ASEAN
Major e-commerce platforms raise merchant commission fees to improve profitability
(26 September 2024) Southeast Asia’s major online shopping platforms, including Shopee, Tokopedia, and Lazada, are raising merchant commission fees to improve profitability amid a challenging post-pandemic market. Tokopedia increased fees on 16 September, with commissions now reaching up to 10%, compared to the previous maximum of 6.5%. Shopee has also raised its commission fees in Indonesia, now ranging from 4.25% to 8%, up from 3.5% to 6.5%. These changes follow similar fee hikes in Malaysia by Shopee, Lazada, and TikTok Shop earlier this year. Some merchants have responded by closing their online stores, citing reduced margins and rising costs, while others remain due to the difficulty of establishing independent operations. Despite some dissatisfaction, analysts do not foresee significant impacts on transaction volumes or merchant availability in the short term. Shopee maintains its market lead with 48% market share in the region, followed by Lazada with 16.4%, and both Tokopedia and TikTok at 14.2%.

ASEAN
QR code payments usage expands rapidly across Southeast Asia
(18 September 2024) QR code payments are expanding rapidly across Southeast Asia, driven by low bank account ownership, limited ATM networks, and increased smartphone usage. Cambodia saw a 29% increase in QR transactions in 2023, totalling 601 million. The National Bank of Cambodia launched the Bakong Tourists mobile payment system, built on the 2020 Bakong digital payment infrastructure, which utilises the KHQR code and has 3.3 million payment locations nationwide. In Malaysia, DuitNow QR, launched in 2019, recorded 1.5 billion transactions worth MYR 1.37 billion in the first half of 2023, up 64% and 37% year-on-year. Cross-border interoperability allows Malaysian users to make payments in other ASEAN countries. Singapore’s PayNow system processed 437 million transactions worth SGD 157 billion in 2023, with increasing cross-border linkages. Thailand’s PromptPay recorded 5.7 billion transactions in 2023, nearly doubling from the previous year. Indonesia, Vietnam, and the Philippines also reported significant increases in QR transactions, reflecting growing regional adoption.

MALAYSIA
Malaysia generating enough energy surplus to support major development projects
(26 September 2024) Malaysia is generating an energy surplus sufficient to support major development projects and expand its energy exports, according to Prime Minister Anwar Ibrahim on 26 September. The surplus will support the upcoming Johor-Singapore Special Economic Zone (SEZ), which Malaysia and Singapore aim to finalise by year-end. The SEZ, located in Johor, is intended to attract investment and facilitate the movement of goods and people. Anwar confirmed that the government will continue its renewable energy and transition initiatives, aiming for net-zero emissions by 2050. Johor’s energy demand is expected to increase, driven by investments from companies like Nvidia and ByteDance in data centre facilities. These investments have contributed to stronger-than-expected economic growth in Malaysia over the past two quarters, with the local stock market outperforming others in the region. Anwar indicated that third-quarter economic performance also appears promising

CAMBODIA
Cambodia announces withdrawal from Cambodia-Laos-Vietnam Development Triangle Area
(25 September 2024) Cambodian Prime Minister Hun Manet announced Cambodia’s withdrawal from the Cambodia-Laos-Vietnam Development Triangle Area (CLV-DTA) agreement following protests claiming the deal primarily benefited foreign interests. The agreement, established in 2004, aimed at promoting cooperation on trade and migration in Cambodia’s northeastern provinces and border areas with Viet Nam and Lao PDR. Social media critics focused on land concessions, particularly with Viet Nam, a historically sensitive issue. In response to planned protests, authorities arrested at least 66 individuals, most of whom were released, though protest leaders face charges. Hun Manet labelled the opposition as extremists and dismissed allegations that Cambodia ceded territory to foreign countries. He stated that the decision to exit the agreement was made to address public concerns over territorial issues and prevent the exploitation of the CLV-DTA by opposition groups.

MALAYSIA, LAO PDR
Malaysia emphasizes significant potential of Malaysian investments for Lao PDR
(26 September 2024) Malaysian Ambassador to Lao PDR, Edi Irwan Mahmud, emphasised the significant potential for Malaysia to increase investments in Lao PDR, particularly in renewable energy, agriculture, tourism, and infrastructure. Malaysia is the fourth-largest investor in Lao PDR, following China, Thailand, and Viet Nam, with trade volume reaching MYR 48.3 million in the first half of this year. The largest Malaysian investment is the USD 430.32 million Don Sahong Hydropower Project, with a capacity of 260 megawatts, operated by Mega First Corp Bhd and supplying power to Cambodia through Lao PDR’s state-owned Electricité du Laos. Additional investment includes a 40-hectare Agro Vege Farm project in Champasak by Agrotech Pro Ltd. Tourism is also growing, with 7,059 visitors from Lao PDR to Malaysia in the first half of 2023, supported by direct AirAsia flights between Kuala Lumpur and Vientiane. Edi Irwan highlighted opportunities for Malaysia to contribute to Laos’ infrastructure development through investment and technology transfer.

INDONESIA
Indonesia submits request to join CPTPP mega-trade agreement
(26 September 2024) Indonesia has formally submitted a request to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in a bid to expand its export markets, according to coordinating minister for economic affairs Airlangga Hartarto. The request, sent to New Zealand as the agreement’s depository, aims to structurally reform Indonesia’s economy and improve market access. Indonesia initially announced its intent to join the 12-country trade pact in May, seeking to attract investment. The CPTPP includes members such as Australia, Canada, Japan, Malaysia, and the United Kingdom. The move has been endorsed by President-elect Prabowo Subianto, who will succeed President Joko Widodo on 20 October.

INDONESIA, RUSSIA, CHINA
Chinese and Russian projects officially commence in new capital of Nusantara
(26 September 2024) Multi-million dollar construction projects by Chinese and Russian firms have officially commenced in Indonesia’s new capital, Nusantara, as announced by President Joko Widodo. China’s Delonix Group is investing IDR 500 billion (USD 32.5 million) in a 2.42-hectare integrated complex featuring a hotel, luxury apartments, shopping malls, offices, and sports facilities. Russia’s Magnum Estate International is developing a 1.3-hectare resort complex with serviced apartments and commercial spaces, also with investments of IDR 500 billion. Australia’s AIS is building a IDR 150 billion (USD 9.8 million) educational facility for 750 students, featuring advanced science labs and STEM facilities. These projects, aimed at boosting Nusantara’s attractiveness to international investors, were inaugurated on 25 September. President-elect Prabowo Subianto has committed to continuing the development of Nusantara after taking office. Widodo mentioned that additional investor proposals are under review, with potential new projects set to launch soon.  

RCEP Monitor

CHINA
China’s market share for key EV battery components tops 80%
(26 September 2024) In 2023, Chinese companies held over 80% of the global market share for key EV battery components, with 89.4% for cathodes, 93.5% for anodes, 87.4% for separators, and 85% for electrolytes. The Chinese market share for separators increased by 13.1 percentage points in two years, while Japan’s share fell to 9.7%. Chinese firms, such as BTR New Material Group, are expanding internationally, with a USD 700 million investment in Morocco for cathode and anode production, set to equip 500,000 EVs annually by 2026. Meanwhile, Shenzhen Senior Technology Material is building a USD 700 million separator plant in Malaysia and has secured a contract with Samsung SDI through 2030. Despite the growing dominance of Chinese manufacturers, the global battery sector faces challenges, including reduced government subsidies for electric vehicles and declining sales for companies like Tesla. North America is seen as a growth area for Japanese firms, with Asahi Kasei building a USD 1.38 billion separator plant in Canada and Sumitomo Metal Mining considering expanding production of LFP cathodes.

AUSTRALIA
Sharp drop in global lithium prices severely impact Australia
(26 September 2024) Lithium prices have dropped sharply due to reduced electric vehicle sales and a global oversupply of lithium ore, falling by over 75% since June 2023. This has severely impacted Australia, the largest producer of lithium ore, with companies like Core Lithium and Arcadium Lithium suspending operations, leading to job losses. In contrast, companies like Pilbara Minerals and Liontown Resources are expanding production, confident in a future price recovery. Australia is increasing its focus on lithium refining, with firms such as IGO and Covalent Lithium investing in domestic refining to reduce reliance on Chinese processing. Government-backed efforts are underway to reduce environmental impacts of lithium extraction, including research into new methods like “shock quenching.” Additionally, companies like Lithium Australia are developing recycling initiatives to strengthen the country’s lithium battery industry and reduce waste.

SOUTH KOREA
Bank of Korea proposes cap on university admissions from affluent Gangnam district
(24 September 2024) The governor of the Bank of Korea (BoK) has proposed limiting university admissions from Seoul’s affluent Gangnam district to address housing market pressures and growing inequality. He argues that intense competition for education in Gangnam is driving up property prices and debt while exacerbating regional depopulation. Despite hitting its inflation target, the BoK has maintained its interest rate at 3.5%, citing concerns over household debt, which stands at 92% of GDP. South Korea’s demographic challenges, including the world’s lowest fertility rate, are a significant concern, with the BoK governor advocating for foreign labour recruitment. The BoK forecasts economic growth of 2.4% in 2024 and 2.1% in 2025 but warns the country’s manufacturing-based growth model may need restructuring. Additionally, Rhee, speaking as chair of the Bank for International Settlements’ committee, highlighted the August sell-off and the need for enhanced data collection on financial derivatives and swaps.