CARI Captures Issue 607: ASEAN governments seeking to foster EV development in ASEAN

ASEAN
ASEAN leaders announce commitment to build electric vehicle ecosystem within region
(25 May 2023) At the 42nd ASEAN Summit held in Labuan Bajo, Indonesia on 10 May, 2023, ASEAN leaders announced their commitment to promote the growth of the electric vehicle (EV) ecosystem within ASEAN, as well as become an important part of the EV global supply chain. Indonesian President Joko Widodo stated that the declaration would mark a significant milestone in the region’s economic cooperation. He recognized that the EV industry would play a vital role in the global supply chain, highlighting the importance of the downstream sector in particular. The ASEAN member states announced they would follow a strategy similar to what Indonesia and the Philippines have taken, electrifying public transportation, pushing for EV manufacturing, as well as creating battery production hubs. The member states also announced they would seek to create a favorable business and investment environment to facilitate this development.

MALAYSIA
Malaysia expected to be first country in Southeast Asia to see air travel industry recovering
(23 May 2023) Malaysia is expected to become the first country in Southeast Asia to see its air travel industry recovering and experience overcapacity. Intensifying competition between local airlines would see lower airfares as early as 2024, although it would not be at the same price level as before the COVID-19 pandemic. A total of 6.7 million passengers passed through Malaysia Airports Holdings Bhd’s airports in the country in March 2023, according to MIDF Research. This translates into a recovery of 75%, with domestic travel’s recovery standing at 84% while international travel’s recovery stands at 66%. The international segment recorded the highest number of passengers since the onset of the pandemic at 3 million passengers, with travel mainly coming from Singapore, Indonesia, Thailand, India, China, and Japan.

THE PHILIPPINES
El Nino weather phenomenon not expected to fan food inflation
(22 May 2023) According to the Philippines’ finance secretary, the Philippines is expected to experience a ‘weak to moderate’ El Nino weather phenomenon later in 2023 through early 2024. As such, this year’s El Nino is not expected to fan food inflation, with authorities not expecting a significant reduction in local food production, especially for rice and corn. However, El Nino is still expected to cause a 1.8% decline in rice output and 1% drop in yellow corn production. Inflation in the Philippines remains elevated, while economic growth moderated in the last quarter. The central bank held its key rate last week, pointing to the potential impact of El Niño on food and utility costs as a risk to inflation outlook. To mitigate the weather phenomenon’s impact on local food production, the Philippine government will aid farmers, stock up on farm input, and promote early planting in areas with low water supply.

CAMBODIA
World Bank raises 2023 growth forecast for Cambodia to 5.5% up from earlier projection of 5.2%
(20 May 2023) The World Bank has raised its growth projections for Cambodia for 2023 to 5.5%, up from its earlier projection of 5.2%. This year’s growth is driven by pent-up consumer demand and the return of foreign tourists, with the overall contribution of the services sector to economic growth returning to 2019 levels. As well, the agricultural sector is benefitting from improved access to regional markets, thanks to newly ratified bilateral and regional free trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) agreement, the Cambodia-China Free Trade Agreement (FTA) and the Cambodia-South Korea FTA. Cambodia’s economic recovery has strengthened despite weakening global demand, with growth initially led by export-oriented manufacturing before evolving to services and agriculture. Inflation has also returned to the pre-COVID-19 pandemic levels, at 2.2% in February 2023 as food and oil prices moderated.

LAO PDR
Lao PDR economy expected to grow by 4.5% in 2023 amid global economic challenges
(22 May 2023) According to the latest report by the Lao Academy of Social and Economic Science (LASES), Lao PDR’s economy is expected to grow by 4.5% in 2023 amidst global economic challenges. Economic growth will be driven by the services sector, the growth of tourism, the processing industries, and agricultural production for export. According to LASES, the reopening of China and the launch of the cross-border China-Laos railway has significantly bolstered regional trade and people-to-people exchanges. The services sector is expected to grow by 4.8% in 2023, while the agricultural sector is anticipated to grow by 3.5%. Meanwhile, the manufacturing sector is expected to grow at 4.6%. However, Lao PDR is also facing pressing issues such as soaring inflation and high public debt. Inflation was recorded at 39.89% in April 2023, down from 41% in March.

VIET NAM
Viet Nam’s foreign direct investment businesses posts more than US$14 billion in trade surplus in first four months of 2023
(22 May 2023) Viet Nam’s foreign direct investment (FDI) businesses posted more than US$14 billion in trade surplus in the first four months of 2023. Viet Nam’s overseas shipments in the January-April period shrank 11.8% year-on-year to US$108.57 billion. FDI businesses accounted for 73.7% of the country’s exports in the period, earning nearly US$79.99 billion, down 12.1% year-on-year. Imports by FDI companies in the same period fell 17.4% year-on-year to US$65.6 billion. Global investors have flocked to Viet Nam seeking to take advantage of the country’s labor costs and tax incentives. In an attempt to promote exports, Viet Nam also sought to attract FDI through bilateral and multilateral free trade agreements. FDI companies account for up to 70% of Viet Nam’s total export turnover.

THE PHILIPPINES
The Philippines pursuing resumption of free trade negotiations with the EU
(23 May 2023) According to the Philippine Trade Secretary, the Philippines is pursuing the resumption of free trade negotiations with the European Union (EU). The Trade Secretary noted that the Philippines-EU Free Trade Agreement will help the Philippines secure additional dutyfree market access, as well as provide a more conducive framework for attracting more significant EU investments into the Philippines. The government is currently seeking to facilitate international partnerships and collaboration through the recently-ratified Regional Comprehensive Economic Partnership (RCEP) mega-trade agreement that will encourage foreign direct investment inflows. The government’s current development strategy is focused on uplifting the country’s export sectors and driving investments into strategic areas.

INDONESIA
Indonesia to relax June 2023 export ban for five raw materials
(24 May 2023) The Indonesian government will relax a June 2023 export ban for certain raw materials, with Indonesia to continue shipping said raw minerals for the next year. Indonesia had originally planned to ban the export of all metal ore starting in June to encourage investments in the domestic processing industry. But authorities will now allow the export of copper, iron ore, lead, zinc and anode mud from copper concentrates until May 2024 so that local smelters, the development of many of which was delayed by the COVID-19 pandemic, would be ready to handle the materials. Under the new rules, companies will be allowed to keep exporting if they pay export duties and if their smelters were at least half-completed as of January 2024. But they will be fined for every month of delay. Copper miners Freeport Indonesia and Amman Mineral Nusa Tenggara would be exempted from the ban as their smelter development had been disrupted. Bauxite exports will still be banned in June 2023, since four existing smelters can absorb ores intended for export.

---

RCEP Monitor

---