ASEAN
US imposes preliminary duties on solar panels from Southeast Asia
(02 October 2024) The US Commerce Department has imposed preliminary countervailing duties on solar imports from Southeast Asia, citing illegal government subsidies benefiting foreign manufacturers. Rates include 8.25% for Cambodia, 9.13% for Malaysia, 23.06% for Thailand, and 2.85% for Viet Nam, with specific company rates such as 14.72% for Hanwha Q Cells Malaysia and 0.14% for Trina Solar Thailand. These duties, which apply retroactively to imports from Thailand and Viet Nam dating back to early July, are in response to claims from US solar manufacturers, including First Solar and Hanwha Qcells, that cheap imports harm domestic production. Chinese officials and some renewable developers oppose the tariffs, warning they could slow the US clean energy transition. A final determination, which may adjust these rates, is expected in spring 2024.

MALAYSIA
Ringgit appreciates 14.35% against US dollar over last three months
(01 October 2024) The Malaysian ringgit has appreciated 14.35% against the US dollar over the last three months, becoming the world’s best-performing currency, according to MUFG Bank. This surpasses gold, which rose 14.2% in the same period. The ringgit’s recovery is attributed to Malaysia’s economic growth and expectations of US Federal Reserve rate cuts, which have driven its sharp rally. The Thai baht followed closely with a 13.79% rise, and the Japanese yen gained 13.04%. MUFG Bank projects that the ringgit could strengthen to MYR 4 per US dollar by year-end, contingent on positive market sentiment and a potential 50 basis point interest rate cut by the US Federal Reserve. BMI revised its end-2024 forecast for the ringgit to MYR 4, from MYR 4.55, and predicted a 9% rise in 2025. On 27 September, the ringgit closed at MYR 4.12, recovering from MYR 4.81 in February. Analysts believe the ringgit could extend its rally, supported by narrowing interest rate differentials and improved trade performance.

MALAYSIA
Google commences construction of USD 2 billion data center in Malaysia
(02 October 2024) Google has commenced construction on its first data center in Malaysia with a groundbreaking ceremony attended by Prime Minister Anwar Ibrahim and Alphabet’s President and Chief Investment Officer, Ruth Porat. Located at Elmina Business Park, Sungai Buloh, the USD 2 billion (MYR 8.31 billion) investment is expected to contribute USD 3.2 billion (MYR 13.34 billion) to Malaysia’s GDP and create 26,500 jobs by 2030. Specific details on the data center’s capacity remain undisclosed, but it will support Google services such as Search, Maps, Workspace, and AI, while establishing Malaysia as a Google Cloud region. Additionally, Google announced initiatives including the restoration of Taman Aman Lake in Petaling Jaya to enhance water quality and biodiversity, and a partnership with the Future Skills For All programme to train 260 teachers in digital skills, reaching up to 61,000 students. Google also launched its Solar API in Malaysia, adopted by the Malaysian Green Technology and Climate Change Corporation to streamline solar energy system design.

THAILAND
Google announces USD 1 billion investment in digital infrastructure in Thailand 
(01 October 2024) Google has announced a USD 1 billion investment to develop digital infrastructure in Thailand, including a new data centre in Chonburi and cloud facilities in Bangkok, aimed at supporting the region’s growing demand for cloud computing. The project is expected to create 14,000 jobs between 2025 and 2029 and contribute USD 4 billion to Thailand’s GDP by 2029, according to a report from Deloitte. The announcement followed a meeting between Google President Ruth Porat and Thai Prime Minister Paetongtarn Shinawatra, who highlighted the move as a significant step towards establishing Thailand as a digital hub in Southeast Asia. The investment follows similar initiatives from Microsoft, which announced plans in May to build Thailand’s first data centre region. This investment is part of Thailand’s broader strategy to modernise its economy and strengthen its digital sector, with the goal of the digital economy contributing 30% to GDP by 2027.

VIET NAM
Vietnamese government aiming for 6.8% to 7% growth in 2024  
(03 October 2024) The Vietnamese government is aiming for an economic growth rate of 6.8% to 7% in 2024, exceeding the National Assembly’s target of 6% to 6.5%, according to the Ministry of Planning and Investment. The ministry reported that several economic indicators have already outperformed the National Assembly’s goals, despite challenging domestic and global conditions. The country’s GDP growth projections from international organizations remain lower, with the Asian Development Bank forecasting 6% and the International Monetary Fund predicting 6.1% for 2024.

THE PHILIPPINES
The Philippines to implement 12% VAT on foreign digital service providers
(03 October 2024) The Philippines will implement a 12% value-added tax (VAT) on digital services provided by foreign tech companies like Amazon, Netflix, Disney, and Alphabet, following a law signed by President Ferdinand Marcos Jr. This move aims to create fair competition between foreign digital service providers and domestic businesses, which already pay VAT. The Bureau of Internal Revenue expects to collect PHP 105 billion (MYR 8 billion) from this tax between 2025 and 2029, with 5% of the revenue allocated to projects supporting the Philippine creative industries. Educational and public interest services will be exempt from the VAT. The tax applies to digital services consumed within the Philippines.

THE PHILIPPINES
Inflation likely decreased between 2% and 2.8% in September 2024
(03 October 2024) Inflation in the Philippines likely decreased to between 2% and 2.8% in September, driven by lower food and oil prices, and high-base effects from the previous year, according to the Philippines’ central bank the Bangko Sentral ng Pilipinas (BSP). This would represent a significant drop from the 3.3% inflation rate recorded in August, placing inflation within the central bank’s target range of 2% to 4%. The BSP attributed the decline to cheaper food items, such as meat, vegetables, and rice, as well as lower oil prices and a stronger peso, which reduced import costs. The central bank indicated that this lower inflation may provide room to reduce borrowing costs.

RCEP Monitor

CHINA
China may issue up to RMB 10 trillion in special debt to support economy
(03 October 2024) China could issue up to RMB 10 trillion (USD 1.4 trillion) in special debt to support its economy, according to Jia Kang, former head of a Ministry of Finance-affiliated research institute. He suggested that increased government investment in public projects could stimulate jobs, income, and consumption. This proposed debt issuance would exceed the government’s planned RMB 1 trillion in ultra-long sovereign bonds for 2023. Jia emphasised that long-term bonds with 30-50 year maturities would not overburden the government. Current fiscal measures have boosted market optimism, leading to stock market gains, though some economists, such as those from Nomura and Morgan Stanley, have cautioned about risks related to China’s high debt-to-GDP ratio, which reached 286% earlier this year. The Ministry of Finance is expected to issue more details on fiscal stimulus, with economists projecting spending to focus on consumption, infrastructure, and supporting local governments.

SOUTH KOREA
South Korean President to visit the Philippines, Singapore, and Lao PDR
(03 October 2024) President Yoon Suk-yeol will visit the Philippines, Singapore, and Lao PDR for six days starting Sunday, attending the Association of Southeast Asian Nations (ASEAN) summit and holding multiple bilateral talks. In the Philippines, he will meet President Ferdinand Marcos Jr to explore strengthening bilateral relations. Yoon will then hold talks with Singapore’s Prime Minister Lawrence Wong and deliver a speech on Korea’s unification vision. In Lao PDR, he will attend ASEAN-related meetings, including the ASEAN plus three summit with South Korea, China, and Japan, and hold eight bilateral summits with countries such as Lao PDR, Viet Nam, and Thailand. South Korea plans to establish a comprehensive strategic partnership with ASEAN during the summit. Discussions are ongoing to arrange Yoon’s first summit with Japan’s new Prime Minister Shigeru Ishiba.

JAPAN
Market analysts maintain expectations for BOJ to hike rates despite PM’s dovish stance
(02 October 2024) Japanese Prime Minister Shigeru Ishiba’s recent dovish comments on not requiring further rate increases led to a significant depreciation of the yen, which fell to 147.15 against the U.S. dollar, marking its largest decline since June 2022. Despite this, market analysts maintain expectations for the Bank of Japan (BOJ) to hike rates, with some forecasting an increase in 2024 or early 2025. BOJ board member Asahi Noguchi supports maintaining accommodative monetary policy for now, while upcoming rate reviews are scheduled for 30-31 October and December. Analysts suggest potential rate hikes may be postponed due to Ishiba’s announcement of a general election on 27 October. Economic indicators and inflation remain key factors in determining the timing of any future rate adjustments, with some expecting further yen weakness to be limited. The BOJ’s coordination with the government aims to stabilise the currency following previous market disruptions triggered by rate increases.