CARI Captures Issue 600: UK formally accepted into Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
ASEAN, UNITED KINGDOM
CPTPP members formally agree to the UK’s entry into Pacific trading bloc
(31 March 2023) Trade officials from the 11 member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 31 March, 2023 agreed on the U.K.’s entry into the mega-trading bloc. A joint ministerial statement welcomed the ‘substantial conclusion of the negotiations for the accession of the U.K. to the CPTPP’. The UK will be the CPTPP’s first non-founding member since its launch in 2018. The UK’s entry into the CPTPP is expected to be finalized at the upcoming CPTPP ministerial meeting in Auckland, New Zealand in July 2023. The UK applied for membership in the CPTPP in 2021, a year after it exited the European Union. With the entry of the UK, the total GDP of the members of the CPTPP will expand to 15% of the world’s total, from the current 12%.
ASEAN
Southeast Asian tech startups facing shortage of tech talent
(04 April 2023) According to a study on tech roles at startups in Singapore, Indonesia, and Viet Nam carried out by Glints and Monk’s Hill Ventures, Southeast Asian startups are facing a shortage of tech talent despite recent mass layoffs by large tech companies. In 2022, Singapore-based Sea laid off more than 7,000 employees, while Indonesia-based GoTo also laid off around 12% of its workforce. According to the study, there is now a redistribution of tech talent from big tech companies and growth-stage companies to early-stage startups. However, early-stage startups are competing for these tech talents with established businesses in the banking and retail sectors which are in the process of digitalizing their operations. Amidst growing recessionary pressures and weaker fundraising prospects, startups are less able to offer competitive pay to attract said talent.
MALAYSIA, CHINA
Malaysia and China to discuss Asian Monetary Fund to reduce US Dollar dependency
(04 April 2023) Malaysia’s Prime Minister Anwar Ibrahim stated that China is open to talks with Malaysia on forming an Asian Monetary Fund in order to reduce reliance on the US Dollar and the International Monetary Fund. Anwar stated that he had initially mooted forming the Asian Monetary Fund during his first stint as finance minister in the 1990s. He stressed that with the current strength of the economies in countries such as China and Japan, this plan is more feasible now. Anwar also stated that Malaysia’s central bank is already working on enabling both Malaysia and China to negotiate on trade matters using the ringgit and renminbi respectively. During a recent state visit to China, Anwar managed to secure US$39 billion in promised investments.
INDONESIA
Annual inflation falls to seven-month low of 4.97% in March 2023
(03 April 2023) Annual inflation in Indonesia fell to 4.97% in March 2023, its lowest rate since August 2022. This was a drop from the 5.47% annual inflation seen in February 2023. Meanwhile, the annual core inflation rate was measured at 2.94% versus the 3.09% measured in February 2023. Indonesia’s statistics bureau noted that price pressures in 2023 were below those seen in recent years, excluding the early years of the COVID-19 pandemic. It was noted that consumption patterns have not returned 100% to pre-pandemic levels. Inflation in Indonesia has stayed above the central bank’s target range of 2% to 4% since the middle of 2022 amid high global food and energy prices. Authorities have argued that inflation would likely return to within its target range in September 2023.
THAILAND
Thailand to continue its investments into its industrial east despite upcoming elections in May 2023
(04 April 2023) Thailand will proceed with its five-year investment of US$64.31 billion into its industrial east despite an upcoming general election in May 2023. The 2023 to 2027 plan in the Eastern Economic Corridor (EEC) will include investments in sectors such as electric vehicles and medical technologies. The EEC covers three provinces east of Bangkok, and is considered a centerpiece of the current government’s efforts to boost growth and encourage investments, particularly in high-tech industries. Authorities stated that investments of more than US$11.69 billion a year during the five-year period would be achieved as Thailand is well placed to attract investors seeking to relocate their operations. However, certain projects are behind schedule, such as a rail project linking Thailand’s main Suvarnabhumi airport to Bangkok’s second international airport at Don Mueang.
VIET NAM
Viet Nam’s rice exports jumped by 30.2% to highest level in past 12 years in Q1 2023
(05 April 2023) Viet Nam’s rice exports jumped by 30.2% to US$952 million in the first quarter of 2023, its highest level in the past 12 years. The country recorded a 19.3% year-on-year increase in its rice exports in the January-March period to 1.8 million tons. The average export price in the same period was estimated at US$531 per tonne, an increase of 9.2% year-on-year. According to the Vietnam Food Association, Vietnamese rice export prices have been on a rising trend since late 2022. The prices of Viet Nam’s 5-per cent broken rice was quoted at US$468 to US$472 per tone as of end-March, up 5.6% from February, while premium-grade jasmine rice rose about 2% to US$548 to US$552 per tonne.
SINGAPORE
Singaporean grocery chain Happy Farms secures about US$1.5 million in funding
(04 April 2023) Singaporean gourmet grocery chain Happy Farms secured about US$1.5 million from Heliconia Capital, a wholly-owned subsidiary of Temasek Holdings. Heliconia managed to acquired new Series B-1 shares in Little Farms, according to the latter’s filings with Singapore’s Accounting and Corporate Regulatory Authority (ACRA). Happy Farms is also issuing a US$9.05 million exchangeable bond to Heliconia, which entitles the latter to ordinary shares upon maturity. Heliconia also acquired a call option to invest up to US$3.8 million in Little Farms via the subscription of additional Series B-1 shares. Happy Farms is a boutique grocery chain which sources organic fruit, vegetables and fresh produce from independent suppliers and farmers in Australia, Europe, and other regions. It opened its first store in 2016 and has since scaled to 10 outlets across the country.
RCEP Monitor
SOUTH KOREA
Financial regulators to ease local currency lending rules for foreign bank branches
(05 April 2023) South Korea’s financial regulators stated that it would ease local currency lending rules for foreign bank branches. The Financial Services Commission stated that it seeks to exempt smaller players from a requirement to keep the loan-to-deposit ratio at or below 100% by raising the threshold for the requirement. Foreign bank branches would also be allowed to classify short-term borrowings from their head offices as deposits for an amount equal to up to half their long-term borrowings, which are already counted as deposits under the current rules. The eased rules are expected to free up to US$9.29 billion in fresh loans. The regulators stated that the changes were being made to reflect changes in economic conditions since the rules were first introduced in 2010.
JAPAN
Cashless payments account for more than one-third of all consumption in Japan
(04 April 2023) Cashless payments reached US$838 billion in 2022, a 17% annual increase. This is according to data collected by the Bank of Japan, the Japan Consumer Credit Association, and the Payments Japan Association. Cashless payments are defined as purchases made through credit cards, debit cards, QR code apps like PayPay and prepaid e-money such as transit cards. Such forms of payments accounted for 36% of consumption in 2022 This is attributed to the increased demand for touchless purchasing options during the COVID-19 pandemic. Credit cards are the most popular option for cashless payments, with usage having risen by 16% in 2022. A survey by Japan’s industry ministry in 2022 found 54% of respondents use cashless payments at least 70%-80% of the time.
NEW ZEALAND
New Zealand’s central bank unexpectedly raises rates by 50 basis points to tame inflation
(05 April 2023) New Zealand’s central bank unexpectedly raised rates by 50 basis points, maintaining its pace of tightening to tame stubbornly high inflation even as the economy is expected to head into a recession. The Official Cash Rate was raised from 5.25% to 4.75%. According to reporting by Bloomberg, most economists had expected a 25-point hike. The Reserve Bank of New Zealand (RBNZ) noted that inflation remained ‘too high and persistent’, while employment is ‘beyond its maximum sustainable level’. The RBNZ had previously raised the OCR by 50 points in February 2023 and 75 points in November 2022. Inflation was measured at 7.2% in the fourth quarter of 2022, and the RBNZ in February predicted it would slow to 5.3% by the end of 2023.