THE PHILIPPINES
Economy grows by 5.2% year-on-year in Q3 2024, marking slowest expansion in five quarters
(07 November 2024) The Philippine economy grew by 5.2% year-on-year in Q3 2024, down from a revised 6.4% growth in Q2, marking the slowest expansion in five quarters. Household consumption rose by 5.1%, supported by central bank rate cuts in August and October, although declining exports and agricultural output moderated overall growth. Exports of goods and services declined by 1.0%, while imports increased by 6.4%, resulting in a “deep contraction” in net exports. The National Economic and Development Authority Secretary attributed export declines to inventory adjustments in the electronics sector, particularly semiconductors. Agriculture contracted by 2.8%, impacted by El Nino and seven typhoons, including Typhoon Yagi. Government expenditures grew by 5%, slower than the prior quarter’s 10.7% due to climate-related disruptions. President Ferdinand Marcos Jr. is targeting upper-middle-income status for the Philippines by the end of his term, requiring at least 6.5% growth in Q4 to meet the government’s 6-7% annual GDP target. HSBC noted easing inflation, central bank rate cuts, and reduced “revenge spending” as factors influencing Q3 consumption.

THE PHILIPPINES
Authorities begin clearing debris in northern regions following Typhoon Yinxing’s landfall
(08 November 2024) On 08 November, Philippine authorities began clearing uprooted trees and debris in northern regions as Typhoon Yinxing moved out to sea after making landfall the previous night with winds reaching 175 km/h. Nearly 30,000 residents had evacuated to government shelters before the storm, which fortunately caused no casualties despite significant damage. The typhoon brought 242.6 mm of rain and uprooted trees, knocked down power lines, and caused soil erosion. Cagayan province’s disaster chief reported minor landslides without fatalities. In Pamplona, strong winds tore roofs from homes, and shelter-seeking residents in Santa Ana faced additional challenges as high winds shattered windows. By 8 AM on 08 November, Typhoon Yinxing was moving across the South China Sea, while clean-up operations were underway, including power restoration and road clearing. This is the third major storm to impact the Philippines in a month, following Storm Trami and Super Typhoon Kong-rey, which collectively resulted in 158 fatalities. Climate research indicates storms in the Asia-Pacific are forming closer to coastlines, strengthening rapidly, and persisting longer on land due to climate change.

MALAYSIA
Sarawak state targets quadrupling renewable energy capacity by 2035
(08 November 2024) The state of Sarawak has set a target to quadruple its renewable energy generation capacity to 15 GW by 2035, up from its current 5.7 GW, with 62% of existing capacity derived from hydropower. Sarawak’s surplus energy is exported through the Borneo Grid to Indonesia and Brunei, and discussions are ongoing to supply up to 1 GW of renewable power to Singapore by 2031, involving a 700-km undersea cable project with Sembcorp Industries. The Baleh Dam, a 1.3 GW hydropower facility, is set to come online in 2027, while a collaboration with Abu Dhabi’s Masdar and Petronas subsidiary Gentari aims to develop a 1 GW floating solar project at the Murum Hydroelectric Plant. The CEO of the Asian Strategy and Leadership Institute views the 15 GW goal as ambitious but achievable, though he notes challenges related to local energy stability, environmental impacts of hydropower, talent development, and investment. Sarawak is also exploring power supply to Johor, driven by industrial and data centre demands. Sarawak Energy, now the first Southeast Asian global patron of the World Energy Council, is focusing on partnerships to support regional energy needs and climate objectives.

MALAYSIA
Malaysia’s central bank maintains overnight policy rate at 3.00% in final policy meeting of 2024
(06 November 2024) Bank Negara Malaysia (BNM) maintained its overnight policy rate at 3.00% in its final policy meeting of 2024, consistent with market expectations and a steady economic outlook. This rate has held since May 2023, with economists forecasting it will remain stable until at least 2026. BNM noted continued economic strength, supported by resilient domestic spending and increased exports. Inflation rates, both headline and core, have averaged 1.8% year-to-date, with 2025 inflation projected to stay manageable due to easing global costs and stable domestic demand. However, BNM highlighted that the inflation outlook may be influenced by government policies, particularly as Malaysia phases out blanket subsidies on items like diesel, electricity, and chicken, with further fuel subsidy cuts expected by mid-2025. In October’s budget, the government raised its 2024 economic growth forecast to 4.8%-5.3%, up from 4%-5%. Preliminary estimates for Q3 show annual growth at 5.3%, down from Q2’s 5.9%.

INDONESIA
Indonesia aims to increase palm oil production to support growing biofuel demand
(07 November 2024) Indonesia aims to increase palm oil production to support its growing biofuel demand and President Prabowo Subianto’s food security objectives. The country launched a mandatory B35 biodiesel program in early 2023, requiring a 35% palm oil blend, and plans to increase this to 40% in 2025 to reduce carbon emissions and oil imports. While Indonesia produces approximately 60% of the world’s palm oil, efforts to boost productivity will focus on expanding a smallholder replanting programme, improving farming practices, and introducing higher-yielding crop varieties. Since 2017, around 360,000 hectares have been replanted under the programme, though this remains below the target of 180,000 hectares annually. It is estimated that 2024 production will remain around 50 million tonnes, with output unlikely to increase substantially in the short term due to replanting delays; newly planted trees require about three years to mature. The USDA forecasts a 3% production increase to 47 million tonnes in 2024-25, partly driven by recovery from 2023’s El Niño conditions, despite longstanding moratoriums on new land clearance to prevent deforestation. 

VIET NAM
Viet Nam sets dong’s reference rate at historic low amidst strengthening US Dollar
(07 November 2024) The State Bank of Vietnam (SBV) set the dong’s reference rate at a historic low of VND 24,283 per dollar on Thursday, amid pressure from a strengthening U.S. dollar. The dong traded at 25,402 per dollar, close to its all-time low, reflecting a more than 4% decline this year, its weakest performance since 2015. Analysts suggest that the SBV may permit a gradual depreciation of the dong but is prepared to intervene to avoid excessive weakening. The SBV sets the daily reference rate based on a basket of eight currencies, allowing a 5% trading band. The depreciation trend follows regional central banks’ adjustments to a strong dollar, with other currencies such as South Korea’s won also reaching multi-year lows. SSI Securities Corp. highlighted that this situation may push the SBV to enhance foreign exchange reserves and increase flexibility in exchange rate policies to support market depth.

VIET NAM, BRUNEI DARUSSALAM
Viet Nam and Brunei Darussalam collaborating to strengthen tourism cooperation
(08 November 2024) The Vietnamese Embassy in Brunei Darussalam held a workshop on 06 November to strengthen tourism cooperation with Brunei and the BIMP-EAGA region post-COVID-19. The Vietnamese Ambassador highlighted rising demand for sustainable and Halal tourism, noting opportunities for Viet Nam and Brunei to tap into the nearly 400 million people within BIMP-EAGA. Vu expects tourism growth in 2025, supported by cultural events in Viet Nam that are expected to attract Muslim tourists from the region. He underscored the eco-tourism potential in Brunei, Borneo, and BIMP-EAGA countries, as well as the impact of Indonesia’s capital relocation to Nusantara on tourism appeal. With existing direct flights between Brunei and Viet Nam, both countries serve as gateways connecting the Mekong region and BIMP-EAGA. The Embassy aims to collaborate with partners to promote tourism across these regions, including new travel routes. Representatives from Brunei and Malaysia expressed interest in closer tourism ties, acknowledging Viet Nam’s recent e-visa introduction, enhanced air links, and expanded Halal services. Brunei’s Tourism Department Acting Director, called Viet Nam a key market, with plans to promote Brunei’s cultural and Islamic tourism through social media influencers. In 2024, Brunei welcomed 4,000 Vietnamese tourists, and its national airline facilitated travel for over 12,000 passengers on six weekly flights between Brunei and Ho Chi Minh City.

RCEP Monitor

SOUTH KOREA
Korean government revises approach to regulating dominant online platforms
(08 November 2024) South Korea’s government has revised its approach to regulating dominant online platforms, shifting from the proposed Platform Competition Promotion Act (PCPA) to amendments in the existing Monopoly Regulation and Fair Trade Act. The PCPA, criticised by the United States for potentially benefiting Chinese companies, was aimed at platforms with over 60% market share and annual local revenues exceeding KRW 4 trillion (USD 2.9 billion), such as Naver, Kakao, and Baemin. The amendments will still enable scrutiny of dominant platforms but focus on interventions for specific abuses rather than broad preemptive controls. However, the changes have drawn mixed reactions. Industry groups, like the Digital Economy Research Institute, warn of stifled innovation, while advocates such as People’s Solidarity for Participatory Democracy argue that the adjustments lack the power to curb monopolistic practices effectively. The Korea Fair Trade Commission (KFTC) recently fined Kakao T KRW 72.4 billion for abusing market power in the taxi-hailing sector, where it holds a 96% share, a record penalty intended to address anti-competitive behaviour. Meanwhile, Democratic Party legislators have threatened to revive the PCPA if voluntary negotiations between platforms like Coupang and Baemin and small business owners stall, reflecting ongoing tensions.

CHINA
Chinese spending on chipmaking equipment projected to exceed USD 40 billion in 2023
(07 November 2024) China’s spending on chipmaking equipment is projected to exceed USD 40 billion in 2023 but is expected to fall below this level in 2024 due to earlier advance purchases spurred by U.S.-China tensions, according to SEMI. In 2025, the market is anticipated to contract further by 5-10%, driven by declining equipment utilisation rates at Chinese semiconductor plants. ASML Holding, which recorded 50% of its recent quarterly sales in China, forecasts this share to decrease to 20% in 2025, leading the company to lower revenue expectations. SEMI also estimates a 4% annual decline in China’s chipmaking equipment spending from 2023 to 2027, contrasting with projected annual growth of 22% in the Americas, 19% in Europe and the Middle East, and 18% in Japan. Despite this downturn, China will remain the world’s largest chipmaking equipment market, with expected spending of USD 144.4 billion between 2024 and 2027, outpacing South Korea’s USD 108 billion and Taiwan’s USD 103.2 billion. China’s government aims to boost domestic self-sufficiency in semiconductors, with a 2023 self-sufficiency rate of 23%, supporting local suppliers like Naura Technology Group and AMEC, which are increasing technological capabilities. Semiconductor Manufacturing International Corp. (SMIC) and other local chipmakers are expanding procurement of domestic equipment, in part due to state direction.

CHINA
Chinese exports rose by 12.7% year-on-year to USD 309.06 billion, fastest increase since March 2023
(06 November 2024) In October, China’s exports rose by 12.7% year-on-year to USD 309.06 billion, marking the fastest increase since March 2023 and surpassing analysts’ forecast of 5.2%. This significant growth, compared to 2.4% in September, is attributed to delayed shipments due to improved weather, price discounts, and seasonal demand. Imports, however, dropped by 2.3%, missing the forecasted decline of 1.5%. Export gains included an 8.1% rise to the U.S., a 12.7% increase to the EU, and a 15.8% rise to ASEAN nations, while imports from these regions fell over 6%. Exports to Russia surged nearly 27%. Chinese car exports grew 11%, despite tariffs from the U.S. and EU. Economists expect export strength to continue into early next year as businesses anticipate possible trade conflicts with the U.S. Fiscal stimulus measures, including rate cuts and relaxed property purchase rules, have been implemented to counter weak domestic demand, and further stimulus details are expected after China’s parliament meeting concludes. Factory activity also showed slight improvement in October, with the purchasing managers’ index reaching 50.1, a positive shift from September’s 49.8.