CARI Captures Issue 636: ASEAN and Japan agree to deepen economic and security cooperation

ASEAN, JAPAN
ASEAN and Japan agree to deepen cooperation regarding economic and security issues
(17 December 2023) On 17 December, 2023, ASEAN and Japan agreed to deepen cooperation regarding security and economic issues at a summit in Tokyo commemorating 50 years of friendship and cooperation. In a ‘joint vision statement’ issued after the gathering, the leaders pledged to enhance cooperation in areas as varied as maritime security, supply chains, sustainable energy practices, and people-to-people exchanges. The leaders also launched a new initiative for the next-generation auto industry aimed at mapping out strategies to enable ASEAN members to remain a major hub of auto production and exports. Other efforts to boost the economy included supporting digital startups as well as accelerating public and private investment to achieve decarbonization.

THAILAND
Cabinet approves debt suspension for smaller businesses and support for retail debtors
(19 December 2023) In order to address the country’s ongoing debt issues, Thailand’s cabinet has approved debt suspension for smaller businesses as well as support for retail debtors. The programme is aimed at helping the 10.3 million Thais believed to be struggling to service their debts. At the end of the second quarter of 2023, household debt stood at 90.7%. The government also aims to maintain diesel prices at about US$0.86 per litre and electricity bills at up to US$0.12 per unit to help lower energy costs. The diesel price cap would be maintained for three months and supported by tax measures and the national oil fund. While new electricity bills will be decided in January 2024, vulnerable groups will be offered the current rate of US$0.11 per unit. Government subsidies have helped keep inflation low, with headline inflation measuring at -0.44% in November 2023, the lowest in nearly three years.

MALAYSIA
Malaysia sees 2.4% year-on-year decline in overall trade in November 2023
(19 December 2023) According to Malaysia’s Ministry of Investment, Trade and Industry (Miti), Malaysia recorded a 2.4% year-on-year decline in trade growth to US$49.51 billion in November 2023. Exports dropped by 5.9% year-on-year to US$26.08 billion, while imports grew by 1.7% year-on-year to US$23.43 billion. Malaysia’s trade surplus for the month measured at US$2.65, which is the lowest surplus recorded since May 2020. Shipments of Malaysian manufactured goods saw a contraction of 6.7% year-on-year, while exports of mining goods saw growth of 0.5% year-on-year. Shipments of agricultural goods meanwhile saw a contraction of 5.5% year-on-year.

MALAYSIA, JAPAN
Malaysia attracts potential investments worth US$1.40 billion
(19 December 2023) Malaysia has managed to attract some US$1.40 billion worth of potential investments from Japan during Prime Minister Anwar Ibrahim’s visit to Japan. Anwar noted that the Malaysia-Japan relationship is seeing a new shift in terms of investment, trade, education and technology cooperation. Anwar noted that the potential investments could be in the form of new investments or expansion of existing investments, and involves a wide range of sectors including renewable energy, electrical and electronics, chemicals and digital economy.

CAMBODIA, JAPAN
Number of users of Cambodian digital currency Bakong reaches 10 million
(19 December 2023) According to the National Bank of Cambodia (NBC), the number of users for Cambodia’s digital currency Bakong has reached 10 million. This indicates that some 60% of Cambodia’s population is likely able to use Bakong to make payments or transfer money. The NBC jointly developed Bakong in cooperation with Soramitsu, a Tokyo-based blockchain technology startup. The digital currency first went into circulation in October 2020. Bakong has been described as the world’s first central bank digital currency, and enables anyone to make monetary transactions with a smartphone. As for taking Bakong digital transactions to other countries, the NBC has already launched cross-border payment connectivity with Thailand, Lao PDR and Viet Nam.

THE PHILIPPINES
Philippines’ central bank decides to maintain inflation target range of 2% to 4% through 2026
(21 December 2023) On 21 December, the Philippines’ central bank stated it would maintain its inflation target range of 2% to 4% through 2026, and reiterated its readiness to tweak monetary policy to achieve targets. According to the central bank, the inflation target range remained an ‘appropriate representation of the medium-term goal for price stability’. The central bank noted that its current higher-for-longer policy stance, coupled with non-monetary measures by the government, is ultimately aimed at a sustained return of inflation to the medium-term target and to keep inflation expectations anchored. Inflation in the Philippines eased to 4.1% in November 2023.

VIET NAM
Viet Nam to lift regional minimum salary for laborers by 6% in 2024
(21 December 2023) Viet Nam intends to lift its regional minimum salary for laborers by 6% in 2024, with the National Wage Council having granted the green light to the increase and submitting it to the government for approval. If approved, the regional minimum wage increase will take effect on 01 July, 2024. The regional minimum salary for workers in Region I, which includes urban areas of Hanoi and Ho Chi Minh City, is set to rise to US$204 a month, while that of Region II, which includes rural areas of the two cities along with major urban areas in the country like Can Tho, Danang and Hai Phong, is set to increase to US$181. Meanwhile, the minimum salary for workers in Region III, which includes the cities and districts of northern Bac Ninh, Bac Giang and Hai Duong provinces, is poised to climb up to US$158. Meanwhile, in Region IV, which comprises the rest of the country, the minimum salary is poised to rise to US$141.

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CHINA, JAPAN
Chinese electric vehicle maker BYD seeking to crack Japanese market
(18 December 2023) China’s top electric vehicle (EV) maker BYD is seeking to crack the Japanese market, seeing it as a gateway to global markets. BYD first entered the Japanese market in January 2023, and has set a goal of selling 30,000 EVs annually in Japan by 2025. Japan is the world’s fourth-largest auto market, with Japanese automakers holding a market share surpassing 90%. BYD sold 2.08 million vehicles globally during the first three quarters of 2023, raising global sales volume 75% year-on-year. In the third quarter of 2023, BYD was roughly 3,400 units shy of beating world EV leader Tesla. BYD intends to build a web of dealerships in Japan in order to reach out to Japanese consumers.

JAPAN
Japanese exports contract by 0.2% to US$61 billion in November 2023
(20 December 2023) Japanese exports contracted by 0.2% year-on-year to US$61 billion in November 2023, the first contraction in three months. Imports meanwhile fell by 11.9%, resulting in an overall trade deficit of US$5.42 billion. While automobile exports increased by 16.3%, those of steel dropped 11.6%, while chip manufacturing equipment shipments dropped by 10.6%. While exports to the EU fell for the first time in 33 months at 0.03%, exports to the U.S. grew by 5.3% for a 26th consecutive month of expansion. Meanwhile, China-bound exports fell 2.2%, the 12th straight month of decline.

NEW ZEALAND
Government predicts smaller budget deficit for fiscal year ending 30 June, 2024
(20 December 2023) New Zealand’s new centre-right government projected a smaller budget deficit at its half-yearly economic update. The government forecast a budget deficit of US$5.84 billion for the fiscal year ending 30 June, 2024, smaller than the deficit of US$7.11 billion forecasted in the update released ahead of the election. It continues to expect a return to a US$87.46 million surplus by 2026/27. While net debt under the old calculations was forecast to peak at 43.5% of GDP in 2023/24, these forecasts were finalized on 24 November, 2023 ahead of the formation of the new government, and did not take into account new policies or the surprisingly weak GDP data released last week. The new government’s proposed spending cuts are expected to be broadly neutral in terms to the overall fiscal outlook once combined with other signaled commitments.