously. MAS expects headline inflation to average between 5.5% to 6.5% in 2023, while core inflation will average between 3.5% to 4.5%.

Brunei Darussalam to maintain oil and gas production at 300kboe/d in the medium term
(08 March 2023) The Bruneian Department of Energy under the Prime Minister’s Office (PMO), aims to maintain the production of oil and gas at 300 thousand barrels of oil equivalent per day (300kboe/d) in the medium term and aims to increase this to approximately 350kboe/d in the long term. According to officials, the Department of Energy has a strategic plan that requires the development of resources in the deep ocean and an increase in exploration activities. Authorities plan to spend nearly US$14.8 billion in the next five years to finance development and operational programs. This will be an increase of 15% compared to the previous five years. The country’s net income from the upstream oil and gas sector in 2022 was the highest since 2014

RCEP Monitor

South Korea posts record current account deficit in January 2023 amidst slumping exports
(10 March 2023) South Korea posted its largest ever current account deficit in January 2023 amidst slumping exports. The country’s current account came at a US$4.52 billion deficit, slumping from a US$2.68 billion surplus in December 2022. It marked the largest monthly current account deficit since relevant data started to be compiled in January 1980. Exports fell by 14.9% year-on-year in January 2023, comprising the fifth straight month of contraction. Meanwhile, imports rose by 1.1% over the same period as the purchase of consumer goods increased. Those figures led South Korea to post a goods account deficit of US$7.46 billion in January, compared with a surplus of US$1.54 billion a year earlier.

Household consumption rises by 2.7% month-on-month in January 2023
(10 March 2023) Household consumption rose by 2.7% month-on-month in January 2023, led by increases in expenditure on transportation, communication and entertainment. On a yearly basis, consumption declined by a slight amount. This data suggests a rebound in consumer confidence at the start of 2023 despite concerns about higher prices in fuel and daily necessities. Nationwide core inflation sped up beyond 4% in January, doubling the Bank of Japan’s 2% price goal. The solid consumption data has fueled speculation that the central bank may consider moving toward policy normalization. Solid private consumption may help boost Japan’s economic recovery, given that it accounts for 60% of the country’s GDP.

Japan says no decision yet on export curbs for chip-making equipment to China
(10 March 2023) Japan’s Trade Minister stated that Japan has not yet made a decision regarding export restrictions on chip-making equipment to China. In 2022, the Biden administration in the United States imposed sweeping constraints on China’s access to chips and chip-making equipment due to concerns over national security. According to reporting by Bloomberg News in January 2023, Japan had agreed to join the US curbs alongside the Netherlands, although the final details have yet to emerge. This week, the Netherlands announced it would curb exports of some so-called immersion DUV lithography products to China. China has labeled America’s efforts as counterproductive.

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