ASEAN, CHINA
Chinese EV manufacturers significantly expand presence in Southeast Asia
(19 August 2025) Chinese electric vehicle (EV) manufacturers have significantly expanded their presence in Southeast Asia, with EV sales in the region increasing 79% year-on-year in H1 2025, driven by aggressive pricing, local assembly, and expanded model availability. Chinese original equipment manufacturing (OEMs) accounted for over 57% of EV sales, up 67% year-on-year, with BYD, GAC Group, Chery, SAIC, Wuling, Changan, and Great Wall Motor leading. In Thailand, EVs reached 18% of vehicle sales in the first seven months of 2025, while in Viet Nam, VinFast sold 67,569 units, tripling year-on-year and outpacing Chinese brands. BYD became the top-selling brand in Singapore, surpassing Toyota. Chinese EVs are often discounted by 8–20%, mirroring domestic price strategies, with some units sold as demo cars or post-motor-show stock at up to 27% off. Industry concerns include sustainability, resale value, and after-sale service reliability, especially for weaker players like Neta, which has cut operations in Thailand. Despite these issues, Chinese exports remain profitable, with China shipping 3.68 million vehicles abroad in the first seven months of 2025, one-third of which were EVs. Several Chinese manufacturers are scaling up production in Southeast Asia, including BYD’s USD 1.3 billion plant in Indonesia and new facilities by Changan and GAC in Thailand. Analysts note that early adopters are driving Chinese EV uptake due to tech appeal, but charging infrastructure and brand support remain gaps. AlixPartners projects only 15 of China’s 129 EV brands will remain viable by 2030 despite expected global growth.

MALAYSIA, UNITED STATES
Malaysia subject to 19% US tariff due to refusal to accept certain conditions during negotiations
(18 August 2025) Malaysia is subject to a 19% US tariff—down from the initially scheduled 25%—due to its refusal to accept certain conditions in negotiations, according to Malaysia’s Investment, Trade and Industry Minister. He cited Malaysia’s adherence to “red lines,” including policies like the Bumiputera policy, as the basis for not meeting all US demands. While affirming that Malaysia will not retaliate, he underscored the importance of the US as a key investor and export destination. Prime Minister Anwar Ibrahim reiterated Malaysia’s position against external pressure that could compromise national policy. The Trade Minister also noted that US semiconductor tariffs remain at 0%, but warned that potential hikes—such as the 300% duties proposed by Donald Trump—would significantly impact Malaysia and ASEAN’s integrated supply chains. On trade diversification, he confirmed Malaysia has concluded a trade deal with South Korea, targeted for signing at APEC or a leaders’ summit. Negotiations with the EU have resumed after a 2012 stall, and engagement with the Gulf Cooperation Council has begun. Malaysia is also working to upgrade trade agreements with India and China, incorporating green and digital provisions. An Asean Digital Economy Framework Agreement, to be discussed on 28 August in Malaysia, aims to enhance intra-regional trade and SME participation, addressing the current intra-Asean trade level of under 25%.

MALAYSIA, SINGAPORE
Malaysia expresses interest in establishing cross-border ride-hailing services with Singapore
(19 August 2025) Malaysia has reiterated its interest in establishing cross-border ride-hailing services with Singapore to improve bilateral transport connectivity, but Malaysia’s Transport Minister stated that implementation must be mutually agreed and cannot proceed unilaterally. Discussions were previously raised with the former Singapore’s Transport Minister, but Singapore was not prepared to proceed at the time. The Johor Chief Minister has also advocated for such services, including through talks with Grab to revise the Cross-Border Travel Agreement ahead of Visit Johor 2026. While Singapore’s Land Transport Authority (LTA) confirmed discussions took place on 01 August, it clarified that there are no current plans to liberalise cross-border point-to-point transport via ride-hailing, although it is exploring options to enable bookings for licensed taxis via apps and expanding boarding/alighting points. Only 300 licensed cross-border taxi drivers currently operate under the scheme, which restricts pick-ups and drop-offs to designated terminals, limiting user uptake. Recent enforcement actions by both countries have targeted illegal ride-hailing activities by foreign drivers; Malaysia’s Road Transport Department detained four Singaporean private-hire drivers operating illegally in Johor since 09 August, while Singapore’s LTA impounded 19 vehicles for similar offences. Malaysia described these actions as reciprocal, acknowledging that both countries are enforcing existing laws, but emphasised the need for a more sustainable solution through bilateral agreement. It has been noted that enabling cross-border ride-hailing would require complex legal harmonisation. In response to crackdowns, Johor ride-hailing drivers are planning to form an association to seek government engagement.

INDONESIA
Bank Indonesia unexpectedly cuts its benchmark rate by 25 basis points
(20 August 2025) Bank Indonesia cut its benchmark BI-Rate by 25 basis points to 5% on Wednesday, marking a second consecutive monthly reduction and signalling potential for further easing, despite stronger-than-expected GDP growth in Q2. The decision, predicted by only 9 of 39 economists surveyed by Bloomberg, was justified by a stable rupiah, subdued inflation forecast of 1.5%–3.5% for 2025–2026, and a need to support economic expansion. The Bank Indonesia Governor noted the central bank now expects 2024 growth to exceed the midpoint of its 4.6%–5.4% range. The rupiah remained stable, bond yields fell to 6.41%, and equities gained up to 1% following the announcement. The move aligns monetary policy more closely with fiscal priorities, including President Prabowo Subianto’s proposed higher spending and a 2026 growth target of 5.4%. Domestic demand remains weak, with manufacturing contraction, sluggish consumption, and July lending growth slowing to 7.03%, the lowest since March 2022. The Governor reiterated calls for commercial lenders to reduce borrowing costs in line with the central bank’s rate cuts. The rupiah has appreciated over 1% against the US dollar in August, supported by foreign inflows. July inflation rose to 2.4% but remains within target.

VIET NAM
Viet Nam announces USD 48 billion worth of projects to support economic growth
(19 August 2025) Viet Nam announced that approximately 250 projects worth around USD 48 billion (MYR 202.82 billion), or roughly 13% of national GDP, are being implemented to support economic growth. Of these, 129 state-funded projects—covering sectors such as urban development and transportation—account for about VND 478 trillion (USD 18 billion), while 121 projects valued at USD 30.5 billion are funded through other sources, including select foreign investors. Key initiatives include the Rach Mieu 2 Bridge, Saigon Marina International Financial Center, Viettel Group’s R&D Centre, and Vingroup’s National Exhibition and Convention Center in Hanoi. Viet Nam’s Prime Minister stated these projects aim to overhaul the country’s strategic infrastructure and reaffirmed his 2024 GDP growth target of 8.3%–8.5%, despite headwinds from a pending US trade deal that could impose a 20% tariff on Vietnamese exports. The Prime Minister has called for both immediate and structural economic measures to meet these growth objectives.

VIET NAM
Viet Nam introduces visa and labour reforms to boost competitiveness
(21 August 2025) Viet Nam has introduced several new measures aimed at improving its attractiveness to foreign investors, including Decree No. 219 on foreign workers, Decree No. 221 on visa exemptions for individuals contributing to socio-economic development, and Decree No. 229, which extends visa-free stays to 45 days for citizens from 12 countries. These changes are intended to address labour shortages, particularly in high-tech sectors, amid a decline in the proportion of FDI sector workers with degrees or certificates, which dropped from 25.5% in 2021 to 21.7% in 2024. Business leaders view Decree 219 as a key improvement, citing benefits such as faster processing, broader exemptions, and enhanced HR efficiency. Some commentators emphasised the need for immediate foreign expertise to support Viet Nam’s digital and economic transformation. However, experts also called for further reforms, including long-term residence permits for major investors. Concerns were raised over restrictive implementation, such as the narrow eligibility for the Special Visa Exemption Card (SVEC), with some urging flexibility to maximise national benefit. Clearer guidelines and consistent enforcement were also highlighted as essential to maintain investor confidence and support Viet Nam’s regional competitiveness.

LAO PDR
Bank of Laos reduces base interest rate by 0.5 percentage points to 9.0% per annum
(21 August 2025) On 15 August 2025, the Bank of Laos reduced its base interest rate by 0.5 percentage points to 9.0% per annum, following a Monetary Policy Committee meeting. The decision aims to stimulate economic activity and stabilise the financial system amid ongoing domestic and international challenges. Inflation showed a declining trend, averaging 10.18% from January to July, with July’s figure falling to 5.30% from 8.3% in May. The Lao kip depreciated marginally by 0.11% against the US dollar and 1.19% against the Thai baht, while the gap between commercial bank and market rates widened. Despite this, M2 money supply grew 11.92% year-on-year, indicating sustained banking activity. Foreign reserves remained sufficient to cover 4.91 months of imports. However, the economy continues to face structural risks including high import dependency, external debt pressures, and global commodity price volatility. The bank reaffirmed its commitment to a market-based exchange rate regime, maintaining the reference rate at 6.5, and announced accompanying policy measures including improved foreign exchange management, centralisation of government deposits, modernisation of payment systems, and enhanced debt oversight. It also plans to implement new credit and lending strategies to increase access to finance and support economic growth.

RCEP Monitor

SOUTH KOREA
Bank of Korea flags elevated uncertainty due to trade and financial risks
(19 August 2025) The Bank of Korea Governor stated that while South Korea’s economy rebounded in Q2, elevated uncertainty—particularly from US trade negotiations and financial stability risks—continues to weigh on monetary policy considerations ahead of the 28 August policy meeting. He cited rising delinquency rates among small businesses and regional developers, as well as persistent volatility in the won, which has fluctuated in the mid-1,300 range against the US dollar. Although housing debt growth has slowed following mortgage caps, property prices in parts of Seoul remain elevated. The benchmark interest rate currently stands at 2.5%, following a cumulative 1 percentage point reduction since October, with the last cut in May. While four board members were previously open to another rate cut within three months, the resolution of some US tariff issues has reduced immediate downside risks, softening expectations for further easing in August. Rhee indicated that policy decisions will continue to be based on evolving conditions in growth, inflation, and financial stability. Inflation is expected to remain near the 2% target, supported by stable energy prices and subdued demand, though food prices may rise due to poor weather. Growth momentum is anticipated to continue in H2, aided by a supplementary budget, but external risks, particularly from Washington’s ongoing trade negotiations with countries including China, remain significant.

CHINA
Approvals for overseas IPO slow to trickle despite strong demand
(21 August 2025) Between 01 July and 15 August 2025, China’s securities regulator, the CSRC, approved only three public offerings in Hong Kong, a sharp decline from the 52 approvals granted in the first half of the year, contributing to growing uncertainty around Hong Kong’s IPO revival. The slowdown contrasts with strong demand, with 76 new companies applying for clearance in the same period, pushing the backlog to 240. Despite earlier commitments from the CSRC Vice Chairman to accelerate overseas listing approvals, the regulator maintains full discretion over timing. Under a 2023 rule, Chinese firms must file with the CSRC within three days of a foreign listing application, although foreign exchanges impose no such requirement. It was found that direct Hong Kong listings had the shortest average approval time (182 days) in H1 2025. Amid lower regulatory barriers, Shein reportedly pivoted to a Hong Kong IPO after failing to secure approval for a London listing. Meanwhile, PwC forecasts HKD 200 billion in IPO proceeds on HKEX in 2025. HKEX announced record H1 2025 results, with 34% growth in core revenue and a near doubling of daily turnover to HKD 220.3 billion, led by a 154% increase in Southbound Stock Connect volumes. The number of A-to-H listings has surged, including from CATL and smaller firms, although state media reported the CSRC is considering raising the minimum market capitalisation for such listings to RMB 20 billion. Analysts suggest regulators may be shifting focus to quality control, curbing speculative activity, and strengthening the domestic capital market, as reflected in guidance from July’s Politburo meeting and commentary from Jefferies.

JAPAN, UNITED STATES
Japanese exports to the US declines by 10.1% year-on-year in July 2025
(21 August 2025) Japan’s exports to the United States declined by 10.1% year-on-year in July to JPY 1.73 trillion, marking the fourth consecutive monthly drop, primarily due to a 28.4% decrease in auto shipments following a 25 percentage point increase in vehicle tariffs imposed by President Donald Trump. As a result, Japan’s trade surplus with the US narrowed by 23.9% to JPY 585.1 billion, while imports from the US fell 0.8% to JPY 1.14 trillion. Although a reduction in the tariff rate to 15% was agreed in late July, its implementation timeline remains unspecified. Other US-bound exports such as auto parts and semiconductor-making equipment declined by 17.4% and 31.3%, respectively. Vehicle export volume to the US fell 3.2%. Globally, Japan’s trade deficit in July shrank by 81.3% to JPY 117.5 billion due to falling import values, especially in crude oil and coal. Overall exports fell 2.6% to JPY 9.36 trillion, while imports dropped 7.5% to JPY 9.48 trillion. Japan’s trade deficit with China stood at JPY 609.2 billion for the 52nd consecutive month, with exports down 3.5% and imports down 3.9%. Conversely, Japan’s trade surplus with the rest of Asia rose 3.6-fold to JPY 478.5 billion, remaining positive for a sixth consecutive month. The trade deficit with the EU totalled JPY 278 billion, continuing an 18-month run in negative territory.