CARI Captures Issue 638: Malaysia and Singapore to raise consumption taxes in early 2024

ASEAN
Malaysia and Singapore to raise consumption taxes in early 2024
(28 December 2023) Singapore and Malaysia plan to raise their consumption taxes in early 2024 to broaden their financial base in order to support their aging populations as well as return to fiscal sustainability. Singapore will be raising its goods and services tax (GST) from 8% to 9% on 01 January, 2024, the second of a two-tier increase with the first having occured in January 2023. The tax increase highlights Singapore’s desire to shore up its revenue base in the face of climbing health care costs due to the country’s ageing population. In Singapore’s 2023 budget, the country’s total spending on health care tripled to US$12 billion compared with 10 years earlier. In Malaysia, the government plans to raise its sales and services tax (SST) by two percentage points to 8% in March 2024, excluding essential expenses like food, beverages and telecommunications.

THE PHILIPPINES
International tourist receipts top pre-pandemic levels
(03 January 2024) International tourism receipts in 2023 have managed to eclipse the level prior to the COVID-19 pandemic. According to data by the Department of Tourism, the Philippines registered an estimated US$8.7 billion in international tourism receipts in 2023, up 124.9% year-on-year. This has exceeded the US$8.65 billion registered in 2019, prior to the pandemic. Authorities are targeting 7.7 million international visitor arrivals in 2024, with the Philippines having logged 5.45 million international visitors in 2023, surpassing the 4.8 million target but representing only 66% of total arrivals in 2019. South Korea and the United States were the main tourist sources in 2023.

INDONESIA
Indonesia eyeing higher and earlier debt issuance to pre-empt tighter finances
(03 January 2024) Indonesia is eyeing higher and earlier debt sales to pre-empt finances possibly tightening this year due to a weaker global economy and softer commodity prices reducing revenue and inflows. The government is seeking to raise US$15.5 billion from bond sales in the first quarter of 2024, higher than actual borrowings a year ago as well as the last quarter of 2023. Indonesia began marketing three tranches of benchmark-sized dollar bonds, joining a flurry of global issuance at the start of 2024. Indonesia has set its budget deficit at 2.3% for 2024, after enjoying some tax windfall in 2023 that shrank the gap to the lowest in more than a decade. This provided room for Indonesia to reduce borrowings, boosting the performance of its sovereign debt.

INDONESIA
Indonesia’s rice harvests for January and February 2024 expected to drop 46.3% year-on-year
(03 January 2024) Indonesia’s rice output for January and February 2024 is expected to drop by 46.3% year-on-year due to the El Nino weather phenomenon impacting the harvests. A prolonged drought driven by El Nino is expected to reduce rice output by 2% in 2023, while planting for 2024’s main harvest season has been delayed. El Nino is expected to remain in early 2024 and gradually dissipate by April. The rice harvest in January is expected to produce 930,000 tons, while the harvest in February is expected to produce 1.32 million tons, against monthly consumption of 2.54 million tons. Indonesia has set a target of producing 32 million tons of rice in 2024, up 3.56% from an estimated 30.9 million in 2023.

VIET NAM
Viet Nam’s economy expands by 5.05% in 2023, missing official growth target
(29 December 2023) According to Viet Nam’s General Statistics Office, Viet Nam’s economy expanded by 5.05% in 2023, missing the official growth target of 6.5%. This was primarily attributed to slowing overseas demand. This year’s growth was also below the average annual growth of 5.87% during the previous decade. Viet Nam’s economy expanded by 6.72% in the fourth quarter of 2023, a slight increase from the 5.47% expansion recorded in the third quarter and 4.25% recorded in the second quarter. Viet Nam’s annual exports fell by 4.4% from 2022 to US$355.5 billion, with shipments of coffee, a key export commodity, down 9.6% year-on-year to 1.6 million metric tons. Retail sales rose 9.6% year-on-year, while foreign tourist arrivals shot up to 12.6 million visitors from 3.6 million in 2022.

THAILAND, CHINA
Thailand and China set to permanently waive visa requirements for each other
(03 January, 2024) Thailand and China will permanently waive visa requirements for each other’s citizens from March 2024 onwards. Thailand had initially waived visas for Chinese nationals in September 2023 in a bid to boost tourist arrivals. More than 22,000 Chinese nationals entered Thailand in the first two days of the waiver. Thai authorities expect some 3.5 million Chinese tourists to have visited Thailand in 2023, which is short of its 4 million target. This is also less than half the nearly 11 million Chinese tourists who visited Thailand in 2019. The Thai government has set a target of 8.2 million Chinese tourists for 2024.

THE PHILIPPINES
Inflation in the Philippines cools to 22-month low in December 2023
(05 January 2024) Consumer prices in the Philippines rose by 3.9% year-on-year in December 2023, a 22-month low. While inflation eased back to within the Bangko Sentral ng Pilipinas’ (BSP) 2% to 4% goal for the first time since March 2022, the 2023 average of 6% missed the inflation target for a third straight year. Rice inflation accelerated for the second straight month to 19.6% year-on-year, the fastest pace since March 2009. In response, the government is mulling further cutting tariffs on rice imports to help cool rice prices. The BSP stated that they have gauged it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident.

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SOUTH KOREA
US$18.8 billion of foreign direct investment flows into South Korea in 2023
(04 January 2024). South Korea drew in a record US$18.8 billion worth of foreign direct investment in 2023, a 3.4% increase year-on-year. The electronics sector alone accounted for US$3 billion of the total, with the rise in investments indicating investors remain bullish about the long-term prospects of South Korea’s technology industries. Semiconductors and rechargeable batteries represent two major pillars of the country’s electronics industry. While global consumer demand for some electronic products remains slow, semiconductors regained strength in late 2023, with the industry shipping 21.8% more year-on-year in December 2023. Exports of rechargeable batteries, used for electric vehicles, slid 1% in December after a brief double-digit expansion in November.

CHINA
China’s BYD overtakes Tesla in electric car sales in last quarter of 2023
(03 January 2024) China’s BYD overtook Telsa in electric car sales in the last quarter of 2023. The company claimed it had sold 526,000 battery-only vehicles in the last quarter, as compared to 484,500 electric vehicles sold by Tesla. This marked the first quarter in which BYD’s battery-only sales have outpaced Tesla’s. However, Tesla sold more electric vehicles for the whole of 2023, delivering 1.8 million. In comparison, BYD sold 1.6 million battery-only vehicles for the whole of 2023, while selling more than 3 million so-called-new energy vehicles (NEVs), which includes both battery-only vehicles and hybrids.

CHINA, EU
China launches anti-dumping investigation into liquor products from the EU
(05 January 2024) China is launching an anti-dumping investigation into liquor products such as brandy from the European Union (EU). Beijing claimed the investigation was instigated by an application from a domestic liquor association, and targets French cognac. It is believed the anti-dumping investigation was launched in retaliation to the EU opening a probe into China’s electric vehicle subsidies. China’s investigations will focus on brandy products that come in smaller than 200 liter containers and hail from the EU. China imported US$1.57 billion worth of spirits from distilled grape wine in 2023 through November. Meanwhile, the country exported about US$12.7 billion worth of electric vehicles to the EU in the same period.