CARI Captures Issue 635: Taiwanese startups eye ASEAN markets due to China risks
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.
ASEAN, TAIWAN
Taiwanese startups eye ASEAN markets due to China risks
(12 December 2023) Technology startups in Taiwan are increasingly eyeing ASEAN markets for further expansion as the prospects of stability for doing business in China wanes. According to Taiwan’s Ministry of Economic Affairs, Taiwanese companies invested more in Southeast Asia and South Asia than in China for the first time in 2022, with total investments into the region reaching US$5.2 billion. In comparison, a total of US$5 billion was invested into China. In November 2023, a delegation of close to 30 Taiwanese startups met in Singapore seeking regional partnerships. This delegation was led by Taiwan’s deputy minister of National Development Council, an agency overseeing efforts to help the island’s startups access global markets. This would be the first time that the council led a business expedition to Singapore for Taiwanese startups.
INDONESIA
TikTok announces US$1.5 billion investment into GoTo to restart e-commerce business in Indonesia
(11 December 2023) Chinese short video app TikTok announced a US$1.5 billion investment into GoTo in a deal that would allow it to restart its e-commerce business in Indonesia. Under the terms of the deal, TikTok’s e-commerce platform TikTok Shop will be merged with GoTo’s e-commerce platform Tokopedia, with TikTok having a controlling stake in the entity. The strategic partnership will begin with a pilot period carried out in close consultation with and supervision by the relevant regulators. The deal is expected to be closed in 2024. TikTok Shop was forced to close in October 2023 after Indonesian authorities banned direct sales on social media to protect millions of small businesses.
MALAYSIA
Chief of state pension fund appointed as second finance minister
(12 December 2023) Malaysian Prime Minister Anwar Ibrahim made significant changes to his cabinet on 12 December, 2023 amidst dropping approval ratings. Among the new figures in the cabinet included Amir Hamzah Azizan, the CEO of the state pension fund Employees’ Provident Fund (EPF), who was appointed to the position of second finance minister. The selection of the EPF CEO was in response to public perceptions that the finance ministry had been neglected due to Anwar’s other responsibilities as prime minister. Former defense minister Mohamad Hasan was moved to the foreign ministry, while deputy prime minister Fadillah Yusof was moved to the newly-created energy transition and public utilities portfolio from the commodities ministry. Popular lawmaker Dzulkefly Ahmad, meanwhile, returns to the post of health minister. Anwar’s approval ratings have dropped amidst an economic slowdown and rising consumer costs.
MYANMAR
Myanmar’s economy expected to grow just 1% over the year to March 2024 amidst border disruptions
(12 December 2023) According to the World Bank, Myanmar’s economy is expected to grow just 1% over the year to March 2024 amidst border disruptions caused by anti-junta resistance elements. GDP growth is expected to remain stagnant at about 2% next fiscal year. The ongoing fighting has disrupted Myanmar’s trade with its neighbors across land borders, which accounted for 40% of its exports and 21% of its imports in the six months to September 2023. The volatility of the kyat, persistent power disruptions and high inflation is also expected to hammer households and businesses. Inflation is set to remain at around 20% until March 2024.
THE PHILIPPINES
International tourist arrivals in 2023 breach 5 million mark
(12 December 2023) According to the Department of Tourism, international tourist arrivals to the Philippines in 2023 breached the 5 million mark, logging in at 5,067,752 as of 12 December, 2023. Authorities had set a target for 2023 of 4.8 million arrivals. Due to these developments, tourism contributed nearly US$7.85 billion to the Philippines’ economy this year. In 2022, 2.6 million foreign tourists had visited the country. The Philippines’ recovery from the COVID-19 pandemic from January to November 2023 in terms of international tourist arrivals was measured at 65%. This is compared to the 62% recovery found among many other nations in the Asia-Pacific.
VIET NAM
Viet Nam to see 32% growth in coffee consumption through 2027
(10 December 2023) According to Euromonitor Asia, Viet Nam is expected to see 32% growth in coffee consumption through 2027. Alongside India, Viet Nam will lead coffee consumption in the Asia region through the coming years. The Philippines and Indonesia are also expected to see significant growth in coffee consumption. While Viet Nam is already the world’s largest exporter of robusta, Vietnamese coffee has also become a cultural export, with the country having popularized its distinctive drip filters and ca phe sua da (iced milk coffee) around the globe. In making their projections, Euromonitor Asia observed that coffee drinking is correlated with discretionary income and urbanization.
LAO PDR
ADB approves US$32 million financing package to help Lao PDR strengthen climate change response
(12 December 2023) On 12 December, 2023, the Asian Development Bank (ADB) approved a US$32 million financing package to help Lao PDR strengthen its response to climate change as well as to help improve the livelihoods of agricultural communities in Vientiane and the central provinces of Bolikhamxai and Khammouan. Dubbed the Flood and Drought Mitigation and Management Sector Project, the package will aid Lao PDR in its efforts to reduce financial and economic losses from floods and droughts as well as enhance dietary diversity. Lao PDR is highly vulnerable to extreme weather events including floods and droughts, which is estimated to reduce the country’s GDP by up to 2% annually.
RCEP Monitor
JAPAN
Wholesale inflation eases to 0.3% yeah-on-year in November 2023
(12 December 2023) Wholesale inflation in Japan eased to 0.3% year-on-year in November 2023, following a 0.9% gain in October. This comprised the 11th straight month of slowdown since December 2022, when wholesale inflation hit 10.6%. While the slowdown was attributed partly to the base effect of last year’s sharp rise in raw material costs, analysts expect wholesale prices to start falling from December onwards due to slumping oil prices and the yen’s recent appreciation. This latest data underscored the Bank of Japan’s view that commodity-driven inflation will gradually dissipate, with the focus to shift towards whether domestic demand will be strong enough for the central bank to start normalizing its ultra-loose monetary policy.
JAPAN
Government plans to issue US$24.7 billion package to help stem falling birthrates
(12 December 2023) The Japanese government plans to issue a package of different measures to help stem falling birthrates by year-end, which will call for annual outlays of US$24.7 billion. Dubbed the Children’s Future Strategy Policy, the package contains an expansion of child allowances, free university education for families with three or more children, and regulatory changes to improve day care services. The expansion of child allowances will include the elimination of income restrictions, the extension of the benefit period to high school-age children; and the doubling of the monthly payment to US$306 for third and subsequent children. Meanwhile, for households with three or more children, tuition and enrollment fees for universities, junior colleges and technical colleges will be made “free of charge” without income restrictions from fiscal 2025 onwards.
SOUTH KOREA
South Korea unveils US$29 billion financial package to aid EV battery makers diversify supply chains
(13 December 2023) South Korea unveiled a US$29 billion financial package over the next five years aimed at helping local electric vehicle (EV) battery makers diversify their supply chains. This comes as the US calls for a reduced reliance on China, which is the world’s biggest EV and battery maker. The financial aid will take the form of loans, credit guarantees, lower borrowing rates, and insurance premiums for investment in manufacturing facilities in North America, where South Korean EV battery manufacturers can benefit from tax breaks from the Biden administration’s Inflation Reduction Act. The Korean government also aims to set up a fund to help firms secure minerals and expand their production overseas.