MALAYSIA
Malaysia government introduces record MYR 421 billion budget
(22 October 2024) Malaysia’s Prime Minister Anwar Ibrahim presented a record budget of MYR 421 billion (USD 96.8 billion) for 2025, driven by a USD3.1 billion increase, primarily due to salary bonuses for civil servants and pensioners. Civil service wages and retirement payouts will rise by RM6 billion each, with a MYR 500 (USD 115) bonus for civil servants and MYR 250 (USD 57.5) for pensioners in February. The statutory minimum wage for the private sector will increase to MYR 1,700 (USD 391) from February. Despite the budget rise, development expenditure remains unchanged at MYR 86 billion (USD 19.8 billion), while operating expenditure grows to MYR 335 billion (USD 77.0 billion), including MYR 4 billion (USD 919.8 million) for debt interest. Subsidies will be cut by MYR 9 billion (USD 2.1 million), though MYR 13 billion (USD 3 billion) in cash transfers will support the poorest 60% of adults. Fuel and public service subsidies will be reduced for the wealthiest 15%, but maintained for the rest. The fiscal deficit is projected to fall to 3.8% of GDP by 2025, supported by projected growth of up to 5.5% and an expansion of sales and services tax in May 2025. A new 2% levy on dividend income exceeding MYR 100,000 (USD 22,993) will also be introduced.

MALAYSIA, THAILAND, INDONESIA, VIET NAM
Malaysia, Indonesia, Viet Nam, and Thailand join BRICS as partner countries
(24 October 2024) Malaysia, Indonesia, Viet Nam, and Thailand have joined BRICS as partner countries, aligning with other recent additions including Algeria, Belarus, Bolivia, and Turkey. BRICS, founded in 2006 and comprising Brazil, Russia, India, China, and later South Africa, now represents economies valued at over USD 28.5 trillion and holds an annual summit, currently in Kazan, Russia. Malaysia’s Foreign Affairs Minister Mohamad Hasan cited enhanced trade potential and alignment with the Global South’s agenda, particularly as Malaysia prepares for ASEAN chairmanship in 2025. Minister of Economy Rafizi Ramli aims to strengthen Malaysia’s BRICS ties and resilience amid global economic challenges. Indonesia’s Foreign Minister Sugiono will highlight peace and solidarity for developing nations, while representatives from Thailand and Viet Nam also join the discussions. Political analysts suggest the ASEAN members’ BRICS association may reflect intentions to diversify trade and balance relations, especially with China’s prominent BRICS role. Despite concerns regarding ASEAN’s unity and BRICS’ ability to manage an expanded, diverse membership, these nations are expected to use their partner status to amplify ASEAN’s voice in BRICS discussions. 

THE PHILIPPINES
Tropical Storm Trami causes severe flooding, leads to 40 deaths and displacing of thousands
(25 October 2024) Tropical Storm Trami caused severe flooding in the Philippines, leading to at least 40 deaths and displacing tens of thousands. Over two months’ worth of rainfall fell in some areas within two days, particularly impacting Batangas and the Bicol region. In Batangas, six unidentified bodies were found, and several areas remain inaccessible to rescue teams. Flash floods in Subic Ilaya killed five people. Around 193,000 people have been evacuated, with 30,000 fleeing the Bicol region due to unexpectedly high flooding. Rescuers are struggling to reach people stranded on rooftops due to a shortage of rubber boats. A hospital in Lemery was forced to close due to flooding. Storm surge warnings along the west coast of Luzon remain in effect. Despite the storm moving out to sea, search efforts for a missing fisherman were suspended due to strong currents.

THE PHILIPPINES
The Philippines builds up its capital market to support growth and clean energy projects
(25 October 2024) The Philippines is reintroducing interest rate swaps (IRS) and enhancing the bond repurchase (repo) market to create alternative benchmarks for loan pricing, driven by an anticipated USD 20 billion annual capital requirement through 2050 to support growth and clean energy projects. The Peso IRS overnight reference rate, aligned with Bangko Sentral ng Pilipinas’ daily reverse repurchase rate, will be introduced as a floating benchmark for IRS transactions. Bloomberg LP is expected to provide the trading platform, with 15 banks, including BDO, Metrobank, and Citi, serving as market makers to quote one-, three-, and six-month swaps. Five additional banks will participate regularly. To boost repo market activity, fund managers and trust entities are seeking exemption from the documentary stamp tax (DST), which currently applies to non-bank repo participants. The Bankers Association of the Philippines (BAP) awaits the International Swaps and Derivatives Association’s recognition of the Peso IRS reference rate, which, alongside the proposed DST exemption, could enhance market depth and create a yield curve for pricing debt instruments of varying terms.

THAILAND
Thailand plans to introduce THB 300 travel tax for foreign visitors
(24 October 2024) Thailand plans to introduce a THB 300 (approximately MYR 39) travel tax for foreign visitors, initially targeting air passengers in mid-2025. Tourism and Sports Minister Sarawong Thienthong stated that the proposal will go to Cabinet for approval in January, with a phased implementation over six months. The first phase focuses on air travellers, who make up 70% of foreign arrivals, with a second phase planned for overland visitors. The tax will include a capped insurance premium of THB 60 per person and will use a system similar to South Korea’s Electronic Travel Authorisation, requiring online registration and payment before arrival. Frequent border crossers for trade purposes will be exempt via a border pass. The ministry aims to standardise the THB 300 levy across all entry points to ensure uniformity.

THAILAND
Thailand’s car production in September falls by 25.48% year-on-year
(24 October 2024) Thailand’s car production in September fell by 25.48% year-on-year, following a 20.56% decline in August, according to the Federation of Thai Industries. Domestic car sales also dropped significantly by 37.11% to 117,000 units, as reported by the spokesperson for the federation’s automotive division. Export figures declined by 10.83% from the previous year, attributed to economic challenges faced by trading partners and the ongoing conflict in the Middle East. Thailand remains a key production hub in Southeast Asia for major carmakers, including Toyota and Honda.  

VIET NAM
IMF projects Viet Nam’s economy to grow by 6.1% in 2025
(24 October 2024) The International Monetary Fund (IMF) projects Viet Nam’s economy to grow by 6.1% in 2025, consistent with its 2024 forecast, according to the World Economic Outlook 2025. Vietnam’s consumer price index is expected to increase by 3.5%, down by 0.6% from the previous year. In contrast, Viet Nam’s Ministry of Planning and Investment forecasts a more robust growth range of 6.5% to 7.5% for 2025. Prime Minister Pham Minh Chinh expressed the government’s ambition to target a higher growth rate between 7% and 7.5% in 2025, as stated in his recent address to the National Assembly.

RCEP Monitor

CHINA
China Iron & Steel Association urges steel mills to limit production after price rally
(25 October 2024) The China Iron & Steel Association (CISA) urged steel mills to limit production despite a recent rebound in steel prices triggered by government stimulus measures. CISA emphasised that the price increase does not reflect a long-term improvement in the industry, which continues to face oversupply and weak demand, particularly from the property sector. Steel production has exceeded 1 billion tonnes annually over the past four years, but output has recently declined, and the association aims to maintain this trend to balance supply and demand. CISA forecasts annual steel output to decrease to 800 million tons by 2035. Iron ore prices, a key steelmaking input, rose 1.9% to USD 101.15 per tonne in Singapore, while steel rebar and hot-rolled coil contracts increased by 1.3% and 1.5%, respectively, in Shanghai.

AUSTRALIA
Australian economy on track for soft landing, with inflation cooling
(25 October 2024) Australia’s economy is on track for a soft landing, with inflation cooling without major impacts on domestic growth, according to Treasurer Jim Chalmers at the IMF and World Bank meetings. While inflation is moderating, the IMF has advised reducing fiscal spending if disinflation slows further. The Reserve Bank of Australia (RBA) has maintained its key interest rate at 4.35%, despite slow economic growth, low unemployment, and rising house prices. The RBA has extended its core inflation target timeframe beyond 2026, noting robust hiring trends. Amid ongoing inflation concerns, the Labor government has reported consecutive budget surpluses to showcase fiscal prudence ahead of the upcoming election. In foreign policy, Australia has stabilised relations with China, its top trade partner, leading to lifted trade curbs on key exports like lobsters, wine, and coal, although broader tensions remain, especially with tightened security ties to the US. Third-quarter inflation data is due on 29 October.

NEW ZEALAND
Annual trade deficit narrows to NZD 9.1 billion in 12 months through September
(22 October 2024) New Zealand’s annual trade deficit narrowed to NZD 9.1 billion in the 12 months through September, the smallest shortfall since March 2022 and down from a peak of NZD 17.1 billion in May 2022, according to Statistics New Zealand. The contraction is driven by weak economic conditions that reduced import demand, with imports decreasing 8.4% year-on-year to NZD 78.5 billion, including an 11% fall in plant and machinery imports and a 23% drop in passenger vehicle imports. The Reserve Bank of New Zealand began easing monetary policy in August after sustained high interest rates curbed economic growth and business investment. Exports also declined 1.2% to NZD 69.4 billion, contributing to a narrower current account deficit, which reached NZD 27.6 billion or 6.7% of GDP for the year through June, down from a record 9.4% at the end of 2022.