CARI Captures Issue 626: Thai government to implement US$15 billion digital wallet project
THAILAND
Economists warn government’s US$15 billion cash handout policy risks stoking inflation
(09 October 2023) According to a statement signed by 81 economic experts (including two former Bank of Thailand governors), the government has been urged to scrap its flagship US$15 billion cash handout policy, claiming it risks stoking inflation and hurting long-term fiscal discipline. The government’s ‘digital wallet’ program would give most Thais a one-time handout of 10,000 baht (US$270), and is expected to be rolled out in the first quarter of 2024. Thais aged 16 and above are eligible to receive the handouts, and the money is to be spent on specific goods and services around their neighborhoods and within a set period. Proponents of the policy claim the multiplier effect on the economy could be four times the cost of the handouts and lift economic growth to as high as 5% in 2024.
THE PHILIPPINES, CAMBODIA
Cambodia and the Philippines mull establishing direct flight connections
(10 October 2023) Cambodia and the Philippines are discussing establishing direct flights between their countries in order to bolster tourism. Philippine Airlines had reportedly agreed to promote direct flights to Cambodia in the near future. The Cambodian Minister of Foreign Affairs and International Cooperation met with the Filipino ambassador on 05 October, 2023 to discuss economic diplomacy. During the meeting, both parties pledged to strengthen bilateral collaboration in trade, investment, agriculture, defence, and in fostering people-to-people ties.
THE PHILIPPINES
The Philippines’ central bank not ruling out 25-basis-point interest rate hike in November 2023
(11 October 2023) The Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP), has not ruled out a 25-basis point interest rate hike in November 2023 due to upside risks to inflation having materialized. Recent data showed inflation accelerated to a four-month high of 6.1% in September 2023, surpassing all economist’s estimates in a Bloomberg survey. These figures were driven by the fastest gain in rice prices in 14 years. For the past four meetings, the BSP has held its policy rate steady at 6.25%, a 16-year high. The BSP is currently watching the elevated debt levels at some Filipino companies, warning that some of them will be unable to pay off their loans.
MALAYSIA
Federal government spent US$11.73 billion on various subsidies in 2022
(10 October 2023) According to the 2022 Auditor-General’s Report, the federal government spent some US$11.73 billion on various subsidies in 2022, an increase of 322.1% compared to 2021. In comparison, the government spent US$2.78 billion on subsidies in 2021. The highest subsidy expenditures went to petroleum products, comprising 81.5% of the total expenditure. A total of US$9.56 billion was spent on subsidizing petroleum products. The report also stated that the finance ministry spent US$25.43 billion, or 40.8% of the government’s total operational expenditure for 2022. This was a 64.5% increase compared to 2021. In June 2023, Prime Minister Anwar Ibrahim said his administration was working on implementing targeted subsidies. The government expects to save at least US$1 billion to US$2 billion a year from its shift towards targeted subsidies.
INDONESIA
Geothermal operator Barito Renewables Energy’s shares up 25% in market debut in Jakarta
(09 October 2023) On 09 October, 2023, Indonesian geothermal operator Barito Renewables Energy’s shares were up 25% in the company’s market debut on the Indonesia Stock Exchange, after having raised US$200 million in an initial public offering last week. More than 4 billion shares were sold to the public, representing just 3% of the company, which is a subsidiary of Indonesian energy group Barito Pacific. Barito Renewables operates three geothermal power plants in West Java province with a combined installed capacity of 886 megawatts. The successful listing marks another test of investors’ appetite for Indonesia’s underdeveloped renewable energy sector.
VIET NAM
Exports drop 8.5% year-on-year to US$258.97 billion in the first nine months of 2023
(10 October 2023) According to government customs data, Viet Nam’s exports fell 8.5% year-on-year to US$258.97 billion in the first nine months of 2023. Imports in the same period fell 14.0% to US$237.33 billion, resulting in a trade surplus of US$21.64 billion. Exports in September fell 6.3% month-on-month to US$30.68 billion, while imports dropped 2.9% to US$28.48 billion. These figures indicate weak global demand, with exports of smartphones falling 13.7% in the first nine months of 2023, while exports of garments fell 13.6%. The subdued demand tracks that of other regional export economies, and has caused economists to slash growth forecasts for Viet Nam.
CAMBODIA
Cambodia draws in US$3.76 billion worth of investments in first nine months of 2023
(09 October 2023) Cambodia drew in US$3.76 billion worth of fixed-asset investments in the first nine months of 2023, marking an 8.6% rise from the US$3.46 billion worth of investments recorded in the same period in 2022. According to data released by the Council for the Development of Cambodia (CDC) on 07 October, 2023, in the same period they approved 191 investment projects, a 27% increase from the 150 projects approved in the same period in 2022. These foreign investments came primarily from China, Malaysia, Singapore, Viet Nam, and the British Virgin Islands. The Asean+3 Regional Economic Outlook (AREO) has projected that Cambodia’s economy will grow by 5.9% in 2023.
RCEP Monitor
SOUTH KOREA
Samsung Electronics’ operating profit likely falls 77.9% in third quarter of 2023
(11 October 2023) Samsung Electronics stated that it expects its operating profits to have reached US$1.8 billion in the third quarter of 2023, a drop of 77.9% year-on-year. This has been attributed to an overhang from a long slump in memory chip prices. The company’s revenue is believed to have dropped 12.7% year-to-year to US$50.01 billion in the same quarter. On a quarter-on-quarter basis, the company’s operating profit likely jumped 258.2%, while revenue increased by 11.7%. Analysts believe the company’s performance may rebound in the fourth quarter of 2023 due to industry players making big production cuts.
NEW ZEALAND
New Zealand sees record net immigration in the year ending August 2023 at 110,000
(11 October 2023) According to Statistics New Zealand, New Zealand saw record net immigration in the year ending 2023 at 110,000. This beat the previous high of 103,000 set a month earlier. The surge in immigration likely reflects pent-up demand that had built up during the COVID-19 pandemic, with employers struggling to find skilled workers to fill vacant roles in 2022. The figures show the greatest number of immigrants came from India, followed by the Philippines and China. The total number of immigrants reached a record number of 225,000 during the year, while the number of New Zealanders leaving the country also neared record levels at 115,000. Many New Zealand citizens have been lured to Australia seeking better pay.
AUSTRALIA
Australia has highest level of mortgage stress in the developed world
(10 October 2023) According to the International Monetary Fund, Australia has the highest level of mortgage stress in the developed world, with 15% of income devoted to paying off loans. Australian borrowers have been affected by a series of rate rises by the Reserve Bank of Australia (RBA) starting in May 2022. The increased cost of borrowing has left Australia with the highest level of debt stress in the developed world, followed by Canada, Norway, and the Netherlands. In July 2023, the Australian National University calculated that if the RBA increased the current rate by another 50 basis points to 4.6%, Australians would be paying 40% of their income into their mortgages and other loans.