Mekong Monitor: Thailand’s economy forecasted for clear recovery momentum in 2022 due to weak domestic demand

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Mekong Monitor: Thailand’s economy forecasted for clear recovery momentum in 2022 due to weak domestic demand

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TRADE, ECONOMY, AND INVESTMENT

THAILAND

Thailand’s economy forecasted for clear recovery momentum in 2022
(8 December 2020) Thailand’s economy is only forecasted for a clear recovery momentum in 2022, as domestic demand is expected to remain weak in 2021, according to CIMB Thai Bank. It is believed that the only sector which will see a recovery in 2021 will be Thailand’s exports. Reasons attributed for the projected weak domestic demand include higher non-performing loans which could cause commercial banks to be more hesitant to approve business loans and rising household debt which would make consumers more reserved on expenditure. It is noted that Thailand’s household debt-to-GDP ratio in the second quarter ballooned to 84%, an 18-year high. The Thai baht’s strengthening value against the US dollar is also expected to impact the country’s domestic demand.
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THAILAND

Thai cabinet approves plan to offer long-stay tourist visas for visitors from all countries
(8 December 2020) The Thai cabinet approved on 8 December a plan to offer long-stay tourist visas (STV) for visitors from all countries. Under the STV, foreign visitors can stay in Thailand for up to nine months. Under the previous scheme, only visitors from low-risk COVID-19 countries were allowed to enter the country, but the eventual number of visitors that arrived in Thailand was lower than the government’s expectations (with only 825 tourists visiting the country overall). All foreign visitors to Thailand will have to comply with the rules and regulations under STV, including having to undergo a 14-day compulsory quarantine period upon arrival, as well as obtaining health insurance that covers COVID-19 treatment at the cost of US$100,000.
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CAMBODIA, MALAYSIA

Malaysian conglomerate G Capital Berhad to set up commercial bank in Cambodia
(8 December 2020) Malaysia-based conglomerate G Capital Bhd, which specialises in the provision of charter services with a fleet of land-based passenger transportation assets and specialty vehicles, revealed that it had received “approval in principle” from Cambodia’s central bank to set up a full-fledged commercial bank in Cambodia alongside other partners. The company had entered into a heads of agreement with Public Bank Bhd’s Indo-China operations regional head Phan Ying Tong and Cambodian firm E S Packaging Co Ltd to jointly undertake the establishment of Oriental Bank Plc. G Capital stated it will hold no less than 20% of the issued shares of the new company, while Phan will hold a 51% stake and E S Packaging a 20% stake. The remaining 9% stake will be held by an additional investor.
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MYANMAR

Mitsubishi Corp. sign two train car contracts worth US$663 million in Myanmar
(8 December 2020) Mitsubishi Corp. signed two contracts to deliver new train cars for two railway tracks in Myanmar, with both contracts worth a total of US$663 million. The two contracts will be covered by an international yen loan agreement between the governments of Myanmar and Japan. Mitsubishi will deliver 66 cars for the 46-km Yangon Circular Railway, which runs in a loop in Myanmar’s largest city, and 180 cars for the 620-km Yangon-Mandalay Railway, which connects Yangon, Naypyitaw and Mandalay. The new train cars will reduce travel time on the Yangon Circular Railway from 170 minutes to 110 minutes, and on the Yangon-Mandalay Railway from about 15 hours to around eight hours. Improvements to the Yangon-Mandalay Railway is expected to bring development to the northern Mandalay region.
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VIETNAM

Oil trading giant Gunvor International to supply liquified natural gas to Vietnamese province of Binh Thuan
(8 December 2020) Oil trading giant Gunvor International entered into a joint venture with US-based development company Energy Capital Vietnam (ECV) to supply liquified natural gas (LNG) to the Vietnamese province of Binh Thuan. Gunvor will supply the super chilled fuel to an ECV-led project in Binh Thuan, where it will be converted into power. Both companies expect initial LNG consumption to amount to about 1.5 million tonnes per year. The LNG will be delivered via a subsea pipeline to an offshore floating storage and regasification unit to import LNG. The project’s commercial operational delivery is expected by 2025.
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About Greater Mekong Subregion (GMS)

The Greater Mekong Subregion (GMS) Economic Programme was launched by the Asian Development Bank in 1992 connecting five developing ASEAN countries, namely Cambodia, Laos, Myanmar, Vietnam and Thailand, and Chinese provinces of Yunnan and Guangxi Zhuang Autonomous region. The region has some of the most robust economies sharing the Mekong River Basin thanks to its reform and liberalisation. The subregion is growing at a faster pace than the whole of East Asia and the Asia Pacific as the GDP growth rate for 2017 was at 6.4 percent, according to the World Bank. The population at the subregion as of 2016 is at 340 million while the GDP at PPP is at US$3.1 trillion in 2016. In 2015, trading within the region was at US$444 billion.

China-ASEAN Monitor: Singapore and China sign landmark 10 agreements in areas ranging from public health and trade

Photo Credit: Borneo Bulletin

TRADE, ECONOMY, AND INVESTMENT

Singapore and China sign landmark 10 agreements in areas ranging from public health and trade
(8 December 2020) Singapore and China signed a landmark 10 deals in areas ranging from public health to trade at the 16th Joint Council for Bilateral Cooperation (JCBC). The year 2020 marks the 30th anniversary of diplomatic ties between both countries. Among the areas covered by the agreements included public health, strengthening cooperation between biomedical companies, cooperation and the exchange of best practices in environmental sustainability, an agreement on trade facilitation and security, and the application of new technologies. Both sides also marked key milestones in government-to-government projects, including the 5th anniversary of the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity (CCI) and the 10th anniversary of the China-Singapore Guangzhou Knowledge City. Singaporean deputy prime minister Heng Swee Keat stated that three areas for further cooperation with China will include connectivity, digitalisation and sustainable development.
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China Construction Bank (CCB) granted qualifying full bank license by the Singapore
(8 December 2020) The China Construction Bank (CCB) was granted a qualifying full bank (QFB) license by the Monetary Authority of Singapore (MAS) under the China-Singapore Free Trade Agreement Upgrade Protocol. This is the tenth QFB license granted to a foreign bank by the MAS, and the third QFB license to a Chinese bank. Foreign banks with the QFB license may undertake universal banking and operate a total of 25 locations. The CCB Singapore branch subsequently stated that they would focus on setting up a commodity trade financing centre, an investment banking transaction centre and a fintech innovation centre. The two other Chinese banks in Singapore with the QFB license are the Bank of China and the Industrial and Commercial Bank of China.
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China becomes the Philippines’ most important source of FDI since 2017
(9 December 2020) A joint report by the United Overseas Bank (UOB) Ltd. and the Hong Kong University of Science and Technology’s Institute for Emerging Market Studies revealed that China had become the Philippines’ most important source of foreign direct investment (FDI) since 2017, under the first full year in office for current Filipino President Rodrigo Duterte. The Philippines was among the ASEAN countries that benefited the most from new investments related to China’s Belt and Road Initiative in recent years. According to official data, investment pledges by Chinese firms reached US$965.8 million worth in 2018, on top of the US$33.9 million from Hong Kong-based investors. The UOB report noted that the Philippines sought to attract Chinese investors through its visa-on-arrival policy and relaxation of visa policies for Chinese workers.
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The Philippines generated over US$462 million export sales in third China International Import Expo
(8 December 2020) The Philippines Department of Trade and Industry (DTI) stated that the Philippines generated over US$462 million in export sales during the third China International Import-Expo (CIIE). The total export sales included US$455.689 million worth of export deals from signings and commitments, as well as US$6.17 million worth of onsite booked sales and business matching activities. The DTI revealed that they exceeded their US$160 million export sales target. The Philippines’ participation in this year’s CIIE featured 40 local companies that showcased a range of tropical fruits, processed fruits and vegetables, healthy snacks, seafood and marine products, and other premium food selections. The DTI revealed that they expect more sales as negotiations and commitments from the event come to fruition in the coming weeks.
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Thai real estate developer WHA Corp expect sales to rebound in 2021
(4 December 2020) Thailand’s largest industrial estate developer WHA Corp. said they expected sales to rebound in 2021 due to both the easing of travel restrictions and strong demand from companies seeking to relocate production from China. The developer owns 11 industrial parks across Thailand and saw their demand negatively affected by the COVID-19 outbreak. WHA Corp. is expected to benefit from the trend of global manufacturing shifting away from China due to the pandemic, demand for new supply chains, and a tightening labour market in China. WHA Corp.’s land sales plunged by 78% in the nine months through September 2020 from the same period in 2019.
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CARI Captures Issue 482: ASEAN and the European Union have formally elevated their relationship to a strategic partnership

ASEAN, EU

Asean and the European Union have formally elevated their relationship to a strategic partnership
(01 December 2020) On 01 December 2020, the EU and ASEAN agreed to upgrade their relationship to a strategic partnership, thus committing both parties to regular summits at the leaders level. The German Foreign Minister stated that both parties will ‘stand up for safe and open trade routes’, as well as ‘free and fair trade’. He also stated that both parties collectively represent about 1 billion and almost 25% of global economic power. According to a factsheet released by the EU in tandem with the announcement of the partnership, among the main areas of cooperation between both parties include economic cooperation, security cooperation, sustainable connectivity, and sustainable development.

ASEAN

Divergence of manufacturing data correlates with bond-market performance in ASEAN
(04 December 2020) The divergence of recent purchasing managers indexes (PMI) data for the ASEAN countries of Indonesia, Thailand, the Philippines, and Malaysia has largely correlated with their bond-market performance. PMI data published this week were both above the 50 point threshold, indicating manufacturing expansion. For Indonesia, their numbers have risen for six of the past seven months, while the data for Thailand has signalled growth for two straight months for the first time in 2020. Their positive PMI readings correlate with their debt performance, with Indonesian bonds returning 10% this quarter to dollar-based investors, while Thai bonds saw returns of 5%. On the other hand, poor PMI numbers for Malaysia and the Philippines have correlated with their poor bond performance, with Malaysian and Filipino debt returning only 1.6% this quarter (currently the worst performers in Asia).

INDONESIA, UNITED STATES

US tech giants shift investment focus on Indonesian unicorns
(04 December 2020) Google, Amazon, Facebook, Apple and Microsoft (GAFAM) are increasingly shifting their investment focus to Indonesia. Indonesia’s internet economy is believed to have grown more than fivefold in five years to reach US$44 billion in 2020, and is expected to reach US$124 billion by 2025. In November 2020, Microsoft announced it had taken part in a US$100 million funding round for Indonesian e-commerce platform Bukalapak. Between late October and early November 2020, Google had reportedly invested into e-commerce platform Tokopedia, following Facebook's and PayPal's cash injections into ride-hailing company Gojek in June 2020. For Indonesian unicorns, US tech investments provide a welcome development in light of the increased need for capital in light of the COVID-19 pandemic. For the GAFAM firms, investments into unicorns provide a window into the Indonesian market without having to develop local operations organically.

THE PHILIPPINES

The Philippines government lowers growth outlook for the economy in 2020 to between 8.5%-9.5%
(03 December 2020) The Philippines government lowered its growth outlook for the economy to 8.5% to 9.5%, significantly lower than the 4.5%-6.6% contraction predicted in July 2020. The economy is expected to pick up in the final three months of 2020. The economy is expected to grow by 6.5%-7.5% growth in 2021, and 8%-10% growth for 2022. The government also lowered 2020’s budget deficit ceiling to 7.6% of GDP, from the previous cap of 9.6%, based on stronger revenue forecasts. They also raised the deficit ceiling for 2021 and 2022 due to higher expected spending. Growth is expected to be boosted by 2022 due to both infrastructure investments and an expectation that all forms of quarantine will be lifted.

THE PHILIPPINES

The Philippines considering subsidizing coronavirus tests to boost domestic tourism
(01 December 2020) The Philippines is considering subsidizing coronavirus tests for tourists to boost its tourism market that's gradually opening to domestic tourists. The government is considering shouldering as much as half the costs of COVID-19 tests for tourists. Travel vouchers for the subsidized tests from state-run Philippine General Hospital in Manila will be given to tourists, although it is unknown who can qualify for the tests. The tourism department is also moving to set up uniform requirements for entry to tourist destinations, as currently different travel protocols set up by local governments have been confusing. The tourism industry accounts for about 12.7% of the Philippines GDP in 2019.

SINGAPORE

Tech-based stocks slowly gaining more prominence in Singapore’s stock market
(28 November 2020) Technology stocks are slowly starting to gain prominence in Singapore’s stock market. A lack of technology stocks has been a key factor in Singapore’s benchmark gauge failing to recoup its losses suffered in March 2020. The Straits Times Index is down more than 11% for 2020. Among the recent developments in Singapore’s stock market has been a change in MSCI Inc’s rules which potentially paves the way for internet giant Sea Limited’s entry into the MSCI Singapore Index, data centre operator Keppel DC REIT becoming the third tech company becoming part of Singapore’s benchmark Straits Times Index, and smartphone solutions provider Nanofilm Technologies International Limited going public in one of Singapore’s largest primary listing since 2017. In a bid to attract new offerings, Singapore’s stock exchange extended its partnership with Nasdaq Inc. earlier in 2020, to make documentation easier for firms seeking a second listing in Singapore.

MALAYSIA, INDONESIA

Malaysian state of Sarawak to export liquefied petroleum gas to West Kalimantan province in Indonesia
(02 December 2020) The chief minister of the Malaysian state of Sarawak will supply liquefied petroleum gas (LPG) to West Kalimantan in Indonesia after both parties came to a formal agreement. The governor of West Kalimantan had reportedly written a letter to the Sarawakian Chief Minister to supply LPG to West Kalimantan, especially to the Indonesian villages near the Sarawak border. The Sarawak Chief Minister stated that without a regulatory procedure for Sarawak to sell LPG to Indonesia, then smuggling would take place. The Sarawak state government, through its wholly-owned Petroleum Sarawak Berhad (Petros), must make formal arrangements for the supply of LPG with the West Kalimantan authorities. The Sarawak state government is currently negotiating with the Malaysian federal government and state-owned oil company Petroliam Nasional Berhad (Petronas) for Petros to take an active role in the exploration of oil and gas within the state.

MALAYSIA

A total of 99,696 workers were laid off between January to November 27, 2020, due to COVID-19
(03 December 2020) A total of 99,696 workers were laid off between January to November 27 2020 due to the COVID-19 pandemic. These included highly skilled workers comprising managers (13,109 people); professionals (26,079 people); and technicians and associate professionals (19,095 people). An estimated 75% of the total number of workers who lost their jobs during this period were from the B40 group who earn US$984.38 a month and below. For those who earned US$984.38 a month. Among the sectors which have been affected by the pandemic include manufacturing, hospitality, food and beverage, wholesalers and retailers, as well as construction and transportation.

VIET NAM, SOUTH KOREA

The total registered capital of South Korean businesses in Viet Nam reached US$70.4 billion as of October 2020
(03 December 2020) The total registered capital of South Korean businesses operating in Viet Nam reached US$70.4 billion as of October 2020, with 8,900 projects. In 2020 alone, there has been a total of 530 projects in Viet Nam amounting to US$3.4 billion. The number of South Korean expats working in Viet Nam has also totalled 10,000. This was all revealed during the Vietnam-Korea Investment Connection event organized in Hanoi by the Vietnam Trade Promotion Agency, the Vietnamese Department of Asia-Africa Markets from the Ministry of Industry and Trade and the South Korea Trade-Investment Promotion Agency (KOTRA). It was also argued during the event that South Korean businesses will be able to leverage from the 14 free trade agreements signed by Viet Nam to increase their export revenues as well as expand export markets.

THE PHILIPPINES

Annual inflation in November 2020 rose 3.3% year-on-year; reaching highest level in 20 months
(04 December 2020) Annual inflation in the Philippines for the month of November 2020 rose by 3.3% year-on-year; reaching its highest level in 20 months as a series of typhoons impacted food supplies and drove prices higher. This was above the central bank’s projected range of 2.4%-3.2% for the same month. Core inflation, which excludes food and fuel prices, rose by 3.2% in November 2020 from 3.0% in October 2020. In the January-November 2020 period, inflation averaged at 2.6%, below the midpoint of the official 2%-4% target range for 2020. Weak domestic demand due to the impact of COVID-19 restrictions and consumers’ reluctance to spend are expected to keep inflation largely in check. The Philippines central bank has cut interest rates five times in 2020, and has not ruled out further rate cuts.

Mekong Monitor: Thailand dominates ASEAN-6’s IPO market in 2020, contributing more than 60% of the total funds raised in the region

Photo Credit:Luxury Travel Advisor Post

TRADE, ECONOMY, AND INVESTMENT

THAILAND

Thailand dominates ASEAN-6’s IPO market in 2020, contributing more than 60% of the total funds raised in the region
(30 November 2020) A report by Deloitte noted that Thailand dominated the ASEAN-6’s initial public offering market, contributing more than 60% of the total funds raised in the region. Thailand recorded 23 IPO launches from the start of 2020 to November 15, 2020, down from 34 launches for the whole of 2019. However, the IPOs in 2020 raised a total of US$3.94 billion, exceeding 2019’s roughly US$3 billion. Moving into 2021, Thailand is expected to see momentum in IPO activities, due to the planned in easing of rules to attract more listings by foreign companies, as well as plans by the Stock Exchange of Thailand to launch a new stock market for start-ups and SMEs. 25 companies are currently expected to go public in Thailand. Thailand is expected to beat Singapore for the second consecutive year in the region’s IPO market.
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THAILAND

General tourism market to be closed until March 2021 due to ongoing COVID-19 pandemic
(02 December 2020) Thailand’s Minister for Sports and Tourism announced that Thailand’s general tourism industry will be closed until March 2021. Tourist visas such as e-Visas and visa-on-arrivals will still be on hold for now. Thailand will continue to be open for businessmen, technical experts, high-level workers and those in the medical field, while the 14-day quarantine will continue to be enforced for many countries still suffering from the pandemic. Although tourists can still enter the country through the new TR and STV visas, many have been turned off by the rigorous application process. The Thai Hotel Association and The Thailand Travel Agents Association have been urging the government to create travel corridors with other low-risk countries.
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VIET NAM

Viet Nam orders halt to all international commercial flights after country reports first COVID-19 cases in three months
(01 December 2020) Viet Nam’s Prime Minister ordered the aviation authority to halt international commercial flights after the country reported its first local COVID-19 cases in almost three months. Rescue flights bringing Vietnamese nationals home from abroad will be allowed to continue. Viet Nam had previously suspended international commercial flights from 01 April 2020, onwards amid the COVID-19 outbreak, causing local carriers to lose an estimated US$4 billion in 2020. Some international flights were allowed to resume in the summer and fall (albeit with travellers having to undergo a mandatory 14-day quarantine). Officials in Ho Chi Minh City have isolated 513 people after three people tested positive for the virus. The Prime Minister directed provincial governments to enforce social distancing “in high risk areas” in a manner not to hurt businesses and production activities.
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MYANMAR

Ports on the Yangon River will be able to accommodate larger vessels than usual from November 2020 onwards
(02 December 2020) Ports on the Yangon River will be able to accommodate larger vessels than usual in terms of size and draft as a result of improved waterways in the river. In November 2020, a 10.5 meter draft vessel docked at Yangon for the first time in its history. Of the 149 vessels that called in Yangon between July and November 2020, 135 had drafts above 8 meters and gross tonnages of 15,000 tonnes to 30,000 tonnes. Prior to recent development conducted on the Yangon, larger vessels could only pass through the Yangon river only by waiting for the tide to rise. The improved capacity of the Yangon River is expected to allow higher cargo throughput at the port and encourage a higher volume of trade. 95% of Myanmar’s trade is conducted by sea.
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CAMBODIA

Project to construct 38 roads in Siem Reap province to cost about US$150 million
(02 December 2020) The government plans to construct some 38 roads in Siem Reap province at a total cost of US$150 million. The government also plans to beautify about 9 kilometres of the Siem Reap river in the city to make it more attractive. The road project comes under the Siem Reap Tourism Development Master Plan 2020-2035, which aims to transform Siem Reap into a smart city. The road project is aimed at reducing traffic congestion, promoting transportation growth, and attracting investors, businessmen and international tourists. The government has targeted Siem Reap province alongside Phnom Penh and Sihanoukville provinces for national development and a destination for tourism, culture, history and nature.
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About Greater Mekong Subregion (GMS)

China-ASEAN Monitor: Tech investments into Indonesia jumped 55% year on year in first half of 2020 as Chinese investors shift away from India

Photo Credit: Google Photo

TRADE, ECONOMY, AND INVESTMENT

Tech investments into Indonesia jumped 55% year on year in first half of 2020 as Chinese investors shift away from India
(29 November 2020) Chinese venture capitalists are shifting their focus away from India towards Indonesia, after the former began targeting opportunistic Chinese takeovers and banning Chinese apps. According to a recent report by Google and Temasek, investments into Indonesia’s tech sector in the first half of 2020 jumped 55% from the same period in 2019, totalling US$2.8 billion. Among the Chinese venture capital investors shifting their focus to Indonesia included Shunwei Capital and BAce Capital. However, one Chinese capitalist warned that many Indonesian tech companies are already fully valued, and that ‘there is too much capital chasing too few quality start-ups’.
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Huawei signs agreement with Indonesia to develop digital talents and for technological cooperation
(2 December 2020) Chinese telecommunications company Huawei Technologies recently entered into an agreement with Indonesia to develop local digital talent, including in 5G technology and related fields. Huawei will assist in training 100,000 people in digital technologies such as cloud and 5G sectors. Huawei will also collaborate with an Indonesian government agency that is pushing the forward development of artificial intelligence and 5G. The company will also provide technical cooperation to Indonesian telecom company Indosat Ooredoo in the installation of 5G infrastructure in the Jakarta capital region and other areas. These investments into Indonesia comes as Huawei’s activities in Europe and other Southeast Asian countries such as Singapore and Vietnam are being curtailed.
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JPMorgan planning on doubling number of private bankers in Singapore to serve wealthy Chinese clients
(30 November 2020) New York-based bank JPMorgan Chase & Co plans to double the number of private bankers serving Chinese clients at its Singapore office. The number of millionaires in China grew by 11% to 1.3 million in 2019, and many wealthy Chinese nationals seek to park their funds, buy property, and set up family offices in Singapore due to the latter’s clear and investor-friendly regulations. The China team is the latest addition to JPMorgan’s team in Singapore, which has traditionally focused more on local clients and those in Indonesia. Many major Chinese firms such as Tencent Holdings Ltd., Alibaba Group Holding Ltd., and ByteDance Ltd are setting up offices in Singapore, which thus brings in lots of senior people with concentrated wealth holdings seeking ways to build upon it.
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Chinese smartphone giants currently occupy nearly 66% of Myanmar’s mobile market
(30 November 2020) Chinese smartphone giants including Xiaomi, Huawei, and Oppo currently occupy nearly 66% of Myanmar’s mobile market. Myanmar is a fast growing market, with internet penetration only reaching 41% as of January 2020. As well, Myanmar’s GDP per capita is expected to rise by more than 55% by 2022. Chinese companies such as Xiaomi, Huawei and Oppo benefit from the fact that Myanmar consumers are generally price sensitive, which gives Chinese companies an edge over other brands such as Apple and Samsung. Although Huawei was the top-selling brand in Myanmar until early 2016, as of October 2020 Xiaomi has a leading market share of over 31%. The reason for Huawei’s decline in market share was attributed to the company’s strategic positioning as a premium brand. Myanmar telecommunications companies are currently focused on improving 4G connectivity.
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Chinese market absorbed some 39.09% of Cambodia’s total milled-rice exports in the first 11 months of 2020
(2 December 2020) The Chinese market absorbed some 39.09% of Cambodia’s total milled-rice exports in the first 11 months of 2020. Cambodia exported a total of 601,045 tonnes of milled rice to international markets in the period January-November 2020, up 16.9% from the same period in 2019. Other markets such as the EU, ASEAN, and other destinations accounted for 31.35%, 13.01% and 16.55% respectively of total milled-rice exports for the same period. The significant opportunities of the Chinese market often meant leaders from the Cambodia Rice Federation (CRF) frequently attended events in China to promote Cambodian rice produce.
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CARI Captures Issue 481: Development of green economy offers annual US$1 trillion economic opportunity for ASEAN

ASEAN

Development of green economy offers annual US$1 trillion economic opportunity for ASEAN
(26 November 2020) A recent report by Bain & Company estimated that accelerating the development of the Southeast Asian green economy would offer a US$1 trillion economic opportunity annually for ASEAN businesses by 2030. It was noted that there is a gap between where Southeast Asia is now compared to other regions in terms of their green initiatives. Among the sectors of the green economy which Bain & Company believe Southeast Asia could become a global leader in include sustainable energy and resources, healthy and sustainable food systems, efficient and low carbon supply chains, building green cities, and setting up green financing and liquid carbon markets. As part of Bain & Company’s continued efforts to drive global sustainability transformation, the company set up a Global Sustainability Innovation Centre (GSIC) in Singapore, with the support of the Singapore Economic Development Board (EDB).

INDONESIA, UNITED STATES

Indonesia approaches US private equity firms to invest into new sovereign wealth fund
(26 November 2020) During a visit to the United States last week, Indonesia’s minister of maritime affairs and investment approached several US private equity firms to invest into the Indonesia Investment Authority, Indonesia’s new sovereign wealth fund. The fund is hoping to raise up to US$15 billion, and will invest in infrastructure such as toll roads and electricity networks. Among the US firms approached included Blackstone, Carlyle, EIG Partners, Global Infrastructure Partners, Stonepeak, I Squared Capital and JPMorgan. As well, the US International Development Finance Corporation (DFC) could possibly inject some US$2 billion into the fund. Indonesia is also reportedly approaching the Japan Bank for International Cooperation and the Abu Dhabi Investment Authority.

INDONESIA

Record policy rate cuts by central bank having little impact on borrowing rates of Indonesian banks
(26 November 2020) Although the Indonesian central bank has cut its key rate by 225 basis points since June 2019 to a record-low of 3.75%, this has had little impact on the borrowing rates charged by Indonesian banks. For comparison, PT Bank Central Asia, Indonesia’s largest lender by market value, eased rates for customers by only about 100 basis points during the same period. This is reportedly due to low demand among consumers for new loans, with loans shrinking 0.47% year-on-year in October 2020 (the first time on record). Indonesians are limiting their spending and businesses are delaying their investments as the country grapples with its COVID-19 pandemic. As well, banks are also hesitant to lend due to a relatively high level of non-performing loans as consumers and businesses struggle to repay debts, as well as ongoing loan restructurings.

MALAYSIA

Malaysian government passes US$78 billion budget for 2021; largest in nation’s history
(26 November 2020) On 26 November, 2020, Malaysia’s parliament passed the 2021 budget, which has a spending plan of US$78 billion. This makes it the largest budget in Malaysia’s history. The supply bill will enter the ‘committee stage’ on 30 November, 2020, as the lower house will scrutinize each portion of the bill and several more rounds of voting take place. If the budget is not approved before 15 December, 2020, only about 20% of the original budget allocated for pensions and debt servicing can be spent without legislative approval. Malaysia’s main equities index closed at its highest level in 2020 after the budget was passed, and the ringgit rose to its highest level against the dollar in 10 months. Sovereign bonds also held losses. Among the proposals included in the budget were automatic moratoriums on loan repayments for the poorest 40% of the population, aid to farmers, and allowances for fishermen.

SINGAPORE

Singapore economy contracts by 5.8% year-on-year in third quarter of 2020, outperforming initial projections
(22 November 2020) The Singapore economy contracted by 5.8% year-on-year in the third quarter of 2020, outperforming initial projections of a 7% contraction. The third quarter contraction was also better than the 13.3% year-on-year contraction recorded in the second quarter of 2020. On a quarter-on-quarter seasonally adjusted basis, Singapore’s GDP rose by 9.2% in the third quarter, once again outperforming the 13.2% contraction in the second quarter. Singapore’s economy is now expected to shrink by between 6% and 6.5% in 2020 compared to 2019; narrower than the previous official forecast range of a 5% to 7% contraction. Singapore is now expected to rebound back to growth by between 4% and 6% in 2021.

SINGAPORE

Financial services sector expected to offer 1,800 new jobs in the next 12 months up to June 2021
(26 November 2020) The financial services sector is expected to offer 1,800 newly-created jobs in the 12 months up to June 2021, according to a survey by the Monetary Authority of Singapore. The survey covered more than 30 firms that collectively account for over 40% of the financial services workforce. Despite the COVID-19 pandemic, the financial services industry created a net 1,900 new jobs in the first six months of 2020. Close to 49% of the new jobs to be created through June 2021 will be in technology, followed by private banking and wealth at 12%. During the same period, financial firms are also offering 2,000 traineeships. Singapore’s financial sector accounts for more than 13% of its GDP, and employs some 170,000 people.

THE PHILIPPINES

The Philippines central bank to greenlight digital banks to drive financial inclusion in country
(26 November 2020) The Philippines central bank stated on 26 November, 2020, that it will allow the establishment of digital banks to help drive financial inclusion in the Philippines, where only roughly 30% of the population have bank accounts. The central bank created a new license category for banks that offer ‘financial products and services that are processed end-to-end through a digital platform and/or electronic channels with no physical branches.’ To be eligible for the new license category, digital bank will be required to have a minimum capitalization of US$20 million. They will also have to maintain a head office in the Philippines. The central bank stated that digital banks will help in realizing their target of at least 50% of total retail payment transactions shifting to digital, as well as 70% of adult Filipinos having transaction accounts by 2023.

THE PHILIPPINES

The Philippines offering corporate income tax cuts and structural reforms to woo foreign investors
(25 November 2020) The Philippines plans to attract foreign investors through corporate income tax cuts and structural reforms. A bill currently pending in the Senate would cut corporate tax rates from 30% to 25% at the start, and eventually to 20%. The bill also seeks flexibility in granting fiscal and other incentives to attract high-value investments. A Board of Investments campaign to attract foreign investors is focused on particular sectors including automotive, aerospace, electronics, copper-nickel products, and IT and business process management. The Philippines is currently undergoing a recession in 2020 as it grapples with the second worse COVID-19 pandemic in Southeast Asia.

VIETNAM

33 venture capital firms to invest some US$800 million into Vietnamese tech startups over next three to five years
(26 November 2020) At the Vietnam Venture Summit 2020, part of The Vietnam Tech and Startup Week, 33 venture capital firms from South Korea, Japan, Singapore, Indonesia, and Vietnam made a commitment of US$800 million to be invested into Viet Nam’s tech startups. This figure is comparable to the US$861 million invested in Vietnamese tech startups in 2019. Investment proceeds in the first half of 2020 had decreased by some 22% year-on-year to US$222 million due in part to the COVID-19 pandemic. Viet Nam is expected to benefit from the ongoing trade tensions between the US and China, as foreign manufacturing and investments shift away from China.

VIETNAM

Ministry of Finance propose extension of fuel tax cut through 2021 to help aviation industry
(24 November 2020) Viet Nam’s Ministry of Finance is proposing Viet Nam’s Prime Minister extend a 30% cut in the jet fuel environmental tax through to 2021 to help struggling airlines. Viet Nam’s National Assembly had earlier in 2020 approved a cut in the jet fuel tax from US$0.13 per liter to US$0.09, which would last from August to December 2020. Extending the tax cut to 2021 is expected to reduce government tax revenue by about US$43,076.91. The proposal to extend the tax cut follows the National Assembly’s approval earlier in November 2020 to provide financial support to national carrier Vietnam Airlines JSC through loan guarantees and allowing the government investment arm State Capital Investment Corp., to invest in the carrier.

Mekong Monitor: US business sector pledge to continue with investment plans in Thailand

Photo Credit: Bangkok Post

TRADE, ECONOMY, AND INVESTMENT

THAILAND, UNITED STATES

US business sector pledge to continue with investment plans in Thailand
(26 November 2020) During a meeting between the Thai prime minister and the US Ambassador and businessmen from the US-ASEAN Business Council (USABC) at the Foreign Affairs Ministry, US businessmen pledged to press on with investment plans in Thailand. They called on the government to maintain momentum in tourism stimulus projects and to ease travel restrictions. The US Ambassador stated that Thailand had the potential to become one of the best countries in the world to invest in should it have a suitable investment climate. The Thai Prime Minister informed the US businessmen that he had called for the US and ASEAN to strengthen ties in three areas – COVID-19 vaccine development, a global and regional economic recovery from the pandemic, and the enhancement of skills to meet the demands of the future labour market.
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THAILAND

Thailand received more than 1,000 foreign tourists in October 2020; marking the first set of visitors in six months
(24 November 2020) Thailand received more than 1,000 foreign tourists in October 2020; marking the first set of visitors to the country since March 2020. Tourists have begun returning in small numbers under a special long-stay tourist visa issued by the government in October 2020. For comparison, some 3.07 million foreign visitors had visited the country in October 2019. Thailand has retained a nationwide state of emergency to prevent a resurgence of COVID-19, although it has relaxed most of its coronavirus measures to allow businesses to reopen and some visitors to return. The tourism ministry stated that some of the information on the October 2020 tourist numbers may be subject to revision.
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CAMBODIA, MYANMAR

Cambodia to donate 2 million face masks and other medical supplies to Myanmar to help latter fight COVID-19
(25 November 2020) Cambodia will donate some 2 million face masks and other medical supplies to Myanmar to help the latter fight the COVID-19 pandemic. Besides the 2 million face masks, the other medical supplies to be donated to Myanmar include 100,000 fabric face masks, 20,000 N-95 masks, 20,000 goggles, 20,000 sets of personal protective equipment, 500 hand-held temperature scanners, and 20 sets of ventilator machines. The medical supplies will be flown to Myanmar on 26 November on a special flight. Last week, Cambodia also donated 2 million face masks and other medical supplies to neighbouring Lao PDR.
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VIETNAM

Taiwanese company Foxconn plans to expand production in Vietnam with US$270 million investment
(25 November 2020) Taiwanese electronics manufacturer Foxconn plans to expand production in Vietnam with an investment of around US$270 million. The company currently makes a wide range of products in Vietnam, including TVs, telecom equipments, and computer-related products. The company had begun production of liquid crystal displays in Vietnam last week. The Taiwanese company plans to roll out full-scale production in Vietnam and take advantage of the recently signed Regional Comprehensive Economic Partnership (RCEP) agreement (of which Vietnam is a signatory). Foxconn will mostly likely produce PC-related parts such as displays in Vietnam. Vietnam’s close geographical location to China makes it convenient for parts procurement. Foxconn is currently attempting to shift production away from mainland China, with the goal of making its total production outside China more than 30% of its overall production.
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VIETNAM

US asks Vietnam to curb Chinese trans-shipments and ease bilateral trade deficit
(23 November 2020) The U.S. National Security Adviser reportedly told Vietnam that they must curb the illegal re-routing of Chinese exports through Vietnam and purchase more US goods to avoid punitive US tariffs. The US Commerce Department imposed preliminary anti-subsidy duties on Vietnamese car and truck tires in November 2020, citing the country’s ‘undervalued currency’ as one justification. Chinese exporters are reportedly re-routing their goods through Vietnam to avoid higher US tariffs, and Hanoi is attempting to curb this practice. Vietnam has apparently expressed interest in purchasing US military equipment and American LNG in order to reduce Vietnam’s bilateral trade surplus with the US, which in 2020 is on pace to break 2019’s record of US$56 billion. Vietnam is also interested in getting American companies involved in offshore oil and gas projects.
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About Greater Mekong Subregion (GMS)

China-ASEAN Monitor: China’s Nanjing Iron & Steel Company Limited to invest in coke plant in Morowali Industrial Plant in Indonesia

Photo Credit: Business Recorder

TRADE, ECONOMY, AND INVESTMENT

China’s Nanjing Iron & Steel Company Limited to invest in coke plant in Morowali Industrial Plant in Indonesia
(23 November 2020) Chinese company Nanjing Iron & Steel Company Limited announced in a filing to the Shanghai Stock Exchange that it will invest in a coke plant located in Morowali Industrial Park in Indonesia due to stricter environmental rules in China. The plant will cost an estimated US$383.5 million and will have an annual capacity of 2.6 million metric tonnes (mt). China produced 390.99 million mt of coke in the first ten months of 2020, down 0.7% year-on-year. Nanjing Iron & Steel will hold a 78% stake in the joint venture through its subsidiary Hainan-based Jinmancheng Technology Investment Company Limited. Nanjing Iron & Steel noted that Indonesia is closer to the major coking coal exporter of Australia, and that transportation costs are comparatively lower.
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China cooperates with the Philippines in terms of medical supplies and equipment
(25 November 2020) According to the Philippines Ambassador to China, relations between both countries have ‘blossomed’ despite the COVID-19 pandemic and maritime disputes in the South China Sea. Both countries cooperated in terms of medical supplies and equipment. China also helped facilitate more than 60 Philippine Air Force transport jets landing in south China. A webinar by Dr. Zhong Nanshan, who led China’s efforts in containing the pandemic, would be held in the Philippines at the request of the Philippine government. A team of Chinese medical experts had arrived in the Philippines in April 2020 to help the Department of Health in its COVID-19 response. The ambassador also noted that China will face challenges in the implementation of the Belt and Road Initiative post-COVID-19, as present budgetary challenges would affect key infrastructure projects in countries such as the Philippines.
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Thailand briefly loses spot as most popular cross-border destination for Chinese tourists
(23 November 2020) Thailand lost its top spot as the most popular tourist destination for mainland Chinese tourists, according to a survey conducted by HSBC Holdings Plc between 28 October – 2 November 2020. Instead, Japan and South Korea emerged as the top two preferred cross-border destinations, reflecting HSBC’s own view that short-haul travel would recover faster than long-haul international travel. Respondents to the survey stated they would need at least six months after quarantine restrictions are relaxed to become comfortable with international travel, and that an effective vaccine would be key to boosting confidence for Chinese tourists.
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China and Singapore to cooperate to promote greater financial connectivity
(24 November 2020) According to the People’s Bank of China (PBOC), China will cooperate with Singapore to promote greater financial connectivity. The vice-governor of the PBOC stated that financial cooperation between both countries played an important role in promoting the development and opening up of western China. The PBOC will also cooperate with the Monetary Authority of Singapore to strengthen cooperation between both sides’ financial institutions and bolster the connectivity of financial markets. The vice-chairman of the China Banking and Insurance Regulatory Commission vowed to continue opening up the country’s banking and insurance industry, and that China and ASEAN should further expand the two-way opening up under the recently signed Regional Comprehensive Economic Partnership (RCEP) agreement and deepen financial cooperation under the Belt and Road Initiative.
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Chinese state-owned company wins US$405 million contract to construct airfield for new international airport
(23 November 2020) Chinese state-owned company Metallurgical Corporation of China won a US$405 million contract to design and construct the airfield for a new international airport in Phnom Penh. The new airport will cover about 700 hectares and form part of a broader residential and commercial development spanning about 2,600 hectares, and is being overseen by local conglomerate Overseas Cambodia Investment Corporation, which currently holds a 90% stake in the project. MCC’s contract amounts to about 30% of the total budget for the new airport, and involves the construction of a 4,000 meter-long, 60 meter-wide runway, as well as a taxiway, apron and related facilities. The bulk of the funding for the new airport will come from China Development Bank. The first phase of the new airport will open in 2023.
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RCEP a feather in ASEAN’s cap

RCEP a feather in ASEAN’s cap
Originally published in TheEdge Malaysia, 23 November – 29 November 2020.

It is not often that the venerable BBC or the influential Financial Times would report on an ASEAN event, like they did the signing of the Regional Comprehensive Economic Partnership (RCEP) on 15th November.

Not that we need their imprimatur nowadays given how far Britain has fallen back with not much to show of notable success.

Nevertheless, they remain influential. Why they took note of 15-nation RCEP is because it is now the largest trading bloc in the world. It is bigger than the United States-Mexico-Canada free trade agreement (FTA) and the European Union (EU) trading bloc.

With a third of the world’s population (more if India had chosen to join) and 30% of global output, it is formidable. The RCEP sits in East Asia, in the part of the world with the highest rates of economic expansion, with China well placed to be the engine of growth.

Perhaps, most importantly, the immediate benefit in this large and growing middle-class market is the rules of origin in trade, which would connect member countries along the value chain to the final RCEP country destination. This free trade in the huge market can only attract investments in countries in the region that provide the best attraction to value add along that value chain.

At a time when the COVID-19 pandemic had disrupted supply chains and protectionist sentiment is encouraging near-shoring, the ability to focus on and within the RCEP as a huge reservoir of demand, is a shot in the arm for free trade and a rules-based multilateral economic order. It is the best piece of economic news in the gloom of COVID-19 recession.

From the RCEP platform too, with the attraction of greater investment, RCEP-plus markets can be penetrated, like in Europe and South America. Europe, in particular, should move swiftly to have a bloc-to-bloc arrangement with the RCEP area. If that is too complicated to achieve, the EU-ASEAN FTA must be given priority, as a springboard to the most vibrant market in the world.

The two largest trading blocs in the world, strong believers in free trade and a rules-based multilateral order, should forge a robust link, with the injection also of sustainable development measures and responsible business practices – not the strongest suit of most RCEP member countries.

And, of course, the US – if President-elect Biden dismantles xenophobic America First Trump thinking, opens up and engages with the world – can also be a partner.

First indications from the response of the President-elect to RCEP, however, are not too encouraging. Biden comes from an old school of American foreign policy thinking, which sees through the glass darkly whenever China is involved in any initiative or arrangement.

Time has gone by when it is the US alone that wrote trade and investment rules – and China must not be allowed, as he had reportedly said, to do so. As I have written before, US must understand, when it comes to engaging the world again in a less-mad Trumpian fashion, once you have pawned the crown you cannot expect to get it back at the same price.

This is the American problem. Foreign policy thinking on both sides of the American divide has not adjusted to the fact of China’s rise – and how to manage it creatively. Such fossilisation will only harm US interests, especially in the part of the world that now has RCEP.

The geopolitical response to RCEP in the West as a whole is that it would only advance China’s dominance of the region. Indeed, RCEP itself has always been portrayed in the West as a Chinese initiative – which is totally incorrect. It is an ASEAN idea adopted at its summit in Cambodia in 2012. But the US, in particular, sees the Chinese ghost everywhere. China’s domination of the region could become a self-fulfilling prophecy.

Of course, there is still India outside the RCEP. Australia and Japan in the Quad with US and India, but they are also in RCEP. Then, there is the Comprehensice and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which they are both members of.

Biden has stated he would look again at CPTPP, from which Trump withdrew in 2017. But American re-engagement with the region – Trump again did not bother to attend the ASEAN summits last weekend – must not be a spoiler.

When formations and consociational arrangements are directed at a particular target and not for the common good, they are disruptive rather than stabilising. Unless the US becomes a force for stability and prosperity, it risks becoming marginalised in the RCEP region.

Forces set to undermine it will be a challenge for RCEP even as it seeks to realise and implement what member states have committed themselves to.

So, ASEAN still has a big role to play after RCEP comes into force when six of their number and three of the extra-ASEAN partners have ratified the agreement.

First, the kind of role Iman Pambagyo of Indonesia played as chief ASEAN trade negotiator for RCEP, should be continued. He fully understands what it takes to keep RCEP on course when he stated it is about “simultaneous start, differentiated timetables.” There is still a lot of navigating to do.

Indeed, second, the ASEAN role should be extended to minimising and resolving the play of power politics from within or without RCEP which includes brokering good relations with the US and other non-RCEP countries. ASEAN claims centrality. It should not be shy about playing it out.

Third, ASEAN’s own integration processes must not be neglected. In the association with the higher-level-of-development RCEP countries, for instance, e-customs trade facilitation should be introduced region-wide, and not with those countries alone.

The common rules of origin will allow companies to ship products between countries with a single certificate of origin to lower cost and, as earlier noted, to incentivize supply chains. The boost in trade across the bloc to be achieved by lowering tariffs, standardising customers rules and procedures and widening market access – should be taken advantage of across ASEAN as well.

The ASEAN Economic Community, on the other hand, is still unfinished business. Many proposals have been made by the private sector time and time again on its many shortcomings, not least the increase in non-tariff barriers and measures. There is similar commitment to such removal in RCEP. Hopefully it will be a fillip to an ASEAN clean-up as well.

Fourth, at the summit last weekend, a memorandum of understanding was signed by ASEAN leaders on the implementation of non-tariff measures (NTMs) on essential goods. It falls short of what the private sector has been pushing for: It is not binding. The list of essential goods also does not cover what had been proposed. There is too much room as well allowing for NTM introduction in “exceptional circumstances.” Nevertheless it is a start – and hopefully not just for the duration of the COVID-19 pandemic.

Fifth, ASEAN must not take its eye off an effective response to the pandemic, both in the ASEAN and RCEP context. Indeed, it should drive the sharing and pooling of the COVID-19 vaccine from whatever source – one of the many proposals contained in the private sector’s “A Pathway towards Recovery and Hope for ASEAN” (Pathway225) – recognised in the chairman’s statement at the end of last weekend’s ASEAN summit.

The summit adopted the secretariat’s ASEAN Comprehensive Recovery Framework (ACRF), which is a good document that needs the substance offered in Pathway225. The business councils stand ready to work with ASEAN officialdom on this, whether through the Special Business Advisory Board (SBAB) or the working group that had put together Pathway225.

ASEAN must recover its strength, moving out of the pandemic. Now with the RCEP, to be able to take full advantage of the promise of the economic bloc.

Finally, it must also not be forgotten by ASEAN that all the other members of RCEP are nation states which can make quick and focused decisions. If ASEAN is not to break up by itself making exclusively state-based decisions within the RCEP framework, it must enhance the regional grouping’s decision-making process.

Here, the ASEAN High Level Special Commission (AHLSC) proposed in Pathway225, designed for faster decision-making to recover from the COVID-19 pandemic, will also be useful to take united positions in RCEP. Whichever way you look at it there is no avoidance of improving ASEAN decision-making procedures.

Otherwise, there is the very real danger, if not quite of disintegrating, of ASEAN losing steam in its own integration process, as member states cast individual eyes on immediate and new attractions of the RCEP. Distraction has been a serious problem in ASEAN economic history.

So, well done ASEAN. The world has looked up and taken notice of the RCEP. But there is much work to be done, starting with its ratification, to give substance to its great promise. Thought must also be given to make ASEAN work together effectively within the RCEP – and not fall into separate silos.

CARI Captures Issue 480: The Philippines calls for ASEAN to intensify climate action

ASEAN

Southeast Asia’s internet economy projected to exceed US$100 billion in 2020
(13 November 2020) Philippine President Rodrigo Duterte has urged ASEAN to intensify its fight against climate change. The calamities faced by the Philippines is “a stark reminder of the urgency of collective action to combat the effects of climate change,” he said at the 37th ASEAN Summit on 12 November. According to the National Disaster Risk Reduction and Management Council, super typhoon Rolly battered Bicol and Southern Luzon on 1 November, killing 24 people and leaving more than US$352 million (P17 billion) in damage to infrastructure and agriculture. Duterte urged ASEAN countries to further enhance cooperation on disaster risk reduction management and to reinforce capacities. He also called on countries to amplify their voices to demand climate justice from developed countries. Duterte said developed countries must deliver their commitment to finance and invest in innovative adaptation solutions so that developing countries would have a fair shot at progress and sustainable development.

ASEAN

ASEAN MOU on essential goods enters into force
(13 November 2020) A memorandum of understanding (MOU) signed by the Association of Southeast Asian Nations (ASEAN) on 12 November to ensure the smooth flow of essential goods and prevent supplies disruption during the COVID-19 pandemic took effect on 13 November. The MOU includes a list of 152 essential goods, consisting mostly of medical goods such as test kits and equipment. It is based on a list jointly drawn up by the World Trade Organization (WTO) and World Health Organization (WHO). The memorandum is part of the Hanoi Action Plan on strengthening supply chain connectivity adopted in June 2020. It commits ASEAN member countries to refrain from imposing restrictive trade measures on essential goods and supplies except for public health emergencies. ASEAN Secretary-General Lim Jock Hoi said that the MOU proves ASEAN’s unanimous cooperation to facilitate the smooth flow of essential goods in the region.

CAMBODIA, SOUTH KOREA

Cambodia and South Korea begin fourth round of FTA negotiation
(18 November 2020) Cambodia and South Korea began the fourth round of negotiations on a bilateral free trade agreement (FTA) on November 18. Cambodian Ministry of Commerce spokesman Seang Thay told a local news outlet that the talks are expected to conclude on 20 November. The first round of negotiations was held in July, the second from 31 August to 2 September, and the third ended on 8 October. Minister of Economy and Finance Aun Pornmoniroth told a closed-door meeting in early October that the two sides are determined to conclude FTA talks by the end of 2020. According to a South Korean news agency, the latest round would focus on general rules, rules of country, customs clearance, and market access. Ministry of Commerce spokesman Pen Sovicheat said the two sides continued to scrutinise over the more technical aspects of the agreement to ensure mutual benefits.

INDONESIA, US

Indonesia and the US sign US$750 million trade and infrastructure agreement
(19 November 2020) Indonesia and the US have signed a US$750 million agreement to finance trade and infrastructure projects as part of efforts to strengthen their economic partnership. The Indonesian Ambassador to the US, Muhammad Lutfi, stated that the agreement was part of efforts to expand cooperation in investment and the procurement of goods and services, as well as expand opportunities for both parties to work together on government projects and business development in infrastructure, transportation, and energy. Both Indonesia and the US exchanged US$19.72 billion in goods between January and September 2020, a 1.85% year-on-year decline. US companies also invested US$480.1 million in 1,024 Indonesian projects within the same period, making Indonesia the eighth-highest beneficiary of private US funds.

THAILAND, SINGAPORE

(13 November 2020) Thailand plans to add Singapore to its regional energy grid by 2023, along with Cambodia and Myanmar, said permanent secretary for energy Kulit Sombatsiri. The move comes after the success of a Laos-Thailand-Malaysia energy deal, in which Thailand buys electricity from hydroelectric power plants in Laos and sells it to Malaysia through transmission lines operated by the state-run Electricity Generating Authority of Thailand (Egat). The plans are expected to be discussed for approval by regional policymakers through teleconference, hosted by Vietnam, next week as part of the ASEAN Sustainable Energy Week. In 2019, ASEAN energy ministers agreed that Egat could sell 300MW to Malaysia. The deal with Singapore would allow Thailand to sell 100MW to the island state. However, if the deal is approved, Egat would still need to compete with local energy-producing firms under Singapore’s free trade model, said Thailand’s chief of the Energy Policy and Planning Office’s Power Policy Division Veerapat Kiatfuengfoo.

SINGAPORE

Singapore could still have COVID-19-related restrictions for more than a year
(19 November 2020) Singapore could be living with COVID-19-related restrictions for more than a year, as it enters Phase 3 of pandemic easing measures. Under this phase, maximum gatherings outside homes could increase from five to eight, while restrictions such as wearing masks and safe distancing will continue. Further easing will depend on the availability of an effective vaccine and capacity for testing. Singapore has entered into supply agreements with several vaccine companies to build a “portfolio of vaccines” which will be trialled and tested before being distributed to the population. Groups such as the elderly, frontline workers, and vulnerable groups will be prioritised for the vaccine.

THE PHILIPPINES

Government plans to cut approval time for COVID-19 vaccines
(19 November 2020) The Philippines government plans to cut the approval time for COVID-19 vaccines already approved by other nations in order to fast track their use among high-risk individuals in the country. President Rodrigo Duterte issued an order for the country’s Food and Drug Administration to cut the approval process from six months to three weeks. Duterte also agreed to pay vaccine makers in advance, with the private sector pledging to buy at least 1 million doses. Authorities had earlier suggested that the Philippines may join clinical trials for vaccines from Russia and China in 2020.

THE PHILIPPINES

The Philippines’ central bank cuts its interest rate by 25 basis points to 2.0%
(19 November 2020) The Philippine central bank cut its interest rate by 25 basis points to 2.0%, bringing the total rate reduction in 2020 to 200 basis points. Bangko Sentral ng Pilipinas (BSP) also implemented credit relief and other liquidity measures in response to the COVID-19 pandemic amid limited fiscal stimulus. BSP governor Benjamin Diokno has stated that fiscal stimulus will be key to reviving the economy and that monetary policy can’t do all the work alone. The Philippines’ GDP shrank by 11.5% in the three months to September 2020 compared to the same period in 2019. In the second quarter of 2020, GDP had shrunk by 16.9%. Although jobs are being restored as the economy reopens, consumer confidence remains low.

THAILAND

Bank of Thailand to ease capital outflows to temper a rallying currency
(20 November 2020) Thailand’s central bank, Bank of Thailand (BoT), intends to ease capital outflows to cool a rallying baht as it threatens Thailand’s post-COVID-19 economic recovery. The government has also called on the BoT to restrain the baht to protect the exports. The baht has been the second-best performer in Asia in November 2020 as foreign investors turned net buyers of almost US$2.4 billion worth of bonds and stocks as global demand returns for riskier emerging-market assets. The baht had recently rallied more than 8.0% from 2020’s low in April, hitting a 10-month high last week. With its borders continuing to be closed, Thailand is relying on trade to minimise the economic impact of the COVID-19 pandemic.

BRUNEI, ASEAN

Brunei’s ASEAN chairmanship to focus on advancing post-pandemic recovery
(16 November) As ASEAN Chair for 2021, Brunei will continue to advance regional post-pandemic recovery and community-building efforts, said Sultan Hassanal Bolkiah, speaking from Bandar Seri Begawan. Brunei will take over the ASEAN chairmanship in 2021, after Vietnam handed over the symbolic gavel at the close of the 37th ASEAN Summit in Hanoi on 15 November. The sultan unveiled the theme for Brunei’s 2021 chairmanship, “We Care, We Prepare, We Prosper”, which reflects the three priority areas the country plans to promote, which are: a caring community, preparation for the future, and prospering together as a region. Brunei has yet to announce how ASEAN-related meetings will take place in 2021, whether the meetings would be held virtually or in-person. ASEAN leaders signed a declaration on 12 November agreeing to the establishment of a travel corridor in 2021 but the feasibility of regional travel by next year remains unclear, with the pandemic at different stages in ASEAN member countries.