THAILAND
Thailand records 32.6 million foreign tourist arrivals as of 28 December
(30 December 2025) Thailand recorded 32.6 million foreign tourist arrivals as of 28 December, according to the Ministry of Tourism and Sports, representing a decline of more than 7% from the same period last year and putting the country on track for its first annual fall in arrivals outside the pandemic in a decade. Safety concerns following the abduction of Chinese actor Wang Xing, a major earthquake in Myanmar, a border conflict with Cambodia, severe flooding in southern Thailand and a domestic political transition weakened traveller confidence during the year. The baht appreciated about 8%, increasing relative travel costs compared with regional competitors such as Indonesia, where the rupiah fell 4%. The Association of Thai Travel Agents cited safety concerns and currency strength as the main factors affecting arrivals. Full-year international arrivals are expected to reach 32.8 million, generating THB 1.52 trillion in revenue, down from 35.5 million visitors and THB 1.67 trillion in 2024. Tourism revenue from foreign visitors totalled THB 1.5 trillion as of 28 December. Malaysians were the largest visitor group with 4.5 million arrivals, followed by 4.4 million Chinese and 2.5 million Indian tourists. The tourism authority is targeting 36.7 million foreign visitors in 2026, with short-haul markets expected to account for over 70% of arrivals and Chinese tourists projected at 6.7 million. Arrivals could reach 38 million next year if Chinese visitor numbers recover to 8 or 9 million and authorities manage border tensions and currency pressures.

ASEAN
Economic costs of lung diseases in Southeast Asia to reach USD 584 billion by 2050
(29 December 2025) Chronic respiratory diseases are increasing across Asia, with chronic obstructive pulmonary disease rising from the seventh to the fourth leading cause of death in Southeast Asia between 2000 and the present, according to a recent World Health Organization report. The WHO estimates the economic cost of these diseases to the region will reach USD 584 billion by 2050 due to healthcare strain and productivity losses. WHO director-general’s special envoy for chronic respiratory diseases stated during a visit to Malaysia that these non-communicable diseases are under-prioritised despite causing significant economic and social losses. Chronic respiratory diseases, including asthma, lung cancer and COPD, are driven by smoking, air pollution and chemical exposure, and reduce life expectancy by up to three years in the most polluted areas of Southeast Asia. Earlier this year, nine of the world’s ten most polluted cities were in Asia, including Dhaka, Karachi, Kathmandu, Hanoi and Bangkok, while Myanmar and Indonesia rank among the five countries with the highest smoking prevalence globally. Economic impacts cited by academics include air pollution reducing Thailand’s GDP by an estimated 6% between 2020 and 2025, asthma costing Viet Nam VND 422 billion, and COPD generating projected costs of IDR 1,499 trillion in Indonesia. Malaysia led the adoption of an Integrated Lung Health Resolution at the World Health Assembly this year, mandating prioritisation of lung health and policy action to reduce exposure to polluted air and second-hand smoke. Experts cited declines in pollution-related deaths in Beijing following clean air policies and benefits from tobacco control in Thailand, noting that most countries in the region lack comparable measures. He also called for increased investment in diagnostics, treatment and screening, as most lung cancer cases in Malaysia are diagnosed at stage four or five, according to the Lung Cancer Network. Diagnostic capacity remains limited, with only 27% of public health facilities in middle-income countries having access to spirometers and 34% able to supply WHO-recommended asthma inhalers, constraining effective disease management.

MALAYSIA
Malaysia records MYR 54.13 billion in digital investments in third quarter of 2025
(31 December 2025) Malaysia approved MYR 54.13 billion in digital investments in the third quarter of 2025, generating 21,815 high-value jobs across 402 digital companies, according to the Malaysia Digital Economy Corporation. Singapore-based investors accounted for MYR 25.1 billion of the approved investments, followed by Malaysian investors with MYR 17.2 billion, the United States with MYR 6.4 billion and China with MYR 3 billion. Artificial intelligence-related investments generated 8,328 jobs, representing 38% of total projected employment, indicating rising demand for digital professionals, data scientists, AI engineers, and specialised services talent. Kuala Lumpur and Selangor attracted 88% of total approved digital investments, valued at MYR 47.8 billion, and nearly 90% of the 19,417 digital jobs created, maintaining the Klang Valley as the primary investment destination. Malaysia’s Digital Minister said the investment inflows demonstrate Malaysia’s intent to advance from a technology consumer to an AI solutions creator, supported by digital infrastructure, skilled talent and international collaboration. MDEC said Malaysia’s positioning as an ASEAN digital hub, combined with a skilled workforce and targeted incentives, continues to draw domestic and foreign AI-focused investments.

MALAYSIA, THAILAND
Cross-border consumer demand and infrastructure projects to boost Thai-Malaysia economic ties
(31 December 2025) Cross-border consumer demand and infrastructure plans are shaping Malaysia–Thailand economic cooperation, highlighted by Thai halal snack producers reporting strong purchases by Malaysian consumers in southern Thai border towns within one month of distribution. Business operators cited the existing Sungai Golok–Rantau Panjang link as a key logistics route, with expectations that a planned second six-lane bridge will improve traffic flow and trade. Malaysia and Thailand committed in December 2024 to raise bilateral trade and investment to USD 30 billion by 2027, following talks between Malaysian Prime Minister Anwar Ibrahim and former Thai premier Paetongtarn Shinawatra. Bilateral trade reached USD 18.64 billion from January to August 2025, compared with USD 25.03 billion in 2024, with Thailand ranked as Malaysia’s seventh-largest trading partner and third within ASEAN. Both countries launched a twin-city project pairing five southern Thai provinces with five northern Malaysian states to boost agricultural, tourism, halal, and digital sector links. Transport initiatives include reviving the Bangkok–Butterworth rail service and discussions on extending Malaysia’s East Coast Rail Link to Thailand via Rantau Panjang and Sungai Golok. A second 117.3-metre bridge at Rantau Panjang–Sungai Golok, estimated to cost MYR 40.54 million and targeted for completion by 2028, is expected to separate inbound and outbound traffic and ease congestion at the busiest Kelantan–Narathiwat checkpoint, which handled about 3 million crossings in 2024. Thai officials said inbound visitors have exceeded pre-pandemic levels, while customs data show two-way trade in timber, seafood, dairy, vegetables, and construction materials. Security incidents in southern Thailand, including attacks and robberies linked to insurgent groups, have periodically reduced tourism and trade flows and prompted Malaysian travel advisories, affecting local business confidence. Malaysian authorities confirmed there are currently no plans for a Malaysia–Thailand border special economic zone, citing existing regional frameworks, while remaining open to future consideration if mutual benefits arise. Analysts and officials said political instability and security risks in Thailand’s southern provinces continue to constrain investment decisions despite ongoing bilateral talks and connectivity projects.

VIET NAM
Vietnamese lenders face liquidity shortages after bank lending rose 19.4% year-on-year as of 24 December
(29 December 20205) Viet Nam’s central bank warned that some lenders are facing liquidity shortages after bank lending rose 19.4% year on year as of 24 December, exceeding the full-year target of 16% and outpacing deposit growth. The head of monetary policy at the State Bank of Vietnam said most loans rely on short-term funding, increasing pressure on interest rates and bank liquidity. The central bank said it will continue flexible monetary policies to support lending and businesses, while acting cautiously due to elevated credit growth. Authorities had pushed banks to expand lending to support the export-driven economy and the government’s growth objective of 10% next year. Credit to the technology sector increased by just over 30% in 2025, up from about 25% growth in the first nine months. The deputy governor said external risks, including US tariffs, Federal Reserve rate cuts and geopolitical uncertainty, will complicate economic management. The prime minister has instructed the central bank to draft a roadmap to abolish annual credit growth quotas starting next year to support a target of at least 10% annual growth over the next five years. Viet Nam’s economy expanded 8.2% in the last quarter, the fastest in three years, driven by increased exports to the US ahead of higher tariffs in early August. The central bank also said it has received nine applications for gold bar production licences following the end of its long-standing monopoly on bullion trading and production.

VIET NAM
Ho Chi Minh City is intensifying efforts to expand exports to Halal market
(30 December 2025) Ho Chi Minh City is intensifying efforts to expand exports to the Halal market to help businesses diversify amid rising tariff tensions and tighter standards in traditional markets. The Halal market serves about 2.2 billion Muslim consumers globally and is forecast to reach an economic scale of USD 10 trillion before 2028. The Middle East, with annual merchandise imports exceeding USD 1.2 trillion and average GDP growth of five to six percent, has been identified as a priority growth market. In the first 11 months of 2025, Viet Nam’s exports to the United Arab Emirates reached USD 5.4 billion and to Saudi Arabia USD 1.9 billion. High-tech products, including mobile phones and components, accounted for nearly 35% of export value, alongside electronics, footwear, textiles, garments, seafood, cashew nuts, vehicles and agricultural products. Authorities said export potential between Ho Chi Minh City and Middle Eastern markets remains underexploited despite interest from regional retailers such as Lulu Hypermarket and Al Othaim Markets. The director of the Ho Chi Minh City Investment and Trade Promotion Centre said the city is developing a Halal ecosystem as a strategic priority to deepen integration into global value chains. In 2025, ITPC organised more than 160 trade and investment promotion activities, including targeted programmes for Halal markets focused on supply-demand matching and supply chain connectivity. The Halal food sector is projected to grow from more than USD 2.71 trillion in 2024 to over USD 5.91 trillion by 2033 at an average annual rate of about 9%. The Ministry of Foreign Affairs said Ho Chi Minh City should enhance cooperation with Middle Eastern partners, introduce supportive tax and financing policies, and encourage participation in major Halal trade exhibitions to secure long-term export contracts.

INDONESIA
Trade surplus expected to widen to USD 3.06 billion in November from USD 2.4 billion in October
(31 December 2025) Indonesia’s trade surplus is expected to widen to about USD 3.06 billion in November from USD 2.4 billion in October, according to a Reuters poll of 15 economists. Exports are forecast to contract by 0.53% year on year, an improvement from the 2.31% decline recorded in October. Imports are expected to rise by 3.2% after shrinking 1.15% in the previous month. Statistics Indonesia is scheduled to release the official trade figures on 05 January alongside December inflation and other economic data. Earlier in 2025, exports were supported by frontloaded shipments ahead of US tariff implementation in August. Export performance weakened in October due to softer demand from China and lower shipments of coal and copper. Import activity has remained subdued amid weak domestic demand and a depreciating rupiah. The rupiah has fallen more than 3% against the US dollar this year, increasing import costs. Economists also expect annual inflation to remain broadly stable at 2.73% in December, within the central bank’s 1.5% to 3.5% target range for 2025.

RCEP Monitor

CHINA
Two Chinese flagship exchange-traded funds launched in Thailand
(29 December 2025) China Asset Management Co. said it launched two flagship exchange-traded funds in Thailand, providing Thai investors with access to Chinese blue-chip and technology stocks. The products track the CSI300 Index and the STAR 50 Index and were issued as depository receipts listed on the Stock Exchange of Thailand. ChinaAMC stated the launch supports cross-border investment flows and reflects strong local demand for Chinese equities and technology exposure. Thai securities firm InnovestX Securities partnered on the transaction and managed the depository receipt issuance and market-making. The CSI300 Index has risen about 18% year to date following a 15% increase in 2024. The STAR 50 Index has gained 36% so far this year, driven by sectors including semiconductors, biotechnology and high-end manufacturing. ChinaAMC said Thai investors can trade the products in real time during local market hours using baht without opening overseas accounts and with capital gains tax exemptions. The firm said the launch aligns with broader capital market opening efforts and China–Thailand financial cooperation. In September, ChinaAMC and U.S. investment adviser Rayliant launched a Nasdaq-listed ETF focused on Chinese companies in transformative technologies. ChinaAMC has also obtained a mandate to manage a Thailand-domiciled fund investing in leading Chinese companies with international operations.

SOUTH KOREA
Consumer inflation slows to 2.1% in 2025 from 2.3% in 2024
(31 December 2025) South Korea’s consumer inflation slowed to 2.1% in 2025 from 2.3% in 2024, according to official data, aligning closely with the Bank of Korea’s 2% target. The data supports expectations that the central bank may maintain interest rates at current levels for an extended period. The Bank of Korea kept its policy rate unchanged at 2.50% on 27 November for a fourth consecutive meeting and indicated it may be approaching the end of its rate cut cycle. In December, the consumer price index increased 2.3% year on year, matching median market forecasts. On a month-on-month basis, consumer prices rose 0.3%, exceeding economists’ expectations of a 0.2% increase.

CHINA
China on track to meet its 2025 economic targets, with growth expected at 5%
(31 December 2025) President Xi Jinping said China is on track to meet its 2025 economic targets, with growth expected at about 5%, citing resilience despite domestic and external pressures. His remarks coincided with official data showing the manufacturing purchasing managers’ index rose to 50.1 in December from 49.2 in November, marking the first expansion in nine months and ending an eight-month contraction. A separate private survey also showed manufacturing activity moving above the 50 threshold. The improvement supported Beijing’s gradual approach to stimulus, with policymakers indicating no immediate need for large-scale support while external demand remains firm. Market reaction included a decline of up to 0.8% in China’s 30-year bond futures and higher cash-market yields as investors reduced demand for safe assets. Recent policy measures include CYN 62.5 billion in consumer subsidies for 2026, an extension of tax breaks on eligible home sales, and the front-loading of CYN 295 billion for key projects, signalling limited urgency for major stimulus. The People’s Bank of China cut policy rates only once in 2025, maintaining a conservative stance. National Bureau of Statistics data showed production and demand expanding, with 16 of 21 industries improving and high-tech manufacturing PMI rising to 52.5. However, the non-manufacturing index rose only marginally to 50.2, while services activity contracted for a second consecutive month. Input costs exceeded output prices, with sub-indexes at 53.1 and 48.9 respectively, indicating margin pressure for manufacturers. Broader indicators showed continued weakness in investment, consumer spending and the property sector, underscoring fragile domestic demand despite manufacturing stabilisation.