VIET NAM
Typhoon Yagi to trim off 0.15% off Viet Nam’s 2024 growth
(16 September 2024) Super Typhoon Yagi caused significant destruction in northern Viet Nam, resulting in estimated damages of VND 40 trillion (USD 1.6 billion), according to the Ministry of Planning and Investment. The storm, which made landfall on 7 September, is expected to reduce Vietnam’s 2024 economic growth by 0.15%, with third-quarter growth down by 0.35% and fourth-quarter growth by 0.22%. More than 350 people were reported dead or missing as of 15 September, with over 2,000 injured and 230,000 homes damaged. Additionally, 190,000 hectares of rice fields and 79,000 hectares of other crops, including fruit trees, were flooded. The storm also led to power outages, transportation disruptions, and landslides, though industrial parks housing companies like Samsung and Apple suppliers were largely unaffected. Taiwanese manufacturers in Haiphong, however, sustained damage and are seeking tax deductions.

MYANMAR
Housing prices in Yangon surge as residents flee civil war to city 
(15 September 2024) Housing prices in Yangon have surged as Myanmar’s civil war intensifies, prompting rural residents to flee to the city. Real estate brokers report a 30% rise in prices between June and July 2024, with standard condominiums reaching around MMK 500 million (USD 91,000) by August. This marks a 70% increase from February 2021, when the military took power. The influx of residents from Mandalay, driven by conflict in the region, has contributed to the demand. Additionally, many are shifting their investments from paper assets to property due to concerns over the currency’s value and banking stability. The rise in prices benefits major companies like Yoma Group, whose StarCity condo sales have helped Yoma Strategic Holdings return to profitability in the year ending March 2024. Business owners in Yangon are experiencing increased customer traffic, which is speculated to result from the growing population.

MYANMAR
Typhoon Yagi kills at least 226 people in Myanmar, with more than half a million affected
(17 September 2024) Typhoon Yagi, the most powerful storm in Asia this year, has killed at least 226 people in Myanmar, with over 70 missing and more than half a million affected. Flooding caused by torrential rains damaged infrastructure and crops across 84 townships, including Naypyidaw, displacing tens of thousands and destroying over 2,100 homes. The government has set up 438 relief camps to assist the displaced, while receiving 10 tons of aid from India. Myanmar’s junta leader, Min Aung Hlaing, has requested foreign aid for rescue and relief efforts. The United Nations estimated that 631,000 people were affected, with the death toll expected to rise. In neighboring Thailand, flooding has killed 45 people since mid-August, affecting 28,000 households. Yagi also impacted Vietnam, killing over 350 people and causing USD 1.6 billion in damage. Evacuation efforts in Myanmar continue, hindered by damaged infrastructure and ongoing conflict.

MALAYSIA
Government mulling raising tax on sugar-sweetened beverages (SSBs) by 20% 
(14 September 2024) Malaysia plans to increase the tax on sugar-sweetened beverages (SSBs) as part of its strategy to reduce sugar consumption and address non-communicable diseases such as diabetes. Malaysia’s Health Minister announced that the heavier tax will be included in the 2025 draft budget, to be presented in parliament on 18 October. The existing sugar tax, introduced in 2019 and raised to 0.5 ringgit per liter this year, has reduced sugary drink consumption by 9.25%. The new proposal, possibly increasing the levy by 20%, comes as 15.6% of Malaysian adults are diabetic, according to the 2023 National Health and Morbidity Survey. Experts support the tax but emphasize the need for education and awareness to combat non-communicable diseases.

MALAYSIA
Ringgit surges to 28-month high against US dollar following Fed’s rate cut  
(19 September 2024) The ringgit surged to a 28-month high against the US dollar, closing at 4.2025/2105, following the US Federal Reserve’s 50-basis-point interest rate cut. This marks a rise from the previous day’s close of 4.2410/2460, positioning the ringgit as one of Asia’s top-performing currencies. Bank Muamalat Malaysia’s chief economist noted that the Fed’s move reduced market uncertainties and aligned with its goals of disinflation and full employment. The ringgit is expected to appreciate further, with support levels around MYR 4.0728. Bank Negara Malaysia is likely to maintain its Overnight Policy Rate at 3.00% for the rest of the year. The ringgit also strengthened against major currencies, including the British pound, Japanese yen, and euro, and gained against ASEAN currencies such as the Singapore dollar, Thai baht, Philippine peso, and Indonesian rupiah.

THAILAND
Thai cabinet approves THB 10,000 handout for 14.5 million citizens  
(17 September 2024) The Thai cabinet has approved a THB 10,000 baht (USD 300) handout for 14.5 million vulnerable citizens, with disbursements starting between 25-30 September. The total cost for this phase is THB 145 billion. Thailand’s Finance Minister expects the initiative to boost consumption in Thailand’s sluggish economy, which grew by only 2.3% in Q2 2024. Approximately 21.5 million others have registered for the handout, though no timeline has been provided for their payments. The scheme, initially projected to cost up to THB 500 billion, has been scaled back due to a lower number of registrants and concerns over digital token distribution potentially violating currency laws. Payments will be made via the banking system. The government is under pressure to stimulate growth, and ministers are pushing the Bank of Thailand to cut its 2.5% policy interest rate. The central bank’s monetary policy committee will meet on 16 October to review rates.

CAMBODIA
Cambodia’s public debt reaches USD 11.27 billion by end of Q2 2024 
(17 September 2024) Cambodia’s public debt reached USD 11.27 billion by the end of Q2 2024, with 99% being external debt, according to the Ministry of Economy and Finance’s Public Debt Statistical Bulletin. The debt is predominantly in US dollars (47%), followed by Special Drawing Rights (19%), Chinese yuan (11%), Japanese yen (11%), and euro (7%). Bilateral development partners provided 63% of the loans, and multilateral partners contributed 37%. In the first half of 2024, Cambodia secured USD 313 million in new concessional loans, equivalent to 14% of its legal borrowing limit. Debt service payments amounted to USD 50 million. The loans support infrastructure projects aimed at long-term sustainable economic growth. The government’s public debt management strategy for 2024–2028 outlines borrowing plans of USD 2.3 to 2.7 billion annually from foreign financial institutions. The Ministry confirmed that the country’s public debt remains sustainable and low-risk. 

RCEP Monitor

JAPAN
Yen strengthen passes 140 level against the dollar, marking strongest position since July 2023
(16 September 2024) The yen strengthened past the JPY 140 level against the dollar, appreciating 0.6% to JPY 139.96, marking its strongest position since July 2023. The yen has gained 15% this quarter, becoming the top performer among Group-of-10 currencies, as investors anticipate a narrowing interest-rate gap between the US and Japan. The Federal Reserve is expected to lower US interest rates this week, with speculation of a 50 basis point cut, while the Bank of Japan is projected to hold its rate steady after two rate hikes earlier this year. The yen’s rapid appreciation, from its July low of JPY 161.95 against the dollar, is impacting Japanese exporters and Tokyo’s stock market. The BOJ Governor indicated that further rate hikes are possible if inflation forecasts align, with many economists expecting another rate increase by December. Additionally, the unwinding of carry trade strategies has contributed to the yen’s rise, with strategists now revising earlier predictions of yen weakness and forecasting further gains in the coming months.

JAPAN, UNITED STATES
US and Japan nearing agreement on export controls targeting China’s chip industry  
(17 September 2024) The US and Japan are nearing an agreement on export controls targeting China’s chip industry, with Washington pushing for non-US companies to obtain licences for selling tech products to China. The Biden administration seeks to close loopholes in existing export rules, aiming to limit China’s access to critical chipmaking tools, which would impact Japanese firms like Tokyo Electron and Dutch companies such as ASML. Japan, however, is concerned about potential Chinese retaliation, particularly the restriction of critical minerals like gallium and graphite. The US has been in talks with Japan and the Netherlands to align export control rules and avoid subjecting these countries to the US Foreign Direct Product Rule (FDPR). Negotiators, including the US Commerce Secretary, are attempting to finalise the agreement amid Tokyo’s growing concerns over the economic impact and a possible increase in mineral prices. Additionally, Japan is wary of US actions ahead of the 2024 presidential election, fearing further complications in their negotiations.

CHINA
China faces increasing pressure to meet its 2024 growth target of around 5% 
(16 September 2024) China’s economic outlook faces increasing pressure to meet its 2024 growth target of around 5%, as recent data reveals weakening industrial output, consumption, and investment. August’s data indicates GDP growth of 4.6%-4.7%, below the target, with full-year growth potentially missing the mark if current trends continue. The People’s Bank of China (PBOC) signalled a shift toward fighting deflation, indicating potential monetary easing. Despite this, aggressive stimulus appears unlikely as the government seeks to avoid large-scale measures that previously caused boom-bust cycles. Local governments have shown reluctance to spend, issuing fewer bonds, while real estate investment contracted, contributing to a property slump estimated to have caused USD 18 trillion in household wealth losses. President Xi Jinping has urged officials to faithfully implement existing policies but seemed to indicate tolerance for slightly missing the 5% target.