CARI Captures Issue 643: Viet Nam pushes US to change its ‘non-market economy’ classification

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.

Viet Nam pushes US to change its ‘non-market economy’ classification
(05 February 2024) Viet Nam is pushing the US to change its ‘non-market economy’ classification before the US presidential elections in November 2024. The US continues to classify Viet Nam as a non-market economy, defined as a country in which the state has either a monopoly or near-monopoly on trade. The classification primarily impacts the response to allegations of ‘dumping’. The US uses different criteria to assess dumping in market and non-market economies, with the latter more liable to pay significantly higher anti-dumping duties. On 24 October, 2023, the US Commerce Department announced it would review Vietnam’s non-market economy classification. A decision that must be made within 270 days, meaning around mid-July 2024.

Government to ‘urgently’ move bill to ban the recreational use of cannabis
(06 February 2024) The Thai government is seeking to ‘urgently’ move a Bill that would ban the recreational use of cannabis. Thailand had previously decriminalized the drug in June 2022 under the previous government, which included the pro-decriminalization Bhumjaithai party. The move would prompt hundreds of cannabis dispensaries to sprout around the country, particularly in Bangkok. Critics have called for tighter legislation. Thailand’s health minister said the new Bill – which bans the recreational use of cannabis – will be proposed at the Cabinet meeting next week. The new Bill would be an amendment to the existing one, and will only allow the usage of cannabis for health and medicinal purposes.

Thai SEC announce new criteria for marking troubled stocks on Bangkok bourse
(06 February 2024) On 06 February, 2024, the Thai Securities and Exchange Commission (SEC) announced new criteria for marking financially distressed companies listed on the Bangkok bourse from April 2024 onwards. As part of the new rules, the “C” or caution sign will apply to companies that have reported net losses for three consecutive years or annual revenue below THB 100 million (US$2.8 million), defaulted on loans or bonds, or submitted financial statements with a “no comment” from an auditor. As well, companies with a free-float ratio below the minimum requirement will be marked with “CF,” while those with inadequate audit committee members will receive a “CC.” The new measures come amidst calls for Thailand to raise the standard of listed companies and prevent corporate scandals that contributed to the SET index falling 15.2% in 2023, becoming Asia’s worst-performing market.

Inflation rate eases to 2.8% year-on-year in January 2024
(06 February 2024) According to the Philippine Statistics Authority (PSA), the inflation rate in the Philippines eased to 2.8% year-on-year in January 2024 from 3.9% in December 2023. According to the PSA, the inflation rate in January was the lowest since the 2.3% inflation rate recorded in October 2020. In January 2023, the inflation rate was recorded at 8.7%. The downtrend in the overall inflation in January was primarily attributed to a slower annual increment of food and non-alcoholic beverages prices at 3.5% in January from 5.4% in December. Core inflation, which excludes select food and energy prices, decreased to 3.8% in January from 4.4% in December.

Singaporean banks’ profits set to peak in fourth quarter of 2023 due to coming rate cuts
(6 February 2024) Singaporean banks’ profits are expected to peak in the fourth quarter of 2023 due to central banks around the world pivoting towards rate cuts. Analysts have argued that the earnings momentum for Singaporean banks has peaked, with the tailwinds enjoyed by rising interest rates in 2023 unlikely to be sustained in 2024. Besides higher global rates, Singapore banks have also benefited from strong inflows of wealth over the last few years. Singaporean banks are also expected to see sharper scrutiny of their wealth management businesses in 2024 in response to an SGD 2.2-billion money laundering scandal that hit Singapore last year.

Malaysia’s benchmark stock index ends higher after volatile session
(06 February 2024) On 06 February, 2024, Malaysia’s benchmark stock index, the FBM KLCI, recovered from a volatile trading session to end on a slightly positive note as investors weighed larger developments in the global economy. The day’s trading volume totaled 3.09 billion shares valued at MYR 2.17 billion (US$455 million). Malaysia’s stock market was helped along by bullish sentiments concerning China’s economy, in particular news that Beijing will ramp up support. Among Malaysia’s blue chip stocks, Nestle rose for a sixth consecutive session by RM1.30 (US$0.27) to RM121.30 (US$25.45) as the food & beverage giant is expected to benefit from the seasonal festivities.

Indonesian economy expands 5.05% in 2023, lower than 2022’s 5.31%
(06 February 2024) According to Statistics Indonesia (BPS), Indonesia’s economy expanded by 5.05% year-on-year in 2023, lower than the 5.31% recorded in 2022. The economy also expanded on a quarterly basis from 4.94% in the third quarter of 2023 to 5.04% in the fourth quarter. The island that saw the largest GDP increase was Kalimantan, the site of the new capital city of Nusantara under construction, followed by Sulawesi and Maluku, which are locations for nickel downstream investments. Maintaining domestic demand was another factor driving growth.

RCEP Monitor

Australia’s central bank keeps interest rates at 12-year high and suggests further tightening possible
(06 February 2024) Australia’s central bank, the Reserve Bank of Australia (RBA), left interest rates at a 12-year high on 07 February, 2024, and suggested that further tightening may be needed. The RBA kept its cash rate at 4.35%, and stated that a further increase in rates cannot be ruled out. The Australian Dollar rose as much as 0.5% to 65.17 US cents, while yields on three-year government bonds were up 2 basis points to 3.70%. Compared to many of its global peers, the RBA retains a mild tightening bias. The RBA also predicts that core inflation will only hit the midpoint of its 2% to 3% target band in 2026.

Toyota to boost spending on EV production in the US by US$1.3 billion
(07 February 2024) Toyota is boosting investment at a factory in the state of Kentucky in the US by US$1.3 billion. The Japanese automaker announced that the added spending is earmarked for its first U.S.-made EV and other unspecified battery-powered models, and includes money for a battery pack assembly line at the factory. The added investment brings total outlays at the Georgetown, Kentucky, factory to nearly US$10 billion since 1986. The Kentucky location is Toyota’s oldest vehicle assembly plant in the U.S. Toyota has taken a more cautious approach towards introducing fully electric vehicles than peers such as Volkswagen and General Motors.

Australia to propose setting up international standards for ethical and environmentally friendly mining
(07 February 2024) The Australian government has proposed setting up international standards for ethical and environmentally friendly mining in an attempt to command higher prices for its minerals. Australia’s Minister of Resources stated that she will propose the idea at the PDAC 2024 Convention, a mineral industry trade event, in Canada in March 2024. She also noted that Australia intends to cooperate with ‘like-minded nations’ including Canada, which already has high working standards and environmental standards. This comes amidst the falling global prices of metals such as nickel and lithium, which has negatively impacted the Australian minerals industry. The slump follows an EV market slowdown alongside oversupply from countries like Indonesia. An international standard on ethics and the environment could help strengthen the competitiveness of Australia’s minerals, which are relatively expensive compared to other countries.

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