ASEAN
ASEAN-5 economies expected to grow by 4.5% in 2023 according to IMF
(11 April 2023) According to the IMF’s World Economic Outlook April 2023, the ASEAN-5 economies are projected to grow by 4.5% in 2023. According to the IMF, the ASEAN-5 is composed of Indonesia, Malaysia, the Philippines, Singapore, and Thailand. This is an upgrade of 0.2% from the previous projections made by the IMF in the World Economic Outlook for January 2023. The grouping is also expected to grow by 4.6% in 2024, a downgrade of 0.1% from the previous projections made in January. On a country-by-country basis, the Philippines is expected to grow the fastest within ASEAN in 2023 at 6.0% growth, followed by Cambodia and Viet Nam, which are both expected to grow at 5.8%.

THAILAND, CHINA
US$5.4 billion China-built line connecting Kunming and Beijing currently delayed
(12 April 2023) A US$5.4 billion China-built line that aims to connect Bangkok and Kunming in China via Lao PDR is expected to be operational by 2028. The project is part of China’s Belt and Road Initiative (BRI) and is currently delayed, having first been proposed to the Thai government in 2010. Under the deal signed by the Thai government, Thailand will cover all project expenditures while using Chinese technologies. When the project is complete, trains will run from Bangkok to Nong Khai, on the Mekong River border with Lao PDR, at up to 250 km/h. Among the reasons for the delay of the project including ongoing attempts by activists to protect some old stations due to be demolished in order for newer stations to be built.

THAILAND
Apple in talks with suppliers to manufacture Macbooks in Thailand
(13 April 2023) Apple is in talks with its suppliers to manufacture Macbooks in Thailand, as the company seeks to diversify its supply chains away from China amidst geopolitical tensions. Apple has already been manufacturing its Apple Watch in Thailand for more than a year. Apple and its suppliers are discussing possible assembly and production of components and modules for MacBooks in Thailand, with final assembly to take place in Viet Nam. Apple had already started mass production of Macbooks in Viet Nam in the first half of 2023, making it the first time the flagship product will be made outside of China. Thailand has emerged as a beneficiary of the ongoing U.S.-China trade war, with many servers, data centers, and printer and automotive suppliers having set up factories in the country since 2018.

INDONESIA, CHINA
Jakarta-Bandung High-Speed Railway expected to be operational by August 2023
(11 April 2023) According to Indonesia’s coordinating minister for maritime and investment affairs, the Jakarta-Bandung High Speed Railway is expected to be operational by August 2023. The project is part of China’s Belt and Road Initiative (BRI), and the 142-kilometer rail line is set to link Jakarta to the city of Bandung in West Java. The project is spearheaded by the Indonesian-Chinese consortium PT Kereta Cepat Indonesia China (KCIC), and has been beset by delays and cost overruns of various kinds since the Indonesian government first awarded the contract for the project in September 2015. While the project was initially supposed to cost US$5.5 billion, cost overruns have now seen the total cost of the project increase to US$7.2 billion.

SINGAPORE
Customer satisfaction with finance sector in Singapore increases in fourth quarter of 2022
(12 April 2023) Customer satisfaction with the finance sector in Singapore had increased in the fourth quarter of 2022. These findings were part of a national study on customer satisfaction carried out by the Singapore Management University’s Institute of Service Excellence (ISE), which is conducted quarterly and annually. According to the Customer Satisfaction Index of Singapore, the finance sector’s score improved by 0.9% year on year in the fourth quarter of 2022, rising to 75.5 points out of a total score of 100. Within the finance sector, the banks sub-sector scored 75.6 points, up 1% year on year, while the credit cards sub-sector scored 73.8 points, a 0.9% increase. But e-payment apps fell by 1.8%, scoring 75.6 points. The increase in customer satisfaction was attributed to recent steps taken by banks to boost their online banking security. However, the study also found that customers were on the whole less willing to try out newly established digital banks.

SINGAPORE
Update to visa scheme to see AI engineers and alternative meat scientists favored
(10 April 2023) The Singapore government is in the process of updating the country’s visa scheme, with the changes to come into effect in September 2023. The government has released a list of 27 jobs that will be favored in the updated point-based assessment process. The new scheme shifts the focus from an individual’s qualifications towards companies’ contributions to the local economy. Applicants for Singapore’s Employment Pass for 27 jobs in six industries – agritech, financial services, green economy, health care, infocomm technology and maritime – will be favored under the new scheme. Within the ICT sector, the government is seeking more AI and data scientists, cloud and cybersecurity specialists, and software developers. In the financial sector, investment advisers for high-net-worth individuals and family offices are being sought. In agritech, the talent being favored include alternative protein food application scientists. 

MALAYSIA
Foreign investors purchase US$983 million worth of Malaysian government bonds in March 2023
(13 April 2023) According to data by Bank Negara Malaysia (BNM), global investors purchased US$983 million worth of Malaysian government bonds in March 2023, the most since January 2022. Based on standard deviation analysis, the magnitude of increase in those flows compared with the five-year average was bigger than in the region’s other major economies. Malaysian bonds are currently attractive due to inflation showing signs of stabilizing within the country. Malaysia also has a strong current account given oil and commodity exports. Even though the yields of Malaysian debt are relatively low, they offer a yield pickup if traders short the ringgit against the dollar for hedging via forward contracts as long as the Malaysian currency doesn’t strengthen. BNM has kept monetary policy unchanged at its past two meetings.

RCEP Monitor

ASEAN, UNITED KINGDOM
CPTPP members formally agree to the UK’s entry into Pacific trading bloc
(31 March 2023) Trade officials from the 11 member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 31 March, 2023 agreed on the U.K.’s entry into the mega-trading bloc. A joint ministerial statement welcomed the ‘substantial conclusion of the negotiations for the accession of the U.K. to the CPTPP’. The UK will be the CPTPP’s first non-founding member since its launch in 2018. The UK’s entry into the CPTPP is expected to be finalized at the upcoming CPTPP ministerial meeting in Auckland, New Zealand in July 2023. The UK applied for membership in the CPTPP in 2021, a year after it exited the European Union. With the entry of the UK, the total GDP of the members of the CPTPP will expand to 15% of the world’s total, from the current 12%. 

ASEAN
Southeast Asian tech startups facing shortage of tech talent
(04 April 2023) According to a study on tech roles at startups in Singapore, Indonesia, and Viet Nam carried out by Glints and Monk’s Hill Ventures, Southeast Asian startups are facing a shortage of tech talent despite recent mass layoffs by large tech companies. In 2022, Singapore-based Sea laid off more than 7,000 employees, while Indonesia-based GoTo also laid off around 12% of its workforce. According to the study, there is now a redistribution of tech talent from big tech companies and growth-stage companies to early-stage startups. However, early-stage startups are competing for these tech talents with established businesses in the banking and retail sectors which are in the process of digitalizing their operations. Amidst growing recessionary pressures and weaker fundraising prospects, startups are less able to offer competitive pay to attract said talent.

MALAYSIA, CHINA
Malaysia and China to discuss Asian Monetary Fund to reduce US Dollar dependency
(04 April 2023) Malaysia’s Prime Minister Anwar Ibrahim stated that China is open to talks with Malaysia on forming an Asian Monetary Fund in order to reduce reliance on the US Dollar and the International Monetary Fund. Anwar stated that he had initially mooted forming the Asian Monetary Fund during his first stint as finance minister in the 1990s. He stressed that with the current strength of the economies in countries such as China and Japan, this plan is more feasible now. Anwar also stated that Malaysia’s central bank is already working on enabling both Malaysia and China to negotiate on trade matters using the ringgit and renminbi respectively. During a recent state visit to China, Anwar managed to secure US$39 billion in promised investments.

INDONESIA
Annual inflation falls to seven-month low of 4.97% in March 2023
(03 April 2023) Annual inflation in Indonesia fell to 4.97% in March 2023, its lowest rate since August 2022. This was a drop from the 5.47% annual inflation seen in February 2023. Meanwhile, the annual core inflation rate was measured at 2.94% versus the 3.09% measured in February 2023. Indonesia’s statistics bureau noted that price pressures in 2023 were below those seen in recent years, excluding the early years of the COVID-19 pandemic. It was noted that consumption patterns have not returned 100% to pre-pandemic levels. Inflation in Indonesia has stayed above the central bank’s target range of 2% to 4% since the middle of 2022 amid high global food and energy prices. Authorities have argued that inflation would likely return to within its target range in September 2023.

THAILAND
Thailand to continue its investments into its industrial east despite upcoming elections in May 2023
(04 April 2023) Thailand will proceed with its five-year investment of US$64.31 billion into its industrial east despite an upcoming general election in May 2023. The 2023 to 2027 plan in the Eastern Economic Corridor (EEC) will include investments in sectors such as electric vehicles and medical technologies. The EEC covers three provinces east of Bangkok, and is considered a centerpiece of the current government’s efforts to boost growth and encourage investments, particularly in high-tech industries. Authorities stated that investments of more than US$11.69 billion a year during the five-year period would be achieved as Thailand is well placed to attract investors seeking to relocate their operations. However, certain projects are behind schedule, such as a rail project linking Thailand’s main Suvarnabhumi airport to Bangkok’s second international airport at Don Mueang.

VIET NAM
Viet Nam’s rice exports jumped by 30.2% to highest level in past 12 years in Q1 2023
(05 April 2023) Viet Nam’s rice exports jumped by 30.2% to US$952 million in the first quarter of 2023, its highest level in the past 12 years. The country recorded a 19.3% year-on-year increase in its rice exports in the January-March period to 1.8 million tons. The average export price in the same period was estimated at US$531 per tonne, an increase of 9.2% year-on-year. According to the Vietnam Food Association, Vietnamese rice export prices have been on a rising trend since late 2022. The prices of Viet Nam’s 5-per cent broken rice was quoted at US$468 to US$472 per tone as of end-March, up 5.6% from February, while premium-grade jasmine rice rose about 2% to US$548 to US$552 per tonne.

SINGAPORE
Singaporean grocery chain Happy Farms secures about US$1.5 million in funding
(04 April 2023) Singaporean gourmet grocery chain Happy Farms secured about US$1.5 million from Heliconia Capital, a wholly-owned subsidiary of Temasek Holdings. Heliconia managed to acquired new Series B-1 shares in Little Farms, according to the latter’s filings with Singapore’s Accounting and Corporate Regulatory Authority (ACRA). Happy Farms is also issuing a US$9.05 million exchangeable bond to Heliconia, which entitles the latter to ordinary shares upon maturity. Heliconia also acquired a call option to invest up to US$3.8 million in Little Farms via the subscription of additional Series B-1 shares. Happy Farms is a boutique grocery chain which sources organic fruit, vegetables and fresh produce from independent suppliers and farmers in Australia, Europe, and other regions. It opened its first store in 2016 and has since scaled to 10 outlets across the country.

RCEP Monitor

ASEAN
Southeast Asia leads global growth in cloud infrastructure
(29 March 2023) Southeast Asia is leading global growth in cloud infrastructure, as foreign cloud service providers and data center operators invest to create new hubs in economies like Thailand, Indonesia and Malaysia. According to market researcher IDC, Southeast Asia’s total cloud infrastructure revenue rose to US$2.18 billion in 2022, an increase of 25% year-on-year. Singapore accounted for around half the total, while the Philippines, Indonesia, Viet Nam, Thailand and Indonesia each logged annual growth of over 30%, outpacing global markets which expanded by 29%. After Singapore, Thailand was the biggest regional market in 2022 with US$338 million in revenue, followed by Indonesia at US$313 million, and Malaysia at US$221 million. Japan’s NTT Group intends to invest US$90 million to build its third data centre in Bangkok, while Amazon’s cloud computing unit earlier in March 2023 committed to investing US$6 billion in Malaysia over the next 14 years.

INDONESIA
Indonesian nickel company Merdeka Battery Materials plans US$580 million IPO
(28 March 2023) Indonesian nickel company Merdeka Battery Materials plans to raise up to US$580.29 million in an initial public offering (IPO) in April 2023. Merdeka Battery Materials will be the second Indonesian nickel firm to go public in 2023 after PT Trimegah Bangun Persada of the Harita conglomerate group. Nickel-rich Indonesia plans to become a major player in the electric vehicle industry. The company plans to sell 10.24% shares in the IPO at around US$0.05 a piece in the offering set for 12 to 14 April. However, an additional 1.01%  shares could be issued in the case of oversubscription. The company plans to use the proceeds from its IPO to repay some US$300 million in outstanding loans, capital expenditure, and working capital.

THE PHILIPPINES
The Philippines’ central bank may pause rate hike cycle in May 2023
(26 March 2023) The Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP), may pause its rate hike cycle at its next policy meeting in May 2023. Finance Secretary Benjamin Diokno had noted that monetary authorities had ‘done enough’ in addressing inflation. The BSP raised the overnight reverse repurchase rate by 25 basis points on 23 March, 2023 to 6.25%, the highest since 2007. Within the past year, rate hikes have cumulatively added up to 425 basis points. The BSP later stated that it might not hike rates at its next meeting if prices decline on a month-on-month basis. Annual inflation eased to 8.6% in February 2023 from a 14-year high of 8.7% in January 2023.

MALAYSIA
Malaysian stock exchange enhances Main Market listing requirements
(27 March 2023) The operator of Malaysian stock exchange Bursa Malaysia Securities Bhd announced enhancements to the Main Market listing requirements to facilitate the offering of listed real estate investment trusts (REIT) and exchange-traded funds (ETS) with waqf feature. The amendments will take effect on 03 April, 2023. Under the Waqf Amendments, Bursa Malaysia has enhanced the post-listing disclosure framework of Islamic REITs and ETFs to provide transparency on the waqf arrangement. Bursa Malaysia’s CEO noted that the enhancements will promote the growth of waqf and Sustainable and Responsible Investment assets, helping further promote Bursa Malaysia’s position as a leading global Islamic finance marketplace.

VIET NAM
Viet Nam’s retail market expected to grow to US$350 billion by 2025
(27 March 2023) According to Viet Nam’s Ministry of Industry and Trade, the Vietnamese retail market is currently worth US$142 billion and is expected to grow to US$350 billion by 2025. In January 2023, total retail sales of consumer goods and services decreased by 6% month-on-month to more than US$20.4 billion due to weaker demand as many commodities were purchased ahead of the Lunar New Year. Year-on-year, total retail sales rose by 13%. For the first two months of 2023, total retail sales advanced 13% year-on-year to over US$42.3 billion. The Vietnamese retail market has always been appreciated by foreign investors due to its stable and positive growth. Thailand’s Central Retail Corporation (CRC) recently announced a capital increase of US$1.45 billion in Viet Nam, with goals to double the number of its stores to 600 in 57 of Viet Nam’s 63 provinces. Meanwhile, Japanese retail giant Aeon Co, Ltd is also accelerating the opening of shopping malls in Viet Nam to nearly three times to about 16 by 2025.

SINGAPORE
Seven out of ten businesses ready to relocate their staff out of Singapore due to rising rental costs
(27 March 2023) According to a recent survey carried out by the European Chamber of Commerce, Singapore (EuroCham), seven out of ten businesses are ready to relocate their staff out of Singapore if there is no relief from rising rental costs. It was noted that this is the first time in the past ten years that companies have expressed a readiness to leave Singapore should rental prices continue to rise. The survey also found that 50% of employees who have had to renew their residential housing lease in 2023 or in 2022 had faced rental increases of more than 40%, while a further 36% experienced hikes of between 20% to 40%. As well, some 62% of employees had either received less than S$1,500 a month or nothing at all from their companies to offset the increase in rent. When companies participating in the survey were asked to indicate the most important factors that have led to an increase in operational costs, 22% of respondents cited “increased cost of rental: residential allowance for employees”.

CAMBODIA
Cambodia to require over US$9 billion in investments in power sector
(29 March 2023) Cambodia will require over US$9 billion in investments through to 2040 to develop new power plants and expand the national grids, according to its Master Power Development Plan 2022-2040. Over US$2.5 billion has already been approved between 2022 and 2025. The remaining US$6.5 billion will be for renewable energy investments, including in hydropower dams, solar power projects, battery energy storage systems, natural gas-fired power plants, and biomass power plants. It is forecasted that Cambodia’s electricity demand will increase to 24 billion kilowatt hours (kWH) by 2025, to 36 billion kWh by 2030, to 50 billion kWh by 2035, and to 66 billion kWh by 2040. According to its Master Power Development Plan, Cambodia will not add new coal-fired power plants except for the coal projects that were approved by 2019, instead encouraging investments in clean energy.

RCEP Monitor

MALAYSIA, INDONESIA
Malaysia losing out to Indonesia in attracting foreign direct investment
(21 March 2023) Over the last few years, Malaysia has been increasingly losing out to Indonesia in the race to attract foreign direct investment. According to data by UNCTAD, since 2008 Malaysia has attracted less annual investment than Indonesia in every year except 2016. In 2021, Malaysia was able to attract US$11.6 billion in investments, while Indonesia drew US$20.1 billion. Among Indonesia’s advantages over Malaysia include its vast resources, larger population base, relatively stable politics, favorable investment climate, and finally strong growth prospects. In particular, Indonesia’s digital economy has proved particularly attractive to international investors. Malaysia’s government has recognized the need to make the country more attractive to FDI, stating in February 2023 its commitment to easing its procedures for doing business. Malaysia’s Prime Minister Anwar Ibrahim has stated that investment bodies will take the lead to speed up approvals for projects with high potential.

MALAYSIA, SOUTH KOREA
Malaysia secures US$5.43 billion in potential investments from South Korea
(21 March 2023) According to the Malaysian Investment Development Authority (MIDA), a trade and investment mission to South Korea secured some US$5.43 billion in potential investments. Among the Korean companies that have expressed interest in investing in Malaysia include SKC, POSCO Holdings, Coway and LOTTE Fine Chemical. SKC is considering making additional investments in the electric vehicle (EV) segment in Malaysia due to increasing worldwide demand for Li-ion batteries. POSCO Holdings, for their part, plans to develop a carbon capture storage project and further expand its steel processing plant in Malaysia in order to support new business segments such as EV, batteries, and green energy. Coway plans to establish its first manufacturing hub and research and development (R&D) facilities outside of South Korea, while Lotte Fine Chemical stated they plan to invest in Malaysia’s chemical sector. In 2022, South Korea ranked as Malaysia’s seventh largest foreign investor in Malaysia in terms of approved investments.

THAILAND
Thailand raises its rice export target for 2023 to 8 million tonnes
(22 March 2023) Thailand raised its rice export target for 2023 to 8 million tonnes, up from its previous target of 7.5 million tonnes, due to higher rice output. Thailand’s rice exports in the first two months of 2023 were recorded at 1.39 million tonnes, with 52% shipped to Asian markets. Thailand’s government plans to increase its rice output by 6% from the previous season to 29.3 million tonnes of paddy in the 2023/24 season. Of the total production, 10.12 million tonnes of milled rice are allocated for domestic consumption, while eight million tonnes are set for export, while another 1.41 million tonnes of paddy are reserved for seed stock. Thailand exported 7.69 million tonnes of rice in 2022, beating its annual target of 7.5 million tonnes. Its top export markets included Iraq, South Africa, and China.

THE PHILIPPINES
Central bank slows rate hike to 25 basis points amidst stubbornly high inflation
(23 March 2023) The Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP), slowed its key rate hikes to 25 basis points on 23 March, 2023. This comes as the BSP attempts to combat stubbornly high inflation. With core inflation rising in February 2023 despite a modest decline in headline inflation, the BSP deemed further monetary policy action necessary to address broadening price impulses attributed to robust domestic demand and lingering supply-side constraints. The rate hike follows a 50 basis point increase in February. The benchmark rate now stands at 6.25%. The central bank has now cumulatively raised the key rate by 4.25 percentage points since it kicked off a tightening cycle in May 2022.

THE PHILIPPINES
Philippines’ export groups request exemption from 12% VAT on local purchases
(21 March 2023) The Philippines’ largest exporter groups urged the government to exempt their local purchases from a 12% value-added tax (VAT) in order to ensure they remain competitive in the international market. A tax regulation implemented in June 2021 began imposing a 12% VAT on sales transactions that were previously not taxed, including purchases of exporters. In July 2021, the Philippines’ tax agency suspended that rule amidst the COVID-19 pandemic and plans to review the regulation further. The exporter groups in question included business-process outsourcing firms, electronics and garments groups. They warned that failure to address their concerns might have a crippling consequence on the parts localization initiatives of exporters, and will particularly affect their local suppliers.

SINGAPORE
Local shares make second consecutive session of gains on 22 March, 2023, on expectations global banking crisis is abating
(22 March 2023) Local shares made a second consecutive session of gains on 22 March, 2023. This was attributed to expectations that the global banking crisis may be abating. The Straits Time Index (STI) rise by 47.05 points, or 1.5%, to 3,220.98, with gainers outstripping losers 386 to 208 on trades of 1.87 billion shares worth US$1.39 billion. It was noted that the absence of any recent negative developments in the global banking sector has brought more calm to traders. Local Singaporean banks were among the top gainers, with DBS rising 1.8% to US$33.50, OCBC rising 1.3% to US$12.36, and UOB jumping by 2.9% to end at US$29.50.

VIET NAM
Government considering extending e-visa stay from 30 days to 90 days
(22 March 2023) The Vietnamese government is considering allowing e-visa holders to be able to stay in Viet Nam for up to 90 days, three times longer than the current 30 days. The e-visa, which is single entry, is currently being granted to citizens from 80 countries, and authorities are to decide on the list of countries and territories whose citizens are granted e-visas and the list of international border gates that will allow entry and exit with e-visas. The government is also considering extending the visa-free duration of stay to 30 days (from the current 15 days) for citizens from countries where Viet Nam has unilaterally waived visa requirements. These countries include many in Europe as well as South Korea and Japan. Viet Nam is targeting to welcome eight million tourists into the country in 2023.

RCEP Monitor

THAILAND, EUROPEAN UNION
Thailand and the EU agree to restart negotiations on bilateral trade agreement
(16 March 2023) Thailand and the EU have agreed to restart negotiations on a bilateral free trade agreement, with an aim to conclude a deal by 2025. Trade negotiations had been stalled for nearly a decade after the EU called off further talks following a military coup in Thailand in 2014. Senior officials intend to begin talks in July 2023 in Thailand, during which negotiations will cover trade in goods and services as well as investment in key Thai industries where the EU is keen to increase its share, such as renewable energy, electric vehicles and chipmaking. Should the talks succeed, it will be the EU’s third bilateral free trade agreement in Southeast Asia after Singapore in 2019 and Viet Nam in 2020. The EU currently represents Thailand’s second-largest destination for Thai outbound capital, accounting for 14% of FDI from Thailand, as well as the country’s fourth-largest export market.

THE PHILIPPINES
Filipino conglomerate Prime Infrastructure Capital Inc aims for new gas wells and solar investment
(15 March 2023) Filipino conglomerate Prime Infrastructure Capital Inc, which has interests spanning energy, water distribution and waste management, aims to drill new natural gas wells at its Malampaya concession, which is the Philippines’ only major natural gas project. The company is also seeking other gas fields to ensure long-term output. The company is also seeking to invest in other energy projects, including an investment of at least US$3.7 billion in solar power and battery energy storage systems. Prime Infrastructure is planning an initial public offering (IPO) sometime in 2023. The Malampaya gas project, located offshore Palawan province, started commercial operations in 2001, and supplies power plants that deliver about a fifth of the country’s electricity requirements.

THE PHILIPPINES
The Philippines posts largest trade deficit in five months in January 2023
(14 March 2023) The Philippines posted its largest trade deficit in five months in January 2023. This was attributed to exports falling sharply, pointing to a worsening trade balance that could put pressure on the peso in the near term. The trade deficit in January widened by 27.2% to US$5.74 billion, the biggest since the record monthly deficit of US$6 billion in August 2022, from US$4.5 billion in January 2022. Exports saw the steepest decline in nearly three years, with a decrease of 13.5% year-on-year to US$5.2 billion, while imports grew 3.9% year-on-year to US$11 billion. It was the first monthly rise for imports in three months. For the full year of 2022, the Philippines’ trade deficit increased by 38% year-on-year to US$58.3 billion, as imports showed signs of recovery from market disruptions caused by the global outbreak of COVID-19 in 2020.

SINGAPORE
Private home sales rise month-by-month in February 2023 despite increased buyers’ stamp duty
(15 March 2023) Private home sales rose month-on-month in February 2023 despite an increased buyers stamp duty for properties of higher value. According to data by the Urban Redevelopment Authority, developers sold 432 units in February 2023, a nearly 10% jump from the 393 units sold in January. On a year-on-year basis, sales decreased by 20.3% from the 542 units sold in February 2022. Meanwhile, the number of units launched dipped from 410 in January to 401 in February. In Singapore’s budget for fiscal year 2023 announced in February, the buyer’s stamp duty for both residential and non-residential properties of higher value was increased. For homes, the portion of the value in excess of S$1.5 million and up to S$3 million will now be taxed at 5%, an increase from 4%. The value of the property in excess of S$3 million will be taxed at 6%. The changes took effect on 15 February, and are expected to impact 15% of homes. Despite the increase, many buyers have not been put off buying residential property.

INDONESIA
Indonesia’s central bank holds interest rates unchanged on 16 March, 2023
(16 March 2023) Indonesia’s central bank held interest rates unchanged on 16 March, 2023, and maintained its stance that its previous hikes were sufficient to steer inflation back to within target later in 2023. Bank Indonesia (BI) left unchanged its benchmark 7-day reverse repurchase rate at 5.75%, where it had been since January 2023. BI’s other main policy rates for overnight deposit and lending were also kept steady at 5% and 6.5% respectively. BI’s previous rate hikes between August 2022 and January 2023 totalled 225 basis points. Headline inflation in Indonesia picked up slightly to 5.47% in February. BI has stated that inflation was on track to get back within its 2% to 4%  target range from September 2023 onwards, while core inflation would remain within target the whole year.

MALAYSIA
Fitch Solutions claim Malaysia is emerging as key digital infrastructure hub in Asia Pacific region
(16 March 2023) Fitch Solutions Country Risk and Industry Research stated that Malaysia is emerging as one of the key digital infrastructure hubs in the Asia-Pacific. The rating agency attributed this development to the government’s digitalisation plans, easing regulatory landscape, and technology-friendly policies. The company ranks Malaysia as one of the top markets for infrastructure-led utility businesses regionally and globally, providing the appropriate platform for data centre operations. Among the examples of companies investing into Malaysia’s digital infrastructure include Amazon Web Services (AWS), who recently unveiled plans to invest US$6 billion by 2037 to boost cloud services in Malaysia. As well, Microsoft and Google had also announced plans to build data centres in Malaysia as of March 2023, albeit without specific location plans.

SINGAPORE, CAMBODIA
Electricity retailer Keppel Energy receives conditional approval to import 1GW of renewable energy annually from Cambodia
(16 March 2023) Singaporean electricity retailer Keppel Energy has received conditional approval to import 1 gigawatt (GW)  of hydropower, solar and potentially wind power annually from Cambodia’s Royal Group Power Company via new subsea cables that would transmit the electricity over more than 1,000km. The 1GW of electricity supplied over a year will be able to power up to all households in Singapore (about 1.4 million) annually, and could potentially be scaled up to include renewable energy sources from Lao PDR as well. The deal will be finalised after Keppel has conducted further studies on the project’s viability and secured regulatory approvals from the relevant governments. Singapore is targeting importing 4GW of low-carbon electricity by 2035, which will make up about 30% of Singapore’s projected energy supply in the same year.

RCEP Monitor

MALAYSIA, SINGAPORE
Malaysian government considers reviving Kuala Lumpur-Singapore High-Speed Rail project
(08 March 2023) The Malaysian government has signaled its interest in reviving the Kuala Lumpur-Singapore High Speed Rail (HSR) project. On 08 March, 2023, the Malaysian Transport Minister Anthony Loke stated that while the government has not yet decided to revive the project, it also has no intention to shelve it. He stated that the government is willing to hear proposals from the private sector, as long as it is not funded by the government. He stated that many parties are keen to pursue the project, and that authorities are open to new funding mechanisms and implementation models. The HSR project was first announced by Malaysia and Singapore in 2013, and its estimated cost was US$15 billion. Following a change of government in 2018, Malaysia subsequently requested that the project be suspended. On 01 January, 2021, both parties agreed to terminate the project.

INDONESIA
Indonesian government approves new list of tax holidays for businesses investing in new capital Nusantara
(09 March 2023) Indonesia’s government has approved a new regulation that offers incentives for businesses investing into the country’s planned new capital Nusantara, including tax holidays of up to 30 years and 95 years of land use permits. Among the specific incentives included in the new regulation include a 100% exemption from corporate income tax for local and foreign companies if they are registered as taxpayers in Indonesia and invest in several priority areas in Nusantara. Companies investing in the top two priority sectors — infrastructure and public services — will be able to apply for a 30-year tax holiday if they begin investing between now and 2030, with eligible investments including projects in renewable energy, toll roads, ports and airports, public transports, industrial parks, health care and education. Banks, insurers, and Islamic finance companies will be eligible for a 100% tax exemption for business units set up in Nusantara for up to 25 years if they invest between 2023 and 2035, and for 20 years for the period between 2036 and 2045. Meanwhile, the new regulations also offers exemption from personal income tax for Nusantara-based employees.

THAILAND
Thai government offers tax breaks for companies issuing digital tokens for investments
(07 March 2023) On 07 March, 2023, Thailand’s cabinet agreed to waive corporate income tax and value-added tax for companies that issue digital tokens for investment. Companies will have access to alternative ways of raising capital through investment tokens as well as traditional methods such as debentures. According to estimates by officials, there will be US$3.71 billion worth of investment token offerings over the next two years. After Thailand’s Securities Exchange Commission began regulating digital assets, cryptocurrencies have gained popularity in Thailand in recent years. In 2022, the government relaxed tax rules in crypto trading to promote industry development. However, regulators have also banned the usage of digital assets as a means of payment, due to concerns it may impact Thailand’s financial stability and overall economy.

THE PHILIPPINES
Core inflation rises by 7.8% year-on-year in February 2023, its fastest pace since March 1999
(07 March 2023) Core inflation in the Philippines rose by 7.8% year-on-year in February 2023, its fastest pace since March 1999. This was a slight rise from the 7.4% rise recorded in January 2023. Core inflation does not include volatile food and energy costs. Meanwhile, headline inflation rose by 8.6% year-on-year in February, a slight drop from the 8.7% recorded in January. On a month-by-month basis, there was no change in price growth. The slight drop in headline inflation was attributed to transport, which posted a 9% rise in February compared to 11% in January. The Philippines’ central bank sees inflation staying above the 2% to 4% target until the early fourth quarter of 2023.

VIET NAM
Viet Nam looking to purchase its first LNG shipment after drop in prices
(09 March 2023) Viet Nam is looking to purchase its first LNG shipment following a rapid drop in spot prices. State-owned company PetroVietnam Gas JSC is in discussions with suppliers about procuring an LNG shipment for this summer to be sent to the Thi Vai terminal. The company is seeking government approval before releasing a tender to purchase a shipment. Previous LNG import plans from Viet Nam to Hong Kong were delayed after the global energy crisis in 2022 made shipments too expensive and scarce. LNG imports is expected to help Viet Nam curb its dependence on coal, which made up nearly half of its power mix in 2021, and thereby reduce emissions. Although Viet Nam has finished construction on its first LNG import terminal, operations have yet to begin.

SINGAPORE
Private sector economists raise 2023 growth projections for Singapore to 1.9%
(10 March 2023) In the latest quarterly survey by the Monetary Authority of Singapore (MAS), private sector economists have raised their 2023 growth projections for Singapore to a median of 1.9%, a slight increase from the 1.8% growth projected back in December 2022.  MAS themselves project growth between 0.5% to 2.5% for 2023. The median forecast in the survey for Consumer Price Index-All Items, also referred to as headline inflation, for 2023 was 5%, a decrease from 5.2% in December. However, the projection for core inflation, which excludes accommodation and private transport costs, was raised to 4.1% from 4% previously. MAS expects headline inflation to average between 5.5% to 6.5% in 2023, while core inflation will average between 3.5% to 4.5%.

BRUNEI DARUSSALAM
Brunei Darussalam to maintain oil and gas production at 300kboe/d in the medium term
(08 March 2023) The Bruneian Department of Energy under the Prime Minister’s Office (PMO), aims to maintain the production of oil and gas at 300 thousand barrels of oil equivalent per day (300kboe/d) in the medium term and aims to increase this to approximately 350kboe/d in the long term. According to officials, the Department of Energy has a strategic plan that requires the development of resources in the deep ocean and an increase in exploration activities. Authorities plan to spend nearly US$14.8 billion in the next five years to finance development and operational programs. This will be an increase of 15% compared to the previous five years. The country’s net income from the upstream oil and gas sector in 2022 was the highest since 2014

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MALAYSIA
Malaysia’s 2023 budget focuses on MSMEs and redistributive taxation
(25 February 2023) On 24 February, 2023, the Malaysian government introduced its budget for fiscal year 2023, with a focus on supporting MSMEs and redistributive taxation. Regarding support for the poor, the government allocated US$169 million to upskill workers under a pilot programme dubbed the People’s Income Initiative. The government also set aside US$559 million in direct cash aid for the poor, benefitting more than 400,000 recipients. In terms of support for MSMEs, the budget allocates US$74 million for micro and small businesses. The budget also reduces the income tax for middle class Malaysians by up to 2%, while also raising the income tax for wealthy Malaysians by 2%. A new tax on luxury goods will also be introduced, while the government are also mulling introducing a capital gains tax from 2024 onwards. Excise duty will also be introduced on vape products.

MALAYSIA
Authorities approve Tesla’s application to import battery electric vehicles into Malaysia 
(01 March 2023) The Malaysian government has approved Tesla’s application to import battery electric vehicles (BEVs) into Malaysia, as well as establish a head office, a Supercharger network, and an experience and service centre. Tesla’s presence in Malaysia is expected to create skilled and higher-paying job opportunities for workers in the BEV segment, while increasing the participation of local automobile companies in Tesla’s ecosystem both domestically and globally. Tesla’s entry into Malaysia is facilitated through the BEV Global Leaders initiative, which aims to help boost BEV demand in the local market and further promote the development of the entire BEV ecosystem. Malaysia hopes to leverage its established electrical and electronics ecosystem to make it a preferred investment destination for technology related to electric mobility.

MALAYSIA, BRUNEI DARUSSALAM
Malaysia expecting ‘drastic’ increase in number of Bruneian tourists visiting country
(26 February 2023) Malaysian authorities are expecting a ‘drastic’ increase in the number of Bruneian tourists visiting Malaysia, attributing this to the re-opening of the Brunei-Malaysia land and sea borders by Brunei in 2022. According to the Malaysian High Commissioner to Brunei Darussalam, Datuk Raja Reza Raja Zaib Shah, the Malaysian state of Sarawak plays a key role in bilateral relations. The envoy said the regular exchange of visits at all levels is vital to increased cooperation between both countries. Sarawak is looking to deepen its trade and investment relations with Brunei Darussalam, as well as collaborate in the areas of agriculture and tourism. Trade between Malaysia and Brunei Darussalam stood at US$2.95 billion in 2022, compared to US$1.79 billion in 2021.

THAILAND
Capital expenditure and tourism rebound to fuel Thailand’s expansion in 2023
(28 February 2023) Capital expenditure and a rebound in tourism will fuel Thailand’s growth in 2023, despite the headwinds caused by weaker exports and a possible delay in the budget for next fiscal year. The Thai government has recently approved three projects at a combined investment of US$14.9 billion, including a high-speed railway line connecting three airports, an expansion of an airport southeast of Bangkok, and a deep seaport. In terms of tourism, foreign arrivals to Thailand topped 2 million for the second straight month in January 2023. Because of these factors, Thailand’s government is sticking to its forecast of 3.8% GDP growth in 2023, even after factoring in a below-par performance in the last quarter of 2022. Headline inflation is expected to moderate to a range of 3% to 4% later in 2023 from a 14-year high of 7.86% in August 2022 as global energy and commodity prices ease.

INDONESIA
Indonesian President launches construction of US$2.6 billion hydropower plant in North Kalimantan province
(01 March 2023) On 01 March, 2023, the Indonesian government launched the construction of a US$2.6 billion hydropower plant in North Kalimantan province. Named Mentarang Induk, the plant is being developed by PT Kayan Hydropower Nusantara, a joint venture between Indonesian companies PT Adaro Energy Indonesia and PT Kayan Patria Pratama Group and Malaysian company Sarawak Energy Bhd. The plant will be linked to a planned industrial park that will house electric vehicle and battery plants, as well as aluminum and petrochemical facilities. The plant is expected to take seven years to construct. While Indonesia is a major thermal coal producer and relies on coal as its main source of power, the country has pledged to move away from the fuel before 2060.

THE PHILIPPINES
Inflation may remain at 14-year high in February 2023, pressuring central bank to sustain aggressive monetary tightening
(28 February 2023) Inflation in the Philippines may remain at a 14-year high in February 2023, putting pressure on the Bangko Sentral ng Pilipinas (BSP) to sustain its current course of aggressive monetary tightening. Consumer prices are expected to rise anywhere within the range of 8.5% to 9.3% year-on-year in February, compared with the 8.7% rise recorded in January, the fastest since November 2008. The BSP has raised rates by 400 basis points since May 2022. While the BSP’s governor recently stated that there was scope for the BSP to slow rate increases to a quarter point in March 2023, central bank officials have maintained their readiness to take action against rising inflation expectations. In contrast, Indonesia and Malaysia have paused rate increases amid signs of easing inflation.

VIET NAM
Viet Nam slashes retail prices of gasoline and other oil products by up to 2.7%
(02 March 2023) Viet Nam has slashed the prices of gasoline and other oil products by up to 2.7% in the second reduction in 2023 due to a recent drop in global oil prices The changes took effect on 28 February, 2023. Gasoline prices dropped by 0.52% to 23,320 Vietnamese dong per litre for RON95 bio-fuel and 22,420 Vietnamese dong for E5 RON92. Diesel prices went down by 2.7% to 20,250 Vietnamese dong per litre, and kerosene fell by 1.8% to 20,470 Vietnamese dong. According to the General Statistics Office, Viet Nam imported about 1.9 million tonnes of oil products from January to February 2023, up 43% from the same period in 2022. Gasoline and diesel accounted for most of the imports of Viet Nam.

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THAILAND
Thailand’s economy projected to expand by 4% in 2023 due to rebounding tourism
(22 February 2023) According to Nomura Holdings Inc, Thailand’s economy is expected to expand by 4% in 2023, even after a shock 1.5% quarter-by-quarter contraction in the fourth quarter of 2022. This is attributed to China’s recent reopening, which has triggered a rush of Chinese tourists to Thailand. This will help raise domestic consumption, countering headwinds to merchandise exports from a slowing global economy. An economist from DBS sees significant upside from returning Chinese tourists over the next two years, driven by revenge travelling, improvements in flight capacity, and Thai authorities’ efforts to spur tourism. Nomura Holdings expects 30 million foreign tourists coming to Thailand in 2023

SINGAPORE
Core inflation rises to 5.5% year-on-year in January 2023, highest since November 2008
(23 February 2023) Singapore’s core inflation rose to 5.5% year-on-year in January 2023, its highest since November 2008. This was a rise from the 5.1% recorded in December 2022. Core inflation had remained stable from October to December 2022. The spike in inflation in January was driven by a rise in the Goods and Services Tax (GST) rate as well as higher price rises for services, food and retail and other goods. The core consumer price index rose by 0.8% on a month-on-month basis. Core inflation excludes accommodation and private transport costs. Overall inflation, on the other hand, was recorded at 6.6% year-on-year in January, higher than the 6.5% recorded in December 2022. Core inflation is expected to remain above 5% year-on-year in the first quarter of 2023, and remain elevated for the first half of this year.

SINGAPORE, INDIA
Singapore launches new digital payments connection with India to allow real-time cross-border transfer of money
(21 February 2023) On 21 February, 2023, Singapore launched a new digital payments connection with India to allow the real-time cross-border transfer of money virtually. The initiative saw Singapore’s PayNow digital payments infrastructure linked with India’s Unified Payments Interface. This is expected to reduce the costs and inefficiencies of remittances between both countries. Singapore has a large presence of Indian workers who use remittance agents to transfer money back home, but these transactions typically take a few days. Singapore’s connection with India follows similar initiatives previously made with Thailand and Malaysia, and is part of Singapore’s goal of becoming a regional nexus for transactions worth billions of dollars.

INDONESIA
Tax breaks being offered to banks to encourage them to relocate to new capital
(22 February 2023) Indonesia is unveiling a number of tax breaks to encourage companies and people to move to its new capital Nusantara on Borneo island. Banks and insurers who set up shop in Nusantara will pay no income tax for up to 25 years if they invest before 2035, while those investing before 2045 can get up to 20 years of tax break. The tax breaks being offered by the government will only be offered up to 2045, when Nusantara is set to be completed. Indonesia is currently seeking investors to help build Indonesia’s new capital city, with the state budget only covering some 20% of the total cost of the project. The new capital is expected to cost US$40 billion.

THE PHILIPPINES, CHINA
Economic and trade cooperation between the Philippines and China expected to reach new heights after RCEP ratification
(23 February 2023) Economic and trade cooperation between the Philippines and China are expected to reach new heights after the Philippines recently ratified the Regional Comprehensive Economic Partnership (RCEP). The Philippines ratified RCEP on 21 February, 2023, being the last signatory member to ratify the trade pact, which currently involves 15 economies in the Asia-Pacific region. The ratification of RCEP is expected to integrate the Philippines’ economy further within regional industrial and supply chains, adding further growth impetus to the country. Specific sectors within the Philippines expected to benefit from RCEP include agricultural product processing, electrical machinery and the digital economy. China is the Philippines’ largest trade partner and second-largest export market. Their bilateral trade surged 10.6% on a yearly basis to US$84.91 billion in 2022.

VIET NAM
High-end home prices could drop by 10% or more in 2023 before rebounding in 2024
(23 February 2023) High-end home prices may fall by 10% or more in 2023 before rebounding in 2024. This is attributed to higher mortgage costs impacting property speculators, forcing them to sell their holdings and push more supply within the market. Authorities have already signalled their concerns about a mismatch in the supply of luxury and affordable housing. Following an official crackdown on corruption in the property and bond markets starting in 2022, there has been a slowdown in lending. According to Viet Nam’s central bank, credit growth in 2022 was 24% in the real estate sector compared with 14% in the broader economy.

VIET NAM
Viet Nam targets US$4 billion in fruit and vegetable exports in 2023, a 20% increase year-on-year
(23 February 2023) Viet Nam targets US$4 billion worth of fruit and vegetable exports in 2023, a 20% increase year-on-year. The export of dragon fruit, bananas and durian alone is expected to contribute US$2 billion to the country’s export turnover in 2023. Fruit and vegetable exports registered positive numbers in early 2023, reaching US$300 million in January, an increase of 3% year-on-year. This has been attributed to China’s recent reopening, its rising imports of Vietnamese fruits and vegetables, and the efforts of Vietnamese exporters to maintain orders with partners in the United States, the European Union and Japan. From 01 January to 13 February, 220,000 tonnes of fruits were exported to China through border gates in the northern province of Lng Sn, a 40% increase year-on-year.

RCEP Monitor

SINGAPORE
Budget for fiscal year 2023 to include more support measures and payouts
(14 February 2023) Singapore’s government announced its budget for fiscal year 2023, which includes more support measures and payouts to help households, workers, and businesses cope with the rising cost of living and higher sales tax. Singapore’s inflation rate in 2022 came in at 6.1% year-on-year, a significant jump from 2.3% in 2021. The total size of the Assurance Package program is expected to reach US$9.6 billion, with adult Singaporeans to receive between SG$700 and SG$2,250 over a five-year period. The government expects a budget deficit of about SG$0.35 billion, or 0.1% of GDP, for fiscal year 2023. Seeking to raise revenue, the Singaporean government raised the GST by a percentage point to 8% in January 2023, and reiterated that they intend to raise the sales tax again to 9% in January 2024. Overall, the government aims to raise revenue to SG$96.7 billion, up 7.1% year-on-year, while also lowering overall expenditure by 2.6%.

MALAYSIA
Malaysian government to focus on tackling costs of living and raising wages for workers
(15 February 2023) The Malaysian government under Prime Minister Anwar Ibrahim will focus on tackling high costs of living and raising wages for workers. According to Malaysia’s Economy Minister, the government plans to set a wage growth target for all workers and formulate the necessary policies to support them. This comes as the government projects growth for 2023 moderating to between 4% and 5%, after growing at the quickest pace in more than two decades in 2022 due to pent-up demand. Malaysia’s central bank projects inflation to remain elevated in 2023. Meanwhile, wages remain relatively low, having grown at an average increment of about US$31.9 a year between 2010 to 2019. The Malaysian government will table its 2023 budget to parliament on 24 February 2023.

THAILAND
Thailand’s government approves new US$9 tourist tax from June 2023 onwards
(15 February 2023) On 14 February, 2023, the Thai government announced that the cabinet had approved a new tourist tax to take effect on 01 June, 2023. Foreign travelers entering the country by air will be charged US$8.84, while those arriving by land or boat will pay US$19.13. Day travelers and transit passengers are exempted, as are children under 2 years old. The government is expected to collect US$113.19 million from the new tax in 2023, which will be used as accident insurance for tourists. Thailand aims to welcome 25 million tourists in 2023, up from the 11 million arrivals the country saw in 2022. Since the COVID-19 pandemic, the Tourism Authority of Thailand’s focus has shifted from increasing traveler volume to attracting long-stay and high-spending tourists.

VIET NAM
Viet Nam at center of supply chain diversification shift by Japanese manufacturers
(14 February 2023) According to a recent survey of Japanese manufacturers by the Japan External Trade Organization, Viet Nam emerged as the top target for expansion as Japanese companies seek to diversify their supply chains away from China and into Southeast Asia. This is partly motivated by subsidies announced by the Japanese government in 2020 to shift production away from China. 60% of respondents in Viet Nam plan to expand in the country in the next year or two, higher than anywhere else included in the survey except India and Bangladesh. However, only 59.5% of respondents in Viet Nam expect a profit in 2022, lower than all but six countries. This has been attributed to Viet Nam still recovering from a factory lockdown in 2021 to stem the spread of COVID-19. Viet Nam is rising up the global value chain, with high-tech goods as a share of exports hitting 42% in 2020, up from 13% in 2010.

INDONESIA
Indonesia’s trade balance in January 2023 settles at US$3.9 billion, lowest since May 2022
(15 February 2023) Indonesia’s trade balance in January 2023 settled at US$3.9 billion, its lowest since May 2022 but still beating expectations. Overall outbound shipments rose by 16.4% year-on-year, with export gains largely driven by robust oil & gas shipments. Meanwhile, imports managed to rise by only 1.3% year-on-year. Import growth was driven mainly by imported energy, with oil & gas imports up sharply by 30.4% year-on-year, offsetting the contraction in non-oil and gas imports. Indonesia’s trade surplus in 2023 is expected to be robust, although nowhere close to the record high of US$7.5 billion recorded in April 2022. This recent trade report comes amidst plans by the government to require certain exporters to keep a portion of their export earnings onshore in a bid to help boost the domestic supply of foreign currency.

INDONESIA
Bank Indonesia opts to keep rates unchanged at 5.75%, bringing recent rate hike cycle to end
(16 February 2023) On 16 February, 2023, Bank Indonesia (BI) opted to keep its rates unchanged at 5.75%, bringing to an end a recent rate hike cycle. BI remained confident that its current policy stance will ensure core inflation remains within target. BI’s decision was attributed to moderating price pressures and the relative stability enjoyed by the rupiah. Headline inflation dipped to 5.3% year-on-year in January 2023, down from 5.5% in December 2022, while core inflation eased to 3.3%. Easing inflation for transportation and utilities has helped ease price pressures. Should inflation sustain its downward path, it is believed that BI can opt to remain dovish in the near term.

CAMBODIA, SINGAPORE
Cambodian and Singaporean conglomerates to jointly develop modern logistics complex in Phnom Penh
(16 February 2023) Cambodian logistics provider WorldBridge Group and Singaporean supply chain solutions company YCH Group will jointly build a modern logistics complex in Phnom Penh with support from the International Finance Corporation (IFC). The two firms signed a collaboration agreement with the IFC on 15 February, 2023, with the intention of developing a Cambodia SuperPort or the Phnom Penh Logistics Complex. The complex will help raise Cambodia’s competitiveness, improve supply chain efficiency, and reduce overall logistics costs. Logistics is considered a crucial sector for Cambodia to achieve its target of becoming an upper-middle-income country by 2030 and a high-income country by 2050, such as by facilitating manufacturing.

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ASEAN
Close to 60% of Southeast Asians see unemployment and economic recession as biggest challenge for region in 2023
(09 February 2023) According to the ISEAS Yusof-Ishak Institute’s State of Southeast Asia: 2023 Survey Report, close to 60% of Southeast Asians saw unemployment and economic recession as the biggest challenge facing the bloc in 2023, followed by 57.1% who saw climate change as the top concern. Increased military tensions and widening socio-economic gaps and rising income disparity tied at third place at 41.9%. Meanwhile, 82.6% of respondents saw ASEAN as too slow and ineffective in coping with the rapidly changing geopolitics. 59.9% of respondents saw China as the most influential economic power in the region, while in terms of the most influential political and strategic power, 41.5% viewed China as the most influential, while another 31.9% chose the United States instead. When it came to seeking out third parties to hedge against the US-China strategic rivalry, 42.9% of respondents preferred the European Union, while another 26.6% chose Japan.

INDONESIA
Jakarta mandates higher blend of palm oil-based fuel in biodiesel, leaving less for exports
(08 February 2023) In February 2023, Indonesia mandated a higher blend of palm oil-based fuel in biodiesel, leaving less for exports. The mandate will increase the blend of palm oil-based fuel in biodiesel to 35% from 30%. The so-called B35 program is designed to cut greenhouse gas emissions and reduce the country’s dependence on imported crude oil. B35 is expected to increase the amount of palm oil used for fuel by 20% in 2023. It is believed that this will lead to Indonesia’s 2023 palm oil exports falling by about 20% from just over 30 million tonnes in 2022. In light of a directive by the European Union to phase out the import of palm oil linked to deforestation, Jakarta’s move is seen as an attempt to increase local demand to protect palm oil prices. Indonesia has taken steps toward boosting the biodiesel blending rate to 40%.

MALAYSIA
World Bank argues that price control mechanisms have caused supply shortages in Malaysia
(09 February 2023) During the launch of the World Bank’s Malaysia Economic Monitor (MEM) 2023, the World Bank noted that price control mechanisms and allocation of agricultural subsidies have distorted the efficiency of resources allocation, leading to supply shortages and higher prices for food staples. It was observed that Malaysia had the highest number of price controls within the region and that it had exacerbated the country’s cost of living. A survey carried out by the World Bank found that over half of the firms surveyed that were affected by these price controls had cut their production by a fourth. Commenting on agricultural subsidies, it was noted that the bulk of agricultural subsidies goes towards supporting the production of rice despite Malaysian consumers spending more on non-rice products.

MALAYSIA
Unemployment rate maintained at 3.6% in December 2022
(09 February 2023) The unemployment rate in Malaysia was maintained at 3.6% in December 2022, according to a research note by MIDF Research. The unemployment rate for youth aged 15 to 24 descended to a new pandemic low of 11.8% but remained higher than the pre-pandemic level of 10.4% in 2019. As well, the labor force and employment rose by 2.4% year-on-year and 3.1% year-on-year respectively, supported by robust domestic economic growth and an upbeat external front. Employment growth for 2022 hit a new record high at 3.5%, while the unemployment rate averaged 3.8%, higher than the average of 3.3% recorded in 2019. MIDF Research noted that labor shortages, global supply chain disruptions, and COVID-19 concerns will present downside factors with regard to the recovery of the Malaysian job market.

MALAYSIA, THAILAND
Malaysia and Thailand to sign four MoUs to explore cooperation in energy and digital economy
(08 February 2023) Malaysia and Thailand are to sign four memoranda of understanding (MoUs) to explore potential cooperation in the fields of energy and digital economy. The signing of the four MoUs will be witnessed by Malaysian Prime Minister Anwar Ibrahim and Thai Prime Minister Prayuth Chan o-cha in conjunction with the former’s visit to Thailand. The four MoUs are between Malaysia Digital Economy Corporation (MDEC) Sdn Bhd and Digital Economy Promotion Agency of Thailand; Tenaga Nasional Bhd (TNB) and Electricity Generating Authority of Thailand (EGAT); TNB Renewables Sdn Bhd and Planet Utility Co Ltd; as well as TNB Power Generating Sdn Bhd and B.Grimm Power Public Co Ltd. In 2022, Thailand was Malaysia’s seventh largest trading partner globally, with total trade increasing by 17.9% year-on-year.

VIET NAM, SINGAPORE
Viet Nam and Singapore sign Green-Digital Economic Partnership during Vietnamese Prime Minister’s visit to Singapore
(09 February 2023) On the start of a three-day visit by Vietnamese Prime Minister Pham Minh Chinh to Singapore on 09 February, 2023, both parties signed the Green-Digital Economic Partnership, which will see both countries collaborate on energy connectivity and infrastructure. This was one of several deals signed during the Vietnamese Prime Minister’s visit, including a separate plan to promote economic and trade cooperation by enhancing ties through projects including renewable energy and low-carbon solutions. Singapore represented Viet Nam’s largest source of foreign investment into the country in 2022, investing some US$6.46 billion. Singapore and Viet Nam have set the same goal of achieving net-zero emissions by 2050, although political instability currently taking place in Viet Nam may impact Hanoi’s energy plan going forward.

THE PHILIPPINES
Philippines stock rally loses steam due to investor worries over inflationary pressures and monetary tightening
(08 February 2023) After its best January performance in four years, the Philippines stock index has begun to lose steam due to investor worries over inflationary pressures and rising interest rates impacting profit growth and cap stock prices. The index, which had dropped by 8% in 2022, had recently benefited from China’s loosening of COVID-19-related restrictions in late 2022. The index had been up 20% in the past four months due to optimism over China’s reopening. However, concerns over sticky inflation have driven the stock market down in the past weeks. The consumer price index (CPI) in January 2023 was up 8.7% year-on-year, rising from the 8.1% annual inflation rate seen in December 2022. With inflation at a 14-year high, it is believed the Philippines’ central bank will raise rates again when it meets on 16 February, having raised rates by 350 basis points in 2022.

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