CARI Captures Issue 603: Latest month tourist arrivals in select ASEAN countries (% of level in same month in 2019)
MALAYSIA
Malaysia had quickest recovery in tourism among regional peers in 2022
(25 April 2023) According to research by Standard Chartered Global Research, Malaysia had the quickest recovery in tourism numbers among its regional peers in 2022. Malaysia was able to recover some 92% of tourist arrivals compared to its 2019 levels, with its tourism recovery driven by tourists from Singapore. Excluding Malaysia, tourist arrivals to Indonesia, the Philippines, Singapore, Thailand and Viet Nam had recovered to an average of about 60% of 2019 levels, following a broad resumption of international travel in 2022. It was noted that the return of Chinese and Hong Kong tourists was slower at about 18.4% of pre-pandemic levels. From a current account perspective, Thailand is expected to record the largest improvement in its travel balance in 2023, followed by Malaysia. Malaysia’s travel balance improved to -0.1% of GDP in 2022 from -0.9% in 2021, but remains below the 2017 to 2019 average of 2.2% of GDP.
MALAYSIA
Malaysia semiconductor industry to benefit from increased investments in packaging and testing
(22 April 2023) Malaysia’s semiconductor industry is expected to benefit from increased investments in packaging and testing, part of a surge in investments globally to set up new chip facilities outside China in order to meet the new requirements set by the United States’ Chips Act. Malaysia is currently a key node in the global semiconductor supply chain, and presently supplies an estimated 13% of the demand for testing and packaging. In 2021, Intel Corp announced that it would invest some US$6.8 billion over 10 years to expand its chip packaging and testing operations within Malaysia. A separate US$449.8 million deal was announced in 2022 by TF AMD Microelectronics to build a new manufacturing facility. The semiconductor sector accounted for 81% of total approved manufacturing FDI in 2021. Some analysts have called for Malaysia to start moving up the value chain and attract companies to set up wafer-fabrication plants in the country.
THE PHILIPPINES
Government maintains growth forecast of 6% to 7% for 2023, but hikes inflation projections
(25 April 2023) The Philippines government maintained its growth forecast of 6% to 7% for 2023, as well as 6.5% to 8.0% for 2024 to 2028 in consideration of the risks posed by geopolitical and trade tensions, a possible global economic slowdown, and recent weather disturbances. However, authorities raised its average inflation target for 2023 to 5% to 7% from the previous assumption of 2.5% to 4.5% in light of persistently high food, energy and transport costs. The government also stated that it is committed to combating inflation and ensuring food and energy security. Among the government’s strategies include modernizing agriculture, expanding agri-business, encouraging private sector participation in infrastructure development, promoting digital transformation, and enhancing the competitiveness of local industries.
THE PHILIPPINES
Philippines conglomerates propose US$1.8 billion upgrade to Ninoy Aquino International Airport
(27 April 2023) Six Philippines conglomerates and a US fund have pitched a US$1.8 billion upgrade to the Ninoy Aquino International Airport. The six conglomerate-backed companies include Aboitiz InfraCapital, AC Infrastructure Holdings, Asia’s Emerging Dragon, Alliance Global-Infracorp Development, Filinvest Development and JG Summit Infrastructure Holdings, as well as New York-based Global Infrastructure Partners. All of these companies have decided to form the Manila International Airport Consortium, which has pledged to invest in new facilities and technology to transform the airport into a “world-class” site under a public-private partnership (PPP) model. The consortium also plan to double the airport’s annual passenger capacity to 62.5 million. In exchange, the consortium seeks to operate the airport for 25 years.
VIET NAM
More than 1,800 property companies suspend operations in Q1 2023
(25 April 2023) More than 1,800 property companies engaged in developing and selling properties in Viet Nam have suspended operations in the first quarter of 2023 due to ongoing strains in the property sector. The number of property companies that suspended operations jumped 61% year-on-year, while the new property companies that opened plunged 63% in the same period. Some 340 other companies were also dissolved. Viet Nam’s property sector has been beset by funding woes due to a government anti-graft campaign that deterred investors, with Vietnamese real estate firms forced to restructure businesses and debts, downsize operations and cut staff. In the first quarter of 2023, the sale of apartments, homes and lots fell 39% year-on-year to 106,401.
SINGAPORE
Core inflation rises 5% year-on-year in March 2023, slightly lower than forecast
(24 April 2023) Singapore’s core inflation rate, which excludes private road transport and accommodation costs, rose 5% year-on-year in March 2023, slightly lower than the 5.5% growth seen in February 2023. A Reuters poll of economists had forecast a 5.1% increase in March. The core inflation rate was driven by lower inflation for services, food, retail and other goods. Meanwhile, headline inflation was up 5.5% year-on-year in March, compared with a 5.6% increase predicted by a Reuters poll. The Monetary Authority of Singapore (MAS) predicts that core inflation will remain elevated in the next few months but should progressively ease in the second half of 2023 and end the year significantly lower. Core inflation is expected to average 3.5% to 4.5% in 2023.
SINGAPORE
Government raises tax on residential property purchases for foreigners from 30% to 60%
(27 April 2023) On 26 April, 2023, the government announced they would raise the tax on residential property purchases for foreigners from 30% to 60% effective 27 April, 2023. The Additional Buyer’s Stamp Duty (ABSD) was doubled due to strong demand for purchasing homes for owner-occupation, with a lot of demand coming from wealthy foreigners from Asia looking to invest in Singapore’s property market. There was a sharp increase of 60% for purchases by foreigners in March 2023, with many foreigners looking to relocate to Singapore in view of geopolitical tensions. Based on the most recent estimates by the Monetary Authority of Singapore, there were about 400 family offices in Singapore at the end of 2020, with the number rising to around 700 by end-2021.
RCEP Monitor
JAPAN
Hotel prices increase by around 15% in first quarter of 2023 compared to first quarter of 2019
(27 April 2023) According to research by STR 2023, a US research firm specializing in the hospitality industry, the average rate paid for hotel rooms in Japan is up approximately 15% in the first quarter of 2023 compared to the first quarter of 2019. This increase in hotel room prices has been attributed to nationwide travel support campaigns, high-spending visitors from the U.S., the U.K., Australia and France, a weaker yen, and inflationary pressures, especially higher energy prices. On 07 October, 2022, the government eased its travel restrictions and allowed visa-free, independent tourism with no daily cap. This shift in policy followed nearly two and a half years of strict COVID-19 restrictions. According to the Japan National Tourism Organization, the estimated number of foreign visitors entering Japan as of March 2023 was around 1,817,500, equivalent to 65.8% of the level seen in March 2019.
AUSTRALIA
Australian home rental prices record largest annual increase in 13 years in first three months of 2023
(26 April 2023) According to the Australian Bureau of Statistics, national rents advanced some 4.9% year-on-year in the first three months of 2023. This is the largest annual increase since 2010, and has been attributed to both low vacancy rates and rising immigration triggering a housing crunch. The National Housing Finance and Investment Corporation warned earlier in April 2023 that Australia faced a shortfall of more than 100,000 homes over the next five years. Australia faces low building approvals due to high mortgage costs and weakening developer confidence, leading to supply constraints that are expected to continue until 2024. Australia’s central bank has raised rates by 3.5% between May 2022 and March 2023.
SOUTH KOREA
South Korean president offers tax breaks and manpower support if Tesla builds factory in country
(27 April 2023) South Korean President Yoon Suk-Yeol has offered tax breaks and manpower support if Tesla Inc builds a new car factory in South Korea. On 26 April, 2023, Yoon met with Tesla CEO Elon Musk as part of Yoon’s visit to the United States. Musk informed Yoon that South Korea remains among the top candidates to host a new Tesla factory. Yoon also expressed hope that South Korean businesses will expand cooperation with SpaceX in the area of space exploration, with Musk also being the CEO of SpaceX. South Korea has identified electric vehicles, rechargeable batteries, and spacecraft as key growth drivers for its economy.