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.

RCEP Monitor

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.

ASEAN 
Sliding currencies bring higher import costs and inflationary pressures for ASEAN
(16 October 2023) Several Southeast Asian currencies are trading near their lows for the year against a surging US Dollar, bringing higher import costs and inflationary pressures to their economies. The Malaysian ringgit and the Thai baht are the worst performers in Southeast Asia in 2023, falling 6.9% and 4.4%, respectively, against the US Dollar through 13 October, 2023. Meanwhile, the Vietnamese dong is down 3.4%, while Singapore’s dollar and Indonesia’s rupiah have slipped a more modest 2.1% and 0.7%, respectively. The broader depreciation comes amidst a surging US Dollar being fueled by strong US economic and wage growth. Exporters have been unable to take advantage of a weaker currency due to a sluggish Chinese economy, with China being the main trading partner for most ASEAN economies. 

ASEAN 
Southeast Asia’s dairy industry attracts private equity deals
(17 October 2023) Southeast Asia’s nascent dairy industry is attracting private equity (PE) deals hoping to cash in on the growing consumption of dairy products within the region. The growth of the regional dairy industry is being fueled by favorable demographics, a growing middle class, and higher discretionary spending. PE firm Growtheum announced an investment of US$100 million in Viet Nam-based International Dairy Products (IDP) in April 2023. In August 2023, Growtheum injected US$70 million into Indonesia’s KIN Dairy. As well for this year, General Atlantic made a US$130 million investment into Indonesian dairy products and foods company PT Cisarua Mountain Dairy (Cimory), while Vietnamese colostrum milk producer VitaDairy is looking to sell a 30% stake. Several challenges facing Southeast Asia’s dairy industry include fragmented farming practices and underdeveloped logistics infrastructure.  

ASEAN 
ASEAN states expanding their major airports to meet rising domestic demand
(18 October 2023) Several ASEAN are seeking to expand their major airports to meet rising domestic demand as well as to attract foreign direct investment and tourism. Air passenger demand in the region is expected to nearly triple in the two decades from 2019, with the region’s average annual growth rate of 4.6% higher than the global average of 3.4%. In Thailand, a new satellite terminal opened at Suvarnabhumi Airport near Bangkok in September 2023 which can host up to 28 aircraft and handle 15 million passengers annually. In Viet Nam, US$4 billion will be invested to increase the capacity of Hanoi’s Noi Bai International Airport to 60 million passengers by 2030, 2.5 times its current amount.

ASEAN, JAPAN 
Japanese automakers dominance of Southeast Asia challenged by Chinese and Korean EVs
(16 October 2023) Japanese automakers traditional dominance of Southeast Asia is being challenged by Chinese and South Korean manufacturers within the new field of electric vehicles (EVs). These companies have started sales of imported EVs in the region, while also planning for local production in the near future. Japanese cars comprise 80% of new car sales in Southeast Asia, making the region a key overseas market for them. Japanese automakers are more cautious when it comes to EVs due to a lack of recharging facilities within the region, as well as the region’s high temperatures and humidity which causes batteries to deteriorate more quickly. However, certain Japanese automakers have taken tentative steps towards EVs, with Mitsubishi Motors seeking to produce EVs in Indonesia while Toyota Motor and Honda are preparing to produce them in Thailand.     

INDONESIA 
Indonesia reports US$3.42 billion trade surplus in September 2023
(16 October 2023) Indonesia reported a US$3.42 billion trade surplus in September 2023, compared with a Reuters poll expecting a US$2.13 billion surplus. In August 2023, Indonesia reported a US$3.12 billion surplus. The higher-than-expected trade surplus was attributed to an unexpectedly large drop in imports, measuring at US$17.34 billion in September, a 12.45% drop year-on-year. On the other hand, exports dropped 16.17% year-on-year to US$20.76 billion. Indonesia has seen exports decline in recent months due to falling commodity prices and weakening global trade, especially with regard to the country’s major exports of palm oil, coal, and nickel.

VIET NAM 
GDP increases by 5.33% year-on-year in third quarter of 2023
(18 October 2023) According to government reports presented at the 27th session of the National Assembly (NA) standing committee, GDP is estimated to have increased by 5.33% year-on-year in the third quarter of 2023. In comparison, GDP growth in the first and second quarters of 2023 was 3.28% and 4.05%, respectively. GDP growth for 2023 is forecast to exceed 5%, while Viet Nam’s trade surplus will reach approximately US$15 billion. In the last nine months of 2023, average incomes increased by 6.8% year-on-year. The key growth drivers of investments, exports, and consumption in Viet Nam are expected to face systematic challenges caused by a lack of long-term direction, and prompt intervention with regards to green transformation, energy efficiency, and circular economy.

SINGAPORE 
Key exports from Singapore extend their 12th straight month of decline in September 2023
(18 October 2023) Key exports from Singapore extended their 12th straight month of decline in September 2023, with non-oil domestic exports falling by 13.2% year-on-year. This followed a revised 22.5% contraction in August. Exports in September were also up 11.1% month-on-month, compared to the 6.6% fall in August. Non-electronic non-oil domestic exports declined by 13.6% year-on-year, with non-monetary gold, pharmaceuticals, and food preparations contributing the most to the decline. Meanwhile, electronics shipments fell 11.6% year-on-year in September. Integrated circuits, personal computers, and parts of personal computers contributed the most to the fall. Total trade declined by 12.3% year-on-year in September, following a 15.5% contraction in August.  

RCEP Monitor

CHINA 
GDP likely to grow by 4.4% year-on-year in third quarter of 2023 according to Reuters poll
(16 October 2023) According to a median forecast of 60 economists polled by Reuters, China’s GDP likely grew by 4.4% year-on-year in the third quarter of 2023. This would be a slowdown from the 6.3% growth recorded in the second quarter. China’s economy had started to slow down in the second quarter following a downturn in the property sector and huge debts tied to decades of infrastructure outlays. On a quarterly basis, GDP is forecast to grow 1.0% in the third quarter of 2023, versus growth of 0.8% in the previous quarter. The Reuters poll also predicted that China’s economy would expand by 5.0% in 2023, in line with Beijing’s own target but below the 5.5% forecast made in July 2023. Growth is expected to slow down to 4.5% in 2024.

SOUTH KOREA 
South Korea moving to increase number of foreign workers to address labor shortages
(17 October 2023) South Korea is moving to significantly increase the number of incoming foreign workers and the range of jobs they can do to address labor shortages. In 2023, the country raised the maximum number of visas available to migrant workers from abroad to 110,000. The total number of visas available in 2022 was 88,000, also an all-time high, up drastically from the pre-COVID-19 count of 51,000 in 2019. Foreign workers in South Korea overwhelmingly work in unskilled or semiskilled jobs. Business owners have called for laws to be adjusted to make it easier for foreign nationals to take jobs in more sectors that face labor shortages, such as restaurants, accommodations, and courier services.

NEW ZEALAND 
Right-wing coalition to form government following general election on 14 October, 2023
(14 October 2023) A coalition of right-wing parties is expected to form a government following a general election held on 14 October, 2023. The centre-right National Party had acquired around 40% of ballots with 98% of votes already counted, while the ruling Labour Party has been unable to win enough votes to form a government. The nationalist NZ First party is expected to play a kingmaker role in the future coalition government alongside the libertarian, right-wing Act Party. The campaign entering the election was dominated by cost of living issues, a housing shortage, a historically high inflation rate of 6%, and an account deficit that has concerned ratings agencies. Official results will be announced by the election commission about three weeks after the vote.

THAILAND
Economists warn government’s US$15 billion cash handout policy risks stoking inflation
(09 October 2023) According to a statement signed by 81 economic experts (including two former Bank of Thailand governors), the government has been urged to scrap its flagship US$15 billion cash handout policy, claiming it risks stoking inflation and hurting long-term fiscal discipline. The government’s ‘digital wallet’ program would give most Thais a one-time handout of 10,000 baht (US$270), and is expected to be rolled out in the first quarter of 2024. Thais aged 16 and above are eligible to receive the handouts, and the money is to be spent on specific goods and services around their neighborhoods and within a set period. Proponents of the policy claim the multiplier effect on the economy could be four times the cost of the handouts and lift economic growth to as high as 5% in 2024.

THE PHILIPPINES, CAMBODIA
Cambodia and the Philippines mull establishing direct flight connections
(10 October 2023) Cambodia and the Philippines are discussing establishing direct flights between their countries in order to bolster tourism. Philippine Airlines had reportedly agreed to promote direct flights to Cambodia in the near future. The Cambodian Minister of Foreign Affairs and International Cooperation met with the Filipino ambassador on 05 October, 2023 to discuss economic diplomacy. During the meeting, both parties pledged to strengthen bilateral collaboration in trade, investment, agriculture, defence, and in fostering people-to-people ties.

THE PHILIPPINES
The Philippines’ central bank not ruling out 25-basis-point interest rate hike in November 2023
(11 October 2023) The Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP), has not ruled out a 25-basis point interest rate hike in November 2023 due to upside risks to inflation having materialized. Recent data showed inflation accelerated to a four-month high of 6.1% in September 2023, surpassing all economist’s estimates in a Bloomberg survey. These figures were driven by the fastest gain in rice prices in 14 years. For the past four meetings, the BSP has held its policy rate steady at 6.25%, a 16-year high. The BSP is currently watching the elevated debt levels at some Filipino companies, warning that some of them will be unable to pay off their loans. 

MALAYSIA
Federal government spent US$11.73 billion on various subsidies in 2022
(10 October 2023) According to the 2022 Auditor-General’s Report, the federal government spent some US$11.73 billion on various subsidies in 2022, an increase of 322.1% compared to 2021. In comparison, the government spent US$2.78 billion on subsidies in 2021. The highest subsidy expenditures went to petroleum products, comprising 81.5% of the total expenditure. A total of US$9.56 billion was spent on subsidizing petroleum products. The report also stated that the finance ministry spent US$25.43 billion, or 40.8% of the government’s total operational expenditure for 2022. This was a 64.5% increase compared to 2021. In June 2023, Prime Minister Anwar Ibrahim said his administration was working on implementing targeted subsidies. The government expects to save at least US$1 billion to US$2 billion a year from its shift towards targeted subsidies. 

INDONESIA
Geothermal operator Barito Renewables Energy’s shares up 25% in market debut in Jakarta
(09 October 2023) On 09 October, 2023, Indonesian geothermal operator Barito Renewables Energy’s shares were up 25% in the company’s market debut on the Indonesia Stock Exchange, after having raised US$200 million in an initial public offering last week. More than 4 billion shares were sold to the public, representing just 3% of the company, which is a subsidiary of Indonesian energy group Barito Pacific. Barito Renewables operates three geothermal power plants in West Java province with a combined installed capacity of 886 megawatts. The successful listing marks another test of investors’ appetite for Indonesia’s underdeveloped renewable energy sector.

VIET NAM
Exports drop 8.5% year-on-year to US$258.97 billion in the first nine months of 2023
(10 October 2023) According to government customs data, Viet Nam’s exports fell 8.5% year-on-year to US$258.97 billion in the first nine months of 2023. Imports in the same period fell 14.0% to US$237.33 billion, resulting in a trade surplus of US$21.64 billion. Exports in September fell 6.3% month-on-month to US$30.68 billion, while imports dropped 2.9% to US$28.48 billion. These figures indicate weak global demand, with exports of smartphones falling 13.7% in the first nine months of 2023, while exports of garments fell 13.6%. The subdued demand tracks that of other regional export economies, and has caused economists to slash growth forecasts for Viet Nam. 

CAMBODIA
Cambodia draws in US$3.76 billion worth of investments in first nine months of 2023
(09 October 2023) Cambodia drew in US$3.76 billion worth of fixed-asset investments in the first nine months of 2023, marking an 8.6% rise from the US$3.46 billion worth of investments recorded in the same period in 2022. According to data released by the Council for the Development of Cambodia (CDC) on 07 October, 2023, in the same period they approved 191 investment projects, a 27% increase from the 150 projects approved in the same period in 2022. These foreign investments came primarily from China, Malaysia, Singapore, Viet Nam, and the British Virgin Islands. The Asean+3 Regional Economic Outlook (AREO) has projected that Cambodia’s economy will grow by 5.9% in 2023. 

RCEP Monitor

SOUTH KOREA
Samsung Electronics’ operating profit likely falls 77.9% in third quarter of 2023
(11 October 2023) Samsung Electronics stated that it expects its operating profits to have reached US$1.8 billion in the third quarter of 2023, a drop of 77.9% year-on-year. This has been attributed to an overhang from a long slump in memory chip prices. The company’s revenue is believed to have dropped 12.7% year-to-year to US$50.01 billion in the same quarter. On a quarter-on-quarter basis, the company’s operating profit likely jumped 258.2%, while revenue increased by 11.7%. Analysts believe the company’s performance may rebound in the fourth quarter of 2023 due to industry players making big production cuts. 

NEW ZEALAND
New Zealand sees record net immigration in the year ending August 2023 at 110,000
(11 October 2023) According to Statistics New Zealand, New Zealand saw record net immigration in the year ending 2023 at 110,000. This beat the previous high of 103,000 set a month earlier. The surge in immigration likely reflects pent-up demand that had built up during the COVID-19 pandemic, with employers struggling to find skilled workers to fill vacant roles in 2022. The figures show the greatest number of immigrants came from India, followed by the Philippines and China. The total number of immigrants reached a record number of 225,000 during the year, while the number of New Zealanders leaving the country also neared record levels at 115,000. Many New Zealand citizens have been lured to Australia seeking better pay.

AUSTRALIA
Australia has highest level of mortgage stress in the developed world
(10 October 2023) According to the International Monetary Fund, Australia has the highest level of mortgage stress in the developed world, with 15% of income devoted to paying off loans. Australian borrowers have been affected by a series of rate rises by the Reserve Bank of Australia (RBA) starting in May 2022. The increased cost of borrowing has left Australia with the highest level of debt stress in the developed world, followed by Canada, Norway, and the Netherlands. In July 2023, the Australian National University calculated that if the RBA increased the current rate by another 50 basis points to 4.6%, Australians would be paying 40% of their income into their mortgages and other loans.