ASEAN
The First ASEAN Digital Ministers Meeting (ADGMIN1) aims to strengthen cooperation between ASEAN countries
(20 January) The first ASEAN Digital Senior Officials Meeting (ADGSOM1) convened in Kuala Lumpur on 20 January 2021. Among the agendas discussed in the two-day meeting are the ASEAN ICT Fund (AICTF), the ASEAN Digital Master Plan 2025 (ADM 2025), the implementation of the 2020 work cycle activities and its presentation as well as the report of the first ASEAN Cyber ​​Security Coordination Committee meeting. ASEAN digital senior officials met with their dialogue partners from the US, China, Japan, South Korea, India, European Union (EU) and the International Telecommunications Union (ITU). ASEAN member states need to strengthen their connectivity and move as one bloc in accelerating digitalisation in the region, especially during the COVID-19 pandemic. The meeting will then proceed to the ministerial level ASEAN Digital Ministers Meeting (ADGMIN1) on 21 January 2021.

MALAYSIA
Growth forecast for Malaysia lowered to 1%-3% amidst state of emergency and lockdown.
(13 January 2020) Several economists slashed their 2021 growth forecasts for Malaysia after the country announced stricter measures to contain a recent surge in COVID-19 cases. Alex Holmes, Asia economist at Capital Economics, pointed out that the six states and territories under lockdown, which include capital city Kuala Lumpur and Malaysia’s richest state, Selangor, account for 57% of the population and 65% of gross domestic product. Economists from UOB said in a 20 January report that their growth forecast downgrade to 5% assumed that the restrictions are extended for another four weeks until end-February.  The state of emergency declared on 19 January rocked the country’s stocks and currency, but the move will remove near-term political uncertainty that the country has struggled with in the past year and that could be “a blessing in disguise” for the Malaysian ringgit, said Lavanya Venkateswaran, market economist at Mizuho.

MALAYSIA
Malaysia Aviation Group (MAG) gets nod to move forward with restructuring exercise
(20 January 2020) Malaysia Aviation Group (MAG), the parent company of Malaysia Airlines, today obtained approval from the UK Court to proceed with a major component of the debt restructuring of the Group, following the severe impact of the COVID-19 pandemic on the global travel and tourism industry. The statement added that MAG has since been in active discussions with all its stakeholders and has managed to obtain overwhelming support to carry out its restructuring after many rounds of negotiations. However, it added that there remains a minority of creditors that have yet to indicate their support for the restructuring. “Therefore, part of the restructuring is being implemented by means of a scheme of  arrangement to be proposed by its aircraft leasing subsidiary, MAB Leasing Limited,” MAG said. Daily operations and activities of Malaysia Airlines, and all subsidiaries under MAG will not be impacted by the ongoing restructuring. The outcome of the creditor meeting will be reported back to the Court at the sanction hearing on 22 February. It is expected that the UK Court process and the wider Group restructuring exercise will conclude by the end of Q1 2021.

SINGAPORE
Business investments into Singapore rise to 13%, the highest in over a decade
(20 January 2021) Business investment commitments into Singapore rose 13% in 2020 to their highest in more than a decade, helped by sectors such as semiconductors, energy and chemicals even as the city-state suffered its worst recession from the COVID-19 pandemic. Commitments for investments in fixed assets such as facilities, machinery and other equipment swelled to US$13 billion (S$17.2 billion) in 2020, while commitments by total business expenditure, whose major components include wages and rental, fell 24% to S$6.8 billion. Still, Singapore bagged some major wins in 2020, with China’s Tencent, Zoom Video Communications Inc and TikTok owner ByteDance planning major expansions in the city-state. The Economic Development Board (EDB), however, cautioned that investments in fixed assets for 2021 may not reach the levels of 2020.

INDONESIA, SINGAPORE
Southeast Asia’s and Singapore’s biggest tech startup, Sea Group, now fully controls the Indonesia’s PT Bank Kesejahteraan Ekonomi (Bank BKE)
(20 January 2021) Recent moves by tech firms to acquire small Indonesian banks will add more colour to ASEAN’s financing landscape, but are unlikely to pose a material challenge to the biggest incumbent lenders in the near term, said Fitch Ratings. In the past two months, there had been separate reports on consumer Internet firm Sea Group planning to acquire Bank Kesejahteraan Ekonomi (BKE) and mulling over the purchase of another Indonesian bank. While Sea Group secured a full digital banking licence in Singapore last month, it will still need approval from the Indonesian financial service regulator to wholly acquire BKE due to limits on foreign ownership. Indonesia’s Gojek is also increasing its stake in Bank Jago. This highlights the ambition of tech firms to make further inroads in financial services, said Fitch.  Analysts had said that Indonesia and the Philippines provide the largest market potential among Asean’s six major economies for digital banks, on the back of their large unbanked population and low levels of household leverage. The six are Singapore, Malaysia, Thailand, the Philippines, Indonesia and Vietnam.

VIETNAM
Shopee is Vietnam’s most-visited e-commerce site, followed by Mobile World, Tiki and Alibaba’s Lazada.
(20 January 2021) According to data from iPrice Group, Shopee was the most-visited site in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam in the third quarter of 2020. Only a year earlier, Lazada (owned since 2016 by China’s Alibaba Group Holding) was number one in the Philippines, Singapore and Thailand, while Indonesia’s most-visited site was Tokopedia, the e-commerce group backed by Japan’s SoftBank Group. Shopee, owned by Singapore-based tech group Sea, received 62 million monthly visits in Vietnam in the third quarter of 2020, up more than 80% from a year earlier. Shopee’s bullish expansion in Vietnam is part of a new phase of development in Southeast Asia’s US$100 billion digital economy. Shopee is now far outperforming its rivals in the country. Next is the Gioi Di Dong, also known as Mobile World, which had 29 million monthly visits during the same period. Tiki, a local e-commerce operator, followed with 22 million , and Lazada had 20 million, according to iPrice data.

BRUNEI
Brunei government identifies six priority sectors for growth in a 15-year economic blueprint.
(15 January 2021) Brunei’s  Ministry of Finance and Economy launched the Brunei Economic Blueprint, which provides guidelines for the country to achieve the third goal of the Brunei Vision 2035 strategy, thus developing a dynamic and sustainable economy. The country aims to diversify its economy away from oil and gas, which contributes to 95% of export earnings, transforming the small nation on the island of Borneo into the fifth richest nation in the world with a GDP per capita of US$61,000 based on PPP in 2020.

ASEAN
ASEAN startups raised a total of US$8.6 billion in 2020, with 42.6% of fundraising happening in Singapore alone 
(14 January 2021) According to a recently published report by Deal Street Asia, the total capital raised by Southeast Asian-based startups in 2020 totalled US$8.6 billion. This was 2% lower than that raised in 2019 – which measured at US$8.76 billion. This slight decline was attributed to corrections in company valuations as well as fewer mega-deals signed during the COVID-19 pandemic. Singapore retained its position as the investment destination of choice in 2020, with 42.6% of total deals in the region occurring in the island state alone. Indonesia followed with a 39.2% share, and Thailand at 5.8%. 2020’s two largest fundraisers were ride-hailing giants Gojek and Grab; raising at least US$1.6 billion and US$1.1 billion respectively. Digital industries were the biggest beneficiaries overall of stay-at-home orders and social distancing requirements caused by COVID-19, including fintech, e-commerce, health tech, and edtech.

MALAYSIA
2021 growth forecasts for Malaysia slashed in light of new two-weeks lockdown due combat COVID-19
(13 January 2021) Several economists have cut their 2021 growth forecasts for Malaysia after the country announced a two-week lockdown for six states and federal territories starting on 13 January 2021, to combat rising cases of COVID-19. A state of emergency was also declared that will last until 1 August, 2021. Among the economists who have cut their growth forecasts include Capital Economics (7% from 10% previously), UOB (5% from 6%), and Fitch Solutions (10% from 11.5%). Considering that the states and territories impacted by the lockdown account for 57% and 65% of the country’s population and GDP respectively, the lockdown is expected to hit the country quite significantly. However, it is believed that the state of emergency may help the Malaysian ringgit, as it will temporarily remove political uncertainty.

MALAYSIA
Toyota and Honda shut down operations at multiple plants due to strict lockdown measures 
(14 January 2021) Toyota Motor and Honda Motor have halted operations at multiple plants in Malaysia due to strict lockdown measures implemented on 13 January 2021. Toyota shut down two assembly plants on 14 January 2021, while Honda suspended production at two factories on 13 January 2021. One plant makes two-wheelers while the other produces four-wheel vehicles. In 2019, Toyota manufactured around 61,000 vehicles in Malaysia, while Honda’s annual capacity in the market is 300,000 two-wheelers and 100,000 four-wheelers. Malaysia is the third-largest auto producer in Southeast Asia, behind Thailand and Indonesia. Output during the January-November period of 2020 fell 19% to roughly 430,000 vehicles.

SINGAPORE
Singaporean sovereign wealth fund GIC most active state-owned investor in the world in 2020 
(13 January 2021) Singaporean sovereign wealth fund GIC emerged as the most active state-owned investor in the world in 2020, according to a report by independent data and analysis platform Global SWF. Out of the 438 state-owned investors included in the report, GIC) the 10th-largest state fund worldwide) deployed US$17.7 billion into 65 deals – a slight decrease from US$24 billion in 2019. The three largest state-owned investors in the world – Japan’s Government Pension Investment Fund (GPIF), Norway’s Norges Bank Investment Management (NBIM) and China Investment Corporation (CIC) – were not among the world’s most active funds in 2020, due to their lack of investments in private markets. Due to COVID-19, total investment activity by state funds dropped from US$199.4 billion in 2019 to US$162.3 billion in 2020. GIC and the other Singaporean sovereign wealth fund Temasek were the top two tech investors in the world in 2020.

INDONESIA, SINGAPORE
Singapore tech startup Sea Ltd. acquires Indonesian bank PT Bank Kesejahteraan Ekonomi to gain a foothold in ASEAN fintech 
(13 January 2021) Singapore’s tech startup Sea Ltd. has gained ‘full control’ of Indonesian bank PT Bank Kesejahteraan Ekonomi to gain a foothold in the ASEAN fintech sector. The company acquired stakes from existing shareholders PT Danadipa Artha Indonesia and PT Koin Investama Nusantara through its subsidiary Turbo Cash Hong Kong Ltd. Sea Ltd. is Southeast Asia’s most valuable company, and plans to establish itself as a leader in financial technologies and services across the region. The company raised US$3 billion in stock offerings in December 2020, intending to use the proceeds to fund business expansion. ASEAN internet companies are all seeking to establish themselves in the digital banking industry, with Indonesian startup Gojek paying US$160 million to increase its stake in Indonesian bank PT Bank Jago, hoping to allow users to open bank accounts with Jago and then manage their finances through their app. Gojek’s e-wallet GoPay, which extends digital financial services to merchants and drivers, competes with Sea’s e-wallet ShopeePay and Ovo, backed by Grab and Tokopedia.

THE PHILIPPINES
Philippines economy expected to rebound by between 6.5% and 7.5% in 2021
(13 January 2021) According to the governor of the Philippines’ central bank  Bangko Sentral ng Pilipinas, the economy of the Philippines is expected to rebound by between 6.5% and 7.5% in 2021. This is after the country suffered a contraction of between 8.5% to 9.5% in 2021. The economy’s recovery has been attributed to improvements in remittances and foreign direct investments. The Bangko Sentral ng Pilipinas had delivered five interest rate cuts totalling 200 basis points in 2020, making it one of the most aggressive in the world in terms of policy easing. The central bank had also cut banks’ reserve requirement ratio by 200 basis points and provided extra liquidity support by purchasing government securities and extending loans to the government. Inflation in 2021 and 2022 is expected to remain within the targeted 2% to 4% range.

THAILAND
Government announces stimulus programs worth US$7 billion to support individuals and businesses 
(12 January 2021) The Thai government has announced stimulus programs worth US$7 billion to provide support to individuals and businesses impacted by the country’s largest wave of COVID-19 infections yet. Among the measures unveiled included cash handouts to about 30 million people, mostly informal sector workers and farmers who have been impacted by the pandemic. Each beneficiary will receive US$116.6 per month for two months. The government has also directed state-owned banks to boost liquidity to businessmen and farmers, with the Bank for Agriculture and Agricultural Cooperatives offering as much as US$666.0 million worth of loans to entrepreneurs and farmers, while the Export and Import Bank of Thailand will reserve US$166.5 million for exporters and importers. Among the other stimulus measures announced include reductions in electricity and water bills for two months and reductions in land and building taxes by 90% for another year.

Vietnam begins human trials of locally manufactured vaccine Nanocovax
(17 December 2020) Vietnam began human trials of its locally manufactured vaccine Nanocovax on 17 December, with three volunteers receiving their doses at the Military Medical University in Hanoi. The volunteers will be monitored for 72 hours at the academy before being allowed to return home, after which they will be monitored for 56 hours after the vaccination. The vaccine was developed by Ho Chi Minh City-based Nanogen Pharmaceutical Biotechnology JSC. The Vietnamese government has remained committed to producing a home-grown vaccine to avoid reliance on foreign-made vaccines. The first phase trial for Nanocovax is expected to last four months, followed by another four-month trial for the second phase which will involve 400 to 600 test subjects. The third and final phase will last six months and might involve as many as 10,000 people in Vietnam, Bangladesh, India and Indonesia.

ADB revises Southeast Asia’s 2020 GDP growth to 4.4% contraction
(10 December 2020) The Asian Development Bank (ADB) has revised its GDP forecast for Southeast Asia from a 3.8% contraction in its September Update to 4.4% in 2020 in its December supplement to the Asian Development Outlook (ADO) 2020 report. It has also revised the 2021 GDP growth for the region from 5.5% to 5.2%. Economic growth in Southeast Asia remains under pressure as COVID-19 outbreaks and containment measures continue, particularly in Indonesia, Malaysia and the Philippines. GDP forecasts in 2020 are downgraded for the three countries as COVID-19 containment hampers economic recovery. Meanwhile, success in reopening economies signal better growth prospects for Brunei, Thailand, and Vietnam. Forecasts are unchanged for Cambodia, Laos, Myanmar, Singapore and Timor-Leste.

THE PHILIPPINES
Banks warned of higher non-performing loans as pandemic-relief impact eases
(11 December 2020) Moody’s Investors Service has warned Philippine banks of potentially higher non-performing loans (NPLs) in the coming months, especially after loan payment moratoriums and other pandemic-related relief measures taper off. According to a recent sector analysis, Moody’s said that the Philippines is the only ASEAN country that saw a significant rise in NPL levels in the midst of the COVID-19 pandemic. Despite Bangko Sentral ng Pilipinas’s (BSP) recent efforts to mandate banks to help borrowers in the time of the pandemic, Philippine banks’ asset-weighted average NPL ratio rose to 3.4% as of 30 September 2020 from 2.0% a year earlier. Moody’s said the NPLs in the Philippines arose mostly from the retail and small and medium enterprise (SME) segments, which were hit hard by the pandemic. BSP officials said they project the country’s bad loans to rise to about 4.6% of their total loan portfolio by the end of 2020.

MALAYSIA
Overseas holdings of government securities rose to US$49 billion in November 2020, highest level since October 2016
(9 December 2020) Overseas holdings of Malaysian government securities rose to US$49 billion (RM198.4 billion) in November 2020, its highest level since October 2016, according to data by the country’s central bank, Bank Negara Malaysia (BNM). The month of November marked the seventh straight month of purchases and came as the Ringgit rallied 2.0% to its highest level in almost a year. “Ringgit bonds” remain attractive to overseas investors considering the large onshore investor base, a well-managed pandemic situation, and BNM’s relatively ample room for further policy changes. Malaysia’s 10-year benchmark yield measured at 2.76%, offering a 183-basis point premium over comparable US Treasuries. Investor appetite for Malaysian bonds are expected to continue due to optimism over the global vaccine rollouts and a recovery in regional trade.

SINGAPORE, UK
Singapore and the UK sign free trade agreement
(10 December 2020) Singapore and the UK signed a free trade agreement on 10 December, which covered some US$22.4 billion in bilateral trade in goods and services between both countries. Under the UK-Singapore FTA, companies from both countries will enjoy the same benefits they are currently receiving under the EU-Singapore FTA. These would include tariff eliminations on goods trade, as well as increase access to services and government procurement markets. There will also be reductions of non-tariff barriers in sectors including electronics, motor vehicles and vehicle parts, pharmaceutical products and medical devices, and renewable energy generation. Under the new agreement, tariffs will remain eliminated for 84% of all tariff lines for Singapore exports to the UK, while Singapore will continue to bind their level of duty-free access for all UK products entering Singapore. Both countries aim to launch negotiations on a UK-Singapore Digital Economy Agreement (DEA) in 2021.

INDONESIA
Indonesia to raise excise duties on cigarette products by an average of 12.5%
(10 December 2020) Indonesia plans to raise excise duty on cigarette products by an average of 12.5% effective 1 February 2020. Indonesia, the world’s second-largest cigarette market after China, seeks to earn US$12 billion (174 trillion rupiah) in state revenue from tobacco products in 2021, a 5.0% increase from its 2020 target. The country sets varying rates of levies depending on the types of cigarettes, from machine- or hand-rolled as well as whether they contain cloves. The government hiked the duty by 23.0% in 2020. While Indonesia seeks to reduce the number of smokers, it’s also mindful of workers who rely on the tobacco industry, which is why it won’t be raising the levy for hand-rolled cigarettes, Finance Minister Sri Mulyani Indrawati said in the a  on 10 December. The government expects cigarette production in Indonesia to decline by as much as 3.20% to 288.8 billion sticks in 2021.

THAILAND
Thai rubber glove makers aim for 20% share of global market
(10 December 2020) Thailand’s rubber glove industry is aiming to expand its share of the global market from 15% to 20% in the next five years. Thai Rubber Glove Manufacturers Association (TRGMA) is pushing for increased investment and improved overall competitiveness in the industry in order to meet the target. According to TRGMA president Veerasith Sinchareonkul, the long-term aim was to grab a 40% share of the world market. The move follows a 20% rise in global demand for rubber gloves to 3.6 million amid the COVID-19 pandemic with demand expected by another 10% in 2021. TRGMA is urging the Thai government to provide more financial support to help manufacturers expand investment and streamline regulations to ease the setting up of new factories. Thailand is the world’s second-largest exporter of rubber gloves, driven by 19 manufacturers with a combined production capacity of 46 billion per year.

VIETNAM
Ho Chi Minh City seeks FDI in technology-based sectors
(9 December 2020) Ho Chi Minh City (HCM) plans to step up efforts to attract FDI by focusing on infrastructure and administrative procedures, with priority given to high-tech projects, said standing vice chairman of the People’s Committee, Le Thanh Liem. He said priority would be given to foreign investors in technology who have innovative and advanced management capabilities. According to the head of the HCM City Export Processing and Industrial Zones Authority Hua Quoc Hung, HCM City plans to offer competitive land rents and other incentives at industrial parks (IPs) and export processing zones (EPZs), and earmark more lands for building infrastructure to attract investment. The city would switch to newer models of IPs and EPZs to attract foreign investment, and ensure it has appropriate incentives during the transition process. HCM City received US$3.81 billion worth of FDI in the first 11 months of 2020, accounting for 14.4% of the country’s total FDI during the period.

SINGAPORE
Singapore set to host world’s first electric-powered air taxi service by 2023
(9 December 2020) Singapore is set to host the world’s first electric-powered air taxi service by end-2023. The vertical-takeoff craft is being developed by German company Volocopter GmbH, and it hopes to commence operations once it completes flight trials, evaluation and certification in collaboration with the Singaporean authorities. Singapore is at the forefront of plans to introduce flying taxis thanks to a more welcoming regulatory ecosystem than in other countries. Volocopter chief executive Florian Reuter stated that local capabilities in battery research, material science and route validation for autonomous operations will be central to the project. Volocopter, which counts computer chip manufacturer Intel Corp. and automakers Daimler AG and Geely as investors, plans to set up a team of 50 pilots, engineers and operations specialists to support the Singapore flights.

CAMBODIA
Cambodia eyes opportunities in the Chinese market through mango exports
(10 December 2020) As China’s support for Cambodia’s agricultural development continues to increase, more high-quality agricultural products, including mangoes, will be directly exported to China. According to Cambodia’s agriculture minister Veng Sakhon, the upcoming export of fresh mangoes to China will contribute to economic growth and poverty reduction in Cambodia’s rural areas. He said the country has planted more than 124,000 hectares of mango trees, yielding around 1.44 million tonnes of fresh mangoes per annum. Huang Kejin, managing director of Cam MJ Industrial Park, which includes a dried mango processing factory, is optimistic about the export prospect of Cambodia’s dried mangoes to China. He said that in 2021, a total of three dried mango processing lines in the park will be put into operation, requiring about 42,000 tonnes of mangoes a year.

LAOS
Laos pledges to achieve economic goals in next five years
(9 December 2020) Laos intends to carry out its economic reforms from now until 2025 to ensure sustainable and quality growth of its GDP. An annual economic growth rate of 4.0%-5.0% has been set as the target for 2021-2015, with inflation of not more than 6.0% per year. According to deputy prime minister Sonexay Siphandone, there are several goals to be achieved in the next five years. These include boosting national revenue, minimising loopholes for financial leaks and wisely using natural resources. Laos’ economy is projected to grow by 3.3% in 2020 due to the COVID-19 pandemic which has disrupted economic activities and slowed the growth of the service sector. The pandemic has resulted in rising unemployment, with the rate currently at about 20%, and the government has pledged to address this issue. One of the main challenges for Laos is the rising debt burden and fluctuating currency exchange rates.