CARI Captures Issue 633: Malaysia to scrap entry visa requirements for Chinese and Indian nationals

MALAYSIA, INDIA, CHINA
Malaysia to scrap entry visa requirements for Chinese and Indian citizens starting 01 December, 2023
(26 November 2023) The Malaysian government will scrap entry visa requirements for Chinese and Indian citizens entering the country starting on 01 December, 2023. Citizens of both countries will be allowed to stay in the country for up to 30 days visa-free, but will be subject to security screening. This comes as Malaysia is seeking extra tourist arrivals to support economic growth, with Malaysian Prime Minister Anwar Ibrahim announcing in October 2023 plans to improve visa facilities in 2024 to encourage the entry of tourists and investors. On 24 November, 2023, Chinese authorities stated it would allow citizens of six countries including Malaysia to enter the country without a visa.

MALAYSIA, INDONESIA
Fligths between Kuching and Pontianak expected to be revived in early 2024
(27 Novemebr 2023) Flights between Kuching in the Malaysian state of Sarawak and Pontianak in the Indonesian province of West Kalimantan are expected to be resumed in early 2024. According to Sarawak’s Transport Minister, Indonesia had agreed in principle for the resumption of flight operations during the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) meeting held in October 2023. Indonesia had suspended the routes connecting Sarawak and Pontianak since March 2022. As well, bus services between the border of Singkawang in Indonesia and Kuching will start on 01 December, 2023, with two buses serving the route initially.

THAILAND
Bank of Thailand flags baht volatility and elevated household debt
(28 November 2023) According to the Bank of Thailand (BOT), the higher-for-longer stance adopted by central banks in advanced economies to fight inflation has seen their interest rates surpass that of emerging markets, with the end result being currency volatility in emerging economies such as Thailand. The Thai baht has seen swings increase from 8% to 9% from about 3% to 4% before the COVID-19 pandemic. The BOT also noted that higher interest rates in advanced economies may impact capital flows to emerging market economies. The BOT also raised concerns about the elevated levels of household debt as well as declining levels of spending by tourists.

THAILAND
Prime Minister Srettha faces challenges in implementing digital wallet scheme
(28 November 2023) Prime Minister Srettha Thavsin is facing challenges implementing his party’s flagship policy of a 10,000 baht (US$280) handout of digital money through an e-wallet. The handout policy is expected to cost 500 billion baht (US$14 billion), equivalent to 3% of GDP, and will put money directly into the digital wallets of 50 million Thais earning less than 70,000 baht (US$2,000) per month. The Bank of Thailand has voiced opposition to the digital wallet scheme, warning it may spur inflationary pressures. Thai businesses have also raised concerns on how the scheme will impact the public debt. The government must also contend with legal challenges based on the fiscal discipline law.

VIET NAM
Viet Nam emerges as world’s second largest shrimp supplier
(28 November 2023) According to Viet Nam’s General Department of Fisheries under the Ministry of Agriculture and Rural Development, Viet Nam has emerged as the world’s second-largest shrimp supplier. Viet Nam accounts for 13% to 14%  of total global value. Viet Nam currently exports shrimp to about 100 countries and territories across the world, with its five largest export markets being Europe, the United States, Japan, China, and the Republic of Korea. During the 2010 to 2023 period, Viet Nam had a brackish water shrimp farming area of 644,000 to 737,000 hectares. In the first ten months of 2023, Viet Nam’s shrimp export revenue reached US$2.8 billion, down 24% year on year.

VIET NAM
Parliament approves global minimum corporate tax of 15%, delays implementing offsets
(29 November 2023) On 29 November, 2023, Viet Nam’s parliament approved implementing the global minimum tax rate of 15% on multinationals from 01 January, 2024 onwards. However, parliament has delayed implementing measures to offset the higher tax rate. The higher rates are in line with global tax reform initiatives, with the government stating it would work on specific incentives in 2024. While Viet Nam’s corporate income tax is already set at 20%, for years it has offered much lower effective rates to foreign investors. The government is expected to make an additional US$601 million a year under the new plan, which will impact an estimated 122 foreign companies.

CAMBODIA
Cambodia scraps US$1.5 billion coal-fired power project in favour of natural gas-fired plant
(29 November 2023) Cambodia has scrapped a US$1.5 billion coal-fired power project in a protected reserve along the south-western coast in favour of building an 800 MW natural gas-fired plant instead. As part of the new project, the government is considering constructing a liquefied natural gas (LNG) terminal to import the super-chilled fuel and re-gasify it for use in the power plant. The planned LNG terminal is a fixed land-based facility and would make Cambodia a new LNG import market. The planned Botum Sakor coal plant had been criticized for encroaching on Cambodia’s densest forest areas, meaning it risks polluting it. Cambodia is seeking to lift its share of clean energy generation capacity to 70% by 2030 from 52% in 2022 by building new solar plants, wind farms and hydro projects.

---

RCEP Monitor

---

AUSTRALIA
Consumer price rises slows in October 2023, raising chances of end to rate-hiking cycle
(29 November 2023) Consumer price indicators in Australia rose by 4.9% year-on-year in October 2023, which was lower than economists’ estimates of a 5.2% rise and ending a two-months streak of acceleration prior. This has bolstered the case for the Reserve Bank of Australia (RBA) to resume pausing interest rate hikes next week. The case rate currently stands at 4.35%, a 12-year high. Swaps are pricing about a 50% chance of a hike by the RBA in 2024, down from about 70% beforehand. When excluding volatile items, annual inflation eased to 5.1%  in October from 5.5%.

SOUTH KOREA
Ban on short selling of stocks seen as populist move ahead of elections
(27 November 2023) South Korea’s ban on the short selling of stocks in November 2023 is seen by analysts as a populist move ahead of national legislative elections in 2024. On 05 November, 2023, the Financial Services Commission (FSC) announced that there would be a prohibition on short-selling in Seoul stock markets — except for market makers and liquidity providers — from the next day until the end of June 2024. The ban will thus be in effect for almost eight months. The move has been welcomed by South Korea’s retail investors, who complain short selling benefits institutional investors. The surprise move by the FSC saw the benchmark Korea Composite Stock Price Index (KOSPI) stock market increase 5.4% in the three weeks since the ban. Analysts see the ban as a populist move by the ruling People Power Party to appease retail investors, who are a powerful voting bloc.

JAPAN
Finance Ministry to assumed interest rate paid on bonds for first time in 17 years
(29 November 2023) The Japanese government will raise the assumed interest rate paid on bonds in the government’s annual budget proposal for the first time in 17 years in fiscal 2024. This reflects recent moves by the Bank of Japan to allow long-term yields to rise, as the central bank seeks to exit its super-accomodative stance. Japan’s Finance Ministry sets rate assumptions based on actual bond yields, with a certain additional margin. The change will be reflected in the fiscal 2024 draft budget to be finalized in late December 2023. The rate for fiscal 2024 has been set at 1.5% at the preliminary spending request stage, based on the actual coupon rate of 0.4%, with 1.1 point of leeway in case of a surge in yields. In fiscal 2023, the assumed rate was raised to 1.3% at the request stage, but was ultimately left at 1.1%, where it has stayed for the past seven years. The assumed interest rate was last raised in fiscal 2007, when it was lifted by 0.3% to 2.3%, after which it was left unchanged or lowered every year since.