Captures has widened its scope to include news related to all the members of the Regional Comprehensive Economic Partnership (RCEP) agreement which was signed towards the end of 2020. Besides the ASEAN Member States, this includes Australia, New Zealand, China, Japan, and South Korea. The other weekly newsletters under CARI, China-ASEAN Monitor and Mekong Monitor will also be consolidated into the Captures newsletter. We hope this new version of Captures will serve you better and look forward to providing a curation of stories relevant to ASEAN and its trading partners.

ASEAN
Southeast Asian economies preparing for impact of Trump tariffs
(11 August 2024) Southeast Asian leaders, including Philippine President Ferdinand Marcos Jr., Malaysian Prime Minister Anwar Ibrahim, and Cambodian Premier Hun Manet, congratulated Donald Trump on his presidential win and expressed hope for continued US support for regional stability and economic growth. Concerns over potential US trade tariffs, specifically Trump’s proposed 10%-20% blanket tariffs on imports and a 60% tariff on Chinese imports, have Southeast Asian countries preparing for economic impacts, given their reliance on the US market. Analysts note Vietnam, as the largest Southeast Asian exporter to the US, could be significantly affected, especially with its trade surplus reaching EUR 96 billion last year. It should be recalled that the previous Trump administration had nearly sanctioned Vietnam for currency manipulation. Oxford Economics estimates that proposed tariffs may reduce exports from “non-China Asia” by 3%, with poorer economies facing greater declines. Some Southeast Asian nations could see investment inflows if companies divest from China in response to new tariffs, as occurred after 2018, benefiting countries like Vietnam and Malaysia.

INDONESIA
Middle class contracts to 47.8 million in 2023 due to COVID-19 and sluggish trade
(15 November 2024) Indonesia’s middle class has contracted significantly, with the Central Bureau of Statistics reporting a decrease from 57.3 million people in 2019 to 47.8 million in 2023, while the “aspiring middle class” grew from 128.85 million to 137.5 million over the same period. Economists cite the COVID-19 pandemic’s aftermath, limited social assistance for middle-class individuals, and Indonesia’s dependency on trade with countries experiencing economic slowdowns as contributing factors. Policy specialists have highlighted that middle-class citizens primarily support tax revenues but receive minimal social benefits, which are typically linked to formal employment. Additionally, the country’s reliance on international trade has been strained by reduced demand from key partners like the US, China, and Japan. Researchers also attribute further middle-class challenges to deindustrialisation, which has shifted the labour force from manufacturing to lower-paid, informal service jobs lacking social security. Newly inaugurated President Prabowo Subianto has promised economic reforms, including GDP growth of 8% and poverty reduction. 

THAILAND
Thai cabinet approves new holidays in 2025 to boost tourism and support economy
(12 November 2024) Thailand’s cabinet has approved two new holidays in 2025 — 2 June and 11 August — to encourage extended travel on long weekends, aiming to boost tourism and support the economy. The cabinet also declared 2 January, 2026, a holiday, extending the New Year’s break to five days. With these additions, public holidays in 2025 will total 21 days. A deputy government spokeswoman noted that the holidays align with Prime Minister Paetongtarn Shinawatra’s plan to make 2025 a “year of tourism and sports.” Tourism, which comprises 12% of Thailand’s GDP and accounts for nearly 20% of jobs, is central to Thailand’s economy, and the additional holidays are expected to strengthen its post-pandemic recovery. Thailand has already welcomed approximately 30 million tourists in 2023, on track to reach a target of 36.7 million by year-end. Recent forecasts from online platform Agoda suggest that foreign tourist arrivals in 2024 may surpass the pre-pandemic record of nearly 40 million in 2019, which generated USD 60 billion (MYR 266.1 billion) in revenue.

MALAYSIA, UNITED STATES
Malaysia removed from US currency manipulation watch in final report under Biden
(15 November 2024) The U.S. Treasury Department’s latest semi-annual currency report, covering the year to June 30, concluded that no major U.S. trading partners manipulated their currency. Key countries monitored include China, Japan, South Korea, Taiwan, Singapore, Viet Nam, and Germany, while Malaysia was removed, and South Korea was newly added for its significant global current account surplus and trade deficit with the U.S. China remains on the monitoring list due to its substantial U.S. trade surplus and lack of transparency in foreign exchange practices. China’s export volume growth, despite declining prices, reflects weak domestic demand and heavy reliance on foreign demand, with net exports contributing 43% to China’s real growth in Q3 2024. Japan’s presence on the monitoring list is due to its USD 65 billion U.S. trade surplus and a rise in its global current account surplus to 4.2% of GDP. Japan’s recent yen-support interventions were noted as transparent but advised to be exceptional without prior consultations. The report marks President Biden’s last Treasury review before currency oversight shifts to the incoming Trump administration, which has pledged 60% tariffs on Chinese goods and 10%-20% tariffs on other imports.

MALAYSIA
Cross-border renewable energy auction for Singapore to start by year-end
(13 November 2024) Malaysia’s Deputy Prime Minister announced that the cross-border renewable energy auction for Singapore’s energy importer, facilitated by Energy Exchange Malaysia, will start by year-end. As part of a broader ASEAN grid integration, this initiative aims to enhance regional energy security and stimulate economic cooperation in renewable energy trade. Malaysia also plans to phase out coal-fired power gradually, with no new coal plants, aligning with the International Energy Agency’s recommendations to mitigate global warming. By 2035, Malaysia targets a 20% increase in grid flexibility to support renewable integration, alongside investments in smart grids and energy storage systems. Under the National Energy Transition Roadmap, Malaysia aims to elevate renewable energy’s share in its power capacity to 70% by 2050 from the current 28%. Additionally, Malaysia is set to restructure water services in collaboration with the National Water Services Commission and aims to achieve 98% rural clean water access and a 31% non-revenue water rate by 2025.

THAILAND
Baht drops over 1% amid investor concerns over independence of central bank
(12 November 2024) Thailand’s baht dropped over 1% to 34.739 per dollar, the largest decline among Asian currencies, amid investor concerns over potential government influence on the central bank’s independence. The market responded to news that Kittiratt Na-Ranong, a former finance minister known for criticising the central bank’s tight monetary policy, is set to become the Bank of Thailand’s (BOT) new chairman. This anticipated appointment has raised investor caution, especially given the government’s continued push for rate cuts. The baht has fallen more than 7% this quarter, marking Asia’s weakest performance, partly due to Thailand’s exposure to Trump’s expected trade tariffs, which could pressure the economy further. Although the BOT chairman does not set policy, Kittiratt’s role in appointing members to the Monetary Policy Committee and evaluating the governor has raised market expectations for potential rate cuts in 2024.

CAMBODIA, VIET NAM
Cambodia overtakes Sri Lanka in apparels exports  
(13 November 2024) Sri Lanka’s apparel export industry is facing stagnation, with projections of USD 5 billion in export value for 2024, falling behind competitors like Cambodia, which earned nearly USD 9 billion from textiles in 2024’s first three quarters, a 25% increase from 2023. Cambodia’s apparel industry, bolstered by FTA access and modernisation initiatives, has seen substantial growth, making it the sixth-largest garment exporter to the US and Europe. Other Southeast Asian nations, including Vietnam, have also increased apparel exports by leveraging FTAs and advanced manufacturing technologies. The region’s growing focus on sustainability, with eco-friendly practices and renewable energy adoption, is positioning Southeast Asia as a competitive and responsible apparel production hub.