CARI Captures Issue 707: Viet Nam scraps two-child policy in response to falling fertility rates
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 scraps two-child policy in response to falling fertility rates
(05 June 2025) On 05 June, Viet Nam’s National Assembly approved amendments removing the long-standing two-child policy in response to declining fertility rates and demographic pressures. The policy, introduced in 1988, had penalised Communist Party members with limited career advancement for having more than two children. Viet Nam’s birth rate has fallen below replacement level, from 2.11 in 2021 to 1.91 in 2024, with urban centres such as Ho Chi Minh City reporting a 2024 rate of 1.39 and a growing elderly population, now nearly 12%. The country’s working-age population is projected to peak in 2042, with an overall population decline likely by 2054. In December, Ho Chi Minh City began offering a USD 120 incentive to women who have two children before age 35. The government provides six months of paid maternity leave and free healthcare for children under six, with free public school tuition extending to the end of high school starting September. The Health Ministry also proposed increasing fines for sex-selective practices to USD 3,800, amid persistent gender imbalances in regions like the Red River Delta.
VIET NAM, UNITED STATES
Viet Nam’s Trade Minister meets with American corporate execs ahead of trade talks
(12 June 2025) Viet Nam’s Trade Minister Nguyen Hong Dien met with executives from Nike, Walmart, and Exxon Mobil in the US as part of efforts to gain corporate backing ahead of trade negotiations aimed at avoiding a proposed 46% tariff, which has been temporarily reduced to 10% for a 90-day negotiation period. Dien urged companies to support the talks and warned Nike — which manufactures around 50% of its shoes and 25% of its clothing in Viet Nam — that higher tariffs could disrupt its global supply chain and increase consumer prices. He also encouraged Walmart to establish a purchasing centre in Viet Nam. Exxon Mobil pledged support during a separate meeting. The minister also engaged with the American Apparel & Footwear Association, Gap Inc, Levi Strauss and others ahead of the next negotiation round. Viet Nam reported progress after the second round of talks but acknowledged unresolved issues. To address US concerns, Viet Nam has intensified its crackdown on trade fraud and agreed to increase imports from the US, including a recent USD 3 billion agricultural purchase. However, US pressure to cut Viet Nam’s reliance on Chinese imports remains. From January to May 2025, Vietnam’s exports to the US reached USD 57.2 billion, while imports from China totalled USD 69.4 billion, according to the national statistics office.
MALAYSIA
Malaysia becomes ASEAN’s top destination for foreign direct investments and tourism
(12 June 2025) Malaysia has become Southeast Asia’s top destination for both foreign direct investment and tourism, according to the Housing and Local Government Minister, who cited the Malaysian government’s policies on governance, investor support, and diplomacy. Malaysia ranked third globally in the 2025 Baseline Profitability Index, behind India and Rwanda, and led the Southeast Asian region, surpassing Singapore, Viet Nam, Indonesia and the Philippines. The BPI evaluates countries’ investment attractiveness based on profit potential, value retention, and capital repatriation. In tourism, Malaysia received over 10.1 million foreign visitors in Q1 2025, ahead of Thailand (9.55 million), Viet Nam (6 million), and Singapore (4.31 million), according to data cited by Vietnam Express. Nga also pointed to Malaysia’s recent appointment as president of the UN-Habitat General Assembly as further recognition of the country’s leadership in sustainable urban development and international engagement.
THAILAND
Consumer Confidence Index falls to 54.2 in May 2025 from 55.4 in April
(12 June 2025) Thailand’s Consumer Confidence Index fell to 54.2 in May 2025 from 55.4 in April, marking its fourth consecutive monthly decline and the lowest level since March 2023, based on a UTCC survey of 2,242 individuals. The Overall Thai Economic Confidence Index dropped to 48.1, the Employment Opportunity Confidence Index to 51.9, and the Future Income Confidence Index to 62.7. The UTCC cited fears over US trade policy shifts and “Trump 2.0” as key drivers of pessimism. Despite Q1 stimulus and 0.5 percentage points in interest rate cuts, consumers report sluggish recovery and credit access issues. The Thai Chamber of Commerce Confidence Index also declined to 48.0 in May. The Commerce Ministry projected negative inflation in Q2 2025, with low core inflation indicating deflation risks. Thailand faces a 07 July deadline for trade talks with the US; unresolved issues may trigger reciprocal tariffs, with the UTCC estimating potential losses of THB 150–200 billion in exports and tourism. UTCC forecasts Q2 GDP growth just over 1%, with 2025 full-year growth expected between 1.5–2%, subject to downside risks. The UTCC urged immediate deployment of a THB 175 billion stimulus budget, further interest rate cuts, debt restructuring, and tourism promotion targeting 35 million international arrivals. Political instability could delay the 2026 budget by up to nine months and freeze THB 1.75 billion in stimulus funds, compounding economic vulnerabilities.
THAILAND
Thailand records 33% year-on-year drop in Chinese tourist arrivals in January-May period
(12 June 2025) Thailand recorded a 33% year-on-year drop in Chinese tourist arrivals to 1.95 million in January–May 2025, contributing to a 3% fall in total foreign arrivals to 14.36 million; May alone saw a 45% decline in Chinese visitors. The sharp reduction follows negative publicity from a high-profile criminal case involving a Chinese actor as well as ongoing safety concerns, including a March earthquake that damaged infrastructure in Bangkok. The Tourism and Sports Ministry has proposed a THB 750 million (USD 23 million) subsidy scheme to boost arrivals, with THB 350 million earmarked for flights from secondary Chinese cities, aiming to attract 790,000 tourists and generate THB 33.5 billion in revenue. Forecasts for total 2025 arrivals have been revised downward to 35 million by both the Kasikorn Research Center and InnovestX, from earlier projections of 40 million and 39–40 million respectively. Meanwhile, arrivals from the UK and US rose 20% and 11%, respectively, while India recorded a 16% increase. Prime Minister Paetongtarn Shinawatra issued five directives, including strengthening tourist security, expediting immigration procedures, and intensifying media campaigns to counter misinformation. The government aims to offset the China shortfall by attracting higher-spending tourists from Western markets.
THE PHILIPPINES
Filipino rice sector faces severe vulnerability due to policy failures and under-investments
(11 June 2025) A new report by the Integrated Rural Development Foundation warns that the Philippines’ rice sector faces severe vulnerability due to policy failures, tariff reductions, and prolonged under-investment, placing food security at risk. The country became the world’s top rice importer in 2024 with 4.7 million metric tons, and further increases are projected by the USDA to reach 5.5 million metric tons by 2026. Tariffs on imported rice were reduced from 35% to 15% last year, while the loss of 520,000 hectares of converted farmland has led to a shortfall of 3.3 million metric tons in potential milled rice. Producers receive only PHP 11–12 per kilogram versus production costs of PHP 17–18, deterring new entrants to farming. Government investment in agriculture remains at 0.3% of GDP, far below the 1% UNESCO benchmark, with outdated irrigation, poor seed access, and low R&D spending. Rice cartels are reported to manipulate prices while retail costs remain elevated. Despite this, the UN FAO projects 2024–25 output at 19.7 million tons, slightly above the five-year average. The government declared a food security emergency in February and began subsidised rice sales in April, to run through December. Imports in the first five months of 2025 dropped 20.9% year-on-year to 1.7 million tons. The report proposes a mandated minimum support price of PHP 25/kg for unhusked rice and passage of the long-pending National Land Use Act. On 10 June, the Asian Development Bank announced up to USD 1.5 billion in funding for sustainable rice production from 2025–2030, with USD 500 million allocated to support Philippine smallholder farmers.
INDONESIA
Indonesia secures USD 18.8 billion in infrastructure investments under ESG framework
(13 June 2025) Indonesia has secured USD 18.8 billion in infrastructure investment under its ESG-based financing framework launched in 2022. The framework guides public-private partnership (PPP) schemes using instruments such as the Project Development Facility (PDF), Viability Gap Fund (VGF), Availability Payment (AP), and guarantees via the Indonesia Infrastructure Guarantee Fund (IIGF). These tools are designed to attract private investment into large-scale, high-risk infrastructure projects while adhering to sustainability principles. Sectors covered include roads, toll roads, energy, and water. In addition, the government has mobilised USD 3.29 billion through the SDG Indonesia One blended finance platform managed by PT Sarana Multi Infrastruktur (PT SMI), with USD 396 million already disbursed across 111 development and 7 financing projects. Commitments under this platform have been made by 38 partners.
RCEP Monitor
CHINA
Exports rise 4.8% year-on-year in May 2025, below 5% forecast
(09 June 2025) China’s exports rose 4.8% year-on-year in May, below the 5% forecast and down from April’s 8.1%, while imports declined 3.4%, missing expectations and marking a second consecutive monthly contraction. Exports to the U.S. dropped 34.5%, accelerating from April’s 21% fall, and U.S. imports into China fell 18.1%. Exports to Europe and ASEAN increased over 10%. China’s overall trade surplus reached USD 103.2 billion, up from April’s USD 96.18 billion. Consumer prices declined 0.1% in May, the fourth straight month of deflation, with transportation fuel down 12.9% and food prices down 0.4%; core CPI rose 0.6%. Manufacturing activity contracted for the second consecutive month. Despite a 90-day truce agreed in Geneva, trade tensions persisted, with tariffs revised to 30% on Chinese exports to the U.S. and 10% on U.S. goods to China. President Trump and President Xi held a call agreeing to resume talks and ensure the flow of rare earth exports, while China’s Ministry of Commerce confirmed it is approving export licences for those materials. Senior U.S. officials, including Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, are meeting Chinese Vice Premier He Lifeng in London for further negotiations. Domestically, a weak property market and employment concerns continue to suppress consumption. Analysts expect additional fiscal support, with Nomura Securities projecting increased policy intervention in H2 to meet the 5% growth target.
JAPAN
Retail rice prices nearly double over the past year, prompting emergency stockpiles release
(12 June 2025) Japan’s retail rice prices nearly doubled over the past year due to a combination of supply chain disruptions, weather-related crop damage, panic-buying, and increased domestic and tourist demand, prompting the government to release emergency stockpiles in March. The average retail price fell to JPY 4,223 for 5kg in early June from a May peak of JPY 4,285. Farm Minister Shinjiro Koizumi has committed to accelerating price relief by distributing reserve rice directly to retailers, despite criticism over the quality of the “old” rice. Longstanding government policies, including the 1971 acreage reduction scheme that halved rice paddy land to below 1.4 million hectares by 2024, continue to affect supply. Although officially abolished in 2018, land-use incentives for alternative crops like soybeans persist. Structural issues in agriculture remain, with 80% of rice farmers operating part-time on under 2 hectares and relying on non-farming income, while contributing only 20% of total production. Industry figures argue that the acreage policy has undermined agricultural sustainability and advocate for export expansion and new farmer entry schemes. Public support for Prime Minister Shigeru Ishiba has reached its lowest since October, with inflation and rice prices cited as contributing factors. Ishiba told parliament that increasing production is under consideration but stressed the need to balance pricing with producer welfare and food security.
AUSTRALIA
Average price of Australian home reaches AUD 1 million for first time
(11 June 2025) The average price of an Australian home reached AUD 1,002,500 in the March 2025 quarter, marking the first time it has surpassed AUD 1 million, according to data from the Australian Bureau of Statistics (ABS). This represents a 0.7% increase from the previous quarter. New South Wales remains the most expensive state, with an average home price of AUD 1.2 million, followed by Queensland at AUD 945,000. Western Australia, South Australia, and Queensland were identified as the primary contributors to the national increase, though annual growth is slowing. The ABS figures reflect valuations across 11.3 million dwellings nationwide. The Australian Housing and Urban Research Institute attributed the milestone to long-term home price growth exceeding wage increases, affecting both low- and medium-income households. He highlighted insufficient housing supply, population growth, investor tax incentives, and underinvestment in social housing as key drivers. Rental shortages and limited social housing availability persist. Compared internationally, Australia’s average home price is nearly double that of the UK (AUD 560,000) and higher than Canada’s AUD 763,000. Prime Minister Anthony Albanese stated his government would reduce planning-related red tape for developers to help meet a target of building 1.2 million homes within five years.
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15 participating countries |
20 chapters |
2.2 billion |
US$26.2 trillion |
28% |
| ASEAN member states, Australia, China, Japan, South Korea, New Zealand | trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement | combined population, 30% world’s population | combined GDP, 30% global GDP | global trade (based on 2019 figures) |