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.

MALAYSIA
Manufacturing sector expands in April despite Middle East-linked cost pressures
(04 May 2026) Malaysia’s manufacturing sector expanded in April, with the S&P Global PMI rising to 51.6 from 50.7 in March, indicating moderate improvement despite cost pressures linked to the Middle East conflict. Part of the increase was attributed to safety-stock building as firms responded to geopolitical risks. Manufacturers added jobs for a second consecutive month, with employment growth described as modest but the strongest so far in 2026. Input cost inflation reached a 45-month high due to higher energy and material costs, prompting firms to raise selling prices at the fastest rate on record. Business confidence weakened for another month, falling to its lowest level in eight months amid ongoing uncertainty. Malaysia’s GDP grew 5.3% year-on-year in Q1 2026, below expectations, as manufacturing and services activity slowed following US-Israel military strikes on Iran in late February. Bank Negara Malaysia maintained its 2026 growth forecast at 4% to 5%, supported by domestic demand and investment. The outlook for the manufacturing sector remains dependent on developments in the Middle East, with firms taking measures to mitigate supply and cost disruptions.

MALAYSIA
Banking sector to face increasing headwinds in coming quarter due to global energy shocks
(04 May 2026) Malaysia’s banking sector is expected to encounter increasing headwinds in the coming quarters due to global energy shocks linked to the Middle East conflict, with MBSB Research describing the outlook beyond Q1 2026 as “precarious”. First-quarter performance, including loan growth and asset quality, remained stable, but the full second- and third-order effects of rising costs remain uncertain. Cost pressures are shifting from businesses to mass-market consumers, while government spending cuts are expected to weigh on both retail and business loans. Sustained high energy prices may dampen corporate investment and household spending, with private consumption accounting for about 60% of GDP, increasing sensitivity to consumer sentiment. Kenanga Research highlighted vulnerabilities in unsecured lending segments such as personal financing, credit cards, and SMEs, potentially driving banks towards lower-risk, asset-backed lending. Bank Negara Malaysia data showed private sector loan growth held steady at 5.6% year-on-year in March, while corporate bond growth slowed to 5.8% from 7.4%.

MALAYSIA
Malaysia increasing biodiesel adoption to address rising energy costs
(04 May 2026) Malaysia is increasing biodiesel adoption to address rising energy costs and reduce fuel import dependence, supported by its palm oil industry. The government is spending over USD 1.8 billion monthly on fuel subsidies, intensifying the push for alternatives. Malaysia currently mandates a B10 blend and is targeting B15, with longer-term goals of B20 or B30, requiring infrastructure upgrades across 34 blending depots. Upgrading facilities is estimated to cost about MYR 600 million (USD 151 million) and may take one to two years. There are one million diesel vehicle users, indicating significant demand potential. The Malaysian Biodiesel Association states production capacity is 2.4 million tonnes annually, with 1.3 million tonnes produced last year and capacity to supply 400,000 tonnes for B15. Biodiesel costs MYR 4.5 per litre compared to diesel at MYR 6.2, providing economic incentives for adoption. Malaysia lags regional peers such as Indonesia, which has implemented B50, partly due to lower fuel import dependency at 15.6% versus Indonesia’s 35.2%in 2023. Only 1.3 million tonnes, or 6.5%, of Malaysia’s 20 million tonnes of palm oil output is used for biodiesel, indicating underutilisation. Industry representatives, including MBA president Tee Lip Teng, are urging rapid progression to B15 and beyond without reverting to lower blends. Some motorists remain concerned about potential engine impacts from higher blends. The government positions biodiesel as central to achieving net-zero emissions by 2050, with potential greenhouse gas reductions of up to 80% compared to conventional diesel.

LAO PDR, VIET NAM
Lao PDR exports record 2.92 billion kWh of electricity to Viet Nam in Q1 2026
(03 May 2026) Lao PDR exported a record 2.92 billion kWh of electricity to Viet Nam in Q1 2026, representing 3.8% of total output and an increase of nearly 120% year-on-year. The growth was driven by newly commissioned renewable projects in 2025 and expanded cross-border transmission infrastructure, including the 81km Tuong Duong–Do Luong line that began operations in November 2025. Vietnam Electricity (EVN) reported that 47 Lao projects with a combined approved capacity of 8,260 MW had been authorised by end-2025, with 2,379 MW already operational. The 600 MW Monsoon Wind Power Project in Sekong and Attapeu provinces commenced commercial operations in late 2025, becoming Southeast Asia’s largest wind farm and Asia’s first cross-border renewable project, supplying power via a 500 kV line under a 25-year power purchase agreement with EVN. The 250 MW Truong Son Wind Farm in Bolikhamxay province is over 80% complete and will connect to Viet Nam via the 220 kV Do Luong substation. The first phase of the Savan 1 wind plant in Savannakhet province is largely completed and is expected to generate 0.9 billion kWh annually with grid integration above 90%. Transmission capacity expansions by EVN’s National Power Transmission Corporation have strengthened the Lao PDR–Viet Nam power corridor. Viet Nam has set targets to import 5,000 MW of electricity from Lao PDR by 2030 and 11,000 MW by 2050.

JAPAN, VIET NAM
Japan and Viet Nam agree to strengthen cooperation in critical minerals, energy, and economy security
(02 May 2026) Japanese Prime Minister Sanae Takaichi and Vietnamese Prime Minister Le Minh Hung agreed to strengthen bilateral ties with a focus on energy cooperation, critical minerals, and economic security under their Comprehensive Strategic Partnership. Japanese investment into Viet Nam declined approximately 75% year-on-year to USD 233 million in Q1 2026, while bilateral trade increased 12.3% to USD 13.7 billion. Both sides prioritised coordination on critical minerals to secure stable supplies and reinforce supply chains. Six agreements were signed covering infrastructure, climate action, agriculture, technology, digitalisation, and space cooperation. Japan will support Viet Nam’s energy security under the USD 10 billion Power Asia Initiative by assisting crude oil supply arrangements for the Nghi Son Refinery and Petrochemical Complex. Discussions also covered cooperation in artificial intelligence, semiconductors, and space. Viet Nam is seeking external support for oil supplies amid disruptions linked to the Middle East conflict. Takaichi is scheduled to meet additional Vietnamese leaders and deliver a speech marking ten years since Japan’s “Free and Open Indo-Pacific” strategy, emphasising regional autonomy and resilience. Vietnam reaffirmed support for Japan’s regional initiatives aligned with the Asean Outlook on the Indo-Pacific.

INDONESIA
Indonesia records trade surplus of USD 3.32 billion in March 2026
(04 May 2026) Indonesia recorded a trade surplus of USD 3.32 billion in March, exceeding the USD 2.41 billion forecast and rising from USD 1.28 billion in February, as import growth undershot expectations despite declining exports. Exports fell 3.1% year-on-year to USD 22.53 billion, below expectations of a 0.96% increase, driven by weaker shipments of mining products such as copper and lignite, as well as cocoa, coffee, and tea. Analysts attributed the decline to slower global demand, particularly from China, and the impact of earlier front-loading of exports to the United States. Imports rose 1.51% to USD 19.21 billion, significantly below the 10% forecast and February’s 10.85% growth, reflecting normalisation after pre-holiday front-loading and a weaker rupiah, which hit a record low of 17,385 per US dollar. Economists indicated that geopolitical tensions linked to the Iran conflict have not yet materially affected March data but pose downside risks to exports and could increase fuel import costs. Maybank Indonesia expects the trade surplus to narrow in coming months due to rising oil prices and potential increases in fuel imports. Indonesia’s April inflation eased to 2.42% from 3.48% in March, below the 2.76% forecast, supported by base effects linked to earlier electricity tariff discounts. Core inflation moderated to 2.44% from 2.52%. The government has increased subsidies to contain fuel price pressures, while Bank Indonesia expects inflation to remain within its 1.5% to 3.5% target range through 2027. The central bank is likely to maintain its policy rate at 4.75% if subsidised fuel prices are sustained.

INDONESIA
Bank Indonesia intervenes in foreign exchange markets after rupiah sets record low
(05 May 2026) Bank Indonesia intervened in foreign-exchange markets after the rupiah fell 0.2% to a record low of 17,422 per US dollar. Intervention measures included offshore and domestic non-deliverable forwards, spot transactions, and purchases of government bonds in the secondary market, according to the executive director of monetary and securities management at Bank Indonesia. The currency decline reflects investor outflows from economies most exposed to rising oil prices linked to the Iran war. Regional currencies also weakened, with the Indian rupee reaching a record low and the Philippine peso approaching its historic trough. Bank Indonesia stated it will continue market intervention to maintain orderly market conditions and stabilise the rupiah in line with its fundamental value.