MALAYSIA
Malaysian ports expected to sustain elevated container volumes due to US-China tariff war
(20 June 2025) Malaysian ports are expected to sustain elevated container volumes over the next two to three months due to spillover effects from US-China tariff tensions, with volumes rising from rerouted containers originally destined for the US. Analysts attributed this trend to cancellations or rejections by US SMEs unable to absorb tariff costs, causing containers to be redirected to countries like Malaysia. Many of these containers originate from intra-Asian trade via major Chinese ports. The ongoing 90-day grace period, expiring mid-August, is prompting frontloading of shipments, delaying a potential rebound in US-bound trade until late Q3 2025. It has been noted however that trade normalisation could reduce the current surge in throughput. It has also been noted that US efforts to re-shore production may shift supply chains away from Southeast Asia, potentially reducing US-bound cargoes at Malaysian ports. However, he identified opportunities for Malaysian exporters and logistics providers to climb the value chain and modernise infrastructure. National policies like the New Industrial Master Plan 2030 and the National Fourth Industrial Revolution Policy were cited as frameworks to drive transformation. Critical success factors include incentivisation, infrastructure upgrades, human capital development, and Industry 4.0 adoption. As ASEAN chair, Malaysia is also positioned to promote regional integration, FDI attraction, and regulatory harmonisation amid US-China decoupling pressures.

MALAYSIA
Expanded Sales and Services Tax (SST) to generate MYR 5 billion in additional revenue in 2025
(20 June 2025) Malaysia’s expanded Sales and Service Tax (SST), scheduled to take effect on 1 July 2025, is projected to generate MYR 5 billion in additional revenue in 2025 and MYR 10 billion by 2026, according to the Finance Ministry. The revised framework includes a 5–10% sales tax on non-essential goods such as salmon, king crab, imported fruits, and racing bicycles, while maintaining exemptions for essential items. A service tax of 6–8% will now apply to sectors including property leasing, construction, financial services, private healthcare, education, and beauty services, with exemptions for residential rentals and SMEs earning below MYR 500,000 annually. Industry groups including the Federation of Malaysian Business Associations and five other associations have urged a deferment, warning of increased costs, reduced investment, and risks to SMEs operating on thin margins. Concerns have been raised over cascading taxation, compliance burdens, and impacts on consumer demand and business expansion, particularly in the manufacturing and leasing sectors. Real estate consultancy Knight Frank noted that the 8% rental tax may trigger contract renegotiations or downsizing. While officials argue the tax reform is necessary to offset declining petroleum revenue and address Malaysia’s low tax-to-GDP ratio (below 13% versus OECD’s 34%), analysts recommend a phased or fine-tuned approach to limit economic disruption. Political implications are under scrutiny, especially among urban middle-income groups. Anwar Ibrahim, also finance minister, has defended the SST as a progressive alternative to GST, stating that implementation may be adjusted based on public feedback. The government has delayed enforcement penalties until 31 December 2025 to allow transition time.

CAMBODIA, THAILAND
Cambodia imposes ban on imports of Thai fruits and vegetables amidst border tensions
(19 June 2025) Cambodia has imposed a ban on imports of Thai fruit and vegetables effective Tuesday, escalating tensions linked to a renewed border dispute that intensified following a May military clash that killed a Cambodian soldier. This ban follows a warning by former leader Hun Sen demanding the removal of Thai border restrictions. Cambodia has also taken additional retaliatory steps including the closure of a border checkpoint, reduced internet bandwidth from Thailand, shortened visa durations, and banned Thai films from domestic broadcast. Cambodia has formally submitted the border dispute to the International Court of Justice, seeking a ruling on four contested areas, including the tri-border zone of Mom Bei and three ancient temples. Thailand has rejected ICJ jurisdiction and prefers bilateral negotiations. Both governments continue to frame their military actions as defensive. Prime Minister Hun Manet affirmed a commitment to territorial integrity while expressing a desire to maintain peaceful relations with Thailand. Thai Prime Minister Paetongtarn Shinawatra reaffirmed a stance on sovereignty protection and criticised Hun Sen’s social media remarks as unprofessional. The ongoing dispute has provoked strong nationalist sentiment and disrupted bilateral trade and diplomatic engagement.

INDONESIA, UNITED ARAB EMIRATES
Indonesia secures USD 2.3 billion investment from Dubai firm to develop data centre in West Java
(19 June 2025) Indonesia has secured a USD 2.3 billion investment from Dubai-based EDGNEX to develop a data centre on a 12-hectare site in Cikarang, West Java, with the first phase scheduled for completion in 2026 and full development extending to 2028. Minister of Communication and Digital Affairs Meutya Hafid stated that the project is a key component of Indonesia’s digital transformation strategy and reflects growing international investor confidence in the country’s digital ecosystem. National data centre capacity has reached 290 megawatts (MW) as of October and is projected to rise to 900 MW by end-2025. The government aims to position Indonesia as a regional digital data hub and will continue to facilitate new investment opportunities to support this objective.

INDONESIA
Electricity demand grew at average of 4% annually over past decade
(20 June 2025) The International Energy Agency (IEA) estimates that USD 25 trillion in global grid investment will be needed by 2050 to meet net-zero targets, with South-East Asia, particularly Indonesia, facing acute infrastructure challenges. Indonesia’s electricity demand grew at an average of 4% annually over the past decade, reaching 289 TWh in 2023, despite a reported electrification rate of 99.8%. The national grid remains inefficient due to the country’s archipelagic geography and a predominately radial network design, which limits resilience and impedes the integration of distributed renewables. The government plans to add 69.5 GW of capacity by 2034, with 60% from renewables, requiring substantial grid expansion. However, 40% of transformers are over 25 years old, constraining renewable deployment and electrification. A lack of a formal frequency control and ancillary services (FCAS) market puts grid reliability solely under state utility PLN. Infrastructure modernisation, including battery energy storage systems (BESS), is seen as essential for accommodating variable renewables and maintaining stability. Key obstacles include limited workforce and technical capacity, supply chain constraints, regulatory complexity, and local opposition. Disparities persist between oversupplied regions (Java, Sumatra, Bali) and underpowered outer islands. Capital investment pressures may lead to higher electricity tariffs and further strain financially vulnerable utilities. Indonesia’s ability to achieve its energy transition goals depends on accelerating grid development and overcoming systemic structural, financial, and regulatory barriers.

INDONESIA, RUSSIA
Russia announces readiness to supply oil and LNG to Indonesia
(20 June 2025) During President Prabowo Subianto’s first state visit to Russia, President Vladimir Putin announced Russia’s readiness to supply oil and liquefied natural gas (LNG) to Indonesia and reaffirmed support for the stalled Tuban refinery project, a joint venture between Rosneft and Pertamina. The Tuban refinery, initiated in 2017, is designed to process up to 300,000 barrels of crude oil per day and is projected to cost USD 23 billion following delays and cost overruns, up from the original USD 13.5 billion. A final investment decision is expected in Q4 2025. Putin also offered Russian participation in new offshore oil and gas developments and infrastructure upgrades to enhance output from Indonesia’s ageing oil fields. While Prabowo did not specifically comment on the oil supply proposals, he noted progress across multiple economic sectors. Indonesia, which joined the BRICS grouping earlier this year, has recently included Russian crude in its tenders, reflecting a shift towards discounted Russian oil amid ongoing Western sanctions.