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

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

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

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

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

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

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

RCEP Monitor

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

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

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

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

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

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

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

RCEP Monitor

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

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

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

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

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

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

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

RCEP Monitor

ASEAN
ASEAN-5 economies expected to grow by 4.3% and 4.7% in 2023 and 2024 respectively 
(30 January 2023) According to the IMF’s World Economic Outlook Update released on 30 January 2023, the ASEAN-5 economies are expected to grow by 4.3% and 4.7% in 2023 and 2024 respectively. In comparison, ‘emerging market and developing economies’ are expected to grow by 4.0% and 4.2% in 2023 and 2024. The ASEAN-5 as defined by the IMF comprises of Indonesia, Malaysia, the Philippines, Singapore, and Thailand. The IMF also estimated that the ASEAN-5 had grown by 3.8% and 5.2% in 2021 and 2022 respectively. The IMF projects that the global economy is projected to fall from an estimated 3.4% in 2022 to 2.9%  in 2023, then rise to 3.1% in 2024. The IMF noted that risks to the global economy have moderated since October 2022, with upsides including a stronger boost from pent-up demand in numerous economies and a faster fall in inflation. The downsides include a severe health outcome in China, Russia’s ongoing war in Ukraine, and tighter global monetary tightening.

INDONESIA 
Local Indonesian companies hope to cash in on Indonesia’s rich nickel deposits to enter EV and battery sectors 
(03 February 2023) Local Indonesian companies are hoping to cash in on Indonesia’s rich nickel deposit to enter the electric vehicle (EV) and EV battery sectors. With nickel comprising a key component in EV batteries, Indonesia hopes to leverage upon its rich deposits to develop a battery industry, enter the global EV supply chain and develop a manufacturing base. This comes as global EV makers, including China’s BYD and Tesla of the U.S. have either signed or are “finalizing” deals to invest in Indonesia. The government has sought to foster the local EV industry through subsidies and is also targeting increasing electric car sales to 20% of total car sales in Indonesia in 2025. Consultancy Mckinsey predicted that Indonesia’s revenue from the entire EV supply chain is projected to reach nearly US$50 billion by 2035. Among the Indonesian conglomerates hoping to enter EVs include major coal miners Indika Energy, Adaro Energy and TBS Energi Utama. As well, Bakrie & Brothers, a conglomerate with interests spanning energy, infrastructure, and telecommunications, is also hoping to enter the EV industry.

THE PHILIPPINES
Marcos Jr. administration reportedly mulling issuing Eurobonds to supplement budgetary needs 
(03 February 2023) The Marcos Jr. administration is reportedly mulling issuing Eurobonds to help supplement its budgetary needs. According to the Philippines’ Finance Secretary, the plan is still in the works. Should the plan go through, the Eurobonds would be sold to retail investors. The Marcos Jr. administration has tapped international debt markets twice for its spending needs since taking office. The first time was in October 2022, when it borrowed US$2 billion from dollar-denominated bonds sold in three tranches, with debt papers payable in five, 10.5, and 25 years. The second came at the start of 2023, when the government borrowed US$3 billion through the sale of green bonds sold under the state’s sustainable finance framework. The Philippines’ debt stock mainly comprises domestic liabilities at 70% of total debt. The Marcos Jr. administration is currently operating with a budget deficit due to inheriting a significant amount of debt from the previous administration.

MALAYSIA 
World Bank says Malaysia’s current strategy of fiscal consolidation through spending cuts is ‘challenging’ 
(03 February 2023) The World Bank called for Malaysia to explore new sources of revenue to improve its fiscal position, noting that its current strategy of fiscal consolidation through spending cuts is ‘challenging’. The World Bank said that the Malaysian government needs to raise taxes due to declining revenue and should consider re-introducing the goods and services tax, or revising the personal income or sales and services taxes. Government revenue in Malaysia remains low and trails comparative peers. Government revenue is expected to resume declining in 2023 on moderating crude oil prices. Malaysia currently operates Southeast Asia’s widest fiscal deficit after the Philippines, having seen its budget strained by the cost of keeping essentials at below-market prices. The World Bank noted that relying on spending cuts would be difficult as structural expenditure was already elevated, while operating expenditures on supplies and services have been declining or are already at low levels.

SINGAPORE 
Retail sales in Singapore rose by 7.4% in December 2022, exceeding market consensus 
(03 February 2023) Retail sales in Singapore continued to rise by 7.4% in December 2022, exceeding the market consensus of a 5.8% expansion. Meanwhile, sales were up 1.3% on a month-on-month basis. The recent trend of falling supermarket sales coupled with strong spending at department stores and recreational goods extended into December 2022. Supermarket and hypermarket sales fell 2.2% year-on-year, while department store sales and spending on recreational goods were up 11% and 7.8%, respectively. Retail sales continued to sustain gains in the face of elevated prices, the latter of which was bolstered by the return of foreign tourists. Analysis by ING projected that retail sales would moderate in early 2023 as prices remain high and economic activity is affected by the projected global economic slowdown. The implementation of the goods and services tax at the start of 2023 should add more downward pressure on sales.

THAILAND 
Land prices in Bangkok sees average increase of 70% to 75% between 2020 and 2022 
(03 February 2023) Land prices in Bangkok saw an average increase of 70% to 75% between 2020 and 2022 due to infrastructure development along with urbanisation driven by mass transit expansion. The Real Estate Information Center (REIC) recently reported the price index of vacant land in Greater Bangkok in the fourth quarter in 2022 at 381.4 points, an increase of 12.5% compared to the same period in 2021, and a rise of 3.4% from the third quarter of 2022. Despise this, the rise of prices of vacant land remained lower than the five-year pre-pandemic average of 14.8% year-on-year and 4.1% quarter-on-quarter between 2015 and 2019. The lower growth was attributed to the global economic slowdown due to the COVID-19 pandemic and the Russian invasion of Ukraine.

VIET NAM
Government seeking ways to boost Viet Nam’s exports through trade facilitation 
(03 February 2023) The Vietnamese government is considering trade facilitation measures to boost production and exports as the country attempts to avoid the global recession. Viet Nam’s Prime Minister Pham Minh Chinh noted that with external factors having led to lowering demand and decreasing production, it is important to diversify exports and supply chains while developing a resilient and self-independent economy. In order to diversify export markets, Viet Nam is considering trade facilitation, technical barriers reduction, and improving the quality of its products. It is noted that with northern Europe and Latin America representing a smaller share of Viet Nam’s exports, there is much room for growth. According to S&P Global Market Intelligence, the Vietnamese manufacturing sector faced challenging business conditions in January 2023, with declining production and new orders.

RCEP Monitor

JAPAN, ASEAN
Japan considering upgrading its relationship with ASEAN to comprehensive strategic partnership  
(25 January 2023) Japan is seriously considering upgrading its relationship with ASEAN to a comprehensive strategic partnership from its current status of strategic partnership. The upgrade in ties would be a symbolic commitment and help expand the scope of ties. Japan would be catching up with China and the United States, both of whom upgraded their relationship with ASEAN to a comprehensive strategic partnership in 2021 and 2022 respectively. 2023 is considered a milestone in the Japan-ASEAN relationship, as both sides will celebrate the 50th anniversary of diplomatic relations. Japan plans to host a special summit with ASEAN members in Tokyo in December 2023 to commemorate the 50th anniversary. The Japanese government is also preparing to hold business summits as well as conferences for Generation Z to foster youth exchange.

INDONESIA
Indonesia planning incentives for exporters to keep their foreign exchange earnings at home
(26 January 2023) Indonesia is planning incentives for exporters to keep their foreign exchange earnings onshore for at least three months. This is to ensure Indonesia has a buffer to weather risks, including a possible global economic slowdown in 2023. The government is planning on offering ‘competitive’ interest rates for exporters that deposit their forex earnings in local banks. The proposed minimum holding period would be three months in Indonesia’s financial system. The government stated they would have to make the rates competitive compared to Singapore, a regional financial hub. Details of the incentives would be laid out in a revision of a 2019 regulation that mandates exporters of natural resources keep their earnings in a special account at domestic banks. Previously, it was stated that revisions to the regulation could include applying the foreign-exchange rules to exporters in the manufacturing sector, as well as more attractive tax incentives for exporters’ special savings.

INDONESIA
Bank Indonesia indicates the end of hikes as Federal Reserves also winds down monetary tightening
(26 January 2023) Bank Indonesia has indicated the end of rate hikes as the US Federal Reserves also seemingly winds down its course of monetary tightening. It is believed the Federal Reserve’s rate will likely peak at 5.25%, with a chance of easing to 5% by the end of 2023 as US inflation cools. Indonesia itself saw a 225 basis-point increase since August 2022, which has taken the benchmark rate to the highest since July 2019. As noted by Bank Indonesia’s governor, Indonesia might have seen enough interest rate increases for now, with inflation in Indonesia expected to ease to about 3.5% by end-2023, coming off its seven-year high of nearly 6% in September 2022. The rupiah has advanced 4% in 2023 against the US Dollar, strengthening below the key 15,000 level as foreign funds return to Indonesia.

THE PHILIPPINES
The Philippines’ economy expanded by 7.6% in 2022 due to resilient domestic consumption
(26 January 2023) The Philippines’ economy expanded by 7.6% in 2022 due to resilient domestic consumption, despite soaring inflation. The growth recorded in 2022 was faster than the 5.7% growth recorded in 2021, and narrowly exceeded the government’s projection of 6.5% to 7.5% growth. Growth in domestic demand was met by expansion in the services and industry sectors, with production in most subsectors back to their pre-pandemic levels. The fastest growth was recorded in the accommodation and food services at 31.8%, following the authorities reopening the economy and lifting COVID-19-related restrictions. In the fourth quarter of 2022, the economy expanded by 7.2%, slower than the 7.8% in the same period in 2021. Inflation in December 2022 jumped to a 14-year high of 8.1%, putting the full-year average at 5.8% and breaching the central bank’s target of 2% to 4%.

THAILAND
Bank of Thailand raises rates by 25 basis points to 1.50%, signals further monetary tightening
(25 January 2023) On 25 January 2023, the Bank of Thailand’s (BOT) monetary policy committee voted to raise the one-day repurchase rate by 25 basis points to 1.50%. This is the central bank’s fourth straight interest-rate increase since 2022, with the BOT signaling sustained monetary tightening ahead to ward off ongoing price pressures as a rebound in tourism helps fuel the economy’s recovery. The BOT warned that the recovery in tourism, while spurring jobs and consumption, could also fan demand-side inflation. While headline inflation in Thailand is off the peak, core inflation remains the fastest since 2008. The BOT warned that core inflation could remain high for longer than expected due to a potential increase in pass-through given elevated costs.

SINGAPORE
Singapore home prices grew at slowest pace in more than two years in fourth quarter of 2022
(27 January 2023) Singapore home prices grew at their slowest pace in more than two years in the fourth quarter of 2022, signalling that the property boom is starting to moderate amidst dwindling supplies and rising interest rates. Private property values rose 0.4%, marking the weakest growth since the second quarter of 2020. For the full year, prices climbed 8.6%. A series of cooling measures announced in September 2022 led to a ‘knee-jerk effect’ on prices and volumes in the fourth quarter, meaning the market will need time to readjust. Private rents are expected to rise at a slower pace in 2023 as the supply of new homes picks up, easing pressure on tenants. The first three quarters of 2022 saw rents surge almost 21%.

VIET NAM
Steel industry slumps due to government crackdown on property market
(24 January 2023) Demand for steel in Viet Nam has slumped due to an ongoing government crackdown on the real estate sector, which is impacting demand for new buildings. Hoa Phat Group, the largest steelmaker in Southeast Asia, suspended operation of four blast furnaces in Viet Nam in autumn 2022, while other Vietnamese steelmakers using electric furnaces have also been forced to slash production. Operating rates at makers using electric furnaces in southern Viet Nam started declining around September 2022. Many of these plants are believed to be working at less than 50% capacity, with some having laid off employees. The government has been spearheading a crackdown on corruption, focusing on illegal deals in financial and capital markets linked to the real estate industry. These anti-corruption measures subsequently triggered a downturn in the property market.

RCEP Monitor

SINGAPORE
Geopolitical tensions increases attractiveness of Singapore as investment hub for wealthy Chinese
(15 January 2023) Geopolitical tensions have seen an increasing number of wealthy Chinese move their capital and businesses to Singapore, owing to the city-states’ neutral status. The number of Chinese family funds in Singapore has jumped from a handful a few years ago to an estimated 600 today. As well, some 500 Chinese businesses have registered in the city in 2022, hoping to use Singapore to expand into other Asian markets. In response to the influx of Chinese capital, many of the largest US, European, and Japanese investment banks have begun to shift more of their senior staff to Singapore from Hong Kong. A record S$448 billion ($339 billion) in asset management inflows was recorded in 2021, 15.7% higher than in 2020, according to the latest data from the Monetary Authority of Singapore.

MALAYSIA
Workers expected to see salary adjustments and increments of between 3% and 20% in 2023
(17 January 2023) Workers in Malaysia are expected to see salary adjustments and increments of between 3% and 20% in 2023, depending on the industry, with high-growth industries such as technology and manufacturing more likely to see major changes in salary structure. This was according to human resource service provider Randstad’s 2023 Job Market and Salary Trends Report. While salaries and careers had stagnated during the COVID-19 pandemic, the rise in the cost of living and inflation in Malaysia had forced companies to reevaluate and recheck their salary scales to keep existing talent and attract new ones. The report noted that skills and talent development are particularly needed in three industries – technology, manufacturing, and construction. It was noted that companies may shift operations to Malaysia as part of their business transformation and restructuring, which will create new job opportunities for local talent.

MALAYSIA
Malaysia’s tourism sector struggles to draw back tourists compared to other ASEAN countries
(16 January 2023) Malaysia’s tourism sector is struggling to draw back tourists compared to other ASEAN countries. Malaysia opened its borders to tourists back in April 2022, before subsequently dropping all vaccination and PCR-test requirements in August. In 2022 alone, Malaysia welcomed about 3 million visitors, up from 134,728 visitors in 2021. The intake in 2022 was just around 12% of the number of visitors to Malaysia in 2019. In comparison, Thailand, Singapore and Indonesia — which welcomed 10 million, 4.6 million, and 4.6 million international visitors, respectively — saw arrivals return to about one-quarter of pre-pandemic levels. As well, Viet Nam welcomed 3.6 million international visitors, which is about one-fifth of its intake in 2019. Malaysia’s relatively sluggish tourism rebound has been attributed to poor cost competitiveness as well as country’s reputation for Islamic conservatism.

INDONESIA
Indonesia to break ground on US$2.7 billion housing project in new capital in Q2 2023
(18 January 2023) Indonesia is expected to begin construction on a US$2.7 billion housing project in the new capital on Borneo in the second quarter of 2023. The housing project will house the thousands of civil servants expected to move to the new capital, named Nusantara. Authorities have already begun constructing much of the basic infrastructure in the area, with an aim to start relocating some government administration and civil servants in 2024. Authorities are currently in negotiation with three private developers for the housing project, including a consortium of China’s CCFG Corp and Risjadson Brunsfield Nusantara (CCFG-RBN), South Korean firm Korea Land and Housing Corp and local developer PT Summarecon Agung.

INDONESIA
Indonesia will not import fossil fuels from 2045 onwards, to be replaced with palm oil
(18 January 2023) Indonesia will not import fossil fuel from 2045 onwards, as it will have developed palm oil as an alternative fuel by then. The Indonesian government is currently researching the potential of palm oil, as it believes that Indonesia will be able to produce around 100 million tons of palm oil by 2045. At least 30% of palm oil production will be used for the food industry, while the remaining 70% will be used to manufacture ethanol. The development of alternative fuels has been identified as one of the five green pillars of the Indonesian government, alongside decarbonization of the electricity sector, the utilization of low-carbon transportation, the development of green industry, and the strengthening of carbon sink. The government has put a moratorium on oil palm plantation permits, which will have encourage greater productivity of existing plantations.

THAILAND, SRI LANKA
Thailand vows to complete FTA negotiations with Sri Lanka by the beginning of 2024
(18 January 2023) Thailand has vowed to complete FTA negotiations with Sri Lanka by the beginning of 2024. According to the director-general of Thailand’s Trade Negotiations Department, during the third round of FTA talks held on 09 – 10 January, 2023 in Colombo, the two countries agreed on a timeframe to conclude the negotiations by the beginning of 2024. The third round was supposed to have been held in 2018, but was put off for four years due to the COVID-19 pandemic and the restructuring of Sri Lanka’s negotiations-related agencies. The third round focused on rules on bilateral trade in goods and services, rules of origin, investment, customs procedures, and trade facilitation. Sri Lanka currently ranks as Thailand’s fourth-largest trading partner in South Asia. In the first 11 months of 2022, bilateral trade between the two countries tallied at US$334 million.

SINGAPORE, MALAYSIA
Johor Bahru-Singapore Rapid Transit System (RTS) Link to be operational by end-2026
(17 January 2023) The Johor Bahru-Singapore Rapid Transit System (RTS) Link is on track to be completed by end-2026. At a meeting of the foreign ministers of Singapore and Malaysia on 16 January, 2023, they noted the ‘good progress’ of the rail link project, and ‘looked forward’ to the commencement of passenger services by end-2026. The 4km rail shuttle service will connect Woodlands in Singapore to Bukit Chagar in Johor Bahru in five minutes. It will be able to serve up to 10,000 passengers per hour in each direction. Despite the change in government in Malaysia in November 2022, the rail link project was unaffected, and as of December was reportedly more than 20% completed. The project received approval from Malaysia back in 2019.

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ASEAN
Indonesia to set up office to spearhead ASEAN’s response to Myanmar crisis
(11 January, 2023) As chair of ASEAN for 2023, Indonesia will set up an office to spearhead ASEAN’s response to the ongoing Myanmar crisis. Called the Office of Special Envoy, it will be headed by Indonesian Foreign Minister Retno Marsudi. Marsudi stated that she will seek to engage with ‘all stakeholders’ in Myanmar, noting that it is crucial to enable a national dialogue to address the crisis afflicting the country. Marsudi said Indonesia’s moves are in line with a five-point consensus on Myanmar that ASEAN had earlier adopted. Marsudi added that ASEAN is “disappointed” with the lack of progress that the Myanmar junta, which seized power in a military coup on 01 February, 2021, is making toward implementing the consensus. The five-point consensus calls for an immediate cessation of violence, dialogue among all parties concerned and a visit by the ASEAN special envoy to Myanmar.

THAILAND
Thailand rescinds policy requiring visitors to show proof of COVID-19 vaccinations
(09 January 2023) On 09 January, 2023, Thailand rescinded a policy announced on 07 January 2023, requiring visitors to show proof of COVID-19 vaccinations. Thailand’s health minister stated that requiring visitors to show proof of vaccination was inconvenient, and that enough vaccinations had been administered globally to forgo the policy. Thailand’s aviation authority had initially announced the policy as effective on 09 January, 2023, ahead of an expected deluge of Chinese visitors. Thailand is now expecting some 7 to 10 million Chinese visitors, compared to an earlier estimate of some 5 million visitors. Thailand’s tourism authority is expecting arrival numbers for 2022 to have exceeded 11.5 million, just over a quarter of the record of nearly 40 million in 2019.

MALAYSIA
Malaysia to operate special lanes for Chinese visitors at international entry points
(10 January 2023) Malaysia’s Immigration Department will operate special lanes for travelers from China at its international entry points. This is part of Malaysia’s efforts to contain the COVID-19 virus. Travelers who are suspected to be COVID-19 positive will then be referred to health ministry officials who are stationed onsite. Thermal scanners will be set up at international entry points, with symptomatic travelers having to undergo throat swabs as well as the rapid antigen test. Travelers who test positive will subsequently have to either isolate themselves at home or at their lodging residences, or be referred to the hospital depending on the severity of their symptoms. On 08 January, 2023, Malaysia’s tourism minister had announced that his ministry will station officers who are fluent in Mandarin at all international airports to help Chinese travelers who have difficulty communicating in English.

MALAYSIA
Malaysia’s economy expected to grow by 4.1% in 2023, reflecting high base effect and weakening external environment
(09 January 2023) According to the Socio-Economic Research Centre (SERC), Malaysia’s economy is expected to grow by 4.1% in 2023, reflecting the normalization of technical high-base effects and a weakening external environment. Growth in 2023 is expected to face headwinds including moderating exports, normalization of domestic demand, inflation and high cost of living, and interest rate hikes. The SERC foresees mild and shallow recessions in advanced economies like the US and Europe, but this is likely to be mitigated by the reopening of China. Meanwhile, global inflation will likely cool throughout 2023, and central banks are unlikely to cut rates. Bank Negara Malaysia is expected to raise its overnight policy rate by an additional 50 basis points in 2023, bringing the benchmark interest rate to its pre-pandemic level of 3.25%.

THE PHILIPPINES
The Philippines’ trade deficit shrank 21.9% year-on-year in November 2022 as exports grew
(10 January 2023) The Philippines’ trade deficit shrank to 21.9% year-on-year in November 2022 as exports continued to improve amidst a smaller import bill. The trade deficit stood at US$3.68 billion in November, larger than the $3.31 billion gap recorded in October 2022. The country’s external trade grew by 3.6% year-on-year to US$17.89 billion in November, slower compared to the 12.5% annual growth in October. Exports grew by 13.2% year-on-year to US$7.1 billion in November, while imports dropped by 1.9% year-on-year to US$10.78 billion. Should the trade deficit continue to narrow, the pressure on the peso is expected to ease. However, the declining import of capital goods is a cause for alarm, as it may suggest lower infrastructure and investment spending.

INDONESIA
Tesla close to preliminary deal to set up factory in Indonesia
(11 January 2023) Electric vehicle maker Tesla is close to a preliminary deal to set up a factory in Indonesia, with the automaker hoping to capitalize on Indonesia’s rich deposits of nickel, a key component of EV batteries. The plant would produce as many as 1 million cars a year, in line with Tesla’s ambition for all its factories globally to eventually reach that capacity. The discussions include plans for multiple facilities in Indonesia serving different functions, including production and supply chain. Indonesian President Joko Widodo had visited Tesla CEO Elon Musk in May 2022, and subsequently struck a US$5 billion nickel-supply agreement with the carmaker in August 2022. An Indonesian factory would be at least the third Tesla plant outside the US market, joining facilities in China and Germany.

SINGAPORE
700 families office currently in Singapore, up from 400 in end-2020
(12 January 2023) There are currently 700 family offices in Singapore, up from 400 at end-2020 and a sevenfold increase from 2017. This comes as more ultra-high net worth families set up offices in Singapore to manage their wealth. These families come from Asia, Europe and the United States, with demand from Asia particularly prominent given that private wealth has grown faster within the region than elsewhere in the world. The COVID-19 pandemic had forced affluent families to reconsider their wealth management and succession plans to better prepare against future uncertainty, prompting many to open offices in Singapore. Observers have pointed to several factors that make Singapore an attractive destination for setting up family offices, including its stable political and regulatory environment, a developed financial services sector, and good living standards.

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ASEAN, INDONESIA
Indonesia’s 2023 ASEAN Chairmanship begins under theme of ‘ASEAN Matters: Epicentrum of Growth’
(04 January 2023) Indonesia’s 2023 Chairmanship began on 01 January, 2023 under the theme of ASEAN Matters: Epicentrum of Growth’. This followed Indonesia’s presidency of the G-20 in 2022, during which it led the world’s top 20 economies in a year marked by the Russo-Ukraine War and the resulting food and energy crisis. Economic growth will be a huge part of Indonesia’s ASEAN chairmanship, with Indonesian President Joko Widodo having called for robust, inclusive, and sustainable economic growth within ASEAN. Indonesia also intends to navigate ASEAN through the ongoing Sino-China rivalry, with the aim of preventing the bloc from becoming a proxy to either superpower. Indonesia will also have to resolve the ongoing Myanmar Crisis, with Myanmar currently having made zero progress on ASEAN’s five-point consensus. Jakarta also intends to continue supporting the accession of Timor-Leste to ASEAN.

INDONESIA
Indonesia raises US$3 billion in US dollar bond issuance, its first for the year
(05 January 2023) Indonesia raised US$3 billion in a US dollar bond issuance, its first for the year in a transaction that drew in a total of US$14.4 billion worth of orders. The Indonesian government issued the bonds in five, 10 and 30 year tranches. These raised US$1 billion, US$1.25 billion and US$750 million respectively. The final orders were US$3.6 billion for the five-year bond, US$4.7 billion for the 10 year and US$6.15 billion for the 30 year tranche. Final yields were set at 4.8% for the five year, 5.1% for the 10 year and 5.75% for the 30 year bond. Proceeds from the bond issuance will be used to finance the state budget. The Indonesian government usually offers foreign investors bonds denominated in US Dollar, Euros, and Japanese Yen throughout the year.

THE PHILIPPINES
President Ferdinand Marcos Jr. secures US$22.8 billion worth of investment pledges from China
(05 January 2023) The Philippines President Ferdinand Marcos Jr. secured some US$22.8 billion worth of investment pledges during a state visit to China. Marcos Jr. had met with Chinese President Xi Jinping on 04 January, 2023 as part of a three day visit. The commitments Marcos Jr. secured from Chinese investors included US$13.76 billion for renewable energy, US$7.32 billion for electric vehicles and mineral processing, and US$1.72 billion for agriculture. Among the 14 agreements signed in total, some were regards to loans and infrastructure under China’s Belt and Road Initiative, as well as agriculture exports to China. Both parties also agreed to narrow the trade gap which currently favors China, as well as find compromises with regards to the ongoing South China Sea dispute.

THE PHILIPPINES
The Philippines’ central bank ready to take ‘all policy action necessary’ in response to
inflation
(05 January 2023) The Philippines’ central bank stated they were ready to take ‘all policy action necessary’ in response to upward pressure on consumer prices. The consumer price index rose 8.1% year-on-year in December 2022, driven mainly by higher food and energy prices. This brought the full-year average to 5.8%, a 14 year high and above the official 2% – 4% target band. The central bank noted that upside risks will continue to dominate the inflation outlook up to 2023, while remaining broadly balanced in 2024. The central bank also set the same 2% – 4% inflation target for 2023. Core inflation, which excludes volatile food and energy components, rose to 6.9% in December 2022 from 6.5% in November. Meanwhile, food inflation increased to 10.6% in December from November’s 10.3%, reflecting spikes in prices of vegetables, sugar, rice and other agricultural commodities due to climatic conditions and holiday demand.

MALAYSIA
Malaysia’s economy expected to grow by 4% in 2023 amidst lingering environment of high inflation
(05 January 2022) According to Maybank Investment Bank (Maybank IB), Malaysia’s economy is expected to grow by 4% in 2023 amidst an environment of high inflation and rising interest rates globally. This is compared to the estimated 8% growth in 2022. Although consumer spending is expected to slow down to 6% in 2023, consumers are expected to tap into their excess savings built up during the COVID-19 pandemic to sustain consumer spending growth. Inbound tourism is expected to sustain a resurgence in 2023, while robust approved investment growth is likely to continue amid supply chain relocation and rising capital expenditure for data centres, 5G infrastructures as well as automation. In terms of monetary policy, Maybank IB predicted that Bank Negara Malaysia (BNM) will raise its overnight policy rate (OPR) by another 25 basis points to 3% before pausing for the rest of 2023.

SINGAPORE
Singapore’s economy grows more than expected at 3.8% year-on-year in 2022
(03 January 2023) Singapore’s economy grew more than expected at 3.8% year-on-year in 2022. 2022’s growth beat the 3.5% expected by the government, but was half the 7.6% growth seen in 2021. However, this was weighted by a 3.0% contraction in the key manufacturing sector in the final three months. Growth in the fourth quarter came in at 2.2%, sharply down from 4.2% in the third quarter. Exports for computer chips and other products have been hit by softer global demand caused by surging inflation and interest rate hikes. Moving forward, domestic demand is expected to be hit by elevated interest rates, declining household savings and high inflation. Prime Minister Lee Hsien Loong warned in his New Year’s message that growth in 2023 is expected to ease to 0.5 – 2.5%.

CAMBODIA, UNITED STATES
Trade between Cambodia and the United States reach US$8.51 billion in the first 11 months of 2022
(01 January 2023) Total trade between Cambodia and the United States reached US$8.51 billion in the first 11 months of 2022, marking gains of 21.79% on-year, with Cambodian exports to the United States accounting for a 96.56% share. Cambodia’s trade surplus with the United States for the same period expanded by 24.35%, from US$6.37 billion to US$7.93 billion. The United States remained Cambodia’s largest export market, comprising a 40.17% market share of the total US$20.458 billion. In December 2022, the two-way merchandise trade came to US$620.18 million, down 2.28% from November 2021 but up 4.63% from October 2022.

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ASEAN
Workers in Southeast Asia expected to see larger salary bumps in 2023 due to persistent inflation and labor crunch
(28 December 2022) Workers across Southeast Asia are expected to see bigger salary bumps in 2023 as companies seek to retain talent in the face of persistent inflation and labor crunch. According to a survey carried out by services companies Aon, median salary increase budgets across industries in 2023 are forecast at 6.8% for Indonesia, 5.1% for Malaysia, 6.0% for the Philippines, 4.7% for Singapore, 5.1% for Thailand and 7.9% for Viet Nam. With the exception of Malaysia, all figures are expected to exceed 2022 rates. While inflation plays a significant role in driving salary changes within ASEAN, the shifts are also due to supply and demand in the labor market, with high attrition rates in 2022 putting pressure on employers to boost compensation to ease hiring and retention. Another survey by consultancy Mercer released in November 2022 projected that markets in the Asia-Pacific region would see an average 4.8% increase in overall salaries in 2023, a slight jump from 4.6% in 2022.

MALAYSIA
Malaysian export prices fell 0.7% in November 2022 while import value barely moved
(28 December 2022) According to the most recent statistics by Malaysia’s Department of Statistics (DOSM), Malaysian export prices fell by 0.7% in November 2022, while the import value index barely moved. In their statement, the DOSM noted that the export unit value index dipped to 148.7 points from 149.7 points in October 2022, while the import unit value index eased by a marginal 0.01% to 133.2 points. The DOSM also noted that Malaysia’s terms of trade continued to decline by 0.7% month-on-month to 111.6 points in November 2022. In terms of the export volume index, it had decreased by 0.4% in the same month. Malaysia’s terms of trade maintained a positive year-on-year growth of 4.3% compared with 107.0 points in November 2021.

SINGAPORE
Singapore’s Internet tech rout intensifies with US$110 billion wipeout for both Sea Ltd and Grab combined
(28 December 2022) The tech rout currently roiling Singaporean markets has been intensified by the US$110 billion wipeout for both Sea Ltd and Grab Holdings, both the largest tech firms in Singapore by market capitalization. Sea Ltd saw its market capitalization plunge by 78% in 2022 while Grab Holdings’ has more than halved. Higher interest rates and a slowing economy has created a challenging environment for Singapore’s tech firms, as investors increasingly begin to question their ability to turn a profit. The MSCI Singapore gauge has lagged the Straits Times Index — which doesn’t count Grab and Sea as its members and is more focused on old-economy sectors like banking and property — by about 20 percentage points in 2022. The outlook for Singaporean tech firms remains dim as concerns over a potential recession have triggered layoffs, closure of business units, and other measures to rein in expenses across the tech industries.

MALAYSIA
Malaysian conglomerate Berjaya Corp mulling potential acquisition of financial services firm
(28 December 2022) Malaysian consumer-to-property conglomerate Berjaya Corp is currently evaluating the potential acquisition of a licensed financial services entity governed by the central bank. To facilitate the potential purchase of a 51% equity stake, Berjaya Corp said its founder and major shareholder Vincent Tan Chee Yioun intends to pare down his stake to not more than 19.6% by the end of January 2023. Tan currently owns an 18.84% stake in Berjaya. Under Malaysia’s financial services act, no individual should hold more than 10% of a licensed entity governed by the country’s central bank. Berjaya currently has businesses in the financial services sector via units including stockbroking firm Inter-Pacific Securities Sdn Bhd and general insurer Berjaya Sompo Insurance Bhd.

MALAYSIA
Malaysia to present its 2023 budget on 24 February, 2023, according to new government
(29 December 2022) The Malaysian government will present its budget for 2023 on 24 February, 2023, according to a schedule published on its parliament’s website. The previous administration of Prime Minister Ismail Sabri had on 07 October, 2022 unveiled a smaller budget for 2023, but it was never approved as parliament was dissolved to make way for national elections in November 2022. Newly-elected Prime Minister Anwar Ibrahim, who is also the nation’s finance minister, is expected to present an updated budget when parliament convenes in February 2023. Prime Minister Anwar Ibrahim has ordered a review of government subsidies programmes, aiming to direct money towards lower-income groups. Malaysia is estimated to spend a record US$17.4 billion on subsidies in 2022.

VIET NAM
Viet Nam’s GDP grows at 8.02% in 2022, fastest pace in 25 years
(29 December 2022) Viet Nam’s GDP grew at 8.02% in 2022, the fastest pace in 25 years, backed by strong domestic retail sales and exports. The reading is higher than the official growth target of 6.0%-6.5% and growth in 2021 of just 2.58%, when COVID-19-related lockdowns impacted factory activity. Viet Nam’s high annual growth comes despite fears of a global recession and its impact on demand for Vietnamese exports. Viet Nam is a key manufacturer of goods like textiles, footwear and electronics for big-name international brands. GDP growth in the fourth quarter of 2022 was measured at 5.92%, slowing from an expansion of 13.71% in the third quarter. Exports in 2022 were up 10.6% to US$371.85 billion, while retail sales rose 19.8%.

VIET NAM, LAO PDR
Viet Nam and Lao PDR agree to intensify cooperation in areas of agriculture, forestry, fishing and rural development
(29 December 2022) Viet Nam and Lao PDR agreed to intensify their cooperation in the areas of agriculture, forestry, fishing, and rural development. During a meeting between the Minister of Agriculture and Rural Development of Vietnam, Le Minh Hoan, and the Minister of Agriculture and Forestry of Lao, Phet Phomphhiphak, both countries examined their plan with regards to cooperation in the above mentioned areas. Both countries also reviewed their cooperation for the 2017-2021 period. In terms of intensifying cooperation, there was emphasis on the training of human resources, technical support, the exchange of experts and the promotion of aid projects from Viet Nam to Lao PDR. In order to strengthen trade and investment ties, both parties also called for promoting connectivity in agriculture between both companies, hold frequent exchanges, and establish a joint agricultural business association.

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ASEAN
Southeast Asian venture capital firms expected to be pickier in 2023 amidst economic headwinds
(19 December, 2022) Southeast Asian venture capital firms are expected to be pickier in 2023 than in 2022 amidst plunging valuations and economic headwinds worldwide. According to data firm Crunchbase, venture capital-backed companies raised only US$369 billion in the first three quarters of 2022, compared to the whole of 2021’s record-breaking feat of US$679.4 billion invested globally. Tech stocks began stumbling in the beginning of 2022 amidst rising interest rates and disappointing earnings results. Mahy Southeast Asian tech firms have lost most of their valuations since going public. For instance, Sea Group’s market capitalization currently stands at around US$30 billion, down from more than US$200 billion recorded in late 2021. GoTo’s US$28 billion valuation has dropped more than 75% since it went public in Jakarta in April, while Grab has lost 69% of its initial valuation of about US$40 billion since its December 2021 debut. While many Southeast Asian funds have capital to deploy, they are currently awaiting greater investment opportunities.

ASEAN
Foreign ministers from five ASEAN Member States meet to discuss developments in Myanmar
(23 December 2022) Foreign ministers from five ASEAN Member States met in Bangkok on 23 December, 2022, to discuss the ongoing crisis in Myanmar. Thailand hosted the meeting with Myanmar’s military-appointed Foreign Minister Wunna Maung Lwin, while foreign ministers from Cambodia, Viet Nam and Lao PDR also attended. The other five ASEAN Member States – Malaysia, Indonesia, the Philippines, Singapore and Brunei Darussalam – were invited but declined to attend. In April 2021, ASEAN put forth a “five-point consensus” on the situation in Myanmar, calling for an immediate end to violence. But Myanmar’s military has made little progress on its implementation. While ASEAN had agreed to set a deadline for Myanmar to implement the five-point consensus in October 2022, it failed to reach a concrete agreement in November.

THE PHILIPPINES, SOUTH KOREA
The Philippines and South Korea sign US$3 billion ODA loan package
(23 December 2022) The Philippines and South Korea signed a Korean Development Assistance loan package worth US$3 billion on 21 December, 2022. The Framework Arrangement signed between both countries concerned loans from the Economic Development Cooperation Fund for the years 2022 through 2026. This enables the Philippine government to obtain ODA loans from the Korean government up to a maximum commitment of US$3 billion until 2026. The Framework Arrangement paves the way for the implementation of more development cooperation projects between both countries. The amount of US$3 billion is three times that of the previous 2017-2022 term arrangement. In 2021, South Korea was the Philippines’ 6th largest ODA source. South Korea has participated in several Philippines infrastructure development projects, including the construction of highways, railways, ports and airports.

INDONESIA, JAPAN
Japanese lender MUFG Bank will invest US$200 million in Indonesian fintech firm Akulaku
(23 December 2022) Japanese lender MUFG Bank will invest US$200 million in Indonesian fintech firm Akulaku, and is expected to hold a stake of around 10%. Akulaku was established in 2014 and offers ‘buy now, pay later’ services to its subscribed customers of about 30 million. The company posted revenue of around US$600 million in 2021 and is one of the most promising fintech companies in Indonesia. Akulaku mainly offers its services to partner e-commerce operators. MUFG Bank plans to expand its customer base in Indonesia by investing into fintech companies that offer its services online. As well, the company also aims to grow its services through investments in diverse financial companies throughout the Southeast Asian region.

THAILAND
Thailand to exceed its most-recent target for foreign tourist arrivals by about 15%
(23 December 2022) Thailand will exceed its most-recent target for foreign tourist arrivals by about 15%, due to a year-end rush of tourists from Europe and the US. According to the Tourism Authority of Thailand, at least 11.5 million international travelers will come in 2022, compared to the initial target of 10 million. Thailand’s foreign-arrival numbers has largely picked up since mid-2022, after almost all COVID-19-related restrictions were lifted, giving a boost to Southeast Asia’s second-largest economy. About 12% of Thailand’s GDP came from foreign tourism prior to the pandemic. Total revenue from the tourism sector, including domestic tourists, is expected to reach US$43 billion in 2022, about half the pre-COVID-19 levels. The Tourism Authority of Thailand has kept its target for foreign visitors in 2023 unchanged at 20 million.

MALAYSIA
Malaysia’s urbanization rate nearly triples since 1970, with three quarters of population living in cities now
(23 December 2022) Malaysia’s urbanization rate has nearly tripled since 1970, with three quarters of the country’s residents now living in cities. According to the Department of Statistics, Malaysia’s urban population expanded to 24.4 million in 2020 from 3 million in 1970. Concurrently, the rural population rose slightly to 8.1 million from 7.5 million within the same period. The data underlines the Malaysian economy’s shift away from a major producer of commodities such as rubber and tin to one of the world’s leading producers of semiconductors. Shipments of manufactured goods, including the growing electrical and electronics sector, made up almost 85% of total exports in November 2022, with agricultural goods accounting for just 7%. In 2021, Malaysia was the world’s sixth-largest exporter of semiconductor devices and integrated circuits.

SINGAPORE
Core inflation in Singapore holds steady at 5.1% year-on-year in November 2022
(23 December 2022) Core inflation in Singapore held steady at 5.1% year-on-year in November 2022, the same rate as in the previous month. This was due to smaller increases in the costs of services and electricity and gas being broadly offset by a steeper pickup in the costs of retail and other goods and food. Core inflation excludes accommodation and private transport costs. The headline consumer price index, or overall inflation, also remained unchanged in November 2022 at 6.7%. On a month-on-month basis, core inflation increased marginally by 0.2% and overall inflation by 1%. Core inflation is expected to remain elevated in the next few quarters before slowing down in the second half of 2023. For 2022 as a whole, overall inflation is expected to average about 6% and core inflation about 4%.

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