MALAYSIA
Malaysia maintains overnight policy rate at 3%, citing continued economic support  
(05 September 2024) Malaysia’s central bank, Bank Negara Malaysia (BNM), maintained its overnight policy rate at 3%, in line with predictions, citing continued economic support. The central bank is optimistic about growth, inflation, and the ringgit, despite potential risks from weaker external demand and commodity production. BNM forecasts inflation to remain below 3%, although future domestic policy changes could affect this outlook. The ringgit, which has rebounded from a 26-year low, is expected to remain stable due to positive economic prospects and structural reforms. BNM emphasised caution regarding future rate adjustments, despite global trends of easing monetary policy, and signalled no changes to the rate through 2025.

SINGAPORE
Singapore dollar reaches strongest level against US dollar since 2014 
(05 September 2024) The Singapore dollar has reached its strongest level against the US dollar since 2014, driven by Singapore’s monetary policy that focuses on exchange rate management to combat inflation. The Singapore dollar is also nearing record highs against currencies like the Indonesian rupiah and Japanese yen. While businesses in sectors such as logistics, transportation, banking, and insurance are optimistic, others like hotels and restaurants are more concerned, particularly with Singaporeans spending abroad due to favourable exchange rates. The Monetary Authority of Singapore (MAS) maintains the currency within a set range, limiting extreme fluctuations, with the Singapore dollar’s rise being 16 cents from its pandemic low. Currency strength has led to increased transfers into US dollars, with a 364% rise from June to August year-on-year. Exporters face challenges as the strong currency could affect competitiveness. 

INDONESIA
Middle class contracts from 21.4% of population in 2019 to 17.1% in 2024
(06 September 2024) Indonesia’s middle class has contracted from 21.4% of the population in 2019 to 17.1% in 2024, with 9.5 million fewer people in this category, according to the Central Statistics Agency (BPS). The proportion of the aspiring middle class slightly increased to 49.2%, while the vulnerable population rose to 24.2%. Rising interest rates, deindustrialisation, and job losses, particularly during the pandemic, have driven this shift. Economic growth remains strong at over 5%, but inflation, currently at 2.12%, has heavily impacted middle-class spending, particularly on food (41.67%) and housing (28.52%). Economists warn that government policies, such as VAT increases and housing subsidies for the lower classes, may further strain middle-class spending power. Despite this, BPS expects recovery, while the government recognises the middle class’s critical role in driving economic consumption.

THAILAND
Thailand’s Ministry of Foreign Affairs to introduce compulsory Electronic Travel Authorization (ETA) for visa-exempt foreigners
(05 September 2024) Thailand’s Ministry of Foreign Affairs is set to introduce a compulsory Electronic Travel Authorization (ETA) for visa-exempt foreigners entering the country by air, land, or sea, with phased implementation scheduled between December 2024 and June 2025. The ETA, expected to be free, will require applications through an online portal, with email confirmations typically issued within 24 hours. While specific requirements are yet to be published, applicants may need to provide an accommodation address and proof of onward travel. The system aims to enhance security by conducting computerized checks on passport authenticity, criminal records, and Interpol notices, facilitating entry through electronic gates using a QR code. There is uncertainty regarding whether the ETA will limit the number of 60-day visa-exempt entries, potentially affecting individuals who currently extend stays indefinitely via border runs. The ETA will not apply to diplomats but appears to offer no exemption for tourists over 70. Concerns have been raised about potential links between the ETA and tax residency status for long-term visitors remitting funds into Thailand. The Ministry has yet to release comprehensive guidelines, prompting calls for detailed information well ahead of the rollout.

THAILAND
Thailand considering legalisation of casinos to boost tourism and economic growth
(01 September 2024) Thailand is considering the legalisation of casinos to boost tourism and economic growth, with a draft bill expected to be passed by the end of the decade. The proposed casinos could generate THB 187 billion (USD 5.5 billion) in revenues, equivalent to 1% of the country’s GDP. Prime Minister Srettha Thavisin initiated the drafting process, and despite leadership changes, the plan is likely to continue. Potential casino locations include the Eastern Economic Corridor and tourist hotspots like Phuket and Pattaya, with a projected USD 5 billion capital expenditure for the Pattaya project. Casinos are expected to follow an integrated resort model similar to Singapore’s, offering entertainment beyond gambling. Thai citizens may be required to pay a THB 5,000 (USD 147) entrance fee, while admission for foreigners would be free. 

BRUNEI DARUSSALAM, INDIA
Brunei Darussalam and India agree to elevate ties to Enhanced Partnership
(05 September 2024) Brunei Darussalam and India have agreed to elevate their bilateral relationship to an “Enhanced Partnership” following talks between Sultan Haji Hassanal Bolkiah and Indian Prime Minister Narendra Modi in Bandar Seri Begawan. The joint statement highlighted commitments to strengthening cooperation in defence, trade, investment, food security, energy, and technology. They also pledged to uphold peace, maritime security, and respect for international law. Both leaders agreed to collaborate on ICT, cyber security, renewable energy, and combating terrorism. They reiterated their commitment to enhancing the ASEAN-India Comprehensive Strategic Partnership and addressing climate change, with Brunei appreciating India’s support for hosting the ASEAN Centre for Climate Change.

LAO PDR
Lao PDR  prepares to connect with Korea through direct flights from Luang Prabang
(06 September 2024) The Korea Support Programme (KSP) aims to improve Luang Prabang International Airport’s airspace and flight procedures, with the goal of establishing direct flights from the Republic of Korea to Lao PDR. The project, funded by Korea’s Ministry of Economy and Finance and executed by KOTRA, seeks to enhance Lao PDR’s aviation infrastructure to meet International Civil Aviation Organization (ICAO) standards, boost tourism, and support economic recovery. During the final reporting seminar in Vientiane, Korean and Lao officials discussed the project’s proposed airspace redesign, updated flight procedures, and a conceptual airport design. The project also includes further design work and training for Lao airspace managers. Public-Private Partnerships (PPP) were highlighted as a means to finance infrastructure improvements. The project is expected to enhance air transport safety, attract Korean airlines, and strengthen economic ties between the two countries, particularly in tourism.

RCEP Monitor

CHINA
China’s wealthy shift capital abroad to pursue business opportunities
(05 September 2024) China’s wealthy are increasingly shifting capital abroad to pursue business opportunities, rather than solely for investment returns, according to asset managers. A significant trend has emerged this year, with Chinese family offices seeking to acquire smaller businesses in Japan, driven by slower domestic growth and a weaker yen. From January to July 2023, mainland China’s non-financial direct overseas investments rose 16.2% to USD 83.55 billion, covering over 6,100 businesses globally. Wealth management firm Noah Holdings reported a 23% increase in overseas registered clients, with assets under management abroad rising nearly 15%, while domestic assets declined by over 6%. The trend reflects affluent Chinese entrepreneurs’ growing interest in globalising their businesses, using markets such as Hong Kong, Singapore, and Japan as gateways for expansion.

AUSTRALIA
Australia’s economy records weakest performance in over 30 years
(04 September 2024) Australia’s economy recorded its weakest performance in over 30 years, excluding the early COVID-19 period. GDP grew by only 0.2% in the April-June quarter and by 1% year-on-year, marking the slowest annual growth since 1991-92, according to the Australian Bureau of Statistics. On a per capita basis, GDP declined by 0.4% quarterly and 1.5% annually, reflecting the impact of record immigration. The economy is under pressure from 13 consecutive interest rate hikes by the Reserve Bank of Australia between May 2022 and November 2023, aimed at controlling inflation, which remains above the 2-3% target. Rising dissatisfaction with economic conditions has contributed to declining support for Prime Minister Anthony Albanese, with only 41% of respondents approving of his performance in a recent poll, while 54% disapproved.

NEW ZEALAND
New Zealand to raise entry fees for international tourists starting 01 October, 2024  
(03 September 2024) New Zealand will raise entry fees for international tourists from NZD 35 (USD 22) to NZD 100 (USD 62) starting 01 October, 2024, to help cover the costs of public services and environmental upkeep. The government aims to address the financial strain of tourism on local communities and infrastructure, with international visitors spending over USD 11 billion in the year ending March 2024. However, the New Zealand Tourism Industry Association has expressed concerns that the fee hike, combined with increased regional airport taxes, could further hinder the country’s post-pandemic tourism recovery, with industry profits still 5% below pre-pandemic levels.