CARI Captures Issue 616: The Philippines-Malaysia trade relationship
THE PHILIPPINES, MALAYSIA
The Philippines and Malaysia set to increase cooperation in areas including transnational crime, agriculture, and digital economy
(27 July 2023) The Philippines and Malaysia are set to convene joint meetings in October 2023 to increase cooperation in various areas including transnational crime, agriculture, and digital economy. This was agreed during the Philippines’ President Ferdinand Marcos Jr.’s three-day state visit to Malaysia. Other areas which will see bilateral cooperation include halal industry, Islamic banking, education, tourism and culture, and sports. The Malaysian government also offered to help build capacity in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) in the southern Philippines, especially in priority sectors such as halal, Islamic banking, and food security. In 2022, Malaysia was the 10th largest trading partner of the Philippines, with trade totaling US$8.84 billion. Malaysia also ranked as the Philippines’ 11th largest export destination and 9th largest import source, valued at US$2.46 billion and US$6.38 billion respectively.
ASEAN
Honda Motor to launch e-motorbike sales in Indonesia, sees Southeast Asia as promising market
(26 July 2023) Global motorcycle leader Honda Motor will be launching its first electric two-wheeler models in Indonesia, seeing Southeast Asia as a promising market for its e-motorcycles. The EM1 e: scooter, scheduled to go on sale in Japan in late August 2023, will be the first electric motorcycle made by Honda for the Indonesian market. Honda plans to release another model in Indonesia within the year, and two more in 2024. There are plans to sell seven e-motorbike models by 2030, with a sales target that year of 1 million units. Honda aims to sell 3.5 million e-motorbikes globally in 2030, with close to 30% of those sales expected to come from Indonesia. The Southeast Asian motorcycle market reached 10.6 million units in 2022, and is the world’s third-largest market after China and India.
INDONESIA
Indonesian e-commerce and superapp company GoTo makes e-wallet app accessible throughout the country
(26 July 2023) Indonesian e-commerce and superapp company GoTo made its e-wallet app accessible throughout the country, as it looks to tap into a large number of unbanked Indonesians. Previously, the e-wallet GoPay could only be accessed for payments via the apps of Gojek and Tokopedia, both of whom merged in May 2021 to form GoTo. By launching the app, GoTo hopes to extend its user base beyond its existing customers. According to research by Google, Temasek, and Bain & Co., over 80% of Indonesia’s population are unbanked or underbanked. Unbanked people do not have bank accounts, while those who are underbanked have bank accounts but insufficient access to financial services such as credit.
MALAYSIA
Malaysian government unveils plan to ‘reset’ Malaysia’s growth trajectory
(26 July 2023) On 27 July, 2023, the Malaysian government unveiled a plan to ‘reset’ Malaysia’s growth trajectory. The plan seeks to boost incomes and increase female labor force participation, while also reducing the budget deficit. The ten-year plan involves attracting companies that create high-income jobs for locals with tax breaks, boosting manufacturing, and implementing reforms to make its stock markets attractive. One of the key outcomes targeted by this plan includes achieving a fiscal deficit of 3% of GDP or lower. The Malaysian government also seeks to boost economic growth to 6% in the short-term. In 2023, officials project that the Malaysian economy will expand by between 4% to 5%.
SINGAPORE
Manufacturing output decreases 4.9% year-on-year in June 2023
(26 July 2023) According to the Economic Development Board, Singapore’s manufacturing output decreased 4.9% year-on-year in June 2023. Excluding biomedical manufacturing, manufacturing output fell 5.2%. On a three-month moving average basis, manufacturing output decreased 7.3% year-on-year in June 2023, while on a seasonally adjusted month-on-month basis, manufacturing output increased 5.0%. Looking at the performance of specific clusters, it was noted that output for transport engineering increased 10.8% year-on-year in June, while output for biomedical manufacturing decreased 1.8% year-on-year. For other clusters, it was observed that the electronics sector fell 2.9%; general manufacturing decreased 7.5%; chemicals output shed 8.6%; and precision engineering decreased 11.5%.
SINGAPORE, BRUNEI DARUSSALAM, CHINA
China to reinstate its 15-day visa-free entry for citizens of Singapore and Brunei Darussalam
(23 July 2023) China will reinstate its 15-day visa-free entry for citizens of Singapore and Brunei Darussalam from 26 July, 2023 onwards. This follows a three-year suspension of visas as China adopted strict travel restrictions under its stringent zero-COVID-19 policy, which only ended in December 2022. According to the Chinese Embassy in Singapore, Singaporean citizens will be able to enter China without a visa for 15 days if they are there for business, tourism, family visits and transit. Visas already issued to Singaporeans will still be valid, while those that have been requested will be processed. According to Singapore’s Ministry of Foreign Affairs, the resumption of visa-free travel will facilitate people and business flows between our countries and pave the way for deeper bilateral cooperation.
CAMBODIA
Cambodian Prime Minister Hun Sen to step down, eldest run to succeed him
(26 July 2023) On 26 July, 2023, Cambodian Prime Minister Hun Sen announced he would step down, with his eldest son Hun Manet to succeed him. Hun Sen announced the post-election timeline of Hun Manet’s accession, with the next step coming in August 2023 when the National Election Committee formalizes the results of the national election held on 23 July, 2023. Following this, the newly elected lower house of parliament will convene and vote on Hun Manet’s candidacy. The ruling Cambodian People’s Party claimed 96% of parliamentary seats after its main rival, the Candlelight Party, was disqualified in May 2023. Hun Sen stated that he would run for a seat in Cambodia’s Senate in February 2024 and then become the Senate president.
RCEP Monitor
JAPAN
Bank of Japan provides more flexible bandwidth for government bond yields to fluctuate
(29 July 2023) On 28 July, 2023, the Bank of Japan (BOJ) unexpectedly tweaked its monetary policy stance by providing more flexible bandwidth for government bond yields to fluctuate. The BOJ will now allow 10-year Japanese government bonds to rise above the current cap of 0.5%. While maintaining its policy of guiding yields 50 basis points above or below 0%, the BOJ added new wording in a statement, saying “it will conduct yield curve control with greater flexibility, regarding the upper and lower bounds of the range as references, not as rigid limits, in its market operations.” The surprise move by the BOJ comes as inflation in Japan becomes more embedded than expected, with Japan’s core CPI hitting 3.3% in June, the 15th straight month above the 2% inflation target and having accelerated from 3.2% in May.
SOUTH KOREA
Quarterly growth in the second quarter of 2023 comes up to 0.6%
(25 July 2023) The South Korean economy grew faster than predicted in the second quarter of 2023, coming up to 0.6% quarter-on-quarter. This is an increase from the 0.3% growth recorded in the first quarter of 2023. Within the same quarter, private consumption had dropped by 0.1% amid declines in expenditures on services such as restaurants and accommodations, while government consumption was down 1.9% due to lower spending on social security benefits. The Bank of Korea predicts that South Korea’s GDP will grow by 1.6% in 2023 from 2022. The economy had grown by 2.6% year-on-year in 2022. Overall exports in the second quarter was down 1.8% due to lower shipments of petroleum products.
AUSTRALIA
Retails sales decline 0.8% month-on-month in June 2023 in response to rate hikes
(27 July 2023) Australian retail sales unexpectedly dropped in June 2023, contracting by 0.8% month-on-month. According to the Reserve Bank of Australia (RBA), this weakness was driven by department stores and clothing and footwear. This suggests consumer activity is dropping in response to the RBA’s 12 interest-rate increases in the past 15 months. The recent decline in retail sales bolsters the case for the RBA to hold rates steady for a second-straight meeting, after recent inflation data showed a cooling of prices. The RBA had left the cash rate at 4.1% earlier in July 2023 to assess the impact of its tightening cycle that began in May 2022.