CARI Captures Issue 725: Trade takes center stage at recent ASEAN Summit held in Kuala Lumpur, Malaysia
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.
ASEAN
Trade takes center stage at recent ASEAN Summit held in Kuala Lumpur, Malaysia
(27 October 2025) ASEAN leaders agreed to upgrade the ASEAN Trade in Goods Agreement (ATIGA) during the recent ASEAN Summit held in in Kuala Lumpur, Malaysia, with the upgraded agreement to expand the number of tariff-free goods, streamline customs procedures, and reduce nontariff barriers. The move, described by Malaysian Prime Minister Anwar Ibrahim as a “decisive step forward,” seeks to strengthen intraregional trade and reduce reliance on the U.S. and China amid global trade tensions driven by U.S. President Donald Trump’s tariffs. The original ATIGA removed around 98% of tariffs within the bloc, but the value of intra-ASEAN trade fell from 25% of total trade in 2010 to 21% in 2024. A draft chairman’s statement affirmed ASEAN’s commitment to an open, rules-based trading system. Leaders also discussed the ASEAN Digital Economy Framework Agreement to establish regional rules for e-commerce, logistics, and data industries. In parallel, the 15-member Regional Comprehensive Economic Partnership (RCEP) held its first summit since taking effect in 2022. Among other things, the bloc committed to advance the accession process of applicants. Thus far, Bangladesh, Sri Lanka, Hong Kong, and Chile have expressed interest in joining the trade bloc. China is promoting participation in multilateral trade frameworks such as the RCEP to counter the effects of U.S. tariffs. ASEAN and China also signed the upgraded ASEAN-China Free Trade Area 3.0, with the deal expanding cooperation into new areas, including the digital and green economies, supply chain resilience, consumer protection, and support for MSMEs.
UNITED STATES, MALAYSIA, THAILAND, CAMBODIA, VIETNAM
Trump signs trade agreements with Malaysia and Cambodia and frameworks with Thailand and Viet Nam
(28 October 2025) US President Donald Trump announced trade agreements with Malaysia and Cambodia and frameworks with Thailand and Vietnam during his visit to Kuala Lumpur, described by the White House as “historic.” The deals remove several tariff and non-tariff barriers on US exports and include Southeast Asian commitments to purchase about USD 150 billion of American semiconductor, data centers, and aerospace equipment. However, they do not lower the 19–20% tariffs initially imposed by the US, and the benefits to ASEAN countries remain limited. Barclays Plc estimated that tariff exemptions granted to Malaysia cover around USD 12 billion of exports, but only about USD 1 billion, or 0.2% of GDP, would effectively be zero-rated due to restrictions. Malaysia’s Trade Minister said the deal includes exemptions for palm oil, cocoa, and pharmaceuticals, and Prime Minister Anwar Ibrahim noted the US was open to semiconductor tariff negotiations. Analysts described the deals as one-sided, with unclear reciprocal benefits and unresolved issues over “transshipped” goods that could attract 40% tariffs. Cambodia sought further exemptions for garments and footwear, while Thailand’s Commerce Minister Suphajee Suthumpun said detailed negotiations will conclude by year-end. Economists from HSBC and Bloomberg Economics said the agreements may offer ASEAN short-term relief from tariffs but at the cost of increased market access for US products. The ASEAN bloc also signed an upgraded free trade agreement with China during the same summit.
THE PHILIPPINES
Peso reaches record low against US Dollar in late October due to concerns over corruption
(30 October 2025) The Philippine peso reached a record low against the US dollar in late October, reflecting investor concerns following revelations of large-scale corruption in government flood control projects. The currency has fallen over 2% since July, when President Ferdinand Marcos Jr.’s State of the Nation address exposed the schemes, triggering congressional probes, protests, and a net foreign investor outflow of USD 127 million from the stock market. The Bangko Sentral ng Pilipinas (BSP) has cut policy rates by 175 basis points since August 2023 to offset the resulting slowdown and may reduce rates by another 25 basis points in December, with further easing possible in 2025, according to Monetary Board member Benjamin Diokno. The US imposition of a 19% tariff on Philippine goods since August has added pressure on exports and manufacturing. The government lowered its 2025 growth target to 5.5–6.5% from 6–8%. While a weaker peso could lift remittance values, household consumption, and outsourcing competitiveness, it risks higher import and fuel costs, with potential inflationary effects. The Department of Budget and Management estimated each one-peso depreciation could add PHP 9.3 billion (USD 158 million) in tax revenue in 2026. The BSP Governor said intervention would occur only if depreciation became sharply inflationary, noting the central bank’s USD 109 billion in reserves provides flexibility to stabilise the peso. Officials have signalled a preference for market-driven exchange rates and prioritising growth over currency support, with inflation remaining within the 2–4% target range.
THAILAND
Finance Ministry raises 2025 growth forecast to 2.4% from 2.2%
(30 October 2025) Thailand’s Finance Ministry raised its 2025 GDP growth forecast to 2.4% from 2.2%, citing stronger-than-expected exports and the impact of government stimulus measures. Export growth for 2025 is now projected at 10%, up from 5.5%, as Thailand’s shipments in September recorded their fastest expansion in over three years despite higher US tariffs under President Donald Trump. Officials said fourth-quarter GDP growth could exceed 1%, compared with the earlier 0.3% estimate. The ministry expects consumer prices to fall 0.2% in 2025, reversing an earlier forecast of a 0.4% increase, due to lower oil prices and ongoing energy subsidies. Prime Minister Anutin Charnvirakul’s USD 1.36 billion stimulus programme, which subsidizes food, goods, and services, is aimed at supporting consumption constrained by high household debt and weak income growth. Export resilience has been supported by firm demand in key markets and regional tariff parity, with Thailand and Viet Nam benefitting from supply chain shifts away from China. The Bank of Thailand recently kept its policy rate unchanged and slightly reduced its 2025 growth forecast to 2.2% from 2.3%.
THAILAND
Exports rise 19% year-on-year in September to USD 30.9 billion
(27 October 2025) Thailand’s exports rose 19% year-on-year in September to USD 30.9 billion, the strongest increase in 42 months and well above the projected 5%–6% growth, according to the Commerce Ministry. The Trade Policy and Strategy Office attributed the performance to higher demand from the United States following a reduction in the reciprocal tariff rate to 19% from 36%, aligning Thailand with ASEAN peers. Exports to the US grew 35.3%, driven by shipments of telecommunications equipment, electronics, and computer parts linked to AI and telecom demand. Imports increased 17.2% to USD 29.7 billion, producing a trade surplus of USD 1.2 billion for the month. From January to September 2025, exports totalled USD 254.1 billion (up 13.9%) while imports reached USD 254.6 billion, leaving a USD 429 million deficit. Exports to Russia, Latin America, and South Asia rose 32.5%, 31.7%, and 28.6% respectively. The ministry expects export values of USD 25 billion–USD 26 billion per month in the fourth quarter, projecting full-year growth of 9.4%–10.4%, exceeding the previous 2%–3% target.
CANADA, ASEAN
Canada seeks to expand energy investments and trade with ASEAN
(27 October 2025) Canadian Prime Minister Mark Carney, during bilateral talks with Malaysian Prime Minister Datuk Seri Anwar Ibrahim at the 47th Asean Summit in Kuala Lumpur, reaffirmed Canada’s intent to expand energy investment in Southeast Asia under a newly signed Letter of Intent covering liquefied natural gas, oil, nuclear, and renewable energy. The Prime Minister’s Office said the LoI aligns with Canada’s Indo-Pacific strategy to enhance energy security and economic resilience through trade diversification. Carney stated Canada aims to double non-US exports within ten years and identified Malaysia and ASEAN as central to this objective. He also advanced negotiations on a Canada-ASEAN free trade agreement, backed by a USD 25 million technical assistance package. In addition, he met with leaders of Lao PDR, the Philippines, Viet Nam, and the European Council, and visited Canadian firm CAE’s training facility, where Malaysia Airlines agreed to purchase a Canadian-built flight simulator. Carney also met the Petronas president and group chief executive to discuss collaboration related to the LNG Canada project in Kitimat, British Columbia. Canada further committed CAD 226,000 to expand the BlackBerry Cybersecurity Centre of Excellence in Cyberjaya into an international innovation hub.
INDONESIA
Indonesian equities recorded their steepest decline in over six months over potential index re-weighting
(27 October 2025) Indonesian equities recorded their steepest decline in over six months after MSCI Inc. issued a consultation paper proposing revisions to how the free float of Indonesian securities is calculated, raising concerns about potential index re-weighting. The Jakarta Composite Index fell up to 3.8%, its largest drop since 8 April, with PT Dian Swastatika Sentosa and PT Barito Renewables Energy among the main drags; the latter was identified as one of the firms likely to be affected. MSCI’s paper, dated September 2025, proposes broadening the definition of free float, which could reduce index weightings under its free float-adjusted methodology. Indonesian stocks currently account for 1.1% of the MSCI Emerging Markets Index. The consultation reignited investor concerns over low free-float ratios, as Indonesia has the region’s highest share of benchmark-listed firms with less than 10% of shares freely traded. Analysts said the paper, reportedly circulated to investors only on Monday, triggered profit-taking after the Jakarta index had its best week since August. Market participants cited uncertainty, particularly around tycoon-linked firms such as Barito Renewables, as a factor behind the sell-off, reflecting persistent volatility in Indonesia’s equities market.
RCEP Monitor
SOUTH KOREA, UNITED STATES
South Korea and the United States reach trade deal at APEC Summit
(29 October 2025) South Korea and the United States have reached terms on a trade deal under which Seoul will invest USD 350 billion in the US, including USD 200 billion in cash. The agreement, discussed during the Asia-Pacific Economic Cooperation forum in Seoul, provides for South Korea to invest up to USD 20 billion annually in exchange for the US lowering tariffs on South Korean goods to 15%. The deal builds on a July framework announced after President Lee Jae Myung’s meeting with US President Donald Trump in Washington, though no written document or final timeline has yet been confirmed. Disagreements persist over payment terms, with Trump demanding an upfront contribution and Seoul warning this could destabilize its currency. Both leaders reiterated their commitment to economic cooperation, with Lee pledging expanded US-based investment to support American manufacturing. Trump described South Korea as a key partner in shipbuilding and broader industrial collaboration. Public opposition remains high: a Realmeter–Economy Business Newspaper poll found 80.1% of South Koreans view the USD 350 billion demand as unfair. Frictions were heightened by the recent arrest of hundreds of South Korean workers at a Hyundai–LG Energy Solution battery factory in Georgia. Lee acknowledged remaining “sticking points” but said the pact must not create “catastrophic consequences” for South Korea, while Trump said the deal was “pretty close to being finalised.”
AUSTRALIA
Consumer price index rises 3.2% year-on-year in third quarter, fastest pace in over a year
(28 October 2025) Australia’s consumer price index rose 3.2% year-on-year in the third quarter, its fastest pace in over a year and above both the 2.1% recorded in the previous quarter and the 3% forecast by economists, according to the Australian Bureau of Statistics. The largest increases were in housing, recreation and culture, and transport. The trimmed mean inflation rate climbed to 3% from 2.7%, marking its first rise since December 2022. The data placed headline inflation above the Reserve Bank of Australia’s 2%–3% target range for the first time since mid-2024. Analysts said the figures would likely delay expectations of interest rate cuts, with AMP forecasting that the RBA will hold its 3.6% cash rate through November and December. The RBA had previously warned inflation could be higher than expected, citing persistent price pressures in housing and market services. The RBA governor acknowledged that inflation was slightly above expectations but said it was not “running away.” Recent monthly CPI readings of 2.8% in July, 3% in August, and 3.5% in September reflected steady upward momentum. The Australian dollar strengthened 0.21% to 0.6596, while the S&P/ASX 200 fell 0.76% following the release. Australia’s economy grew 1.8% in the second quarter, above both the 1.6% forecast and 1.3% recorded previously.
CHINA
Industrial profits rise 21.6% year-on-year in September, sharpest increase since November 2023
(27 October 2025) Profits at Chinese industrial enterprises rose 21.6% year-on-year in September, the sharpest increase since November 2023 and the second consecutive monthly gain, following a 20.4% rise in August, according to National Bureau of Statistics data released on 27 October. Cumulative profits for the first nine months of 2025 increased 3.2%. The growth exceeded Bloomberg Economics’ forecast of 3.9%, driven by higher factory and mining output, slower declines in producer prices, and government measures to reduce overcapacity. NBS attributed the rebound to more active macroeconomic policies and growth in high-tech and equipment manufacturing. The improvement, however, reflects a low base from 2024 when profits had fallen sharply for four straight months through November. Surveys by the People’s Bank of China indicated stronger corporate loan demand and improved business conditions in the third quarter, alongside rising raw material and sales prices, suggesting the impact of recent “anti-involution” policy efforts. Nonetheless, domestic demand remains weak, with households showing reduced confidence in employment and consumption. The Communist Party, in an October 23 communiqué, reaffirmed its commitment to meeting the 2025 growth target by stabilising jobs, firms, markets, and expectations, and signalled readiness to enhance macroeconomic support if required. Authorities have recently unveiled funding measures totalling one trillion yuan to bolster investment and local government finances.
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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) |