CARI Captures Issue 599: Revenue growth in select ASEAN cloud markets, 2022 (%)
ASEAN
Southeast Asia leads global growth in cloud infrastructure
(29 March 2023) Southeast Asia is leading global growth in cloud infrastructure, as foreign cloud service providers and data center operators invest to create new hubs in economies like Thailand, Indonesia and Malaysia. According to market researcher IDC, Southeast Asia’s total cloud infrastructure revenue rose to US$2.18 billion in 2022, an increase of 25% year-on-year. Singapore accounted for around half the total, while the Philippines, Indonesia, Viet Nam, Thailand and Indonesia each logged annual growth of over 30%, outpacing global markets which expanded by 29%. After Singapore, Thailand was the biggest regional market in 2022 with US$338 million in revenue, followed by Indonesia at US$313 million, and Malaysia at US$221 million. Japan’s NTT Group intends to invest US$90 million to build its third data centre in Bangkok, while Amazon’s cloud computing unit earlier in March 2023 committed to investing US$6 billion in Malaysia over the next 14 years.
INDONESIA
Indonesian nickel company Merdeka Battery Materials plans US$580 million IPO
(28 March 2023) Indonesian nickel company Merdeka Battery Materials plans to raise up to US$580.29 million in an initial public offering (IPO) in April 2023. Merdeka Battery Materials will be the second Indonesian nickel firm to go public in 2023 after PT Trimegah Bangun Persada of the Harita conglomerate group. Nickel-rich Indonesia plans to become a major player in the electric vehicle industry. The company plans to sell 10.24% shares in the IPO at around US$0.05 a piece in the offering set for 12 to 14 April. However, an additional 1.01% shares could be issued in the case of oversubscription. The company plans to use the proceeds from its IPO to repay some US$300 million in outstanding loans, capital expenditure, and working capital.
THE PHILIPPINES
The Philippines’ central bank may pause rate hike cycle in May 2023
(26 March 2023) The Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP), may pause its rate hike cycle at its next policy meeting in May 2023. Finance Secretary Benjamin Diokno had noted that monetary authorities had ‘done enough’ in addressing inflation. The BSP raised the overnight reverse repurchase rate by 25 basis points on 23 March, 2023 to 6.25%, the highest since 2007. Within the past year, rate hikes have cumulatively added up to 425 basis points. The BSP later stated that it might not hike rates at its next meeting if prices decline on a month-on-month basis. Annual inflation eased to 8.6% in February 2023 from a 14-year high of 8.7% in January 2023.
MALAYSIA
Malaysian stock exchange enhances Main Market listing requirements
(27 March 2023) The operator of Malaysian stock exchange Bursa Malaysia Securities Bhd announced enhancements to the Main Market listing requirements to facilitate the offering of listed real estate investment trusts (REIT) and exchange-traded funds (ETS) with waqf feature. The amendments will take effect on 03 April, 2023. Under the Waqf Amendments, Bursa Malaysia has enhanced the post-listing disclosure framework of Islamic REITs and ETFs to provide transparency on the waqf arrangement. Bursa Malaysia’s CEO noted that the enhancements will promote the growth of waqf and Sustainable and Responsible Investment assets, helping further promote Bursa Malaysia’s position as a leading global Islamic finance marketplace.
VIET NAM
Viet Nam’s retail market expected to grow to US$350 billion by 2025
(27 March 2023) According to Viet Nam’s Ministry of Industry and Trade, the Vietnamese retail market is currently worth US$142 billion and is expected to grow to US$350 billion by 2025. In January 2023, total retail sales of consumer goods and services decreased by 6% month-on-month to more than US$20.4 billion due to weaker demand as many commodities were purchased ahead of the Lunar New Year. Year-on-year, total retail sales rose by 13%. For the first two months of 2023, total retail sales advanced 13% year-on-year to over US$42.3 billion. The Vietnamese retail market has always been appreciated by foreign investors due to its stable and positive growth. Thailand’s Central Retail Corporation (CRC) recently announced a capital increase of US$1.45 billion in Viet Nam, with goals to double the number of its stores to 600 in 57 of Viet Nam’s 63 provinces. Meanwhile, Japanese retail giant Aeon Co, Ltd is also accelerating the opening of shopping malls in Viet Nam to nearly three times to about 16 by 2025.
SINGAPORE
Seven out of ten businesses ready to relocate their staff out of Singapore due to rising rental costs
(27 March 2023) According to a recent survey carried out by the European Chamber of Commerce, Singapore (EuroCham), seven out of ten businesses are ready to relocate their staff out of Singapore if there is no relief from rising rental costs. It was noted that this is the first time in the past ten years that companies have expressed a readiness to leave Singapore should rental prices continue to rise. The survey also found that 50% of employees who have had to renew their residential housing lease in 2023 or in 2022 had faced rental increases of more than 40%, while a further 36% experienced hikes of between 20% to 40%. As well, some 62% of employees had either received less than S$1,500 a month or nothing at all from their companies to offset the increase in rent. When companies participating in the survey were asked to indicate the most important factors that have led to an increase in operational costs, 22% of respondents cited “increased cost of rental: residential allowance for employees”.
CAMBODIA
Cambodia to require over US$9 billion in investments in power sector
(29 March 2023) Cambodia will require over US$9 billion in investments through to 2040 to develop new power plants and expand the national grids, according to its Master Power Development Plan 2022-2040. Over US$2.5 billion has already been approved between 2022 and 2025. The remaining US$6.5 billion will be for renewable energy investments, including in hydropower dams, solar power projects, battery energy storage systems, natural gas-fired power plants, and biomass power plants. It is forecasted that Cambodia’s electricity demand will increase to 24 billion kilowatt hours (kWH) by 2025, to 36 billion kWh by 2030, to 50 billion kWh by 2035, and to 66 billion kWh by 2040. According to its Master Power Development Plan, Cambodia will not add new coal-fired power plants except for the coal projects that were approved by 2019, instead encouraging investments in clean energy.
RCEP Monitor
CHINA
Shipping group Maersk notes that China’s economic rebound is weaker than expected
(27 March 2023) The chief executive of Danish shipping group AP Møller-Maersk noted that China’s economic rebound is weaker than expected as consumers remain ‘stunned’ by the recent COVID-19 related restrictions as well as real estate meltdown in 2022. Profits at Chinese industrial groups slumped 22.9% in January-February 2023, underscoring concerns about the economy’s rebound. With 70% of Chinese savings in real estate, Chinese consumers have been hit hard by a government crackdown on the real estate sector, while Chinese stocks are also underperforming. Maersk gained greater exposure to China’s domestic consumer market through its US$3.6 billion acquisition of Hong Kong-based LF Logistics in 2023, which has extensive logistics operations on the mainland. It was also noted that there are no signs of decoupling between the US and China beyond the high-tech sector, which accounts for a fraction of Chinese exports and imports.
CHINA
Chinese e-commerce giant Alibaba Group Holding to split into six companies
(28 March 2023) Chinese e-commerce giant Alibaba Group Holding will split into six companies and pursue public listings for five of them. The six business groups will focus on sectors such as cloud computing, e-commerce and logistics. Alibaba stated that the restructuring is part of a long-running move towards becoming a “nimbler organizational structure”. The six new companies will be: Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Service Group, Cainiao Smart Logistics, Global Digital Commerce Group and Digital Media and Entertainment Group. Alibaba Group itself will follow the holding company management model, with Daniel Zhang remaining as chairman and CEO.
JAPAN, UNITED STATES
Japan and the United States agree to boost cooperation on critical minerals trade
(28 March 2023) Japan and the United States agreed to boost cooperation on critical minerals supply chains as Washington D.C. seeks to counter China’s dominance of the electric vehicle battery sector. Following the pact, electric vehicles that use critical minerals that have been collected or processed in Japan will be eligible for tax incentives under the US Inflation Reduction Act. The US Treasury Department is in the process of putting in place new requirements that will mandate battery components and critical minerals be sourced from countries with free trade agreements with the US in order to benefit from the full US$7,500 per vehicle consumer tax credit. While Japan does not have any FTA with the US, the new pacts would give the allies the same status for critical minerals trade.