ASEAN
Asian Development Bank downgrades 2023 growth projections for Southeast Asia to 4.7%
(14 December 2022) In its latest report, the Asian Development Bank (ADB) downgraded its growth projections for 2023 for Southeast Asia to 4.7%, from a previous projection of 5.0% growth made in September 2022. However, the ADB also raised its 2022 growth forecast for Southeast Asia to 5.5% from a previous forecast of 5.1%. Viet Nam was predicted to be the fastest growing economy in Southeast Asia in both 2022 and 2023, at 7.5% and 6.3% respectively. The ADB trimmed its 2023 growth outlook for developing Asia to 4.6% from 4.9%. Developing Asia will also likely end 2022 with a 4.2% expansion, slightly lower than the 4.3% forecast in September. The ADB attributed the slowdown in growth across Asia in 2023 to recurrent lockdowns in China, the war in Ukraine, and slowing global growth. High inflation and rising interest rates are also expected to have a negative impact.

ASEAN, EUROPEAN UNION
ASEAN and EU resolve to cooperate more at first-ever EU-ASEAN Summit in Brussels
(15 December 2022) ASEAN and the EU resolved to cooperate more on everything from green energy to security at the first-ever EU-ASEAN Summit, which was held in Brussels on 14 December, 2022. The Summit commemorated the 45th anniversary of diplomatic ties between both countries, and came as both blocs see an increasing confluence of interests, including in charting their own strategic paths outside of the US-China rivalry. In a joint statement, the leaders of both blocs vowed to develop the EU-ASEAN Strategic Partnership, which is based on international law, mutual interest and mutually beneficial cooperation. The EU also announced the first tranche of investment projects with ASEAN under the Global Gateway investment strategy. The total package is worth EUR 10 billion. The Global Gateway seeks to provide investments in infrastructure worldwide, focusing on energy, transport, digitalization, education, trade and sustainable value chains.

INDONESIA
Indonesia posts larger-than-expected trade surplus of US$5.16 billion surplus in November 2022
(15 December 2022) Indonesia posted a larger-than-expected trade surplus of US$5.16 billion in November 2022. A poll carried out by Reuters had expected a trade surplus of US$4.26 billion. Indonesia’s imports had unexpectedly contracted by 1.89% on a yearly basis to US$18.96 billion. Exports were up by 5.58% on a yearly basis to US$24.12 billion, the slowest increase since October 2020. The value of exports for the January-November period, at US$268.18 billion, surpassed the country’s highest record for annual shipments, which was reached in 2021 at US$231 billion. While Indonesia’s exports have enjoyed a boom in 2022 due to high commodity prices, export growth has been slowing since June due to moderating prices of commodities such as palm oil, nickel, and iron ore.

SINGAPORE, CHINA
Boom in Chinese family offices setting up office in Singapore draws finance professionals
(12 December 2022) A boom in mainland Chinese family offices setting up in Singapore has been drawing thousands of financial professionals from other investment banks. Wealthy mainland Chinese account for up to half of a rise in Singapore-based single family offices. Total numbers have jumped nearly threefold since the COVID-19 pandemic began, and now total as many 1,500. Since April 2022, the Singapore government has required Singapore-based family offices to hire at least two investment professionals to qualify for tax exemptions, while larger funds must have at least three. These new rules have incentivized these family firms to employ thousands of finance professionals, including asset management, private wealth management and other banking professionals. The government also tightened other rules in 2022, with higher minimum capital and hiring requirements.

MALAYSIA
Property sector expects 2023 to be challenging due to current property glut
(15 December 2022) The Malaysian property sector expects 2023 to be challenging due to the current glut in the property market. The property market had been heavily impacted by the COVID-19 pandemic due to inflation, interest rates hikes, productivity lag, labour shortages as well as issues in the supply chain which either drove up costs or reduced productivity. Due to an oversupply of properties in certain sectors and locations, developers are trying to come up with innovative ways to do sales and promote their products. The property sector saw a significant recovery in 2022, driven by pent-up demand. Looking at the data of the property industry in 2022, volumes had increased by 70% with about 105,000 transactions, while value increased by 30% to MYR 47 billion worth of transactions.

THE PHILIPPINES
The Philippines’ central bank raises key interest rate to 5.5% to tame high inflation
(15 December 2022) On 15 December, 2022, the Philippines’ central bank raised its key interest rate by half a percentage point to 5.5%, its highest level since January 2009. The hike matched the US Federal Reserve’s latest monetary tightening on Wednesday. This latest move came after a 75-basis-point increase in November 2022. Inflation in the Philippines had accelerated to 8% in November, its fastest pace since 2008. This puts the 11-month average at 5.6%, well above the central bank’s 2% to 4% inflation target. So far, the central bank has raised its key rate by 3.5 percentage points in 2022, as it tries to ease the downward pressure on the Philippines’ peso from the US Federal Reserve’s rate increases. The peso had dropped to a record low of 59 against the US Dollar in October, before it stabilized at 55 in December.

CAMBODIA, CHINA
China-linked toll expressway opens for business after three years of construction work
(13 December 2022) Cambodia’s first toll expressway, which is a Chinese-linked project and connects Phnom Penh and Sihanoukville, has opened for business after three years of construction. The expressway cost around US$2 billion to construct, and stretches some 190 kilometers. The expressway cuts the time of the trip between the two cities from five hours to two. The expressway is operated by Chinese state-owned company China Road and Bridge Corporation (CRBC), who also constructed the road after China and Cambodia signed a deal for the road in 2018 under the build-operate-transfer model. Under the agreement, CRBC will collect tolls for five decades before transferring ownership to Cambodia. The expressway is expected to drive investments into the country.

RCEP Monitor

ASEAN, SOUTH KOREA
South Korean President Yoon Suk-yeol seeks closer ties with ASEAN as part of Indo-Pacific strategy
(06 December 2022) South Korean President Yoon Suk-Yeol is seeking closer ties with ASEAN as part of his Indo-Pacific strategy. On 05 December, 2022, President Yoon hosted Vietnamese President Nguyen Xuan Phuc in Seoul as his first state guest since taking office in May 2022. During the state visit, both South Korea and Viet Nam reaffirmed plans to cooperate in the defense industry and in the development of rare earth metals. President Yoon described Viet Nam as a ‘core partnering nation’ in South Korea’s Indo-Pacific strategy and in the Korea-ASEAN Solidarity Initiative. Yoon had outlined a new strategy for engaging with ASEAN during his visit to Cambodia in November 2022 to attend the East Asia Summit. Yoon seeks to expand South Korean investments, currently focused in Viet Nam and Singapore, to the rest of the region.

MALAYSIA
Malaysia remains preferred investment destination for Chinese investors in the digital economy
(07 December 2022) According to the Malaysia Digital Economy Corporation (MDEC), Malaysia remains the preferred investment destination for Chinese investors in the digital economy. Among the prominent Chinese companies awarded Malaysia Digital Status recently included Bytedance, Chin Data, ChinaSoft International and GDS Data Centers. The Malaysia Digital initiative was launched by the government in July 2022, and is designed to help drive digital transformation in focus areas in Malaysia. The Malaysia Digital Status is awarded to eligible companies to participate in and undertake any of Malaysia Digital’s activities. Malaysia Digital Status companies will be entitled to a set of incentives, rights and privileges from the government.

SINGAPORE
Singapore to introduce new ‘complex’ safety net rules for gig economy
(08 December 2022) Singapore will introduce new safety net rules for the gig economy from late 2024 onwards. Described as ‘complex’ by tech companies, the new set of rules will require ride-hailing and food delivery companies to contribute to social security savings programmes for workers, and compensate them for workplace injuries. Following the release of recommendations by a government advisory committee, major tech platforms like Singapore’s Grab, Foodpanda and Indonesia’s Gojek, all of whom heavily rely on gig workers, broadly welcomed the move to provide basic protections for gig workers in Singapore, of whom there are more than 73,000. However, there are concerns that these regulations will cause platform services to become more expensive, adding further uncertainty to the still-unprofitable tech companies.

THE PHILIPPINES
Business groups attack government plan to set up US$4.9 billion sovereign wealth fund
(05 December 2022) Filipino business groups have attacked a government plan backed by President Ferdinand Marcos Jr. to set up a US$4.9 billion sovereign wealth fund. Critics of the plan claim it could end up becoming like 1MDB, the controversial debt-ridden Malaysian sovereign wealth fund. On 05 December 2022, 12 business and economic policy groups, including the prominent Makati Business Club and Management Association of the Philippines, stated that they did not support creating the Maharlika Investments Fund. They noted that while in other countries sovereign wealth funds are funded by commodities or export revenue surpluses, the Philippines faces ballooning fiscal deficits and debt. Under the proposed plan, the fund will draw initial capital mainly from state pension funds and from two major state-owned lenders.

THE PHILIPPINES
Jobless rate eases to 4.5% in October 2022, with number of unemployed people dropping to 2.24 million
(07 December 2022) The jobless rate in the Philippines eased to 4.5% in October 2022, with the total number of unemployed people in the country dropping to 2.24 million from 3.5 million in October 2021, with 1.26 million escaping joblessness in 2022 amid record high inflation. The unemployment rate in October was lower than the 7.4% recorded in October 2021 and the 5% recorded in September 2022. The employment rate in October rose to 95.5%, from 95% in September. This was the highest rate recorded since January 2020. It meant there were 47.11 million employed Filipinos in October, up from 43.82 million in the same period in 2021.

VIET NAM, CAMBODIA, JAPAN
More Japanese apparel manufacturers shift production away from China to Cambodia and Viet Nam
(08 December 2022) More Japanese apparel manufacturers are shifting production away from China to Southeast Asia, including in Cambodia and Viet Nam, due in part to China’s rising labor costs and zero-COVID-19 policies. As Japanese companies seek to reduce costs amidst a depreciating yen and rising costs of raw materials, many are leveraging upon the Regional Comprehensive Economic Partnership (RCEP) to expand production to RCEP countries in Southeast Asia. Adastria, which owns popular fashion brands including Global Work, has increased production in Cambodia and Viet Nam in 2022, mainly for standard products such as blouses. Meanwhile, major menswear company Aoyama Trading is expanding its product procurement from Indonesia and Viet Nam, while Matsuoka Corporation, a contract manufacturer for Uniqlo subsidiary Fast Retailing, is planning on increasing its production in Viet Nam from 16% to 28% by fiscal year 2025.

THAILAND
Tesla enters Thai market as EV competitors seek to set up local production
(07 December 2022) EV manufacturer Tesla has officially entered the Thai market, the second market in Southeast Asia that Tesla has entered. The first Tesla showroom in Southeast Asia had opened in Singapore in 2021. Tesla opened its first pop-up outlet in Thailand in Bangkok’s Siam Paragon mall, and they plan to set up at least 10 supercharging stations in the country in 2023. This comes amidst greater competition from other EV players to set up local production in Thailand, hoping to take advantage of government incentives. The Thai government in 2022 cut the import tax on electric vehicles from 8% to 2% for foreign makers who promise to begin local production within a certain time frame. Tesla, however, has no plans to set up production in Thailand.

RCEP Monitor

ASEAN
Growth across the ASEAN manufacturing sector reports slowdown for second consecutive month
(01 December 2022) According to S&P Global’s latest purchasing managers index (PMI) survey, growth across the ASEAN manufacturing sector reported a slowdown for the second consecutive month in November 2022, amid falling factory orders for the first time in 14 months as a result of reduced client activity. It was noted that firms registered a weaker rise in purchasing activity, while staffing levels fell for the first time since June 2022. The ASEAN headline PMI registered 50.7 in November 2022, down from 51.6 in October, signaling only a mild improvement in operating conditions. While the latest reading remained above the 50.0 mark, indicating a 10th monthly improvement in the health of the ASEAN manufacturing sector, the rate of growth was the slowest within this period. Cost pressures across the region’s manufacturing sector remained elevated in November, due to high material and energy costs.

THAILAND
Thailand to levy tax on stock trading in 2023 to fund post-pandemic recovery
(29 November 2022) Thailand will levy a tax on stock transactions in 2023, as the country seeks to tap new revenue streams to fund its post-pandemic recovery measures. According to the finance ministry, a levy of 0.05% will be imposed on stock trading in 2023, before it’s raised to 0.1%. Some investors such as market-makers and pension funds will be exempted from the tax. The country had waived the tax in January 1992 to help promote equity trading. In the past three decades, the value of average daily stock trading has surged about tenfold to US$2.3 billion, as more retail investors turn towards the market amidst a low interest rate environment. Thailand’s bourse has about 660 listed companies. Thailand’s Finance Minister noted that retail investors might be less impacted than large investors by the new levy.

THAILAND
The Bank of Thailand raises its key interest rate by quarter point to 1.25% to keep inflation in check
(30 November 2022) The Bank of Thailand raised its key interest rate by a quarter point to 1.25% in order to keep inflation in check. This is the third time in a row in 2022 the Bank of Thailand has raised its key interest rate, bringing the rate to its highest since February 2020. The bank had previously raised rates by 25 basis points in both August and September. Inflation in Thailand had slowed to 5.98% in October, down from 6.41% in September. Prices are still rising relatively quickly, largely due to accelerating oil prices. The bank has forecast Thailand’s economy to grow by 3.3% in 2022, while also expanding by 3.8% in 2023.

SINGAPORE, SOUTH KOREA
Korean entertainment company SM Entertainment plans to set up its Southeast Asian headquarters in Singapore
(30 November 2022) South Korean entertainment company SM Entertainment plans to set up its Southeast Asian headquarters in Singapore as part of its expansion plans in the region. The planned Singapore headquarters will be managing its joint ventures in Indonesia, Viet Nam and Thailand, as well as communicate with its South Korea office for other related ventures and plans. The company is currently in the midst of hiring more local talents. The company also plans to set up retail businesses in Singapore, including cafes, merchandise stores, and pop-up exhibitions. SM Entertainment’s Indonesia branch has won brand endorsements such as Mie Sedaap and Sasa for Choi Siwon of K-pop boy band Super Junior, and Somethinc and Lemonilo for NCT Dream.

MALAYSIA
Malaysian palm oil output to drop by 5% to 8% month-on-month in November 2022 due to flooding
(30 November 2022) Malaysian palm oil output will likely drop by 5% to 8% month-on-month in November 2022 due to the impact of heavy rains and flooding on plantation operations. Rainfall was much higher than usual in October and November, which prevented harvesting and transport of palm fruit in several producing regions. Supply worries caused by the flooding have sent benchmark palm oil prices to near a four-month high in November. In the first 15 days of November, many oil palm estates had water levels that were several feet high, leading to crop losses. Among the affected areas included Perak, Pahang and Johor in Malaysia, as well as Kalimantan in Indonesia. Malaysia’s total palm oil production is estimated at 18.2 million to 18.4 million tonnes in 2022.

INDONESIA
Inflation eased in November 2022 but stayed above the central bank’s target range
(01 December 2022) Inflation in Indonesia eased in November 2022, but stayed above the central bank’s target range for the sixth consecutive month amid rising food prices and higher transportation fares. Headline annual inflation eased to 5.42% in November, compared with 5.71% in October. Bank Indonesia’s inflation target range is 2% to 4%. Annual core inflation which excludes government-controlled prices and volatile food prices, edged lower to 3.30% from 3.31% in October. Among the largest contributors to inflation were fuel prices, air fares, and inner city transportation costs. Bank Indonesia intends to maintain a front-loaded and pre-emptive interest rate policy in 2023 to control inflation.

THE PHILIPPINES
The Philippines central bank sees November annual inflation between 7.4% and 8.2%
(30 November 2022) The Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP), expects November annual inflation to be in the range of 7.4% and 8.2%, reflecting upward price pressures from electricity and agricultural products. Inflation hit its highest in nearly 14 years in October 2022 at 7.7%, and is expected to decelerate gradually in the following months due to the dissipation of cost-push shocks owing to bad weather. The BSP has stated that it may pause its interest rate hikes in the first quarter of 2023 if there are no major shocks. The BSP has raised policy rates six times in 2022 to 5% to curb inflation, with rate rises running near a 14-year high.

RCEP Monitor

MALAYSIA
Anwar Ibrahim sworn in as Malaysia’s tenth prime minister following 15th general election
(24 November 2022) On 24 November, 2022, opposition leader Anwar Ibrahim was sworn in as Malaysia’s tenth Prime Minister, following the country’s fifteenth general election on 19 November.The election had led to Malaysia’s first hung parliament, after which followed days of behind-the-scenes negotiations between the various parties. The breakthrough came when the Barisan Nasional (National Front) coalition, which emerged with 30 seats, agreed to back a unity government under Anwar. Anwar’s Hope Pact secured 82 seats of its own, short of the 112 needed for a simple majority. The rival National Alliance under former Prime Minister Muhyiddin Yassin secured 73 seats in the election, and had at one point received the support of Borneo-based parties which had won a combined 28 seats.

THE PHILIPPINES
The Philippines central bank ready to move at slower pace of rate increases
(22 November 2022) The Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP), is ready to move at a slower pace of rate increases amidst expectations of the US Federal Reserve turning less hawkish in the near future. Governor Felipe Medalla expects the Fed’s next rate move to be a half-point increase followed by a quarter-point. The BSP has delivered the most aggressive tightening in Southeast Asia in 2022, with 300 basis points of moves since May 2022 to contain inflation and support the peso. By the second half of 2023, the BSP expects inflation to slow to the midpoint of their 2% to 4% target range. The Philippines’ peso has remained Southeast Asia’s worst performing currency. The BSP is unlikely to change limits on bank’s foreign exchange position.

THAILAND
Thailand’s economy expands by 4.5% year-on-year in the third quarter of 2022
(21 November 2022) Thailand’s economy expanded by 4.5% year-on-year in the third quarter of 2022, buoyed by a reinvigorated tourism sector. Thailand’s economy had expanded by 2.5% during the previous three months. On a seasonally adjusted quarter-on-quarter basis, the economy grew at an annualized 1.2% from the second quarter which ended in June 2022. Officials predict full-year growth to reach 3.2%, an increase from the 2.7% to 3.2% prediction announced in August 2022. For 2023, 3% to 4% growth is now being forecast. According to the Tourism Authority of Thailand, the country is expected to welcome up to 10 million foreign tourists in 2022, as well as 18 million in 2023. However, headline inflation remains a problem, hitting a 14-year-high of 7.86% in August 2022, followed by 6.41% in September and 5.98% in October.

CAMBODIA, CHINA
Cambodian government advisor claims China’s BRI has contributed enormously to Cambodia’s economic growth
(23 November 2022) Senior advisor to the Cambodian government Sok Siphana has claimed that China’s Belt and Road Initiative (BRI) has contributed enormously to Cambodia’s economic growth. Siphana stated that the BRI has helped develop a lot of Cambodia’s infrastructure, including the Phnom Penh-Sihanoukville Expressway, the Sihanoukville Coal Power Plant and the Siem Reap Angkor International Airport. He pointed to the Sihanoukville Special Economic Zone, which he claimed would help accelerate Cambodia’s development of a modern industrial mix. He also claimed that the Regional Comprehensive Economic Partnership (RCEP) trade pact and the Cambodia-China Free Trade Agreement (CCFTA), which both entered into force earlier in 2022, will help promote additional trade of Cambodia’s agricultural products and commodities.

SINGAPORE
Singapore predicts GDP growth in 2023 to come in as low as 0.5% due to export slump
(23 November 2022) Singapore predicted its GDP growth for 2023 to come in as low as 0.5%, as an export slump underscores a worsening global economic outlook. Trade officials believe the growth range for 2023 could start from the floor of 0.5% to a ceiling of 2.5%, weaker than the 3.5%” expansion forecast for 2022. For the July-September quarter, the preliminary figure of 4.4% year-on-year growth was downgraded to 4.1%. Earlier in November 2022, Singapore reported that non-oil exports shrank 5.6% on the year in October 2022, pulling back from September’s 3.1% rise. For the rest of 2023, the weaker external outlook will weigh on the growth of Singapore’s outward-oriented sectors. The decline in October in non-oil exports broke an almost two-year streak of consistent expansion for Singapore’s exports.

VIET NAM
Viet Nam will promote the usage of e-commerce channels to expand export markets
(22 November 2022) Viet Nam will promote the usage of e-commerce channels to expand export markets and enable enterprises to participate in foreign distribution channels. It is believed that e-commerce channels will play an important part in helping Viet Nam’s enterprises to develop a strategic relationship with foreign distribution networks, part of Hanoi’s plan to build a stable and sustainable export distribution model. Authorities plan to provide support in market information to around 20,000 enterprises and training and consultancy to another 15,000, in order to help them improve competitiveness and participate more in the global value chains. In addition, 5,000 enterprises will be provided with support to build the capacity for joining cross-border e-commerce. Viet Nam hopes to develop import and export markets to ensure sustainable growth in the long term and encourage Vietnamese firms to participate more in global production networks.

INDONESIA
Indonesia to use excess budget cash to reduce borrowing in 2023
(24 November 2022) Indonesia will accumulate excess cash in its 2022 budget, which it intends to use to reduce borrowing in 2023, when it is expected to face market volatility and a weakening global economy. Indonesia has overseen a strong fiscal position in 2022, with tax revenues gaining a boost from exports (driven by high commodity prices) as well as the post-pandemic recovery in economic activity. As of end-October 2022, the government had collected excess cash of US$17.26 billion, although its overall budget was in a deficit representing 0.91% of GDP. In 2023, the government is targeting a budget deficit of 2.8% of GDP assuming economic growth of 5.3%, compared with the actual forecast range of 5% to 5.3% for 2022. However, Indonesia’s central bank stated this week that growth in 2023 may slow to 4.37%.

RCEP Monitor

ASEAN
ASEAN holds 40th ASEAN Summit and other meetings in Phnom Penh, Cambodia
(13 November 2022) ASEAN held the 40th ASEAN Summit in Phnom Penh, Cambodia, on 11th November, 2022, while other meetings were also held in conjunction with it, including the East Asia Summit and the US-ASEAN Summit. Among the main takeaways from the ASEAN Summit included the fact that no joint statement was released following the East Asia Summit after the US and Russia failed to agree on the necessary language. No progress was also made with regards to the ongoing Myanmar Crisis, with ASEAN merely stating they would continue to review Myanmar’s representation at ASEAN meetings should the situation require it. On the other hand, US-ASEAN ties were elevated to a comprehensive strategic partnership, while East Timor was granted observer status in ASEAN, paving the way for full membership.

MALAYSIA
Malaysia’s political leaders offer slew of promises ahead of general election on 19 November, 2022
(18 November 2022) Malaysia’s political leaders are offering a slew of promises ahead of its general election on 19 November, 2022. Prime Minister Ismail Sabri and his ruling United Malays National Organization has promised new infrastructure projects including improved online connectivity and highways to the East Malaysian state of Sarawak. He has also promised to create a new deputy prime minister post to be helmed by a leader from Sarawak. The ruling National Front coalition’s election manifesto has focused on people’s welfare and improving the country’s competitiveness. The opposition Hope Pact for their part has pledged to address Malaysia’s aging society by creating a special agency to look after citizens’ welfare, as well as make Malaysia a data center hub. The Hope Pact’s leader, Anwar Ibrahim, has also pledged to forgo his salary if he becomes Prime Minister.

INDONESIA, UNITED STATES
Rich countries pledge to raise at least US$20 billion to help Indonesia wean off coal
(15 November 2022) Rich nations, including the United States, Japan, Canada, and six European countries pledged to raise at least US$20 billion to help Indonesia wean off coal and reach carbon neutrality by 2050, a decade earlier than initially planned. An accord was signed with Indonesia on the sidelines of the G20 summit in Bali. Under the deal, Indonesia pledges to be carbon-neutral by 2050, — 10 years earlier than previously planned — and to almost double its renewable energy generation by 2030. As part of the deal, Indonesia had committed to a shift towards clean energy in return for US$10 billion in public sector finance and US$10 billion in private funding over three to five years. The financing provided will include grants, concessional loans, guarantees, and private investments.

THAILAND
Thailand’s bourse plans to offer ETFs and depository receipts on foreign companies
(16 November 2022) Thailand’s bourse plans to offer exchange traded funds (ETFs) and depository receipts (DRs) on foreign companies to boost business and attract international investors. As part of their plan to promote the Thai exchange as a trading center for overseas stocks, the Stock Exchange of Thailand is working with other Asian trading venues to promote such products. Foreign investors who do not want to invest directly into Myanmar, Lao PDR, Cambodia and Viet Nam, can instead invest in those equities through ETFs and DRs on the Thai stock exchange. International funds have poured more than US$500 million net into local equities in Thailand in November 2022, drawn to the strong growth outlook in tourism, restaurant, hotel and healthcare shares.

SINGAPORE
Singapore’s non-oil domestic exports contract by 5.6% year-on-year in October 2022
(17 November 2022) Singapore’s non-oil domestic exports contracted by 5.6% year-on-year in October 2022. This presented the first decline since November 2020. This was a reversal from the 3.1% growth registered in September 2022. On a seasonally-adjusted monthly basis, non-oil domestic exports decreased by 3.7% in October, extending the 3.9% decline in the preceding month. The export of electronics products fell 9.3% year on year in October, continuing the previous month’s 10.6% contraction, while non-electronics exports fell by 4.5% from the previous year, reversing from September’s 7.6% expansion. According to certain experts, the decline in both industries signal a slowdown in global growth.

THE PHILIPPINES, INDONESIA
The Philippines and Indonesia hike key interest rates to tame inflation
(17 November 2022) The Philippines and Indonesia both hiked their key interest rates on 17 November, 2022, as both countries seek to tame inflation. Bank Indonesia raised its seven-day reverse repurchase rate by 50 basis points to 5.25%, the highest since September 2019. Inflation in Indonesia has dropped to 5.71% in October 2022 from 5.95% in September, above Bank Indonesia’s target range of 2% to 4% in 2022. The Philippines’ central bank, for their part, raised its key rate by 75 basis points to 5.0%, the highest since March 2009. Inflation in the Philippines accelerated to 7.7% in October 2022, the highest level since 2008. That puts the year-to-date average to 5.4%, well above the government’s 2% to 4% target.

BRUNEI DARUSSALAM
Tourist arrivals in Brunei Darussalam has seen steady increase since easing of travel restrictions
(18 November 2022) Tourist arrivals in Brunei Darussalam have seen a steady increase since the easing of travel restrictions and the re-opening of land borders. Hospitality and tourism service providers have seen an increase in bookings and visits from foreign tourists, signaling the tourism industry is returning to pre-pandemic levels. Fifteen leading hotels in the country reported a hike in room bookings, from 8,271 to 12,406 – or a 50% increase – from August to September in 2022. The Acting CEO of Royal Brunei Airlines has stated that the increase in flight frequencies and resumptions of flights in the coming months will boost the number of travelers coming into the country.

RCEP Monitor

ASEAN
ASEAN fintech segment keeps its charm
(7 Nov 2022) The Fintech in ASEAN report, a joint production by UOB, PWC and the Singapore Fintech Association found that fintech funding activity in ASEAN posted US$4.3 billion in the first nine months of 2022 despite geopolitical uncertainties and rate hikes to combat high inflation. The average deal size has also increased to US$26.5 million from US$23 million year-on-year since 2021. Together, Singapore (43%) and Indonesia (33%) accounted for more than three-quarters of ASEAN’s total funding. Of the 163 funding deals, more than half (55%) went to Singapore-based fintech firms. The payments category received the most funding at US$1.9 billion, followed by alternative lending at US$506 million. Despite the broader crypto market’s volatile performance this year, the cryptocurrency category took third place at US$461 million.

ASEAN
40th and 41st ASEAN Summits commence in Cambodia from 10-13 November 2022
(10 Nov 2022) This is the first time the ASEAN will be holding the event in person since the start of the COVID-19 pandemic. The 2020 summit, chaired by Vietnam, and the 2021 summit, chaired by Brunei, were held online. Cambodia is this year’s ASEAN chair, and the leaders at the summit, to be held in the capital Phnom Penh, will discuss how the 10 countries in the association can promote peace, prosperity and stability in the region as it recovers from the pandemic. The theme for this year’s summit is “ASEAN A.C.T: Addressing Challenges Together”. Leaders will discuss the worsening situation in Myanmar and other regional and international developments.

Laos PDR
Inflation in Laos surges to recorded high of 36.75% in October 2022
(7 Nov 2022) Laos recorded the highest year-on-year inflation rate at 36.75% in October, up from 34% in September, according to the latest report from the Lao Statistics Bureau. According to the report released on Saturday from the Lao Statistics Bureau website, the price of food and non-alcoholic beverages has surged by 38.8% year on year, driven by the rising price of rice and other daily food items such as pork, poultry, fish, seafood, eggs, vegetable oil, fruit, and vegetables. Commercial transport and delivery charges rose by 58.1% compared to the previous month, especially for fuel, which was recorded at 95% in October. The cost of other consumer goods and many other products also rose, including clothing, footwear, construction materials, household items, medical equipment, and medicines.

MALAYSIA
Bursa’s carbon exchange to be operational by end og 2022
(9 Nov 2022) Bursa Malaysia’s Voluntary Carbon Market (VCM) will be operational by way of the auction before year-end of 2022. Bursa Malaysia chairman Tan Sri Abdul Wahid Omar said it was crucial to support industries that can generate economic progress and environmental change. Abdul Wahid said VCM facilitated price discovery for new products by serving as a reference price for carbon credit trading and generating tangible price signals for potential issuers to embark on domestic carbon credits projects.

SINGAPORE
Singapore proposes raising carbon tax from S$5 to S$25 per tonne for greenhouse gas emissions in 2024 and 2025
(8 Nov 2022) Singapore plans to raise its carbon tax to S$25 per tonne for greenhouse gas emissions in 2024 and 2025, and S$45 per tonne for greenhouse gas emissions in 2026 and beyond. Speaking in Parliament on 8 November at the second reading of the Carbon Pricing (Amendment) Bill, Minister for Sustainability and the Environment Grace Fu said that the progressive increases will set Singapore on a trajectory to reach between S$50 and S$80 per tonne by 2030. The carbon price provides an effective policy to motivate emitters to take action to reduce their emissions, and in helping Singapore achieve its net zero ambitions.

THAILAND
Thailand scraps plan to allow foreigners to buy land
(8 Nov 2022) Thailand is walking back a policy that would have allowed limited land ownership by wealthy foreigners after a public backlash against the plan. Earlier this year, the government announced the plan aimed at attracting investment from overseas, limiting foreigners to 0.16 ha of land if they invest at least 40 million baht (US$1.07 million) in securities or bonds for at least three years. Critics have argued the investment sum was too small and that the policy could drive up property prices, crowding out local ownership. Interior Minister Anupong Paochinda called the issue “a delicate matter” and said a study was needed to weigh the advantages and disadvantages.

VIETNAM
Vietnam to require 24-hour take-down for “false” social media content
(4 Nov 2022) Vietnam’s Minister of Information and Communications, Nguyen Manh Hung, said that authorities had tightened regulations to deal with “false” content on social media platforms so that it must be taken down within 24 hours instead of 48 hours previously. Speaking to the legislature, Hung proposed by 2023 to completely deal with “News-lisation”, a term used by authorities to describe when people are misled into thinking that social media accounts are authorised news outlets. Vietnam, which is a US$1 billion market for Facebook, has tightened internet rules over the past few years, culminating in a cybersecurity law that came into effect in 2019 and national guidelines on social media behaviour introduced in June last year. Critics have raised concerns the laws could hand the authorities more power to crack down on dissidents.

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ASEAN
Southeast Asia to host three major diplomatic gatherings in November 2022
(31 October 2022) Southeast Asia will host three major diplomatic gatherings in November 2022. This includes the ASEAN Summit and related meetings, which will be held in Phnom Penh, Cambodia on 08-13 November 2022. Following this, the Group of 20 (G-20) Summit will be held from 15-16 November in Bali, Indonesia, after which the annual Asia-Pacific Economic Cooperation (APEC) summit will be held between 18-19 November in Bangkok, Thailand. US President Joe Biden will attend the US-ASEAN Summit and the East Asia Summit in Cambodia, as well as the G-20 Summit in Indonesia. During his time in Indonesia, President Biden is also likely to hold a bilateral meeting with Indonesian President Joko Widodo. US Vice President Kamala Harris, for her part, will be attending the APEC conference in Thailand.

MALAYSIA
Malaysia’s central bank raises overnight policy rate by 25 basis points
(03 November 2022) Malaysia’s central bank, Bank Negara Malaysia (BNM), raised its overnight policy rate (OPR) by 25 basis points to 2.75%, its fourth consecutive rate hike since May 2022. In May, the central bank raised the OPR to 2% from 1.75%, reportedly the lowest on record following a 25 basis point cut in July 2020. It raised the OPR by another 25 basis points to 2.25% in July 2022, followed by another 25 basis points to 2.5% in September. BNM stated that the policy adjustment was in response to inflationary pressures being more persistent than expected. BNM attributed this to strong demand, tight labor markets, and elevated commodity prices. BNM also projected that underlying inflation, as measured by core inflation, will average closer to the upper hand of the 2% to 3% forecast range for 2022.

SINGAPORE
New fund inflows to Singapore jump 59% year-on-year in 2021
(02 November 2022) Singapore attracted US$317 billion in new funds in 2021, a 59% increase from the previous year, according to data by the Monetary Authority of Singapore (MAS). Due to concerns that these new money inflows are flowing into the property market, thereby driving up prices, regulators have imposed measures on the real estate sector to prevent overheating. Singapore is marketing itself as an international wealth hub, and is enjoying a post-COVID-19 resurgence as investors are drawn to its stability. Assets managed by local firms soared 16% in 2021 to US$4 trillion, mostly from overseas, exceeding the global growth rate. These new money inflows come on top of gains from higher asset prices in 2021. Singapore hopes to add as many as 20,000 finance jobs over the next five years.

SINGAPORE
Factory activity in Singapore contracts for second straight month, suggesting continued deterioration in outlook
(02 November 2022) Factory activity in Singapore contracted for the second consecutive month in October 2022, while the electronics sector pulled back for the third straight month. This suggested a continued deterioration in momentum, outlook, and confidence in the last quarter of 2022. October became the second consecutive month of contraction in overall activity for the manufacturing sector after having expanded for 26 straight months. This has been attributed to a faster drop in key indexes such as new orders, factory output, and inventory. Singapore’s overall purchasing managers’ index (PMI) fell to 49.7, 0.2 point below September’s PMI reading. Singapore’s electronics sector recorded a decline of 0.3 point from September 2022 to post a further contraction at 49.1. This has strengthened the view that an electronics down cycle is underway.

THAILAND
Thailand posts surprise current-account surplus in September 2022, offering reprieve for Thai baht
(02 November 2022) Thailand posted a surprise current-account surplus in September 2022, offering a reprieve for the Thai baht. This is due to a better than expected rebound in tourism, lower oil prices and falling shipping costs. The current-account surplus may reach as much as US$3 billion during the October-December period, although much will depend on the trajectory of energy prices. The current account posted a deficit of US$17.7 billion in the first nine months of 2022, and Thailand’s finance ministry predicted it might swing back to a surplus of US$5.6 billion in 2023. A return to a current-account surplus may help prop up the Thai baht, which has slumped almost 12% in 2022 to a 2006-low. Thailand’s central bank has lagged behind its peers in terms of hiking rates.

THE PHILIPPINES
Shell completes exit from the Malampaya gas field in the Philippines
(01 November 2022) Oil and gas giant Shell has completed the sale of its stake in an operator of the Malampaya gas field in the Philippines, effective 01 November, 2022. The sale will move full control of Shell Philippines Exploration B.V., which owns a 45% operating interest in and operates the Malampaya gas field, to Malampaya Energy XP, a subsidiary of Prime Infrastructure Capital. The other members of the field’s service contract consortium are a subsidiary of Udenna and PNOC Exploration, which own a 45% and 10% interest respectively. Shell had agreed to sell its stake in the gas field in May 2021. The gas field had been discovered in 1991, and currently provides fuel to power plants that deliver about a fifth of the Philippines’ electricity requirements. However, the field’s output is declining and is expected to finish by 2027.

CAMBODIA
Cambodia exports US$1.325 billion worth of footwear in the first nine months of 2022
(02 November 2022) Cambodia exported some US$1.325 billion worth of footwear in the first nine months of 2022, up 32.69% year-on-year from the same period in 2021, which recorded US$998.238 million worth of footwear exports. Footwear-related goods accounted for 7.67% of the total value of Cambodia’s exports in the same period, or US$17.258 billion. In September alone, footwear-related exports were US$141.815 million – up 35.58% from US$104.601 million in the same month of 2021. According to industry insiders, there has been a slowdown in new orders in the third quarter of 2022, and signs of possible weakness in exports in the coming months. There are about 70 footwear factories in Cambodia, most of which are invested by entities from mainland China, Hong Kong, Taiwan, South Korea, and Japan.

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ASEAN, AUSTRALIA, NEW ZEALAND
AANZFTA in process of being upgraded, to focus on rules of origin and e-commerce
(18 September 2022) The ASEAN-Australia-New Zealand Free Trade Agreement is in the process of being upgraded, with key upgrades expected to include a simpler process to validate the origin of goods and improved e-commerce arrangements. Australia’s two-way trade with ASEAN has pulled ahead of the United States and Japan, and is currently second only to China. Among the changes proposed include switching from government organizations issuing certificates of origin to self-declaration. The AANZFTA was the first region-to-region trade deal signed by ASEAN, although industry groups now argue that the agreement needs to be updated with the times. On 20th September, Australia’s Assistant Minister for Trade Senator Tim Ayres released a statement noting that ASEAN, Australia and New Zealand had ‘progressed negotiations’ to upgrade the agreement. He noted that the purpose of the upgrades is to modernize the trade agreement, further reduce trade barriers and boost trade and investment within the region.

THAILAND, VIET NAM
Thailand and Viet Nam top crypto trading hubs within ASEAN, recording over US$100 billion in transactions in one year
(21 September 2022) Thailand and Viet Nam have become the top crypto trading hubs among the ASEAN states, even beating traditional financial center Singapore. Both countries recorded over US$100 billion in crypto-related transactions each from July 2021 to June 2022, according to numbers published on Wednesday by blockchain data platform Chainalysis. Thailand recorded US$135.9 billion in crypto value transacted over the year, while Vietnam logged US$112.6 billion. Meanwhile, Singapore booked just US$100.3 billion as financial regulators within the country tighten scrutiny over the crypto sector. Both Thailand and Viet Nam also saw high traffic to marketplaces for non-fungible tokens (NFTs) that give their owners the deeds to items like virtual art pieces on blockchain.

THAILAND, VIET NAM
Thailand and Viet Nam to meet in October 2022 to discuss raising export prices for rice
(16 September 2022) Thailand and Viet Nam, the world’s third-largest and second-largest rice exporters respectively, will hold talks in October 2022 to discuss raising export prices for rice. On 06 – 07 October, Thai Agriculture and Cooperatives Minister Chalermchai Sri-on will visit Vietnam for talks with Vietnamese Agriculture and Rural Development Minister Le Minh Hoan regarding the countries’ agricultural cooperation including rice export prices. Both countries could reportedly raise rice export prices by some 20%, adding to global inflationary pressures. Earlier in September, both countries had agreed to cooperate in raising rice export prices as their farmers are unable to cover higher production costs due to soaring costs of fertilizers, agricultural chemicals and fuel. In August, export prices for Thai rice stood at US$446 per ton, up about 7% year-on-year, while those of Vietnamese rice leveled off at about US$385. In 2021, Thailand and Viet Nam accounted for 12% of global rice exports each.

THE PHILIPPINES, INDONESIA
Central bank of the Philippines and Indonesia raise benchmark interest rates in response to inflation
(22 September 2022) The central banks of the Philippines and Indonesia raised their benchmark interest rates on 22 September, 2022 in response to inflationary pressures. The Philippines raised rates by 50 basis points or half a percentage point, bringing the benchmark to 4.25%, the highest since August 2019. Bank Indonesia, for their part, hiked its policy rate for the second consecutive month, also by 50 basis points to 4.25%. The Philippines has increased its rates by 225 basis points since May 2022, with inflation averaging 4.9% on the year from January to August. As well, the Philippines’ central bank raised its full-year inflation outlook for 2022 to 5.6%, from 5.4%. Meanwhile, in Indonesia, Bank Indonesia projects CPI to reach higher than 6% by the end of 2022. The central bank noted that inflationary pressures are expected to increase in September following an adjustment of subsidized fuel prices while global energy and food prices remain high.

INDONESIA
Gojek launches joint venture with TBS Energi Utama to supply 2 million electric e-motorbikes
(20 September 2022) Indonesian ride-hailing group Gojek launched a joint venture with energy group TBS Energi Utama in 2021 to supply e-motorbikes, in order to help Gojek make its fleet all-electric this decade. The joint venture, called Electrum, will be able to supply some 2 million e-motorbikes, according to a recent interview of a Gojek top executive. The new company is also expected to help develop Indonesia’s electric vehicle ecosystem by leveraging Gojek’s nationwide presence and TBS’s energy expertise. Thus far, Electrum operates 13 battery-swapping stations in Jakarta and has supplied Gojek with about 300 e-motorbikes. Gojek currently has more than 2 million registered drivers for its Indonesian ride hailing and delivery services, both of which overwhelmingly use motorcycles. Recent hikes in fuel prices are expected to accelerate the movement towards electric vehicles.

THE PHILIPPINES
The Philippines posts balance of payment deficit for fifth straight month in August 2022
(19 September 2022) According to the Bangko Sentral ng Pilipinas (BSP), the Philippines posted a balance of payment (BOP) deficit for a fifth straight month in August 2022, as the national government withdrew from its deposits to settle foreign currency debt obligations during the month. The BSP reported a US$572-million BOP deficit in August, which compares with the US$1.819-billion deficit in July and the US$1.044-billion surplus the same month in 2021. The latest data from the Bureau of the Treasury found that the government’s running debt rose to a fresh record-high of US$220 billion as of end-July 2022. The latest monthly deficit brought the year-to-date BOP level to a US$5.492-billion deficit, higher than the US$253-million deficit in the comparable period of 2021. In terms of the balance of trade in goods, it was noted that it stood at a US$5.93 billion shortfall in July, up 69.1% from the US$3.5 billion gap in July 2021.

SINGAPORE
Cost of business in Singapore outpacing that of rival Hong Kong, including in cost of office space and utilities
(22 September 2022) The cost of business in Singapore is rising at a faster pace than that of rival Hong Kong, with expenses including the hiring of talent, office space and utilities outpacing that of its rival, which has seen only modest price increases. Despite this, the rate of new business formation in Singapore reached a 17-month high in August 2022, signaling its current attractiveness to firms wanting to exit Hong Kong. In Hong Kong, the number of new local businesses held roughly steady with 2021’s pace but is down from a peak in 2017. In terms of the office rental market, while Singapore’s rental costs remain well below Hong Kong’s, landlords in the latter have slashed office rents in core business districts through June 2022 by 4% from December 2021. In contrast, the cost of rent in Singapore’s central business area accelerated for a third quarter. As well, both city-states are seeing a divergence in labor tightness, with Singapore’s high ratio of job vacancies to those unemployed resulting in salaries for new job offers rising faster than those in Hong Kong in many key sectors in 2021.

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ASEAN
Five Southeast Asian countries among global top ten for e-commerce sales growth in 2022
(15 September 2022) Five ASEAN countries are among the global top ten for e-commerce sales growth in 2022, according to data by eMarketer. These top ten countries include Indonesia, Malaysia, The Philippines, Thailand, and Vietnam. The Philippines topped the chart at 25.9% growth year-on-year, while Indonesia came second at 23%. eMarketer predicted the entire region’s 2022 ecommerce sales growth year-on-year at 20.6%, the highest in the world, totaling US$89.67 billion. The COVID-19 pandemic caused a shift in consumer behavior with regards to e-commerce, with a recent report from Google, Temasek and Bain & Company predicting that as many as 40 million people in Singapore, Malaysia, Indonesia, The Philippines, Vietnam, and Thailand became new internet users in 2020. While most residents in Southeast Asia lack computers, almost all of them have mobile devices and thus internet access.

THAILAND
Thai government expects a 22% drop in investment pledges in 2022
(12 September 2022) The Thai government is expecting a 22% drop in investment pledges in 2022 to US$13.76 billion, after a first-half slump. Nevertheless, the government hopes that its measures to promote investment, including a long-term resident visa launched in September, will draw more foreign investors later in 2022. Among the areas which the country hopes to attract investments into include high-tech sectors. The Thai government has supported electric vehicles to maintain its status as a regional auto production base. For the January to June period of 2022, Thai and foreign investment pledges slumped 42% to about 220 billion baht, due mainly to a large power plant project in 2021. Foreign investments, which made up 60% of the overall applications in the January-June period, more than halved year-on-year.

MALAYSIA
JP Morgan is optimistic that Malaysia will be able to meet the annual GDP growth of 7.7% in 2022
(15 September 2022) JP Morgan is optimistic that Malaysia will be able to meet the annual GDP growth of 7.7% in 2022, which would make it one of the highest in the region. It was noted that Malaysia remains resilient, with a strong banking sector, supportive government policies and prudent corporate citizens. JP Morgan stated they were ‘bullish’ about Malaysia’s electrical and electronic industry, with the country currently supplying 10% of the semiconductor components globally. Furthermore, she said the country has managed to attract the highest foreign direct investment in the last six years, totalling US$1.9 billion into the country as of August 2022. Previously, Malaysia’s Finance Minister stated that the country’s economic growth may surpass the official estimates of between 5.3% and 6.3% in 2022, attributing this to rapid growth in the second quarter of 2022 at 8.9% and expected improved performance in the third quarter.

SINGAPORE
Non-oil domestic exports grow by 11.4% year-on-year in August 2022
(16 September 2022) Non-oil domestic exports grew by 11.4% year-on-year in August 2022, following 7% growth in July. According to data by Enterprise Singapore, non-electronics exports grew while electronics exports decreased from a high base a year ago. While exports to the top ten markets as a whole rose in August 2022, including to the US, the EU and Indonesia, exports to China, Taiwan and Hong Kong declined. On a month-on-month seasonally adjusted basis, non-oil domestic exports decreased by 3.9% in August, following the previous month’s 1.4% growth. Total trade grew by 26% year-on-year in August, following the expansion of 30.5% in July. Total exports rose by 21.8% while total imports grew by 30.9%.

INDONESIA
Indonesia records a US$5.76 billion trade surplus in August 2022, largest in four months
(15 September 2022) Indonesia recorded a US$5.76 billion trade surplus in August 2022, the largest in four months. The resource-rich country has reported a trade surplus every month since May 2020, with exports boosted by high commodity prices. The surplus in August 2022 was the largest since April’s US$7.56 billion, which was the biggest on record for Indonesia. Exports rose 30.15% on a yearly basis in August to US$27.91 billion, with shipments of oil and gas and mineral products recording the biggest increase. Meanwhile, imports measured at US$22.15 billion, up 32.81% on a yearly basis. Analysts have warned that Indonesia’s trade surplus would narrow near the end of the year, as prices of certain commodities such as palm oil and iron ore start to ease. For the period of January to August 2022, it is predicted that Indonesia would record a current account balance within a range of 0% to 0.45% of GDP in 2022.

THE PHILIPPINES
Filipino electronics exporters expect sales to grow by 10% in 2022 due to peso’s weakness
(14 September 2022) Philippines electronics exporters expect sales to grow by 10% in 2022, due in part to a weak peso which will attract buyers (including holiday shoppers). Historically, there is a catch up that happens near the end of the year, as people buy electronics as gifts. The Philippines has registered a recent decline in electronics shipments, its largest export. Sales grew 2% from January to July. The industry group Semiconductor and Electronics Industries in the Philippines Inc. aims to grow the electronics sector’s revenue by 5% to 6% and produce higher-value products in the coming years. It is believed the previous government’s move to scrap tax incentives could put the industry’s growth target and jobs in peril, with US$3.2 billion worth of investments having already been diverted to other countries.

BRUNEI DARUSSALAM
Brunei Darussalam records 62.5% year-on-year increase in total trade in June 2022
(13 September 2022) Brunei Darussalam recorded a 62.5% increase year-on-year in total trade in June 2022. According to the latest data by the Department of Economic Planning and Statistics at the Ministry of Finance and Economy, Brunei Darussalam’’s exports increased by 61.1% yearly, which was mainly due to the increase in mineral fuel exports. Mineral fuels also recorded the highest contribution to total exports at 76.2%, followed by chemicals at 21.3%. Imports increased by 64.3% year on year for June 2022. The highest share of exports in June 2022 went to Malaysia at 30.7%, followed by Australia at 14.4% and Singapore at 12.6%. The highest share of imports came from Malaysia at 23.7%, followed by the United Arab Emirates at 22.9% and Iraq at 10.1%.

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ASEAN
ASEAN equities outperform global peers despite gloomy global outlook
(04 September 2022) While global equities are struggling due to ongoing monetary tightening by the US Federal Reserve, ASEAN equities are outperforming global peers and are becoming a haven for global investors. The benchmark MSCI Asean Index is outperforming the broader MSCI Asia Pacific Index and is set to fare better than a gauge of global stocks for a third straight quarter. The bullish sentiments towards the region is due to a resurgence of tourism, booming domestic demand, and promising earnings outlooks due to commodity exports. Most of the region’s major economies are expected to grow by at least 5% in 2022. The heavy weightage of Southeast Asia’s equity benchmarks towards banks rather than tech make the region’s equities favorable in a high interest rate environment. Market watchers do not expect an exodus of capital due to tightening by the Fed as had occurred in 2013, due to the region’s stronger fundamentals. Inflation is also less acute in Southeast Asia compared to other regions.

MALAYSIA
Central bank raises overnight policy rate (OPR) by 25 basis points in response to inflation
(08 September 2022) Malaysia’s central bank, Bank Negara Malaysia (BNM), has raised its overnight policy rate (OPR) by 25 basis points to 2.5% in line with expectations. This is BNM’s third consecutive 25 basis point OPR hike in 2022, bringing the year-to-date increase to 75 basis points. The ceiling and floor rates of the OPR’s corridor are correspondingly increased to 2.75% and 2.25% respectively. Given the positive growth prospects of the Malaysian economy, BNM’s current stance of monetary policy is expected to remain accommodative and supportive of economic growth moving forward. Downside risks to the Malaysian economy include weaker-than-expected global growth, further escalation of geopolitical conflicts, and worsening supply chain disruptions. In terms of inflation, BNM stated that the consumer price index (CPI) is projected to peak in the third quarter of 2022 before moderating thereafter.

TAIWAN, MALAYSIA, SINGAPORE
Malaysia and Singapore removed from Taiwan’s initial list of countries eligible for visa-free entry
(06 September 2022) Malaysia and Singapore were removed from Taiwan’s initial list of countries eligible for visa-free entry starting on the week of 12 September. On 05 September, a table published online by Taiwan’s Bureau of Consular Affairs showed that visitors from a list of countries including Singapore and Malaysia were allowed to travel to Taiwan visa-free and stay for up to 30 days. On 06 September, the website was updated to reflect that Taiwan would be “temporarily suspending” visa-free entry for visitors from Singapore, Malaysia, and other countries. The Taipei Representative Office in Singapore stated in a press release on 06 September that the adjustment of border control measures had been due to a ‘misunderstanding’. On 05 September, Taiwan announced that it would resume visa-free entry for visitors from several countries, as it seeks to ease restrictions related to the COVID-19 pandemic. Taiwan has already ended the requirement for pre-departure negative PCR tests.

INDONESIA, THE PHILIPPINES
President Marcos Jr.’s visit to Indonesia secures about US$8.5 billion in investment pledges
(07 September 2022) The Philippines President Ferdinand Marcos Jr. secured about US$8.5 billion in investment pledges during his visit to Indonesia. Among the preliminary agreements signed in Jakarta included US$7 billion in infrastructure projects through private-public partnerships (including a four-level expressway), as well as a US$662-million trade value for the supply of coal and fertilizers. As well, Marcos Jr. also secured about US$822 million in investments in several sectors including textiles, garments, renewable energy, technology and agriculture. Altogether, the deals are expected to generate some 7,000 new jobs in the Philippines. After visiting Indonesia, Marcos. Jr is now visiting Singapore on the second leg of his first official trip abroad.

INDONESIA
Indonesia raises about US$2.65 billion from the sale of dollar bonds, defying global selloff
(07 September 2022) Indonesia raised about US$2.65 billion from the sale of dollar bonds, defying the global selloff, defying the global selloff caused by the rise in borrowing costs. Bolstered by its commodity exposure, Indonesian assets have emerged as a haven for investors in 2022, with Indonesia’s equity market up nearly 10%. Spreads on the country’s dollar-denominated debt narrowed the most in more than two years in August. While the five year and ten year maturities were in line with the market, the 30-year portion of the debt priced more than 20 basis points outside the curve, indicating the government had to pay extra. However, the longest maturity was still six times oversubscribed. Proceeds of the bond sale will be used to repurchase outstanding debt as well as for government expenditure, which has risen due to surging energy costs. While US dollar bond sales across Asia have stalled due to a strong dollar and rising interest rates, Indonesia still managed to attract investors from Europe and North America.

SINGAPORE
Singapore hotel room prices rise to highest in almost a decade as tourism surges
(05 September 2022) Singapore hotel prices have surged to its highest in almost a decade as the country seeks to reposition itself as the tourism and business destination in Asia following the COVID-19 pandemic. The average hotel room rate in July rose nearly 70% year-on-year to US$184 a night, the highest since September 2012. Visitors to Singapore continue to accelerate amidst a loosening of COVID-19 restrictions, with arrivals rising for the sixth straight month in July to 726,601, up from 543,733 in June. This growth in tourist arrivals is likely to hold as the country plays host to a growing number of international business and sporting events in 2022, including the Formula One Grand Prix from 30 September to 02 October, several music concerts later this year, the Milken Institute Asia Summit, Forbes Global CEO Conference and several crypto events in September, followed by gamescom asia in October. Between four to six million visitors are expected in 2022, with 1.5 million arrivals in the first half of 2022 alone.

THAILAND
Hotel occupancy rate in Thailand rebounds from pandemic low due to resurgence in tourism
(08 September 2022) The hotel occupancy rate in Thailand is rebounding from a record low during the COVID-19 pandemic, according to a joint survey by the Bank of Thailand (BoT) and the Thai Hotels Association (THA). The average room occupancy at Thai hotels was 48% in August 2022, up from 46% a month earlier. This helped lift the average employment rate at these hotels to 75% from 71% in July. Hotels in Thailand are benefiting from a global rebound in tourism as authorities scrap all COVID-19-related restrictions. Hotels were also supported by a government-funded air travel and hotel subsidy program. Tourism is a major economic sector for Thailand, accounting for 12% of GDP and 20% of total employment. Authorities expect foreign tourist arrivals in 2022 to exceed 8 million.

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