CARI Captures Issue 634: Sweden announces new trade and investment strategy for Southeast Asia

ASEAN, SWEDEN
Sweden announces new trade and investment strategy for Southeast Asia
(06 December 2023) Sweden has announced a new trade and investment strategy for Southeast Asia as part of its larger plan to deepen cooperation with like-minded partners. According to Sweden’s Minister for International Development Cooperation and Foreign Trade Johan Forssell, there will be a particular focus on digitalization and green transition. Forssell was in Singapore on 05 December, 2023 to attend the Sweden Indo-Pacific Business Summit, where he led a business delegation of 51 Swedish companies keen to expand their regional footprint. Said companies included fashion giant H&M Group, tech firm Ericsson, carmaker Volvo, and medical tech company Getinge. Singapore, for their part, noted that they were keen to collaborate with Sweden to develop sustainability-related capabilities in Singapore and widen the range of sustainable finance solutions for the Asian market.

MALAYSIA
Malaysia targeting tourist arrivals to surpass pre-pandemic levels in 2024
(06 December 2023) Malaysian authorities are targeting tourist arrivals to the country in 2024 to surpass pre-pandemic levels in 2024. According to Tourism Malaysia Deputy Director General (Promotion), tourism arrivals in 2024 should surpass the 26.1 million foreign visitors seen in 2019. Malaysia has seen an upswing in the number of visitors in 2023, prompting authorities to revise its 2023 year-end tourism target to 19.1 million arrivals from 16.1 million. These targets do not take into account day-visitors who usually enter the country by Malaysia’s land borders. The tourism industry contributed 14% to the country’s GDP in 2022, making it one of the largest contributors to the economy.

MALAYSIA
Malaysia attracts US$48 billion in approved investments in the January to September 2023 period
(06 December 2023) According to the Malaysian Investment Development Authority (MIDA), Malaysia attracted some US$48 billion in approved investments in the January to September 2023 period, exceeding its full-year target. The services sector dominated investment inflow, bringing in about 52%, or US$25.06 billion, of approved investments, while the manufacturing sector brought in 44%, or US$21.38 billion, of approved investments. MIDA noted that 3,949 investment projects pushed up the value of investments by 6.6% year-on-year. These investments are expected to unlock 89,495 new job opportunities. Foreign direct investment (FDI) constituted 55.9% of the total approved investments, while domestic direct investments (DDI) contributed 44.1%.

MALAYSIA, TIMOR-LESTE
Malaysia and Timor-Leste looking to establish direct flights to promote tourism and cultural exchange
(05 December 2023) Malaysia and Timor-Leste are looking to establish direct flights connecting the major destinations of both countries to promote tourism and cultural exchange. There are currently no direct flights between Kuala Lumpur and Dili. Connecting flights were among the issues discussed between Malaysia’s Minister of Tourism, Arts and Culture and Timor-Leste’s Vice-Prime Minister during a meeting held in Malaysia on 04 December, 2023. Other issues discussed included Muslim-friendly tourism. Malaysia is also seeking to support Timor-Leste in capacity-building and technical assistance programs, including in cultural heritage management.

INDONESIA
TikTok nears deal to invest into Indonesian e-commerce platform Tokopedia
(05 December 2023) Chinese social media platform TikTok is reportedly nearing a deal to invest in Indonesian e-commerce platform Tokopedia in a bid to resuscitate its e-commerce business in its largest market after having previously been banned by authorities. Tokopedia is the e-commerce unit of Jakarta-listed GoTo, which operates in multiple other industries including ride-hailing, food delivery, and financial services operations. The deal could be completed as early as December 2023. TikTok’s e-commerce platform TikTok Shop first started operations in Indonesia in 2021, before the Indonesian government banned transactions on social media platforms on 27 September, 2023 to ensure “fair and just” competition as well as to protect user data. Before the ban, TikTok had hoped to generate about US$6 billion in gross merchandise value in Indonesia.

THE PHILIPPINES
Bangko Sentral ng Pilipinas to either pause or hike rates at next meeting
(06 December 2023) The governor of the Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP), stated that the bank could either pause or hike rates at its next meeting on 14 December, 2023. The BSP kept rates steady at 6.5% at its last meeting in November after an off-cycle 25-basis point hike on 26 October. Even though inflation rose at its slowest pace in 20 months in November at 4.1%, the central bank stated that there was a need to keep monetary policy “sufficiently tight until a sustained downtrend” was evident. The BSP projects that inflation could return to its target range of 2% to 4% by December, and remain below 3% in the early part of 2024.

THAILAND, JAPAN
Japan’s fisheries industry finds strong demand in Thailand
(03 December 2023) Japan’s fisheries industry is benefitting from strong demand in Thailand, with Thai consumers preferring Japanese fish due to its high quality and freshness. Japanese marine product exports to Thailand amounted to US$158 million in 2022, up 14.6% year-on-year. The value of Japan’s marine products exports to Thailand represented 27% of Japan’s exports to China. Southeast Asia as a whole has factors that are expected to increase regional demand for Japanese fresh fish exports, including the region’s growing consumer purchasing power and the increasingly diverse desires that go with economic development, as well as improved infrastructure that supports [cold chain] transportation.

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AUSTRALIA
Australia’s economy expands by 0.2% quarter-on-quarter in third quarter of 2023
(06 December 2023) Australia’s economy expanded by 0.2% quarter-on-quarter in the third quarter of 2023. While this marked the eighth straight quarter of growth for Australia, it was its slowest in a year. This slowdown is attributed to flagging exports and household consumption. Annual growth stood at 2.1%, little changed from the previous quarter. Household disposable income has seen a sharp decline due to high inflation, higher interest rates, and additional tax obligations. Household spending has been effectively flat for four quarters in a row. These recent figures have bolstered the case for the Reserve Bank of Australia to pause rate hikes for now.

CHINA
Moody’s cuts outlook on China’s sovereign credit rating to negative
(05 December 2023) Rating agency Moody’s Investors Service has slashed its outlook on China’s sovereign credit rating to negative, citing growing risks of persistently lower midterm economic growth as well as the country’s ongoing property crisis. Moody’s noted there was evidence that authorities and state companies would provide financial support to weak regions, thereby “posing broad downside risks to China’s fiscal, economic and institutional strength”. Moody’s affirmed its A1 long-term local and foreign-currency issuer rating for China. The rating agency had downgraded its credit rating for the country from Aa3 to A1 in 2017 due to concerns that efforts to support growth would spur rising debt in the economy. It predicts that China’s economy will expand by 4% in 2024 and 2025.

CHINA, ITALY
Italy informs China it is leaving the Belt and Road Initiative
(06 December 2023) The Italian government has informed China that it will be leaving the Belt and Road Initiative (BRI), claiming it has brought no immediate economic benefits to the country. In 2019, Italy became the first and only major Western country to join the BRI. With the 2019 accord expiring in March 2024, the Italian government has reportedly sent a letter to China informing the latter it will not be renewing the pact. While the Italian government had hoped membership of the BRI would bring trade benefits for Italy, Chinese firms seemed to be the main beneficiaries. According to Italian data, Italian exports rose to US$17.7 billion in 2022 from US$14.00 billion in 2019. During the same period, Chinese exports to Italy rose to US$61.90 billion from US$34.12 billion.