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.

FRANCE, ASEAN
French President Emmanuel Macron on official tour of Southeast Asia
(27 May 2025) French President Emmanuel Macron has announced EUR 9 billion in commercial deals and new defence cooperation initiatives during a visit to Viet Nam, as part of a broader tour aimed at strengthening EU ties with Southeast Asia amid escalating US-China tensions. Macron will next visit Indonesia and Singapore, where he will deliver a keynote at the Shangri-La Dialogue. His trip coincides with intensified EU efforts to diversify supply chains and expand trade, including ongoing talks with Malaysia, Indonesia and Thailand, efforts to revive negotiations with Australia, and a push to finalise a broad agreement with India by year-end. Southeast Asian nations, wary of US tariffs and a flood of cheap Chinese exports, are increasingly viewing Europe as a stabilising counterbalance, though limited in strategic capacity. Macron’s agenda includes highlighting the global implications of the Ukraine war, especially concerning China and North Korea’s support for Russia, which has unsettled officials in Seoul and Tokyo. The EU is also exploring ties with the CPTPP trade bloc and holding informal discussions with South Korea and Japan on Trump-era trade dynamics. Trump’s recent tariff threats against the EU—potentially rising to 50 percent by July—have further prompted Southeast Asian countries to monitor EU-US trade negotiations closely. Macron’s Indo-Pacific strategy, supported by joint military activities with regional partners, seeks to counter perceptions of Europe’s limited strategic relevance, despite internal EU debates over prioritising commitments in Asia versus challenges closer to home.

ASEAN, GCC
ASEAN to initiate FTA negotiations with Gulf Cooperation Council (GCC)
(27 May 2025) Prime Minister Datuk Seri Anwar Ibrahim confirmed that ASEAN will initiate free trade agreement (FTA) negotiations with the Gulf Cooperation Council (GCC), following discussions at the 2nd ASEAN-GCC Summit in Kuala Lumpur. The announcement builds on earlier talks held in Riyadh two years prior. Kuwait’s Crown Prince Sheikh Sabah Khaled Al-Hamad Al-Sabah, representing the current GCC Supreme Council, stated that GCC is ASEAN’s seventh-largest trading partner, with bilateral trade reaching USD 130.7 billion in 2023 and a target of USD 180 billion by 2032. The Crown Prince also noted increased foreign investment flows into Asia as an indicator of long-term integration. Malaysia signed a joint statement on Monday to begin bilateral negotiations for a Malaysia-GCC FTA (MGFTA). Malaysian Investment, Trade and Industry Minister Tengku Zafrul Aziz said the MGFTA aims to reduce tariffs and non-tariff barriers, enhance business mobility, and strengthen regulatory cooperation. He projected further growth beyond the current USD 22 billion in trade between Malaysia and the GCC.

MALAYSIA, JAPAN
Malaysia secures MYR 4.68 billion in potential investment leads from Japan at Osaka Expo 
(03 June 2025) Malaysia has secured MYR 4.68 billion in potential investment leads from Japan following a recent investment mission linked to Expo 2025 Osaka, representing approximately 57% of the MYR 7.39 billion in total potential investments related to Malaysia’s expo presence to date, according to the Malaysian Investment Development Authority (Mida). Engagements took place in Kyoto, Kobe, Osaka, and Tokyo, involving one-on-one meetings and a seminar focused on green and high-value sectors. The CEO of Malaysian Investment Development Authority (MIDA) stated that the agency would continue to facilitate investments aligned with national goals in clean energy, innovation, and sustainability. Malaysia’s Investment, Trade and Industry Deputy Minister, officiating the Malaysia Pavilion, emphasised the expo’s role in showcasing Malaysia’s innovation and sustainability credentials. A key outcome was the signing of a memorandum of understanding between Sarawak Energy Bhd and the Japan Bank for International Cooperation to advance clean energy cooperation. The Malaysia Pavilion is scheduled to host over 150 business engagements during the six-month expo and contributes to the government’s target of generating MYR 13 billion in combined investment and trade outcomes.

INDONESIA
Trade surplus narrows to USD 159 million in April 2025, smallest since October 2019
(02 June 2025) Indonesia’s trade surplus narrowed sharply to USD 159 million in April 2025, its smallest since October 2019 and well below the USD 2.8 billion median forecast in a Bloomberg analyst survey, as imports surged by 22% year-on-year to USD 20.59 billion, driven by capital goods, raw materials and consumer goods. Exports increased by 5.8% to USD 20.76 billion, with gains in coffee and basic metals partially offsetting a 21% decline in mining exports, notably coal. Imports from China rose 54% year-on-year, with key items including mechanical and electrical machinery, vehicles and parts; imports from Japan and Singapore also increased. The import rebound reflects pre-emptive restocking in anticipation of rising global trade risks, including upcoming US tariff increases on steel in June and the expiry of tariff reprieves in July. The continued import surge and weaker mining exports could maintain pressure on the trade balance and affect the current account, though it is noted that low oil prices and stable services should mitigate the impact. Indonesia has generally posted trade surpluses above USD 1 billion in recent years, with the last deficit recorded in April 2020.

CAMBODIA
Public debt stock reaches USD 12.18 billion as of end-Q1 2025
(01 June 2025) Cambodia’s public debt stock reached USD 12.18 billion at the end of Q1 2025, a 1.24% increase from USD 12.03 billion at end-2024, with 99% (USD 12.06 billion) comprising external debt and 1% (USD 118.33 million) domestic debt, according to the Ministry of Economy and Finance’s Public Debt Statistical Bulletin. Debt composition included 48% in USD, 18% in SDR, 11% in JPY, 10% in CNY, 8% in EUR, and 5% in local and other currencies. In Q1 2025, Cambodia signed USD 78.81 million in new concessional loans, representing 3% of the legally permitted ceiling, with an average grant element of approximately 50%. Debt service payments totalled USD 237.8 million during the same period. Cambodia’s Deputy Prime Minister and Finance Minister stated that all loans were directed toward public investment in priority sectors aimed at long-term economic productivity. Cambodia’s total public debt stood at 18.4% of GDP, significantly below the 40% threshold, and was assessed as “sustainable” and at “low risk” of distress.

VIET NAM, UNITED STATES
Viet Nam to purchase USD 2 billion worth of agricultural products from United States
(03 June 2025) Vietnamese companies will sign memorandums of understanding with US partners to purchase USD 2 billion worth of American agricultural products, according to Vietnam’s agriculture ministry. The agreements, signed during a US visit led by Agriculture Minister Do Duc Duy and a 50-company delegation, include five MoUs covering USD 800 million of corn, wheat, dried distillers grains, and soybean meal from Iowa over three years. These deals form part of ongoing negotiations with the Trump administration to reach a new trade agreement aimed at reducing the USD 123 billion US trade deficit with Viet Nam. Reciprocal tariffs of 46% imposed by the US have been paused until July but remain a threat to Viet Nam’s export-driven economy. In 2023, Vietnam imported USD 3.4 billion of US farm goods and exported USD 13.68 billion in agricultural products to the US. Additional Vietnamese commitments include purchases of Boeing aircraft, liquefied natural gas, and enforcement actions against counterfeit goods and digital piracy, in response to US concerns.

VIET NAM
Vietnamese conglomerates bid for construction of USD 67 billion North–South high-speed railway project
(02 June 2025)  Vingroup and Truong Hai Group Corporation (Thaco), two of Vietnam’s largest conglomerates, have submitted competing bids to lead the USD 67 billion North–South high-speed railway project connecting Hanoi and Ho Chi Minh City. Vingroup, via its newly established subsidiary Vinspeed, has proposed completing the 1,500km rail line by December 2030, with plans to operate the route and develop real estate along it. Vingroup is seeking an unprecedented 35-year, zero-interest government loan covering 80% of the cost (approximately USD 49 billion), offering to fund the remaining 20% and claiming a potential USD 6 billion cost reduction through international technology partnerships. In contrast, Thaco has proposed funding 80% through domestic and international loans, requesting state guarantees and interest coverage for 30 years. Both bids require the government to manage land clearance. Concerns have been raised about moral hazard, cost control, safety, and public debt implications, with economist Do Thien Anh Tuan warning that full government backing could result in the project’s total cost becoming public debt. The government approved the project in November 2023, with renewed emphasis on private sector involvement amid regional infrastructure competition. Communist Party chief To Lam has publicly supported greater private sector roles, and analysts suggest a possible future collaboration between the rival bidders.

RCEP Monitor

AUSTRALIA
Australia announces 3.5% increase to Australia’s national minimum wage
(03 June 2025) The Fair Work Commission (FWC) has announced a 3.5% increase to Australia’s national minimum wage, raising it to AUD 24.94 per hour effective 1 July 2025, providing approximately AUD 1,670 more annually for full-time minimum wage workers. This adjustment affects around 2.6 million employees and constitutes a real wage increase amid declining inflation, with headline consumer price inflation at 2.4% in Q1 2025, within the Reserve Bank of Australia’s 2–3% target. The FWC President stated the increase is necessary to prevent the permanent erosion of real incomes among low-paid workers. The Australian Council of Trade Unions (ACTU) supported the decision, citing that minimum wage earners were disproportionately impacted by post-pandemic inflation. Last year’s minimum wage increase was 3.75%, broadly aligned with inflation at the time. The Reserve Bank recently reduced interest rates to a two-year low, citing easing domestic inflation and global risks, with the possibility of further cuts. The labour market remains steady with unemployment at 4.1% for over a year, bolstered by public sector hiring, and wage growth remains subdued, reducing inflationary concerns.

CHINA
Official manufacturing PMI rises slightly to 49.5 in May 2025  
(31 May 2025) China’s official manufacturing purchasing managers’ index (PMI) rose slightly to 49.5 in May from 49.0 in April but remained below the 50 threshold, indicating continued contraction for a second month. The new orders sub-index increased to 49.8, while the new export orders sub-index rose to 47.5, reflecting a partial rebound in trade activity, including with the United States. The non-manufacturing PMI edged down to 50.3 from 50.4. US President Donald Trump announced a doubling of global steel and aluminium tariffs to 50%, accusing China of breaching a bilateral tariff rollback agreement. Moody’s maintained a negative outlook on China, citing ongoing trade tensions and long-term credit risks, although it acknowledged improvements in state-owned enterprise and local government debt management. China’s central bank introduced interest rate cuts and liquidity injections earlier in the month, with further monetary and fiscal stimulus expected. Despite faster-than-expected GDP growth in Q1 and a 2025 target of around 5%, analysts warn that sustained tariff pressure could undermine momentum. The short-term rise in April exports was attributed to overseas buyers accelerating orders during the 90-day US-China tariff pause.

JAPAN
JPY 2.6 trillion 10-year bond auction sees highest bid-to-cover ratio since April 2024
(03 June 2024) Japan’s JPY 2.6 trillion 10-year bond auction saw the bid-to-cover ratio rise to 3.66, the highest since April 2024 and up from 2.54 last month, offering temporary support ahead of Thursday’s 30-year debt sale. Ten-year yields declined 2.5 basis points to 1.48%, and futures rose to 139.15. Demand was supported by the attractiveness of the 1.5% yield level, but investors remain cautious amid concerns about the upcoming 30-year auction, where yields reached 3.185% last month. Thirty-year yields rose 0.5 basis points to 2.935% on Tuesday. Uncertainty is driven by global concerns over growing budget deficits, reduced central bank bond purchases, and Japan’s shift toward a normalised yield environment. Bank of Japan Governor Kazuo Ueda signalled a continued reduction in bond purchases, which will be reviewed at the 16–17 June policy meeting. A government draft fiscal policy plan calls for increased domestic bond buying. Recent weak demand at 20- and 40-year auctions has heightened sensitivity in the super-long segment. The Ministry of Finance sent a market questionnaire last week, prompting speculation about potential adjustments to issuance. Former BOJ board member Makoto Sakurai suggested the pace of quarterly JPY 400 billion purchase reductions may soon pause. Market participants view the improved 10-year auction result as easing pressure on that segment, though risks persist for longer maturities.