CARI Captures Issue 630: Rising energy prices push Thailand to propose resuming talks over disputed waters with Cambodia

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.

Rising energy prices push Thailand to propose resuming talks over disputed waters with Cambodia
(07 November 2023) Prompted by rising energy prices, Thai officials have proposed talks with Cambodia over the resource-rich overlapping claims area (OCA), a 27,000-square-kilometer body of water in the Gulf of Thailand claimed by both countries. The OCA is believed to contain up to 11 trillion cubic feet of natural gas plus large oil deposits, and has been contested since the seventies. In 2001, both parties agreed to a framework that states that any deal to develop energy resources within the OCA must be negotiated “simultaneously” with another on territorial issues. Thai officials are now proposing dividing the two issues and to push ahead with discussions on joint development of the OCA’s energy resources. Rising energy prices have worsened Thailand and Cambodia’s energy security, with both countries seeking new alternative energy sources now.

Employees Provident Fund allocates 83% of total fund allocation for domestic investments in 2023
(07 November 2023) The Employees Provident Fund (EPF) has allocated RM97 billion (US$20.77 billion) or 83% of its total fund allocation for domestic investments in 2023. According to Malaysia’s Ministry of Finance, the EPF has maintained an average annual fund allocation of over 80% for investments in the domestic market from 2019 to 2023. As of now, the total value of EPF investment assets stands at RM1.082 trillion (US$231.70 billion), with 61.4% allocated to domestic investments and the remaining 38.6% for overseas investments. The EPF’s overall domestic investment as of June 2023 had grown to RM665 billion (US$142.40 billion), a 9% increase year-on-year. Total domestic investment is anticipated to increase to RM700 billion (US$149 billion) by end-2023.

Chinese automaker Geely eyeing Southeast Asian EV market through partner Proton Holdings
(08 November 2023) Chinese automaker Geely is teaming up with its Malaysian partner Proton Holdings to tap into Southeast Asia’s electric vehicle (EV) market. In 2022, Proton reached an agreement with Smart Automobile, a joint venture between Geely and Mercedes-Benz Group, to become the official distributor of Smart’s EVs in Malaysia and Thailand. In September 2023, both parties signed a memorandum of agreement toward assembling the EVs at Proton facilities in Malaysia. Earlier in July, the Malaysian government announced that Geely would invest around US$10 billion in Malaysia’s main automaking hub of Tanjung Malim in Perak state. The hub will house facilities for research and development as well as for manufacturing.

Indonesia sells US$2 billion dollar-denominated sukuk in first such issuance in 18 months
(07 November 2023) Indonesia sold a US$2 billion dollar-denominated sukuk, its first such issuance in 18 months. The country issued US$1 billion worth of five-year shariah-compliant notes for general financing, as well as another US$1 billion worth of 10-year notes for expenditure. The five-year notes were priced at par to yield 5.4%, while the 2033 notes were issued at par to yield 5.6%. Indonesia’s last dollar-denominated sukuk transaction took place in May 2022. Earlier in 2023, Indonesian authorities had sold yen-denominated bonds, with funds from some tranches earmarked for ocean conservation and climate change mitigation efforts.

Annual inflation slows to 4.9% in October 2023 due to slower increases in food prices
(07 November 2023) The consumer price index rose by 4.9% in October 2023, less than the 6.1% growth recorded in September and the central bank’s own projections of 5.1% to 5.9% growth. This is the first time annual inflation in the Philippines slowed in three months, and was attributed to slower increases in food prices. For instance, rice price inflation slowed down to 13.2% in October from 17.9% in September. Core inflation, which excludes more volatile food and energy prices, eased to 5.3% from 5.9% in the prior month. Year-to-date inflation (between January and October 2023) averaged at 6.4%, outside the central bank’s target range of 2% to 4%.

Singapore Airlines delivered its second-largest quarterly profit on record
(07 November 2023) Singapore Airlines Ltd. delivered its second-largest quarterly profit on record in the third quarter of 2023. Net income in the third quarter climbed 27% year-on-year to US$522 million, while revenue rose 4.3%. Demand has remained strong in the post-COVID-19 rebound, with Singapore Airlines’ passenger traffic totalling 8.9 million in the quarter, up 42% year-on-year. Group capacity is expected to reach about 92% of pre-pandemic levels on average in December 2023. Passenger load factor, an indication of how full planes are, stood at 88.6%, up 2% from the same period in 2022.

Lao PDR sees 285% increase year-on-year in tourist arrivals in first nine months of 2023
(07 November 2023) According to statistics by the Ministry of Information, Culture, and Tourism, the first nine months of 2023 saw an influx of more than 2.4 million foreign tourists, marking a 285% increase year-on-year. ASEAN countries contributed over 1.6 million tourists. However, the majority of tourists would come from Western countries. This influx of tourists was attributed in part to improved accessibility facilitated by faster travel on highways and the Laos-China railway. The Laotian government is seeking to boost tourism through the upcoming Visit Laos Year 2024 campaign, and is targeting 4.6 million visitors to visit the country in 2024. Lao PDR aims to generate US$712 million in revenue in 2024.

RCEP Monitor

China aims to reduce exposure to distressed debt as BRI marks tenth anniversary
(07 November 2023) In September 2023, China pledged to promote “small yet smart” projects as its Belt and Road Initiative (BRI) marked its tenth anniversary. This comes as Beijing seeks to reduce its exposure to distressed debt, with a recent report by AidData noting that more than half of China’s US$1.1 trillion of loans to low- and middle-income countries have entered their principal repayment periods. This figure could rise to 75% by 2030. The report also noted that some 80% of the lending involved countries in financial distress. Chinese-linked infrastructure projects with significant environmental, social and governance (ESG) risk exposure rose to 1,693 projects worth US$470 billion in 2021, up from 17 projects worth US$20 billion in 2000.

China’s records trade surplus of US$684 billion in the first ten months of 2023
(07 November 2023) New data released on 07 November, 2023, showed that China recorded a trade surplus of US$684 billion in the first ten months of 2023. This was more than double the US$254 billion recorded during the same period in 2018. In October 2023, China’s exports dropped 6.4% year-on-year while imports grew by 3%, reversing a 6.2% contraction in September. China’s trade surplus with Europe has swelled over the past five years, with Europe now having a trade deficit with China of nearly US$428 billion in 2022 (the largest in world history). These figures have highlighted the problems exporters face in accessing the Chinese market.

South Korea loosens environmental regulations and cracks down on unions to attract foreign investment
(08 November 2023) The Korean government’s loosening of environmental regulations and tougher approach to labor activism is helping attract more foreign direct investment (FDI). FDI into South Korea reached US$23.9 billion for the first three quarters of 2023, up from US$21.5 billion for the same period in 2022. Four companies that produce chipmaking equipment, including ASML of the Netherlands, chose South Korea for research centers and production bases. ASML manufactures extreme ultraviolet lithography equipment, critical for producing advanced chips, for Korean tech giant Samsung Electronics.

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