CARI Captures Issue 631: Indonesia and United States elevate ties to Comprehensive Strategic Partnership

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.

Indonesia and the United States agree to elevate ties to Comprehensive Strategic Partnership
(13 November 2023) On 13 November, 2023, Indonesian President Joko Widodo and US President Joe Biden met at the White House in Washington D.C. Both leaders agreed to enhance bilateral ties to a Comprehensive Strategic Partnership, describing it as an ‘”unprecedented level of cooperation, built on shared values of democracy and pluralism”. It was reported that both leaders had also kicked off preliminary discussions toward a critical minerals agreement. The United States has sought to expand minerals trade with Indonesia to curb its dependence on China. Both parties are seeking to sign a limited free trade agreement that would allow electric vehicles made using Indonesian nickel to be subject to subsidies created under the Biden administration’s Inflation Reduction Act (IRA). According to a fact sheet released by the White House in the aftermath of the meeting, both parties also agreed to enhance cooperation in climate change, digital connectivity, and defense.

Bursa Malaysia sees net inflow of US$143.37 million for week ending 10 October, 2023
(14 November 2023) According to MIDF Research, Bursa Malaysia saw a net inflow of US$143.37 million for the week ending 10 October, 2023. Foreign investors maintained their net buying stance on Bursa Malaysia for the second consecutive week. According to MIDF Research, the acquisition was nearly four times the amount purchased in the previous week, with every day of the week recording net buying. The top three sectors with net foreign inflows for the week were financial services (US$41.19 million), utilities (US$26.08 million), and healthcare (US$23.58 million). Meanwhile, energy (US$5.04 million), consumer products and services (US$4.90 million), and REITs (US$317,796.75) were the only three sectors that recorded net foreign outflows.

Singaporean property investor to build two data centers in Osaka for US$660 million
(14 November 2023) Singaporean property investor SC Capital Partners plans to build two data centers in Osaka, Japan, for US$660 million. The first data center is slated to open in 2027. SC Capital plans to lease the data centers to corporate clients before eventually selling them. After the sale, the fund plans to operate the properties for a fee. Demand for data centers has grown with the rise of 5G communication and artificial intelligence technologies. As part of their business continuity plans, many Japanese companies are seeking backup locations for their data in Osaka as an alternative to Tokyo. SC Capital invests in data centers across the Asia-Pacific region through its subsidiary SC Zeus Data Centers.

Vietnamese IT company FPT on acquisition offensive in the US
(14 November 2023) Vietnamese information technology company FPT is on an acquisition offensive in the US with an eye on the AI and chip sectors. FPT recently became a major investor in artificial intelligence startup Landing AI, which it claims will open a ‘new era for AI development in Vietnam and bring new opportunities for [Viet Nam’s] future generations to excel in high-tech fields’. FPT aims to increase annual revenue in the US to US$1 billion by 2030. FPT also recently announced in November 2023 the acquisition of US product engineering services company Cardinal Peak. FPT’s business strategy is in line with the Vietnamese government’s plans to accelerate the development of its AI and semiconductor industries.

Fitch Ratings projects Viet Nam’s economy to expand by 6.3% and 7.0% in 2024 and 2025 respectively
(12 November 2023) According to ratings agency Fitch Ratings, Viet Nam’s GDP is projected to expand by 6.3% in 2024 and 7.0% in 2025. Fitch noted that domestic fiscal and monetary policies have been providing support for the economy. It was noted that Viet Nam’s economy had slowed down to 4.3% in the first nine months of 2023 amidst weak external demand and lingering headwinds in the domestic property sector. Meanwhile, household spending growth is expected to be strong over 2024 as economic headwinds subside and real GDP growth climbs back up towards trend levels of above 7% a year.

Lao PDR to release tourism promotion campaign Visit Laos Year 2024 on 23 November, 2023
(14 November 2023) Lao PDR will launch the tourism promotion campaign Visit Laos Year 2024 on 23 November, 2023 to coincide with the annual That Luang festival. According to the country’s Minister of Information, Culture and Tourism, the theme for the year-long event is “A Paradise of Lao Culture, Nature and History,” with the elephant chosen as its mascot. The Visit Laos Year 2024 campaign aims to promote the development of new products and services within the Laotian tourism industry. It will also focus on improving the quality of services in line with the requirements of target market groups. Authorities hope that Lao PDR will host at least 4.6 million foreign and Laotian tourists in 2024, generating a revenue of US$712 million.

Thai government pitches US$28 billion Landbridge project to bypass Strait of Malacca
(14 November 2023) Thailand’s government is pitching a US$28 billion Landbridge project that will help commercial shipping bypass the Strait of Malacca by connecting the Indian and Pacific oceans through a landbridge. Prime Minister Srettha Thavisin told investors in San Francisco on 13 November, 2023 that the project will help cut travel time by an average of four days and lower shipping costs by 15%. The Landbridge project will involve seaports being constructed on either side of Thailand’s southern peninsula and linked by highway and rail networks. While the port on the western side of the peninsula will have the capacity to handle 19.4 million ton equivalent units (TEUs), the eastern one will be able to handle 13.8 million TEUs. Together, this will account for about 23% of the Port of Malacca’s total cargo. When completed, the project is expected to create 280,000 jobs and propel Thailand’s annual economic growth rate to 5.5%.

RCEP Monitor

Imports of chipmaking equipment jumps 93% year-on-year in third quarter of 2023
(14 November 2023) Imports of semiconductor manufacturing equipment jumped 93% year-on-year in the third quarter of 2023 to US$8.7 billion. Imports of equipment for lithography, a critical part of the semiconductor manufacturing process that involves forming nanometer-scale circuit patterns, grew nearly fourfold. China’s imports of this gear from the Netherlands swelled more than sixfold. In October 2022, the United States imposed curbs on the export of chipmaking equipment to China, with Japan and the Netherlands later following suit. China’s chipmaking equipment imports from Japan rose by roughly 40% on the year last quarter. Meanwhile, imports from the U.S. grew only around 20%.

Seoul dubbed world’s best performing office market with occupancy rate of over 98%
(15 November 2023) Seoul has been dubbed the world’s strongest-performing office market for the last two years with more than 98% of grade-A offices currently occupied, while office rents have surged 15% year-on-year. According to data by CBRE Group Inc., Seoul had an office vacancy rate of just 1.7% in the third quarter, compared to an average of 19% in Asia. Offices have been in short supply in Seoul since 2021, with just half of what has historically been available. This shortage is expected to last until 2025, when new projects now under construction will come online. The current shortage has been attributed to redevelopment projects imposed by the government a few years ago as well as disruptions caused by the pandemic. Meanwhile, office rents are expected to grow by about 15% year-on-year in 2023.

Economists trim their fourth-quarter inflation forecasts after release of monthly indexes
(15 November 2023) Some economists in New Zealand have trimmed their fourth-quarter inflation forecasts after the first release of monthly indexes. With the data for October 2023 softer than expected, ANZ Bank New Zealand and Westpac Banking Corp. have both lowered their annual inflation forecasts for New Zealand to 4.8% from 5.1% previously. Indications of a more rapid slowdown in inflation adds to expectations that the Reserve Bank of New Zealand (RBNZ) won’t increase the Official Cash Rate further after having held it at 5.5% since the middle of 2023.

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