SINGAPORE
Singapore outranks Shanghai and Tokyo as leading startup and venture capital hub
(20 June 2023) According to the latest global study by US-based research company Startup Genome, Singapore now outranks Shanghai and Tokyo as a leading startup and venture capital hub. Singapore now ranks 8th after surging ahead 10 places from the 2022 ranking. In Asia, it placed second behind Beijing, which fell two places to 7th in the same period. The study looked at 3.5 million startups across 290 ecosystems, an ecosystem being defined as a shared pool of resources generally located within a 100 km radius in a given region. The top 40 ecosystems were ranked on six factors: performance, funding, market reach, connectedness, talent and expertise, and knowledge. Singapore was found to rank highly on factors such as funding and connectedness. Singapore is home to around 4,000 tech startups and over 400 venture capital companies. The country now has 18 unicorns, more than four times the global average of 4.

VIET NAM
Credit growth slows in Viet Nam amidst softening global demand
(21 June 2023) According to the State Bank of Vietnam (SBV), credit growth slowed in Viet Nam amidst softening global demand. As of 15 June, 2023, credit growth was seen at 3.36% against the end of 2022, and was much lower than the same period in 2022. On 19 June, the SBV lowered key interest rates for the fourth time this year, as it sought to boost growth as the manufacturing-led economy weakens amid softening global demand. The refinance rate was cut to 4.5%, the discount rate to 3.0% and the electronic interbank rate to 5.0%. The SBV attributed the weaker credit growth to fading demand to expand businesses as well as weaker spending by borrowers. The central bank targets credit growth at 14% to 15% for 2023.

MALAYSIA
Sabah state expected to record more than 1.7 million tourist arrivals in 2023
(19 June 2023) Sabah state is expected to record more than 1.7 million tourist arrivals in 2023. According to Sabah’s Chief Minister, the final number is expected to be higher than the 1.72 million recorded in 2022, but still short of the 2.2 million tourists targeted. From January to April 2023, Sabah registered a total of 792,899 visitor arrivals, a 94% increase year-on-year. Of these, 565,424 were visitors from within Malaysia, while 227,475 were from abroad. The Sabah state government seeks to push for more air connectivity into Sabah to add to the current weekly 100 international flights into the state with a total seat capacity of 18,164 as well as 366 domestic flights with a total seat capacity of 60,303. The state government is currently seeking to upgrade basic tourism facilities for the convenience and safety of tourists, as well as develop and upskill community-based tourism operators.

MALAYSIA
Used car marketplace Carsome raises fresh funds via mix of equity and debt
(20 June 2023) Southeast Asian used car marketplace Carsome announced it had raised fresh funds via a mix of equity and debt in its latest financing round. The company said the latest round raised the company’s liquidity position to US$200 million. The equity funding round included existing investors 65 Equity Partners, Seatown Private Capital Master Fund, Qatar Investment Authority, Gobi Partners and Asia Partners. Carsome was also able to attract a long-term debt facility from EvolutionX Debt Capital, a growth-stage debt financing platform that backs technology companies in Asia. Earlier in June 2023, Carsome announced that revenue grew 250% in 2022 and that it had achieved operating profitability for the first time in the first quarter of 2023. As of October 2022, the company earned around 60% of its revenue from Malaysia, 25% from Indonesia and 15% from Thailand.

INDONESIA
Indonesia to ban export of raw copper once construction of local smelters completed
(20 June 2023) Indonesia will ban the export of raw copper once Freeport Indonesia and Amman Mineral Internasional finish building local smelters in 2024. According to Indonesian President Joko Widodo, once the two companies complete their smelters then the copper will be processed domestically into copper cathodes. He expects both facilities to start production in May 2024. The Indonesian government is pushing for more onshore refining as it seeks to climb up the commodities value chain, having already adopted similar policies for nickel exports. The government has had to push back its plans for an export ban on raw copper several times as the local unit of Freeport McMoRan Inc., the world’s top copper producer, kept seeking extensions for a smelter that started construction in 2021.

SINGAPORE
Grab Holdings slashes 1,000 jobs, its biggest round of layoffs since COVID-19 pandemic
(20 June 2023) Singapore-based Grab Holdings is slashing over 1,000 jobs in a bid to manage costs and reorganize the company in a competitive landscape. The company primarily focuses on ride-hailing and food delivery services. This is the group’s largest round of layoffs since 2020, when it cut 360 jobs in response to the COVID-19 pandemic. Grab posted strong revenue growth and narrowed losses in 2022, citing a rebound in mobility demand. Grab is the latest Southeast Asian tech giant to initiate a round of layoffs, with Indonesia’s GoTo announcing it was laying off 600 employees in March 2023 while Singapore-based Sea Ltd slashed more than 7,000 jobs in the last six months of 2022.

CAMBODIA, THAILAND
Cambodian goods exports to Thailand rises nearly 10% year-on-year in first five months of 2023
(20 June 2023) Cambodian goods exports to Thailand rose by 9.47% year-on-year in the first five months of 2023, reaching US$480.24. Total merchandise trade between both countries in the January-May 2023 period reached US$1.71 billion, down 8.78% year-on-year from US$1.90 billion. Cambodia also imported some US$1.23 billion worth of goods from Thailand, down 14.38% year-on-year from $1.43 billion. Thailand was Cambodia’s fourth largest merchandise trading partner for the five-month period, behind China, the United States and Viet Nam. The majority of Cambodian exports to Thailand are either agricultural products or electronics components. Total merchandise trade between Cambodia and Thailand in 2022 was valued at US$4.66 billion, up 14.22% year-on-year.

RCEP Monitor

ASEAN
TikTok Shop grows estimated ASEAN GMV from US$600 million in 2021 to US$4.4 billion in 2022
(15 June 2023) TikTok Shop, the e-commerce arm of Chinese video-sharing platform TikTok, has managed to grown its estimated Southeast Asian gross merchandise value (GMV) from US$600 million in 2021 to US$4.4 billion in 2022, posing the fastest growth rate among e-commerce rivals like Sea Group’s Shopee, Alibaba’s Lazada and GoTo’s Tokopedia. This is according to a study conducted by Singapore-based consultancy Momentum Works. Having made its debut in Southeast Asia in 2021, the company now seeks to expand its footprint in the region, having recently announced that they will invest more than US$12 million in the region over the next three years to support over 120,000 local merchants and businesses. In comparison, Shopee’s GMV grew from US$42.5 billion in 2021 to US$47.9 billion in 2022, maintaining its position as ASEAN’s largest online shopping player with close to half of the region’s market share. On the other hand, Alibaba’s Lazada saw its GMV drop from US$21 billion in 2021 to US$20.1 billion.

SINGAPORE
Singapore’s non-oil domestic exports contract for eighth consecutive month in May 2023
(16 June 2023) Singapore’s non-oil domestic exports (NODX) contracted for the eighth consecutive month in May 2023, falling by 14.7%. This followed a 9.8% contraction seen in April 2023, as well as a 8.3% contraction seen in March 2023. Electronic product exports contracted by 27.2% in May, following a 23.3% decline seen in April. As well, non-electronic exports dropped by 10.7% in May, following a 5.8% drop in April. While NODX to Singapore’s top exports dropped as a whole in May 2023, NODX to China and the United States rose. On a year-on-year basis, total trade declined by 17.9% in May, following the 18.9% contraction in April. Exports and imports fell by 15.2% and 20.7% respectively.

CAMBODIA, SINGAPORE
Cambodian exports to Singapore increases by 1,819.9% year-on-year in May 2023
(14 June 2023) Cambodian exports to Singapore increased by 1,819.9% year-on-year in May 2023. This made Singapore the fourth-largest export market for Cambodia after the United States, China and Viet Nam. Singapore accounted for 6.1% of Cambodia’s exports in May, while the United States accounted for 38.4%, China accounted for 7.7%, and Viet Nam accounted for 7.3%. According to the latest data by the General Department of Customs and Excise (GDCE), for the first five months of 2023 Cambodian exports to Singapore rose by 508.3% year-on-year. As a whole, Cambodian exports rose by 7.9% year-on-year in May, after having dropped for the first four months of 2023. Between January and May 2023, Cambodia’s exports reached US$9.18 billion.

THE PHILIPPINES
Government targets doubling its merchandise and service exports to US$240.5 billion annually in the next six years
(15 June 2023) The Philippines’ government has launched an ambitious target of more than doubling its merchandise and service exports to US$240.5 billion annually in the next six years. Under the government plan, total exports are targeted to rise by 12.5% to 14% annually from 2023 to 2028, driven by electronics and electrical goods, information technology and business process outsourcing services and minerals. Authorities plan to attract more foreign investment, lower the cost of doing business, cut red tape, improve infrastructure, reduce power costs, and address the current mismatch in education and skills levels. The Philippines also plans to maximize preferential trade deals like the Regional Comprehensive Economic Partnership Agreement, of which the country is a signatory.

THE PHILIPPINES
The Philippines’ central bank expected to maintain key rate at current level for remainder of 2023
(16 June 2023) According to the Philippines’ Finance Secretary Benjamin Diokno, the central bank is expected to maintain the key rate at the current level for the remainder of 2023. The Bangko Sentral ng Pilipinas (BSP) is expected to keep the benchmark rate at 6.25% on 22 June, 2023, and possibly for the rest of 2023. According to the Finance Secretary, the BSP may consider a rate cut in the first quarter of 2024. The BSP has raised borrowing costs by 425 basis points since May 2022 to rein in the fastest inflation in the country in 14 years. Inflation had eased to an 11-month low in May 2023. Authorities forecast price gains to ease to within the 2% to 4% target by the fourth quarter of 2023.

INDONESIA
Indonesia’s first publicly-listed film production company MD Pictures looking to raise up to US$150 million
(15 June 2023) Indonesia’s first publicly-listed film production company MD Pictures is looking to raise up to US$150 million over the next six months. The company plans to do this through a rights issue and debt, with the company planning to offload around a 20% stake through the rights issue. Over the next two years, the company plans to raise a total of around US$300 million. MD Pictures also plans to enter into film distribution as well as launch its own content platform. In 2021, the company sold just under a 15% stake to Tencent for around US$50 million. MD Pictures is one of Indonesia’s largest film production companies, and produces content for different platforms. The company’s gross profit doubled to more than US$20 million in 2022.

VIET NAM
Vietnamese economy facing multiple headwinds including shrinking exports and frequent blackouts
(14 June 2023) The Vietnamese economy is facing multiple headwinds including shrinking exports and frequent blackouts. Although Viet Nam’s economy expanded by 8% in 2022, it has been slowing recently. Year-on-year, the January to May 2023 period saw declines of 11.6% in exports, 17.9% in imports and 2.5% in manufacturing. In the first quarter of 2023, GDP growth slowed to 3.3% year-on-year from 5.9% in the fourth quarter of 2022. Falling demand in key export markets such as the EU, the United States, and China may impact Vietnamese exports. Viet Nam has also been suffering from blackouts recently due to high temperatures impacting power supplies. This has negatively impacted business operations in the country. As well, stalled debt talks threaten to shut down Viet Nam’s biggest oil refinery.

RCEP Monitor

THE PHILIPPINES
World Bank sees the Philippines’ economy expanding by 6% in 2023
(08 June 2023) The World Bank has upgraded its growth forecasts for the Philippines for 2023, with the country expected to grow by 6.0% in 2023 before slowing down to 5.9% growth for 2024 and 2025. The World Bank had previously forecasted 5.4% growth in December 2022 and 5.6% growth in April 2023. This year’s growth will be supported by resilient domestic demand despite high inflation and tight financial conditions. The Philippines’ GDP rose by 6.4% year-on-year in the first quarter of 2023, with the Philippines’ government targeting 6% to 7% growth for the entire year. Downside risks to this year’s growth include the possibility of higher-than-expected global inflation, tighter global financial conditions, and an escalation of geopolitical tensions.

THE PHILIPPINES
Inflation eases to 6.1% year-on-year in May 2023, supporting case for longer pause in rate hikes
(07 June 2023) Inflation eased to 6.1% year-on-year in May 2023, slower than the 6.6% growth recorded in April. Core inflation, which excludes volatile items such as fuel prices, retreated slightly to 7.7% in May, a slight decrease compared to the 7.9% growth recorded in April. Inflation had begun soaring in 2022 as a result of supply chain bottlenecks, fuel prices, a weak peso, and the Philippine economy’s full reopening. The Philippines’ central bank, the Bangko Sentral ng Pilipinas, hopes inflation will drop to within the 2% to 4% target range in 2023, with the bank expecting price growth to slow further in September or October. Year-to-date, inflation averaged 7.5%. Data from the Philippine Statistics Authority showed that prices of certain food products such as rice, vegetables and milk went down across the country in May.

MALAYSIA, INDONESIA
Cross-border QR code payment system between Indonesia and Malaysia set up
(06 June 2023) Indonesia and Malaysia have set up a cross-border QR code payment system that settles payments in local currencies. This is part of an ASEAN initiative linking cross-border payment systems using QR codes to facilitate transactions within the regional bloc. The central banks of Malaysia and Indonesia, which are Bank Negara Malaysia and Bank Indonesia respectively, launched the two nations’ cross-border linkage in April 2023. Malaysia’s national QR code is DuitNow QR while Indonesia’s is Quick Response Code Indonesian Standard (QRIS). Bank Indonesia predicts that the initiative will create transaction costs savings of up to 30%. Since payments are denominated in local currencies, the settlements will not be impacted by the US Dollar exchange rate, thereby insulating the rupiah and ringgit financial systems from potential dollar shocks. The initiative could also allow micro, small, and medium-sized enterprises (MSMEs) to reach markets beyond their home countries.

MALAYSIA, INDONESIA
Malaysia and Indonesia pledge to work together to fight against EU ‘discrimination’ against palm oil
(08 June 2023) Malaysia and Indonesia pledged to collaborate in fighting the European Union’s (EU) ‘discrimination’ against palm oil. Both Indonesia and Malaysia are the world’s largest palm oil producers, and have criticized a recently introduced deforestation regulation introduced in 2022 which prevents the sale to or within the EU of palm oil, soy, coffee, cocoa, rubber, timber and beef grown or raised on land deforested after 2020. Both Malaysia and Indonesia have labeled the new regulation as harmful to small farmers in their countries. There are about 400,000 small farmers in Malaysia and 40 million in Indonesia, respectively. In a joint statement, both countries called upon Brussels to “promptly address such discriminatory measures and work towards a fair and equitable resolution.”

MALAYSIA
Health tourism sector expected to generate more than US$370 million in revenue once fully recovered
(05 June 2023) Malaysia’s health tourism sector is expected to generate more than US$370 million in revenue once fully recovered. Medical tourists have started returning to Malaysia following the reopening of borders in April 2022. Malaysia’s healthcare travel industry achieved a 100% year-on-year increase in revenue in 2022. The industry recorded US$283 million in revenue in 2022, which is 76% of its pre-pandemic performance of US$370 million in 2019. Over the past decade, the healthcare travel industry brought in more than 10 million healthcare visitors. It has been noted that medical tourists generate four times the revenue compared to normal tourists, as the former also spend on accommodation, retail and food while seeking treatment in Malaysia.

SINGAPORE
Retail sales rose by 3.6% year-on-year in April 2023, rising for the third straight month
(05 June 2023) According to data released by the Department of Statistics, Singapore’s retail sales rose by 3.6% year-on-year in April 2023, cooling from the 4.5% increase in March and 12.6% increase in February. While retail sales rose for the third straight month, overall sales continued to decrease. The estimated total retail sales value in April was US$2.89 billion, with online retail sales making up an estimated 12%, lower than the 13% recorded in March. Retail sales grew year-on-year in April for most categories, with food and alcohol seeing the largest increase of 30.5% and cosmetics, toiletries and medical goods coming in second at 16.8%. Apparel and footwear also rose by 13% as consumers shopped for more clothes. Meanwhile, sales at petrol service stations dropped by 14.2%.

VIET NAM
Viet Nam expects record coffee exports in 2023 due to soaring prices
(08 June 2023) Viet Nam expects record coffee exports in 2023 due to soaring prices due to global production falling short of demand amidst El Nino-induced extreme weather conditions. According to Fitch Solutions, the now-widely expected transition to El Nino conditions in the third quarter of 2023 is expected to negatively impact production in Viet Nam and Indonesia, both major robusta coffee producers. As well, other large producers like Brazil and Colombia will also be negatively impacted by drought. El Nino typically suppresses rainfall, with the average rainfall across Viet Nam expected to drop 25% to 50%. Viet Nam’s coffee exports in May jumped 28.5% to US$418 million, resulting in overall export earnings in the first five months of 2023 of over US$2 billion, up 1.3% year-on-year. In 2022, Viet Nam exported 1.7 million tonnes of coffee.

RCEP Monitor

INDONESIA
Indonesia considering new limits on exports of liquefied natural gas to ensure adequate domestic gas supply
(31 May 2023) According to Indonesia’s deputy coordinating minister for maritime sovereignty and energy, the Indonesian government is considering new limits on the export of liquefied natural gas (LNG) in order to ensure adequate domestic supply. This would be an extension of trade curbs on other commodities including nickel, coal, and palm oil. Authorities have defended the planned curbs as necessary to meeting domestic energy needs, encouraging domestic industry growth, and maintaining existing export commitments. In 2022, Indonesia was the sixth largest LNG exporter in the world. Under the planned curbs, new LNG export contracts or renewals of existing agreements could be prohibited to prioritize the needs of domestic consumers, while existing contracts wouldn’t be impacted. Indonesia is also expanding its gas output in order to meet local demand as well as provide additional volumes for exports.

INDONESIA, THAILAND
Indonesia challenging Thailand for auto manufacturing hub of Southeast Asia
(28 May 2023) Indonesia is seeking to overtake Thailand as the auto production hub of Southeast Asia by leveraging its rich nickel resources to capitalize on a global shift to electric vehicles (EVs) and other new energy vehicles. Nickel is a crucial material for EV batteries, with investment into Indonesia’s nickel reserves increasing rapidly. Thailand’s auto production has been steadily declining since a 2013 peak of 2.45 million vehicles, having dropped to 1.88 million in 2022, a decrease of 23%. Meanwhile, auto production in Indonesia increased by more than 30% over the same span, reaching 1.47 million units in 2022, close to 80% of Thailand’s output in the same year. The figure could reach 1.6 million units in 2023. Indonesian production of passenger cars had already overtaken that of Thailand in 2014, and it has recently doubled its rival’s output. The Indonesian government has sought to promote EVs in Indonesia through government policy, such as reducing the value-added tax on some EVs from 11% to 1% starting in April 2023. The government aims to promote domestic production along with sales by limiting eligibility to EVs made with at least 40% domestic components.

MALAYSIA
Foreign selling of Malaysian equity narrows to US$12.7 million during fifth week of outflow
(29 May 2023) Foreign selling of Malaysian equity narrowed to US$12.7 million during the fifth consecutive week of outflow. According to MIDF Research, foreign investors net bought US$2.2 million on 22 May and US$9.2 million on 26 May, but were net sellers from 23 May to 25 May. Foreign investors have been net sellers for 15 out of 21 weeks in 2023, with a total net foreign outflow of US$531.9 million. The top three sectors that saw net foreign inflows were transportation and logistics, technology, and telecommunication and media, while the top three sectors that saw net foreign outflows were financial services, consumer products and services, and REITs. In terms of participation, there was an increase in average daily trading volume (ADTV) across the board, with a 1.4% increase in trading volume by retailers, a 12.6% increase by local institutions, and an 18.2% increase by foreigners.

SINGAPORE
Singapore faces high risk of technical recession in second quarter of 2023
(26 May 2023) According to private-sector economists, Singapore faces a high risk of entering a technical recession in the second quarter of 2023 due to a challenging external environment. Official data from the first quarter showed that the economy declined 0.4% from the previous three-month period on a quarter-on-quarter seasonally adjusted basis. The economy had expanded by 0.1% in the fourth quarter of 2022. A technical recession is defined as two consecutive quarter-on-quarter contractions. Singapore had last entered a technical recession in the second quarter of 2020. On a year-on-year basis, the economy grew by 0.4% year-on-year in the first quarter, a slight slowdown from the 2.1% growth seen in the previous quarter. Singapore’s economy is heavily reliant on trade, meaning it has been impacted by weakening external demand due to a slowdown in the global economy, still-strong inflationary pressures and a downturn in the global semiconductor industry.

MALAYSIA
Government plans to make Kuala Lumpur regional hub for startups and digital industries
(29 May 2023) The Malaysian government plans to make Kuala Lumpur a regional hub for startup companies and digital industries in an effort to boost the country’s digital economy. Malaysia’s Economy Minister noted that the digital economy is one of the three high-value strategic sectors that the government is currently focusing on, alongside renewable energy and food security. The Ministry of Economy is currently collaborating with other ministries involved in the digital economy ecosystem including the Ministry of Science, Technology and Innovation, the Ministry of Communications and Digital, and the Ministry of Investment, Trade and Industry, in order to boost the digital economy. To position Kuala Lumpur as a center for the regional digital economy, the government is pushing for aggressive policy changes including consolidating the efforts of government agencies, creating a more efficient and open work visa process, implementing more attractive digital incentives, and producing a workforce suited for the digital economy.

VIET NAM
Viet Nam’s exports contract for fourth month so far in 2023 amidst global slowdown
(29 May 2023) According to the General Statistics Office in Hanoi, Viet Nam’s exports contracted for a fourth month so far in 2023 amidst a global economic slowdown. Exports declined by 5.9% in May 2023, while imports shrank 18.4%. These numbers added to risks of a growth slowdown in an economy already dealing with a crisis in the local property sector. Meanwhile, headline inflation in May rose by 2.43% year-on-year, the lowest level in 14 months. Meanwhile, core inflation, which excludes the costs of food, fuel, health-care and education services, came in at 4.54%. Slowing inflation has given Viet Nam’s central bank room to reduce borrowing costs to support businesses, including builders, thereby helping spur economic activity. The State Bank of Vietnam bank has cut key policy rates three times in 2023.

VIET NAM
Viet Nam plans to cut down annual rice exports to four million tonnes by 2030
(27 May 2023) Viet Nam plans to cut down annual rice exports to four million tonnes a year by 2030, down from 7.1 million tonnes in 2022. According to the government strategy, the move is aimed at boosting the exports of high-quality rice, ensuring domestic food security, protecting the environment and adapting to climate change. As part of the government move, rice export revenue will fall to US$2.62 billion a year by 2030, down from US$3.45 billion in 2022. Viet Nam also intends to diversify its rice export markets to reduce its reliance on any country. The Philippines has traditionally been Viet Nam’s largest rice buyer, accounting for 45% of its shipments in 2022. As part of the government strategy, by 2025 60% of Vietnamese rice exports will be shipped to Asian markets, 22% to Africa, 7% to American markets, 4% to the Middle East and 3% to Europe.

RCEP Monitor

ASEAN
ASEAN leaders announce commitment to build electric vehicle ecosystem within region
(25 May 2023) At the 42nd ASEAN Summit held in Labuan Bajo, Indonesia on 10 May, 2023, ASEAN leaders announced their commitment to promote the growth of the electric vehicle (EV) ecosystem within ASEAN, as well as become an important part of the EV global supply chain. Indonesian President Joko Widodo stated that the declaration would mark a significant milestone in the region’s economic cooperation. He recognized that the EV industry would play a vital role in the global supply chain, highlighting the importance of the downstream sector in particular. The ASEAN member states announced they would follow a strategy similar to what Indonesia and the Philippines have taken, electrifying public transportation, pushing for EV manufacturing, as well as creating battery production hubs. The member states also announced they would seek to create a favorable business and investment environment to facilitate this development.

MALAYSIA
Malaysia expected to be first country in Southeast Asia to see air travel industry recovering
(23 May 2023) Malaysia is expected to become the first country in Southeast Asia to see its air travel industry recovering and experience overcapacity. Intensifying competition between local airlines would see lower airfares as early as 2024, although it would not be at the same price level as before the COVID-19 pandemic. A total of 6.7 million passengers passed through Malaysia Airports Holdings Bhd’s airports in the country in March 2023, according to MIDF Research. This translates into a recovery of 75%, with domestic travel’s recovery standing at 84% while international travel’s recovery stands at 66%. The international segment recorded the highest number of passengers since the onset of the pandemic at 3 million passengers, with travel mainly coming from Singapore, Indonesia, Thailand, India, China, and Japan.

THE PHILIPPINES
El Nino weather phenomenon not expected to fan food inflation
(22 May 2023) According to the Philippines’ finance secretary, the Philippines is expected to experience a ‘weak to moderate’ El Nino weather phenomenon later in 2023 through early 2024. As such, this year’s El Nino is not expected to fan food inflation, with authorities not expecting a significant reduction in local food production, especially for rice and corn. However, El Nino is still expected to cause a 1.8% decline in rice output and 1% drop in yellow corn production. Inflation in the Philippines remains elevated, while economic growth moderated in the last quarter. The central bank held its key rate last week, pointing to the potential impact of El Niño on food and utility costs as a risk to inflation outlook. To mitigate the weather phenomenon’s impact on local food production, the Philippine government will aid farmers, stock up on farm input, and promote early planting in areas with low water supply.

CAMBODIA
World Bank raises 2023 growth forecast for Cambodia to 5.5% up from earlier projection of 5.2%
(20 May 2023) The World Bank has raised its growth projections for Cambodia for 2023 to 5.5%, up from its earlier projection of 5.2%. This year’s growth is driven by pent-up consumer demand and the return of foreign tourists, with the overall contribution of the services sector to economic growth returning to 2019 levels. As well, the agricultural sector is benefitting from improved access to regional markets, thanks to newly ratified bilateral and regional free trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) agreement, the Cambodia-China Free Trade Agreement (FTA) and the Cambodia-South Korea FTA. Cambodia’s economic recovery has strengthened despite weakening global demand, with growth initially led by export-oriented manufacturing before evolving to services and agriculture. Inflation has also returned to the pre-COVID-19 pandemic levels, at 2.2% in February 2023 as food and oil prices moderated.

LAO PDR
Lao PDR economy expected to grow by 4.5% in 2023 amid global economic challenges
(22 May 2023) According to the latest report by the Lao Academy of Social and Economic Science (LASES), Lao PDR’s economy is expected to grow by 4.5% in 2023 amidst global economic challenges. Economic growth will be driven by the services sector, the growth of tourism, the processing industries, and agricultural production for export. According to LASES, the reopening of China and the launch of the cross-border China-Laos railway has significantly bolstered regional trade and people-to-people exchanges. The services sector is expected to grow by 4.8% in 2023, while the agricultural sector is anticipated to grow by 3.5%. Meanwhile, the manufacturing sector is expected to grow at 4.6%. However, Lao PDR is also facing pressing issues such as soaring inflation and high public debt. Inflation was recorded at 39.89% in April 2023, down from 41% in March.

VIET NAM
Viet Nam’s foreign direct investment businesses posts more than US$14 billion in trade surplus in first four months of 2023
(22 May 2023) Viet Nam’s foreign direct investment (FDI) businesses posted more than US$14 billion in trade surplus in the first four months of 2023. Viet Nam’s overseas shipments in the January-April period shrank 11.8% year-on-year to US$108.57 billion. FDI businesses accounted for 73.7% of the country’s exports in the period, earning nearly US$79.99 billion, down 12.1% year-on-year. Imports by FDI companies in the same period fell 17.4% year-on-year to US$65.6 billion. Global investors have flocked to Viet Nam seeking to take advantage of the country’s labor costs and tax incentives. In an attempt to promote exports, Viet Nam also sought to attract FDI through bilateral and multilateral free trade agreements. FDI companies account for up to 70% of Viet Nam’s total export turnover.

THE PHILIPPINES
The Philippines pursuing resumption of free trade negotiations with the EU
(23 May 2023) According to the Philippine Trade Secretary, the Philippines is pursuing the resumption of free trade negotiations with the European Union (EU). The Trade Secretary noted that the Philippines-EU Free Trade Agreement will help the Philippines secure additional dutyfree market access, as well as provide a more conducive framework for attracting more significant EU investments into the Philippines. The government is currently seeking to facilitate international partnerships and collaboration through the recently-ratified Regional Comprehensive Economic Partnership (RCEP) mega-trade agreement that will encourage foreign direct investment inflows. The government’s current development strategy is focused on uplifting the country’s export sectors and driving investments into strategic areas.

INDONESIA
Indonesia to relax June 2023 export ban for five raw materials
(24 May 2023) The Indonesian government will relax a June 2023 export ban for certain raw materials, with Indonesia to continue shipping said raw minerals for the next year. Indonesia had originally planned to ban the export of all metal ore starting in June to encourage investments in the domestic processing industry. But authorities will now allow the export of copper, iron ore, lead, zinc and anode mud from copper concentrates until May 2024 so that local smelters, the development of many of which was delayed by the COVID-19 pandemic, would be ready to handle the materials. Under the new rules, companies will be allowed to keep exporting if they pay export duties and if their smelters were at least half-completed as of January 2024. But they will be fined for every month of delay. Copper miners Freeport Indonesia and Amman Mineral Nusa Tenggara would be exempted from the ban as their smelter development had been disrupted. Bauxite exports will still be banned in June 2023, since four existing smelters can absorb ores intended for export.

RCEP Monitor

THAILAND
Move Forward Party wins 152 seats in stunning upset victory in 14 May, 2023 election
(16 May 2023) In Thailand’s general election held on 14 May, 2023, the Move Forward Party secured a stunning victory, managing to secure 152 seats in the lower house. The Move Forward Party was able to secure provinces previously thought to be loyal to other parties. This included the north and northeast, long known to be loyal to the Pheu Thai party, as well as the conservative south, a stronghold for the Democrat Party and others in the ruling coalition. Move Forward was also able to secure 32 of the 33 seats in Bangkok, long a Democrat stronghold. Move Forward’s planned pro-democracy coalition would control 310 seats in the lower house. In order to form a government, the party must find around 70 more votes from either the House or Senate. Thailand’s constitution allows 250 senators to appoint the prime minister. Among Move Forward’s positions include liberalizing liquor laws, recognizing LGBTQ rights, and reforming the kingdom’s strict lese-majeste laws.

BRUNEI DARUSSALAM
Brunei Darussalam ratifies CPTPP, last of original 11 signatories
(16 May 2023) On 14 May, 2023, the Bruneian government announced in a statement that they had ratified the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Brunei Darussalam was the last of the original 11 signatories of the mega-free trade agreement. According to the statement, Brunei notified New Zealand, which serves as depositary for the agreement documents, of its ratification on 13 May. The Bruneian government announced that the CPTPP would provide ‘trading opportunities to new markets like Canada and Latin American countries such as Chile, Peru and Mexico’. The agreement will also increase Brunei’s attractiveness as an investment destination. The agreement is expected to enter into force in mid-July 2023, 60 days after notification.

MALAYSIA
Inflation in Malaysia rose to 3.3% in 2022 versus 2.5% in 2021
(17 May 2023) According to the Department of Statistics Malaysia (DoSM), inflation in Malaysia rose to 3.3% in 2022 from 2.5% in 2021. This increase was driven mainly by food and beverages (5.8%), restaurants and hotels (5.0%), transport (4.7%), and furnishings, household equipment and routine household maintenance (3.5%). The increase in inflation in 2022 was attributed to the rise in the majority of commodities prices, the strengthening of the US dollar against major currencies, and the Russian invasion of Ukraine. Flooding and landslides last year also caused disruptions in the supply of agricultural products, leading to the shortage of food supplies. The reopening of the tourism sector in April 2022 also saw an increase in prices for restaurants and hotels, which posted a 5% increase last year as compared to 0.4% recorded in 2021. DOSM also noted that although the majority of items in the CPI basket saw an increase in prices, there were 17.0% of items that recorded decreases and remained unchanged, which had indirectly eased the inflation.

MALAYSIA
Moody’s believes Malaysia’s consolidation of fiscal deficit will take longer than three years
(16 May 2023) Moody’s Investors Service anticipates that the Malaysian government’s consolidation of its fiscal deficit will take longer than the targeted three years due to rigid operating expenditures and difficulties in increasing Malaysia’s revenue base. The Malaysian government is targeting reducing Malaysia’s fiscal deficit to 3.2% by 2025. Rather, Moody’s anticipates the fiscal deficit falling to 3.6% by 2025 and 5% in 2023. Moody’s noted that there are upsides to the government’s fiscal deficit should it manage to follow through with measures they have proposed, like the Fiscal Responsibility Act and fuel subsidies. Moody’s expects Malaysia’s GDP to expand by 4.5% in 2023, and highlighted that fiscal reforms will be crucial as the country’s debt service charges are expected to remain high in the next two years given fixed spending in the government’s budget.

SINGAPORE
Singapore Airlines reports record annual profit for the year ended March 2023
(16 May 2023) Singapore Airlines Ltd reported a record annual profit for the year ended March 2023, while also stating that forward sales were healthy across all cabin classes, led by bookings to China, Japan and South Korea. Net income for the group totaled US$1.61 billion as people embraced flying again after COVID-19. It posted a loss of US$718.35 million the previous year. Revenue was US$13.28 billion, up from US$5.68 billion. The airline stated it could ramp up operations at short notice when demand for air travel surged after Singapore fully reopened its borders in April 2022. The airline (both Singapore Airlines and its budget arm Scoot) carried 26.5 million passengers in the year, six times higher than the 12 months through March 2022, with passenger capacity rising to 79% of pre-COVID-19 levels in March. In April alone, they carried 1.75 million passengers, up 53% year-on-year.

SINGAPORE
Singapore rolls out anti-money laundering platform to curb illicit flows
(10 May 2023) The Monetary Authority of Singapore (MAS) will be rolling out an anti-money laundering platform to curb illicit flows into the country. On 16 May, 2023, the Singaporean parliament passed a bill that paves the way for the MAS to set up and maintain a secure digital information-sharing system called Cosmic. The platform is meant to make it easier for financial institutions to detect and deter activities in areas like scams, money laundering and terrorism financing. The platform will allow financial institutions to raise red flags to one another as well as request clients’ information from one another if they spot suspicious transactions related to illegal flows. Under current laws, financial firms are prevented from sharing client information unless through police investigation or court orders. Cosmic will be rolled out from the second half of 2024 to six banks.

INDONESIA
Indonesia’s sovereign wealth fund poised to boost spending in 2023 as investor interest in country increases
(17 May 2023) Indonesia’s sovereign wealth fund, the Indonesian Investment Authority (INA), is poised to increase spending in 2023 amidst increased investor interest in the country due to its prominent role in the global green energy transition as well as investors’ eagerness to diversify away from China. The INA stated that by the end of 2023 it would have deployed US$3 billion alongside its partners. As of April 2023, the fund had deployed just over US$2 billion. The INA was launched in February 2021 with US$5 billion in seeding in cash and other assets. As of now, its total assets under management measures up to US$8 billion. Unlike most sovereign wealth funds, which generally manage a country’s surplus export reserves and invest overseas, the INA has raised money from international investors to co-invest in domestic infrastructure, digital and other opportunities. The INA has been envisioned by the Indonesian government as a way for major global institutions to access the potentially higher returns offered by the Indonesian economy.

RCEP Monitor

ASEAN
42nd ASEAN Summit concludes in Labuan Bajo, Indonesia
(11 May 2023) From 10th-11th May, 2023, the Association of Southeast Asian Nations (ASEAN), held its 42nd ASEAN Summit in Labuan Bajo, Indonesia. Among the topics of discussion at the summit included the South China Sea dispute, with a call to all parties to exercise self-restraint. The post-summit chairman’s statement called for resolving tensions in the South China Sea in accordance with international law. The bloc also expressed its encouragement with regards to the progress made in negotiations on the text of a code of conduct in the South China Sea. Indonesian President Joko Widodo, as chairman of ASEAN for 2023, lamented the lack of progress made in implementing the “Five-Point Consensus”, which is a plan for resolving the Myanmar conflict drawn up in 2021. On 10 May, 2023, bloc leaders condemned an attack on an ASEAN-led humanitarian assistance team in Myanmar’s Shan state. The summit also discussed preparations for a roadmap for Timor Leste’s full membership in ASEAN.

MALAYSIA
Malaysia’s GDP expected to grow by 5.6% in first quarter of 2023
(10 May 2023) According to Bank Islam Malaysia Berhad (BIMB), Malaysia’s GDP is expected to grow by 5.6% in the first quarter of 2023 as compared to 5% in the first quarter of 2022. Malaysia’s growth in the first quarter is bolstered by strong domestic demand coupled with moderating inflation amid a slowing global economy. BIMB stated that private consumption would remain the mainstay of demand growth in the second quarter, supported by an improving labour market. Private consumption itself was supported by higher tourism receipts. BIMB observed that 4.5 million tourist arrivals were recorded in the fourth quarter of 2022, with these numbers expected to increase in the first quarter of 2023. The bank also noted that China’s economic reopening is expected to support the growth of the services sector.

MALAYSIA
Malaysia’s industrial production index (IPI) grows by 3.1% year-on-year in March 2023
(09 May 2023) According to the Department of Statistics Malaysia (DOSM), Malaysia’s industrial production index (IPI) grew by 3.1% year-on-year in March 2023. This was driven by a 4.1% expansion in the manufacturing sector and a 0.8% rebound in the mining sector. The IPI also saw an 8.3% month-on-month growth in March, following a consecutive three-month declining trend. The 4.1% growth in the manufacturing sector was mainly backed by domestic-oriented industries, which rose by 5.0%. Compared to February 2023, the manufacturing sector recorded a 7.8% growth, after having registered a continuous decline since December 2022. The manufacturing index grew by 3.4% year-on-year while the mining index grew by 2.1%, while on the other hand the electricity index declined by 1.2%.

THE PHILIPPINES
The Philippines economy slows down to 6.4% growth in the first quarter of 2023
(11 May 2023) The Philippines’ economic growth slowed down to 6.4% in the first quarter of 2023 as compared to the 8% growth recorded in the first quarter of 2022. Growth in the first quarter of 2023 was also lower than the previous quarter’s 7.1% growth. Household consumption, which is a key driver in the Philippines’ economy, grew by 6.3% in the first quarter, slower than the 10% expansion a year earlier. This was attributed to inflation, which hit a 14-year record of 8.7% in January 2023 as utility bills, housing costs, and prices for onions and other food items all went up. Inflation decelerated to 6.6% in April 2023. Consumer spending and investment is expected to be weighed down by higher prices as well as aggressive interest rate hikes by the central bank. The benchmark rate has been raised by a cumulative 425 basis points since May 2022.

THAILAND
Populist election promises could result in US$14.8 billion in extra spending under the next government
(09 May 2023) Populist election promises by major Thai parties before the 14 May, 2023 election could result in spending of more than US$14.8 billion under the next government, which economists warn would take Thailand’s debt and budget to record highs. The incumbent Palang Pracharat Party has pledged giving each farm family US$890, while the opposition party Pheu Thai has offered US$297 for every person over 16.Other parties have promised around US$30 to US$89 per month as welfare for elderly people. The parties stated that the handouts would be funded by either borrowing or higher budget spending. Thailand has maintained its public debt at 40% to 50% of GDP for more than two decades until 2021, when the COVID-19 pandemic saw the government raise the ceiling to 70% to allow more fiscal space for supporting the economy. That has pushed Thailand’s public debt to a current record high of 60.43%. The government has also carried a fiscal budget deficit for decades, with the deficit having risen from US$7.4 billion in the 2013-2014 fiscal year to a record US$20.8 billion in fiscal 2022-2023.

THAILAND, CHINA
Chinese automobile manufacturer Hozon to produce electric vehicles in Thailand for Southeast Asian market
(06 May 2023) Chinese automobile manufacturer Hozon New Energy Automobile will manufacture electric vehicles in Thailand for the Southeast Asian market. According to Thai government officials, Hozon signed an agreement with Thailand’s Bangchan General Assembly this week to start production of its NETA V model. Production is expected to start in 2024. Hozon had launched its NETA V model in the Thai market in 2022, and plans to start offering its NETA U and NETA S models in the near future. Thailand is Asia’s fourth largest autos assembly and export hub for carmakers like Toyota and Honda. Thailand aims to become a key player in the global EV supply chain outside of China by offering tax cuts and subsidies to drive EV adoption and production. The government has set a target that 30% of domestic auto production be EVs by 2030.

THAILAND
Foreign investor purchase US$747 million of Thai bonds on 09 May, 2023
(10 May 2023) Foreign investors purchased US$747 million worth of Thai bonds on 09 May, 2023, the most since November 2022 and taking their total purchases in May 2023 to US$1.5 billion. This helped boost the Thai baht to the top of the Asian currency ranking this month. Foreign capital inflows and the baht rally has been underpinned by the revival of Thailand’s tourism sector following the reopening of China’s economy, with tourist arrivals having risen to over 2.2 million in March 2023, up from 1.5 million in October 2022. The government is forecasting another two million arrivals this month. The baht is also expected to gain following the general election on 14 May, 2023, with the baht historically having appreciated on average by 1.2% in the one month after the voting day. The baht has also been supported by weak oil prices.

RCEP Monitor

THAILAND
Global energy crisis prompts Thailand to accelerate shift towards renewables
(04 May 2023) The global energy crisis sparked by the Russian invasion of Ukraine has prompted Thailand to accelerate its shift towards renewables, making it the latest country to embrace solar and wind power in order to reduce reliance on imported fuel and make Thailand more energy independent. In April 2023, the Thai government announced winners for a roughly 5-gigawatt renewables power purchase plan – Thailand’s biggest so-called feed-in tariff program – that is set to double its wind and solar capacity by 2030. Authorities are now also planning another round for 3.67 gigawatts later in 2023. The government’s next power development plan, which is expected to be unveiled and proposed later in 2023, is expected to see renewables account for more than 50% of the power generation mix by 2037, up from about 20% in the current plan. Thailand currently depends on LNG imports for its power generation.

INDONESIA
GDP expands 5.03% year-on-year in first quarter of 2023 on back of resilient domestic consumption
(05 May 2023) Indonesia’s economy expanded by 5.03% in the first quarter of 2023 on the back of strong domestic consumption. On a quarter-by-quarter basis, Indonesia’s economy contracted by 0.92% in the first quarter. Private consumption grew 4.54% year-on-year in the first quarter, accelerating slightly from 4.48% recorded in the last quarter of 2022. Private consumption remains the largest contributor to Indonesia’s economic output, though its share has fallen to about half of GDP from close to 60% in 2020. Meanwhile, exports expanded 11.68% in the first quarter, a drop from the near-15% growth recorded in the last quarter. This is attributed to lower prices for commodities such as coal, palm oil, crude oil and nickel as the global commodity boom recedes. Bank Indonesia looks set to return to Bank Indonesia’s 2% to 4% target range sooner than expected.

VIET NAM
Rare earth mine production jumps from 400 tonnes in 2021 to 4,300 tonnes in 2022
(05 May 2023) According to the United States Geological Survey, Viet Nam’s rare earth mine production jumped from 400 tonnes in 2021 to 4,300 tonnes in 2022, a tenfold increase. This is attributed to global mining firms flocking to Viet Nam due to the country having the world’s second largest estimated deposits of rare earths in order to reduce reliance on China. Rare earths are used in electronics manufacturing and batteries, making them important for the global transition towards cleaner sources of energy and in defence. Viet Nam’s estimated reserves of 22 million tonnes are half of China’s and larger than any other country. Its output growth in 2022 turned Viet Nam into the world’s sixth biggest producer, up from 10th in 2021. The majority of Viet Nam’s rare earth exports were shipped to China, with Chinese customs data showing a doubling of imports from Viet Nam of rare earth elements (REEs) and other concentrates that usually contain the strategic metals to nearly 12,000 tonnes in 2022.

VIET NAM
Viet Nam’s manufacturing PMI extends contraction in April 2023 amidst weak global demand
(04 April 2023) Viet Nam’s manufacturing Purchasing Managers’ Index (PMI) extended its contraction in April 2023 as companies struggled to find new orders amid weak global demand. The S&P Global Vietnam manufacturing PMI dropped to 46.7 in April from March’s reading of 47.7, well below the 50.0 threshold that separates growth from contraction. Factory output and new orders decreased for the second month in a row and at faster paces than in March. The decline in both manufacturing output and new orders would lead to falls in input purchasing activity and staffing levels. Raw material prices also rose at the softest pace in almost three years, causing manufacturers to start lowering their prices in an attempt to stimulate demand.

MALAYSIA
Malaysia’s central bank unexpectedly raises overnight policy rate by 25 basis points
(03 May 2023) Malaysia’s central bank unexpectedly raised its overnight policy rate by 25 basis points to 3%. Bank Negara Malaysia (BNM) had kept rates unchanged at its two previous meetings this year, as it sought to assess its previous four consecutive hikes totaling 100 basis points made in 2022. While Malaysia’s economy grew by 8.7% in 2022, its future outlook remains clouded due to slowing global demand. BNM stated that the latest developments suggest further expansion in economic activity in the first quarter of 2023, driven by strong domestic demand, household expenditure, and better labor market conditions. BNM maintained its headline inflation forecast of between 2.8% to 3.8% in 2023. In 2022, inflation was measured at 3.3%. Consumer prices rose by 3.4% year-on-year in March 2023, its slowest pace in nine months.

MALAYSIA
Government plans to roll out second 5G network in 2024 to end state monopoly
(03 May 2023) Malaysia’s government plans to roll out a second 5G network in 2024 in order to end the state monopoly. At present, the state-owned Digital Nasional Berhad (DNB) has a monopoly as Malaysia’s sole 5G network operator. Once coverage of this network reaches 80% of Malaysia’s populated areas, a goal expected to be reached in 2023, a second entity will operate another 5G network in parallel. Bidding for contracts to build the second network will be awarded through an open tender process. At present, DNB reached 57.8% of the 5G rollout in the country, with roughly 2,000 5G transmitters to be built to reach the targeted 80%. Government officials stated having dual networks would increase capacity and also reduce the risk of disruption from a failure in any single bnm network. Current Prime Minister Anwar Ibrahim had previously ordered a review of the US$2.47 billion contract awarded to Ericsson in an open tender process under the previous government.

MYANMAR
Domestic travel demand recovering following COVID-19 and 2021 coup
(04 May 2023) Domestic travel demand is on a recovery from the COVID-19 pandemic as well as domestic strife in relation to the military coup in February 2021. With many foreign tourists avoiding the country, local hotel operators have started to focus on domestic tourists instead. During the long holiday period celebrating the country’s New Year water festival, known locally as Thingyan, travel demand grew to a higher level than each of the previous three years. According to real estate consultancy CIM Property Consultants, the average room occupancy rate at large hotels in Yangon stood at 32% in 2022, still below the 56% rate recorded in 2019. CIM projects the occupancy rate to exceed 40% by end-2023 should the situation in the country stabilize and appropriate reforms are carried out.

RCEP Monitor

MALAYSIA
Malaysia had quickest recovery in tourism among regional peers in 2022
(25 April 2023) According to research by Standard Chartered Global Research, Malaysia had the quickest recovery in tourism numbers among its regional peers in 2022. Malaysia was able to recover some 92% of tourist arrivals compared to its 2019 levels, with its tourism recovery driven by tourists from Singapore. Excluding Malaysia, tourist arrivals to Indonesia, the Philippines, Singapore, Thailand and Viet Nam had recovered to an average of about 60% of 2019 levels, following a broad resumption of international travel in 2022. It was noted that the return of Chinese and Hong Kong tourists was slower at about 18.4% of pre-pandemic levels. From a current account perspective, Thailand is expected to record the largest improvement in its travel balance in 2023, followed by Malaysia. Malaysia’s travel balance improved to -0.1% of GDP in 2022 from -0.9% in 2021, but remains below the 2017 to 2019 average of 2.2% of GDP.

MALAYSIA
Malaysia semiconductor industry to benefit from increased investments in packaging and testing
(22 April 2023) Malaysia’s semiconductor industry is expected to benefit from increased investments in packaging and testing, part of a surge in investments globally to set up new chip facilities outside China in order to meet the new requirements set by the United States’ Chips Act. Malaysia is currently a key node in the global semiconductor supply chain, and presently supplies an estimated 13% of the demand for testing and packaging. In 2021, Intel Corp announced that it would invest some US$6.8 billion over 10 years to expand its chip packaging and testing operations within Malaysia. A separate US$449.8 million deal was announced in 2022 by TF AMD Microelectronics to build a new manufacturing facility. The semiconductor sector accounted for 81% of total approved manufacturing FDI in 2021. Some analysts have called for Malaysia to start moving up the value chain and attract companies to set up wafer-fabrication plants in the country.

THE PHILIPPINES
Government maintains growth forecast of 6% to 7% for 2023, but hikes inflation projections
(25 April 2023) The Philippines government maintained its growth forecast of 6% to 7% for 2023, as well as 6.5% to 8.0% for 2024 to 2028 in consideration of the risks posed by geopolitical and trade tensions, a possible global economic slowdown, and recent weather disturbances. However, authorities raised its average inflation target for 2023 to 5% to 7% from the previous assumption of 2.5% to 4.5% in light of persistently high food, energy and transport costs. The government also stated that it is committed to combating inflation and ensuring food and energy security. Among the government’s strategies include modernizing agriculture, expanding agri-business, encouraging private sector participation in infrastructure development, promoting digital transformation, and enhancing the competitiveness of local industries.

THE PHILIPPINES
Philippines conglomerates propose US$1.8 billion upgrade to Ninoy Aquino International Airport
(27 April 2023) Six Philippines conglomerates and a US fund have pitched a US$1.8 billion upgrade to the Ninoy Aquino International Airport. The six conglomerate-backed companies include Aboitiz InfraCapital, AC Infrastructure Holdings, Asia’s Emerging Dragon, Alliance Global-Infracorp Development, Filinvest Development and JG Summit Infrastructure Holdings, as well as New York-based Global Infrastructure Partners. All of these companies have decided to form the Manila International Airport Consortium, which has pledged to invest in new facilities and technology to transform the airport into a “world-class” site under a public-private partnership (PPP) model. The consortium also plan to double the airport’s annual passenger capacity to 62.5 million. In exchange, the consortium seeks to operate the airport for 25 years.

VIET NAM
More than 1,800 property companies suspend operations in Q1 2023
(25 April 2023) More than 1,800 property companies engaged in developing and selling properties in Viet Nam have suspended operations in the first quarter of 2023 due to ongoing strains in the property sector. The number of property companies that suspended operations jumped 61% year-on-year, while the new property companies that opened plunged 63% in the same period. Some 340 other companies were also dissolved. Viet Nam’s property sector has been beset by funding woes due to a government anti-graft campaign that deterred investors, with Vietnamese real estate firms forced to restructure businesses and debts, downsize operations and cut staff. In the first quarter of 2023, the sale of apartments, homes and lots fell 39% year-on-year to 106,401.

SINGAPORE
Core inflation rises 5% year-on-year in March 2023, slightly lower than forecast
(24 April 2023) Singapore’s core inflation rate, which excludes private road transport and accommodation costs, rose 5% year-on-year in March 2023, slightly lower than the 5.5% growth seen in February 2023. A Reuters poll of economists had forecast a 5.1% increase in March. The core inflation rate was driven by lower inflation for services, food, retail and other goods. Meanwhile, headline inflation was up 5.5% year-on-year in March, compared with a 5.6% increase predicted by a Reuters poll. The Monetary Authority of Singapore (MAS) predicts that core inflation will remain elevated in the next few months but should progressively ease in the second half of 2023 and end the year significantly lower. Core inflation is expected to average 3.5% to 4.5% in 2023.

SINGAPORE
Government raises tax on residential property purchases for foreigners from 30% to 60%
(27 April 2023) On 26 April, 2023, the government announced they would raise the tax on residential property purchases for foreigners from 30% to 60% effective 27 April, 2023. The Additional Buyer’s Stamp Duty (ABSD) was doubled due to strong demand for purchasing homes for owner-occupation, with a lot of demand coming from wealthy foreigners from Asia looking to invest in Singapore’s property market. There was a sharp increase of 60% for purchases by foreigners in March 2023, with many foreigners looking to relocate to Singapore in view of geopolitical tensions. Based on the most recent estimates by the Monetary Authority of Singapore, there were about 400 family offices in Singapore at the end of 2020, with the number rising to around 700 by end-2021.

RCEP Monitor

THAILAND
Thailand’s upcoming general election to be held on 14 May 2023
(15 April 2023) Thailand’s upcoming general election will be held on 14 May, 2023, with the contest expected to be mainly between incumbent Prayuth Chan-Ocha from the United Thai Nation Party and Paetongtarn Shinawatra of the Pheu Thai Party. The upcoming election is largely seen as a contest between the pro-establishment groups of the ruling military-backed coalition and a pro-democracy camp of opposition parties. Candidates from more than 60 parties have registered for the election to the 500-seat House of Representatives, where 400 members will be elected using first-past-the-post while the remaining will be picked using proportional representation. The prime minister will be chosen by these 500 lawmakers from the House of Representatives as well as the 250 members of the Senate.

INDONESIA
Indonesia’s central bank keeps rates unchanged for third straight meeting
On 18 April, 2023, Bank Indonesia (BI) left the seven-day reverse repurchase rate unchanged at 5.75%. This is the third straight meeting in which it kept its benchmark interest rates unchanged. BI’s governor noted that the current benchmark level remained sufficient to keep core inflation within BI’s 2% to 4% target range and steer headline inflation to within the same target band sooner than previously estimated. Headline inflation was measured at 4.9% in March 2023, and it is projected to fall below 4% starting August 2023. BI had previously expected headline inflation to return to target in September 2023. BI has raised rates by 225 basis points between August and January 2023 in order to tackle inflation, which shot up this year due to high global food and energy prices.

MALAYSIA
Malaysia’s exports fall by 1.4% year-on-year in March 2023, marking first contraction since August 2020
(19 April 2023) Malaysia’s exports fell by 1.4% year-on-year in March 2023, marking the first contraction since August 2020 amidst slowing global demand. Exports fell to US$29.3 billion, according to a statement by Malaysia’s Ministry of Investment, Trade and Industry. Exports of electrical and electronics products, which accounted for 39% of Malaysia’s total, fell by 4.4% year-on-year, while palm oil and related agricultural products dropped by 14.2%. Malaysia’s imports fell by 1.8%, contributing to its trade surplus widening to US$6.0 billion. Exports to China dropped 6.2% on lower electrical and electronics shipments. Meanwhile, exports to the US increased by 7.5%.

SINGAPORE
Home sales in Singapore rise to six-month high in March 2023
(17 March 2023) According to figures from the Urban Redevelopment Authority, home sales in Singapore rose to a six-month high in March 2023. Purchases of new private apartments increased to 492 units in March, the third month of gains following the plunge to a 14-year-low in December 2022 due to a lack of project launches discouraging buyers. Despite a recent move by the government to raise taxes for buyers of high-end properties in February 2022, demand for housing has yet to dampen. According to Bloomberg Intelligence, home prices could rise by as much as 5% in 2023 after having risen by 3.2% in the first quarter of this year. This is attributed to higher rents and favorable supply-demand dynamics.

CAMBODIA
Cambodia collects US$1.9 billion in tax revenue in first quarter of 2023
(17 April 2023) Cambodia collected US$1.9 billion in tax revenue in the first quarter of 2023, an increase of 2% year-on-year. The General Department of Taxation (GDT), which focuses on collecting internal taxes, collected some US$1.34 billion in tax revenue during the first quarter, up 6.3% from the US$1.26 billion collected in the same period in 2022. Meanwhile, the General Department of Customs and Excise (GDCE), which collects taxes on goods entering and leaving the country, collected some US$564 million in customs and excise revenue during the first quarter, a year-on-year decrease of more than 5% from US$597 million dollars. The GDCE stated that automobiles and machinery topped the list of customs and excise revenue sources at 36.3%, followed by general goods at 32.9%, petroleum at 24%, and construction materials as well as miscellaneous fees at 6.8%.

THE PHILIPPINES
Remittances from overseas Filipino workers fall to lowest level in nine months in February 2023
(19 August 2023) Remittances from overseas Filipino workers (OFW) fell to their lowest level in nine months in February 2023 due to the waning global economic recovery. According to data by the Bangko Sentral ng Pilipinas (BSP), personal remittances rose by 2.4% to US$2.86 billion in February from US$2.79 billion in the same month in 2022. Personal remittances grew by 3% to US$5.93 billion in the first two months from $US5.76 billion in the same period in 2022. In terms of the sources of the remittances, the US posted the highest share with 41.6%, followed by Singapore at 7.3%, Saudi Arabia at 5.5%, Japan at 5.3%, the United Kingdom at 4.7%, the United Arab Emirates at 3.7%, and Canada at 3.2%. The slowdown in OFW remittances was attributed in part to the weaker peso exchange rate that partly reduced the need to send more remittances.

VIET NAM
Government to raise green economy contribution to GDP to US$300 billion by 2050
(19 April 2023) According to Viet Nam’s Minister of Planning and Investment, Viet Nam is set to raise the green economy’s contribution to the GDP from US$6.7 billion in 2020 to US$300 billion by 2050. Green growth is considered a long-term option in balancing the need to reduce greenhouse gas emissions and sustaining economic growth. The Prime Minister has been advised to issue the National Strategy on Green Growth for the 2021-2030 period, with a vision till 2050, and the National Action Plan on Green Growth for the period 2021-2030. Research by the Boston Consulting Group showed that the transition of the wind and solar power industries alone could contribute US$70 – US$80 billion to GDP and directly create about 90,000-105,000 jobs.

RCEP Monitor