ASEAN
Myanmar crisis expected to dominate ASEAN Foreign Ministers’ Meeting this week
(14 July 2023) The ongoing Myanmar crisis is expected to dominate the ASEAN Foreign Ministers’ Meeting as well as the post-ministerial conferences and related meetings being held this week, including the ASEAN Regional Forum to be held on 14 July, 2023. An estimated 3,750 civilians have been killed by Myanmar security forces and nearly 24,000 arrested since the military overthrew the civilian government of Aung San Suu Kyi in February 2021. Little progress has been made on the Five Point Plan devised by ASEAN that calls for, among other things, an immediate end to the violence and dialogue among all contending parties. Other issues expected to be discussed at the forum include the tensions in the South China Sea as well as a growing arms race within the region. The foreign ministers of ASEAN dialogue partners will also be attending, including U.S. Secretary of State Antony Blinken, Russian Foreign Minister Sergey Lavrov and Chinese Foreign Minister Qin Gang.

ASEAN
Rate hikes squeezes profit margins for ASEAN’s millions of MSMEs
(12 July 2023) Recent rate hikes across Southeast Asia are squeezing the profit margins of the region’s estimated 71 million micro, small and medium-sized enterprises (MSMEs). According to the chairman of the ASEAN Business Advisory Council, any surge in interest rates directly escalates the costs of financing for MSMEs, leading to decreased profitability, further limiting their access to capital, and amplifying the risks of default. MSMEs account for 97% of the region’s businesses and employ 67% of the working population, while contributing an average of 40.5% to each country’s GDP. Higher interest rates will also impact the demand side for MSMEs, leading to lower sales. By one estimate, a 1% hike in interest rates could result in a 0.5% drop in the profitability of MSMEs.

INDONESIA
Indonesian government passes new healthcare bill aimed at reforming healthcare industry
(11 July 2023) The Indonesian parliament passed a new healthcare bill aimed at reforming the healthcare industry and improving life expectancy within the country. Parliament approved the law in a plenary session after deliberating the bill for months. The bill has received opposition from Indonesia’s nurses and doctors due to fears that policy changes allowing foreign doctors to operate in Indonesia could jeopardize their jobs. They also argued that the deliberation process at parliament lacked transparency. Life expectancy in Indonesia stood at 71.3 years in 2019, compared with the 76.3 years average for upper-middle-income countries. Indonesia has six doctors for every 10,000 people, according to World Bank data.

THE PHILIPPINES
The Philippines to remain expanding and young population in 2050
(10 July 2023) According to the World Bank’s Development Research Group, the Philippines will remain an expanding and young population by 2050. The number of children per woman in the Philippines is about 2.8, well above the 2.1 replacement rate. With developed and some middle income countries facing declining populations, this will intensify the global competition for workers, with the Philippines well positioned to meet this future global demand for manpower. However, many young people in countries whose populations are expanding are also entering the workforce without the skills needed in the global labor market, including in the Philippines. Bangko Sentral ng Pilipinas expects the country’s remittances, a key driver of consumer spending, to grow 3% in 2023 and 2024.

MALAYSIA
Malaysian Prime Minister Anwar Ibrahim to hold virtual meeting with Tesla CEO Elon Musk by end of week
(10 July 2023) Malaysian Prime Minister Anwar Ibrahim will hold a virtual meeting with Tesla Inc. CEO Elon Musk by the end of this week. It is also confirmed that Tesla will officially launch in Malaysia on 20 July, 2023. In March 2023, Tesla stated it would start selling electric vehicles (EVs) in Malaysia to tap into the rising foreign demand for EVs in Southeast Asia. The company plans to open an office in Malaysia, introduce service centers, and build a network of superchargers. The virtual meeting between Anwar Ibrahim and Elon Musk may go beyond exploring EV investment opportunities in Malaysia, and look into other areas of potential collaboration. The Malaysian government plans to increase its network of EV chargers tenfold within the next two years.

VIET NAM, UNITED STATES
Visiting delegation from Nebraska hopes to grow agricultural trade with Viet Nam
(12 July 2023) A visiting delegation from the US state of Nebraska, led by Governor Jim Pillen, hopes to expand the state’s trade with Viet Nam, particularly in terms of agricultural products. The delegation visited MM Mega Market in Ho Chi Minh City’s Thu Duc City on 11 July, 2023 to understand what Vietnamese customers look for at the grocery store as well as distribution networks in Viet Nam. The governor noted that agriculture drives the Nebraskan economy, and that the delegations’ aim is to help Nebraskan businesses and companies make connections in the Vietnamese market. Viet Nam already imports goods worth almost US$1 billion from Nebraska. The delegation is seeking to promote beef, corn gluten, soybean meals, and other agricultural goods from Nebraska.

SINGAPORE
Sovereign wealth fund Temasek reports US$6 billion net loss for year through March 2023
(11 July 2023) Singapore’s sovereign wealth fund Temasek reported a US$6 billion net loss for the year through March 2023, coming largely from paper losses booked as a result of a downturn in equity markets over the past year, as well as new accounting principles it adopted in 2018. Temasek logged a one-year total shareholder return of -5.07% in Singapore dollar terms, compared with a 5.81% annual return a year ago. The company stated its overall portfolio continued to recover from the COVID-19 pandemic, despite the drops in valuations in areas such as technology, health care and payments that led to the net loss. Singapore remained the wealth fund’s top investment destination, with assets there comprising 28% of its portfolio. China came second at 22%, followed by the Americas at 21%.

RCEP Monitor

MALAYSIA
9.8 million voters eligible to vote in six state elections to be held on 12 August, 2023
(05 July 2023) Some 9.8 million voters will be eligible to vote in six state elections to be held on 12 August, 2023, where they will be able to choose between Prime Minister Anwar Ibrahim’s multiracial unity government and the Malay-majority federal opposition pact. Nominations for the polls will be on 29 July, 2023, and the Election Commission is allowing for a two-week campaign period. The local polls are seen as the first referendum on the new government formed by Anwar Ibrahim after a general election held in November 2022. Out of Malaysia’s 13 states, the six states up for contest include Kelantan, Terengganu, and Kedah, controlled by the Islamist-leaning opposition, and Selangor, Penang, and Negeri Sembilan, controlled by the current unity government.

INDONESIA, PAPUA NEW GUINEA
Indonesia and Papua New Guinea agree to boost border trade
(05 July 2023) During a visit by Indonesian President Joko Widodo to Port Moresby, Papua New Guinea, on 05 July, 2023, both parties agreed to boost border trade.This follows Papuan lawmakers in March 2023 finally ratifying an agreement governing its 760-kilometer border with Indonesia after a decade-long delay, possibly opening the way to improving relations. Annual trade between Indonesia and Papua New Guinea was about US$200 million a year, a small amount when compared to the latter’s trade with other countries. Indonesia also pledged new aid for Papua New Guinea, including US$15 million for upgrading a hospital in Port Moresby as well as support for current Papuan efforts in building more roads.

INDONESIA
Indonesian gold miner set to trade in Jakarta following Indonesia’s largest IPO in 2023
(05 July 2023) Indonesian gold and copper miner PT Amman Mineral Internasional is set to start trading in Jakarta on 07 July, 2023, following Indonesia’s largest initial public offering (IPO) in 2023. The company raised US$711 million in its IPO, making it the largest new share sale in Asia in 2023 outside mainland China. IPOs in Jakarta have raised a total of US$2.2 billion since the start of 2023, already overtaking the tally for all of 2022. Amman Mineral owns the fifth-largest copper mine in the world as of end-2020. The company posted net income of US$1.09 billion in 2022, more than a threefold increase from the previous year’s figure. Proceeds will be used by Amman Mineral for working capital, debt repayment and to fund refinery projects in West Nusa Tenggara province.

INDONESIA
Indonesia seeking financing for US$48 billion new capital city Nusantara
(05 July 2023) The Indonesian government is seeking financing for its US$48 billion new planned capital city Nusantara. The new capital city is envisioned as a green, smart city spanning nearly 260,000 hectares to be located in East Kalimantan province. The Indonesian government plans to foot 20% of the total cost of the project while private investors will finance the rest. Indonesia has approached other countries seeking investments into Nusantara, including Saudi Arabia, the United Arab Emirates, Japan, South Korea, Iran, Canada, Germany, and Singapore. Australia has offered support for Indonesia in developing its new capital city, including scholarships for Indonesians to study sustainable urban planning and local government administration, as well as heightened collaboration between government authorities to share information and experiences about building a new capital city. These new commitments by Australia are expected to be formalized via a memorandum of understanding in the coming months.

SINGAPORE
Central bank sees residential property market in ‘good place’
(05 July 2023) According to the Monetary Authority of Singapore (MAS), Singapore’s residential property market is in a ‘reasonably good place’, with signs that prices are moderating and stabilizing. Singapore has undergone a property boom that has defied a global slowdown, with the Singaporean housing market having seen a buoyant run after an influx of capital alongside a pandemic-induced supply shortage pushed prices and rents to record highs. In response, in April 2023 the government doubled stamp duties for foreign buyers to 60%. It also raised levies for second-home buyers. Home prices declined in the second quarter of 2023 for the first time in three years. According to the MAS, the surge in rental prices will take ‘a little bit of time to resolve’, with rents for private apartments and public housing having surged about 27% and 25% respectively in May 2023 from a year ago.

THE PHILIPPINES
Inflation rate slows for fifth straight month in a row in June 2023
(05 July 2023) According to the Philippine Statistics Authority (PSA), the inflation rate in the Philippines slowed for the fifth straight month in a row in June 2023. The inflation rate eased to 5.4% in June 2023 from 6.1% in May, bringing the year-to-date rate to 7.2%. This is the fifth time that inflation dropped from a peak of 8.7% in January 2023. The inflation rate in June 2023 is also the lowest rate in 15 months. According to the Philippines’ Finance Secretary, inflation is on track to further decline to within the government’s target range of 2% to 4% by the end of 2023. Inflation is also expected to fall below the lower limit of the target in the first quarter of 2024. The slowdown in inflation in June 2023 versus May 2023 was attributed to the slower movement in the prices of food and non-alcoholic beverages. Food inflation, which tracks price movements in a basket of commonly purchased foods, also declined for the fifth consecutive month in June at 6.7% from 7.5% in May.

VIET NAM
Viet Nam welcomed over 5.5 million foreign visitors to country in first six months of 2023
(05 July 2023) According to the Vietnam National Administration of Tourism, Viet Nam welcomed 5.5 million foreign visitors in the first six months of 2023, already exceeding the total number of international arrivals in 2022. Viet Nam’s tourism sector has set a target of 8 million visitors for the remainder of 2023. However, the tourism bureau has since predicted the numbers will likely rise to 10 million. Despite this, international arrivals into Viet Nam are still far off pre-COVID-19 pandemic levels, with nearly 19 million international arrivals being recorded in 2019. Tourism into Viet Nam is expected to get a boost from a new, recently approved visa policy for international visitors. Under the new policy, visa waivers for visitors from selected countries will be tripled from 15 to 45 days. As well, for visitors from countries eligible to apply for an electronic visa to Viet Nam, visas will now be valid for up to 90 days with single or multiple entries.

RCEP Monitor

ASEAN
Return of El Nino weather pattern causing fears of forest fires and droughts across Southeast Asia
(23 June 2023) The return of the El Nino weather pattern to Southeast Asia, and the sweltering heat it is expected to bring to the region, is sparking fears of possible water shortages and forest fires. El Nino is a climate pattern originating in the Pacific Ocean which is marked by above-average sea surface temperatures. It typically brings hot and dry conditions to Southeast Asia. Higher temperatures are expected to impact agricultural production in the region, while pressures on water and electricity supply might impact manufacturing. The peak of El Nino is expected to occur in September 2023. Among the agricultural sectors expected to be impacted include palm oil production in Malaysia and Indonesia, coffee in Viet Nam, rice and sugar in Thailand, and rice and corn in the Philippines. Considering that agriculture accounts for a large share of GDP in emerging Asia, a decline in agricultural production and resulting inflation are expected to put strong downward pressure on their economies. El Nino is also expected to impact hydropower output and also push up demand for electricity.

INDONESIA
Indonesian solar energy startup seeking to close new funding round by end of 2023
(26 June 2023) Indonesian solar energy startup Xurya aims to close a new funding round by the end of 2023. Founded in 2018, the company develops rooftop solar panels for businesses and industries. The company had initially raised US$11.5 million in the second tranche of its Series A round in October 2022. It had raised US$21.5 million in the first tranche in December 2021. Altogether, the company had raised a total of US$33 million in its Series A round. Indonesia is believed to have huge solar power potential, with a report by the Institute for Essential Services Reform arguing that solar power will play an essential role in deep decarbonization goals in Indonesia in 2060 or sooner in 2050. According to a report by Mordor Intelligence, the solar energy market is projected to register a compound annual growth rate of about 10% from 2019 to 2028.

MALAYSIA
Exports expected to reach US$425 billion by 2030 according to Standard Chartered
(26 June 2023) According to a recent report by Standard Chartered, Malaysia’s exports are expected to reach US$425 million by 2030 with an annual growth rate of 6.8%. The report also emphasized the rapid growth of other economies such as India, Indonesia and Viet Nam as key trading partners for Malaysia. The report stated that Malaysia’s exports to India would reach US$18 billion with a compound annual growth rate (CAGR) of 10.1% by 2030, followed by Indonesia (US$12 billion with a CAGR of 9%) and Vietnam (US$13 billion with a CAGR of 8.7%). In line with the projected export growth, the Malaysian government has made significant investments into strengthening its export infrastructure. Machinery and electricals are expected to dominate its exports in 2030, making up 53% of the share of exports with a
CAGR of 6.8%.

THAILAND
Thai universities struggling with lower enrolments due to Thailand’s low birth rate
(25 June 2023) Thai universities are struggling with lower enrolments linked to a sharp decline in the country’s birth rate over the past few years. Thailand’s current higher education market is relatively small, with 200 to 300 universities taking in fewer students than their annual capacity. Over the past five years there has also been a continuous decline in the number of births, having dropped from over a million births 30 years ago to 500,000 to 600,000 a year. In 2021, Thailand registered some 544,000 births, its lowest in at least six decades. The head of the business analytics and intelligence programme at the Graduate School of Applied Statistics of the National Institute of Development Administration (Nida) warned that state and private universities may struggle to survive in the next five years if they do not adapt, possibly leading to mergers or closures. Some have managed to survive by actively recruiting Chinese students.

THAILAND, UK
Thailand and the UK to hold second Joint Economic and Trade Committee (Jetco) meeting in November 2023
(29 June 2023) The UK and Thailand are set to hold a second Joint Economic and Trade Committee (Jetco) meeting in Thailand in November 2023. Both parties had signed a memorandum of understanding (MoU) to establish Jetco in 2022, which aims to promote and enhance economic cooperation on trade and investment, particularly in sectors of mutual interest. According to Thailand’s Trade Negotiations Department, both parties are ready to elevate their economic cooperation to an enhanced trade partnership or a strategic economic partnership in sectors such as food, beverages, health, education, automotives, and agriculture. Both parties ultimately aim to pave the way for future free trade negotiations. In 2022, the UK was Thailand’s 22nd largest trading partner, with bilateral trade amounting to US$6.20 billion, up 12.3% from the previous year.

VIET NAM
Viet Nam has to take ‘aggressive’ measures to meet growth goals for 2023, claims finance minister
(24 June 2023) According to Viet Nam’s finance minister, Viet Nam needs to take ‘aggressive’ measures to meet the government’s growth goals for 2023. Viet Nam saw growth of more than 8% in 2022, its highest growth rate since 1997. But growth slowed in the first quarter of 2023 to 3.3 %, down from 5.9% in the fourth quarter of 2022, amidst declining global demand for its exports. The decline in global demand has been attributed to multiple factors, including the ongoing war in Ukraine which raised petroleum and consumer prices, thus putting pressure on manufacturing input and trade costs and depressing buyers’ appetite. Hanoi targets full-year growth of 6% to 6.5%, following anticipated first-half growth of about 4%. To meet these targets, the government is planning to undertake measures such as extending deadlines for tax payments as well as reducing value added tax and petrol levies.

SINGAPORE
National University of Singapore first Asian university to break into top 10 of QS World University Rankings
(28 June 2023) In the QS World University Rankings 2024, the National University of Singapore (NUS) became the first Asian university to break into the top 10 of the world ranking. NUS moved up three spots to reach Number 8. Singapore’s Nanyang Technological University, on the other hand, maintained its place within the top 30. QS’ latest ranking utilizes a new methodology, in which academic reputation is deemphasized in favor of new metrics like sustainability, employment outcomes and international research networks. NUS’ strong showing was attributed in part to funding in Singapore. NUS was placed Number 7 in terms of employment outcomes.

RCEP Monitor

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

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

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

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

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

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

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

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

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

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

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

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

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

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

RCEP Monitor

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

RCEP Monitor

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

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

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

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

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

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

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

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

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

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

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

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

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

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

RCEP Monitor