SINGAPORE
Singapore’s “deep tech” investments rose 31% in 2023, constituting 25% of total deal values
(29 October 2024) On 1 October, Tianjin in China launched its first driverless public bus network, spanning 20 kilometres and serving 10 stops across key urban areas, using vehicles developed by Singapore’s autonomous vehicle startup Moovita. This marks Moovita as the first foreign AV provider to gain a licence in China. Singapore’s “deep tech” investments rose 31% in 2023, despite a 20% overall market downturn, constituting 25% of total deal values, surpassing the global average. “Deep tech” refers to startups born out of scientific research in areas with potentially large social impacts like AVs, semiconductors, robotics and pharmaceuticals. Singapore’s deep tech startup ecosystem has moved from 18th to 7th globally, reflecting increased investor interest amid supply chain shifts, with key investors from the US, Japan, and Europe. Singapore’s government has committed 1% of its GDP (SGD 25 billion) to research through 2025, boosting initiatives like NTU’s spin-offs, which saw portfolio values grow to SGD 1.27 billion by March. Deep tech firms like Cosmos Innovation and Eureka Robotics highlight the ecosystem’s shift from attracting major corporations toward building homegrown industry leaders in chipmaking, biotechnology, and AI solutions for solar cells, aiming to expand Singapore’s role in global tech innovation.

VIET NAM
Vingroup sets up USD 150 million startup investment fund, with focus on AI, semiconductors, and cloud computing
(29 October 2024) Vingroup, Viet Nam’s largest conglomerate, has launched the VinVentures Technology Investment Fund with USD 150 million to support startups in artificial intelligence, semiconductors, and cloud computing. The fund, primarily comprising USD 100 million in transferred assets from Vingroup’s previous investments, aims to integrate investees with Vingroup subsidiaries, which could serve as potential customers. VinVentures also supports Viet Nam’s goal to attract USD 35 billion in startup investment by 2035. A band of private equity and venture capitalists announced the goal last month when they formed the Vietnam Private Capital Agency (VPCA), an association that includes Golden Gate Ventures and Monk’s Hill Ventures. Amidst a 79% decline in Viet Nam’s fundraising for startups in early 2024, VinVentures seeks expansion in Singapore, Indonesia, and the Philippines, looking beyond Vingroup-linked ventures. Over the next three to five years, VinVentures plans to deploy USD 50 million, although contributions from Vingroup founder Pham Nhat Vuong remain undisclosed. Vingroup has strategic interests in AI through VinAI, which could integrate AI technologies into VinFast electric vehicles, potentially enhancing their functionality.

VIET NAM, UNITED ARAB EMIRATES
Viet Nam and UAE sign Comprehensive Economic Partnership Agreement (CEPA)
(29 October 2024) The United Arab Emirates (UAE) and Viet Nam have signed a Comprehensive Economic Partnership Agreement (CEPA), marking Vietnam’s first free-trade agreement with a Middle Eastern country, according to the Vietnamese trade ministry. Following a year of negotiations, the agreement was signed in Dubai by Vietnamese Prime Minister Pham Minh Chinh. The CEPA will facilitate increased trade and investment in agriculture, energy, technology, and logistics between the two countries. Under the agreement, the UAE will phase out tariffs on 99% of Vietnamese exports, while Viet Nam will remove tariffs on 98.5% of UAE exports. In 2023, trade turnover between Viet Nam and the UAE reached approximately USD 4.7 billion, a 6% increase from the previous year.

MALAYSIA
Malaysia remains logistics hub for solar panel exports amid heightened US tariffs
(28 October 2024) Malaysia remains a logistics hub for solar panel exports amid a recent hike in US tariffs on Southeast Asian solar equipment, according to Malaysia’s Transport Minister. He noted that several major US companies in Malaysia are re-exporting solar equipment, such as microchips and semiconductors, back to the US. Loke emphasised Malaysia’s commitment to fostering inter-ASEAN trade and reducing reliance on a single market. He also highlighted the potential market opportunities arising from Malaysia’s new BRICS partnership, asserting that ministries, including the Ministry of Investment, Trade and Industry, are working to protect Malaysia’s exports from potential impacts. The US previously increased tariffs on solar equipment from Cambodia, Malaysia, Thailand, and Viet Nam, citing unfair government subsidies.

THE PHILIPPINES
The Philippines injects USD 7 billion into financial system through reduction in bank’s reserve requirement ratio
(25 October 2024) The Philippines has injected nearly USD 7 billion into its financial system as a reduction in banks’ reserve requirement ratio (RRR) took effect, aiming to stimulate lending and economic growth. The Bank of the Philippine Islands expects banks to use these funds to increase lending, especially to consumer segments, potentially improving net interest margins by 12.75 basis points. The RRR cut, announced by Bangko Sentral ng Pilipinas (BSP) in September, reduces the reserve ratio to 7% for major banks, with similar reductions for digital and thrift banks. According to Abacus Securities Corp., the RRR cut will initially boost net interest margins but may lower them in the long term as loan rates decrease. Although loan demand is expected to grow slowly, it was noted that excess funds could be reinvested with the BSP if demand does not increase significantly. The BSP’s Governor indicated that further reductions could bring the RRR down to zero by 2029, aiming to streamline the financial system and manage liquidity through term deposit auctions.

THAILAND
Thailand plans to raise retirement age to 65 across private and public sector
(26 October 2024) Thailand plans to raise the retirement age to 65 across both private and government sectors, responding to improved healthcare and longer life expectancy, now averaging 75.3 years according to WHO data. Thailand’s Labour Minister disclosed that the government aims to increase contributions to the social security fund from workers, employers, and the state, while expanding benefits to include two million migrant workers from Myanmar, Lao PDR, and Cambodia. Additionally, the Labour Ministry is evaluating the conversion of annual fluctuating medical costs, estimated at THB 60 billion (approximately USD 1.78 billion), into a fixed expense. Currently, retirement ages vary: it is set at 60 for government workers and ranges from 55 to 60 in the private sector.

THAILAND
Thailand looking for six new airports to establish country as regional transport hub
(29 October 2024) Thailand’s Deputy Transport Minister emphasized the need for six new airports in Thailand—proposed in Mukdahan, Bueng Kan, Satun, Phayao, Kalasin, and Phatthalung—to establish the country as a regional transport hub. Her statement followed discussions at the 59th Asia and Pacific Directors General of Civil Aviation Conference in the Philippines, where a projected doubling of global passenger numbers over the next 20 years underscored the necessity of infrastructure investment in the Asia-Pacific. Thailand’s Department of Airports (DoA) is encouraged to prioritise sustainable and inclusive development, addressing security, universal design, and accessibility for travellers with disabilities. The ministry’s environmental agenda includes expanding carbon reduction initiatives, aiming for carbon neutrality and achieving Level 5 Airport Carbon Accreditation, following the DoA’s receipt of the 2024 Environmental Impact Assessment Monitoring Award.

RCEP Monitor

AUSTRALIA
Australia looking to extract critical minerals from mining by-products
(29 October 2024) Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO) is investigating the potential to extract critical minerals like gallium and germanium from mining by-products to support global semiconductor and advanced technology production. This multiagency effort highlights gallium from alumina refining and germanium from zinc processing, both dominated by China, which controls 90% of global gallium and 60% of germanium supply. Following China’s export controls in 2022, the US has underscored the need for supply chain security, citing Australia’s potential in an August 2023 report by the Center for Strategic and International Studies. Australia previously produced gallium in the 1990s, and the head of CSIRO noted that a single alumina refinery could meet a substantial portion of global demand, estimated at 700 tonnes annually. However, the small global demand for gallium and germanium (140 tonnes per year) could destabilise markets with even modest increases, necessitating strategic management. This initiative, part of Australia’s Critical Minerals Research and Development Hub, aligns with national goals to enhance supply chain resilience and reduce reliance on extraction, aiming for lower-energy, cost-effective methods for mineral processing.

CHINA, UNITED STATES
United States finalizes rules restricting investments into high-tech sectors in China
(29 October 2024) The U.S. Department of the Treasury has issued finalised rules, effective 2 January, restricting U.S. persons from investing in certain high-tech sectors in mainland China, Hong Kong, and Macao, specifically artificial intelligence, semiconductors, and quantum technology. The restrictions, following an executive order from President Joe Biden in August 2023, require U.S. citizens, entities, and permanent residents to either avoid transactions in these sectors or notify the Treasury when they occur. This expanded “U.S. persons” definition could disrupt China’s tech and investment communities, where U.S.-linked individuals, such as “haigui” (overseas returnees), play significant roles. Most U.S. venture capital investors had already reduced involvement in these areas, which are now primarily state-backed in China. The rules exclude publicly traded securities and derivatives, and the Treasury emphasised that the U.S. remains committed to open investment with due consideration for national security. The administration has engaged in discussions with allies, with entities like the European Commission and the U.K. exploring similar restrictions on outbound investments in sensitive sectors.

JAPAN
Labour market shows increased tightening in September, supporting BOJ stance
(29 October 2024) Japan’s labour market showed increased tightening in September, with the job-to-applicant ratio rising to 1.24 from August’s 1.23, surpassing economist forecasts of stability. The unemployment rate fell to 2.4%, its lowest since January, with an increase of 270,000 workers and a decline of 90,000 jobless individuals year-on-year, according to reports from the labour and internal affairs ministries. This employment demand is seen as supportive of the Bank of Japan’s (BOJ) focus on wage-driven inflation as it heads into its policy meeting, although no immediate rate changes are anticipated. BOJ Governor Kazuo Ueda has signalled a patient stance, with most economists predicting a rate hike in December or January, pending further evidence of sustained wage growth. The BOJ’s updated outlook, expected post-meeting, will reflect trends in workforce participation, particularly among women, whose numbers grew by 430,000 year-on-year. Labour shortages remain particularly severe for small and medium-sized firms, with manpower issues cited in 163 bankruptcies out of 4,990 total over the last six months. Prime Minister Shigeru Ishiba has pledged economic support for these firms to manage salary increases and adopt labour-saving technologies. Wage negotiations are set to benefit from these employment trends, with the Rengo labour union targeting a minimum 5% raise, and 6% specifically for smaller businesses, following a 5.1% increase secured this year—the highest in 33 years.