CARI Captures Issue 625: Economists warn that price ceilings on rice in the Philippines could create market distortions

Given recent developments in the region, Captures will widen its scope to include news related to members of the Regional Comprehensive Economic Partnership (RCEP) agreement which was signed towards the end of 2020. The other weekly newsletters under CARI, China-ASEAN Monitor and Mekong Monitor will also be consolidated into the Captures newsletter. We hope this new version of Captures will serve you better and look forward to providing a curation of stories relevant to ASEAN and its trading partners.

Economists warn that price ceilings on rice could create market distortions
Marcos’ price ceiling adds to Philippine rice farmers’ insecurity – Nikkei Asia
(03 October 2023) Economists have warned that a government-imposed price ceiling imposed on rice in early September 2023 could create market distortions. The government of President Ferdinand Marcos Jr. imposed the price ceiling in response to surging food prices, which has impacted Filipino households. Rice inflation climbed to 8.7% in August 2023. Under the new measures, a maximum price of 41 pesos (US$0.72) per kilogram and 45 pesos (US$0.79) per kilogram has been imposed for regular-milled rice and well-milled rice respectively. The government also imposed price caps for purchases of unhusked rice, ranging from 19 pesos (US$0.33) to 23 pesos (US$0.40) for the dry variety, and 16 pesos (US$0.28) to 19 pesos (US$0.33) for the wet variety.

World Bank predicts the Philippines will grow fastest among emerging economies in East Asia and Pacific
Philippines tipped to grow fastest in East Asia and Pacific in 2023 | The Star
(03 October 2023) In the World Bank’s updated growth outlook for the East Asia and Pacific region, the Philippines is expected to grow the fastest in 2023 amongst emerging economies within the region. The Philippines’ forecasted growth for 2023 has been maintained at 5.6%, overtaking Viet Nam whose growth was downgraded to 4.7%. Growth for the entire region excluding China was projected to remain strong but slower at 5%. A special section of the World Bank’s report looked at the diffusion of digital technologies and services reforms and how they can improve economic performance in regional economies, particularly in the Philippines. It was noted that in the Philippines the adoption of software and data analytics by firms had increased the productivity of said firms by 1.5% on average over the period from 2010 to 2019.

Indonesia’s central bank intervenes in foreign exchange market to manage rupiah
Indonesia central bank intervenes to defend rupiah, open to buying bonds (
(03 October 2023) On 03 October, 2023, the Indonesian central bank stated that it had intervened in the foreign exchange market to prop up the rupiah amidst the currency’s depreciation. Bank Indonesia’s head of monetary management informed news agency Reuters that it had intervened in the forex market ‘to build market confidence’. On 03 October, 2023, the rupiah dropped to its weakest level since 06 January, 2023 of 15,610 a dollar. Bank Indonesia also stated that the recent rise in bond yields and capital outflows was ‘manageable’ thus far, but that the bank was open to the possibility of buying bonds to manage yields. Bank Indonesia had raised rates by 225 basis points between August 2022 and January 2023, but have since held rates steady as inflationary pressures subsided.

South Korean chip manufacturer Hana Micron to invest US$1 billion into Viet Nam
South Korea’s Hana Micron to invest $1bn in Vietnam chip production – Nikkei Asia
(02 October 2023) South Korean chip manufacturer Hana Micron plans to invest US$1 billion into chip manufacturing in Viet Nam by 2025, the latest in a wave of semiconductor investments flooding into the country. The company manufactures chip packaging and memory products, and is currently moving equipment to its new, second factory in Bac Giang province. It was stated that provincial authorities had been helping the company by providing conditions to ensure continuous production such as electricity and water. This latest move by Hana Micron comes as global chipmakers seek to diversify global supply chains amidst geopolitical tensions.

Proposed project to upgrade and renovate national highways connecting Viet Nam with Lao PDR and China
Big plans to upgrade Vietnam highways connecting with Laos and China | The Star
(03 October 2023) The Department of Roads of Vietnam has just proposed a project to the Ministry of Transport to upgrade and renovate national highways connecting Viet Nam with northern Lao PDR and China. The proposed project will use loans from the World Bank and will be implemented in five years from 2025 to 2029. Under the project, the section of National Highway 279 at Dien Bien-Tay Trang Border Gate in Dien Bien Province with a total length of 38km will be upgraded to a level 3 road with two lanes and 12m wide. Meanwhile, two sections of National Highway 4H with a length of 94km will be upgraded to a level 4 mountain road and widened to two lanes. As well, a 52km section of National Highway 217 will be renovated and upgraded to ensure technical standards meet a level 3 road.

Lao PDR and Brunei Darussalam elevate ties to strategic partnership
Laos, Brunei elevate ties to strategic partnership | The Star
(04 October 2023) Brunei Darussalam and Lao PDR have elevated their ties to a strategic partnership. This elevation of ties was made during a state visit by Bruneian Sultan Hassanal Bolkiah to Lao PDR between 02 – 04 October, 2023. The state visit was made to commemorate the 30th anniversary of diplomatic relations. During the state visit, the leaders of both countries agreed to promote greater economic cooperation, including in the areas of clean agriculture, export production, and transport services. Both parties also agreed to intensify cooperation in tourism and energy generation. 

Brunei-based airline GallopAir in talks with potential investors
Brunei-based GallopAir, buyer of COMAC planes, says in talks with potential investors – CNA (
(02 October 2023) New Brunei-based airline GallopAir is in talks with potential investors, and is also seeking opportunities for collaboration and investment from the Brunein government and local companies. In September 2023, GallopAir announced a US$2 billion deal to buy 30 regional and narrow-body jets from China-based, state-owned Commercial Aircraft Corporation of China (COMAC). The airline expects to take delivery of its first ARJ21 aircraft in the third quarter of 2024 pending regulatory approvals. GallopAir plans to start with short-haul flights before expanding to medium-haul routes serving Southeast Asia, North Asia, and the Southwest Pacific regions.   

RCEP Monitor

Industrial output index unexpectedly rises 5.5% month-on-month in August 2023
S.Korea factory output posts biggest gain in over three years boosted by chips | Reuters
(04 October 2023) Factory output in South Korea unexpectedly rose in August 2023 at the fastest rate in more than three years. According to Statistics Korea, the country’s industrial output index rose 5.5% month-on-month on a seasonally adjusted basis, following a 2.0% contraction in July. On an annual basis, factory output was 0.5% lower, compared to the 8.1% contraction recorded in the previous month. Production of semiconductors rose 13.4%, while that of machineries (mostly for chip manufacturing) increased by 9.7% and electronic components declined by 3.8%. Across all industries, production rose 2.2% month-on-month in August.

Foreign investments into Japan’s real estate sector rise 45% year-on-year in first half of 2023
Japan’s property sector foreign investments soared 45% (
(03 October 2023) Total foreign investments into Japan’s real estate sector rose by 45% year-on-year in the first half of 2023. Boosting demand for Japanese real estate is the country’s low-interest rate environment and cheap yen. According to real estate consultancy JLL, foreign investors almost doubled their investment into Japanese real estate from a year ago to US$2 billion in the first quarter of 2023. Singapore is the largest source of cross-border investments into Japanese commercial real estate in 2023, with US$3 billion worth of acquisitions year-to-date. U.S. investments came in second place at US$2.58 billion, followed by Canada with US$1 billion worth of investments. 

Reserve Bank of Australia keeps rates unchanged at 4.1% with tightening bias
Australia Extends Rate Pause at Bullock’s First Meeting – Bloomberg
(03 October 2023) The Reserve Bank of Australia (RBA) kept its key interest rates unchanged while retaining a tightening bias for a fourth meeting on 03 October, 2023. The RBA kept its cash rate at 4.1%, while also stating that further tightening of monetary policy may be required to tame inflationary pressures. The RBA has moved at a slower pace than most of its counterparts due to concerns over rapid pass-through of monetary tightening policies to Australian borrowers. Over 90% of new Australian home loans are on floating rates, with the effective mortgage rate in Australia having climbed to 5.6% from 2.75% during the current tightening cycle.

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