VIET NAM
Viet Nam pursuing new trade deals to mitigate US tariffs
(24 September 2025) Vietnamese Prime Minister Pham Minh Chinh said Hanoi is pursuing new trade agreements this year to counter U.S. tariffs on Vietnamese exports, which the United Nations Development Programme estimated could cut shipments to the U.S. by up to 20%, making Viet Nam the most affected country in Southeast Asia. Chinh forecast export growth above 12% in 2025, with exports reaching USD 325.3 billion by 15 September, a 15.8% increase year-on-year. To mitigate tariff impacts, Vietnam aims to conclude free trade agreements with Mercosur and the Gulf Cooperation Council by year-end, while continuing negotiations with Washington after the Trump administration’s 20% tariff on most Vietnamese goods. The White House has also imposed a 40% tariff on goods deemed transshipped through Vietnam, a risk compounded by Vietnam’s reliance on Chinese components. Chinh instructed officials to intensify enforcement against imports violating international copyright or origin standards, issues repeatedly raised by U.S. counterparts.

THE PHILIPPINES, MALAYSIA, THAILAND, EU
EU trade negotiations with Thailand, the Philippines, and Malaysia expected to be finalised by 2026
(25 September 2025) EU Trade Commissioner Maros Sefcovic said negotiations on free trade agreements with Thailand, the Philippines and Malaysia are advancing and expected to be finalised and signed by 2026. Speaking at a meeting between ASEAN economic ministers and the EU in Kuala Lumpur, he noted that the agreements would add to existing EU FTAs with Singapore, Viet Nam and Indonesia, the latter concluded this week after nine years of negotiations. Sefcovic described the bilateral deals as a “building block” towards a future EU–ASEAN region-to-region free trade agreement.

INDONESIA, EU
Indonesia and the EU sign Comprehensive Economic Partnership Agreement
(23 September 2025) Indonesia and the European Union signed the Comprehensive Economic Partnership Agreement (CEPA) in Bali after nearly a decade of negotiations, marking the EU’s third such deal in Southeast Asia after Singapore and Viet Nam. Signed by EU Trade Commissioner and the Indonesian Minister of Economic Affairs, the pact opens investment in electric vehicles, electronics and pharmaceuticals, and is projected to save EU exporters GBP 600 million (USD 708 million) annually in duties. Around 80% of Indonesian exports to the EU, including palm oil, footwear, textiles and fisheries, will become tariff-free once the deal takes effect, expected by 2027 following legal checks, translations and ratifications. Bilateral trade reached USD 30.1 billion in 2024, and the agreement gives the EU access to Indonesia’s 280 million-strong market. Negotiations were delayed by disputes over palm oil and deforestation but gained urgency from U.S. tariff policies under Donald Trump. A protocol on palm oil was included, though details remain undisclosed, with th EU reportedly offering “special treatment” on the EU’s deforestation regulation for signatory partners. The regulation, postponed to end-2025, bans imports of products from land deforested after December 2020. Activists, including Greenpeace Indonesia, warned the agreement could spur further deforestation. Indonesia described the CEPA as a “ten-year journey” aimed at mitigating risks from global tariff wars, while analysts said both sides sought alternative markets to counter protectionism.

INDONESIA, CANADA
Canada and Indonesia sign Comprehensive Economic Partnership Agreement (CEPA)
(26 September 2025) Canada and Indonesia signed a Comprehensive Economic Partnership Agreement (CEPA) that will remove or reduce tariffs on over 95% of Canadian exports, including wheat, potash, timber and soybeans, and more than 90% of Indonesian exports, such as garments and leather goods. Canadian Prime Minister Mark Carney described the deal as timely, while Indonesian President Prabowo Subianto called it a historic first agreement with an ASEAN member state. The CEPA is aligned with Canada’s Indo-Pacific strategy and strengthens Ottawa’s trade presence in the region. Alongside the trade pact, both governments signed a defence cooperation agreement covering military training, maritime security, cyber defence and peacekeeping.

THAILAND
Foreign visitor revenue to fall 20.2% in 2025 below pre-pandemic levels
(26 September 2025) The Tourism Council of Thailand (TCT) projects foreign visitor revenue in 2025 will fall 20.2% below pre-pandemic levels to THB 1.52 trillion, compared with THB 1.91 trillion in 2019, despite an expected 33.14 million arrivals, down 17% from 2019 and 6.7% lower than 2024. The sharper revenue decline reflects reduced spending per visitor, driven by a drop in high-spending Chinese tourists, a rise in lower-spending Malaysian visitors, and growth in budget-conscious Free Independent Travellers and backpackers. The Q3/2025 Tourism Business Confidence Index fell to 66 from 68 a year earlier, with businesses citing domestic deflation, global economic slowdown, currency appreciation, safety concerns, the Thai-Cambodia conflict, and flooding as key negative factors. Average industry revenue in Q3/2025 was 44% of 2019 levels, compared with a peak of 64% in Q1/2023. Regional data show the South as most resilient, with revenues at 50% of 2019 levels and occupancy at 62%, while the North recorded the lowest average revenue at 39%. Bangkok showed the most volatility. Sector-specific results highlight weak performance for tour operators and souvenir shops, while entertainment venues reported higher confidence. Employment has recovered to 87% of pre-pandemic levels, outpacing revenue recovery and raising concerns over profitability. Looking ahead, confidence is forecast to improve to 72 in Q4/2025, with the North expected to post the largest surge (Index 80), followed by Bangkok (75) and the South (74).

THAILAND
Fitch Ratings downgrades Thailand’s credit rating outlook from stable to negative
(24 September 2025) Fitch Ratings downgraded Thailand’s credit rating outlook from stable to negative while affirming its long-term foreign-currency issuer default rating at “BBB+,” citing rising fiscal risks from political uncertainty and weak growth. Gross general government debt reached 59.4% of GDP in August, close to the ‘BBB’ median, after years of stimulus and delayed fiscal consolidation. The move follows Moody’s downgrade and poses challenges for new Prime Minister Anutin Charnvirakul, who took office after Paetongtarn Shinawatra was ousted by court ruling. Thailand’s economy is projected to expand around 2% in 2025, about half the pace of Indonesia and the Philippines, pressured by a 19% U.S. tariff, weak tourism, high household debt and a strong baht. Fitch highlighted risks from continued large stimulus, uncertain fiscal strategy and demographic pressures. It warned Anutin’s pledge to call elections within four months could fuel spending, with fiscal deficits expected at 4.6% of GDP this year and 4.3% next year. The baht traded near a two-week low against the U.S. dollar, though it remains almost 7% stronger year-to-date after hitting a four-year high earlier in the month.

LAO PDR
Lao PDR seeking to develop carbon credit market and clean energy
(25 September 2025) Lao PDR’s Ministry of Agriculture and Environment hosted the Carbon Markets and Clean Energy Conference 2025, bringing together government officials, development partners and private sector representatives to advance carbon market readiness and clean energy integration. The two-day meeting focused on establishing a carbon credit trading system, identifying policies to strengthen the market, and sharing best practices for climate adaptation. Participants discussed investment barriers, emphasising the role of the private sector in mobilising financial support for carbon and energy projects. The conference was positioned as a step towards developing Lao PDR carbon credit market and supporting national clean energy objectives.

RCEP Monitor

SOUTH KOREA, JAPAN, UNITED STATES
Trump declares that South Korea will provide USD 350 billion in “upfront” investments
(25 September 2025) U.S. President Donald Trump said South Korea would provide USD 350 billion in “upfront” investments in U.S. projects, despite Seoul warning that such a commitment without safeguards could trigger a financial crisis. Trump compared the pledge to Japan’s USD 550 billion investment formalised earlier this month alongside a trade deal that lowered U.S. tariffs on Japanese automobile imports and other goods. South Korea maintains the negotiations are at a deadlock, with President Lee Jae Myung stating that safeguards such as a currency swap are necessary, though analysts consider such an arrangement unlikely. Seoul is pressing for most of the funds to be structured as loans rather than direct investments and for mechanisms ensuring project viability, while resisting U.S. demands for control over the funds. A South Korean government official reiterated the principle that any deal must meet national interests and be commercially feasible. Trump’s insistence on “upfront” payments has heightened political uncertainty, raising investor concerns that Seoul could face an unfavourable deal or no agreement at all.

SOUTH KOREA
Samsung Electronics and SK Hynix add over USD 100 billion in market value in September
(26 September 2025) South Korea’s two largest chipmakers, Samsung Electronics and SK Hynix, have added over USD 100 billion in market value in September, driven by rising demand for high-bandwidth memory (HBM) chips used in AI applications and growing expectations of a broader semiconductor recovery. SK Hynix has surged on its dominance in HBM, while Samsung is catching up, with analysts from 20 firms including JPMorgan, Citigroup and Nomura forecasting its share price could surpass the 2021 record of KRW 91,000 within 12 months. Samsung shares have rallied 24% this month, their best performance since 2001, while SK Hynix is up 33%, yet both trade at lower forward price-earnings ratios (14x and 7x respectively) compared to U.S. peers at 26x. Foreign investors are on track for their largest-ever monthly inflows into the two firms in over 13 years, though overseas ownership of Samsung remains seven percentage points below its peak of 58%. Analysts, including Morgan Stanley, project a memory “supercycle” in 2026 as supply shortages emerge in DRAM and NAND due to production shifts towards HBM, reversing earlier pessimism about “legacy” chips. Overseas funds see further upside, citing cheaper valuations relative to U.S. chipmakers, interest rate cuts by the U.S. Federal Reserve, and rising AI-driven capex by U.S. hyperscalers and Chinese firms. Nvidia remains the largest buyer of HBM, with AMD and Broadcom also expected to increase purchases as their AI accelerators gain traction. CLSA forecasts SK Hynix will retain its lead in high-margin HBM, while Samsung, benefiting from expanded HBM business with Nvidia, is now seen as well-positioned for sustained foreign inflows and revenue growth.

CHINA, MEXICO
China launches investigation into Mexico’s planned tariffs and other trade restrictions
(26 September 2025) China’s commerce ministry has launched an investigation into Mexico’s planned tariffs and other trade restrictions on Chinese exports, alongside an anti-dumping probe into Mexican pecan nuts, signalling one of Beijing’s strongest responses to deter countries from aligning with U.S. tariff policies. Mexico recently proposed a 50% tariff on Chinese cars and levies on about 1,400 products, including textiles and steel, affecting all non-free trade partners. The Chinese probe will cover both the new measures and earlier restrictions, citing risks to Chinese companies’ trade and investment interests. The move comes as Mexico prepares for a 2026 review of the US-Mexico-Canada Agreement and faces U.S. pressure to curb China’s economic role, with Washington accusing Beijing of using Mexico to bypass tariffs. President Claudia Sheinbaum has said the tariffs aim to protect domestic industries, not escalate tensions with China. In 2024, Mexico exported USD 5.7 billion to China while importing USD 115 billion, with copper and minerals accounting for over 40% of exports. The pecan anti-dumping probe alleges sales below market value caused rising import volumes and falling prices, with a conclusion expected within 12 months, extendable by six. China has warned that Mexico’s unilateral measures would damage third-party trade interests, while signalling readiness to use indirect tools, such as rare earths export controls, to exert pressure.