MALAYSIA
Microsoft to invest US$2.2 billion into Malaysia over next four years
(02 May 2024) Microsoft has announced its largest investment in Malaysia to date, committing US$2.2 billion over the next four years to support the nation’s digital transformation. Microsoft’s chairman and CEO outlined plans to develop a world-class AI infrastructure accessible to Malaysia and to provide AI skilling opportunities for an additional 200,000 people. The investment also aims to strengthen collaboration with the Malaysian government to establish a national AI Centre of Excellence and to enhance cybersecurity capabilities. Microsoft underlined its commitment to Malaysia’s AI transformation, aiming for inclusive economic growth and innovation. This initiative aligns with the ongoing Bersama Malaysia commitment since 2021, which is aimed at elevating Malaysia as a digital hub. The Malaysian Investment Development Authority (MIDA) emphasized the transformative impact of AI and Microsoft’s contribution to bridging the digital divide and fostering business growth in Malaysia.

SINGAPORE, INDONESIA
Singapore plans to import low-carbon electricity from Indonesia
(29 April 2024) Singapore’s plan to import low-carbon electricity from Indonesia progresses well, as confirmed by Prime Minister Lee Hsien Loong after meeting with Indonesian President Joko “Jokowi” Widodo. The Energy Market Authority of Singapore has granted conditional approvals for five projects to import a total of 2 gigawatts of low-carbon electricity from Indonesia. However, challenges exist due to Indonesia’s regulations, including requirements for state utility facilitation and local sourcing of solar PV components. Lee and Jokowi discussed potential partnerships in carbon capture and storage, as well as utilising carbon credits. The meeting was also attended by incoming leaders Deputy Prime Minister Lawrence Wong and Indonesian Defense Minister Prabowo Subianto, signifying continuity in agreements and relationships.

SINGAPORE
DBS’ digital services face disruptions days after MAS-imposed ban ends
(02 May 2024) Singaporean bank DBS Group Holdings Ltd encountered fresh disruptions to its Internet banking and payment services in Singapore, days after the lifting of a six-month ban imposed by the country’s central bank in 2023 due to similar issues. The bank acknowledged the problem on its Facebook page and confirmed that it had identified the issue causing the disruption. Complaints surged around 5:40 pm local time, as reported by the Downdetector website, but services returned to normal by 8 pm local time. The Monetary Authority of Singapore lifted the ban this week, citing improvements by the bank. Despite the service disruptions, DBS reported better-than-expected results on 02 May, 2024, driven by strong lending and wealth fees, resulting in a 1.9% increase in its shares at close. This pushed DBS’ market capitalisation to S$101 billion, making it the first Singapore-listed company to surpass that milestone.

INDONESIA
Global funds to continue divesting from Indonesian equities amidst weak rupiah
(03 May 2024) Despite the Indonesian central bank’s unexpected interest rate increase, global funds are anticipated to continue divesting from Indonesian stocks. This is due to the surprise hike’s minimal impact in boosting the rupiah. Overseas investors pulled out over US$1 billion from Indonesian equities in April 2024, marking the end of a four-month influx. This trend persisted into May, with investors directing their preferences towards other markets. Janus Henderson Group Plc suggested a potential shift of funds from Indonesia to China due to China’s current momentum and reduced concerns regarding property bond defaults. It has been noted that every percentage point of rupiah depreciation against the dollar will squeeze Jakarta Composite Index companies’ earnings per share growth by a similar amount. The rate hike’s effectiveness in stabilizing the rupiah remains uncertain amidst global economic uncertainties.

VIET NAM
Unexpectedly weak export performance exacerbate currency pressures for Thailand and Viet Nam
(29 April 2024) Unexpectedly weak export performances in Asia’s emerging economies, particularly Thailand and Vietnam, may exacerbate currency pressure caused by a strong US dollar and the Federal Reserve’s hawkish stance. Thailand’s outbound shipments declined by 11% in March 2024, falling below all forecasts, while Vietnam’s exports grew by 10.6% in April, missing the median estimate of 14%. This weaker export performance could lead to continued currency depreciation for both countries, especially as stubborn inflation and sluggish economic growth in key markets such as the US, China, and Southeast Asia dampens demand for goods. Both the Vietnamese dong and the Thai baht have faced downward pressure, with the dong hitting a historic low and the baht trading at a six-month low. Thailand’s trade deficit for the third consecutive month and Viet Nam’s narrowing surplus may strain their foreign-exchange reserves required for currency intervention. Both countries’ export weaknesses were attributed to price-sensitive demand in overseas markets and shipping disruptions in the Red Sea affecting Viet Nam’s exports.

THAILAND
Bank of Thailand Governor affirms bank’s independence despite political pressure
(29 April 2024) The Bank of Thailand’s Governor affirmed the central bank’s commitment to making interest rate decisions independently despite political pressure. He stated that recent decisions demonstrate the bank’s adherence to economic considerations rather than succumbing to political influence. The central bank maintained the key interest rate at 2.50% during its April 2024 policy meeting, despite pressure from the government to lower rates. The monetary policy committee expressed concerns over elevated household debt, recognizing its potential impact on long-term economic growth. The governor acknowledged the challenge of balancing weak economic recovery with monetary policy management. He noted that the current interest rate supports recovery while ensuring responsible debt management. The Thai economy is projected to grow by 2.6% in 2024 and 3.0% in 2025, supported by private consumption and tourism. Inflation is expected to gradually increase and return to the target range of 1% to 3% by the end of the year.

THAILAND
Thailand’s CPI increases by 0.19% year-on-year in April 2024
(03 May 2024) In April 2024, Thailand’s headline Consumer Price Index (CPI) increased by 0.19% compared to the previous year, contrasting with a 0.47% year-on-year decline in March. This figure surpassed the Reuters poll forecast of a 0.25% decrease and marked the first positive inflation in seven months. The core CPI, excluding volatile food and energy prices, rose by 0.37% in April. The Director of Trade Policy and Strategy Office attributed this increase to last year’s low base for electricity prices, the rise in agricultural prices, and a weak baht. Despite the rise, inflation has remained outside the central bank’s target range of 1% to 3% for the 12th consecutive month. Factors contributing to this trend include escalating global energy prices and increased agricultural product prices due to a hot climate. The ministry maintained its inflation forecast for the year at 0.0% to 1.0%. Over the first four months ending in April, the average CPI decreased by 0.55% compared to the same period the previous year.

RCEP Monitor

CHINA
Chinese stocks gain momentum due to supportive policies
(29 April 2024) China stocks have seen a surge in momentum recently, attributed to supportive policies. Most notably, there was a daily record US$3.1 billion northbound inflow on 26 April, 2024. Foreign investors utilising the Connect system recorded the largest single-day net investment since its inception in 2014, with buying of A-shares continuing on 29 April, reaching the sixth-largest single-day net investment this year. The Hang Seng Index, driven by tech stocks, surpassed the 18,000 mark on Monday morning, with even beleaguered Hong Kong-listed Chinese property companies experiencing significant gains. Notably, the CSI 300 rose by 1.11% on Monday to 3,623.91, while the Hang Seng closed 0.54% higher at 17,746.91. China’s securities watchdog aims to enhance listing company quality and shareholder returns. They’ve also announced separate measures to bolster the Hong Kong market, including broadening product availability through the Connect scheme. Concerns persist regarding the sustainability of the rallies without fundamental economic change. While investors flock to Hong Kong on expectations of a weaker yuan and attractive stock valuations, sustained interest from long-term foreign investors remains uncertain due to challenging macroeconomic conditions and stagnant earnings growth.

CHINA
Chinese rare-earth industry face declining revenues due to greater global competition
(29 April 2024) China’s rare-earth industry is facing declining revenues and profits despite government efforts to protect the sector, as global competitors establish their own supply chains and domestic economic conditions remain challenging. China Rare Earth Resources and Technology, a key listed arm of state conglomerate China Rare Earth Group, reported a 5.4% decrease in annual revenue for 2023, amounting to US$550 million. The company attributed this decline to accelerated consolidation and structural adjustments in the global rare-earth industry, leading to falling prices. The latest data from the U.S. Geological Survey (USGS) shows China leading in rare earth reserves and production, but other countries are also increasing their output. Supply-demand pressures, combined with a slowing domestic economy, pose further risks of falling prices.

SOUTH KOREA
President Yoon reaffirms pledge to raise monthly basic pension for seniors
(03 May 2024) President Yoon Suk Yeol reaffirmed his pledge to raise the monthly basic pension benefit for seniors during his tenure. Yoon stated this while speaking at a Parents’ Day ceremony, marking the first time a sitting president attended the annual event. The Yoon government aims to increase the pension from around US$234.76  to US$293.45 per month for individuals aged 65 and above within the lower 70 percent income bracket. He emphasized the ongoing contributions of the older generation and proposed measures to enhance their quality of life, such as creating more job opportunities and boosting wages. Yoon also committed to expanding senior care services, including easing the financial strain of nursing fees.

ASEAN
Food service industry in Southeast Asia sees shift towards food delivery services
(19 April 2024) Across Southeast Asia, the food service industry has seen a significant shift towards food delivery services, with in-house restaurant dining declining to 60% of the food service industry in Asia from 76% in 2019. Delivery apps like Grab and Shopee have played a major role in filling the gap. Euromonitor data shows that the delivery market has grown from 8% of the food service industry in 2018 to 21% in 2023, with a forecasted increase to 23% by 2028. While dining at eateries may increase to 67% by 2028, it might not return to pre-COVID-19 levels for at least five years. The convenience and speed of delivery services are driving this trend. However, the surge in deliveries has led to concerns about plastic waste, prompting calls for companies to reduce packaging. Despite the popularity of delivery, fierce competition has made it challenging for delivery apps to turn a profit. Overall, the food industry in Asia is expected to return to pre-COVID-19 levels in revenue, reaching US$1.3 trillion in revenue in 2024.

INDONESIA
Indonesia’s central bank hikes interest rates to 6.25% amidst slumping rupiah
(24 April 2024) Indonesia’s central bank has raised its benchmark interest rate by 25 basis points to 6.25% in an effort to bolster the weakening rupiah amidst escalating global risks. Bank Indonesia Governor Perry Warjiyo emphasized the pre-emptive nature of the rate hike to maintain inflation within the target range of 1.5% to 3.5% for 2024 and 2025. The rupiah, near a four-year low at around 16,000 per dollar, faces pressure from the dollar’s strength and speculation surrounding when the US Federal Reserve will cut interest rates. Warjiyo anticipates the rate increase will stabilise the rupiah at 16,200 in the second quarter, strengthening to 16,000 in the third quarter and further to 15,800 in the fourth quarter. Following the announcement, the rupiah gained ground, reaching 16,140 against the dollar.

MALAYSIA
Malaysia introduces new incentive schemes to attract startups and venture capital firms
(22 April 2024) Malaysia has introduced new incentive schemes, namely the Unicorn Golden Pass and the VC Golden Pass, aimed at attracting leading startups and venture capital firms to the country. Economy Minister Rafizi Ramli outlined these initiatives during the KL20 Summit startup event in Kuala Lumpur. The Unicorn Golden Pass offers benefits such as waived fees for employment passes, subsidized rental, and preferential tax rates to entice global and regional startups. The VC Golden Pass, on the other hand, targets venture capital firms with assets over US$100 million and offers perks like waived work visa fees and expedited license approval. Prime Minister Anwar Ibrahim highlighted the significance of startups in driving technological progress and announced plans to position Malaysia as a hub for semiconductor, clean energy, agritech, and Islamic fintech industries.

MALAYSIA, THE PHILIPPINES
Malaysia’s ZUS Coffee targeting 150 stores in the Philippines by end-2024
(22 April 2024) ZUS Coffee from Malaysia is expanding its presence in the Philippines, aiming to achieve 150 stores in the country by the end of 2024. Since its debut in Quezon City in September 2023, ZUS Coffee has grown to operate 12 outlets in the Philippines, its sole international market. The coffee chain prioritizes app-based pre-ordering and is part of a rising trend of value-focused operators in the Filipino branded coffee shop market. ZUS Coffee’s pricing strategy positions espressos and americanos at US$0.78 and US$1.13 respectively, with premium beverages like Spanish latte and gula melaka priced around US$1.65. Compared to competitors like Pickup Coffee, But First, Coffee, and Paik’s Coffee, ZUS Coffee offers competitive pricing within the market. Established in 2019, ZUS Coffee now operates 402 stores across Malaysia. In March 2023, Filipino restaurant group Choi Garden Restaurant Company acquired a 35% stake in the chain.

MALAYSIA
Malaysia’s consumer inflation stands at 1.8% year-on-year in March 2024
(25 April 2024) In March 2024, Malaysia’s consumer inflation stood at 1.8% year-on-year, unchanged from February’s figure. Prices for housing, water, electricity, gas, and other fuels saw a 3% increase, as did restaurant and accommodation services, while personal care, social protection, and miscellaneous goods and services rose by 2.6%. However, this was offset by slower increases in health (2.1%), food and beverage (1.7%), and recreation, sport, and culture (1.5%). Core inflation, excluding volatile items, stood at 1.7%. The official forecast for 2024 projects headline inflation between 2% and 3.5%, and core inflation between 2% and 3%. On a state-by-state basis, most states recorded inflation lower than the national level, except for Penang, Sarawak, Pahang, Selangor, and Perlis.

SINGAPORE
Joint venture between Temasek and BlackRock raises US$1.4 billion for climate-focused venture capital fund
(25 April 2024) The joint venture between Singapore’s sovereign wealth fund Temasek Holdings and global asset manager BlackRock has successfully raised US$1.4 billion for its inaugural climate-focused venture capital fund, dedicated to investing in firms with technologies aimed at reducing carbon emissions. Over 30 institutional investors, along with commitments from BlackRock and Temasek, contributed to the fund’s final closing, surpassing its initial US$1 billion target. Temasek has pledged to halve the net carbon emissions of its portfolio by 2030 and reach net zero by 2050, demonstrating its commitment to decarbonization efforts. The partnership, called Decarbonization Partners, has already invested in seven companies specializing in decarbonization technologies such as clean hydrogen and electric vehicle fleet management.

VIET NAM
Viet Nam’s central bank sells dollars in market to prop up falling dong
(22 April 2024) Viet Nam’s central bank has confirmed its intervention in the foreign exchange market by selling dollars to certain banks, as the country’s currency, the dong, reached a record low of 25,463 per dollar. The State Bank of Vietnam disclosed that the intervention price was set at 25,450 dong per dollar. Factors contributing to the dong’s decline include the escalating conflict in the Middle East and speculations about the Federal Reserve potentially postponing interest-rate cuts, bolstering the dollar and adversely affecting emerging-market currencies worldwide. This move aligns Viet Nam with other Asian countries such as South Korea and Indonesia, which are also taking measures to counter the strength of the US dollar. This intervention comes amidst a week where the daily dollar-dong reference rate has increased by 0.7%, marking the most significant rise since 2015.

RCEP Monitor

AUSTRALIA, ASEAN
Australia’s diplomacy with ASEAN seen shift towards engaging with individual countries
(21 April 2024) Australia is seeking to enhance economic ties with ASEAN, as highlighted in a recently-published 200-page report by the Australian government titled “Invested: Australia’s Southeast Asia Economic Strategy to 2040”. Southeast Asia presents significant economic opportunities for Australia, with high projected GDP growth and a significant consumer market. However, Australia’s investment in the region remains relatively low compared to total global inflows. However, Australia’s economic diplomacy is shifting towards engaging with Southeast Asian countries individually rather than as a bloc, as evident in recent diplomatic initiatives.This shift signifies a major change in approach, moving away from prioritizing relations with ASEAN as a collective entity.

JAPAN
Next 30 years could see outflow of funds from rural areas to major banks based in cities
(20 April 2024) Major Japanese banks are vying for an estimated US$377 billion in inherited bank deposits that are expected to move out of regional lenders based mainly in rural areas over the next 30 years. As interest rates rise, large money center banks are eager to expand their deposit bases. Many small regional lenders are worried about the future outflow of funds, as many of their depositors living in rural areas are elderly and their savings could go elsewhere after their money is passed on to their children living mainly in cities. According to estimates by Sumitomo Mitsui Trust Bank, US$377 billion of inherited financial assets will shift to Tokyo and the neighboring prefectures of Kanagawa, Chiba and Saitama from elsewhere in the country over the next 30 years. As well, more than 30% of household assets in 17 prefectures, including Nara, Akita and Ehime, could leave those prefectures.

CHINA
China’s premier auto show, Auto China, returns after four-year hiatus
(25 April 2024) Beijing’s Auto China exhibition has returned after a four-year hiatus, showcasing the strides made by Chinese automakers in the electrification of the world’s largest car market and their expanding global presence. The event, featuring about 1,500 companies including BYD, Chery, and SAIC Motors, will unveil 117 new models and 41 concept cars. Amid domestic challenges such as sluggish consumption and intense competition, Chinese automakers are increasingly exporting vehicles and establishing overseas production facilities. Notably, Chinese automaker Chery signed an agreement with Ebro-EV Motors to establish a joint venture in Barcelona, marking the first Chinese auto plant in Europe. This move is in response to Spain’s interest in becoming a hub for electric mobility. Additionally, Chery has entered a joint venture in Viet Nam, while SAIC Motors is exploring European production and expansion in India. Chinese automakers are also capitalizing on opportunities in markets like Russia, with Great Wall Motor among the top sellers there.

THAILAND
Bank of Thailand resists government pressure to slash rates
(15 April 2024) Thai Prime Minister Srettha Thavisin’s push for a rate cut from the Bank of Thailand (BOT) to support his stimulus program has faced resistance from BOT Governor Sethaput Suthiwartnarueput. Despite pressure from Srettha, on 10 April, 2024 the BOT maintained its benchmark rate at 2.5%, aligning with market expectations. The baht remained stable at 36.30 to the dollar following the decision. It is feared that premature rate cuts may weaken the baht further, with the currency having already dropped by close to 6% this year relative to the dollar. However, the BOT may consider cuts later in 2024 depending on economic data and the Fed’s actions. Thailand has experienced six months of negative inflation, which likely ended in March 2024 due to the expiration of government subsidies and rising global energy prices.

ASEAN
Visitors to Southeast Asia tops 100 million in 2023, 70% of pre-COVID-19 numbers
(15 April 2024) In 2023, Southeast Asian countries received over 100 million visitors in 2023, reaching 70% of pre-COVID levels but still 29.8% lower than in 2019. Thailand led with 28 million tourists, benefitting from economic recovery and the legalization of cannabis. Chinese travellers played a significant role in Thailand’s recovery, drawn by its proximity and cultural appeal. Lao PDR and Cambodia saw increased tourism due to Chinese-led infrastructure projects, including the Laos-China Railway and a new international airport in Siem Reap, Cambodia. Tourism is expected to continue recovering in 2024, with Thailand and China implementing mutual visa waivers to boost travel. However, concerns over China’s economic slowdown may impact consumer spending and tourism in the region.

SINGAPORE
Singapore Prime Minister Lee Hsien Loong to step down in May 2024
(15 April 2024) Singapore Prime Minister Lee Hsien Loong announced on 15 April, 2024 that Deputy Prime Minister Lawrence Wong will succeed him on May 15, marking the city-state’s first leadership change in 20 years. Wong, 51, received unanimous support from the ruling People’s Action Party (PAP) lawmakers. Lee, 72, will continue in the cabinet as a senior minister. Wong began his career as a civil servant in 1997 and has held various ministerial positions, including minister for education and minister for national development. He gained prominence during the COVID-19 pandemic as co-chair of the multi-ministry task force. Wong will lead the PAP into the next general election, expected by November 2025. The succession’s timing suggests the ruling party may be accelerating its election plans amid geopolitical uncertainties. Lee’s original plan to step down by 2022 was disrupted by the pandemic. Wong was endorsed as the leader of the PAP’s “fourth generation” team in April 2022 and has since been involved in key policies and foreign diplomacy.

MALAYSIA
Sarawak state hopes to expand role in Malaysia’s semiconductor industry
(15 April 2024) Sarawak aims to expand its role in Malaysia’s semiconductor industry, leveraging past experience and new partnerships with U.K.-based firms. SMD Semiconductor, wholly owned by the Sarawakian government, focuses on chip design, and has signed agreements with UK-based companies Riverbeck and Big Innovation Centre. SMD’s collaboration with Riverbeck will focus on developing radio frequency integrated circuits for satellite applications, while its collaboration with Big Innovation Centre will focus on sustainable semiconductor manufacturing. Melexis, a Belgian company, is also expanding its presence in Sarawak with a significant investment into expanding its facility in Kuching. Malaysia plays a crucial role in the global semiconductor supply chain, with the country’s electrical and electronic product exports reaching US$120.5 billion in 2023. Sarawak’s semiconductor industry began with 1st Silicon, and has since attracted investments from companies like X-Fab and Taiyo Yuden. The Sama Jaya High Tech Park located in Kuching hosts major multinational corporations, helping make Sarawak an attractive investment destination in the semiconductor sector.

MALAYSIA
Malaysian exports rise by 2.2% in first quarter of 2024 to reach US$75.77 billion
(19 April 2024) Malaysia’s export values experienced a slight decline of 0.8% in March 2024 to RM128.64 billion (US$26.90 billion) but maintained growth momentum for the first quarter of 2024. Exports expanded by 2.2% to MYR 362.41 billion (US$75.77 billion) during the first three months of 2024, driven by increased shipments of manufactured and mining goods. Notable increases were observed in exports of iron and steel products, machinery, equipment and parts, manufactures of metal, crude petroleum, and liquefied natural gas (LNG). Total trade in March rose by 5.1% year-on-year to MYR 244.47 billion (US$51.11 billion), while the trade surplus decreased by half to MYR 12.81 billion (US$2.68 billion) compared to the same period last year. Imports increased by 12.5% year-on-year to MYR 115.83 billion (US$24.22 billion) in March, driven by a surge in capital goods, intermediate goods, and consumption goods. Overall, Malaysia’s total inbound shipments for January-March 2024 rose by 13.1% to MYR 328.19 billion (US$68.62 billion) compared to the same quarter in 2023.

THE PHILIPPINES, SINGAPORE
Singapore inspires the Philippines’ planned special economic zone north of Manila
(18 April 2024) On 18 April, 2024, Singapore Foreign Minister Vivian Balakrishnan concluded his four-day visit to the Philippines. During his visit, the Foreign Minister expressed Singapore’s readiness to exchange ideas with the Philippines with regards to a special economic zone (SEZ) located north of Manila, whose development plans take inspiration from Singaporean infrastructure and urban planning. The focus is on New Clark City, a 9,450-hectare community located within the Clark Freeport and Special Economic Zone, formerly a US military base. Philippines’ President Ferdinand Marcos Jr aims to transform it into the country’s first smart city. Sixteen Singapore firms already operate in Clark, contributing US$139.92 million in investments and employing over 1,600 people as of 2023. Plans for the SEZ include developing affordable housing inspired by Singapore’s HDB flats and transforming the civil aviation complex around Clark International Airport into a global hub akin to Changi Airport. Clark International Airport Corporation (CIAC) president Arrey Perez outlined plans for sports, entertainment, and agricultural trade facilities.

VIET NAM
Viet Nam’s central bank provides troubled bank with US$24 billion in emergency loans
(18 April 2024) Vietnam’s central bank has reportedly provided Saigon Joint Stock Commercial Bank (SCB) with approximately US$24 billion in “special loans” between October 2022 and the start of April 2024. This significant intervention, amounting to around 5.6% of GDP, underscores concerns about stability in Viet Nam’s financial sector. SCB, previously one of the country’s largest commercial lenders, has faced turmoil following the arrest of real estate tycoon Truong My Lan in October 2022, who was subsequently sentenced to death for her alleged role in siphoning US$12.5 billion from the bank. Despite efforts to restore confidence, including placing SCB under central bank supervision, the situation has highlighted potential risks in Viet Nam’s financial system. This development may prompt reassessment among global companies considering Viet Nam as an alternative to China for their supply chains.

RCEP Monitor

SOUTH KOREA, UNITED STATES
Samsung to invest US$45 billion in chipmaking facilities in US
(15 April 2024) The U.S. government will provide up to US$6.4 billion to Samsung Electronics to construct chipmaking facilities in Texas, part of efforts by the Biden administration to enhance domestic semiconductor production. Samsung’s total investments in the U.S. is set to more than double, reaching approximately US$45 billion. The grant will aid in building two chip factories for producing 2-nanometer chips, an advanced packaging facility, and a research and development fab in Taylor, Texas. Samsung also plans to expand an existing facility in Austin to produce power-efficient chips for the aerospace, defense, and automotive sectors. The first fab is expected to start production in 2026, followed by the second in 2027, the same year the R&D facility is set to open. The grant, although smaller than those given to Intel and TSMC, is substantial relative to Samsung’s investment.

CHINA, INDONESIA
Indonesia requests Chinese assistance in developing local infrastructure
(18 April 2024) During a meeting between Indonesian President Joko Widodo and Chinese Foreign Minister Wang Yi in Jakarta, Widodo requested China’s assistance in various sectors, including developing Indonesia’s new capital city Nusantara (namely its transportation system), as well as for investment in the petrochemical industry in North Kalimantan. The Indonesian president also urged the acceleration of feasibility studies for extending the China-backed Jakarta-Bandung high-speed railway to Surabaya. Wang’s visit aims to deepen bilateral economic cooperation, with discussions held on a wide range of topics including the Belt and Road Initiative. Meetings were also held with incoming President Prabowo Subianto. Indonesia hopes to solidify its relationship with China, especially amidst the upcoming change in leadership. China has been a significant trade and investment partner for Indonesia over the years, contributing to various projects.

SOUTH KOREA, JAPAN
South Korea and Japan signal readiness to respond excessive volatility in currency markets
(17 April 2024) South Korea and Japan have expressed concerns over the recent depreciation of their currencies and are prepared to take action against excessive exchange-rate volatility. South Korean Finance Minister Choi Sang-mok and his Japanese counterpart Shunichi Suzuki stated their readiness to deploy measures to stabilize currency markets during a meeting held in Washington D.C.. These concerns come amidst a weakening of the won and yen against the US Dollar. The won strengthened to 1,382.6 per dollar on 17 April, 2024, while the yen hit a 34-year low against the dollar, standing at 154.64 yen in Asia. The finance leaders of South Korea, Japan, and the United States are scheduled to hold their first trilateral meeting in Washington D.C. on 17 April on the sidelines of the ongoing IMF and G20 gatherings. Analysts speculate on potential currency intervention by Japanese authorities if the dollar surpasses 155 yen, though the impact may be limited. Additionally, Bank of Korea Governor Rhee Chang-yong stated readiness to implement measures to stabilize the market due to recent currency movements, which have been deemed excessive.

ASEAN
Top ASEAN financial officials agree to expand cross-border QR payments
(06 April 2024) Top financial officials from the Association of Southeast Asian Nations (ASEAN) have agreed to promote the expansion of cross-border QR payments through compatible platforms. The agreement, outlined in a 25-point statement issued during the 11th ASEAN Finance Ministers’ and Central Bank Governors’ Meeting (AFMGM) held in Luang Prabang, Lao PDR, covers areas such as financing, payment, and service connectivity. Lao PDR, as this year’s ASEAN chair, has agreed with Thailand to launch a cross-border QR payment system between the two countries, with full-scale operations expected to begin in June 2024. Similar arrangements are being pursued with Cambodia and Viet Nam. ASEAN countries aim to form joint QR payment networks to facilitate easier consumption, promote tourism, and facilitate investments. The goal is to unify standards and enlist payment operators to make these compatible QR payment standards widespread. Integrating QR payment standards is seen as aiding in preventing crimes such as money laundering.

MALAYSIA
Malaysia’s Port Klang to double capacity over coming decades
(10 April 2024) Port Klang, Malaysia’s largest port situated on the Malacca Strait, plans to double its capacity over the next few decades to compete with Singapore. The expansion plan aims to increase annual capacity from 14 million twenty-foot equivalent units (TEUs) to 27 million TEUs, with operator Westports Holdings investing US$8.34 billion. Port Klang’s strategic location and handling of various products contribute to its significance in Southeast Asia’s logistics sector. The expansion aligns with supply chain realignment trends, particularly the “China plus one” strategy, with Southeast Asia as a focus. Despite competition from neighbouring countries like Singapore and Thailand, Port Klang remains competitive due to its affordability.

THAILAND
Bank of Thailand holds rates steady for third straight meeting, defying Prime Minister
(10 April 2024) On 10 April, 2024, the Bank of Thailand (BOT) maintained its benchmark rate at 2.5% for the third consecutive meeting, defying Prime Minister Srettha Thavisin’s calls for monetary easing. The BOT cited structural economic challenges as limiting the effectiveness of monetary policy. The bank forecasts the Thai economy to grow by 2.6% in 2024, with headline inflation expected at 0.6%. Inflation has fallen below the target range of 1% to 3% due to government subsidies on diesel and electricity, both of whom are set to expire soon. Market analysts anticipate rate cuts later in 2024, with geopolitical tensions and energy subsidies to be monitored closely by the BOT.

SINGAPORE
Multinationals increasingly shift regional headquarters functions to save costs
(10 April 2024) Multinational corporations are increasingly shifting some of their Southeast Asian regional headquarters’ functions outside Singapore to leverage cost savings and growth opportunities. Sakata Inx, a Japanese printing ink manufacturer, established a regional head office in Malaysia in February 2024, aiming to serve customers more efficiently across South Asia and Southeast Asia. Malaysia’s proposed fiscal 2024 budget introduced tax incentives, including preferential income tax rates of 5% to 10%, attracting companies like Sakata Inx. Thailand is also becoming a preferred destination, with Nissin Foods Holdings relocating its Southeast Asian headquarters there in 2020. Japanese companies are increasingly considering partial relocations to countries like Thailand and Malaysia due to rising costs in Singapore. Despite this trend, Singapore retains advantages in location, language proficiency, and financial services, maintaining its status as a prime spot for regional headquarters.

VIET NAM
Gold smuggling due to high domestic prices negatively impacting dong
(7 April 2024) Vietnam faces challenges in stabilizing its gold market as smuggling activity increases due to high local prices for gold. Since smugglers need to buy dollars in the black market to pay for the commodity, the smuggling of gold leads to distortions in exchange rates and weakening of the dong. Gold imports surged to 55.5 tons in 2021, up from 39.8 tons in 2020, mainly through illegal channels. The rise in smuggling is driven by a shortage of official supplies and flight-to-safety demands amid economic struggles and geopolitical tensions. It is argued that the pressure on the dong negatively impacts the economy. The National Financial and Monetary Policy Advisory Council proposed ending the state monopoly on gold imports and bullion production, aiming to reduce smuggling and narrow the local premium. Abolishing the monopoly is expected to boost tax revenue from official imports and alleviate the reliance on illegal sources.

CAMBODIA
Cambodia’s economy expected to grow by 5.8% in 2024, according to Asian Development Bank
(11 April 2024) According to the Asian Development Bank’s flagship economic report, Cambodia’s economy is projected to grow by 5.8% in 2024, increasing from 5% in the previous year, with further growth expected at 6% in 2025. The ADB highlighted the positive momentum in the garments, footwear, and travel goods (GFT) sector, contributing to this growth. Inflation is anticipated to remain low at around 2% over the next two years due to expected lower energy prices. However, challenges such as potential global economic slowdowns, rising private debt, fluctuating energy prices, and climate vulnerabilities could affect the long-term outlook. Recent bilateral free trade agreements (FTAs) and participation in the Regional Comprehensive Economic Partnership (RCEP) are also expected to contribute positively to Cambodia’s economic performance, namely through a significant increase in export volume.

CAMBODIA
Cambodia confirms commitment to construct US$1.7 billion Funan Techo canal
(11 April 2024) Cambodian Prime Minister Hun Manet confirmed Cambodia’s commitment to constructing the US$1.7 billion Funan Techo canal connecting Phnom Penh to the sea. The project, backed by China, has raised concerns in Vietnam regarding potential access for Chinese warships near its coastline. However, Hun Manet dismissed these concerns, affirming the canal’s historic significance and economic benefits for Cambodia. Construction, funded by China, is set to commence later this year, although specific details are limited. The canal, measuring 100m wide and 5.4m deep, aims to bypass Vietnam’s traditional route and enhance economic prospects for millions. Hun Manet assured that the canal would not affect the mainstream Mekong’s water flow, crucial for regional fisheries. Despite concerns, Cambodian officials maintain that infrastructure developments, including the canal and naval base renovations, are not intended to serve foreign military interests.

RCEP Monitor

CHINA
China’s vehicle sales increase by 9.9% year-on-year in March 2024
(10 April 2024) China’s vehicle sales rebounded in March 2024 to reach 2.69 million units, a 9.9% increase from the previous year. First-quarter shipments surged by 10.6% to 6.72 million, the highest since the same period in 2019. Electric vehicles (EVs) played a significant role, with sales rising by 31.8% to 2.09 million units, driven by new models and price reductions. Exports of vehicles overall increased by 33.2% in the quarter. Concerns over China’s overcapacity in the EV sector have been raised by analysts and international figures such as the U.S. Treasury Secretary Janet Yellen, who stressed the importance of boosting domestic demand. Despite challenges such as declining profit margins, China’s EV industry is expected to become a significant contributor to economic growth by 2030, according to Moody’s Ratings.

JAPAN
Tokyo’s office vacancies fall to three-year low in March 2024
(11 April 2024) In March, Tokyo’s office vacancies hit a three-year low at 5.47%, marking a resilient commercial real estate market compared to global trends. Real estate broker Miki Shoji Co. reported this decline, with rents also increasing steadily throughout 2024 after a previous drop in 2023. The shift is attributed to companies relocating to central business districts or expanding their office spaces. Notably, the data includes occupied spaces, indicating sustained demand. Tokyo stands apart from other global cities facing record office vacancies and decreased property values due to remote work trends, which have not significantly impacted Japan.

AUSTRALIA
Australia to introduce ‘Future Made in Australia Act’ to boost manufacturing and clean energy sectors
(11 April 2024) Australia will introduce the ‘Future Made in Australia Act’ to boost its manufacturing and clean energy sectors in response to global competition. Prime Minister Anthony Albanese will unveil the scheme, departing from Australia’s traditional free-market policies. While specific figures are not provided, the taxpayer-funded initiative aims to compete with other nations’ substantial investments, such as those made by the US under President Joe Biden’s Inflation Reduction Act, as well as other initiatives by countries like China, the European Union, Canada, and Japan. Albanese stresses the need for Australia to actively participate in this global race, describing the current economic and climatic changes as significant. The act aims to foster renewable energy resources, including battery production and green hydrogen, to create jobs and ensure economic competitiveness.

VIET NAM, SOUTH KOREA
South Korean firms based in Viet Nam face competition from China
(04 April 2024) South Korean companies have historically dominated foreign direct investment in Viet Nam, but they are facing increasing competition from Chinese counterparts. Despite South Korea ranking first in cumulative investment in Viet Nam since 1988, recent years have seen stiff competition from China. In 2023, South Korea ranked fourth in foreign direct investment in Viet Nam, behind Hong Kong, China, and Singapore. Factors such as rising labour costs and increased presence of Chinese companies have made Korean firms cautious about new investments in Viet Nam. Additionally, Viet Nam’s implementation of a global minimum corporate tax of 15% may impact its attractiveness as an investment destination, with South Korean companies expected to bear a significant portion of the tax burden. Despite challenges, Viet Nam’s open trade and investment environment, along with diplomatic relations with the United States and the influx of investment from multinational companies leaving China, are expected to contribute to the country’s economic growth.

INDONESIA, MALAYSIA, BRUNEI DARUSSALAM
Bruneian company pitches first high-speed railway on the island of Borneo
(01 April 2024) Brunergy Utama, a Brunei-based infrastructure company, has proposed the Trans-Borneo Railway, a high-speed railway spanning 1,620 kilometers across the island of Borneo. The railway would connect Brunei Darussalam, Indonesia, and Malaysia. The project aims to connect major cities and districts in Borneo, including Pontianak, Kuching, Kota Kinabalu, and Tutong, with plans to extend to Indonesia’s new capital of Nusantara on the western side of the island. The railway is designed to have four terminals, 24 stations, and trains reaching speeds of up to 350 kilometers per hour, with an estimated cost of US$70 billion. The project’s outlook is currently unclear, as neither Malaysia, Indonesia, or Brunei Darussalam have committed to the project.

THE PHILIPPINES, UNITED STATES, JAPAN
The Philippines, United States, and Japan to collaborate on semiconductors and clean energy
(04 April 2024) Japanese Prime Minister Fumio Kishida stated in an interview that Japan, the U.S., and the Philippines plan to collaborate in various sectors such as semiconductors, digitalization, and clean energy. This is with the larger aim of providing an alternative to China’s influence in Southeast Asia. The leaders will hold a trilateral summit in Washington to discuss regional challenges. They will explore economic and security cooperation, including the development of semiconductor facilities by U.S. companies in the Philippines (with Japan providing training for Filipino engineers), the setting up of 5G networks in the Philippines, cybersecurity, and development of supply chains for critical minerals such as nickel.

THAILAND
Thailand’s post-pandemic recovery sluggish compared to neighbors
(01 April 2024) Thailand is facing economic challenges, with household debt reaching nearly 87% of GDP and informal loans amounting to US$1.5 billion. The economy is exhibiting signs of the middle-income trap, characterized by low productivity and limited opportunities for the workforce. Despite other Southeast Asian countries’ strong recovery from the COVID-19 pandemic, Thailand’s economy grew by only 1.9% in 2023. Thai Prime Minister Srettha Thavisin has proposed measures such as cash handouts and legalizing casinos to stimulate economic growth, but these policies have faced criticism. The Bank of Thailand has refused to lower interest rates, pointing instead to the country’s loss of competitive edge due to factors like China’s slowdown and inadequate investments in digital literacy and training.

SINGAPORE
Singapore government bonds worst performing in Southeast Asia in 2024
(04 April 2024) Overseas investors in Singapore government bonds are facing challenges as the debt has performed poorly in 2024, with a loss of over 4% in dollar terms. The upcoming policy review by the Monetary Authority of Singapore (MAS) is unlikely to provide relief due to persistent inflation and robust economic data. The strong link between Singapore bonds and the US market means that any moves in Treasury yields often influence local yields. Despite expectations of easing by central banks, including the Federal Reserve, the timing of rate cuts has been delayed as the US economy remains resilient. Singapore bonds are expected to be less affected by rate cuts compared to regional peers due to the relatively lower increase in Singapore dollar (SGD) rates compared to US dollar (USD) rates. MAS policy is not anticipated to change until October 2024 unless there are significant declines in Singapore inflation. The impact of US events on Singapore bonds is considered more significant than domestic factors, with a stronger USD potentially leading to upward pressure on yields.

SINGAPORE
Total startup investment in Singapore reached US$6.1 billion in 2023
(04 April 2024) In 2023, Singapore emerged as the top startup investment destination in Southeast Asia, attracting a total investment of US$6.1 billion across 522 deals, according to a report by government agency Enterprise Singapore. Early-stage funding accounted for 94% of the deal volume and nearly half of the total deal value, marking an increase from the previous year. This contrasts with a 40% year-on-year drop in global early-stage funding for startups in 2023. The report suggests that startups in Singapore demonstrated resilience in securing funding compared to their counterparts. The director for the startup ecosystem at Enterprise Singapore argued that these funding results reflect investors’ confidence in Singapore as a prime destination for startup development in the region.

CAMBODIA
Cambodia approves investment projects worth US$2.2 billion in first quarter of 2024
(05 April 2024) In the first quarter of 2024, Cambodia experienced a significant surge in fixed-asset investment, reaching US$2.2 billion. This marked a 649% increase compared to the same period in 2023. This increase was accompanied by the approval of 106 investment projects during this period, generating approximately 107,000 jobs. The investments primarily targeted industries, infrastructure, hydroelectric power, agriculture, agro-industry, and tourism. China, Singapore, Vietnam, South Korea, and the United States emerged as the top five foreign investors in Cambodia, with China accounting for 35% of the total investment at US$777 million. The Secretary of State and Spokesperson for the Cambodian Ministry of Commerce highlighted the role of agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Cambodia-China Free Trade Agreement (CCFTA) in attracting foreign direct investment to Cambodia.

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SOUTH KOREA
Korean companies may boost share sales as authorities look to enhance corporate governance
(04 April 2024) Goldman Sachs Group Inc. predicts that South Korean companies may increase share sales as authorities aim to enhance corporate governance and lift a short-selling ban. The investment bank suggested that a plan to encourage firms to enhance valuations through better management practices could lead to more share sales, particularly from low-value traditional businesses. The proposed “Corporate Value-up Program,” aimed at improving profit, unwinding cross-holdings, and boosting shareholder returns, is expected to be finalised in May 2024. South Korea’s equity capital market (ECM) activity has seen a significant increase, accounting for 3% of global deals in the first quarter of 2024, up from 1% in the same period in 2023, with block sales and share placements reaching a record US$4.1 billion between January and March. Investors are also anticipating the potential end of the short-selling ban in June 2204, which  could pave the way for derivative-based equity products like convertible or exchangeable bonds.

JAPAN
Japan’s Nikkei average jumps 2% due to heightened domestic investor interest
(04 April 2024) The Nikkei Stock Average surged on 04 April, closing at 39,773.14, up 321.29 points or 0.81% from the previous day. Semiconductor-related stocks, buoyed by a rebound in U.S. tech stocks, led the rise, with Tokyo Electron hitting an all-time high. Investor sentiment was bolstered by Japanese companies’ improved asset efficiency, with trading house Itochu and cosmetics company Kao experiencing significant gains. The extended uptrend is also attributed to increased purchases of Japanese stocks through the revamped Nippon Individual Savings Account (NISA) program, which is designed to encourage people to move some of their savings into the stock market. According to a survey on NISA account openings at 10 securities companies, average monthly purchases in January and February tripled compared to the same period last year, reaching 1.77 trillion yen (US$11.67 billion).

AUSTRALIA
Government seeks to revitalize Australian manufacturing through US$9.7 billion fund
(04 April 2024) The Australian government is making efforts to revitalise its manufacturing sector through a US$9.7 billion National Reconstruction Fund fund aimed at commercializing local innovation. This initiative comes amidst concerns over the country’s economic resilience, particularly highlighted by recent trade tensions with China and vulnerabilities exposed by the Covid-19 pandemic. The decline of traditional manufacturing industries since the 1970s has left Australia heavily reliant on raw material exports, prompting calls to move up the value chain. However, Australia lags behind in research and development spending, with only 1.68% of GDP allocated to R&D, well below the OECD average. The National Reconstruction Fund aims to address these challenges by investing in maturing companies across various sectors, including renewable energy, medicine, defence, agriculture, and mining. While the vision to rebuild Australia’s manufacturing prowess is realistic, there are concerns about the country’s ability to compete with global players like China.

ASEAN
Green transition in ASEAN countries face hurdles due to greenflation concerns
(25 March 2024) Several ASEAN countries are facing hurdles in their renewable energy transitions, largely due to concerns over ‘greenflation’. Greenflation occurs when fossil fuels are discarded in favour of more expensive low-carbon technologies. For instance, Indonesia recently trimmed its future targets for renewable portions in the country’s primary energy mix. The cuts in the country’s renewables targets were attributed to concerns over burdening the poor with expensive R&D and energy transition costs. In neighboring Malaysia, government officials have warned that a weaker ringgit will make it more expensive to import technologies, equipment, and expertise needed for large-scale decarbonization projects. In Viet Nam, meanwhile, coal imports soared 217% year-on-year in January 2024 year on year, despite Vietnam being Southeast Asia’s leader in terms of solar and wind power capacity.

ASEAN
HSBC sets up US$1 billion growth fund to scale up ASEAN digital platform businesses
(27 March 2024) HSBC announced the establishment of the ASEAN Growth Fund, a US$1 billion lending initiative aimed at supporting companies scaling up through digital platforms across Southeast Asia. The London-based bank aims to capitalize on the region’s rapidly expanding digital economy, projected to reach a value of US$600 billion by the end of the decade, up from US$218 billion in 2023. Amanda Murphy, HSBC’s head of commercial banking for South and Southeast Asia, highlighted the region’s digitally native and expanding workforce as a key driver of growth, particularly in e-commerce. Alongside the ASEAN Growth Fund, HSBC introduced a US$150 million venture debt fund specifically tailored for the Singaporean market. This fund aims to provide financial support to companies in Singapore backed by venture capital or private equity firms.

THAILAND
Weak demand and oversupply may prompt price war in Thai auto market
(27 March 2024) Car sales in Thailand dropped by 26.15% in the first two months of 2024, attributed to factors such as high consumer debt and tighter financing conditions. Hybrid and electric car sales increased, but failed to offset the decline in internal combustion vehicle sales. 2023’s surge in repossessed cars and subsequent fall in resale prices exacerbated the situation, causing potential buyers to delay purchases. Import of electric vehicles further impacted domestic production, though the Federation of Thai Industries downplayed concerns, citing the need for industry development. A ‘vicious cycle’ of weak demand and oversupply have prompted carmakers to offer significant discounts. A price war is anticipated, with luxury brands also lowering prices. EV sales in Thailand are projected to reach 100,000 units in 2024.

THAILAND
Thailand could boost tourism revenue by US$12 billion by legalizing casinos
(26 March 2024) A study suggests that legalizing casinos within large entertainment complexes in Thailand could increase tourism revenue by approximately US$12 billion. Tourist spending is estimated to rise by 52%, reaching THB 65,050 baht (USD$1,790) per trip, potentially adding up to THB 448.8 billion baht in additional earnings. The proposed entertainment complexes would not only feature casinos but also luxury hotels, restaurants, and other attractions. Thailand aims to double foreign tourist arrivals to 80 million by 2027, with tourism already contributing 12% to the nation’s economy. The global fun economy industry, including integrated entertainment venues, is rapidly expanding, presenting significant revenue opportunities for Thailand.

THAILAND, MALAYSIA
Malaysia considering extending its US$10.6 billion East Coast Railway Link project to Thailand
(27 March 2024) Malaysia is considering extending its US$10.6 billion East Coast Railway Link (ECRL) closer to the Thai border to enhance cross-border connectivity and mitigate economic competition with Thailand. Malaysia’s Transport Minister stated that both countries face shared challenges and could benefit from collaboration in areas like transportation infrastructure. The ECRL project, scheduled for completion by 2027, currently terminates at Kota Bharu, around 40 kilometers from the Thai border. Thailand’s proposed US$29 billion Chumphon-Ranong Land Bridge project aims to construct two new ports, potentially creating an alternative trade route to the Malacca Strait. Loke highlighted that the impact of the land bridge on Malaysia’s major ports is expected to be limited. He noted that the implementation of the land bridge project could take up to 15 years, if initiated.

SINGAPORE
Office rents reach 15-year high in first quarter of 2024
(27 March 2024) In the first quarter of 2024, office rents in Singapore reached a 15-year peak, with gross effective monthly rents for premium office space in the Central Business District rising to SG$11.42 (US$8.47) per sq ft, the highest since late 2008. This bucks the trend of commercial property downturns observed in other global financial centres. The resilience of Singapore’s commercial real estate market can be attributed to a resurgence in office occupancy rates and a surge in private wealth. Vacancies for prime office space dipped to 5.3% in the first quarter, a post-pandemic low, compared to 5.5% in the previous quarter. However, significant demand from large occupiers remains subdued. Real estate consultancy firm JLL forecasts a shortfall in securing tenants for over 1.5 million sq ft of office space scheduled for completion between 2024 and 2025.

VIET NAM, INDONESIA, TAIWAN
Taiwan bets on Southeast Asian countries to address semiconductor sector talent shortage
(26 March 2024) Taiwan is addressing its potential talent shortage in the semiconductor industry by turning to Southeast Asian students, notably from Viet Nam, as a source of workers. Minghsin University of Science and Technology (MUST) in Taiwan, for example, provides training in semiconductor manufacturing, with internships offered at leading chip companies. Approximately 700 of the university’s 2,300 students are from Viet Nam. Taiwan’s declining birthrate, stagnant wages, and rising property prices have exacerbated concerns, with annual births falling to a record low of around 135,000 in 2023. To address this, Taiwan plans to spend US$163 million by 2028 to attract 320,000 foreign students, focusing on science, technology, engineering, and math (STEM) fields. Additionally, a new framework encourages foreign students to work in Taiwan after graduation, aiming for a 70% retention rate. Southeast Asian students are a key focus of recruitment efforts, with programmes established in Vietnam, Indonesia, the Philippines, and other countries in the region.

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JAPAN
Bank of Japan steps up intervention warning amidst declining yen
(27 March 2024) The Japanese yen experienced a significant decline against the US dollar on 28 March, 2024, nearing its lowest level in 34 years, prompting concerns of potential intervention by Japanese authorities. Japan’s Finance Minister indicated a readiness to take action against excessive movements in the yen. Despite these warnings, the currency dropped to ¥151.94 against the dollar during morning trading, defying efforts by the Japanese government to stem its decline. The Bank of Japan’s recent shift away from ultra-loose monetary policy, including its first interest rate hike since 2007, failed to exert upward pressure on the yen. Dovish comments by the bank’s governor further weakened the exchange rate, with investors maintaining bets on a significant interest rate differential between Japan and the US. Japanese officials have identified ¥152 against the dollar as a potential trigger for direct intervention, echoing similar actions taken in 2022. Finance officials attributed the recent yen weakening to speculative activities.

SOUTH KOREA
South Korea announces financial aid for small businesses and construction companies
(27 March 2024) South Korea has announced financial aid measures for small businesses and construction companies impacted by high-interest rates. The government, in collaboration with commercial banks, aims to provide KRW 40.6 trillion (US$30.3 billion) in financial support through loan guarantees and reduced interest rates starting in April 2024. Additionally, there are plans to expand schemes returning interest income to small businesses and self-employed individuals with loans. For struggling builders facing high raw material costs and interest rates, liquidity support will be offered through increased guarantees and additional loans to finance profitable real estate projects. The Financial Services Commission (FSC) also intends to expedite assistance through its market stabilising fund.

AUSTRALIA
Consumer price index rises by 3.4% in February 2024, in line with economists’ expectations
(27 March 2024) Inflation in Australia remained steady for the second consecutive month, with the consumer price index rising by 3.4% in the year to February 2024, in line with economists’ predictions. Excluding volatile items, inflation decreased from 4.1% in January 2024 to 3.9% in February 2024. The moderation was attributed to declines in meat and seafood prices, which dropped by 2% due to livestock sell-offs, and a 0.5% decrease in fruit and vegetable prices. Insurance prices saw a significant increase of 16.5% annually, the highest since the calculation of the CPI began in 2022. Rent prices continued to rise, albeit slightly, reaching 7.6% annually, although government measures restrained the increase. Energy prices also eased, with electricity prices growing only 0.3% in February. However, the underlying annual inflation measure rose from 3.8% in January to 3.9% in February, indicating ongoing economic challenges. The RBA is set to make its next decision on interest rates on 07 May, 2024, following the release of March quarter inflation data.

ASEAN
ASEAN startup sector facing declining funding, prompting calls for restructuring and consolidation
(20 March 2024) ASEAN’s startup sector is facing a so-called ‘funding winter’, with startup investment in the region in the first quarter of 2024 dropping to around US$800 million as of 18 March, 2024, around the 2017 level. Although rising US interest rates have been blamed for a global downturn in tech startups, Southeast Asia’s startup scene is notably linked to the fortunes of one firm in particular — Japanese tech conglomerate SoftBank Group — which helped grow many of the region’s top tech companies, such as Grab and Tokopedia, the e-commerce unit of ride-hailing service GoTo, almost from scratch. After SoftBank Groups’ venture capital ambitions were crippled following the collapse of its Vision Fund in 2022, many of the region’s tech startups now face an uncertain future. Facing limited funding moving forward, the region’s startups may have to go through shutdowns, mergers and downrounds. This will impact Southeast Asian consumers, who have become heavily dependent on digital services for everyday life.

MALAYSIA
Malaysia to see faster economic growth of 4% to 5% in 2024
(20 March 2024) Malaysia’s central bank forecasts a faster economic growth rate of 4% to 5% in 2024, driven by increased investment and external demand, following 3.7% growth in 2023. Bank Negara Malaysia anticipates a global economic rebound this year, underpinned by technological advancements and a resurgence in tourism. Despite subdued global demand, Malaysia saw an improvement in labour market conditions and heightened investment activity, particularly in the IT and electronics sectors. Tourism Malaysia aims to surpass pre-COVID 19 tourist arrival levels, targeting 27.3 million visitors in 2024. The services and manufacturing sectors are expected to lead growth, while the agriculture industry may contract due to adverse weather conditions. Inflation is projected to remain moderate, averaging between 2.0% and 3.5% in 2024, following a downward trend observed in 2023.

MALAYSIA, SINGAPORE
Malaysians working in Singapore gain spending power due to slumping ringgit
(21 March 2024) A declining Malaysian ringgit has increased the purchasing power of Malaysians working in Singapore. The Malaysian ringgit has weakened against the US dollar, while the Singapore dollar remains robust and stable. Statistics from Singapore’s Monetary Authority show that one Singapore dollar now equals about MYR 3.5, up from MYR 3 five years ago, benefiting Malaysian expatriates who earn higher incomes in Singapore. The allure of better job prospects, higher salaries, and a strong Singapore dollar motivates many Malaysians to seek employment in Singapore, as evidenced by increased job applications from Malaysia to Singapore. However, Malaysia faces a talent drain as many skilled individuals migrate to Singapore, prompting calls for Malaysia to create more appealing job opportunities to retain local talent.

MYANMAR
Peninsula Hotels group says US$130 million project in Yangon currently stalled
(19 March 2024) Hongkong and Shanghai Hotels, the operator of Peninsula Hotels chain, expressed uncertainty about resuming its US$130-million project in Yangon, stalled since Myanmar’s military coup three years ago. CEO Clement Kwok stated that while basic groundwork might proceed, there’s no clear timeline for the project’s completion. The joint venture with Myanmar tycoon Serge Pun’s Yoma Group aims to redevelop the Myanmar Railway headquarters into an 88-room hotel. Construction halted post-coup, leading to a significant impairment charge for the company. Despite challenges, Hongkong and Shanghai Hotels remain committed to the project and have agreed with local partners to complete the building’s roof.

THE PHILIPPINES
Casino sector expected to see as much as US$6 billion in investments over next five years
(19 March 2024) The chairman of the Philippine Amusement and Gaming Corp, Alejandro Tengco, stated that both foreign and domestic firms are projected to invest up to US$6 billion in the Philippines’ casino sector over the next five years, strengthening its position as one of Asia’s leading gambling destinations. Tengco anticipates the opening of at least one new casino-resort every other year, expanding beyond Manila to areas like Clark and Cebu. The country aims to achieve a total gross gaming revenue (GGR) of US$8 to US$9 billion by 2027, a year earlier than previously expected. In 2023, the Philippines recorded a record total GGR of US$5.07 billion. Despite challenges, such as the absence of mainland Chinese high-rollers due to the pandemic and regulatory changes, casino resort operators like Bloomberry Resorts and Japan’s Universal Entertainment have performed strongly. The Philippines faces upcoming competition from Japan and Thailand, but Tengco believes there’s a window of opportunity to solidify its position in the gaming industry over the next five to six years.

INDONESIA
Prabowo Subianto officially wins Indonesia’s February 2024 presidential elections
(21 March 2024) Prabowo Subianto has been elected as Indonesia’s next president, succeeding Joko “Jokowi” Widodo. Official results from the presidential election show Prabowo secured 96.2 million votes, or 58.59% of the total valid votes, beating two other candidates, Anies Baswedan and Ganjar Pranowo. The voter turnout was 80.18%, slightly down from the 2019 election. Prabowo won in 36 provinces, clearing the necessary electoral hurdles. He will be sworn in on 20 October, 2024 for a five-year term. However, only four out of nine political parties supporting Prabowo passed the parliamentary threshold in the national legislative election held on the same day as the presidential election, meaning Prabowo will need to gain additional coalition partners to gain a majority in the lower house. Prabowo has stated his intent to continue major policies, including shifting the country’s capital to Nusantara and developing a domestic mineral processing industry.

VIET NAM
Vietnamese fruit and vegetable exports to reach US$1.25 billion in first quarter of 2024
(21 March 2024) Viet Nam’s fruit and vegetable export value is projected to reach approximately US$1.25 billion in the first quarter of 2024, marking a 27% increase compared to the same period in 2023, as reported by the Vietnam Fruit and Vegetable Association. Preliminary data from the General Department of Customs indicates that March’s fruit and vegetable exports are estimated at US$433 million, showing a nearly 4% growth year-on-year. This marks the first time Viet Nam’s fruit and vegetable exports have surpassed US$1 billion in the first quarter of the year, demonstrating promising prospects for future industry growth. Major export markets include China, South Korea, the US, Thailand, and Japan. In contrast, Viet Nam’s imports of fruits and vegetables in the first three months of 2024 are estimated to total nearly US$500 million, representing a more than 19% increase year-on-year.

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CHINA
Hong Kong Monetary Authority maintains base rate unchanged, mirroring US Federal Reserve
(21 March 2024) The Hong Kong Monetary Authority (HKMA) opted to maintain its base rate charged through the overnight discount window at 5.75% on 21 March, 2024, aligning with the decision of the US Federal Reserve to keep rates steady. This decision follows Fed Chair Jerome Powell’s remarks on 20 March reaffirming the bank’s commitment to gradual rate cuts amidst ongoing inflation concerns, projecting three interest rate reductions in 2024. HKMA anticipates potential rate cuts totalling 75 basis points by the Fed in 2024, though the timing and subsequent rate trajectory remain uncertain, suggesting a sustained period of high interest rates. Despite this, HKMA assured that Hong Kong’s financial and monetary markets continue to function smoothly and that the exchange rate of the Hong Kong dollar remains stable. However, the public is advised to assess associated risks carefully when making financial decisions such as property purchases or borrowing. Hong Kong’s monetary policy closely mirrors that of the United States due to its currency peg to the US dollar within a narrow band of 7.75-7.85 per dollar.

AUSTRALIA
Unemployment rate unexpectedly drops to 3.7% in February 2024
(21 March 2024) Australia’s jobless rate plummeted to 3.7% in February 2024, a significant drop from January’s 4.1%, surpassing economists’ expectations of 4.0%, as revealed by the Australian Bureau of Statistics (ABS) on 21 March, 2024. The economy added 116,600 jobs, predominantly full-time positions, in February, more than triple the anticipated figure of 40,000 positions. The ABS attributed the unexpected surge in employment to changes in how people enter the job market. The participation rate increased to 66.7%, and hours worked rose by 2.8%, reversing a decline in January 2024. The strong job market performance contrasts with Australia’s sluggish economic growth in the final quarter of 2023, driven by numerous interest rate hikes. The Reserve Bank of Australia (RBA) forecasted a slight increase in the unemployment rate to 4.2% by June and 4.3% by the end of 2024. The RBA governor hinted that rapid unemployment growth could prompt interest rate cuts, though the bank left rates unchanged. Regional variations were observed, with South Australia and New South Wales experiencing significant declines in unemployment rates, while Victoria and Tasmania remained stable. The Northern Territory recorded a rise in unemployment, contrasting with the Australian Capital Territory’s slight decrease. The surge in jobs coincided with a substantial net migrant influx, raising concerns among welfare groups about potential delays in interest rate cuts.

SOUTH KOREA
South Korea seeks multinational framework for semiconductor export controls
(22 March 2024) South Korea is considering utilising a multinational framework to review export controls for sensitive products such as semiconductor-related equipment. This approach could complicate US efforts to limit China’s access to advanced chip-making gear. Despite being a key US ally, South Korea faces pressure due to its significant trade ties with China. South Korea highlighted that any export controls would take months to implement and may not necessarily result in a ban. Seoul stressed that South Korea isn’t singling out China and aims to minimize impacts on domestic industries while fulfilling international obligations. Opting for a multilateral approach indicates caution among Korean policymakers regarding unilateral curbs. Following discussions in Washington with senior US officials, including Trade Representative Katherine Tai, South Korea’s Trade Minister highlighted South Korean investment and manufacturing growth in the US, potentially narrowing the gap between the US and China as destinations for South Korean exports.

SINGAPORE
Taylor Swift’s Eras tour causes economists to upgrade Singapore’s GDP forecast
(08 March 2024) The Singapore leg of singer-songwriter Taylor Swift’s Eras tour caused economists to upgrade the country’s GDP forecast for 2024. Economists now predict Singapore’s economy will expand by 2.9% in the first quarter of 2024, and 2.5% for the whole year (from a previous forecast of 2.3%). It is believed her concerts added 0.2% percentage points of GDP to the city-state’s economy in the first quarter. The Singapore leg of the Eras tour involved the singer performing six concerts through 09 March, carrying benefits for Singapore’s hospitality, food & beverage, and retail activities.

THE PHILIPPINES, UNITED STATES
Potential free trade agreement between the Philippines and United States soon
(12 March 2024) A potential free trade agreement (FTA) between the Philippines and the United States will be discussed once a visiting delegation of American business leaders, organized by US President Joe Biden, returns to the US. The Chairman of the President’s Export Council (PEC), mentioned the possibility of a US-Philippines FTA during a forum in Makati City. The PEC advises the US president on trade-related government policies and programs. The Chairman stated that discussions on the FTA would occur upon their return to the US, but warned that FTA negotiations involve multiple branches of the US government, including Congress. Currently, the US ranks as the Philippines’ third-largest trading partner globally, with total trade reaching approximately US$20 billion. The United States presently has 14 FTAs with 20 countries, according to the ITA.

VIET NAM
Viet Nam expected to be upgraded to emerging market indexes by 2025
(09 March 2024) Viet Nam is striving for inclusion in emerging market indexes, with the demand for upfront funding from equity investors posing a significant obstacle. JPMorgan Chase & Co. and HSBC Holdings Plc anticipate an upgrade for Viet Nam’s US$269 billion stock market by FTSE Russell later in 2024, with a target inclusion by 2025. Despite being a strong candidate on paper due to its robust economy and stock market performance, foreign investors are concerned about the requirement for investors to have fully-funded accounts in the country before trading can commence. Vietnam’s progress towards an upgrade has been slower than anticipated, partly due to issues with fund availability checks and cumbersome account opening processes. Another challenge is the cap on foreign holdings in certain sectors, hindering international investment. However, Vietnam aims to address these concerns and increase its stock market capitalization to 100% and 120% of GDP by 2025 and 2030, respectively.

MALAYSIA
Semiconductor manufacturers shifting operations to Malaysia amidst US-China chip war
(11 March 2024) Semiconductor manufacturing firms are increasingly investing in Malaysia amidst the ongoing Sino-US trade war. Much of this influx is driven by a global strategy adopted by semiconductor firms termed “China plus one,” which aims to diversify supply chains away from China. Malaysia’s appeal lies in its established history of semiconductor manufacturing (primarily back-end operations), bolstered by the current government’s ambition to move up the value chain. Malaysia attracted RM60.1 billion in foreign direct investment in 2023, demonstrating its growing attractiveness to investors. However, challenges such as a shortage of engineering talent and political vulnerabilities remain. The influx of Chinese companies may also attract scrutiny from the US, potentially impacting the Malaysian semiconductor industry’s future access to the American market. Despite these challenges, Malaysia is aggressively pursuing high-end investments to position itself as a key player in the global semiconductor market.

MALAYSIA, GERMANY
Malaysia secures potential investments worth US$9.68 billion during Germany visit
(13 March 2024) During his visit to Germany, Malaysian Prime Minister Anwar Ibrahim highlighted significant support and recognition from German leaders and business figures, with potential investments amounting to MYR 45.4 billion (US$9.68 billion). Anwar discussed Malaysia-Germany relations and various economic cooperation aspects with German Chancellor Olaf Scholz. The potential investments span industries such as semiconductors, aerospace, medical devices, chemicals, and services. During a roundtable meeting, attended by over 35 industry leaders, representatives from companies like Siemens AG, B. Braun GmbH, and Airbus Asia Pacific discussed potential business collaborations. Malaysia and Germany have strong trade ties, with Malaysia being Germany’s largest trading partner in ASEAN and over 700 German companies operating in Malaysia, contributing to the creation of 65,000 jobs.

SINGAPORE, JAPAN
Japan’s Toppan Holdings plans to build semiconductor package substrate plant in Singapore
(14 March 2024) Japan’s Toppan Holdings intends to construct a semiconductor package substrate plant in Singapore to begin operations by late 2026, in response to rising demand linked to artificial intelligence. The investment in the plant is estimated at US$338 million, with 200 jobs expected to be created. Further capacity expansions are anticipated in the future, with total investments potentially surpassing 100 billion yen. Toppan’s main customer, Broadcom, may provide financial support for future capacity expansions. The Singapore facility will be strategically located near semiconductor assembly and testing contractors in Malaysia and Taiwan. The chip substrate market is projected to reach US$29 billion by 2028. Toppan received support from Singapore’s government and Broadcom in selecting the plant site and hiring personnel. This move strengthens Toppan’s business continuity plan, complementing its existing production base in Ishikawa prefecture acquired in 2023.

INDONESIA
Trade surplus measures at US$870 million in February 2024, smallest in nine months
(15 March 2024) In February, Indonesia reported its smallest trade surplus in nine months, standing at around US$870 million, significantly lower than the expected surplus of US$2.32 billion polled by Reuters and January’s US$2 billion surplus. This marks the smallest surplus since May 2023. Indonesia, known for exporting commodities such as coal, palm oil, and nickel, experienced a 9.45% drop in exports to US$19.31 billion, driven by declines in coal and palm oil shipments. This decline may be attributed to 2023’s drop in commodity prices and delays in the issuance of mining permits affecting activities in key mines. Meanwhile, imports surged by 15.84% to US$18.44 billion, surpassing market expectations, driven mainly by increased imports of machinery, plastic, and electrical equipment.

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CHINA
Prices of new homes continue sinking despite mortgage rate cuts
(15 March 2024) In February 2024, official data revealed a further decline in the prices of new homes in China, with top-tier cities like Beijing, Guangzhou, and Shenzhen leading a 0.3% monthly drop despite recent mortgage rate cuts. This decline matched the pace seen in January. Year-on-year, prices fell by 1%, attributed in part to a high base effect. Prices for secondhand homes in top-tier cities also decreased by 0.8% in February, indicating continued affordability challenges for many citizens. Other key provincial cities experienced even larger price drops amid subdued demand amidst weaker economic conditions. China’s real estate sector has been under pressure since the implementation of the “three red lines” policy in 2021 to curb overborrowing by developers, leading to defaults among major real estate firms. To support growth while managing risks, authorities hinted at further monetary easing, including maintaining the interest rate on medium-term lending facility loans at 2.5%.

JAPAN
Bank of Japan to discuss exiting negative rate policy next week amidst wage hikes
(14 March 2024) The Bank of Japan (BOJ) is set to deliberate on the potential termination of its negative interest rate policy during its upcoming meeting, spurred by optimism over achieving the 2% inflation target amidst rising wage levels. The decision hinges on the outcome of Japan’s annual wage negotiations, the results of which will be disclosed by Rengo, the top labour confederation, on Friday. If the negative interest rate policy is lifted, it would mark Japan’s first interest rate hike since February 2007, signalling a shift in monetary policy. Discussions also involve the potential discontinuation of yield curve control, coupled with the cessation of asset purchases, including exchange-traded funds and real estate investment trusts. On 13 March, Toyota Motor and other major corporations agreed to meet labour union demands on wages, bolstering expectations for policy adjustments by the BOJ. BOJ Governor Kazuo Ueda emphasised the significance of the negotiation outcomes in the decision-making process.

AUSTRALIA
Australian stocks among world’s worse this week amid China concerns
(15 March 2024) The S&P/ASX 200, a key Australian stock index, experienced a decline of 2.3% during the week, marking its poorest performance since September. The downturn was attributed to concerns over China’s economic condition, particularly in the commodities sector, which heavily influences the Australian market. Mining companies bore the brunt of the losses, despite a rise in copper prices, following perceived inadequacies in Chinese stimulus measures. Additionally, banks suffered significant setbacks, emerging as the worst-performing sector for the week. This decline was exacerbated by discouraging US economic data, which diminished expectations for relaxed monetary policies. Analysts noted that Macquarie’s downgrades of Australian banks further compounded the negative sentiment among investors.

ASEAN, AUSTRALIA
Australia pledges US$41.8 million in funding for maritime security in ASEAN

(4 March 2024) On the first day of the ASEAN-Australia Special Summit 2024, Australia’s Foreign Minister Penny Wong pledged US$41.8 million in funding for maritime security for ASEAN. The funding aims to support maritime cooperation and secure sea lanes, especially in the South China Sea. Although it was not specified which countries the funding would go to, Wong commended Indonesia, Malaysia, Vietnam, and the Philippines for their efforts in delineating maritime boundaries. The summit, held from 4 – 6 March, 2024 in Melbourne, marks 50 years since Australia became a ‘dialogue partner’ of ASEAN. Additionally, Wong highlighted Australian funding for climate resilience in the Mekong region amidst growing regional concerns over a focus on militarisation amid a climate crisis.

INDONESIA
Incoming president Subianto Prabowo vows fiscal discipline and faster growth during his term
(5 March 2024) Indonesia’s presumed president-elect Prabowo Subianto recently outlined his economic agenda at the Mandiri Investment Forum. He aimed for 8% economic growth over the next five years, broadening the tax base, and maintaining fiscal discipline. Preserving fiscal prudence will help bolster Indonesia’s credit profile, with the legal budget deficit cap set at 3% of GDP. Prabowo’s proposed spending initiatives, including free school lunches and milk for 80 million children, aim to enhance health, education, and employment opportunities. This has reportedly faced pushback within the cabinet, particularly regarding fiscal policy, with Finance Minister Sri Mulyani cautioning against an overreliance on state budget expansion. This uncertainty has led to investor apprehension, reflected in recent bond market fluctuations. Prabowo has also pledged to continue existing policies while enhancing efficiency, potentially through state-owned enterprise rationalisation and privatisation. He also seeks collaboration with the financial sector to address inflation, reduce poverty, and bolster food self-sufficiency.

THE PHILIPPINES, UNITED STATES
United States to invest US$30.36 billion in the Philippines
(01 March 2024) According to the Philippines’ Ambassador to the United States Jose Manuel Romualdez, the United States will invest US$30.36 billion in the Philippines. In response to concerns by Filipino exporters that China will reduce the volume of Filipino fruits it imports, Romualduez stated that the US$30.36 billion invested by the United States will help counter economic coercion by Beijing. Noting that the American investment has already been ‘programmed and approved’, Romualdez noted that American businesses are diversifying and will invest in infrastructure, energy, artificial intelligence, health care, manufacturing, and semiconductors.

THE PHILIPPINES
Philippines’ central bank unlikely to return to tightening cycle due to cooling inflation
(6 March 2024) The Philippines’ central bank, Bangko Sentral ng Pilipinas (BSP), is unlikely to resume its tightening cycle, according to BSP Governor Eli Remolona Jr. In its February 2024 policy meeting, the BSP’s Monetary Board opted to maintain key policy rates for the third time, citing a revised inflation outlook for 2024. The target reverse repurchase rate remains at 6.5%, with the overnight deposit and lending facility rates at 6.0% and 7.0% respectively, maintaining the highest levels in 16 years. Since May 2022, the BSP has increased key policy rates by 450 basis points to combat inflation, which averaged 6.0% in 2023, surpassing the target range of 2.0% to 4.0%. The BSP revised its inflation forecast for 2024 to 3.9% from 4.2% in December, stating that it was considering factors like supply-side shocks and potential second-round effects. In February, inflation reversed its downward trend, reaching 3.4%, with rice prices notably contributing to the rise.

MALAYSIA
Malaysian ringgit rises to a one-month high after policymakers ramp up coordination
(04 March 2024) Malaysia’s ringgit rose to a one-month high after policymakers ramped up their coordination with state-linked firms to lift the Malaysian currency from a 26-year low. The Malaysian ringgit advanced as much as 0.6% to 4.7185 per dollar in early Asian trading, its strongest level since 02 February, 2024. Over the past week, the ringgit has emerged as Asia’s best-performing currency. Malaysian policymakers have sought to drive more inflows into the market by urging government-linked companies (GLCs) to repatriate foreign investment income and convert it into ringgit more consistently. Malaysia’s central bank, Bank Negara Malaysia (BNM), will be enhancing its engagement with corporates and investors to further encourage conversions and bolster sentiments towards the ringgit.

MALAYSIA
Malaysia achieves victory in WTO case against EU over ‘discriminatory’ renewable fuel regulation
(6 March 2024) Malaysia has achieved a favourable outcome in its World Trade Organisation (WTO) case against the European Delegated Act, which was perceived as discriminatory towards the country’s palm oil biofuel. Malaysia’s Plantation and Commodities Minister confirmed that the WTO panel’s final report, issued on 5 March, deemed the EU act discriminatory. The dispute originated in 2018 when the EU introduced regulations on renewable fuel usage, particularly concerning biofuels derived from oil palm crops, a key industry in Malaysia. Malaysia argued that these measures violated fair trade practices and initiated legal action against the EU in 2021. The WTO’s final report criticised the EU’s approach to banning palm oil biofuels based on indirect land use change and its lack of consultation with affected economies. The EU has agreed to comply with the WTO ruling, necessitating amendments to its regulations regarding Malaysian palm oil biofuels. The Malaysian government pledges to monitor these changes closely and pursue further action if necessary to ensure compliance.

LAO PDR, VIET NAM
Laotian and Vietnamese provinces partner to jointly promote tourism
(06 March 2024) The northern Laotian province of Huaphan is collaborating with neighbouring Son La province in Viet Nam to organise a joint tourism fair scheduled for 21 – 22 March, 2024. The event will showcase literary and cultural activities reflecting the close relationship between the two provinces, including a theme song symbolising the enduring bond between their peoples. Highlights will include photo exhibitions, displays of tourism and cultural products, and information on tourist attractions and services available in each province. The fair aims to strengthen tourism ties between Huaphan and Son La, fostering friendly relations between Lao PDR and Viet Nam, particularly in the shared border area. Organisers hope the event will attract foreign tourists, boosting cross-border tourism and generating income for local communities.

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CHINA
China to improve policies supporting childbirth and elderly population
(5 March 2024) China will improve policies supporting childbirth as well as the country’s rapidly ageing population. This comes as China’s population fell for the second consecutive year in 2023, with new births dropping to about half of those in 2016, while marriages hit a record low in 2022. According to a report by the country’s state planner, China will seek to improve policies to boost birth rates by refining parental leave policies, improving the mechanism for sharing the related labour costs of employers, and increasing the supply of childcare services. In response to China’s ageing population, the minimum basic old-age benefits for rural and non-working urban residents will be raised, while basic pensions for retirees will continue to increase. Authorities are also seeking to implement a private pension system nationwide.

CHINA
China sets economic growth target of around 5% for 2024
(5 March 2024) On 05 March, 2024, China announced a GDP growth target of ‘around 5%’ for 2024, matching 2023’s goal. China’s economy had expanded by 5.2% in 2023, but matching that this year may be more ambitious given that the economy’s post-pandemic rebound has been considered largely disappointing. China’s economic recovery has been held down by subdued domestic consumption, overcapacity in certain industries, a depressed property sector, and restrained manufacturing activity. In January 2024, the World Bank projected that China’s economy would expand 4.5% in 2024 amid weaker domestic demand and rising geopolitical tensions. The budget deficit target for 2024 is set at 3% of GDP, while consumer inflation is expected to reach 3%.

JAPAN
Japan’s benchmark stock index Nikkei reaches 40,000 for first time
(4 March 2024) On 4 March, 2024, Japan’s benchmark stock index the Nikkei 225 reached the 40,000 level for the first time. Japan’s Nikkei 225 share index rose to 40,314.64 but fell back slightly. It was up 0.5% to 40,150.00 by early afternoon. Shares in Japan have made significant gains over the past year due to strong demand for technology associated with artificial intelligence, the Bank of Japan’s easy credit policy, and a weak Japanese yen. The rally in the Nikkei 225 was led by semiconductor-related stocks such as equipment makers Tokyo Electron and Advantest, which rose by 2.4% and 3.7% respectively. After having risen by 28% in 2023, the Nikkei Stock Average has risen by 19% since the start of 2024.

ASEAN
Many ASEAN social safety nets remain inadequate despite ageing populations
(17 February 2024) ASEAN governments are under pressure to bolster social safety nets to ensure the well-being of their elderly amid ageing populations across the region. According to estimates by the United Nations, the share of working-age people in the region’s 11 countries peaked at 68% in 2023. This ratio already peaked in Thailand in 2013 and Viet Nam in 2014. Indonesia, one of the more youthful countries in the region, is expected to see its ratio top out in 2030. Meanwhile, the ratio of people age 65 or older in the region topped 7%, the threshold for being considered an ‘aging society.’ Despite these figures, in countries like Indonesia and Viet Nam less than 30% of working-age populations are covered by public pension schemes. In many ASEAN economies, social security outlays account for less than 10%, but are expected to grow moving forward.

ASEAN
ASEAN countries implementing more cash handouts to deal with inflationary pressures
(17 February 2024) ASEAN governments are distributing more money directly to households to help them deal with inflationary pressures. Singapore’s recently announced fiscal 2024 budget, for instance, includes SG$600 (US$445) in shopping vouchers for each household, to be distributed across two rounds in June 2024 and January 2025. This follows a SG$500 voucher handout in January 2024. Meanwhile, Thailand’s new government plans to spend US$14 billion to send THB 10,000 through digital wallets to all Thais aged 16 and over who meet certain requirements. Malaysia, for its part, plans to expand its cash aid for low-income households to MYR 10 billion (US$2.1 billion) in 2024 from MYR 8 billion (US$1.7 billion) in 2023. Economists have questioned these expanded cash aid programs, noting that inflation in Southeast Asia has already been cooling. As well, these programs are expected to impact the fiscal health of these economies.

MYANMAR
Number of electric vehicles in Myanmar increases sixfold in a year
(17 February 2024) According to Myanmar’s Ministry of Transport and Communications, the number of registered electric vehicles jumped 6.5 times from a year earlier. Roughly 1,900 EVs were registered in the year through January 2023 alone. This has been attributed to the ruling military regime banning the import of gas-powered cars in 2022 as part of efforts to shore up their dwindling foreign currency reserves. Import tariffs for EVs were also removed in January 2023, and are expected to continue until March 2024. EVs have also become more attractive to Myanmarese consumers due to skyrocketing gas prices, which have been blamed on fuel imports and distribution being disrupted by the shortage of foreign currencies.

THAILAND
Bank of Thailand resists calls to hold emergency meeting to slash rates
(21 February 2024) The Bank of Thailand (BOT) is resisting calls from the Thai government to hold an emergency meeting to slash rates in response to weak economic growth and negative headline inflation. GDP grew by only 1.9% in 2023, missing market expectations. In response to these weak GDP figures, Prime Minister Srettha Thavisin urged the BOT to hold an emergency meeting before the next regular meeting on 10 April, 2024 to cut rates. Refuting claims by Srettha that the Thai economy is in crisis, the governor of the BOT instead pointed to weak spending by Chinese tourists, a slowdown in Chinese imports from Thailand, and a delay in passing the government’s 2024 budget as reasons why the country’s growth remains sluggish. The ongoing dispute between the government and the BOT has raised fears about the long-term independence of the latter.

MALAYSIA
Malaysian ringgit hits lowest level in 26 years
(20 February 2024) On 20 February, 2024, the Malaysian ringgit hit its lowest level since the Asian Financial Crisis of 1998, which was 26 years ago. The Malaysian ringgit fell nearly 0.3% to almost 4.8 against the US Dollar. The ringgit has suffered a more than 4% drop already in 2024, which has been blamed on Malaysia’s poor export performance, uncertainties about China’s current economic prospects, and rising US interest rates. Malaysia’s central bank argued that growth in global trade and Malaysian exports will nevertheless have a positive impact on the ringgit in 2024. Malaysia’s ringgit is also expected to strengthen against the US Dollar after US authorities recently signaled an end to rate hikes.

MALAYSIA, BRUNEI DARUSSALAM
68% of Malaysian diaspora working in Brunei Darussalam are skilled workers
(21 February 2024) According to data by the Department of Statistics Malaysia (DOSM), 68% of the Malaysian diaspora working in Brunei Darussalam are skilled workers, while 24.1% are semi-skilled. It was also found that for those Malaysians working in Brunei, 41.3% were earning monthly gross salaries between BND 1,000 (MYR 3559.51) and BND 3,000 (MYR 10,678.53), while a further 43.5% received between BND3,001 (MYR 10678.53) and BND10,000 (MYR 35,595.09). Most Malaysians were working in Brunei because of job opportunities, higher salaries, and the high exchange rate of the Bruneian Dollar vis-a-vis the Malaysian Ringgit.

SINGAPORE
Singapore hosted regional headquarters for 4,200 multinational firms in 2023
(22 February 2024) According to a Bloomberg Intelligence report, Singapore hosted the regional headquarters for 4,200 multinational firms in 2023, extending its lead and dwarfing the 1,336 found in its lead rival Hong Kong. It was noted that even many Chinese companies are seeking to station their operations in Singapore to hedge their geopolitical risks. Multinational firms are choosing Singapore due to its better relations with the West, broader talent pool, diversified economy, and tax incentives. Furthermore, while Hong Kong has a lower standard corporate tax rate of 16.5%, this is bested by Singaporean programs that can cut its 17% tax rate to 13.5% or less for certain activities.

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SOUTH KOREA
Bank of Korea maintains its growth projections for 2024 at 2.1%
(22 February 2024) The Bank of Korea maintained its growth projections for 2024 at 2.1%, while also pointing to stubbornly high inflation and household debt as potential headwinds. The Bank of Korea also announced it would keep its key rate steady at 3.5%, marking the ninth consecutive session where it has held the rate. The central bank also maintained its inflation projection at 2.6%. Analysts noted that inflation remains higher than the Bank of Korea’s target, and that risks remain in the form of high real estate prices and household debt.

CHINA, MEXICO
China circumvents US tariffs by shipping more goods via Mexico
(21 February 2024) According to analysis data by the Financial Times, China is circumventing US tariffs by shipping more goods via Mexico. According to figures by Container Trades Statistics, the number of 20ft containers shipped from China to Mexico reached 881,000 in the first three quarters of 2023, the most recent period for which data is available, up from 689,000 in the same period of 2022. The rise came as Mexico overtook China as the largest exporter of goods to the US in 2023. Due to tariffs implemented by the Trump administration in 2018 and which were maintained by the subsequent Biden administration, shipments arriving directly from China now account for less than 15% of US imports, down from more than a fifth in 2017.

JAPAN
Japan’s benchmark Nikkei Stock Average closes above all-time high set in 1989
(22 February 2024) On 22 February, 2024, Japan’s benchmark Nikkei Stock Average closed above its all-time high set in December 1989. The average rose to 39,098, up 836.52 points or 2.19% from the previous day’s close, surpassing the all-time closing high of 38,915.87 recorded on 29 December, 1989. Year-to-date, the Nikkei Stock Average has gained 16.8%. It has been one of the top-performing global indexes since 2023, when it rose by around 30%. The rally in the index was led by semiconductor stocks such as equipment makers Tokyo Electron and Advantest. The rise of the Nikkei Stock Average has been fueled by global investors, who have been lured by corporate governance reforms, a weak yen, an ultra-low interest rate environment, and a tax-deferred investment program aimed at small investors.