LAO PDR, ASEAN
Lao PDR frames the theme of its 2024 ASEAN Chairmanship as ‘Enhancing Connectivity and Resilience’
(21 December 2023) Lao PDR has framed the theme of its 2024 ASEAN Chairmanship as ‘Enhancing Connectivity and Resilience’. At the Chairmanship handover ceremony in September 2023, Lao PDR’s Prime Minister Sonexay Siphandone highlighted that Vientiene would focus on further consolidating the ASEAN Community including enhancing connectivity and economic integration, narrowing the development gap, advancing digital transformation, promoting people-to-people-exchanges, as well as promoting climate resilience and health development. In preparation for its Chairmanship, Laotian authorities have started work on the necessary infrastructure including improving roads and airports, meeting venues, communication and internet facilities, tourism destinations, and accommodation. ASEAN Dialogue Partners have also offered their support, such as through the provision of vehicles and IT systems, capacity building, and English language training.

MALAYSIA
28,310 people evacuated due to flooding in six states
(27 December 2023) According to Malaysia’s National Disaster Management Agency (Nadma), flooding has hit a total of six states in Malaysia, with the number of evacuees as of 6 AM on 27 December, 2023 rising to 28,310 people compared to 25,938 on the evening of 26 December. Kelantan remains the state with the highest number of evacuees at 17,466, who have been placed in 89 temporary relief centres. This is an increase from the 15,145 evacuees housed in 92 centres at 4 PM the day prior. In neighboring Terengganu, the number of flood victims was recorded at 10,103. Johor and Sabah state were the latest states to be impacted by flooding.

SINGAPORE
Annual vessel arrival tonnage at Port of Singapore in 2023 hits over 3 billion gross tonnage
(26 December 2023) According to the Maritime and Port Authority of Singapore (MPA), the annual vessel arrival tonnage – a measure of the traffic of vessels – at the Port of Singapore for 2023 hit just over 3 billion gross tonnage in 2023. This is compared to the 2.83 billion gross tonnage recorded in 2022. The Port of Singapore had previously reached 1 billion gross tonnage in 2004 and 2 billion gross tonnage in 2011. Singapore’s Acting Minister for Transport noted that the 3 billion gross tonnage breakthrough was significant given the maritime industry’s downturn in 2016 and supply chain disruptions resulting from the COVID-19 pandemic.

SINGAPORE
Core inflation eases slightly to 3.2% year-on-year in November 2023
(26 December 2023) According to a joint statement by the Monetary Authority of Singapore (MAS) and the ministry of trade and industry, Singapore’s core inflation eased slightly to 3.2% year-on-year in November 2023, compared to the 3.3% growth recorded in October 2023. This slowdown was attributed to lower inflation for retail and other goods, food, as well as electricity and gas. Core inflation excludes private road transport and accommodation. This slowdown will provide the MAS room to extend its monetary-policy pause during its next monetary decision due in late January 2024. The MAS has kept its policy stance unchanged at its two scheduled reviews in 2023 after tightening settings five times between October 2021 and 2022.

THAILAND
Thailand to increase its minimum wage in January 2023, to raise it further in March
(26 December 2023) Thailand’s government has confirmed it will raise its minimum wage in January 2023 while also planning to raise it further in March 2023. While a wage committee had previously agreed to increase the daily minimum wage by 2.37%, effective in January 2024, Prime Minister Srettha Thavisin had deemed the hike too low. While the government will now commit to the previous deal, the committee will meet in January to seek a further wage hike. Thailand’s ruling Pheu Thai party campaigned on a populist platform with a key plank of raising the daily minimum wage to US$11.61, despite concerns by business groups over competitiveness.

VIET NAM
Vietnamese gaming company VNG seeks listing in New York City
(24 December 2023) Vietnamese gaming company VNG is seeking a listing on the Nasdaq in New York City as it seeks to become a global gaming company. The company, based in Ho Chi Minh City, was founded in 2004 as Vinagame and has grown to become Viet Nam’s leading game publisher. The company has expanded to other areas as well, running a digital wallet, cloud services, and Viet Nam’s most popular messaging platform. Gaming remains a big part of the company’s operations, with 80% of revenue still earned in that division. The company publishes some 10 games a year in Viet Nam and other parts of Southeast Asia, and is seeking to expand into other markets such as Latin America and the Middle East.

SINGAPORE
Nightclub operator Zouk eyeing opening new clubs in New York, Miami and Dubai
(25 December 2023) Singapore-based nightclub and entertainment operator Zouk is eyeing new markets to open clubs, including New York, Miami, and Dubai. The nightlife brand had recently secured deals for venues in Tokyo and Los Angeles. Zouk opened its first nightclub in Singapore in 1991, before proceeding to open Zouk Genting nightclub in the Malaysian resort town of Genting Highlands in 2019. Zouk was previously owned by Malaysian gaming and resorts conglomerate Genting Hong Kong, before being sold to Tulipa, another Malaysian company. The CEO of Zouk noted that spending is currently down 20% to 30% from the previous year.

RCEP Monitor

JAPAN
Japan preparing regulations to require tech giants to allow third-party app platforms and billing
(27 December 2023) Japan is currently preparing regulations that will require tech giants like Google and Apple to allow outside app stores and payments on their mobile operating systems. These antitrust laws are aimed at tackling the abuse of these tech giant’s dominant position within the Japanese market. The proposed legislation is slated to be sent to parliament in 2024 and would focus on restricting moves by platform operators to keep users in the operators’ own ecosystems while shutting out rivals, focusing mainly on the four areas of app stores and payments, search engines, browsers, and operating systems. The plan will allow the Japan Fair Trade Commission to impose fines for violations.

CHINA
China approves 105 domestic games in sign of softening stance towards gaming industry
(25 December 2023) On 25 December, 2023, China approved 105 domestic games in the latest sign of Chinese authorities softening its stance towards the gaming industry after its move to tighten industry restrictions led to a US$80 billion rout last week. On 22 December, 2023, the top gaming regulator National Press and Publication Administration announced new rules to limit the development of online games, including an unspecified cap on spending by adult players. This announcement rekindled fears of a new tech crackdown by the Chinese state. China’s leading game publishers Tencent Holdings Ltd. and NetEase Inc. saw their market value plunge after the announcement was made.

CHINA
Earthquake causes US$74.6 million worth of damage in northwestern province of Gansu
(24 December 2023) A 6.2 magnitude earthquake has caused US$74.6 million worth of direct economic losses in the northwestern province of Gansu, which hosted the epicenter. Officials estimated that the earthquake inflicted losses that included US$48.27 million on animal husbandry and US$14.28 million on crop production. As of 22 December, 2023, the earthquake has reportedly killed 148 people and injured 781. The earthquake is set to further burden the finances of Gansu, an underdeveloped province whose economic output ranked 27th out of 31 Chinese provinces and municipalities as of 2022.

ASEAN, JAPAN
ASEAN and Japan agree to deepen cooperation regarding economic and security issues
(17 December 2023) On 17 December, 2023, ASEAN and Japan agreed to deepen cooperation regarding security and economic issues at a summit in Tokyo commemorating 50 years of friendship and cooperation. In a ‘joint vision statement’ issued after the gathering, the leaders pledged to enhance cooperation in areas as varied as maritime security, supply chains, sustainable energy practices, and people-to-people exchanges. The leaders also launched a new initiative for the next-generation auto industry aimed at mapping out strategies to enable ASEAN members to remain a major hub of auto production and exports. Other efforts to boost the economy included supporting digital startups as well as accelerating public and private investment to achieve decarbonization.

THAILAND
Cabinet approves debt suspension for smaller businesses and support for retail debtors
(19 December 2023) In order to address the country’s ongoing debt issues, Thailand’s cabinet has approved debt suspension for smaller businesses as well as support for retail debtors. The programme is aimed at helping the 10.3 million Thais believed to be struggling to service their debts. At the end of the second quarter of 2023, household debt stood at 90.7%. The government also aims to maintain diesel prices at about US$0.86 per litre and electricity bills at up to US$0.12 per unit to help lower energy costs. The diesel price cap would be maintained for three months and supported by tax measures and the national oil fund. While new electricity bills will be decided in January 2024, vulnerable groups will be offered the current rate of US$0.11 per unit. Government subsidies have helped keep inflation low, with headline inflation measuring at -0.44% in November 2023, the lowest in nearly three years.

MALAYSIA
Malaysia sees 2.4% year-on-year decline in overall trade in November 2023
(19 December 2023) According to Malaysia’s Ministry of Investment, Trade and Industry (Miti), Malaysia recorded a 2.4% year-on-year decline in trade growth to US$49.51 billion in November 2023. Exports dropped by 5.9% year-on-year to US$26.08 billion, while imports grew by 1.7% year-on-year to US$23.43 billion. Malaysia’s trade surplus for the month measured at US$2.65, which is the lowest surplus recorded since May 2020. Shipments of Malaysian manufactured goods saw a contraction of 6.7% year-on-year, while exports of mining goods saw growth of 0.5% year-on-year. Shipments of agricultural goods meanwhile saw a contraction of 5.5% year-on-year.

MALAYSIA, JAPAN
Malaysia attracts potential investments worth US$1.40 billion
(19 December 2023) Malaysia has managed to attract some US$1.40 billion worth of potential investments from Japan during Prime Minister Anwar Ibrahim’s visit to Japan. Anwar noted that the Malaysia-Japan relationship is seeing a new shift in terms of investment, trade, education and technology cooperation. Anwar noted that the potential investments could be in the form of new investments or expansion of existing investments, and involves a wide range of sectors including renewable energy, electrical and electronics, chemicals and digital economy.

CAMBODIA, JAPAN
Number of users of Cambodian digital currency Bakong reaches 10 million
(19 December 2023) According to the National Bank of Cambodia (NBC), the number of users for Cambodia’s digital currency Bakong has reached 10 million. This indicates that some 60% of Cambodia’s population is likely able to use Bakong to make payments or transfer money. The NBC jointly developed Bakong in cooperation with Soramitsu, a Tokyo-based blockchain technology startup. The digital currency first went into circulation in October 2020. Bakong has been described as the world’s first central bank digital currency, and enables anyone to make monetary transactions with a smartphone. As for taking Bakong digital transactions to other countries, the NBC has already launched cross-border payment connectivity with Thailand, Lao PDR and Viet Nam.

THE PHILIPPINES
Philippines’ central bank decides to maintain inflation target range of 2% to 4% through 2026
(21 December 2023) On 21 December, the Philippines’ central bank stated it would maintain its inflation target range of 2% to 4% through 2026, and reiterated its readiness to tweak monetary policy to achieve targets. According to the central bank, the inflation target range remained an ‘appropriate representation of the medium-term goal for price stability’. The central bank noted that its current higher-for-longer policy stance, coupled with non-monetary measures by the government, is ultimately aimed at a sustained return of inflation to the medium-term target and to keep inflation expectations anchored. Inflation in the Philippines eased to 4.1% in November 2023.

VIET NAM
Viet Nam to lift regional minimum salary for laborers by 6% in 2024
(21 December 2023) Viet Nam intends to lift its regional minimum salary for laborers by 6% in 2024, with the National Wage Council having granted the green light to the increase and submitting it to the government for approval. If approved, the regional minimum wage increase will take effect on 01 July, 2024. The regional minimum salary for workers in Region I, which includes urban areas of Hanoi and Ho Chi Minh City, is set to rise to US$204 a month, while that of Region II, which includes rural areas of the two cities along with major urban areas in the country like Can Tho, Danang and Hai Phong, is set to increase to US$181. Meanwhile, the minimum salary for workers in Region III, which includes the cities and districts of northern Bac Ninh, Bac Giang and Hai Duong provinces, is poised to climb up to US$158. Meanwhile, in Region IV, which comprises the rest of the country, the minimum salary is poised to rise to US$141.

RCEP Monitor

CHINA, JAPAN
Chinese electric vehicle maker BYD seeking to crack Japanese market
(18 December 2023) China’s top electric vehicle (EV) maker BYD is seeking to crack the Japanese market, seeing it as a gateway to global markets. BYD first entered the Japanese market in January 2023, and has set a goal of selling 30,000 EVs annually in Japan by 2025. Japan is the world’s fourth-largest auto market, with Japanese automakers holding a market share surpassing 90%. BYD sold 2.08 million vehicles globally during the first three quarters of 2023, raising global sales volume 75% year-on-year. In the third quarter of 2023, BYD was roughly 3,400 units shy of beating world EV leader Tesla. BYD intends to build a web of dealerships in Japan in order to reach out to Japanese consumers.

JAPAN
Japanese exports contract by 0.2% to US$61 billion in November 2023
(20 December 2023) Japanese exports contracted by 0.2% year-on-year to US$61 billion in November 2023, the first contraction in three months. Imports meanwhile fell by 11.9%, resulting in an overall trade deficit of US$5.42 billion. While automobile exports increased by 16.3%, those of steel dropped 11.6%, while chip manufacturing equipment shipments dropped by 10.6%. While exports to the EU fell for the first time in 33 months at 0.03%, exports to the U.S. grew by 5.3% for a 26th consecutive month of expansion. Meanwhile, China-bound exports fell 2.2%, the 12th straight month of decline.

NEW ZEALAND
Government predicts smaller budget deficit for fiscal year ending 30 June, 2024
(20 December 2023) New Zealand’s new centre-right government projected a smaller budget deficit at its half-yearly economic update. The government forecast a budget deficit of US$5.84 billion for the fiscal year ending 30 June, 2024, smaller than the deficit of US$7.11 billion forecasted in the update released ahead of the election. It continues to expect a return to a US$87.46 million surplus by 2026/27. While net debt under the old calculations was forecast to peak at 43.5% of GDP in 2023/24, these forecasts were finalized on 24 November, 2023 ahead of the formation of the new government, and did not take into account new policies or the surprisingly weak GDP data released last week. The new government’s proposed spending cuts are expected to be broadly neutral in terms to the overall fiscal outlook once combined with other signaled commitments.

ASEAN, TAIWAN
Taiwanese startups eye ASEAN markets due to China risks
(12 December 2023) Technology startups in Taiwan are increasingly eyeing ASEAN markets for further expansion as the prospects of stability for doing business in China wanes. According to Taiwan’s Ministry of Economic Affairs, Taiwanese companies invested more in Southeast Asia and South Asia than in China for the first time in 2022, with total investments into the region reaching US$5.2 billion. In comparison, a total of US$5 billion was invested into China. In November 2023, a delegation of close to 30 Taiwanese startups met in Singapore seeking regional partnerships. This delegation was led by Taiwan’s deputy minister of National Development Council, an agency overseeing efforts to help the island’s startups access global markets. This would be the first time that the council led a business expedition to Singapore for Taiwanese startups.

INDONESIA
TikTok announces US$1.5 billion investment into GoTo to restart e-commerce business in Indonesia
(11 December 2023) Chinese short video app TikTok announced a US$1.5 billion investment into GoTo in a deal that would allow it to restart its e-commerce business in Indonesia. Under the terms of the deal, TikTok’s e-commerce platform TikTok Shop will be merged with GoTo’s e-commerce platform Tokopedia, with TikTok having a controlling stake in the entity. The strategic partnership will begin with a pilot period carried out in close consultation with and supervision by the relevant regulators. The deal is expected to be closed in 2024. TikTok Shop was forced to close in October 2023 after Indonesian authorities banned direct sales on social media to protect millions of small businesses.

MALAYSIA
Chief of state pension fund appointed as second finance minister
(12 December 2023) Malaysian Prime Minister Anwar Ibrahim made significant changes to his cabinet on 12 December, 2023 amidst dropping approval ratings. Among the new figures in the cabinet included Amir Hamzah Azizan, the CEO of the state pension fund Employees’ Provident Fund (EPF), who was appointed to the position of second finance minister. The selection of the EPF CEO was in response to public perceptions that the finance ministry had been neglected due to Anwar’s other responsibilities as prime minister. Former defense minister Mohamad Hasan was moved to the foreign ministry, while deputy prime minister Fadillah Yusof was moved to the newly-created energy transition and public utilities portfolio from the commodities ministry. Popular lawmaker Dzulkefly Ahmad, meanwhile, returns to the post of health minister. Anwar’s approval ratings have dropped amidst an economic slowdown and rising consumer costs.

MYANMAR
Myanmar’s economy expected to grow just 1% over the year to March 2024 amidst border disruptions
(12 December 2023) According to the World Bank, Myanmar’s economy is expected to grow just 1% over the year to March 2024 amidst border disruptions caused by anti-junta resistance elements. GDP growth is expected to remain stagnant at about 2% next fiscal year. The ongoing fighting has disrupted Myanmar’s trade with its neighbors across land borders, which accounted for 40% of its exports and 21% of its imports in the six months to September 2023. The volatility of the kyat, persistent power disruptions and high inflation is also expected to hammer households and businesses. Inflation is set to remain at around 20% until March 2024.

THE PHILIPPINES
International tourist arrivals in 2023 breach 5 million mark
(12 December 2023) According to the Department of Tourism, international tourist arrivals to the Philippines in 2023 breached the 5 million mark, logging in at 5,067,752 as of 12 December, 2023. Authorities had set a target for 2023 of 4.8 million arrivals. Due to these developments, tourism contributed nearly US$7.85 billion to the Philippines’ economy this year. In 2022, 2.6 million foreign tourists had visited the country. The Philippines’ recovery from the COVID-19 pandemic from January to November 2023 in terms of international tourist arrivals was measured at 65%. This is compared to the 62% recovery found among many other nations in the Asia-Pacific.

VIET NAM
Viet Nam to see 32% growth in coffee consumption through 2027
(10 December 2023) According to Euromonitor Asia, Viet Nam is expected to see 32% growth in coffee consumption through 2027. Alongside India, Viet Nam will lead coffee consumption in the Asia region through the coming years. The Philippines and Indonesia are also expected to see significant growth in coffee consumption. While Viet Nam is already the world’s largest exporter of robusta, Vietnamese coffee has also become a cultural export, with the country having popularized its distinctive drip filters and ca phe sua da (iced milk coffee) around the globe. In making their projections, Euromonitor Asia observed that coffee drinking is correlated with discretionary income and urbanization.

LAO PDR
ADB approves US$32 million financing package to help Lao PDR strengthen climate change response
(12 December 2023) On 12 December, 2023, the Asian Development Bank (ADB) approved a US$32 million financing package to help Lao PDR strengthen its response to climate change as well as to help improve the livelihoods of agricultural communities in Vientiane and the central provinces of Bolikhamxai and Khammouan. Dubbed the Flood and Drought Mitigation and Management Sector Project, the package will aid Lao PDR in its efforts to reduce financial and economic losses from floods and droughts as well as enhance dietary diversity. Lao PDR is highly vulnerable to extreme weather events including floods and droughts, which is estimated to reduce the country’s GDP by up to 2% annually.

RCEP Monitor

JAPAN
Wholesale inflation eases to 0.3% yeah-on-year in November 2023
(12 December 2023) Wholesale inflation in Japan eased to 0.3% year-on-year in November 2023, following a 0.9% gain in October. This comprised the 11th straight month of slowdown since December 2022, when wholesale inflation hit 10.6%. While the slowdown was attributed partly to the base effect of last year’s sharp rise in raw material costs, analysts expect wholesale prices to start falling from December onwards due to slumping oil prices and the yen’s recent appreciation. This latest data underscored the Bank of Japan’s view that commodity-driven inflation will gradually dissipate, with the focus to shift towards whether domestic demand will be strong enough for the central bank to start normalizing its ultra-loose monetary policy.

JAPAN
Government plans to issue US$24.7 billion package to help stem falling birthrates
(12 December 2023) The Japanese government plans to issue a package of different measures to help stem falling birthrates by year-end, which will call for annual outlays of US$24.7 billion. Dubbed the Children’s Future Strategy Policy, the package contains an expansion of child allowances, free university education for families with three or more children, and regulatory changes to improve day care services. The expansion of child allowances will include the elimination of income restrictions, the extension of the benefit period to high school-age children; and the doubling of the monthly payment to US$306 for third and subsequent children. Meanwhile, for households with three or more children, tuition and enrollment fees for universities, junior colleges and technical colleges will be made “free of charge” without income restrictions from fiscal 2025 onwards.

SOUTH KOREA
South Korea unveils US$29 billion financial package to aid EV battery makers diversify supply chains
(13 December 2023) South Korea unveiled a US$29 billion financial package over the next five years aimed at helping local electric vehicle (EV) battery makers diversify their supply chains. This comes as the US calls for a reduced reliance on China, which is the world’s biggest EV and battery maker. The financial aid will take the form of loans, credit guarantees, lower borrowing rates, and insurance premiums for investment in manufacturing facilities in North America, where South Korean EV battery manufacturers can benefit from tax breaks from the Biden administration’s Inflation Reduction Act. The Korean government also aims to set up a fund to help firms secure minerals and expand their production overseas.

ASEAN, SWEDEN
Sweden announces new trade and investment strategy for Southeast Asia
(06 December 2023) Sweden has announced a new trade and investment strategy for Southeast Asia as part of its larger plan to deepen cooperation with like-minded partners. According to Sweden’s Minister for International Development Cooperation and Foreign Trade Johan Forssell, there will be a particular focus on digitalization and green transition. Forssell was in Singapore on 05 December, 2023 to attend the Sweden Indo-Pacific Business Summit, where he led a business delegation of 51 Swedish companies keen to expand their regional footprint. Said companies included fashion giant H&M Group, tech firm Ericsson, carmaker Volvo, and medical tech company Getinge. Singapore, for their part, noted that they were keen to collaborate with Sweden to develop sustainability-related capabilities in Singapore and widen the range of sustainable finance solutions for the Asian market.

MALAYSIA
Malaysia targeting tourist arrivals to surpass pre-pandemic levels in 2024
(06 December 2023) Malaysian authorities are targeting tourist arrivals to the country in 2024 to surpass pre-pandemic levels in 2024. According to Tourism Malaysia Deputy Director General (Promotion), tourism arrivals in 2024 should surpass the 26.1 million foreign visitors seen in 2019. Malaysia has seen an upswing in the number of visitors in 2023, prompting authorities to revise its 2023 year-end tourism target to 19.1 million arrivals from 16.1 million. These targets do not take into account day-visitors who usually enter the country by Malaysia’s land borders. The tourism industry contributed 14% to the country’s GDP in 2022, making it one of the largest contributors to the economy.

MALAYSIA
Malaysia attracts US$48 billion in approved investments in the January to September 2023 period
(06 December 2023) According to the Malaysian Investment Development Authority (MIDA), Malaysia attracted some US$48 billion in approved investments in the January to September 2023 period, exceeding its full-year target. The services sector dominated investment inflow, bringing in about 52%, or US$25.06 billion, of approved investments, while the manufacturing sector brought in 44%, or US$21.38 billion, of approved investments. MIDA noted that 3,949 investment projects pushed up the value of investments by 6.6% year-on-year. These investments are expected to unlock 89,495 new job opportunities. Foreign direct investment (FDI) constituted 55.9% of the total approved investments, while domestic direct investments (DDI) contributed 44.1%.

MALAYSIA, TIMOR-LESTE
Malaysia and Timor-Leste looking to establish direct flights to promote tourism and cultural exchange
(05 December 2023) Malaysia and Timor-Leste are looking to establish direct flights connecting the major destinations of both countries to promote tourism and cultural exchange. There are currently no direct flights between Kuala Lumpur and Dili. Connecting flights were among the issues discussed between Malaysia’s Minister of Tourism, Arts and Culture and Timor-Leste’s Vice-Prime Minister during a meeting held in Malaysia on 04 December, 2023. Other issues discussed included Muslim-friendly tourism. Malaysia is also seeking to support Timor-Leste in capacity-building and technical assistance programs, including in cultural heritage management.

INDONESIA
TikTok nears deal to invest into Indonesian e-commerce platform Tokopedia
(05 December 2023) Chinese social media platform TikTok is reportedly nearing a deal to invest in Indonesian e-commerce platform Tokopedia in a bid to resuscitate its e-commerce business in its largest market after having previously been banned by authorities. Tokopedia is the e-commerce unit of Jakarta-listed GoTo, which operates in multiple other industries including ride-hailing, food delivery, and financial services operations. The deal could be completed as early as December 2023. TikTok’s e-commerce platform TikTok Shop first started operations in Indonesia in 2021, before the Indonesian government banned transactions on social media platforms on 27 September, 2023 to ensure “fair and just” competition as well as to protect user data. Before the ban, TikTok had hoped to generate about US$6 billion in gross merchandise value in Indonesia.

THE PHILIPPINES
Bangko Sentral ng Pilipinas to either pause or hike rates at next meeting
(06 December 2023) The governor of the Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP), stated that the bank could either pause or hike rates at its next meeting on 14 December, 2023. The BSP kept rates steady at 6.5% at its last meeting in November after an off-cycle 25-basis point hike on 26 October. Even though inflation rose at its slowest pace in 20 months in November at 4.1%, the central bank stated that there was a need to keep monetary policy “sufficiently tight until a sustained downtrend” was evident. The BSP projects that inflation could return to its target range of 2% to 4% by December, and remain below 3% in the early part of 2024.

THAILAND, JAPAN
Japan’s fisheries industry finds strong demand in Thailand
(03 December 2023) Japan’s fisheries industry is benefitting from strong demand in Thailand, with Thai consumers preferring Japanese fish due to its high quality and freshness. Japanese marine product exports to Thailand amounted to US$158 million in 2022, up 14.6% year-on-year. The value of Japan’s marine products exports to Thailand represented 27% of Japan’s exports to China. Southeast Asia as a whole has factors that are expected to increase regional demand for Japanese fresh fish exports, including the region’s growing consumer purchasing power and the increasingly diverse desires that go with economic development, as well as improved infrastructure that supports [cold chain] transportation.

RCEP Monitor

AUSTRALIA
Australia’s economy expands by 0.2% quarter-on-quarter in third quarter of 2023
(06 December 2023) Australia’s economy expanded by 0.2% quarter-on-quarter in the third quarter of 2023. While this marked the eighth straight quarter of growth for Australia, it was its slowest in a year. This slowdown is attributed to flagging exports and household consumption. Annual growth stood at 2.1%, little changed from the previous quarter. Household disposable income has seen a sharp decline due to high inflation, higher interest rates, and additional tax obligations. Household spending has been effectively flat for four quarters in a row. These recent figures have bolstered the case for the Reserve Bank of Australia to pause rate hikes for now.

CHINA
Moody’s cuts outlook on China’s sovereign credit rating to negative
(05 December 2023) Rating agency Moody’s Investors Service has slashed its outlook on China’s sovereign credit rating to negative, citing growing risks of persistently lower midterm economic growth as well as the country’s ongoing property crisis. Moody’s noted there was evidence that authorities and state companies would provide financial support to weak regions, thereby “posing broad downside risks to China’s fiscal, economic and institutional strength”. Moody’s affirmed its A1 long-term local and foreign-currency issuer rating for China. The rating agency had downgraded its credit rating for the country from Aa3 to A1 in 2017 due to concerns that efforts to support growth would spur rising debt in the economy. It predicts that China’s economy will expand by 4% in 2024 and 2025.

CHINA, ITALY
Italy informs China it is leaving the Belt and Road Initiative
(06 December 2023) The Italian government has informed China that it will be leaving the Belt and Road Initiative (BRI), claiming it has brought no immediate economic benefits to the country. In 2019, Italy became the first and only major Western country to join the BRI. With the 2019 accord expiring in March 2024, the Italian government has reportedly sent a letter to China informing the latter it will not be renewing the pact. While the Italian government had hoped membership of the BRI would bring trade benefits for Italy, Chinese firms seemed to be the main beneficiaries. According to Italian data, Italian exports rose to US$17.7 billion in 2022 from US$14.00 billion in 2019. During the same period, Chinese exports to Italy rose to US$61.90 billion from US$34.12 billion.

MALAYSIA, INDIA, CHINA
Malaysia to scrap entry visa requirements for Chinese and Indian citizens starting 01 December, 2023
(26 November 2023) The Malaysian government will scrap entry visa requirements for Chinese and Indian citizens entering the country starting on 01 December, 2023. Citizens of both countries will be allowed to stay in the country for up to 30 days visa-free, but will be subject to security screening. This comes as Malaysia is seeking extra tourist arrivals to support economic growth, with Malaysian Prime Minister Anwar Ibrahim announcing in October 2023 plans to improve visa facilities in 2024 to encourage the entry of tourists and investors. On 24 November, 2023, Chinese authorities stated it would allow citizens of six countries including Malaysia to enter the country without a visa.

MALAYSIA, INDONESIA
Fligths between Kuching and Pontianak expected to be revived in early 2024
(27 Novemebr 2023) Flights between Kuching in the Malaysian state of Sarawak and Pontianak in the Indonesian province of West Kalimantan are expected to be resumed in early 2024. According to Sarawak’s Transport Minister, Indonesia had agreed in principle for the resumption of flight operations during the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) meeting held in October 2023. Indonesia had suspended the routes connecting Sarawak and Pontianak since March 2022. As well, bus services between the border of Singkawang in Indonesia and Kuching will start on 01 December, 2023, with two buses serving the route initially.

THAILAND
Bank of Thailand flags baht volatility and elevated household debt
(28 November 2023) According to the Bank of Thailand (BOT), the higher-for-longer stance adopted by central banks in advanced economies to fight inflation has seen their interest rates surpass that of emerging markets, with the end result being currency volatility in emerging economies such as Thailand. The Thai baht has seen swings increase from 8% to 9% from about 3% to 4% before the COVID-19 pandemic. The BOT also noted that higher interest rates in advanced economies may impact capital flows to emerging market economies. The BOT also raised concerns about the elevated levels of household debt as well as declining levels of spending by tourists.

THAILAND
Prime Minister Srettha faces challenges in implementing digital wallet scheme
(28 November 2023) Prime Minister Srettha Thavsin is facing challenges implementing his party’s flagship policy of a 10,000 baht (US$280) handout of digital money through an e-wallet. The handout policy is expected to cost 500 billion baht (US$14 billion), equivalent to 3% of GDP, and will put money directly into the digital wallets of 50 million Thais earning less than 70,000 baht (US$2,000) per month. The Bank of Thailand has voiced opposition to the digital wallet scheme, warning it may spur inflationary pressures. Thai businesses have also raised concerns on how the scheme will impact the public debt. The government must also contend with legal challenges based on the fiscal discipline law.

VIET NAM
Viet Nam emerges as world’s second largest shrimp supplier
(28 November 2023) According to Viet Nam’s General Department of Fisheries under the Ministry of Agriculture and Rural Development, Viet Nam has emerged as the world’s second-largest shrimp supplier. Viet Nam accounts for 13% to 14%  of total global value. Viet Nam currently exports shrimp to about 100 countries and territories across the world, with its five largest export markets being Europe, the United States, Japan, China, and the Republic of Korea. During the 2010 to 2023 period, Viet Nam had a brackish water shrimp farming area of 644,000 to 737,000 hectares. In the first ten months of 2023, Viet Nam’s shrimp export revenue reached US$2.8 billion, down 24% year on year.

VIET NAM
Parliament approves global minimum corporate tax of 15%, delays implementing offsets
(29 November 2023) On 29 November, 2023, Viet Nam’s parliament approved implementing the global minimum tax rate of 15% on multinationals from 01 January, 2024 onwards. However, parliament has delayed implementing measures to offset the higher tax rate. The higher rates are in line with global tax reform initiatives, with the government stating it would work on specific incentives in 2024. While Viet Nam’s corporate income tax is already set at 20%, for years it has offered much lower effective rates to foreign investors. The government is expected to make an additional US$601 million a year under the new plan, which will impact an estimated 122 foreign companies.

CAMBODIA
Cambodia scraps US$1.5 billion coal-fired power project in favour of natural gas-fired plant
(29 November 2023) Cambodia has scrapped a US$1.5 billion coal-fired power project in a protected reserve along the south-western coast in favour of building an 800 MW natural gas-fired plant instead. As part of the new project, the government is considering constructing a liquefied natural gas (LNG) terminal to import the super-chilled fuel and re-gasify it for use in the power plant. The planned LNG terminal is a fixed land-based facility and would make Cambodia a new LNG import market. The planned Botum Sakor coal plant had been criticized for encroaching on Cambodia’s densest forest areas, meaning it risks polluting it. Cambodia is seeking to lift its share of clean energy generation capacity to 70% by 2030 from 52% in 2022 by building new solar plants, wind farms and hydro projects.

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AUSTRALIA
Consumer price rises slows in October 2023, raising chances of end to rate-hiking cycle
(29 November 2023) Consumer price indicators in Australia rose by 4.9% year-on-year in October 2023, which was lower than economists’ estimates of a 5.2% rise and ending a two-months streak of acceleration prior. This has bolstered the case for the Reserve Bank of Australia (RBA) to resume pausing interest rate hikes next week. The case rate currently stands at 4.35%, a 12-year high. Swaps are pricing about a 50% chance of a hike by the RBA in 2024, down from about 70% beforehand. When excluding volatile items, annual inflation eased to 5.1%  in October from 5.5%.

SOUTH KOREA
Ban on short selling of stocks seen as populist move ahead of elections
(27 November 2023) South Korea’s ban on the short selling of stocks in November 2023 is seen by analysts as a populist move ahead of national legislative elections in 2024. On 05 November, 2023, the Financial Services Commission (FSC) announced that there would be a prohibition on short-selling in Seoul stock markets — except for market makers and liquidity providers — from the next day until the end of June 2024. The ban will thus be in effect for almost eight months. The move has been welcomed by South Korea’s retail investors, who complain short selling benefits institutional investors. The surprise move by the FSC saw the benchmark Korea Composite Stock Price Index (KOSPI) stock market increase 5.4% in the three weeks since the ban. Analysts see the ban as a populist move by the ruling People Power Party to appease retail investors, who are a powerful voting bloc.

JAPAN
Finance Ministry to assumed interest rate paid on bonds for first time in 17 years
(29 November 2023) The Japanese government will raise the assumed interest rate paid on bonds in the government’s annual budget proposal for the first time in 17 years in fiscal 2024. This reflects recent moves by the Bank of Japan to allow long-term yields to rise, as the central bank seeks to exit its super-accomodative stance. Japan’s Finance Ministry sets rate assumptions based on actual bond yields, with a certain additional margin. The change will be reflected in the fiscal 2024 draft budget to be finalized in late December 2023. The rate for fiscal 2024 has been set at 1.5% at the preliminary spending request stage, based on the actual coupon rate of 0.4%, with 1.1 point of leeway in case of a surge in yields. In fiscal 2023, the assumed rate was raised to 1.3% at the request stage, but was ultimately left at 1.1%, where it has stayed for the past seven years. The assumed interest rate was last raised in fiscal 2007, when it was lifted by 0.3% to 2.3%, after which it was left unchanged or lowered every year since.

ASEAN
2023 APEC forum commit to tackling climate change, regional integration, food insecurity, and economic inclusion
(18 November 2023) On 17 November, 2023, the leaders of the 21 APEC member economies agreed to the 2023 APEC Leaders’ Golden Gate Declaration at the conclusion of the 2023 APEC Economic Leaders’ Meeting held in San Francisco. As part of the declaration, the leaders of the member economies committed to tackling a variety of issues including climate change, regional economic integration, food insecurity, and economic inclusion. An accompanying Chair’s Statement was also released which reiterated member’s respective positions with regards to the ongoing war in Ukraine. In the Chair’s Statement most members condemned Russian aggression against Ukraine. The Chair’s Statement also exchanged views on the ongoing conflict in Gaza. Country and business leaders at the APEC Summit also discussed the potential and dangers of artificial intelligence as well as supply chain diversification.

THAILAND
Prime Minister Srettha Thavisin invites US President Joe Biden for official visit to Thailand
(20 November 2023) Thai Prime Minister Srettha Thavisin claimed he had invited US President Joe Biden to Thailand for an official visit. Srettha stated he had made the offer after a dinner hosted by the US president for country leaders and participants on the last day of the recent Asia-Pacific Economic Cooperation (APEC) Summit held in San Francisco. Srettha informed Biden that Thailand is ready to serve as a production base for major US companies. Srettha also claimed that several US firms such as Tesla, Analog Devices, and Walmart are interested in investing in Thailand.

THAILAND
Thailand’s economy slips to 1.5% year-on-year growth in third quarter of 2023
(20 November 2023) Thailand’s economy grew by 1.5% year-on-year in the third quarter of 2023, slowing from the 1.8% growth measured in the second quarter. This slowdown was attributed to a deceleration in agriculture and non-agriculture sectors as well as in the exports and imports of goods. Thailand’s industrial sector saw a second consecutive quarter of decline, and was down by 2.8%. Exports of goods declined by 3.1% in the quarter, while those of services increased by 23.1%. The services sector grew by 3.9%, a slowdown from the second quarter. The National Economic and Social Development Council now expects Thailand’s economy to expand by 2.5% in 2023, the lower end of a previous forecast range of 2.5% to 3.0%.

MALAYSIA, INDONESIA
Penang state seeks to attract medical tourists from Indonesia
(21 November 2023) The Malaysian state of Penang is seeking to attract more medical tourists from Indonesia. According to the non-profit Penang Centre of Medical Tourism (PMED), 287,379 foreign patients traveled to Penang in the first nine months of 2023, compared to 127,920 in the same period in 2022. Indonesians alone contributed 54% of international medical arrivals in Penang in the first 11 months of 2022. Penang state received more than US$75.6 million in medical revenue in 2022, while the Malaysia Healthcare Travel Council reported national revenue of US$279.39 million from 850,000 medical tourists. In March 2023, Indonesian President Joko Widodo had noted that almost two million Indonesians chose to travel abroad for medical treatment every year, including to Malaysia. As such, Indonesia lost some US$10.5 billion in foreign exchange due to capital outflow.

INDONESIA
Indonesia launches investment plan for US$20 billion energy transition pact
(21 November 2023) On 21 November, 2023, Indonesia launched an investment plan to attract US$20 billion pledged by Western nations in a renewable energy transition pact agreed upon in 2022 to allow Indonesia to slash emissions and wean itself off coal. The roadmap outlines Jakarta’s vision to reach net-zero power sector emissions by 2050 using cash from the Just Energy Transition Partnership (JETP). Under the Comprehensive Investment and Policy Plan (CIPP), Indonesia seeks to slash its carbon dioxide emissions to 250 million metric tons for its on-grid power sector by 2030, as well as boost its renewable energy generation share to 44%. Indonesia claims it would need at least US$97.3 billion worth of investments to achieve its target.

VIET NAM
Vegetable export revenue forecast to surpass US$1 billion by 2030
(21 November 2023) According to Viet Nam News Agency, Viet Nam’s vegetable exports are set to reach about US$1 billion to US$1.5 billion by 2030. Vegetable production within the country is set at 23 to 24 million tonnes with about 1 to 1.3 million tonnes designated for processing. By 2030, national vegetable cultivation will cover an area of some 1.2 to 1.3 million hectares, with around 360,000 to 400,000 hectares to be dedicated to safe and concentrated vegetable production. Among this, roughly 50,000 to 60,000 hectares are projected for growing processed vegetables, including tomato, cucumber, chilli, potato, and leafy greens. Fruit and vegetable export revenue hit over US$4.9 billion in the first ten months of 2023.

SINGAPORE
SIngapore government projects growth for 2024 to come in between 1% and 3%
(22 November 2023) On 22 November, 2023, the Singaporean government projected that growth for 2024 would come in between 1% and 3% year-on-year, with the country expecting a recovery in global electronics demand. For the third quarter, the preliminary figure of 0.7% year-on-year growth earlier reported was raised to 1.1%. Singaporean authorities now predict growth of around 1% for 2023, compared with the 3.6% expansion recorded in 2022. Official trade data released last week showed Singapore’s benchmark non-oil domestic exports shrank by 3.4% year-on-year in October 2023, marking the 13th straight month of contraction

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CHINA
Overseas trade from China’s Xinjiang region jumps 40% in first ten months of 2023
(20 November 2023) Overseas trade from China’s Xinjiang region jumped 40% to a record US$409.2 billion in the first ten months of 2023 despite sanctions imposed by Western countries over alleged abuses of Uyghur minorities in the region, the latter of which included allegations of forced labor. Shipments from January to October 2023 exceeded the total value of trade in 2022. In October 2023 alone, shipments worth US$48 billion made it in and out of the region. The Central Asian countries of Kazakhstan, Kyrgyzstan and Tajikistan comprised the largest share of the overseas trade with Xinjiang, with machinery and electronics, apparel and textiles the most frequently traded goods.

CHINA
Over 75% of foreign money invested into China’s stock market in first seven months of 2023 has left
(20 November 2023) More than 75% of foreign money invested into China’s stock market in the first seven months of 2023 have left, with global investors dumping more than $25 billion worth of shares. The sharp selling in recent months puts net purchases by offshore investors on course for the smallest annual total since 2015. Global institutional investors are currently holding off from buying Chinese equity until China’s growth has rebounded enough. While global investors initially began buying Chinese stock at a record pace in January 2023 due to anticipations of an economic rebound following the end of China’s COVID-19-related lockdown measures, foreign funds have started selling down their positions in recent months in response to an ongoing liquidity crisis in the property sector as well as disappointing growth readings.

JAPAN
Japan’s Nikkei 225 expected to hit three-decade high of 35,000 by mid-2024
(21 November 2023) According to analysts polled by Reuters, Japan’s Nikkei 225 is expected to hit a three-decade high of 35,000 by end-June 2024. According to the Reuter’s poll, the median forecast for the Nikkei’s level in mid-2024 is 35,000, with responses ranging from 31,143 to 39,500. All forecasts expect continued earnings growth, despite many also expecting the tailwinds from a weaker yen starting to dissipate with the Bank of Japan beginning to end its super-accommodative stance and the US Federal Reserve’s tightening cycle peaking out. The Nikkei 225 started this week by pushing to its highest level since March 1990 at 33,853.46 following a three-week rally.

INDONESIA, UNITED STATES
Indonesia and the United States agree to elevate ties to Comprehensive Strategic Partnership
(13 November 2023) On 13 November, 2023, Indonesian President Joko Widodo and US President Joe Biden met at the White House in Washington D.C. Both leaders agreed to enhance bilateral ties to a Comprehensive Strategic Partnership, describing it as an ‘”unprecedented level of cooperation, built on shared values of democracy and pluralism”. It was reported that both leaders had also kicked off preliminary discussions toward a critical minerals agreement. The United States has sought to expand minerals trade with Indonesia to curb its dependence on China. Both parties are seeking to sign a limited free trade agreement that would allow electric vehicles made using Indonesian nickel to be subject to subsidies created under the Biden administration’s Inflation Reduction Act (IRA). According to a fact sheet released by the White House in the aftermath of the meeting, both parties also agreed to enhance cooperation in climate change, digital connectivity, and defense.

MALAYSIA
Bursa Malaysia sees net inflow of US$143.37 million for week ending 10 October, 2023
(14 November 2023) According to MIDF Research, Bursa Malaysia saw a net inflow of US$143.37 million for the week ending 10 October, 2023. Foreign investors maintained their net buying stance on Bursa Malaysia for the second consecutive week. According to MIDF Research, the acquisition was nearly four times the amount purchased in the previous week, with every day of the week recording net buying. The top three sectors with net foreign inflows for the week were financial services (US$41.19 million), utilities (US$26.08 million), and healthcare (US$23.58 million). Meanwhile, energy (US$5.04 million), consumer products and services (US$4.90 million), and REITs (US$317,796.75) were the only three sectors that recorded net foreign outflows.

SINGAPORE, JAPAN
Singaporean property investor to build two data centers in Osaka for US$660 million
(14 November 2023) Singaporean property investor SC Capital Partners plans to build two data centers in Osaka, Japan, for US$660 million. The first data center is slated to open in 2027. SC Capital plans to lease the data centers to corporate clients before eventually selling them. After the sale, the fund plans to operate the properties for a fee. Demand for data centers has grown with the rise of 5G communication and artificial intelligence technologies. As part of their business continuity plans, many Japanese companies are seeking backup locations for their data in Osaka as an alternative to Tokyo. SC Capital invests in data centers across the Asia-Pacific region through its subsidiary SC Zeus Data Centers.

VIET NAM, UNITED STATES
Vietnamese IT company FPT on acquisition offensive in the US
(14 November 2023) Vietnamese information technology company FPT is on an acquisition offensive in the US with an eye on the AI and chip sectors. FPT recently became a major investor in artificial intelligence startup Landing AI, which it claims will open a ‘new era for AI development in Vietnam and bring new opportunities for [Viet Nam’s] future generations to excel in high-tech fields’. FPT aims to increase annual revenue in the US to US$1 billion by 2030. FPT also recently announced in November 2023 the acquisition of US product engineering services company Cardinal Peak. FPT’s business strategy is in line with the Vietnamese government’s plans to accelerate the development of its AI and semiconductor industries.

VIET NAM
Fitch Ratings projects Viet Nam’s economy to expand by 6.3% and 7.0% in 2024 and 2025 respectively
(12 November 2023) According to ratings agency Fitch Ratings, Viet Nam’s GDP is projected to expand by 6.3% in 2024 and 7.0% in 2025. Fitch noted that domestic fiscal and monetary policies have been providing support for the economy. It was noted that Viet Nam’s economy had slowed down to 4.3% in the first nine months of 2023 amidst weak external demand and lingering headwinds in the domestic property sector. Meanwhile, household spending growth is expected to be strong over 2024 as economic headwinds subside and real GDP growth climbs back up towards trend levels of above 7% a year.

LAO PDR
Lao PDR to release tourism promotion campaign Visit Laos Year 2024 on 23 November, 2023
(14 November 2023) Lao PDR will launch the tourism promotion campaign Visit Laos Year 2024 on 23 November, 2023 to coincide with the annual That Luang festival. According to the country’s Minister of Information, Culture and Tourism, the theme for the year-long event is “A Paradise of Lao Culture, Nature and History,” with the elephant chosen as its mascot. The Visit Laos Year 2024 campaign aims to promote the development of new products and services within the Laotian tourism industry. It will also focus on improving the quality of services in line with the requirements of target market groups. Authorities hope that Lao PDR will host at least 4.6 million foreign and Laotian tourists in 2024, generating a revenue of US$712 million.

THAILAND
Thai government pitches US$28 billion Landbridge project to bypass Strait of Malacca
(14 November 2023) Thailand’s government is pitching a US$28 billion Landbridge project that will help commercial shipping bypass the Strait of Malacca by connecting the Indian and Pacific oceans through a landbridge. Prime Minister Srettha Thavisin told investors in San Francisco on 13 November, 2023 that the project will help cut travel time by an average of four days and lower shipping costs by 15%. The Landbridge project will involve seaports being constructed on either side of Thailand’s southern peninsula and linked by highway and rail networks. While the port on the western side of the peninsula will have the capacity to handle 19.4 million ton equivalent units (TEUs), the eastern one will be able to handle 13.8 million TEUs. Together, this will account for about 23% of the Port of Malacca’s total cargo. When completed, the project is expected to create 280,000 jobs and propel Thailand’s annual economic growth rate to 5.5%.

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CHINA
Imports of chipmaking equipment jumps 93% year-on-year in third quarter of 2023
(14 November 2023) Imports of semiconductor manufacturing equipment jumped 93% year-on-year in the third quarter of 2023 to US$8.7 billion. Imports of equipment for lithography, a critical part of the semiconductor manufacturing process that involves forming nanometer-scale circuit patterns, grew nearly fourfold. China’s imports of this gear from the Netherlands swelled more than sixfold. In October 2022, the United States imposed curbs on the export of chipmaking equipment to China, with Japan and the Netherlands later following suit. China’s chipmaking equipment imports from Japan rose by roughly 40% on the year last quarter. Meanwhile, imports from the U.S. grew only around 20%.

SOUTH KOREA
Seoul dubbed world’s best performing office market with occupancy rate of over 98%
(15 November 2023) Seoul has been dubbed the world’s strongest-performing office market for the last two years with more than 98% of grade-A offices currently occupied, while office rents have surged 15% year-on-year. According to data by CBRE Group Inc., Seoul had an office vacancy rate of just 1.7% in the third quarter, compared to an average of 19% in Asia. Offices have been in short supply in Seoul since 2021, with just half of what has historically been available. This shortage is expected to last until 2025, when new projects now under construction will come online. The current shortage has been attributed to redevelopment projects imposed by the government a few years ago as well as disruptions caused by the pandemic. Meanwhile, office rents are expected to grow by about 15% year-on-year in 2023.

NEW ZEALAND
Economists trim their fourth-quarter inflation forecasts after release of monthly indexes
(15 November 2023) Some economists in New Zealand have trimmed their fourth-quarter inflation forecasts after the first release of monthly indexes. With the data for October 2023 softer than expected, ANZ Bank New Zealand and Westpac Banking Corp. have both lowered their annual inflation forecasts for New Zealand to 4.8% from 5.1% previously. Indications of a more rapid slowdown in inflation adds to expectations that the Reserve Bank of New Zealand (RBNZ) won’t increase the Official Cash Rate further after having held it at 5.5% since the middle of 2023.

THAILAND, CAMBODIA
Rising energy prices push Thailand to propose resuming talks over disputed waters with Cambodia
(07 November 2023) Prompted by rising energy prices, Thai officials have proposed talks with Cambodia over the resource-rich overlapping claims area (OCA), a 27,000-square-kilometer body of water in the Gulf of Thailand claimed by both countries. The OCA is believed to contain up to 11 trillion cubic feet of natural gas plus large oil deposits, and has been contested since the seventies. In 2001, both parties agreed to a framework that states that any deal to develop energy resources within the OCA must be negotiated “simultaneously” with another on territorial issues. Thai officials are now proposing dividing the two issues and to push ahead with discussions on joint development of the OCA’s energy resources. Rising energy prices have worsened Thailand and Cambodia’s energy security, with both countries seeking new alternative energy sources now.

MALAYSIA
Employees Provident Fund allocates 83% of total fund allocation for domestic investments in 2023
(07 November 2023) The Employees Provident Fund (EPF) has allocated RM97 billion (US$20.77 billion) or 83% of its total fund allocation for domestic investments in 2023. According to Malaysia’s Ministry of Finance, the EPF has maintained an average annual fund allocation of over 80% for investments in the domestic market from 2019 to 2023. As of now, the total value of EPF investment assets stands at RM1.082 trillion (US$231.70 billion), with 61.4% allocated to domestic investments and the remaining 38.6% for overseas investments. The EPF’s overall domestic investment as of June 2023 had grown to RM665 billion (US$142.40 billion), a 9% increase year-on-year. Total domestic investment is anticipated to increase to RM700 billion (US$149 billion) by end-2023.

MALAYSIA, CHINA
Chinese automaker Geely eyeing Southeast Asian EV market through partner Proton Holdings
(08 November 2023) Chinese automaker Geely is teaming up with its Malaysian partner Proton Holdings to tap into Southeast Asia’s electric vehicle (EV) market. In 2022, Proton reached an agreement with Smart Automobile, a joint venture between Geely and Mercedes-Benz Group, to become the official distributor of Smart’s EVs in Malaysia and Thailand. In September 2023, both parties signed a memorandum of agreement toward assembling the EVs at Proton facilities in Malaysia. Earlier in July, the Malaysian government announced that Geely would invest around US$10 billion in Malaysia’s main automaking hub of Tanjung Malim in Perak state. The hub will house facilities for research and development as well as for manufacturing.

INDONESIA
Indonesia sells US$2 billion dollar-denominated sukuk in first such issuance in 18 months
(07 November 2023) Indonesia sold a US$2 billion dollar-denominated sukuk, its first such issuance in 18 months. The country issued US$1 billion worth of five-year shariah-compliant notes for general financing, as well as another US$1 billion worth of 10-year notes for expenditure. The five-year notes were priced at par to yield 5.4%, while the 2033 notes were issued at par to yield 5.6%. Indonesia’s last dollar-denominated sukuk transaction took place in May 2022. Earlier in 2023, Indonesian authorities had sold yen-denominated bonds, with funds from some tranches earmarked for ocean conservation and climate change mitigation efforts.

THE PHILIPPINES
Annual inflation slows to 4.9% in October 2023 due to slower increases in food prices
(07 November 2023) The consumer price index rose by 4.9% in October 2023, less than the 6.1% growth recorded in September and the central bank’s own projections of 5.1% to 5.9% growth. This is the first time annual inflation in the Philippines slowed in three months, and was attributed to slower increases in food prices. For instance, rice price inflation slowed down to 13.2% in October from 17.9% in September. Core inflation, which excludes more volatile food and energy prices, eased to 5.3% from 5.9% in the prior month. Year-to-date inflation (between January and October 2023) averaged at 6.4%, outside the central bank’s target range of 2% to 4%.

SINGAPORE
Singapore Airlines delivered its second-largest quarterly profit on record
(07 November 2023) Singapore Airlines Ltd. delivered its second-largest quarterly profit on record in the third quarter of 2023. Net income in the third quarter climbed 27% year-on-year to US$522 million, while revenue rose 4.3%. Demand has remained strong in the post-COVID-19 rebound, with Singapore Airlines’ passenger traffic totalling 8.9 million in the quarter, up 42% year-on-year. Group capacity is expected to reach about 92% of pre-pandemic levels on average in December 2023. Passenger load factor, an indication of how full planes are, stood at 88.6%, up 2% from the same period in 2022.

LAO PDR
Lao PDR sees 285% increase year-on-year in tourist arrivals in first nine months of 2023
(07 November 2023) According to statistics by the Ministry of Information, Culture, and Tourism, the first nine months of 2023 saw an influx of more than 2.4 million foreign tourists, marking a 285% increase year-on-year. ASEAN countries contributed over 1.6 million tourists. However, the majority of tourists would come from Western countries. This influx of tourists was attributed in part to improved accessibility facilitated by faster travel on highways and the Laos-China railway. The Laotian government is seeking to boost tourism through the upcoming Visit Laos Year 2024 campaign, and is targeting 4.6 million visitors to visit the country in 2024. Lao PDR aims to generate US$712 million in revenue in 2024.

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CHINA
China aims to reduce exposure to distressed debt as BRI marks tenth anniversary
(07 November 2023) In September 2023, China pledged to promote “small yet smart” projects as its Belt and Road Initiative (BRI) marked its tenth anniversary. This comes as Beijing seeks to reduce its exposure to distressed debt, with a recent report by AidData noting that more than half of China’s US$1.1 trillion of loans to low- and middle-income countries have entered their principal repayment periods. This figure could rise to 75% by 2030. The report also noted that some 80% of the lending involved countries in financial distress. Chinese-linked infrastructure projects with significant environmental, social and governance (ESG) risk exposure rose to 1,693 projects worth US$470 billion in 2021, up from 17 projects worth US$20 billion in 2000.

CHINA
China’s records trade surplus of US$684 billion in the first ten months of 2023
(07 November 2023) New data released on 07 November, 2023, showed that China recorded a trade surplus of US$684 billion in the first ten months of 2023. This was more than double the US$254 billion recorded during the same period in 2018. In October 2023, China’s exports dropped 6.4% year-on-year while imports grew by 3%, reversing a 6.2% contraction in September. China’s trade surplus with Europe has swelled over the past five years, with Europe now having a trade deficit with China of nearly US$428 billion in 2022 (the largest in world history). These figures have highlighted the problems exporters face in accessing the Chinese market.

SOUTH KOREA
South Korea loosens environmental regulations and cracks down on unions to attract foreign investment
(08 November 2023) The Korean government’s loosening of environmental regulations and tougher approach to labor activism is helping attract more foreign direct investment (FDI). FDI into South Korea reached US$23.9 billion for the first three quarters of 2023, up from US$21.5 billion for the same period in 2022. Four companies that produce chipmaking equipment, including ASML of the Netherlands, chose South Korea for research centers and production bases. ASML manufactures extreme ultraviolet lithography equipment, critical for producing advanced chips, for Korean tech giant Samsung Electronics.

ASEAN
Southeast Asia’s Internet economy to log slowest growth on record in 2023
(01 November 2023) According to research by Google, Temasek, and Bain & Co., Southeast Asia’s Internet economy will log its slowest growth on record in 2023. Total online spending in the region will rise about 11% in 2023 to US$218 billion, slowing from 20% the year prior and reaching its lowest rate since at least 2017. E-commerce alone is set to reach only US$186 billion in 2025, down from the previous estimate of US$211 billion. This slowdown in online spending is attributed to consumers curbing expenditures to deal with elevated inflation and interest rates. Southeast Asia’s entire internet economy is expected to reach US$295 billion by 2025, down from a previous forecast of US$330 billion. As well, private funding of companies in Southeast Asia in 2023 dropped to its lowest level in six years.

MALAYSIA, SINGAPORE
Singapore and Malaysia to jointly set up special economic zone on border area
(30 October 2023) Singapore and Malaysia will jointly set up a special economic zone on the border area in order to benefit from tighter business links and better connectivity. The Special Economic Zone will be set up in the Malaysian state of Johor, and will tap into the complementary strengths of both parties to foster economic connectivity by improving the cross-border flows of goods, investments, and people. Both parties aim to sign an agreement regarding the special economic zone in January 2024. Singapore and Malaysia were both each other’s second-largest trading partners in 2022, with bilateral trade flows reaching US$83.53 billion. Singapore was also one of Malaysia’s top sources of foreign direct investments in 2022, contributing 8.3% of its total investments.

INDONESIA, UNITED STATES
US senators oppose limited free trade agreement with Indonesia over latter’s critical minerals exports
(02 November 2023) A bipartisan group of US senators has expressed concern about the United States signing a limited free trade agreement with Indonesia, particularly concerning Indonesia’s critical minerals exports benefiting from subsidies created under the United States’ Inflation Reduction Act (IRA). The US$430 billion IRA includes a US$7,500 credit for the purchase of each new clean-energy vehicle. The credit is conditioned on the critical minerals used in making the car being sourced from within the U.S. or a country with which it has a free-trade agreement. The senators opposed to the free trade agreement argued that Indonesia’s mining and refining industry is dominated by Chinese companies, and that eligibility for the critical minerals credit should prioritize domestic producers and existing free trade agreement partners such as Canada and Australia.

THAILAND
Thailand’s total population expected to drop from 66 million to 33 million by 2083
(02 November 2023) According to experts, falling birth rates in Thailand will see the country’s total population fall from 66 million to 33 million by 2083. The working-age population (ages 15 to 64) will drop from 44 million to just 14 million, while the population of children (ages 0 to 14) will drop from 10 million to just 1 million. Meanwhile, the elderly population (ages 65 and above) will increase from 8 million to 18 million, making up 50% of Thailand’s total population. Thailand’s Total Fertility Rate (TFR) has been below the replacement level of about 2.1 children per woman since 1993. In 2022, Thailand’s TFR was as low as 1.16 in nearly every province of Thailand except Yala, the latter of which bucked the trend with a TFR of 2.27.

VIET NAM
Low-cost carrier Vietjet Aviation receives US$100 million funding to support fleet expansion
(31 October 2023) Viet Nam’s low-cost carrier Vietjet Aviation stated it had received a US$100 million funding commitment to support its fleet expansion amidst a robust post-COVID-19 pandemic earnings recovery. Preliminary agreements were signed during the third quarter of 2023 with three Viet Nam-based institutional investors, with the transactions expected to be completed this quarter. The funding will help bankroll Vietjet’s investments in new aircraft, network expansion, and supporting the airline’s growth. The funding comes as the airline reported robust post-pandemic earnings, with consolidated net profit increasing 30% to US$2.3 million in the first nine months of 2023. Vietjet has been expanding its international destinations, particularly to Australia.

LAO PDR, THAILAND
Lao PDR and Thailand mull constructing railway bridge over Mekong River
(02 November 2023) Lao PDR and Thailand have begun talks on the construction of a railway bridge over the Mekong River that would connect Vientiane, Lao PDR with Nong Khai in Thailand. Both parties also discussed the extension of the cross-border rail link from Nong Khai to Vientiane train station in order to promote tourism and enable easier access to the Laos-China railway. Both countries are seeking to further promote bilateral trade volumes by removing existing trade barriers and making it easier to do business. Both countries are also seeking to bolster tourism, especially given the influx of visitors expected during Visit Laos Year 2024.

MYANMAR, UNITED STATES
United States announces sanctions against junta’s most lucrative state-owned enterprise
(01 November 2023) The United States announced sanctions against Myanma Oil and Gas Enterprise or MOGE, the Myanmar junta’s most lucrative state-owned enterprise. The curbs prevent Americans from the provision, exportation, or re-exportation of financial services, directly or indirectly, to or for the benefit of MOGE. These newest sanctions follow repeated calls from rights groups and the military’s opponents in Myanmar to do so since the military seized power in a coup nearly three years ago. The United States claimed it was coordinating with the UK and Canada to align sanctions.

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CHINA, JAPAN, SOUTH KOREA
PMI data for China, Japan, and South Korea shows shrinking factory activity
(01 November 2023) Recent purchasing manager’s index (PMI) data for China, Japan, and South Korea showed shrinking factory activity, amidst a global economy squeezed by weaker global demand and higher prices. China’s Caixin/S&P Global manufacturing PMI fell to 49.5 in October 2023 from 50.6 in September, falling back below the 50.0 point threshold that separates growth from contraction. The results of this survey echoed official PMI data released on 31 October, 2023, which also showed an unexpected contraction in activity. Meanwhile, factory activity in Japan shrank for a fifth straight month in October, the final au Jibun Bank PMI showed. As well, factory activity in South Korea fell for the 16th straight month.

JAPAN
Government announces US$113 billion stimulus package including tax cuts and cash handouts
(02 November 2023) Japan’s prime minister Fumio Kishida announced a sweeping stimulus package of about US$113 billion to address higher cost of living. The package includes temporary cuts to income and residential taxes as well as cash handouts to low-income households. The package also includes an extension of subsidies to offset rising petroleum and electricity prices as well as support for businesses to raise wages. According to Nomura Research Institute, the temporary tax cuts and handouts are expected to boost Japan’s real GDP by just 0.2% on an annual basis. The announcement of the stimulus package comes days after the Bank of Japan ended its seven-year policy of capping long-term interest rates, setting the stage for a gradual unwinding of its ultra-loose monetary easing measures.

SOUTH KOREA
Consumer inflation accelerates for third straight month in October 2023
(02 November 2023) South Korea’s consumer inflation accelerated for the third straight month in October 2023 amidst higher food prices. The consumer price index in October rose 3.8% year-on-year, marking the fastest gain since March 2023 and beating a 3.6% gain projected in a Reuters poll. On a monthly basis, the index rose by 0.3%. Prices of fruit surged 24.6% year-on-year in October, while coffee prices jumped 11.9%. An index of energy prices combining petroleum and electricity prices also jumped by 2.8% year-on-year. It is believed by authorities that the slowing of inflation in South Korea will be more gradual than initially expected due to current geopolitical risks in the Middle East as well as abnormally low temperatures.

ASEAN
Southeast Asian fintech firms extend credit to unbanked population
(24 October 2023) Fintech firms in Southeast Asia are extending credit to young borrowers who generally lack access to traditional financial services. These include buy now, pay later services and digital banks. By partnering with e-commerce sites and telecom carriers, these fintech firms have developed credit scoring models that can assess potential borrowers’ creditworthiness based on their spending habits. According to a study on financial inclusion in Southeast Asian countries by the Centre for Impact Investing and Practices (CIIP), 63% of current fintech users are first-time customers while 57% state they do not have access to alternative financial services, compared with 46% and 40%, respectively, for traditional financial service providers. CCIP also found that the default rates for both fintechs and traditional nonbanks were only slightly higher than banks.

MALAYSIA
Malaysia to ban the export of raw rare earth materials, processed rare earths to be allowed
(24 October 2023) According to Malaysia’s science, technology and innovation minister, Malaysia intends to ban the export of raw rare earth materials, but will allow the export of processed rare earths. This followed the government’s announcement in September 2023 of a plan to curb exports of rare earths in order to avoid “exploitation and loss of resources, [and] guaranteeing maximum returns” for the country. It is estimated that Malaysia contains about 16.1 million tonnes of non-radioactive rare earth elements in Malaysia, estimated to be worth about US$169 billion. Said non-radioactive rare earth elements are expected to contribute as much as MYR 9.5 billion (US$2 billion) to the country’s GDP and create nearly 7,000 jobs by 2025.

INDONESIA
Angel investor network Bali Investment Club to launch US$25 million sustainability-focused investment fund
(24 October 2023) The Bali Investment Club (BIC), an angel investor network that invests in impact-driven Indonesian businesses, is seeking to launch a US$25 million venture capital fund focused on sustainability in early 2024. The BIC will co-invest in the fund alongside European and Southeast Asian limited partners. With ticket sizes ranging from US$250,000 to US$2 million, the fund will target companies in their pre-seed to Series A stages. The fund intends to generate most of the impact through agriculture-focused sectors and the circular economy. The fund will have three verticals – waste reduction and reduction of waste going to landfills, carbon dioxide reduction, and providing higher incomes to bottom-of-the-pyramid players.

SINGAPORE, MALAYSIA
Malaysian ringgit hits fresh low against Singaporean dollar
(24 October 2023) On 24 October, 2023, the Malaysian ringgit hit a fresh low against the US dollar, breaching the MYR3.50 mark to trade at MYR3.5026 against the Singapore dollar at 9:00 AM. It had closed the previous day at MYR3.4887. Between 03 January, 2023 to 23 October, 2023, the Malaysian ringgit had dropped 6.55% against the Singapore dollar. The ringgit has been weighed down by weaker exports and widening interest rate differentials with the US. Bank Negara Malaysia (BNM) had paused interest rate hikes in July 2023. In response to the recent weakening of the ringgit, BNM stated that the central bank possesses “an array of market measures” ready to boost the ringgit, should the need arise. However, these measures were not disclosed.

THAILAND
Thailand aims to foster 10,000 startups by end-2027 to boost innovation
(24 October 2023) Thailand aims to cultivate 10,000 startups in fields like agriculture and medicine by end-2027 in order to spur innovation and raise the productivity of the Thai economy. The Thai government is currently developing a four-year national innovation plan to begin in 2024 that carries the goal of expanding the number of small and midsize enterprises including startups. The government also intends to provide US$138 million to the National Innovation Agency’s grants and investment funds over the next four years, around double the money it allocated for the previous four years. Funds will be focused on five areas: agriculture, medicine, tourism, soft power, and energy.

THAILAND
Automobile production expected to reach 1.85 million units in 2023
(25 October 2023) According to the Federation of Thai Industries (FTI), automobile production in Thailand is expected to reach 1.85 million units in 2023, down from its previous forecast of 1.9 million. The downward revision by the FTI – the second this year after one in July 2023 – was attributed to authorities’ stricter scrutiny of car loan applications, which is weighing down on domestic car sales and clouding sales for the near future. The FTI has also downgraded its projections for domestic car sales from 850,000 units to 800,000 units. The FTI’s export projections for 2023, however, remain unchanged at 1.05 million units. Auto production decreased 8% year-on-year in September 2023 to 164,093 units, marking the second consecutive month of decline.

CAMBODIA
Cambodia to bank on solar energy and electricity imports to address hydropower volatility
(23 October 2023) Cambodia is banking on scaling up solar projects and electricity imports from neighboring countries to address volatility in Cambodia’s hydropower output as well as rising energy demand. Hydropower currently accounts for nearly half of Cambodia’s annual electricity usage, but output has become volatile due to increasingly frequent weather-related disruptions. Over the last two decades, Cambodia has sought to use hydropower to substitute fossil fuels. However, hydropower output in Asia in 2023 dropped at the fastest rate in decades, forcing power regulators to rely more on fossil fuels to meet demand. In the coming years, Cambodia will still see hydropower as central to its power mix.

RCEP Monitor

SOUTH KOREA, SAUDI ARABIA
Hyundai sign US$2.4 billion contract with Saudi Aramco to build gas processing plant
(24 October 2023) South Korea’s Hyundai Engineering & Construction and Hyundai Engineering have signed a US$2.4 billion contract with Saudi state-owned energy company Saudi Aramco to build a gas processing plant in Saudi Arabia. Both Korean engineering companies are affiliates of Hyundai Motor Group, and had been working on the first phase of Saudi Aramco’s Jafurah gas processing facilities project after having won the order in 2021. The US$2.4 billion contract is the second phase of the Jafurah project. Jafurah is believed to contain 200 trillion cubic feet (5.7 trillion cubic metres) of raw gas reserves. The agreement was signed during South Korean President Yoon Suk Yeol’s state visit to Saudi Arabia.

CHINA
Net capital outflows from China hits seven-year high in September 2023
(25 October 2023) Net capital outflows from China hit a seven-year high in September 2023, driven by foreign companies scaling back their operations within the country as well as wealthy Chinese shifting funds abroad. According to China’s State Administration of Foreign Exchange, which tracks monthly international financial transactions by domestic banks on behalf of businesses and households, China’s net capital outflow reached US$53.9 billion in September. This is the largest amount since January 2016, when China recorded a net outflow of US$55.8 billion. Capital outflows related to direct investments, such as the construction of manufacturing plants, reached US$26.2 billion in September, roughly half the total and the largest amount since 2010, when comparable data first became available.

AUSTRALIA
Inflation accelerates to 1.2% in the third quarter of 2023, up from 8.0% in second quarter
(25 October 2023) According to the Australian Bureau of Statistics, Australia’s headline consumer price index (CPI) rose by 1.2% in the third quarter of 2023, up from 0.8% in the second quarter. At an annual rate, headline CPI was 5.4% compared with 6.0% in the second quarter. In September alone, headline consumer prices were 5.6% higher year-on-year, accelerating from the 4.9% recorded in July and 5.2% in August. The most significant price rises in the third quarter were a 7.2% rise in automotive fuel, while rents rose 2.2%, electricity by 4.2% and the cost of new homes by 1.3%. The rise in rent was slower than the 2.5% rise recorded in the June quarter. The Reserve Bank of Australia has left its key rate unchanged at 4.1% for the past four months.