CARI Captures Issue 597: Total trade in goods between Thailand and the EU, 2016 – 2021 (US$ billion)

Thailand and the EU agree to restart negotiations on bilateral trade agreement
(16 March 2023) Thailand and the EU have agreed to restart negotiations on a bilateral free trade agreement, with an aim to conclude a deal by 2025. Trade negotiations had been stalled for nearly a decade after the EU called off further talks following a military coup in Thailand in 2014. Senior officials intend to begin talks in July 2023 in Thailand, during which negotiations will cover trade in goods and services as well as investment in key Thai industries where the EU is keen to increase its share, such as renewable energy, electric vehicles and chipmaking. Should the talks succeed, it will be the EU’s third bilateral free trade agreement in Southeast Asia after Singapore in 2019 and Viet Nam in 2020. The EU currently represents Thailand’s second-largest destination for Thai outbound capital, accounting for 14% of FDI from Thailand, as well as the country’s fourth-largest export market.

Filipino conglomerate Prime Infrastructure Capital Inc aims for new gas wells and solar investment
(15 March 2023) Filipino conglomerate Prime Infrastructure Capital Inc, which has interests spanning energy, water distribution and waste management, aims to drill new natural gas wells at its Malampaya concession, which is the Philippines’ only major natural gas project. The company is also seeking other gas fields to ensure long-term output. The company is also seeking to invest in other energy projects, including an investment of at least US$3.7 billion in solar power and battery energy storage systems. Prime Infrastructure is planning an initial public offering (IPO) sometime in 2023. The Malampaya gas project, located offshore Palawan province, started commercial operations in 2001, and supplies power plants that deliver about a fifth of the country’s electricity requirements.

The Philippines posts largest trade deficit in five months in January 2023
(14 March 2023) The Philippines posted its largest trade deficit in five months in January 2023. This was attributed to exports falling sharply, pointing to a worsening trade balance that could put pressure on the peso in the near term. The trade deficit in January widened by 27.2% to US$5.74 billion, the biggest since the record monthly deficit of US$6 billion in August 2022, from US$4.5 billion in January 2022. Exports saw the steepest decline in nearly three years, with a decrease of 13.5% year-on-year to US$5.2 billion, while imports grew 3.9% year-on-year to US$11 billion. It was the first monthly rise for imports in three months. For the full year of 2022, the Philippines’ trade deficit increased by 38% year-on-year to US$58.3 billion, as imports showed signs of recovery from market disruptions caused by the global outbreak of COVID-19 in 2020.

Private home sales rise month-by-month in February 2023 despite increased buyers’ stamp duty
(15 March 2023) Private home sales rose month-on-month in February 2023 despite an increased buyers stamp duty for properties of higher value. According to data by the Urban Redevelopment Authority, developers sold 432 units in February 2023, a nearly 10% jump from the 393 units sold in January. On a year-on-year basis, sales decreased by 20.3% from the 542 units sold in February 2022. Meanwhile, the number of units launched dipped from 410 in January to 401 in February. In Singapore’s budget for fiscal year 2023 announced in February, the buyer’s stamp duty for both residential and non-residential properties of higher value was increased. For homes, the portion of the value in excess of S$1.5 million and up to S$3 million will now be taxed at 5%, an increase from 4%. The value of the property in excess of S$3 million will be taxed at 6%. The changes took effect on 15 February, and are expected to impact 15% of homes. Despite the increase, many buyers have not been put off buying residential property.

Indonesia’s central bank holds interest rates unchanged on 16 March, 2023
(16 March 2023) Indonesia’s central bank held interest rates unchanged on 16 March, 2023, and maintained its stance that its previous hikes were sufficient to steer inflation back to within target later in 2023. Bank Indonesia (BI) left unchanged its benchmark 7-day reverse repurchase rate at 5.75%, where it had been since January 2023. BI’s other main policy rates for overnight deposit and lending were also kept steady at 5% and 6.5% respectively. BI’s previous rate hikes between August 2022 and January 2023 totalled 225 basis points. Headline inflation in Indonesia picked up slightly to 5.47% in February. BI has stated that inflation was on track to get back within its 2% to 4%  target range from September 2023 onwards, while core inflation would remain within target the whole year.

Fitch Solutions claim Malaysia is emerging as key digital infrastructure hub in Asia Pacific region
(16 March 2023) Fitch Solutions Country Risk and Industry Research stated that Malaysia is emerging as one of the key digital infrastructure hubs in the Asia-Pacific. The rating agency attributed this development to the government’s digitalisation plans, easing regulatory landscape, and technology-friendly policies. The company ranks Malaysia as one of the top markets for infrastructure-led utility businesses regionally and globally, providing the appropriate platform for data centre operations. Among the examples of companies investing into Malaysia’s digital infrastructure include Amazon Web Services (AWS), who recently unveiled plans to invest US$6 billion by 2037 to boost cloud services in Malaysia. As well, Microsoft and Google had also announced plans to build data centres in Malaysia as of March 2023, albeit without specific location plans.

Electricity retailer Keppel Energy receives conditional approval to import 1GW of renewable energy annually from Cambodia
(16 March 2023) Singaporean electricity retailer Keppel Energy has received conditional approval to import 1 gigawatt (GW)  of hydropower, solar and potentially wind power annually from Cambodia’s Royal Group Power Company via new subsea cables that would transmit the electricity over more than 1,000km. The 1GW of electricity supplied over a year will be able to power up to all households in Singapore (about 1.4 million) annually, and could potentially be scaled up to include renewable energy sources from Lao PDR as well. The deal will be finalised after Keppel has conducted further studies on the project’s viability and secured regulatory approvals from the relevant governments. Singapore is targeting importing 4GW of low-carbon electricity by 2035, which will make up about 30% of Singapore’s projected energy supply in the same year.

RCEP Monitor

New Zealand’s economy shrinks by 0.6% in fourth quarter of 2022
(16 March 2023) New Zealand’s economy shrank by 0.6% in the fourth quarter of 2022, raising the chances of a recession and making further interest rate hikes less likely. The contraction in the fourth quarter was well below the Reserve Bank of New Zealand (RBNZ)’s forecast of 0.7% growth and was a reversal from the revised growth of 1.7% seen in the third quarter of 2022. The RBNZ and the treasury have both forecasts the country would enter a shallow recession in the second quarter of 2023. While the RBNZ has undertaken its most aggressive policy tightening since 1999, the weak data released on 16 March, 2023, indicates that the economy is less overheated than the RBNZ had expected, making further hikes less likely.

Japan posts two straight years of export growth in February 2023
(16 March 2023) Japan posted two straight months of export growth in February 2023, driven by solid US-bound shipments of cars. However, Japan is still struggling to make a solid recovery from the COVID-19 pandemic due to lackluster household consumption and a slowing global economy. Exports grew by 6.5% year-on-year in February, driven by U.S.-bound shipments of cars. However, exports to China fell by 10.9% year-on-year, registering a second straight month of double-digit decline, as demand weakened for cars, auto parts and display-making equipment. Meanwhile, imports rose by 8.3%, resulting in a trade deficit of US$6.75 billion. Japan has posted a trade deficit for 19 straight months. Headwinds to Japan’s recovery include monetary tightening across the world, supply chain constraints, and the war in Ukraine.

Business confidence falls by 10 points to -4 in February 2023
(14 March 2023) According to a survey by the National Australia Bank Ltd., business confidence in Australia fell by 10 points to -4 in February 2023, suggesting that the outlook remains clouded for the Australian economy. As well, an earlier Westpac Banking Corp. survey showed consumer sentiment holding near a 30-year low as Australian households grappled with rising prices and higher borrowing costs. The Reserve Bank of Australia (RBA) has raised rates by 3.5% points since May 2022, when they stood at a record-low 0.1%. These two separate surveys have bolstered the case for the RBA to pause its tightening cycle. The RBA has identified business surveys as one of four reports its rate-setting board will monitor closely ahead of its 04 April, 2023 meeting. Other key readings that the RBA will be monitoring include jobs data, retail sales, and monthly inflation.

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