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.

VIET NAM
Viet Nam records 17.5 million international arrivals in 2024, ranking third in Southeast Asia 
(25 March 2025) Viet Nam recorded 17.5 million international arrivals in 2024, surpassing Singapore and ranking third in Southeast Asia behind Malaysia (25 million) and Thailand (35 million). It leads the region in tourism recovery, regaining 98% of its pre-pandemic levels, ahead of Thailand (87.5%) and Singapore (86%). In January and February 2024, 4 million international tourists visited, a 30.2% year-over-year increase, according to the Vietnam National Authority of Tourism. Key growth factors include Vietnam Airlines’ first nonstop US route (San Francisco–Ho Chi Minh City, launched in 2021), expanded electronic visa policies from 2023 allowing 90-day stays, and visa-free entry for over a dozen countries. Security concerns in Thailand have driven more Chinese visitors to Viet Nam. The country aims for 23 million international arrivals in 2025, with Long Thanh International Airport opening by March to raise capacity to 25 million. By 2030, Viet Nam seeks to surpass Malaysia, leaving Thailand as its primary competitor in regional tourism.

VIET NAM, UNITED STATES
Viet Nam to reduce tariffs on several US products to improve trade balance
(26 March 2025) Viet Nam will reduce tariffs on several US products as part of efforts to improve trade balances. The tariff on US liquefied natural gas will drop from 5% to 2%, on automobiles from 45%–64% to 32%, and on ethanol from 10% to 5%. Vietnam will also eliminate tariffs on US ethane. The decree formalising these cuts is expected within the month and will take effect immediately. Viet Nam’s trade surplus with the US exceeded USD 123 billion in 2023. The cuts align with its Comprehensive Strategic Partnership with the US and recent measures to address its trade surplus. US President Donald Trump has announced an 02 April decision on reciprocal tariffs targeting trade partners with high surpluses, referring to the date as a “Liberation Day” for the US economy. The US Treasury Secretary has indicated that the focus will be on the “Dirty 15” economies with the highest goods trade surpluses with the US. The US Census Bureau lists Viet Nam among these economies, along with China, the EU, Mexico, Taiwan, Japan, South Korea, and others. White House officials have warned that early tariff reductions may not guarantee exemption from new US tariffs, as factors such as non-tariff barriers and currency policies will also be considered. The Office of the United States Trade Representative has sought public input on reciprocal tariffs, focusing on countries that collectively account for 88% of total US goods trade.

MALAYSIA, UNITED STATES
United States expected to impose tariffs on several Malaysian exports
(27 March 2025) The US is expected to impose tariffs on Malaysia’s electrical and electronics (E&E), rubber, furniture, and optical and scientific equipment exports, which are among the most vulnerable sectors, according to UOB. E&E exports account for 40% of Malaysia’s total exports, making it the third-largest Asian supplier of electrical machinery to the US. Rubber, furniture, and optical and scientific equipment exports to the US represent 2.9%, 3.5%, and 9% of Malaysia’s total exports, respectively. Malaysia ranks 15th on the US trade deficit list with a USD 24.8 billion (MYR 109.9 billion) deficit. The tariffs stem from the America First Trade Policy executive order, signed by Trump on 20 January 2024, which initiated trade investigations based on trade deficits and economic security. UOB expects retaliatory measures from major economies but notes Malaysia is unlikely to respond with countermeasures. The final tariff structure will depend on Malaysia-US negotiations and proactive policy responses. Trump’s trade strategy, aimed at reshoring US manufacturing, is expected to be more aggressive, with scope for negotiations but limited chances of full tariff removal.

MALAYSIA
Increasing pressure on Malaysia’s external balance forecasted due to slowing export growth and US tariffs  
(28 March 2025) ANZ forecasts increasing pressure on Malaysia’s external balance due to slowing export growth and potential US tariff hikes, which could weaken the ringgit. The currency, stable since early 2025 after strong appreciation in 2024, may depreciate to 4.60 against the US dollar by year-end. The FBM KLCI remains 6% below its 2024 close amid continued foreign equity outflows. Malaysia’s trade and current-account surpluses provide some currency support, with the current-account surplus projected to remain at 1.7% of GDP. However, the balance of payments surplus may narrow to 0.5% of GDP in 2025 from 0.8% in 2024. Lower foreign investment approvals in 2024 suggest weaker foreign direct investment inflows, while global financial market volatility points to a moderate financial account surplus. The government is relying on domestic demand, supported by household spending and business investment, to offset external risks. Bank Negara Malaysia has maintained its 2025 GDP growth forecast at 4.5%–5.5%, despite increasing trade uncertainties.

MALAYSIA, SINGAPORE
Companies investing in JS-SEZ may receive additional incentives beyond standard tax breaks  
(27 March 2025) Companies investing in the Johor-Singapore Special Economic Zone (JS-SEZ) may receive additional incentives beyond standard tax breaks, including talent incentives and import duty exemptions, depending on their economic impact. Investors in the 3,571 sq km zone already qualify for a 5% tax rate for up to 15 years on new manufacturing investments exceeding MYR 1 billion (USD 226 million). The Malaysian government will evaluate projects based on their strategic value, employment creation, and local business impact. South Korean dental implant company Onecera is considering a USD 10 million investment in JS-SEZ for manufacturing, citing lower costs compared to Singapore. The Korea-Asean Business Forum in Seoul, organised by UOB, Kim & Chang, and PwC, highlighted rising South Korean investments in Southeast Asia, which reached USD 10.9 billion in 2023, making South Korea the sixth largest investor in the region. UOB has opened its 11th foreign direct investment advisory centre in Seoul, supporting Korean companies expanding into ASEAN. Since 2011, UOB has facilitated over 150 Korean companies’ investments in Southeast Asia, totalling nearly SGD 3 billion. ASEAN’s growing middle class and strategic market have made it appealing for South Korean businesses.

INDONESIA
Hari Raya homecoming travel expected to decline by 24% in 2025 due to economic slowdown  
(28 March 2025) Indonesia’s Hari Raya homecoming travel is expected to decline by 24% in 2025, with 146.48 million travellers compared to 193.6 million in 2024. Indonesia’s Transport Minister attributed the drop to rising ticket prices, economic slowdown, and widespread industrial layoffs. Domestic flight prices surged, with Jakarta-Padang fares increasing from IDR 1.2 million to IDR 6 million since the start of Ramadan. Layoffs affected 60,000 workers in January and February, according to the Indonesian Trade Union Confederation. The government has introduced discounts on flights, toll fees, and shopping, along with food price stabilisation measures. It has also allocated IDR 50 trillion in religious allowances for three million civil servants and recommended a 20% holiday bonus for four million gig economy motorcycle riders. Gojek and Grab have provided bonuses under specific conditions. Household consumption, contributing 54.04% to GDP in 2024, has slowed, with Ramadan spending growing only 5%–7%, compared to 9%–12% in previous years. February’s Consumer Price Index fell by 0.09% year-on-year, the first recorded deflation since 2000. Weak demand, falling food prices, and layoffs have been attributed as key factors behind declining purchasing power.

THE PHILIPPINES
Bangko Sentral ng Pilipinas on track to resume rate cuts in April
(25 March 2025) The Bangko Sentral ng Pilipinas (BSP)’s Governor stated that the central bank is on track to resume rate cuts in April, with a likely 25-basis-point reduction, and total cuts could reach 75 basis points in 2025 depending on economic data. Inflation has remained within the BSP’s 2%-4% target for seven consecutive months, and the Philippine peso has gained nearly 1% against the US dollar this month, easing pressure for currency market intervention. Remolona confirmed that the BSP has been intervening less in foreign exchange markets in recent months. A 200-basis-point reduction in the reserve requirement ratio (RRR) for big banks will take effect on Friday, lowering it to 5% and injecting billions of dollars into the financial system. The BSP aims to reduce the RRR to zero over time while managing liquidity risks. Despite keeping the benchmark interest rate unchanged in February due to global uncertainties, the central bank continues its easing cycle. Remolona noted “somewhat more upside risk than downside risk” for inflation in 2025 and 2026. The last rate cut occurred in December before an unexpected pause in February.