ASEAN
Startup funding landscape stages impressive comeback in September 2025
(07 October 2025) According to Tracxn data, startup funding in Southeast Asia rose 125.6% month-on-month in September 2025 to USD 231 million, up from USD 84 million in August, and 58.7% higher year-on-year. The rebound indicates renewed investor confidence after months of subdued activity, with capital flowing into fewer but larger deals, reflecting a shift toward conviction-based investments in startups demonstrating resilience and scalability. Established regional funds such as Gobi Partners and returning global investors participated in the month’s transactions, suggesting a recalibration rather than withdrawal of capital. The surge also points to a potential transition toward a more disciplined and sustainable funding environment, driven by an investor focus on profitability and clear growth paths rather than speculative expansion, though volatility earlier in the year tempers expectations of a full recovery.

MALAYSIA
Malaysia proposes 2026 federal budget of MYR 419.2 billion, a 1.7% year-on-year increase
(10 October 2025) Malaysia has proposed a 2026 federal budget of MYR 419.2 billion (USD 99.24 billion), a 1.7% increase from the revised MYR 412.1 billion in 2025, comprising MYR 338.2 billion in operating expenditure and MYR 81 billion in development spending. Fiscal and economic outlook reports show revenue rising 2.7% year-on-year to MYR 343.1 billion, with the fiscal deficit expected to narrow to 3.5% of GDP from 3.8% in 2025. State energy firm Petronas will contribute a MYR 20 billion dividend, its lowest since 2017, reflecting lower crude prices and output. Subsidies and social assistance are projected to decline 14.1% to MYR 49 billion, in line with efforts to improve targeting and reduced commodity prices. Economic growth for 2026 is forecast at 4%–4.5%, while this year’s projection was revised down to 4%–4.8% amid U.S. tariff uncertainties, including a 19% levy on most Malaysian exports. Inflation is expected between 1.3% and 2% in 2026, compared with 1%–2% in 2025. Prime Minister Anwar Ibrahim said ongoing fiscal reforms—including selective subsidy removal, minimum wage increases, and an expanded sales tax—are necessary to maintain fiscal discipline and resilience against external risks. Bank Negara Malaysia maintained its policy rate at 2.75% in September after a July rate cut, with the government noting that monetary policy remains supportive of stable growth.

THAILAND, THE PHILIPPINES
Benchmark price of Thai white rice falls to ten-year low as the Philippines curbs imports
(09 October 2025) The benchmark price of Thai white rice 5% broken fell 1.9% to USD 355 per tonne on Wednesday, the lowest level since September 2015, according to the Thai Rice Exporters Association. The decline follows improved global supply conditions, with the UN Food and Agriculture Organization projecting record global rice production of 556.4 million tonnes in the 2025–26 season, leading to higher stockpiles. Prices have been easing from a 15-year peak in 2024, driven by strong demand and supply concerns. Above-average monsoon rainfall in India, the world’s largest rice exporter, has improved harvest prospects, and the government has lifted export restrictions to avoid domestic oversupply. The Philippines, the top global rice importer, plans to extend import curbs to support local farmers, although cheaper exports from Thailand and other suppliers may gradually lower retail prices in import-dependent economies across Asia, Africa, and the Middle East.

THE PHILIPPINES
Philippine Stock Exchange warns flood-control corruption scandal driving away investors
(06 October 2025) Philippine Stock Exchange President and CEO called for a “swift, credible and comprehensive” investigation into corruption allegations linked to government flood-control spending, warning that continued uncertainty was driving foreign investor withdrawals and weighing on market performance. Foreign investors have withdrawn approximately USD 684 million from the market this year and have been net sellers for six consecutive days as of Friday. The benchmark Philippine Stock Exchange Index has fallen over 8% year to date, among the weakest in Asia, while the peso declined 0.8% against the US dollar on Monday. President Ferdinand Marcos Jr. has formed an independent commission to investigate the allegations, though Senate hearings were left uncertain following Senator Panfilo Lacson’s resignation as committee chair. Religious leaders cautioned against any whitewash. The Economic Planning Secretary said governance reforms were being considered to improve public spending transparency. The Stock Exchange CEO cited the upcoming initial public offering of Maynilad Water Services Inc. as a potential positive for investor sentiment. Severe weather and natural disasters, including a September super typhoon and a magnitude 6.9 earthquake in Cebu, have also contributed to recent market volatility.

THE PHILIPPINES
Bangko Sentral ng Pilipinas unexpectedly cuts rate by 25 basis points to 4.75%
(09 October 2025) The Bangko Sentral ng Pilipinas (BSP) cut its benchmark overnight reverse repurchase rate by 25 basis points to 4.75% on Thursday, marking its lowest level since September 2022 and extending cumulative rate cuts since August 2024 to 175 basis points. Only seven of 26 economists surveyed by Bloomberg had predicted the move, as most expected a pause amid peso weakness. The BSP governor indicated potential further easing this year, citing a weaker economic outlook stemming from reduced business confidence following a government graft scandal involving flood-control projects. The central bank said governance concerns and slower public infrastructure spending have dampened domestic growth prospects. The peso fell 0.5% to 58.235 against the US dollar and has declined about 2% over the past month, while Philippine stocks were the worst performers in the Asia Pacific. Remolona stated the BSP would defend the peso if depreciation became inflationary and did not rule out capital controls. Inflation has remained below the 2%–4% target since March, providing room for policy easing, with the BSP now viewing its “Goldilocks” rate as lower than the previous 5%. Analysts expect another 25 basis-point cut at the next meeting, bringing the rate to 4.50%. The BSP said a favourable inflation outlook and moderating domestic demand support continued monetary accommodation, while maintaining price stability. Policymakers acknowledged that the corruption scandal and tighter fiscal policy could slow state spending, which accounts for about one-fifth of GDP, and weigh on growth amid weaker exports and global trade uncertainty.

MALAYSIA, SINGAPORE
Johor-Singapore SEZ draws new investors with 2-in-1 appeal
(09 October 2025) Panellists at the Asia Future Summit highlighted the Johor–Singapore Special Economic Zone (JS-SEZ) as an emerging regional investment hub drawing firms that might not have considered either market individually. The director of the Economic Development Board’s JS-SEZ Programme Office said the initiative has broadened investor engagement opportunities, attracting companies from previously untapped sectors and markets. Johor’s investment, trade, consumer affairs, and human resources committee chairman reported MYR 56 billion in investments in the first half of 2025, driven largely by JS-SEZ projects, and expressed confidence in achieving MYR 100 billion by end-2025. The OCBC Malaysia CEO said 50% of interested firms in the zone are from China, citing its proximity to Singapore as a major advantage. The Q&M Dental Group CEO announced a SGD 130 million capital raise to expand operations in Singapore, Johor, and China, noting that Q&M runs 37 clinics in Malaysia, including nine in the JS-SEZ. The Johor state economic adviser said the zone enables multinational firms to locate headquarters and R&D functions in Singapore while maintaining manufacturing in Johor. Teo added that the Invest Malaysia Facilitation Centre–Johor is streamlining regulatory processes, while collaboration with Malaysian agencies aims to strengthen the local talent pipeline.

THAILAND
Bank of Thailand governor states that central bank retains room for further rate cuts
(10 October 2025) The Bank of Thailand Governor said the central bank retains room to further reduce its benchmark interest rate, currently at 1.5%, one of the lowest globally, to support growth and bring inflation back within the 1%–3% target range. Speaking ten days into his tenure, the governor stated the bank remains “ready to ease” if economic conditions warrant, noting that the full effects of previous rate cuts have yet to materialise. At the most recent policy meeting, the Monetary Policy Committee held rates steady, with only two of seven members voting for a cut. Thailand’s headline inflation has been negative for six consecutive months, but the governor said there are no signs of deflation, with prices expected to normalise in the medium term. He also announced plans to purchase bad debts from over 2 million borrowers as a complementary measure to monetary easing. On the currency front, the governor attributed the baht’s recent appreciation to a weaker US dollar and capital inflows, adding that the central bank is monitoring movements for irregularities. He said online gold trading had increased currency volatility, prompting coordination with the finance ministry and traders to assess potential measures limited to online transactions. He also reiterated the importance of central bank independence in maintaining monetary stability.

RCEP Monitor

CHINA
China increases enforcement of import restrictions on US-made semiconductors
(10 October 2025) China has increased enforcement of import restrictions on US-made semiconductors, including Nvidia’s artificial intelligence chips, by deploying customs officials to major ports to conduct stringent inspections, according to the Financial Times. The checks, which initially targeted Nvidia’s H20 and RTX Pro 6000D models designed to comply with US export controls, have reportedly expanded to cover all advanced chips potentially breaching US curbs. The move reflects Beijing’s focus on strengthening domestic semiconductor production amid ongoing US-China technology tensions. Earlier reports indicated around USD 1 billion worth of Nvidia’s high-end AI chips were smuggled into China between May and July, though this has not been independently verified. Nvidia’s RTX6000D chip, created for the Chinese market, has experienced weak demand, with some major firms avoiding new orders. Chinese authorities have previously accused Nvidia of breaching anti-monopoly law and instructed technology companies to suspend purchases of its AI chips. Despite progress by domestic chipmakers such as Huawei, industry engineers report Nvidia’s chips continue to outperform Chinese alternatives.

CHINA
China announces new port fees on US vessels as countermeasure to forthcoming US port charges
(10 October 2025) China’s Ministry of Transport announced new port fees on vessels owned, operated, or built by U.S. firms or flying the U.S. flag, effective 14 October, as a countermeasure to forthcoming U.S. port charges on China-linked ships. The fee will start at CYN 400 yuan (USD 56.13) per net tonne per voyage and rise to VYN 640 in April 2026, CYN 880 in April 2027, and CYN 1,120 (USD 157.16) in April 2028. The move follows a U.S. Trade Representative probe and new American fees on Chinese vessels—potentially exceeding USD 1 million for ships carrying over 10,000 containers—intended to bolster U.S. shipbuilding and limit China’s maritime dominance. Chinese vessels calling at U.S. ports will also face a flat fee of USD 80 per net tonne. China’s counter-tariff is expected to have a smaller economic impact on the United States due to its limited commercial fleet; Chinese shipyards produced over 1,000 commercial vessels last year, compared with fewer than 10 in the U.S. The escalation comes amid renewed U.S.-China trade tensions, with both sides in a temporary 90-day tariff truce ending around 9 November. Presidents Donald Trump and Xi Jinping are expected to discuss the issue at the APEC summit in South Korea at the end of October.

AUSTRALIA
Reserve Bank of Australia Governor states that economy is “in a pretty good spot”
(10 October 2025) The Reserve Bank of Australia (RBA) Governor told a parliamentary committee that the economy is “in a pretty good spot,” with inflation within the 2%–3% target range, a strong labour market, and rising household consumption offsetting weaker public demand. The RBA maintained its policy rate at 3.6% last month after three cuts since February, citing stronger household spending, housing market resilience, and sustained labour tightness as reasons to hold. Economists expect another rate reduction following the 3–4 November meeting, contingent on the 29 October third-quarter inflation report and September jobs data, which is forecast to show unemployment at 4.3%. The governor noted that while overall inflation is now inside target, services inflation remains persistent. The RBA’s policy stance contrasts with regional peers, as Indonesia and New Zealand continue to ease rates while Thailand, Malaysia, and Australia remain on hold. She also highlighted external risks from protectionist U.S. trade policies, geopolitical tensions, and softer Chinese demand, though she said Australia avoided worst-case tariff outcomes, receiving the baseline global rate of 10%.

BRUNEI DARUSSALAM
Central bank announces that new family of banknotes to be introduced in first half of 2026
(22 September 2025) Brunei Darussalam Central Bank (BDCB) announced that a new family of banknotes will be introduced in the first half of next year, standardising the use of “Brunei Dollars” in place of “Ringgit” in line with the Currency Order 2004. The series will include five denominations — BND1, BND5, BND10, BND100 and BND500. BDCB stated that the banknotes will carry enhanced security features to strengthen protection against counterfeiting and to align with international standards in currency technology. The central bank emphasised that the initiative ensures currency integrity while supporting Brunei Darussalam’s gradual transition towards a digital economy. It added that all current banknotes will remain legal tender and circulate alongside the new series.

MALAYSIA, CHINA
Malaysia and China to hold preliminary talks on rare earth processing projects
(02 October 2025) China and Malaysia are holding preliminary discussions on a rare earths processing project that would involve Malaysia’s sovereign wealth fund Khazanah Nasional partnering with a Chinese state-owned company to build a refinery in Malaysia, with Beijing prepared to exchange its processing technology for access to Malaysia’s estimated 16.1 million metric tons of reserves. Khazanah confirmed rare earths are among the industries under study but said talks were at an early stage, while Chinese officials have not commented due to the National Day holiday. The refinery, expected to process both light and heavy rare earths, would represent a policy shift for China, which has previously banned exports of processing technology. Potential obstacles identified include concerns over Malaysia’s ability to provide sufficient raw materials, environmental risks, and regulatory hurdles, as mining requires multiple state and federal approvals, with bans on extraction in protected areas. Malaysia prohibits raw rare earths exports, except for a pilot mining project approved in 2022 to establish operating guidelines. China’s willingness to provide technical support was confirmed by Malaysia’s natural resources minister in August, who added that President Xi Jinping had limited cooperation to state-linked firms to protect trade secrets. The proposed joint venture is also seen as a move to counter Australian company Lynas Rare Earths, which already operates a processing plant in Pahang and signed a supply deal with Kelantan in May. A deal would make Malaysia one of the few countries with access to both Chinese and non-Chinese processing technologies.

THAILAND, MALAYSIA
Thailand forecasts 24 percent decline year-on-year in Chinese tourist arrivals in 2025
(01 October 2025) Thailand forecasts about 200,000 Chinese tourist arrivals during the 27 September–8 October Golden Week, a 24 percent decline from 2024, with tourism revenue expected to fall 17 percent year-on-year to THB 9.1 billion. The Tourism Authority of Thailand attributed the decline to persistent safety concerns despite Thailand’s visa exemption, while competitors Malaysia and Viet Nam reported stronger demand due to lower costs and improved perceptions of safety. Outbound bookings from China rose 28 percent this year with international flight capacity up 10 percent, but Thailand did not rank among the top 10 destinations, which included Ho Chi Minh City, Kuala Lumpur, Hanoi, Denpasar, and Singapore. Malaysia registered 1.8 million Chinese arrivals in the first five months of 2025, boosted by visa waivers and tourism campaigns, and expects Golden Week arrivals to at least match last year’s levels. Chinese tourists in Thailand are projected to stay six to eight nights with daily spending of around THB 6,600, primarily travelling from Beijing, Guangzhou and Chengdu, with additional demand from second-tier cities including Shenzhen and Xi’an.

THAILAND
Strong baht impacting exports, tourism, and household spending
(01 October 2025) Thailand’s baht has appreciated over 8 percent against the US dollar this year, strengthening from 34 on 01 January to 31.70 on 09 September before easing to about 32.40, pressuring exporters, tourism operators, and households. Export margins have narrowed, with US tariffs of 19 percent compounding difficulties, while business owners reported reduced competitiveness and uncertainty in long-term contracts. Tourism arrivals fell 7.52 percent year-on-year between January and September to nearly 24 million, with Malaysia the largest source market and China contributing 3.38 million. The Tourism Authority of Thailand expects Chinese arrivals during Golden Week to drop 24 percent from last year’s 262,001, causing tens of millions of dollars in lost revenue for tourism businesses. Prime Minister Anutin Charnvirakul, facing an economy forecast to expand just 1.8 percent in 2025, has pledged stimulus measures to ease household debt, lower living costs, and provide small-business credit. Thailand’s Finance Minister said he asked the central bank to limit baht volatility, rejecting speculation that gold exports were the main driver of the currency’s strength, despite shipments of 88.4 tonnes worth USD 8.73 billion this year. Ratings agencies have downgraded Thailand’s outlook, with factory output contracting 4 percent in August and exports slowing to 5.8 percent growth, the weakest in almost a year. For individuals earning in US dollars, the stronger baht has reduced take-home pay in local currency, further weighing on household consumption.

THE PHILIPPINES
Massive corruption scandal and resultant unrests darkens growth outlook
(02 October 2025) A corruption scandal involving billions of dollars in fraudulent flood-control allocations in the Philippines has triggered mass protests, weakened investor sentiment, and pressured financial markets, with congressional hearings alleging collusion among lawmakers, public works officials, and contractors to divert funds into ghost projects and padded contracts, while audits revealed non-existent or substandard works. Witness testimonies of cash deliveries to politicians have intensified public backlash, leading tens of thousands to protest in major cities since President Ferdinand Marcos Jr. disclosed in July that budgets were being looted. Economists have cut growth forecasts, with Security Bank lowering their second-half estimate to 5.5 percent from 5.8 percent and full-year projection to 5.5 percent, the bottom of the government’s target, while Sun Life reduced their outlook to mid-5 percent and warned growth could drop to 4.3 percent if spending stalls. The peso was Asia’s worst performer in September and the stock index posted its longest losing streak this year as offshore investors retreated, while the central bank cautioned of weaker investment inflows and service exports. Moody’s Ratings warned that prolonged unrest could dampen growth and delay fiscal consolidation, though it maintained that political risk and institutional strength remain broadly in line with peers. S&P Global Ratings projects GDP growth of 5.6 percent in 2025 and 6.3 percent on average over the next three years, supported by investment-grade ratings, corporate tax cuts, and business incentives.

INDONESIA, CHINA
China requests Indonesia to guarantee long-term supply of resources
(01 October 2025) China has formally requested Indonesia to guarantee long-term supplies of crude palm oil (CPO), natural rubber, and edible bird’s nests to meet rising domestic demand, according to Indonesia’s Deputy Agricultural Minister, who said the request was conveyed by China’s Deputy Minister of Agricultural and Rural Affairs. Indonesia recorded a USD 1.77 billion agricultural trade surplus with China in 2024, led by palm oil exports worth USD 2.72 billion, followed by edible bird’s nests at USD 428 million, rubber at USD 363 million, coconut at USD 270 million, and cacao at USD 218 million. The Deputy Agricultural Minister noted that China is seeking supply certainty as its demand for palm oil increases, while Indonesia, the world’s largest producer, is simultaneously expanding domestic use under its biodiesel programme. The country is currently implementing B40, requiring a 40 percent palm oil blend in diesel, with plans to raise this to B50 next year. He added that Indonesia is working to strengthen palm oil productivity to ensure both domestic energy requirements and secure export commitments can be met.

VIET NAM
Property damage from Typhoon Bualoi estimated at VND 8 trillion
(01 October 2025) Viet Nam’s government estimated property damage from Typhoon Bualoi at VND 8 trillion as of 1 October, with nearly 170,000 houses damaged or inundated, at least 29 fatalities and 22 people missing. The storm, which made landfall on 29 September in northern central Viet Nam, caused widespread damage to infrastructure, including roads, schools, offices and power grids, leaving tens of thousands without electricity. More than 34,000 hectares of rice and other crops were destroyed, though no major damage to industrial facilities was reported despite the presence of large factories operated by Foxconn, Formosa Plastics, Luxshare and Vinfast in affected areas. Flooding spread into northern provinces and Hanoi, disrupting flights, train services and forcing school closures, while many homes were inundated. The disaster management agency’s preliminary report underscored severe agricultural and residential impacts but excluded large-scale industrial losses.

RCEP Monitor

CHINA
China launches K visa for foreign science and technology professionals
(02 October 2025) China’s new K visa for foreign science and technology professionals, announced in August and effective 2 October, has sparked intense domestic backlash after Indian media likened it to the US H-1B visa. The scheme, open to STEM graduates of recognised universities and research institutions in China or abroad, as well as those teaching or conducting research, allows multiple entries and longer stays without requiring local employer sponsorship. However, authorities have not clarified whether it permits employment in China, with state media stressing it is “not a simple work permit” and “should not be equated with immigration.” The controversy escalated after concerns were raised online about competition in a weak job market, leading to xenophobic comments, particularly targeting Indian nationals. State outlets including the Global Times and People’s Daily have defended the visa as a tool to attract global talent, positioning China as an alternative to the US, where H-1B fees have risen under Donald Trump. Official statements frame it as facilitating exchanges in education, science, technology, culture, entrepreneurship, and business. The Ministry of Foreign Affairs has promised further details from embassies and consulates, without a set timeline. Experts note that while the visa aligns with China’s broader push to draw in talent as the US becomes more restrictive, its success may be constrained by language barriers, domestic scepticism, and limits imposed by China’s controlled political environment.

NEW ZEALAND
House prices rise 0.1 percent month-on-month in September, first increase in six months
(02 October 2025) New Zealand house prices rose 0.1 percent in September from August, the first increase in six months after a revised 0.4 percent decline the previous month, though values remain 0.2 percent lower than a year earlier, according to Cotality’s home value index. The rebound follows a two-year low in August and coincides with falling mortgage interest rates, now at their lowest in three years after the Reserve Bank of New Zealand cut the official cash rate to 3 percent in August from 5.5 percent in July 2023, with guidance suggesting a possible fall to 2.5 percent by year-end. Despite this, Cotality’s chief property economist cautioned that the September uptick was marginal and unlikely to indicate a sustained recovery, as buyer caution and a high housing supply remain. House prices fell 1.6 percent in the five months to August, and values may remain weak through 2025 amid subdued growth, with the RBNZ projecting a 0.3 percent contraction this year and economists expecting minimal expansion. The economy shrank 0.9 percent in Q2 2025, unemployment is at a five-year high, though improving consumer spending is expected to support a second-half rebound. Cotality added that further mortgage rate cuts could support borrowers refinancing fixed-term loans, with scope for house values to rise more consistently from 2026, though a sharp boom is unlikely given the slow recovery in the economy and labour market.

AUSTRALIA
Household spending rises 0.1 percent in August, below expectations of 0.3 percent growth
(02 October 2025) Australia’s household spending rose 0.1 percent in August, below expectations of 0.3 percent and following a downwardly revised 0.4 percent gain in July, according to Australian Bureau of Statistics data, with annual growth at 5 percent against forecasts of 5.2 percent. The report showed services spending increased 0.5 percent while goods spending declined 0.2 percent, with the largest category falls in recreation and culture and in alcoholic beverages and tobacco, both down 0.9 percent, while airline travel and accommodation bookings increased. ABS noted spending has risen in 10 of the past 12 months, though the August rise was modest. The data add to the case for the Reserve Bank of Australia to resume rate cuts, with economists expecting a move in November and money markets fully pricing one by March, after the central bank held the cash rate at 3.6 percent earlier this week. The RBA’s governor cited stronger-than-expected household consumption supported by real income growth, rising property prices and a tight labour market, with unemployment at 4.2 percent. Household spending, which accounts for about half of GDP, has been constrained by high debt levels, elevated borrowing costs and inflation, though improving incomes have provided support.

VIET NAM
Viet Nam pursuing new trade deals to mitigate US tariffs
(24 September 2025) Vietnamese Prime Minister Pham Minh Chinh said Hanoi is pursuing new trade agreements this year to counter U.S. tariffs on Vietnamese exports, which the United Nations Development Programme estimated could cut shipments to the U.S. by up to 20%, making Viet Nam the most affected country in Southeast Asia. Chinh forecast export growth above 12% in 2025, with exports reaching USD 325.3 billion by 15 September, a 15.8% increase year-on-year. To mitigate tariff impacts, Vietnam aims to conclude free trade agreements with Mercosur and the Gulf Cooperation Council by year-end, while continuing negotiations with Washington after the Trump administration’s 20% tariff on most Vietnamese goods. The White House has also imposed a 40% tariff on goods deemed transshipped through Vietnam, a risk compounded by Vietnam’s reliance on Chinese components. Chinh instructed officials to intensify enforcement against imports violating international copyright or origin standards, issues repeatedly raised by U.S. counterparts.

THE PHILIPPINES, MALAYSIA, THAILAND, EU
EU trade negotiations with Thailand, the Philippines, and Malaysia expected to be finalised by 2026
(25 September 2025) EU Trade Commissioner Maros Sefcovic said negotiations on free trade agreements with Thailand, the Philippines and Malaysia are advancing and expected to be finalised and signed by 2026. Speaking at a meeting between ASEAN economic ministers and the EU in Kuala Lumpur, he noted that the agreements would add to existing EU FTAs with Singapore, Viet Nam and Indonesia, the latter concluded this week after nine years of negotiations. Sefcovic described the bilateral deals as a “building block” towards a future EU–ASEAN region-to-region free trade agreement.

INDONESIA, EU
Indonesia and the EU sign Comprehensive Economic Partnership Agreement
(23 September 2025) Indonesia and the European Union signed the Comprehensive Economic Partnership Agreement (CEPA) in Bali after nearly a decade of negotiations, marking the EU’s third such deal in Southeast Asia after Singapore and Viet Nam. Signed by EU Trade Commissioner and the Indonesian Minister of Economic Affairs, the pact opens investment in electric vehicles, electronics and pharmaceuticals, and is projected to save EU exporters GBP 600 million (USD 708 million) annually in duties. Around 80% of Indonesian exports to the EU, including palm oil, footwear, textiles and fisheries, will become tariff-free once the deal takes effect, expected by 2027 following legal checks, translations and ratifications. Bilateral trade reached USD 30.1 billion in 2024, and the agreement gives the EU access to Indonesia’s 280 million-strong market. Negotiations were delayed by disputes over palm oil and deforestation but gained urgency from U.S. tariff policies under Donald Trump. A protocol on palm oil was included, though details remain undisclosed, with th EU reportedly offering “special treatment” on the EU’s deforestation regulation for signatory partners. The regulation, postponed to end-2025, bans imports of products from land deforested after December 2020. Activists, including Greenpeace Indonesia, warned the agreement could spur further deforestation. Indonesia described the CEPA as a “ten-year journey” aimed at mitigating risks from global tariff wars, while analysts said both sides sought alternative markets to counter protectionism.

INDONESIA, CANADA
Canada and Indonesia sign Comprehensive Economic Partnership Agreement (CEPA)
(26 September 2025) Canada and Indonesia signed a Comprehensive Economic Partnership Agreement (CEPA) that will remove or reduce tariffs on over 95% of Canadian exports, including wheat, potash, timber and soybeans, and more than 90% of Indonesian exports, such as garments and leather goods. Canadian Prime Minister Mark Carney described the deal as timely, while Indonesian President Prabowo Subianto called it a historic first agreement with an ASEAN member state. The CEPA is aligned with Canada’s Indo-Pacific strategy and strengthens Ottawa’s trade presence in the region. Alongside the trade pact, both governments signed a defence cooperation agreement covering military training, maritime security, cyber defence and peacekeeping.

THAILAND
Foreign visitor revenue to fall 20.2% in 2025 below pre-pandemic levels
(26 September 2025) The Tourism Council of Thailand (TCT) projects foreign visitor revenue in 2025 will fall 20.2% below pre-pandemic levels to THB 1.52 trillion, compared with THB 1.91 trillion in 2019, despite an expected 33.14 million arrivals, down 17% from 2019 and 6.7% lower than 2024. The sharper revenue decline reflects reduced spending per visitor, driven by a drop in high-spending Chinese tourists, a rise in lower-spending Malaysian visitors, and growth in budget-conscious Free Independent Travellers and backpackers. The Q3/2025 Tourism Business Confidence Index fell to 66 from 68 a year earlier, with businesses citing domestic deflation, global economic slowdown, currency appreciation, safety concerns, the Thai-Cambodia conflict, and flooding as key negative factors. Average industry revenue in Q3/2025 was 44% of 2019 levels, compared with a peak of 64% in Q1/2023. Regional data show the South as most resilient, with revenues at 50% of 2019 levels and occupancy at 62%, while the North recorded the lowest average revenue at 39%. Bangkok showed the most volatility. Sector-specific results highlight weak performance for tour operators and souvenir shops, while entertainment venues reported higher confidence. Employment has recovered to 87% of pre-pandemic levels, outpacing revenue recovery and raising concerns over profitability. Looking ahead, confidence is forecast to improve to 72 in Q4/2025, with the North expected to post the largest surge (Index 80), followed by Bangkok (75) and the South (74).

THAILAND
Fitch Ratings downgrades Thailand’s credit rating outlook from stable to negative
(24 September 2025) Fitch Ratings downgraded Thailand’s credit rating outlook from stable to negative while affirming its long-term foreign-currency issuer default rating at “BBB+,” citing rising fiscal risks from political uncertainty and weak growth. Gross general government debt reached 59.4% of GDP in August, close to the ‘BBB’ median, after years of stimulus and delayed fiscal consolidation. The move follows Moody’s downgrade and poses challenges for new Prime Minister Anutin Charnvirakul, who took office after Paetongtarn Shinawatra was ousted by court ruling. Thailand’s economy is projected to expand around 2% in 2025, about half the pace of Indonesia and the Philippines, pressured by a 19% U.S. tariff, weak tourism, high household debt and a strong baht. Fitch highlighted risks from continued large stimulus, uncertain fiscal strategy and demographic pressures. It warned Anutin’s pledge to call elections within four months could fuel spending, with fiscal deficits expected at 4.6% of GDP this year and 4.3% next year. The baht traded near a two-week low against the U.S. dollar, though it remains almost 7% stronger year-to-date after hitting a four-year high earlier in the month.

LAO PDR
Lao PDR seeking to develop carbon credit market and clean energy
(25 September 2025) Lao PDR’s Ministry of Agriculture and Environment hosted the Carbon Markets and Clean Energy Conference 2025, bringing together government officials, development partners and private sector representatives to advance carbon market readiness and clean energy integration. The two-day meeting focused on establishing a carbon credit trading system, identifying policies to strengthen the market, and sharing best practices for climate adaptation. Participants discussed investment barriers, emphasising the role of the private sector in mobilising financial support for carbon and energy projects. The conference was positioned as a step towards developing Lao PDR carbon credit market and supporting national clean energy objectives.

RCEP Monitor

SOUTH KOREA, JAPAN, UNITED STATES
Trump declares that South Korea will provide USD 350 billion in “upfront” investments
(25 September 2025) U.S. President Donald Trump said South Korea would provide USD 350 billion in “upfront” investments in U.S. projects, despite Seoul warning that such a commitment without safeguards could trigger a financial crisis. Trump compared the pledge to Japan’s USD 550 billion investment formalised earlier this month alongside a trade deal that lowered U.S. tariffs on Japanese automobile imports and other goods. South Korea maintains the negotiations are at a deadlock, with President Lee Jae Myung stating that safeguards such as a currency swap are necessary, though analysts consider such an arrangement unlikely. Seoul is pressing for most of the funds to be structured as loans rather than direct investments and for mechanisms ensuring project viability, while resisting U.S. demands for control over the funds. A South Korean government official reiterated the principle that any deal must meet national interests and be commercially feasible. Trump’s insistence on “upfront” payments has heightened political uncertainty, raising investor concerns that Seoul could face an unfavourable deal or no agreement at all.

SOUTH KOREA
Samsung Electronics and SK Hynix add over USD 100 billion in market value in September
(26 September 2025) South Korea’s two largest chipmakers, Samsung Electronics and SK Hynix, have added over USD 100 billion in market value in September, driven by rising demand for high-bandwidth memory (HBM) chips used in AI applications and growing expectations of a broader semiconductor recovery. SK Hynix has surged on its dominance in HBM, while Samsung is catching up, with analysts from 20 firms including JPMorgan, Citigroup and Nomura forecasting its share price could surpass the 2021 record of KRW 91,000 within 12 months. Samsung shares have rallied 24% this month, their best performance since 2001, while SK Hynix is up 33%, yet both trade at lower forward price-earnings ratios (14x and 7x respectively) compared to U.S. peers at 26x. Foreign investors are on track for their largest-ever monthly inflows into the two firms in over 13 years, though overseas ownership of Samsung remains seven percentage points below its peak of 58%. Analysts, including Morgan Stanley, project a memory “supercycle” in 2026 as supply shortages emerge in DRAM and NAND due to production shifts towards HBM, reversing earlier pessimism about “legacy” chips. Overseas funds see further upside, citing cheaper valuations relative to U.S. chipmakers, interest rate cuts by the U.S. Federal Reserve, and rising AI-driven capex by U.S. hyperscalers and Chinese firms. Nvidia remains the largest buyer of HBM, with AMD and Broadcom also expected to increase purchases as their AI accelerators gain traction. CLSA forecasts SK Hynix will retain its lead in high-margin HBM, while Samsung, benefiting from expanded HBM business with Nvidia, is now seen as well-positioned for sustained foreign inflows and revenue growth.

CHINA, MEXICO
China launches investigation into Mexico’s planned tariffs and other trade restrictions
(26 September 2025) China’s commerce ministry has launched an investigation into Mexico’s planned tariffs and other trade restrictions on Chinese exports, alongside an anti-dumping probe into Mexican pecan nuts, signalling one of Beijing’s strongest responses to deter countries from aligning with U.S. tariff policies. Mexico recently proposed a 50% tariff on Chinese cars and levies on about 1,400 products, including textiles and steel, affecting all non-free trade partners. The Chinese probe will cover both the new measures and earlier restrictions, citing risks to Chinese companies’ trade and investment interests. The move comes as Mexico prepares for a 2026 review of the US-Mexico-Canada Agreement and faces U.S. pressure to curb China’s economic role, with Washington accusing Beijing of using Mexico to bypass tariffs. President Claudia Sheinbaum has said the tariffs aim to protect domestic industries, not escalate tensions with China. In 2024, Mexico exported USD 5.7 billion to China while importing USD 115 billion, with copper and minerals accounting for over 40% of exports. The pecan anti-dumping probe alleges sales below market value caused rising import volumes and falling prices, with a conclusion expected within 12 months, extendable by six. China has warned that Mexico’s unilateral measures would damage third-party trade interests, while signalling readiness to use indirect tools, such as rare earths export controls, to exert pressure.

THAILAND, INDONESIA
Changing political fortunes in Thailand and Indonesia affect investor sentiments
(14 September 2025) Foreign investors have withdrawn USD 653 million from Indonesia’s stock market in September, the steepest outflow since April, amid violent protests and President Prabowo Subianto’s abrupt replacement of finance minister Sri Mulyani Indrawati with Purbaya Yudhi Sadewa, unsettling markets given Indrawati’s credibility with global investors. Indonesia plans to inject IDR 200 trillion (USD 12 billion) from its IDR 400 trillion reserves into state banks to support lending, with finance minister Purbaya pledging more if needed, alongside a central bank burden-sharing scheme. Concerns, however, persist over fiscal direction, populist spending measures, and economic weakness. Bond yields show the steepest curve in over two years, while the rupiah has lost over 1.5% this year against the dollar, ranking as Asia’s second-weakest currency. In contrast, Thailand’s SET Index has risen over 4% this month to a seven-month high, buoyed by political stabilisation under new prime minister Anutin Charnvirakul, while foreign equity outflows slowed to USD 21 million in September after USD 670 million in August. The baht has strengthened about 2% against the dollar, the best performance among Asian currencies, with projections that the SET Index could reach 1,340 by year-end.

INDONESIA
Bank Indonesia unexpectedly cuts rate by 25 basis points to 4.75%
(18 September 2025) Bank Indonesia unexpectedly cut its benchmark seven-day reverse repurchase rate by 25 basis points to 4.75% on 17 September, marking its sixth reduction since September 2024 and bringing borrowing costs to their lowest since late 2022, against expectations from all 31 economists surveyed by Reuters of no change. Governor Perry Warjiyo signalled scope for further easing, citing below-capacity growth and weak credit demand, while urging commercial banks to lower lending rates, which have only fallen 7 basis points this year despite BI’s 150 basis points of cuts. The rupiah, down 2% against the US dollar in 2025, firmed slightly after the move, and the stock market hit a record high, though investor concerns persist over fiscal discipline, central bank independence, and recent political instability, including protests and the dismissal of finance minister Sri Mulyani Indrawati. Parliament is considering amendments to a Bill that could both reinforce BI’s growth-support mandate and empower lawmakers to recommend the governor’s removal. New Finance Minister Purbaya Yudhi Sadewa has criticised BI for keeping liquidity “dry” and shifted over USD 12 billion of government funds from the central bank to commercial banks to spur lending, alongside a new USD 1 billion stimulus package. Warjiyo countered that liquidity was ample, citing IDR 2,372 trillion in approved but unused loan commitments.

MALAYSIA, SINGAPORE
Johor-Singapore Special Economic Zone (JS-SEZ) to strengthen both countries’ investment environment
(18 September 2025) Singapore’s Minister of State for Trade and Industry said on 18 September that the Johor-Singapore Special Economic Zone (JS-SEZ) is positioned to strengthen both countries’ ability to compete for global investment amid a precarious global economic environment, citing Singapore’s 11.3% decline in non-oil domestic exports in August following front-loaded shipments ahead of US tariffs. He emphasised Singapore’s advantages in political stability, rule of law, and finance, contrasted with Johor’s land and natural resources, as complementary strengths for the zone. Illustrating this, Paris Baguette established its halal manufacturing plant in Johor and its regional headquarters and innovation centre in Singapore, while Agrocorp International partnered with Japan’s Megmilk Snow Brand in 2023 to form Agro Snow, developing a protein extraction facility in Johor using technology created in Singapore with the Singapore Institute of Technology. The minister highlighted that such arrangements allow manufacturing in Johor alongside R&D and IP protection in Singapore. At the same event, KPMG said the JS-SEZ could reshape competitiveness in sectors including advanced manufacturing, data centres, oil and gas, speciality chemicals, food processing, and green solutions, supported by five key building blocks: talent mobility, enhanced infrastructure, aligned regulations, streamlined customs, and transparent governance. He noted that multinational corporations setting up in the zone can integrate SMEs into their supply chains through component manufacturing, precision engineering, logistics, and other support services, creating opportunities for smaller firms to scale and access regional markets.

THAILAND
Active users of ChatGPT in Thailand increases more than fourfold over past year
(16 September 2025) OpenAI reported that weekly active users of ChatGPT in Thailand have increased more than fourfold over the past year, with growth driven mainly by users aged 18–24 applying the tool for translation, how-to guidance, personal development, tutoring, self-care, and personal writing. The data was presented at the first OpenAI Forum in Thailand, “AI LEAP: Turning Today’s Disruption into Tomorrow’s Advantage,” attended by over 100 business leaders in Bangkok and featuring Jason Kwon, OpenAI’s chief strategy officer, on his first visit to the country. Kwon emphasised that optimism and adaptability are Thailand’s competitive edge in global AI adoption, noting applications across education, healthcare, creativity, and entrepreneurship. The KBTG group chairman highlighted AI’s role in inclusion and democratisation of access, stressing its potential to reduce gaps and empower youth. The speakers underlined Thailand’s reputation as a fast adopter of technology, creative strength, and potential to pioneer new AI-driven industries such as personalised filmmaking. The forum also identified strong governance, inclusion, and early adoption as key foundations for developing a sustainable AI ecosystem in Thailand.

SINGAPORE, CHINA
Applications from Chinese clients to open family offices falls by 50% in 2025
(17 September 2025) Applications from Chinese clients to establish family offices in Singapore have reportedly fallen by 50% compared with 2022, according to data cited by CNBC, amid concerns over stricter anti-money-laundering checks, tighter permanent residence rules, and reduced tax incentives, with alternatives such as Hong Kong, Dubai, and Japan seen as easier jurisdictions. Despite this, official figures show the number of single-family offices in Singapore rose above 2,000 in 2024, up more than 40% from 1,400 in 2023 and 1,100 in 2022, though no origin data is available. The decline follows the SGD 3 billion money-laundering scandal in 2023 involving 10 Chinese nationals, which prompted the Monetary Authority of Singapore to expand due diligence requirements and appoint external firms to conduct checks. KGP Legal said Chinese clients were abandoning projects due to frustration with the onboarding process, which in the short term reduces tax revenue and fees for local service providers, though they argued Singapore must strike a balance between compliance and business efficiency. In contrast, Shook Lin & Bok said their firm had seen fewer Chinese inquiries after the scandal but noted returning business with wealthier, longer-term clients attracted by Singapore’s political stability, independent judiciary, and strong financial ecosystem. Rajah & Tann stated that Singapore’s restrictions align with those in Britain, Switzerland, and Hong Kong and are intended to ensure both compliance and efficiency. Some have argued that tighter scrutiny strengthens Singapore’s position by attracting sustainable and higher-quality wealth, even at the expense of losing opportunistic investors.

LAO PDR
Lao PDR moving to channel hydropower surplus into cryptocurrency mining
(17 September 2025) Lao PDR, burdened by mounting debts from decades of dam construction, is moving to channel its surplus hydropower into cryptocurrency mining, with policymakers highlighting “digital asset mining” as a long-term economic opportunity, according to the state-run Vientiane Times. Electricity made up 26% of exports in 2024, but limited transmission infrastructure has constrained sales abroad, while financing from Chinese loans and foreign firms has left the country heavily indebted, the IMF noted. Lao PDR has begun licensing local crypto trading and mining platforms, aiming to tax and regulate an industry that has previously attracted Chinese miners operating illegally since Beijing’s 2021 ban. The shift comes amid high domestic inflation, a kip that has halved in value against the US dollar in five years, and a new 40% US tariff on Laotian exports. Hydropower output remains seasonal, forcing Laos to buy electricity from Thailand in dry months despite its wet-season surplus. Environmental groups, including the Mekong Energy and Ecology Network and International Rivers, argue the policy worsens displacement, harms agriculture and fisheries, and fails to deliver promised prosperity for affected communities. Critics link the move to crypto directly to debt repayment pressures rather than internal demand, while supporters point to the IMF’s assessment that monetising unused power holds economic logic. Lao PDR aims to build a digital economy by 2030 and is set to exit the UN’s “least developed” status next year, but the IMF warned in November that debt and inflation trends under current policies risk intensifying, weighing on medium-term growth.

VIET NAM
Draft decree issued requiring police approval for certain investment projects
(18 September 2025) Viet Nam’s Public Security Ministry has issued a draft decree that would require police approval for investment projects across sectors including energy, telecommunications, construction, ports, oilfields, nuclear power, satellite services, industrial parks, and golf courses, expanding its role from consultant to gatekeeper on national security grounds. The proposal, open for ministerial comment until 22 September before possible approval by the Prime Minister, states that “security must be ensured, without sacrificing national interests, for economic benefits.” The reform would significantly increase the ministry’s authority over foreign-invested projects, giving it power to vet compliance with yet-to-be-defined security conditions and supervise foreign aid projects. The explanatory text links the move to intensifying global strategic competition. The police, already influential in lawmaking and the economy, are led by To Lam, now Communist Party chief and Viet Nam’s most powerful figure. The decree would affect both critical infrastructure and less essential projects, with implications for foreign firms including SpaceX and Amazon planning satellite services, and multinational manufacturers such as Samsung, Honda and Intel, which have previously raised concerns about slow approvals. Legal experts warn the decree could increase compliance costs, delay projects, and effectively hand the police veto power. The draft follows a narrower 2019 decree focused on defence, but this proposal grants broader oversight, with national and local police tasked to inspect and appraise the security, social and safety impacts of investments in key areas.

RCEP Monitor

CHINA
Youth unemployment rate rises to 18.9% in August 2025
(18 September 2205) China’s National Bureau of Statistics reported that the unemployment rate for individuals aged 16 to 24 rose to 18.9% in August, up 1.1 percentage points from July and surpassing the previous record of 18.8% in August 2024, marking the highest level since university students were excluded from the survey in December 2023. This rate contrasts with 7.2% for those aged 25 to 29, 3.9% for those aged 30 to 59, and an overall unemployment rate of 5.3%. The surge is partly linked to the graduation of a record 12.22 million undergraduate and graduate students in June, about 40% higher than five years earlier, increasing the pool of job seekers amid limited demand. Private-sector investment declined 2.3% year-on-year between January and August, dampening hiring appetite among companies that traditionally employ new graduates. The statistics bureau noted youth unemployment tends to rise in summer as fresh graduates are unable to secure jobs are counted as unemployed, adding pressure on labour markets and potentially weighing on consumer spending recovery given young people’s spending patterns.

HONG KONG
Minimum threshold for residential property purchases for investor visa reduced
(17 September 2025) Hong Kong Chief Executive John Lee announced that under the New Capital Investment Entrant Scheme, the minimum threshold for residential property purchases by investor visa applicants has been reduced from HKD 50 million to HKD 30 million, while the overall investment requirement remains at HKD 30 million across eligible assets including equities, debt securities, and property. As of April, the scheme had received 1,257 applications, with 512 approved, representing more than HKD 37 billion in expected investment. The cap on the amount of residential real estate that can be counted toward the total capital investment remains unchanged at HKD 10 million. The adjustment is aimed at stimulating demand in the high-end property market, though oversupply and weak economic conditions continue to suppress home prices, which remain near their lowest since 2016 despite earlier measures such as property tax cuts and looser mortgage rules.

NEW ZEALAND
GDP contracts by 0.9% in second quarter of 2025, exceeding forecasts
(18 September 2025) New Zealand’s GDP contracted by 0.9% in the second quarter of 2025, exceeding the Reserve Bank of New Zealand’s and analysts’ forecast of a 0.3% fall, with year-on-year GDP down 0.6% against expectations of no change, according to Statistics New Zealand data. The decline marks contraction in three of the last five quarters, with construction, manufacturing output, and professional services identified as the weakest areas. The release triggered a 0.9% fall in the New Zealand dollar to USD 0.5912 and a 0.5% drop to 1.3195 per Singapore dollar by 10:50. Market pricing for rate cuts increased, with expectations rising from 48 to 58 basis points and a 20% probability of a 50 basis point cut in October. The economy had entered a technical recession in the third quarter of 2024, with only modest growth in the following two quarters. In August, the central bank signalled two further rate cuts in 2025, citing constrained household and business spending due to employment declines, higher costs for essentials, and falling house prices.

INDONESIA
Cabinet reshuffle sparks concerns over Indonesia’s future fiscal credibility
(09 September 2025) Indonesian President Prabowo Subianto on 09 September announced a cabinet reshuffle that removed several officials, most notably Finance Minister Sri Mulyani Indrawati, The move was prompted by recent nationwide protests over lawmakers’ housing allowances, economic inequality, and rising living costs, with the unrest resulting in 10 people being killed and five remaining missing. Sri Mulyani was one of Indonesia’s longest-serving finance ministers and was highly regarded by investors for her prudent fiscal policy. This reportedly put her into conflict with Prabowo’s costly welfare policies, most notably a plan to provide free meals for 83 million children and pregnant women. Sri Mulyani had reportedly previously offered her resignation after Prabowo had instituted cuts of up to USD 48 billion in government spending to fund his populist agenda. New finance minister Purbaya Yudhi Sadewa, previously head of the Indonesia Deposit Insurance Corporation, drew criticism after remarks downplaying the recent protests and asserting that 6–7% growth would end the unrest, before apologising and reaffirming confidence in Prabowo’s 8% growth target within two to three years. Sri Mulyani’s departure has sparked concerns about Indonesia’s future fiscal credibility, with Prabowo having voiced his desire to remove a legal deficit ceiling of 3% of GDP for the annual budget.

INDONESIA
New finance minister announces USD 12 billion cash injection to boost lending
(11 September 2025) Indonesia’s new finance minister Purbaya Yudhi Sadewa announced a USD 12 billion cash injection to boost lending, transferring IDR 200 trillion—half of the IDR 400 trillion in government reserves held at the central bank—to state-owned banks, with instructions not to use the funds for government debt purchases but to accelerate loan growth, currently at a three-year low. Sworn in on Monday after Sri Mulyani Indrawati’s removal, Purbaya told lawmakers he aims to “rev up the monetary and fiscal engines” and pledged to drive growth above 6% towards President Prabowo Subianto’s 8% target, citing financial “drought” from slow spending and weak money supply. He said the transfer, drawn from underspent reserves, would not be inflationary, as inflation in August was 2.31%, below the 6.5% growth threshold that might trigger risks. The move follows a smaller IDR 16 trillion transfer earlier this year for low-cost housing and village cooperatives, and contrasts with Indrawati’s reluctance to release reserves at this scale. Markets reacted with Jakarta’s benchmark index rising for a second day, led by financials, though the rupiah remained 1% weaker and bond yields were stable, with investor sentiment still cautious after Indrawati’s exit. Purbaya said budget absorption, particularly for large allocations such as free school meals, will be monitored more closely, while Bank Indonesia has cut its policy rate by 125 basis points since September and reduced SRBI issuance to expand liquidity.

MALAYSIA, VIET NAM
Elevation of Malaysia-Viet Nam relations to strengthen economic, cultural, and educational cooperation
(10 September 2025) Malaysia’s Consul General in Ho Chi Minh City said on 10 September that the elevation of Malaysia–Viet Nam relations to a Comprehensive Strategic Partnership (CSP) in November 2024 would strengthen cooperation in economic, cultural, and educational sectors. Bilateral trade in 2024 reached USD 18.14 billion, with more than 700 Malaysian projects registered in Viet Nam, while the number of Vietnamese students in Malaysia rose by over 340% between 2022 and 2024. The High Commissioner highlighted Malaysia’s ASEAN chairmanship in 2025 under the theme “Inclusivity and Sustainability,” focusing on regional integration, digital transformation, and coordinated responses to global challenges. The remarks were delivered during Malaysia’s 68th National Day and 62nd Malaysia Day celebration in Ho Chi Minh City, attended by the Vice Chairman of the city’s People’s Committee, diplomats, and members of the Malaysian community.

MALAYSIA
Malaysia slows data centre expansion amid electricity and water constraints
(12 September 2025) Malaysia is slowing its data centre expansion amid power grid and water resource constraints and growing U.S. pressure to prevent Chinese firms from using the country as a channel to access U.S.-made AI chips under export controls. More than two-thirds of Southeast Asia’s data centre capacity under construction is committed in Malaysia, with Johor emerging as the hub, hosting 12 operational sites totalling 369.9 MW and 28 planned projects adding 898.7 MW, representing 78.6% of national IT capacity and MYR 164.45 billion in approved investments by Q2 2025. In July, Malaysia mandated permits for all exports, trans-shipments and transits of high-performance U.S. chips, such as Nvidia’s, though rules still allow Chinese data centres to import chips for in-country use. Washington has raised concerns that such facilities could train AI models for Chinese military purposes, adding sensitivity as Malaysia negotiates a trade deal with the U.S. Chinese operators, including GDS Holdings, have adjusted by spinning off overseas units such as DayOne, citing regulatory divergence and trade tension. Johor’s vetting committee for new projects, introduced in 2024, initially rejected about 30% of applications over sustainability concerns, though approval rates have since risen. Despite political momentum under Xi Jinping’s Belt and Road Initiative, including pledges on AI and 5G cooperation after his April visit to Malaysia, analysts warn scrutiny and tariffs could curb Chinese data centre expansion in Southeast Asia.

SINGAPORE
Inland Revenue Authority reports tax collection of SGD 88.9 billion for April 2024-March 2025 period
(11 September 2025) Singapore’s Inland Revenue Authority (Iras) reported tax collection of SGD 88.9 billion for April 2024–March 2025, a 10.7% increase from SGD 80.3 billion the previous year, representing 76.9% of government operating revenue and 12.2% of GDP. Corporate income tax rose 6.7% to SGD 30.9 billion, remaining the largest contributor at 34.8% of collections, though down from 36.1% previously. Goods and services tax increased to SGD 20 billion, or 22.6% of revenue, driven by higher spending and a GST rate adjustment. Individual income tax rose to SGD 19.1 billion, while property tax and stamp duty each grew to SGD 6.6 billion, up from SGD 5.9 billion and SGD 5.8 billion respectively. Tax enforcement actions involved over 8,600 cases, yielding SGD 507 million in recovered taxes and penalties, down from SGD 857 million recovered from 9,590 cases a year earlier. Iras disbursed more than SGD 1.3 billion to around 127,500 businesses under schemes including the Progressive Wage Credit Scheme and Senior Employment Credit. Digital services were enhanced through the expansion of eGiro from two to seven banks and its rollout to corporate taxpayers, alongside upgrades to the myTax Portal with simplified navigation and centralised notifications.

THAILAND
Public debt stands at 67.9% of GDP, among highest in ASEAN
(12 September 2025) Thailand’s public debt stands at 67.9% of GDP, among the highest in ASEAN, and is projected to rise to 68.9% by 2028, with recurring expenditures exceeding 70% of total spending and supplemented by short-term stimulus and tax relief measures. The IMF on 11 September urged prudent fiscal management and consolidation to build buffers, highlighting Thailand’s relatively higher debt compared with regional peers. The Fiscal Policy Office data show Thailand’s fiscal deficit has widened across administrations: –0.8% of GDP in the Thaksin–Surayud era, –2.2% under Abhisit–Yingluck, –2.7% in early Prayut years, –3.9% during Covid-19, and –4.0% under Srettha–Paetongtarn. Economists are questioning the feasibility of reviving the Khon La Khrueng (Half-Half) Co-payment Scheme, warning that limited fiscal space—less than THB 5 billion available—requires reallocations and a clear redesign to balance between supporting small shops and stimulating consumption. The IMF is monitoring political uncertainty and border tensions, with updated economic forecasts to be released in October.

VIET NAM
Government warned that rapid credit expansion may fuel inflation and asset bubbles
(11 September 2025) Vietnamese academics warned lawmakers on 5 September that rapid credit expansion risks fuelling inflation and asset bubbles as the government pursues 8.3%–8.5% GDP growth, well above external forecasts, despite new U.S. tariffs on exports. One economist highlighted that Viet Nam’s money supply growth has led to the region’s highest credit-to-GDP ratio, with loans in 2024 reaching 136.4% of GDP (USD 476 billion), over three times the median for emerging markets. Bank credit expanded 19.3% in H1 2025, exceeding the central bank’s 16% full-year cap and well above the 14% average of the past five years, with much directed to real estate, creating “ghost cities” and pushing up prices. Tthe credit surge has been linked to a stock market rally, with margin debt exceeding USD 11 billion in Q2, about 5% of market capitalisation, while bad debt rose to 5.3% of loans by February from 5% last year. The World Bank noted banks’ capital buffers have nearly halved in three years, raising vulnerability. Despite inflation at 3.2% in August, the government has not indicated plans to slow credit growth and intends to remove credit caps from 2026, a move Fitch Ratings warned could escalate systemic risks without tighter prudential controls.

RCEP Monitor

SOUTH KOREA, UNITED STATES
US and South Korea remain in deadlock over USD 250 billion investment fund
(09 September 2025) The US and South Korea remain in deadlock over a USD 350 billion investment fund central to their July trade deal, with South Korea’s director of national policy at South Korea’s presidential office warning on 10 September that even the Make American Shipbuilding Great Again (MASGA) project may not proceed without agreement. Washington has presented Seoul with draft terms similar to Japan’s USD 550 billion pledge finalised last week, but Seoul has rejected this, citing differences in economic scale, foreign exchange market risks, and the yen’s reserve currency status. Kim stressed that beyond governance and profit-sharing issues, the core challenge is securing and managing USD 350 billion in foreign exchange, adding that South Korea intends the pledge to be structured mainly as loan guarantees rather than capital injections. The fund is tied to the preservation of a 15% tariff on South Korean imports, while US auto tariff cuts for Seoul have not yet been implemented by executive order, leaving working-level talks ongoing. Additional tension stems from a US immigration raid on a Hyundai–LG Energy battery plant in Georgia, where hundreds of South Koreans were detained, raising concerns over Korean firms’ willingness to invest in the US. Kim cautioned that while tariff reductions for autos are significant, the scale of the investment fund risks destabilising South Korea’s economy if rushed.

AUSTRALIA
Future Fund’s valuation reaches AUD 252 billion as of 30 June
(09 September 2025) Australia’s Future Fund reported on 10 September that its valuation reached AUD 252 billion (USD 166.22 billion) as of 30 June, delivering a 12.2% annual return, more than double its 6.1% mandated target, while shifting allocations away from the US towards Germany and Japan. Investments in developed markets rose to AUD 65.13 billion, up from AUD 46.83 billion in 2024, representing a quarter of total assets, while Australian equities increased to AUD 27.2 billion from AUD 23.1 billion. Future Fund’s CEO said the US remained the fund’s largest international recipient but cited tariff changes, taxation adjustments, political uncertainty and fiscal imbalance as reasons for reducing exposure. Property holdings declined to AUD 11.1 billion from AUD 12 billion, and credit investments fell to AUD 22.4 billion from AUD 24.82 billion, while allocations to developed market currencies and commodities, including gold, were raised. Arndt highlighted Germany’s fiscal stimulus measures and Japan’s relative equity market value as driving factors for the diversification.

CHINA
Exports rise 4.4% year-on-year in August 2025, weakest pace in six months
(08 September 2025) China’s exports rose 4.4% year-on-year in August, the weakest pace in six months and below July’s 7.2% growth, while imports increased 1.3% compared with 4.1% the previous month, according to customs data released on 9 September. Exports to the US fell 33% amid ongoing trade tensions, while shipments to south-east Asia rose 22.5% and to the EU 10%, contributing to a trade surplus of USD 102.3 billion, up from USD 98.2 billion in July. Goldman Sachs noted August weekly container throughput dipped but was 5.6% above 2024 levels by month-end. Capital Economics’ attributed the slower export growth partly to a higher base effect, cautioning that fading benefits from the US-China trade truce and Washington’s higher tariffs on rerouted goods could pressure exports further. HSBC analysts said the August slowdown had not yet fully reflected tariff shifts on other trading partners. China’s export growth continues despite domestic weakness in consumer demand and housing, with policymakers last September introducing supportive measures, including stock market support, as trade talks with the US proceed under an extended 90-day tariff truce.

ASEAN
Universities in Europe and Asia look to attract Southeast Asian students
(08 August 2025) Australia will raise its cap on foreign students by 9% to 295,000 with priority for Southeast Asian applicants. Japan and South Korea are targeting 400,000 and 300,000 by 2033 and 2027 respectively, and Taiwan plans to attract 25,000 Southeast Asian students annually. Education consultancy Acumen reported in 2023, 132,000 Vietnamese were studying abroad (representing nearly 40% of Southeast Asian overseas students); Malaysia and Indonesia had each sent over 50,000, and Thailand 32,000. In total, Southeast Asia contributed 350,000 overseas students in 2022. European universities, facing underfunding, are increasingly targeting Southeast Asia: Germany launched a “career truck” in Hanoi in June, French President Emmanuel Macron promoted study opportunities during a Hanoi visit in May, and Indonesian President Prabowo Subianto urged more Indonesians to study in Europe in July. Despite such efforts, Southeast Asians remain underrepresented, with only 7,060 Vietnamese undergraduates in Germany, out of 1.66 million international students across the EU. Experts highlighted visa complexity, lack of funding, and limited scholarships as barriers, while Norway recently eased language and employment rules and adjusted tuition fees, and the European Commission launched the EUR 500 million “Choose Europe Initiative” in May to attract researchers. However, Southeast Asian students are increasingly choosing East Asia, with Japan hosting more Vietnamese students than any English-speaking country, and 23 East Asian universities ranking in the 2024 QS global top 100, up 35% since 2015. Meanwhile, restrictive US policies under the Trump administration, including cuts to Fulbright grants, USD 1.2 billion in funding reductions for Columbia and Johns Hopkins, and reported revocation of tens of thousands of visas, may open opportunities for European institutions to recruit from Southeast Asia and China.

MALAYSIA
Malaysia unveils its first edge AI processor to join global AI race
(25 August 2025) Malaysia-based SkyeChip has launched the MARS1000, the country’s first edge AI processor, unveiled at an industry association event attended by senior government officials. The Malaysia Semiconductor Industry Association described it as a chip designed to power devices such as cars and robots, though it remains less advanced than Nvidia’s data centre processors. The government, under Prime Minister Anwar Ibrahim, has committed at least MYR 25 billion (USD 6 billion) to strengthen domestic capabilities in chip design, wafer fabrication, and AI data centres, with recent investments from Oracle and Microsoft supporting this strategy. Malaysia is already a major global player in semiconductor packaging and manufacturing for suppliers such as Lam Research. However, SkyeChip has not disclosed manufacturing plans for the MARS1000. The US Trump administration has proposed restrictions on AI chip flows to Malaysia and Thailand over concerns about transshipment to China, a risk Kuala Lumpur has sought to counter by tightening export controls and declaring its opposition to illicit trading activities.

INDONESIA
Indonesia must accelerate clean energy transition to ensure industrial competitiveness
(27 August 2025) The deputy chair of Indonesia’s National Economic Council (DEN) stated at the Indonesia Summit 2025 that the country’s industrial competitiveness is constrained by the limited availability of clean and affordable energy, stressing that reliance on fossil fuels undermines the credibility of export-oriented products such as electric vehicle batteries. She cited textiles, glass, EV batteries and data centres as energy-intensive sectors requiring accelerated clean energy adoption. The deputy chair identified pending priorities, including the ratification of the Renewable Energy bill, reforms in state electricity company PLN, and the enforcement of new waste-to-energy regulations. She also highlighted Indonesia’s underutilised geothermal potential and warned that without a sufficient clean energy supply, domestic industries risk losing competitiveness in meeting global demand for green products.

THAILAND
Thailand to allow foreign tourists to convert digital assets into baht
(18 August 2025) Thailand will launch the TouristDigipay programme in the fourth quarter with an 18-month trial under a regulatory sandbox, allowing foreign tourists to convert digital assets into baht for spending in the country. The scheme, aimed at supporting tourism and innovation, permits only conversions into baht, with merchants receiving payments solely in local currency. Spending will be capped at BHT 500,000 per month, with transactions required to go through licensed digital-asset operators and e-money providers, alongside strict account and e-wallet verification measures to curb money laundering. The initiative follows a 33% decline in Chinese tourist arrivals in the first half of 2025, partly due to safety concerns, and a reduction in the annual foreign tourist forecast to 33 million from 37 million. As of 10 August, arrivals stood at 20.2 million, down 6.9% year-on-year, in a sector contributing about 12% of GDP. The government is targeting more visitors from the Middle East and Southeast Asia to offset the fall in Chinese travellers.

SINGAPORE
Headline and core inflation eases in July, below forecasts
(25 August 2025) Singapore’s headline inflation eased to 0.6% in July, below both June’s 0.8% and the 0.7% expected by a Reuters poll, while core inflation fell to 0.5% against forecasts of 0.6%. The Monetary Authority of Singapore (MAS) attributed the slowdown to weaker retail and goods prices and a 5.6% year-on-year fall in electricity and gas costs, offset slightly by a 2.1% rise in private transport from higher car prices. The MAS projected core inflation to average 0.5%–1.5% in 2025, down from 2.8% in 2024, citing easing global oil prices, contained food commodity costs, slower nominal wage growth, and weaker productivity gains reducing unit labour costs. The central bank left monetary policy unchanged in July after earlier easings in January and April, but warned of weaker growth from global trade downshifts and tariff tensions. Analysts noted that July’s figures strengthen the case for a potential policy loosening in October, with eToro suggesting inflation is no longer a constraint, while DBS said the MAS has preserved policy flexibility to respond to future shocks. On 30 July, the MAS forecasted slower economic growth in the second half of 2025, despite robust first-half GDP, while Singapore also faces a baseline 10% reciprocal tariff on exports to the US imposed by the Trump administration, with no agreement yet reached.

VIET NAM
Viet Nam ends state monopoly on gold bullion imports, exports, and bar production
(27 August 2025) Viet Nam has ended the state monopoly on raw bullion imports, exports, and bar production, shifting to a regulated market in which licensed companies and commercial banks can participate, according to government decrees and statements. The State Bank of Vietnam will issue licences for raw gold imports and overseas bar trade, while businesses require registered capital of at least VND 1 trillion and banks VND 50 trillion to qualify. Imported raw gold must be at least 99.5% pure and used for approved purposes such as jewellery and bar production. Saigon Jewelry Co., previously the sole legal bar producer, reported local prices of VND 128 million dong (USD 4,857) per tael, equal to USD 4,028 per troy ounce, compared with the global spot price of USD 3,377. The disparity between domestic and international rates has persisted despite repeated stabilisation efforts. Communist Party chief To Lam in May criticised the rigid domestic system for harming the economy and urged reforms to expand supply and curb smuggling. Consumer demand for gold in Vietnam rose to 55.3 tons in 2023 from 39.8 tons in 2020. Gold’s international price reached a record in April, strengthening demand across Asia. SSI Securities described the shift as a transition from state control to a regulated competitive market designed to improve transparency and efficiency.

VIET NAM
Viet Nam’s richest man to expand ride-hailing service across Southeast Asia
(25 August 2025) Viet Nam’s richest man Pham Nhat Vuong’s Green & Smart Mobility JSC (GSM), also known as Xanh SM, is expanding its ride-hailing operations beyond Viet Nam into Lao PDR, Indonesia, the Philippines, and potentially India, where VinFast has recently opened an EV factory. Vuong, who holds a 95% stake in GSM, is using the venture to promote VinFast globally, with GSM ride services accounting for 21% of VinFast’s Q1 car sales. In Viet Nam, GSM held a 40% ride-hailing market share in Q1 compared with Grab’s 32% and BE Group’s 6%, though Rakuten Insight data puts Grab at 55% and GSM at 35%. GSM plans to invest USD 1 billion in the Philippines over three years, having deployed 2,500 vehicles in Manila, and aims to introduce 10,000 EV taxis in Indonesia by year-end, with projections of 6–12% market share by 2026–27 if the fleet reaches 16,000–35,000 vehicles. Maybank Securities analysts estimate Grab and GoTo could see sales from on-demand services decline by 1% and 3%, respectively, by 2027 due to GSM competition.GSM’s current fleet is smaller than rivals with millions of vehicles across Southeast Asia, and Bloomberg Intelligence noted limited overseas presence and industry-thin margins may constrain growth. The CEO of GSM Global indicated future expansion into intercity transport, premium rides, delivery and corporate services as part of Vingroup’s broader strategy.

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SOUTH KOREA, UNITED STATES
Trump confirms that July trade agreement with South Korea to remain unchanged
(25 August 2025) President Donald Trump confirmed that the July trade agreement with South Korea, which set a 15% tariff on Korean goods and included USD 350 billion in US investment commitments, will remain unchanged despite lobbying from President Lee Jae Myung during their first in-person meeting. Trump said South Korea would honour the deal, adding that Korean Air Lines plans to purchase over 100 Boeing jets and South Korean private sector firms are preparing around USD 150 billion of additional investment in the US. Trump and Lee highlighted cooperation on North Korea, defence, and shipbuilding, with Seoul pledging increased defence spending for advanced assets and Trump proposing US-based Korean shipbuilding projects. GSM-related tariffs left South Korea aligned with Japan but still exposed to future US levies on chips and batteries. Lee sought to use the summit to ease tensions and emphasised progress on the Korean peninsula, while Trump reiterated his interest in another meeting with Kim Jong Un. The talks followed pre-summit friction after Trump accused Seoul of political instability on Truth Social, referencing raids on churches and unrest tied to former President Yoon Suk Yeol’s ousting, but tensions eased during the meeting as Trump described Lee as a strong representative of South Korea. Trump congratulated Lee on his election victory and confirmed US support, while Lee reaffirmed commitment to defence cooperation and economic engagement.

JAPAN, UNITED STATES
Top trade negotiator cancels planned visit to US after unresolved technical issues over trade deal
(28 August 2025) Japan’s top trade negotiator Ryosei Akazawa cancelled a planned trip to Washington after unresolved technical issues emerged over the implementation of the July US-Japan trade deal, according to Chief Cabinet Secretary Yoshimasa Hayashi, who said discussions will continue at the administrative level. Hayashi stated Japan will press the US to amend its presidential order on reciprocal tariffs and issue a written order lowering tariffs on automobiles and parts to 15% from 25%, matching the baseline tariff rate already set at 15%. Akazawa previously said the US had pledged to include a “no-stacking” clause similar to the EU arrangement, preventing tariffs from exceeding 15%. Reuters cited a government source saying Akazawa could travel to Washington as early as next week once issues are resolved. The Bank of Japan warned that despite the agreement, Japan’s exports, industrial production and corporate profits, particularly in manufacturing, face short-term declines due to US tariffs and overseas economic slowdown. Outstanding points also involve written confirmation of Japan’s USD 550 billion investment package in the US, agreed in July in exchange for reduced tariffs, with the US Commerce Secretary signalling an announcement soon. Akazawa previously rejected claims that Japan was simply handing over the USD 550 billion, stating that returns will be shared between both countries in proportion to contributions, while acknowledging the US intends to commit a larger share.

CHINA
Five largest banks expect to report further deterioration in second-quarter results
(29 August 2025) China’s five largest banks, with combined assets exceeding RMB 190 trillion (USD 26.5 trillion), are expected to report further deterioration in second-quarter results, with rising consumer loan delinquencies, declining profitability, and worsening credit quality. Analysts forecast the average net interest margin will fall to a record low of 1.29%, extending a three-and-a-half-year decline from above 2% in 2021, as low deposit and lending rates of around 3% squeeze returns. Industrial and Commercial Bank of China recorded over RMB 10 billion of non-performing consumer loans in March, more than double the previous year, with a ratio of 2.39% that likely rose further, while China Construction Bank and Agricultural Bank of China reported their third straight quarterly increase in bad debt ratios. Combined consumer loans in default at the three lenders have more than doubled since end-2023. Retail banks sold RMB 37 billion of bad debt in Q1, eight times higher year on year, with over 70% tied to consumer loans. Weak household demand persists, with short-term loans for small purchases falling to RMB 9.8 trillion in July after four consecutive monthly declines, as stagnant real wages, up only 1.7% in 2024 at non-state companies, and the property downturn erode borrowing appetite. Moody’s said mortgages and retail debt now carry higher credit risks than corporate loans, reversing traditional risk patterns, while Morgan Stanleym warned bad loan ratios would worsen further before stabilising, with banks retreating from new lending due to elevated risks. Policymakers, seeking to balance growth and financial stability, have slowed rate cuts and opted to subsidise borrowers’ interest payments rather than pressuring banks with further aggressive easing.

ASEAN, CHINA
Chinese EV manufacturers significantly expand presence in Southeast Asia
(19 August 2025) Chinese electric vehicle (EV) manufacturers have significantly expanded their presence in Southeast Asia, with EV sales in the region increasing 79% year-on-year in H1 2025, driven by aggressive pricing, local assembly, and expanded model availability. Chinese original equipment manufacturing (OEMs) accounted for over 57% of EV sales, up 67% year-on-year, with BYD, GAC Group, Chery, SAIC, Wuling, Changan, and Great Wall Motor leading. In Thailand, EVs reached 18% of vehicle sales in the first seven months of 2025, while in Viet Nam, VinFast sold 67,569 units, tripling year-on-year and outpacing Chinese brands. BYD became the top-selling brand in Singapore, surpassing Toyota. Chinese EVs are often discounted by 8–20%, mirroring domestic price strategies, with some units sold as demo cars or post-motor-show stock at up to 27% off. Industry concerns include sustainability, resale value, and after-sale service reliability, especially for weaker players like Neta, which has cut operations in Thailand. Despite these issues, Chinese exports remain profitable, with China shipping 3.68 million vehicles abroad in the first seven months of 2025, one-third of which were EVs. Several Chinese manufacturers are scaling up production in Southeast Asia, including BYD’s USD 1.3 billion plant in Indonesia and new facilities by Changan and GAC in Thailand. Analysts note that early adopters are driving Chinese EV uptake due to tech appeal, but charging infrastructure and brand support remain gaps. AlixPartners projects only 15 of China’s 129 EV brands will remain viable by 2030 despite expected global growth.

MALAYSIA, UNITED STATES
Malaysia subject to 19% US tariff due to refusal to accept certain conditions during negotiations
(18 August 2025) Malaysia is subject to a 19% US tariff—down from the initially scheduled 25%—due to its refusal to accept certain conditions in negotiations, according to Malaysia’s Investment, Trade and Industry Minister. He cited Malaysia’s adherence to “red lines,” including policies like the Bumiputera policy, as the basis for not meeting all US demands. While affirming that Malaysia will not retaliate, he underscored the importance of the US as a key investor and export destination. Prime Minister Anwar Ibrahim reiterated Malaysia’s position against external pressure that could compromise national policy. The Trade Minister also noted that US semiconductor tariffs remain at 0%, but warned that potential hikes—such as the 300% duties proposed by Donald Trump—would significantly impact Malaysia and ASEAN’s integrated supply chains. On trade diversification, he confirmed Malaysia has concluded a trade deal with South Korea, targeted for signing at APEC or a leaders’ summit. Negotiations with the EU have resumed after a 2012 stall, and engagement with the Gulf Cooperation Council has begun. Malaysia is also working to upgrade trade agreements with India and China, incorporating green and digital provisions. An Asean Digital Economy Framework Agreement, to be discussed on 28 August in Malaysia, aims to enhance intra-regional trade and SME participation, addressing the current intra-Asean trade level of under 25%.

MALAYSIA, SINGAPORE
Malaysia expresses interest in establishing cross-border ride-hailing services with Singapore
(19 August 2025) Malaysia has reiterated its interest in establishing cross-border ride-hailing services with Singapore to improve bilateral transport connectivity, but Malaysia’s Transport Minister stated that implementation must be mutually agreed and cannot proceed unilaterally. Discussions were previously raised with the former Singapore’s Transport Minister, but Singapore was not prepared to proceed at the time. The Johor Chief Minister has also advocated for such services, including through talks with Grab to revise the Cross-Border Travel Agreement ahead of Visit Johor 2026. While Singapore’s Land Transport Authority (LTA) confirmed discussions took place on 01 August, it clarified that there are no current plans to liberalise cross-border point-to-point transport via ride-hailing, although it is exploring options to enable bookings for licensed taxis via apps and expanding boarding/alighting points. Only 300 licensed cross-border taxi drivers currently operate under the scheme, which restricts pick-ups and drop-offs to designated terminals, limiting user uptake. Recent enforcement actions by both countries have targeted illegal ride-hailing activities by foreign drivers; Malaysia’s Road Transport Department detained four Singaporean private-hire drivers operating illegally in Johor since 09 August, while Singapore’s LTA impounded 19 vehicles for similar offences. Malaysia described these actions as reciprocal, acknowledging that both countries are enforcing existing laws, but emphasised the need for a more sustainable solution through bilateral agreement. It has been noted that enabling cross-border ride-hailing would require complex legal harmonisation. In response to crackdowns, Johor ride-hailing drivers are planning to form an association to seek government engagement.

INDONESIA
Bank Indonesia unexpectedly cuts its benchmark rate by 25 basis points
(20 August 2025) Bank Indonesia cut its benchmark BI-Rate by 25 basis points to 5% on Wednesday, marking a second consecutive monthly reduction and signalling potential for further easing, despite stronger-than-expected GDP growth in Q2. The decision, predicted by only 9 of 39 economists surveyed by Bloomberg, was justified by a stable rupiah, subdued inflation forecast of 1.5%–3.5% for 2025–2026, and a need to support economic expansion. The Bank Indonesia Governor noted the central bank now expects 2024 growth to exceed the midpoint of its 4.6%–5.4% range. The rupiah remained stable, bond yields fell to 6.41%, and equities gained up to 1% following the announcement. The move aligns monetary policy more closely with fiscal priorities, including President Prabowo Subianto’s proposed higher spending and a 2026 growth target of 5.4%. Domestic demand remains weak, with manufacturing contraction, sluggish consumption, and July lending growth slowing to 7.03%, the lowest since March 2022. The Governor reiterated calls for commercial lenders to reduce borrowing costs in line with the central bank’s rate cuts. The rupiah has appreciated over 1% against the US dollar in August, supported by foreign inflows. July inflation rose to 2.4% but remains within target.

VIET NAM
Viet Nam announces USD 48 billion worth of projects to support economic growth
(19 August 2025) Viet Nam announced that approximately 250 projects worth around USD 48 billion (MYR 202.82 billion), or roughly 13% of national GDP, are being implemented to support economic growth. Of these, 129 state-funded projects—covering sectors such as urban development and transportation—account for about VND 478 trillion (USD 18 billion), while 121 projects valued at USD 30.5 billion are funded through other sources, including select foreign investors. Key initiatives include the Rach Mieu 2 Bridge, Saigon Marina International Financial Center, Viettel Group’s R&D Centre, and Vingroup’s National Exhibition and Convention Center in Hanoi. Viet Nam’s Prime Minister stated these projects aim to overhaul the country’s strategic infrastructure and reaffirmed his 2024 GDP growth target of 8.3%–8.5%, despite headwinds from a pending US trade deal that could impose a 20% tariff on Vietnamese exports. The Prime Minister has called for both immediate and structural economic measures to meet these growth objectives.

VIET NAM
Viet Nam introduces visa and labour reforms to boost competitiveness
(21 August 2025) Viet Nam has introduced several new measures aimed at improving its attractiveness to foreign investors, including Decree No. 219 on foreign workers, Decree No. 221 on visa exemptions for individuals contributing to socio-economic development, and Decree No. 229, which extends visa-free stays to 45 days for citizens from 12 countries. These changes are intended to address labour shortages, particularly in high-tech sectors, amid a decline in the proportion of FDI sector workers with degrees or certificates, which dropped from 25.5% in 2021 to 21.7% in 2024. Business leaders view Decree 219 as a key improvement, citing benefits such as faster processing, broader exemptions, and enhanced HR efficiency. Some commentators emphasised the need for immediate foreign expertise to support Viet Nam’s digital and economic transformation. However, experts also called for further reforms, including long-term residence permits for major investors. Concerns were raised over restrictive implementation, such as the narrow eligibility for the Special Visa Exemption Card (SVEC), with some urging flexibility to maximise national benefit. Clearer guidelines and consistent enforcement were also highlighted as essential to maintain investor confidence and support Viet Nam’s regional competitiveness.

LAO PDR
Bank of Laos reduces base interest rate by 0.5 percentage points to 9.0% per annum
(21 August 2025) On 15 August 2025, the Bank of Laos reduced its base interest rate by 0.5 percentage points to 9.0% per annum, following a Monetary Policy Committee meeting. The decision aims to stimulate economic activity and stabilise the financial system amid ongoing domestic and international challenges. Inflation showed a declining trend, averaging 10.18% from January to July, with July’s figure falling to 5.30% from 8.3% in May. The Lao kip depreciated marginally by 0.11% against the US dollar and 1.19% against the Thai baht, while the gap between commercial bank and market rates widened. Despite this, M2 money supply grew 11.92% year-on-year, indicating sustained banking activity. Foreign reserves remained sufficient to cover 4.91 months of imports. However, the economy continues to face structural risks including high import dependency, external debt pressures, and global commodity price volatility. The bank reaffirmed its commitment to a market-based exchange rate regime, maintaining the reference rate at 6.5, and announced accompanying policy measures including improved foreign exchange management, centralisation of government deposits, modernisation of payment systems, and enhanced debt oversight. It also plans to implement new credit and lending strategies to increase access to finance and support economic growth.

RCEP Monitor

SOUTH KOREA
Bank of Korea flags elevated uncertainty due to trade and financial risks
(19 August 2025) The Bank of Korea Governor stated that while South Korea’s economy rebounded in Q2, elevated uncertainty—particularly from US trade negotiations and financial stability risks—continues to weigh on monetary policy considerations ahead of the 28 August policy meeting. He cited rising delinquency rates among small businesses and regional developers, as well as persistent volatility in the won, which has fluctuated in the mid-1,300 range against the US dollar. Although housing debt growth has slowed following mortgage caps, property prices in parts of Seoul remain elevated. The benchmark interest rate currently stands at 2.5%, following a cumulative 1 percentage point reduction since October, with the last cut in May. While four board members were previously open to another rate cut within three months, the resolution of some US tariff issues has reduced immediate downside risks, softening expectations for further easing in August. Rhee indicated that policy decisions will continue to be based on evolving conditions in growth, inflation, and financial stability. Inflation is expected to remain near the 2% target, supported by stable energy prices and subdued demand, though food prices may rise due to poor weather. Growth momentum is anticipated to continue in H2, aided by a supplementary budget, but external risks, particularly from Washington’s ongoing trade negotiations with countries including China, remain significant.

CHINA
Approvals for overseas IPO slow to trickle despite strong demand
(21 August 2025) Between 01 July and 15 August 2025, China’s securities regulator, the CSRC, approved only three public offerings in Hong Kong, a sharp decline from the 52 approvals granted in the first half of the year, contributing to growing uncertainty around Hong Kong’s IPO revival. The slowdown contrasts with strong demand, with 76 new companies applying for clearance in the same period, pushing the backlog to 240. Despite earlier commitments from the CSRC Vice Chairman to accelerate overseas listing approvals, the regulator maintains full discretion over timing. Under a 2023 rule, Chinese firms must file with the CSRC within three days of a foreign listing application, although foreign exchanges impose no such requirement. It was found that direct Hong Kong listings had the shortest average approval time (182 days) in H1 2025. Amid lower regulatory barriers, Shein reportedly pivoted to a Hong Kong IPO after failing to secure approval for a London listing. Meanwhile, PwC forecasts HKD 200 billion in IPO proceeds on HKEX in 2025. HKEX announced record H1 2025 results, with 34% growth in core revenue and a near doubling of daily turnover to HKD 220.3 billion, led by a 154% increase in Southbound Stock Connect volumes. The number of A-to-H listings has surged, including from CATL and smaller firms, although state media reported the CSRC is considering raising the minimum market capitalisation for such listings to RMB 20 billion. Analysts suggest regulators may be shifting focus to quality control, curbing speculative activity, and strengthening the domestic capital market, as reflected in guidance from July’s Politburo meeting and commentary from Jefferies.

JAPAN, UNITED STATES
Japanese exports to the US declines by 10.1% year-on-year in July 2025
(21 August 2025) Japan’s exports to the United States declined by 10.1% year-on-year in July to JPY 1.73 trillion, marking the fourth consecutive monthly drop, primarily due to a 28.4% decrease in auto shipments following a 25 percentage point increase in vehicle tariffs imposed by President Donald Trump. As a result, Japan’s trade surplus with the US narrowed by 23.9% to JPY 585.1 billion, while imports from the US fell 0.8% to JPY 1.14 trillion. Although a reduction in the tariff rate to 15% was agreed in late July, its implementation timeline remains unspecified. Other US-bound exports such as auto parts and semiconductor-making equipment declined by 17.4% and 31.3%, respectively. Vehicle export volume to the US fell 3.2%. Globally, Japan’s trade deficit in July shrank by 81.3% to JPY 117.5 billion due to falling import values, especially in crude oil and coal. Overall exports fell 2.6% to JPY 9.36 trillion, while imports dropped 7.5% to JPY 9.48 trillion. Japan’s trade deficit with China stood at JPY 609.2 billion for the 52nd consecutive month, with exports down 3.5% and imports down 3.9%. Conversely, Japan’s trade surplus with the rest of Asia rose 3.6-fold to JPY 478.5 billion, remaining positive for a sixth consecutive month. The trade deficit with the EU totalled JPY 278 billion, continuing an 18-month run in negative territory.

VIET NAM, SOUTH KOREA
Viet Nam and South Korea commit to expand bilateral trade to USD 150 billion
(13 August 2025) Vietnamese President To Lam’s four-day state visit to South Korea marked the start of President Lee Jae-myung’s ASEAN policy, with both leaders committing to expand bilateral trade to USD 150 billion by 2030 from USD 86.8 billion. Lam led a high-level delegation including ministers of trade, industry, technology and foreign affairs. Ten memorandums of understanding were signed, covering nuclear and renewable energy, financial policy, and scientific innovation. Lee highlighted the contribution of approximately 10,000 Korean firms operating in Viet Nam and prioritised joint development in semiconductors. Lam requested expanded cooperation in training Vietnamese talent in AI, biotech and shipbuilding. Both sides pledged to strengthen defence-industrial collaboration, including a potential USD 300 million deal for K9 howitzers, though a technology transfer agreement for local production remains pending. Defence ministers agreed to revise existing cooperation frameworks. Analysts noted the strategic backdrop of US tariffs—15% on South Korean and 20% on Vietnamese goods—and the broader US-China rivalry, driving Seoul and Hanoi to seek economic and military diversification. The summit outlined plans for cooperation in maritime security, demining, UN peacekeeping, and strategic information exchange. South Korean firms are expected to increase investments in high-tech sectors, digital infrastructure, and smart cities in Vietnam.

VIET NAM
Viet Nam undergoing one of the fastest demographic ageing transitions globally
(13 August 2025) Vietnam is undergoing one of the fastest demographic ageing transitions globally, with the proportion of citizens aged 60 and above increasing from 8.7% in 2009 to 14.2–16% by early 2024. Projections show Vietnam will enter the ‘aged population’ phase between 2036 and 2038 and become a super-aged society by 2050—achieving in 17–20 years what took France 115 years. The country currently has around 16.1 million elderly, expected to rise to 18 million or 20% of the population by 2045. This demographic shift stems from a postwar baby boom followed by a sharp decline in birth rates, leading to low replacement fertility. Key risks identified include increased numbers of elderly without family support, rising caregiving burdens (especially on women), labour shortages, and escalating healthcare and social welfare pressures. Most elderly care is informal, with fewer than 1% accessing public nursing homes, and Vietnam faces a severe shortage of trained caregivers. The WHO recommends 5,000 care workers per 100,000 people aged 65 and above, a target Vietnam is far from meeting. Non-communicable and age-related diseases, such as cardiovascular conditions, cancer, dementia, and depression, are prevalent and strain healthcare resources.

THAILAND
Bank of Thailand reduces policy rate by 25 basis points to 1.50%
(13 August 2025) The Bank of Thailand’s Monetary Policy Committee unanimously reduced the policy rate by 25 basis points to 1.50%, effective immediately, marking the lowest level in two years. The MPC Secretary stated that while economic growth projections for 2025 and 2026 remain broadly unchanged, the current policy shift is driven by the need to address increasing structural challenges and weakened competitiveness resulting from recent US trade measures. Headline inflation remains subdued, and small and medium-sized enterprises are identified as particularly vulnerable. The MPC concluded that more accommodative monetary policy is necessary to maintain supportive financial conditions and ease the burden on affected sectors.

SINGAPORE
Number of million-dollar flat sales hit record in Q2 2025, reflecting 75.8% year-on-year increase
(13 August 2025) A record 415 public housing units in Singapore were resold for SGD 1 million or more in Q2 2025, reflecting a 75.8% year-on-year increase, according to OrangeTee Group. Combined with 348 such transactions in Q1, high-value sales in H1 2025 now represent nearly 75% of the total for 2024, positioning the market to surpass last year’s full-year record of 1,035 million-dollar units. The highest-priced resale in the quarter was a 122 sqm unit sold for SGD 1,658,888. Overall resale prices rose 0.9% quarter-on-quarter, marking the 21st consecutive quarterly increase but the smallest since Q2 2020. OrangeTee forecasts a full-year public housing resale price increase of 4% to 5.5%, citing stable economic fundamentals and declining interest rates. The government had previously implemented borrowing restrictions to moderate housing demand. On 12 August, following stronger-than-expected H1 performance, Singapore raised its 2025 GDP growth forecast to 1.5%–2.5%, up from 0.0%–2.0%, reversing a prior downgrade prompted by US tariffs.

MALAYSIA
Proportion of Malaysians holding at least MYR 1 million in wealth to double over next decade
(13 August 2025) HSBC Bank projects that the proportion of Malaysians holding at least USD 250,000 (MYR 1.18 million) in financial wealth will double over the next decade, driven by the country’s expanding economy. This projection was disclosed by HSBC’s head of international wealth and premier banking Asia, during the launch of the bank’s updated HSBC Premier offering targeting affluent and high-net-worth clients. The country head of international wealth and premier banking at HSBC Malaysia noted a growing demand among affluent Malaysians for investment solutions that support both wealth accumulation and lifestyle protection. Separately, a 2023 Knight Frank report indicated that the number of Malaysians with wealth exceeding USD 1 million (MYR 4.6 million) is expected to increase from over 85,000 in 2022 to more than 164,000 by 2027.

MALAYSIA
Foreign outflows from Malaysia’s bond market to ease due to Fed rate cut bets
(12 August 2025) Convera Singapore anticipates a potential easing of foreign outflows from Malaysia’s domestic bond market, following renewed expectations of US Federal Reserve rate cuts. In July, global funds withdrew USD 1.2 billion from Malaysian sovereign debt, the highest outflow since October, amid a strengthening US dollar. However, weaker-than-expected US nonfarm payroll data has led swap markets to price in at least two rate cuts in 2025, improving sentiment toward emerging-market assets. Malaysian bonds may benefit from this shift, supported by moderating domestic inflation, with June’s price increase marking the slowest since February 2021. Convera’s FX and macro strategist noted that outflow pressures may have peaked, while the bond market outlook for the remainder of the year will depend on emerging market risk appetite, US monetary policy trajectory, and domestic policy clarity.

SINGAPORE
Limited exposure to US economy shields Singapore from economic turbulence
(14 August 2025) Singapore Prime Minister Lawrence Wong warned of significant global challenges during the country’s 60th independence anniversary, citing an “unravelling” of the international order that had supported its growth. Despite this, investor sentiment remains positive, with the iShares MSCI Singapore ETF rising nearly 30% year-to-date and the Singapore dollar appreciating 7% against the US dollar. Financial institutions dominate the local stock market, with DBS, OCBC, Keppel, and Sea Ltd comprising key holdings, bolstered by defensive characteristics and strong dividend yields. Trade concerns appear muted as the US accounted for only 10% of Singapore’s merchandise trade in 2024, with Asia remaining its primary trading partner. Strategic investments, including a SGD 1 billion AI initiative launched in 2019, have positioned Singapore for growth in sectors such as data centres and pharmaceuticals. Singapore Telecommunications has benefited, with its stock rising 33% this year. Bain & Co. notes Singapore’s increasing prominence in global pharma due to innovation and IP protection, while HSBC highlights its recent rise as Asia’s top destination for medical tourism. Domestically, challenges persist, including income inequality and housing shortages, despite a high per capita GDP of USD 93,000 and limited progress on social welfare. Nonetheless, investors view Singapore as well-placed to lead regionally in a multipolar world.

RCEP Monitor

SOUTH KOREA
Government to announce restructuring plan for petrochemical sector
(14 August 2025) South Korea’s government will unveil a restructuring plan for the petrochemical sector in August 2025, responding to what the country’s Industry Minister described as a “grave” situation driven by global oversupply and sustained weak demand. The sector is currently operating at only 80% of total capacity, reflecting a 20% excess, with margins sharply compressed due to capacity expansion, particularly in China. Drawing on the precedent of the late-2010s shipbuilding sector overhaul, the Industry Minister urged petrochemical firms to voluntarily adjust facilities. Yeochun NCC Co (YNCC), facing KRW 180 billion (USD 130 million) in loans maturing at end-August, has received a KRW 150 billion (USD 108.38 million) loan from DL Chemical, a subsidiary of DL Holdings and major YNCC shareholder. Analysts see YNCC’s difficulties as a potential catalyst for broader industry consolidation. President Lee Jae Myung, elected in June, has pledged tax incentives for mergers and acquisitions and temporary antitrust exemptions to facilitate restructuring. South Korea’s petrochemical exports fell 11.1% year-on-year in H1 2025 to USD 21.7 billion; total exports in 2024 were USD 48 billion, making petrochemicals the country’s fifth-largest export category.

SOUTH KOREA
Potential 10-day public holiday in October drives 28.7% year-on-year surge in overseas travel bookings
(13 August 2025) A potential 10-day public holiday in South Korea this October, contingent on the government designating 10 October as a temporary holiday, has driven a 28.7% year-on-year surge in overseas travel bookings for the 3–9 October period, according to Kyowon Your Travel Easy. Airlines including Jeju Air, Jin Air, T’way Air, Eastar Jet, and Air Busan are adding capacity, with Jeju Air alone scheduling 234 additional international flights. Airfares have risen significantly, with Seoul–Da Nang tickets now priced between KRW 600,000 and KRW 1.2 million, and Seoul–New York flights at around KRW 3 million. Domestic hotel bookings in Jeju and other key locations have exceeded 90% occupancy. Incheon International Airport Corp forecasts international passenger traffic during this period may surpass the previous record of 2.14 million set in January 2025. However, Statistics Korea reported a 34% week-on-week fall in domestic credit card spending during the six-day Seollal holiday in January, despite a 7.3% rise in outbound travellers to 2.97 million. The National Assembly Research Service found limited impact of previous temporary holidays on domestic demand, with concerns over reduced production and exports. Equity issues are also noted, as businesses with fewer than five employees—covering 35% of the workforce—are not mandated to observe temporary holidays. Schools may also face midterm exam scheduling conflicts. The government has yet to announce an official position on the proposed holiday.

JAPAN
Nikkei 225 index hits all time high following stronger-than-expected US inflation data
(13 August 2025) Japan’s Nikkei 225 index surpassed 43,421 points on Wednesday, marking a second consecutive all-time high following stronger-than-expected US inflation data and reduced US–China trade tensions. The increase followed Tuesday’s record breach of the 42,999-point level. US inflation rose by 2.7% year-on-year in July, below market expectations, leading to increased expectations of a rate cut by the Federal Reserve at its September meeting. The CME Group’s FedWatch tool placed the probability of a September rate cut at 96.4%, up from 85.9% a day earlier. The S&P 500 and Nasdaq Composite rose 1.13% and 1.39% respectively on Tuesday, reaching new highs. Investor sentiment was also supported by US President Trump’s announcement of a 90-day extension of the tariff pause on Chinese imports. Other Asian markets also saw significant gains on Wednesday, with the Hang Seng Index up approximately 2.5% and South Korea’s KOSPI gaining 1%. Trump renewed pressure on Fed Chair Jerome Powell to cut rates, criticising the central bank’s reluctance to act sooner, citing negative economic impact. A rate cut would reduce borrowing costs and potentially stimulate the US economy, which remains a key driver of global growth.

THAILAND, CAMBODIA, MALAYSIA, UNITED STATES
US reduces tariffs on Malaysia, Thailand, and Cambodia to 19%
(01 August 2025) The United States has reduced tariff rates for Malaysia, Thailand, and Cambodia to 19% following a ceasefire between Thailand and Cambodia brokered with Malaysian mediation and US support, enabling President Donald Trump to claim a peacekeeping success. The reductions, confirmed in an executive order issued on 01 August and effective from 7 August, followed trade talks in which all three countries offered concessions to the US, including increased market access and, in Malaysia’s case, the elimination of tariffs on selected US agricultural products and facilitation of halal meat imports. Malaysia had previously faced a 25% rate, Cambodia 49% (then 36%), and Thailand 36%. Malaysia’s Investment, Trade and Industry Minister stated the ceasefire discussions between Prime Minister Anwar Ibrahim and Trump contributed to the revised rate, though Malaysia maintained firm positions on excise duties on alcohol, tobacco, and automotives, foreign equity caps, and digital laws. The Philippines, Indonesia, and Viet Nam had earlier secured rates of 19–20%, while Singapore, Brunei Darussalam, Lao PDR, and Myanmar saw no change. Analysts said the tariff reductions were influenced by both geopolitical considerations and reciprocal trade liberalisation. Experts highlighted that the timing, regional diplomacy, and transactional trade approach were central to the outcome, with Washington aiming to counter China’s influence in the region. Cambodian leaders publicly credited Trump’s intervention for averting industry collapse, while Thai officials emphasised the deal’s role in sustaining export competitiveness.

INDONESIA
Economy expands by 5.12% year-on-year in Q2 2025, surpassing expectations
(05 August 2025) Indonesia’s economy expanded by 5.12% year-on-year in Q2 2025, surpassing both the previous quarter’s 4.87% and Q2 2024’s 5.05%, and exceeding the 4.8% median forecast of 26 economists polled by Reuters. Growth was driven by a 10.67% surge in exports—mainly palm oil, iron and steel, electronic equipment and vehicles—attributed in part to frontloading ahead of anticipated U.S. tariffs, and an 11.65% rise in imports, largely of capital goods and raw materials. Government expenditure increased 30.37% due to infrastructure projects across regions. Household consumption grew 4.97%, supported by Eid-ul-Fitr-related spending, though concerns remain over declining purchasing power. Bank Indonesia cut its policy rate by 25 basis points to 5.25% in July, signalling potential further easing to support consumption amid slow retail sales growth. Analysts warned that U.S. tariff hikes, despite recent reductions from 32% to 19%, could negatively affect labour-intensive export sectors and employment. Indonesia’s shrinking middle class—down from 21.4% of the population in 2019 to 17.1% in 2024—is also seen as a constraint on domestic demand. Goldman Sachs revised its 2025 GDP forecast to 5.0%, expecting another 50 basis points in rate cuts by Q1 2026. Economists from Permata Bank and Panin Sekuritas project 2025 growth in the range of 4.7% to 5.1%, citing persistent global trade tensions and domestic inflation pressures.

THE PHILIPPINES
Economy grows by 5.5% year-on-year in Q2 2025, above forecast
(07 August 2025) The Philippine economy grew 5.5% year-on-year in Q2 2025, marginally above the 5.4% forecast in a Bloomberg survey, driven by a 14-year high in farm output and strong household consumption, which accounts for over 70% of GDP. Growth was supported by improved rice and corn harvests, easing inflation, and previous interest rate cuts, although industry, investment, and export growth slowed due to global trade uncertainty linked to US tariffs. The peso rose 0.3% to 57.33 against the dollar following the data release, while the stock index declined slightly. The Economic Planning Secretary attributed the performance to coordinated inflation management, and maintained the government’s revised 2025 GDP growth target of 5.5%-6.5%, down from the earlier 6%-8% goal. Achieving the lower end requires 5.6% growth in H2. The Governor of the Bangko Sentral ng Pilipinas signalled potential for two further 25bp rate cuts this year, with more easing possible in 2026. Bloomberg forecast a 25bp cut at the 28 August policy meeting, citing muted inflation and trade risks. US tariffs of 19% on Philippine goods, equal to regional peers, take effect later on 07 August, but officials downplayed their impact given the economy’s limited export reliance.

SINGAPORE
Singapore accounts for over 50% of ASEAN’s GSSSL bonds and loans in 2024
(07 August 2025) Singapore accounted for over 50% of ASEAN’s green, social, sustainability, and sustainability-linked (GSSSL) bonds and loans in 2024, according to the Monetary Authority of Singapore’s (MAS) sustainability report released on 09 July. GSSSL bond issuance volumes in Singapore rose nearly 80% to USD 13.3 billion in 2024, recovering from two years of decline but still below the 2021 peak of USD 14.4 billion, with green bonds increasing their share. Transition bonds remained a small but growing subset. GSSSL loans originated in Singapore reached over USD 48 billion, marking a seventh consecutive annual high, with sustainability-linked loans the dominant category since 2021. MAS supports sustainable financing through two grant schemes: the Sustainable Bond Grant Scheme and the Sustainable Loan Grant Scheme, both of which provide up to USD 125,000 to offset costs for external reviews or sustainability validation. Lower caps of USD 100,000 apply for issuers not aligned with recognised disclosure standards such as TCFD, ISSB, or ESRS. Bonds must have a minimum issuance or programme size of USD 200 million and at least one-year tenure, while qualifying loans must be at least USD 20 million in size and three years in tenure. Both schemes are valid through 2028 and allow multiple applications.

INDONESIA, UNITED STATES
Indonesian copper exports to the US to face zero percent import tariff
(07 August 2025) Indonesia’s Investment and Downstreaming Minister confirmed that Indonesian copper exports to the United States will face a zero percent import tariff, following trade negotiations under the Indonesia-US agreement concluded in July. Talks with the United States Trade Representative are ongoing to extend tariff reductions to other commodities, including nickel, palm oil, rubber, shorea wood, and copper derivatives. While nickel may not receive full exemption, Roeslani indicated that the current 19% tariff could be lowered further. The zero-tariff status is also being sought for commodities not produced in the US. The tariff on several Indonesian goods was previously reduced from 32% to 19% under a revision of the Trump-era trade measure. In return, Indonesia has pledged to purchase USD 15 billion in US energy products and USD 4.5 billion in US agricultural products, as announced by the US president on 16 July. Additionally, Indonesia plans to procure 50 Boeing aircraft, primarily Boeing 777 passenger jets, though specific buyers were not disclosed.

VIET NAM
Viet Nam’s exports rise 16% year-on-year in July 2025 to USD 42.3 billion
(06 August 2025) Viet Nam’s exports rose 16% year-on-year in July 2025 to USD 42.3 billion, exceeding the 14% forecast, as buyers accelerated purchases ahead of a 20% US import tariff effective 07 August. Imports increased 17.8% to USD 40 billion, surpassing the 15.2% forecast, resulting in a trade surplus of USD 2.27 billion, down from USD 2.83 billion in June. The tariff, originally proposed at 46%, was reduced to 20%, aligning closely with rates imposed on other Southeast Asian exporters. Net exports to the US constitute around 20% of Viet Nam’s GDP, raising concerns about tariff-related factory risks. The government confirmed ongoing trade negotiations with Washington and stated plans to diversify exports to the Middle East and India while promoting domestic consumption. Industrial production rose 8.5% year-on-year and 0.5% month-on-month, while consumer price inflation slowed to 3.19%, below both the June rate (3.57%) and market estimate (3.40%). Coffee exports increased 34.6% to 103,000 tonnes. Viet Nam’s GDP grew 7.96% in Q2 2025, with an official full-year target of 8%, though the impact of new US tariffs remains uncertain.

MALAYSIA, RUSSIA
Number of Malaysian tourists visiting Russia doubles in Q1 2025 year-on-year
(07 August 2025) Russia’s Economic Development Minister stated that the number of Malaysian tourists visiting Russia doubled in Q1 2025 compared to the same period in 2024. The announcement followed President Vladimir Putin’s meeting with Malaysia’s King, Sultan Ibrahim. The Russian Economic Development Ministry also reported that Russian tourist arrivals to Malaysia in 2024 exceeded pre-pandemic 2019 levels by 64%. In July 2025, the validity of Russia’s electronic visa was extended from 60 to 120 days, and the maximum stay increased from 16 to 30 days, with approximately 5,000 users to date. Malaysian citizens were the first to trial Russia’s new “tourist card” system, enabling remote top-ups for payments covering transport, accommodation, and other travel-related expenses.

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SOUTH KOREA, CHINA
South Korea announces temporary visa-free entry for Chinese tourist groups
(06 August 2025) South Korea announced a temporary visa-free entry programme for Chinese tourist groups from 29 September 2025 to June 2026 to stimulate inbound tourism and support domestic economic recovery ahead of the Asia-Pacific Economic Cooperation (APEC) summit. The measure follows China’s November decision to exempt South Koreans and others from visa requirements and precedes China’s October holiday period. The initiative was confirmed by South Korea’s tourism ministry after a policy meeting and coincides with improving bilateral relations under President Lee Jae Myung. The APEC summit, scheduled for 31 October to 1 November in Gyeongju, may also feature bilateral meetings involving Chinese President Xi Jinping and U.S. President Donald Trump. Following the visa-free announcement, shares of tourism-related South Korean firms rose sharply: Hyundai Department Store gained 7.1%, Hotel Shilla increased 4.8%, Paradise casino operator rose 2.9%, and Hankook Cosmetics surged 9.9%.

SOUTH KOREA
Finance Ministry to aid companies cope with increased US tariffs
(05 August 2025) South Korea’s Finance Ministry announced the formation of a task force to develop economic policy measures under President Lee Jae Myung’s administration, focusing on helping companies cope with increased US tariffs and expand into new markets. Following a trade agreement with the United States that set a 15% tariff on South Korean exports—above the 10% baseline and significantly higher than near-zero levels under the Korea-US FTA—the ministry plans short-term domestic demand stimulus and long-term financial support for technology development. The agreement, finalised shortly before President Trump’s 25% tariff deadline, leaves unresolved issues that may resurface during the upcoming summit between Trump and President Lee, including defence spending, corporate investments, non-tariff barriers, and currency concerns. The ministry emphasised that the agreement reduces trade uncertainty and includes a USD 350 billion investment package expected to open business opportunities, enhance bilateral economic cooperation, and stabilise supply chains. Policy initiatives will also target growth in artificial intelligence, semiconductors, and globally successful “K-contents” sectors, with strategies and budget plans to be announced later in August. Regulatory reforms are also planned to encourage business activity. Despite South Korea’s fastest quarterly growth in over a year, driven by consumer demand and tech exports, the IMF revised its 2025 GDP growth forecast for the country down to 0.8% from 1.0%, citing ongoing tariff-related trade risks.

JAPAN
Japan to encourage increased domestic cultivation of rice to meet production shortfalls
(05 August 2025) The Japanese government will announce a reversal of its longstanding rice production adjustment policy that curbs output, with Prime Minister Shigeru Ishiba set to confirm the shift toward encouraging increased rice cultivation at a ministerial meeting on 05 August. The change follows recent production shortfalls, including a 320,000-tonne deficit in 2024 and a cumulative shortfall of 980,000 tonnes from 2021–2024, which have driven up table rice prices and exposed weaknesses in the existing supply-demand balancing policy. The revised approach aims to boost rice output for both domestic use and export, ensure supply stability, and support farmers’ incomes, particularly through large-scale and corporate farming. Japan’s Agriculture Minister will present an analysis attributing price surges primarily to supply shortages rather than distribution issues. Current subsidies that incentivise shifts from table rice to feed rice or other crops like wheat and soybeans may be revised, along with a broader review of paddy and field policies scheduled for fiscal 2027. The Ministry of Agriculture will prepare an updated policy outline by summer 2026. Environmentally friendly initiatives such as “dry direct seeding” and terraced field maintenance will also be promoted in response to growing heat and water scarcity risks. Ishiba is expected to advocate for a flexible production support system, while addressing challenges related to abandoned farmland and intergenerational farm transfer.

THAILAND, CAMBODIA
Thailand estimates over USD 300 million in economic damages from conflict with Cambodia
(29 July 2025) Thailand’s Finance Minister stated on 29 July that the initial costs of evacuation and property damage following the five-day border conflict with Cambodia exceed THB 10 billion (USD 300 million), with broader economic impacts expected. The government is preparing a THB 25 billion budget to support reconstruction and stimulate the economy, including support for repairing infrastructure and housing. The Finance Minister noted this figure may be revised upward, particularly once trade disruption costs are fully accounted for. Relief measures being offered by state-owned banks include loan repayment deferrals, low-interest financing, refinancing schemes, and exemptions from banking fees. Tax relief includes extended filing and payment deadlines until September and deductions of up to THB 100,000 for home repairs and THB 30,000 for vehicles. Additionally, THB 100 million has been allocated to each affected province to address local needs, with the possibility of further disbursement.

THAILAND
Finance Ministry revises its 2025 GDP growth forecast to 2.2% from 2.1%
(30 July 2025) Thailand’s finance ministry revised its 2025 GDP growth forecast to 2.2% from 2.1%, supported by strong first-half performance, though it warned of potential deceleration due to U.S. tariffs ranging from 15% to 36%. Export growth is now projected at 5.5%, up from 2.3%. The Bank of Thailand recently adjusted its own growth forecast to 2.3%, near last year’s 2.5%. The Fiscal Policy Office indicated the economic impact from the Cambodian border conflict is minimal, with border trade comprising just over 1% of total exports, though the labour market may be affected due to the 12% share of Cambodian migrant workers. The Industry Ministry estimated exports to Cambodia could decline by THB 60 billion, noting most Cambodian workers in Thailand are unregistered. The Finance Minister confirmed the conflict has not disrupted trade negotiations with the U.S., with a final trade proposal expected to be submitted by 30 July. The Finance Minister expressed hope for a reduced tariff rate, citing lower negotiated levels by Vietnam (20%) and Indonesia (19%). The finance ministry also reduced its 2025 foreign tourist arrival forecast to 34.5 million, down from 36.5 million, compared to the pre-pandemic peak of nearly 40 million in 2019.

SINGAPORE
Straits Times Index marks its longest losing streak in five weeks
(30 July 2025) Singapore’s Straits Times Index declined for the fourth consecutive session on 30 July, falling 0.2 per cent to 4,219.41, marking its longest losing streak in five weeks amid slower second-quarter employment growth. Advance estimates from the Ministry of Manpower showed total employment rising by 8,400, down from 11,300 in the same period last year, with softness noted in outward-oriented sectors. DBS cautioned that labour market conditions may deteriorate further in the second half due to weakening demand in trade-exposed industries. The Monetary Authority of Singapore left monetary policy settings unchanged at its quarterly meeting but warned that global growth momentum is expected to slow through the remainder of 2025 as front-loaded activity wanes and deferred tariffs take effect. Market breadth was negative, with 342 losers versus 222 gainers, and SGD 2.1 billion worth of securities traded. Singapore Airlines led STI losses, falling nearly 2% to SGD 6.90, while Yangzijiang Shipbuilding rose 3.6% to SGD 2.62. Among local banks, DBS declined 0.7% to SGD 48.26, UOB dropped 0.8% to SGD 36.52, and OCBC was unchanged at SGD 17.04.

INDONESIA
Indonesia preparing third stimulus package in 2025 amidst slowing economy
(29 July 2025) Indonesia is preparing a third stimulus package in 2025 aimed at supporting regional economies, domestic tourism, and transportation, with full details to be released by the Coordinating Ministry for Economic Affairs. Indonesia’s Finance Minister reaffirmed the government’s commitment to maintaining GDP growth near 5%, though DBS and other analysts project growth easing to 4.8% this year, citing weaker consumption, falling foreign direct investment, and global trade risks, including U.S. tariffs. The stimulus will exclude wage subsidies, which end in August, and DBS warns this could blunt its impact, especially for low-income households. The economy grew 4.87% in Q1, the slowest first-quarter growth in over three years, and FDI dropped 6.95% year-on-year in Q2 to IDR 202.2 trillion—the sharpest decline in five years. Bank Indonesia cut rates by 75 basis points so far this year and plans further measures to boost liquidity, though economists argue monetary easing alone is insufficient. President Prabowo is targeting 8% growth through programmes including 3 million homes annually and free school meals, supported by extended property tax breaks. However, economists warn that fiscal constraints, limited stimulus coverage, and structural challenges such as regulatory uncertainty and high logistics costs are dampening investment and household spending. Proposals involving state-directed lending and subsidised housing loans risk undermining financial stability.

MALAYSIA
US to announce trade deals with Malaysia, Thailand, and Cambodia
(31 July 2025) Prime Minister Anwar Ibrahim stated that Malaysia is awaiting an official announcement from U.S. President Donald Trump on 01 August regarding the country’s tariff rate under ongoing trade negotiations, which must be finalized before higher tariffs take effect on 01 August. Anwar confirmed he spoke directly with Trump, who commended Malaysia’s involvement in mediating the recent Thai-Cambodian conflict. Malaysia, previously facing a 25% tariff, has concluded negotiations, and a joint statement is expected from the U.S. Trade Representative and Malaysia’s Ministry of Investment, Trade and Industry. Trade Minister Zafrul Aziz confirmed the deal is finalised pending Trump’s formal response. The U.S. has agreed to 19% and 20% tariffs with the Philippines and Viet Nam respectively, while transshipped goods face a 40% levy. Cambodia and Thailand also reached agreements following ceasefire talks, though Cambodia’s Deputy Prime Minister denied knowledge of a final deal. Singapore will face a 10% baseline tariff with no sectoral exemptions, which Prime Minister Lawrence Wong described as manageable. Trump has confirmed attendance at the ASEAN Summit in Kuala Lumpur in October, which Malaysia will chair.

MALAYSIA, SINGAPORE
Johor town Kluang eyes spillovers in investments and businesses from Johor-Singapore Special Economic Zone (SEZ)
(31 July 2025) Since the Johor-Singapore Special Economic Zone (SEZ) was formalised in January, Kluang—located over 100km from Johor Bahru—has seen a 30% rise in investor and business enquiries, especially in manufacturing, logistics and tourism. Businesses such as Kluang Coffee Powder Factory and logistics firm SSAT are expanding capacity and projecting sales increases of up to 50% and 15% respectively. Local authorities have identified Kluang as a potential satellite city to the SEZ, with infrastructure upgrades including the Gemas-Johor Bahru Electrified Double Track Project and RTS Link expected to enhance connectivity and position Kluang as a logistics hub. Land costs in Kluang remain competitive at MYR 158 per sq ft compared to MYR 393 in Johor Bahru. However, business leaders have warned of potential infrastructural strain and called for comprehensive zoning and infrastructure planning. Agro-tourism operators such as Zenxin Organic Park and UK Farm anticipate long-term gains if the SEZ incorporates agritechnology and food production. Other Johor districts such as Muar, Batu Pahat, and Segamat are yet to see significant spillover but have been identified as potential secondary beneficiaries depending on transport connectivity and local sector strengths. Johor recorded MYR 30.1 billion in approved investments in Q1 2025, the highest in Malaysia, and the state government continues to emphasise equitable development across all 10 districts.

INDONESIA
Trade surplus projected to decline to USD 3.45 billion in June 2025
(31 July 2025) Indonesia’s trade surplus for June is projected to have declined to USD 3.45 billion from USD 4.3 billion in May, according to a Reuters survey of 17 economists. The anticipated narrowing is attributed to a 6.5% year-on-year increase in imports, up from 4.14% in May, alongside a continued rise in exports, which are expected to have grown 10.41% in June, compared to 9.68% the previous month. The country has maintained a monthly trade surplus since 2020, though the surplus has been gradually moderating amid weakening global demand. The official figures, along with July’s consumer price index data, will be released by Indonesia’s statistics bureau on Friday.

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CHINA
Private home prices remained effectively flat in June 2025
(30 July 2025) Hong Kong private home prices remained effectively flat in June, rising 0.03% month-on-month following an identical increase in May, according to the Rating and Valuation Department. This follows a 0.5% rise in April, which ended a four-month decline. Year-to-date, prices have fallen 0.9%, reaching their lowest level since 2016 and reflecting a nearly 30% drop from the 2021 peak. The recent stabilisation is attributed to more affordable mortgage rates, with the one-month HIBOR falling below 1.2% since May, down from over 3.5% during the past two years. Despite the removal of property purchase restrictions and relaxed down payment rules in 2023, demand has remained subdued amid a weak economic outlook and emigration of professionals. Brokerages such as Morgan Stanley and HSBC forecast a market bottom, while realtor JLL maintains a negative outlook, projecting a 5% decline in mass residential prices this year and no sustained recovery until 2026, when housing inventory is expected to normalise. Market forecasts for 2025 remain mixed, with potential price movements of ±5% depending on interest rate trends and U.S.-China trade tensions.

CHINA
China’s manufacturing sector contracts for fourth consecutive month in July
(31 July 2025) China’s manufacturing sector contracted for the fourth consecutive month in July, with the official Purchasing Managers’ Index (PMI) falling to 49.3 from 49.7 in June, below the 50-point threshold indicating growth, and underperforming Bloomberg’s forecast. The National Bureau of Statistics attributed the decline to seasonal factors and adverse weather, including floods and high temperatures, while Capital Economics highlighted softening demand and falling new export orders, citing renewed tariff pressures. Domestic demand also showed signs of weakness amid persistent challenges such as low consumption, youth unemployment, and a property sector debt crisis. The manufacturing slowdown coincided with stalled trade negotiations between China and the US, as a 90-day tariff truce nears expiry on 12 August without a new agreement in place.

SOUTH KOREA, UNITED STATES
US announces trade agreement with South Korea with 15% tariffs set on Korean exports
(30 July 2025) U.S. President Donald Trump announced a “Full and Complete” trade agreement with South Korea that sets a uniform 15% tariff on South Korean exports to the U.S., including a reduction from the previously threatened 25% on auto exports. As part of the deal, Trump stated South Korea would provide USD 350 billion for U.S.-owned and controlled investments, although Seoul described this as a facilitation fund for Korean firms entering U.S. sectors such as shipbuilding, semiconductors, batteries, biotechnology, and energy. Of the total, USD 150 billion is earmarked for shipbuilding cooperation. U.S. Commerce Secretary Howard Lutnick claimed 90% of the investment’s profits would benefit Americans. The agreement follows a similar investment-based deal with Japan, which remains under dispute. South Korea resisted U.S. demands to open its beef and rice markets but did not secure concessions on steel or semiconductors. Additionally, Seoul agreed to purchase USD 100 billion in U.S. LNG and energy products. Trump confirmed U.S. exports to South Korea would remain tariff-free. The deal raises questions over the relevance of the existing U.S.-South Korea FTA, which had already eliminated most tariffs. South Korea’s goods trade with the U.S. in 2024 totalled over USD 197 billion, with a USD 66 billion U.S. trade deficit. South Korea’s Kospi index rose 0.5% following the announcement.