CARI Captures Issue 653: Food service industry in Southeast Asia sees shift towards food delivery services

ASEAN
Food service industry in Southeast Asia sees shift towards food delivery services
(19 April 2024) Across Southeast Asia, the food service industry has seen a significant shift towards food delivery services, with in-house restaurant dining declining to 60% of the food service industry in Asia from 76% in 2019. Delivery apps like Grab and Shopee have played a major role in filling the gap. Euromonitor data shows that the delivery market has grown from 8% of the food service industry in 2018 to 21% in 2023, with a forecasted increase to 23% by 2028. While dining at eateries may increase to 67% by 2028, it might not return to pre-COVID-19 levels for at least five years. The convenience and speed of delivery services are driving this trend. However, the surge in deliveries has led to concerns about plastic waste, prompting calls for companies to reduce packaging. Despite the popularity of delivery, fierce competition has made it challenging for delivery apps to turn a profit. Overall, the food industry in Asia is expected to return to pre-COVID-19 levels in revenue, reaching US$1.3 trillion in revenue in 2024.

INDONESIA
Indonesia’s central bank hikes interest rates to 6.25% amidst slumping rupiah
(24 April 2024) Indonesia’s central bank has raised its benchmark interest rate by 25 basis points to 6.25% in an effort to bolster the weakening rupiah amidst escalating global risks. Bank Indonesia Governor Perry Warjiyo emphasized the pre-emptive nature of the rate hike to maintain inflation within the target range of 1.5% to 3.5% for 2024 and 2025. The rupiah, near a four-year low at around 16,000 per dollar, faces pressure from the dollar’s strength and speculation surrounding when the US Federal Reserve will cut interest rates. Warjiyo anticipates the rate increase will stabilise the rupiah at 16,200 in the second quarter, strengthening to 16,000 in the third quarter and further to 15,800 in the fourth quarter. Following the announcement, the rupiah gained ground, reaching 16,140 against the dollar.

MALAYSIA
Malaysia introduces new incentive schemes to attract startups and venture capital firms
(22 April 2024) Malaysia has introduced new incentive schemes, namely the Unicorn Golden Pass and the VC Golden Pass, aimed at attracting leading startups and venture capital firms to the country. Economy Minister Rafizi Ramli outlined these initiatives during the KL20 Summit startup event in Kuala Lumpur. The Unicorn Golden Pass offers benefits such as waived fees for employment passes, subsidized rental, and preferential tax rates to entice global and regional startups. The VC Golden Pass, on the other hand, targets venture capital firms with assets over US$100 million and offers perks like waived work visa fees and expedited license approval. Prime Minister Anwar Ibrahim highlighted the significance of startups in driving technological progress and announced plans to position Malaysia as a hub for semiconductor, clean energy, agritech, and Islamic fintech industries.

MALAYSIA, THE PHILIPPINES
Malaysia’s ZUS Coffee targeting 150 stores in the Philippines by end-2024
(22 April 2024) ZUS Coffee from Malaysia is expanding its presence in the Philippines, aiming to achieve 150 stores in the country by the end of 2024. Since its debut in Quezon City in September 2023, ZUS Coffee has grown to operate 12 outlets in the Philippines, its sole international market. The coffee chain prioritizes app-based pre-ordering and is part of a rising trend of value-focused operators in the Filipino branded coffee shop market. ZUS Coffee’s pricing strategy positions espressos and americanos at US$0.78 and US$1.13 respectively, with premium beverages like Spanish latte and gula melaka priced around US$1.65. Compared to competitors like Pickup Coffee, But First, Coffee, and Paik’s Coffee, ZUS Coffee offers competitive pricing within the market. Established in 2019, ZUS Coffee now operates 402 stores across Malaysia. In March 2023, Filipino restaurant group Choi Garden Restaurant Company acquired a 35% stake in the chain.

MALAYSIA
Malaysia’s consumer inflation stands at 1.8% year-on-year in March 2024
(25 April 2024) In March 2024, Malaysia’s consumer inflation stood at 1.8% year-on-year, unchanged from February’s figure. Prices for housing, water, electricity, gas, and other fuels saw a 3% increase, as did restaurant and accommodation services, while personal care, social protection, and miscellaneous goods and services rose by 2.6%. However, this was offset by slower increases in health (2.1%), food and beverage (1.7%), and recreation, sport, and culture (1.5%). Core inflation, excluding volatile items, stood at 1.7%. The official forecast for 2024 projects headline inflation between 2% and 3.5%, and core inflation between 2% and 3%. On a state-by-state basis, most states recorded inflation lower than the national level, except for Penang, Sarawak, Pahang, Selangor, and Perlis.

SINGAPORE
Joint venture between Temasek and BlackRock raises US$1.4 billion for climate-focused venture capital fund
(25 April 2024) The joint venture between Singapore’s sovereign wealth fund Temasek Holdings and global asset manager BlackRock has successfully raised US$1.4 billion for its inaugural climate-focused venture capital fund, dedicated to investing in firms with technologies aimed at reducing carbon emissions. Over 30 institutional investors, along with commitments from BlackRock and Temasek, contributed to the fund’s final closing, surpassing its initial US$1 billion target. Temasek has pledged to halve the net carbon emissions of its portfolio by 2030 and reach net zero by 2050, demonstrating its commitment to decarbonization efforts. The partnership, called Decarbonization Partners, has already invested in seven companies specializing in decarbonization technologies such as clean hydrogen and electric vehicle fleet management.

VIET NAM
Viet Nam’s central bank sells dollars in market to prop up falling dong
(22 April 2024) Viet Nam’s central bank has confirmed its intervention in the foreign exchange market by selling dollars to certain banks, as the country’s currency, the dong, reached a record low of 25,463 per dollar. The State Bank of Vietnam disclosed that the intervention price was set at 25,450 dong per dollar. Factors contributing to the dong’s decline include the escalating conflict in the Middle East and speculations about the Federal Reserve potentially postponing interest-rate cuts, bolstering the dollar and adversely affecting emerging-market currencies worldwide. This move aligns Viet Nam with other Asian countries such as South Korea and Indonesia, which are also taking measures to counter the strength of the US dollar. This intervention comes amidst a week where the daily dollar-dong reference rate has increased by 0.7%, marking the most significant rise since 2015.

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AUSTRALIA, ASEAN
Australia’s diplomacy with ASEAN seen shift towards engaging with individual countries
(21 April 2024) Australia is seeking to enhance economic ties with ASEAN, as highlighted in a recently-published 200-page report by the Australian government titled “Invested: Australia’s Southeast Asia Economic Strategy to 2040”. Southeast Asia presents significant economic opportunities for Australia, with high projected GDP growth and a significant consumer market. However, Australia’s investment in the region remains relatively low compared to total global inflows. However, Australia’s economic diplomacy is shifting towards engaging with Southeast Asian countries individually rather than as a bloc, as evident in recent diplomatic initiatives.This shift signifies a major change in approach, moving away from prioritizing relations with ASEAN as a collective entity.

JAPAN
Next 30 years could see outflow of funds from rural areas to major banks based in cities
(20 April 2024) Major Japanese banks are vying for an estimated US$377 billion in inherited bank deposits that are expected to move out of regional lenders based mainly in rural areas over the next 30 years. As interest rates rise, large money center banks are eager to expand their deposit bases. Many small regional lenders are worried about the future outflow of funds, as many of their depositors living in rural areas are elderly and their savings could go elsewhere after their money is passed on to their children living mainly in cities. According to estimates by Sumitomo Mitsui Trust Bank, US$377 billion of inherited financial assets will shift to Tokyo and the neighboring prefectures of Kanagawa, Chiba and Saitama from elsewhere in the country over the next 30 years. As well, more than 30% of household assets in 17 prefectures, including Nara, Akita and Ehime, could leave those prefectures.

CHINA
China’s premier auto show, Auto China, returns after four-year hiatus
(25 April 2024) Beijing’s Auto China exhibition has returned after a four-year hiatus, showcasing the strides made by Chinese automakers in the electrification of the world’s largest car market and their expanding global presence. The event, featuring about 1,500 companies including BYD, Chery, and SAIC Motors, will unveil 117 new models and 41 concept cars. Amid domestic challenges such as sluggish consumption and intense competition, Chinese automakers are increasingly exporting vehicles and establishing overseas production facilities. Notably, Chinese automaker Chery signed an agreement with Ebro-EV Motors to establish a joint venture in Barcelona, marking the first Chinese auto plant in Europe. This move is in response to Spain’s interest in becoming a hub for electric mobility. Additionally, Chery has entered a joint venture in Viet Nam, while SAIC Motors is exploring European production and expansion in India. Chinese automakers are also capitalizing on opportunities in markets like Russia, with Great Wall Motor among the top sellers there.

15 participating countries	20 chapters	2.2 billion	US$26.2 trillion	28%
ASEAN member states, Australia, China, Japan, South Korea, New Zealand	trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement	combined population, 30% world’s population	combined GDP, 30% global GDP	global trade (based on 2019 figures)