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(14 September 2025) Foreign investors have withdrawn USD 653 million from Indonesia’s stock market in September, the steepest outflow since April, amid violent protests and President Prabowo Subianto’s abrupt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.

RCEP Monitor

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.

RCEP Monitor

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.

RCEP Monitor

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.

INDONESIA, THE PHILIPPINES, UNITED STATES
Donald Trump announces trade deals with Indonesia and the Philippines
(23 July 2025) President Donald Trump announced on 22 July that the United States has reached separate trade agreements with the Philippines and Indonesia, imposing a 19% tariff on goods imported from both these countries while American exports are largely exempted from tariffs from either. The Philippine agreement was reached during a bilateral meeting with President Ferdinand Marcos Jr. at the White House, making him the first Southeast Asian leader to visit Trump in his second term. Trump stated on social media that the Philippines would move towards an open market and zero tariffs on US goods, with Finance Secretary Ralph Recto indicating Manila’s willingness to reduce tariffs on select American products and suggesting zero tariffs on US automobiles. The US imported USD 14 billion in goods from the Philippines in 2024, primarily electronics, processed foods, machinery and apparel, and exported USD 9 billion. The Indonesia deal, formally detailed in a joint statement, also includes commitments to remove taxes on US digital services, eliminate pre-shipment inspections on US goods, accept US motor vehicle safety standards, and lift export restrictions on critical minerals. Indonesia previously faced a 32% tariff in April, later reduced to a 10% rate pending the 01 August deadline. In 2024, the US imported USD 28 billion in goods from Indonesia, mainly apparel and footwear, and exported USD 10 billion, chiefly oilseeds, grains, oil and gas. Both agreements deviate from higher tariff threats Trump issued earlier this year and come amid his administration’s shift in focus from quantity to quality of trade deals.

INDONESIA
Toyota Motor announces plan to begin producing electric vehicles in Indonesia in 2025
(23 July 2025) Toyota Motor announced it will begin producing electric vehicles in Indonesia this year, making Indonesia the third manufacturing base for its bZ4X SUV after Japan and China. The company plans to leverage its over-30% market share in Indonesia to expand EV sales and confirmed this marks its first EV production in the country, complementing its existing hybrid vehicle production. Toyota-Astra Motor stated the move aligns with Toyota’s “multi-pathway strategy” toward carbon neutrality by adding EVs to its portfolio of environmentally friendly vehicles. The company also plans to start producing EV pickup trucks in Thailand by year-end. Indonesia’s government offers reduced VAT of 1% and exemption from luxury tax for EVs with at least 40% local content, while vehicles below that threshold face an 11% VAT. Companies with local production commitments also qualify for exemptions on import tariffs and luxury tax under the incentive scheme introduced in 2023.

MALAYSIA
Malaysia announces revised support package on 23 July in support of consumer spending
(23 July 2025) Malaysia announced a revised support package on 23 July, reducing the RON95 petrol price for citizens from MYR 2.05 to 1.99 per litre while maintaining plans for targeted fuel subsidies to be detailed by end-September. The package also includes a one-time cash handout of MYR 100 to all Malaysians aged 18 and above. Fitch Ratings estimates the package will cost MYR 2.3 billion, equivalent to 0.1% of GDP, and remains within the 2025 budget deficit target of 3.8%, though Fitch cautioned that delays in subsidy reform could jeopardise the goal of cutting the deficit to 3% by 2028. The measures aim to offset higher living costs linked to the expanded sales and service tax effective 01 July and respond to criticism of insufficient support. Opposition groups plan a protest in Kuala Lumpur on Saturday, expected to attract 10,000–15,000 participants, with 2,000 police officers deployed. Market reaction was muted, with the stock index up 0.3% and the ringgit steady. Analysts noted the package reflects counter-cyclical policy following Bank Negara Malaysia’s 25-basis-point rate cut on 09 July, with fiscal space from earlier consolidation enabling the measures, which are expected to support consumer spending amid external risks, including a potential 25% US tariff on Malaysian exports.

MALAYSIA
Malaysia resists key US demands during trade negotiations
(22 July 2025) Malaysia is aiming to reduce impending US tariffs, set at 25% from 01 August, to approximately 20%, but is resisting key demands from the Trump administration, including extended tax exemptions for US-made electric vehicles, easing foreign ownership restrictions in power and finance, and subsidy cuts for local fishermen. Prime Minister Anwar Ibrahim has maintained that trade negotiations will not compromise national policies, particularly preferential treatment for Malays and indigenous groups. While Malaysia has addressed concerns over AI chip transshipment to China by requiring export permits and disclosure of potential misuse, it has not agreed to US requests tied to broader policy changes. Minister Zafrul Aziz has indicated progress but warned of risks from poorly-structured deals, stating some demands may be unfair. Malaysia is unwilling to extend its EV tax exemption beyond December due to implications for equal treatment of all foreign manufacturers. With nearly half of EV registrations in H1 2025 coming from Chinese firms, the rationale for special treatment of US EVs is unclear. US pressure on fishing subsidies is politically sensitive due to the sector’s ethnic Malay voter base. The US trade deficit with Malaysia was USD 24.8 billion in 2024. The tariff level will influence Malaysia’s revised 2025 GDP growth forecast, currently set between 4.5% and 5.5%. Negotiations continue amid regional uncertainty, following Viet Mam’s unexpected acceptance of 20% tariffs earlier this month.

SINGAPORE
Core inflation remains at 0.6% year-on-year in June 2025, unchanged from May
(23 July 2025) Singapore’s core inflation rate remained at 0.6% year-on-year in June, unchanged from May and below the 0.7% median forecast, according to the Department of Statistics. Headline inflation was 0.8%, also below the 0.9% estimate. Recreation prices declined 2.6% in June, following a 2% drop in May, while food inflation stood at 1% and healthcare costs rose 2.8%. The Monetary Authority of Singapore’s next policy review is scheduled for 30 July, with official projections keeping core inflation between 0.5% and 1.5% for 2025. Economists at Bank of America, Goldman Sachs and Barclays expect monetary policy to ease given subdued price pressures, while Citigroup assigns a 60% probability to policy settings remaining unchanged. The inflation data follow GDP figures released last week showing Singapore avoided a technical recession, supported by manufacturing and services exports amid anticipation of higher US tariffs.

VIET NAM
Ho Chi Minh Stock Index rises to 19% year-to-date, approaching January 2022 record high
(23 July 2025) Viet Nam’s Ho Chi Minh Stock Index has risen 19% year-to-date, approaching its January 2022 record high, driven by the government’s largest administrative overhaul in decades and the implementation of a US trade deal cutting tariffs on Vietnamese goods from 46% to 20% since April. The Vietnamese Prime Minister reforms aim to streamline bureaucracy, cut costs, and redirect spending to development projects, targeting over 8% GDP growth in 2025 and high-income status by 2045. The economy grew 7.52% in H1 2025, supported by strong manufacturing. Foreign investors posted net inflows of USD 411 million into Vietnamese equities in July, while continuing to exit Malaysia, Indonesia and the Philippines. Major index gainers include Vingroup JSC, Vietnam Joint Stock Commercial Bank for Industry and Trade, and Hoa Phat Group JSC. Market participants anticipate a potential FTSE Russell reclassification of Viet Nam to emerging-market status as early as September, which could attract up to USD 6 billion in additional capital. Risks to the outlook include weaker global growth in H2 and uncertainty over a proposed 40% US tariff on transshipped goods.

THE PHILIPPINES
Philippines bonds positioned for rebound from Asia’s lowest ranks due to rate cuts
(24 July 2025) Philippine bonds are positioned for a rebound from the lowest ranks in Asian debt performance, supported by Bangko Sentral ng Pilipinas’ (BSP) capacity to implement further rate cuts beyond the 125 basis points already made in the past year. Real interest rates in the Philippines are currently the highest among emerging Asian economies, with the inflation rate remaining below BSP’s 2–4% target for four consecutive months, allowing a policy rate buffer of 385 basis points. Benchmark 10-year Philippine bond yields have risen 10 basis points this year to 6.28%, diverging from regional peers that saw declines, largely due to concerns over budget deficits and previous oil price increases. However, market forecasts suggest yields may decline to 5.67% by year-end, a level last observed in October 2024. Investor interest is increasing due to the bonds’ low correlation (0.10 over 120 days) with US Treasuries, which face volatility from US fiscal concerns and uncertain Federal Reserve policy. T Rowe Price cited inflation dynamics and de-correlation from Treasuries as key attractions. Additional upside could stem from potential inclusion in JPMorgan’s local-currency emerging-market debt index, while Citigroup highlighted index inclusion and disinflation as supporting a long, currency-hedged position in 10-year peso bonds.

RCEP Monitor

JAPAN
Trump announces trade agreement with Japan including 15% reciprocal tariffs
(22 July 2025) President Donald Trump announced a trade agreement with Japan that includes a 15% reciprocal tariff on Japanese exports to the US, down from the previously threatened 25%, with auto tariffs also reduced to 15%. Trump stated the deal would involve USD 550 billion in Japanese investment in the US, with the US receiving 90% of the profits, and predicted the creation of “hundreds of thousands” of jobs. Japan agreed to expand market access for US cars, trucks, rice, and agricultural goods. Japanese Prime Minister Shigeru Ishiba confirmed the auto tariff reduction, which affects a sector that accounted for 28.3% of Japan’s exports in 2024. The deal follows a sharp year-on-year decline in Japanese auto exports to the US in May (−24.7%) and June (−26.7%). Trump also referenced a separate liquefied natural gas deal and further upcoming trade talks. The agreement comes amid political uncertainty in Japan, where Ishiba faces pressure following his coalition’s upper house election loss and is reportedly considering resignation. Analysts view the deal as politically significant for Ishiba, with HSBC suggesting it could help him avoid internal challenges. Wisdomtree highlighted that the market had grown overly pessimistic on negotiations and noted the broader strategy behind these deals, including large-scale US investments by SoftBank, OpenAI, and Oracle totalling up to $500 billion in AI infrastructure.

SOUTH KOREA
South Korea preparing for high-level trade talks with the US
(23 July 2025) South Korea is preparing for high-level trade talks with the United States, aiming to match or improve upon the 15% tariff rate secured by Japan to avoid reciprocal 25% tariffs by the 01 August deadline. South Korea’s Industry Minister confirmed Seoul would study the US-Japan agreement closely, with emphasis on enhancing industrial and energy cooperation. The Ministry of Trade, Industry and Energy is prioritising alternative concessions, such as increasing imports of US crops like corn for bioethanol, while explicitly excluding rice and beef market liberalisation from negotiations. President Lee Jae Myung stated that South Korea would not accept a deal significantly inferior to Japan’s, and analysts noted that Seoul may need to expand imports of farm goods and energy and boost US investment to reach a comparable outcome. The KOSPI rose 0.2% following the Japan-US announcement, with Hyundai and Kia shares climbing 7.3% and 7.6%, respectively. The US-Japan deal includes USD 550 billion in Japanese investment and preferential treatment on tariffs for sectors like chips and pharmaceuticals. South Korea has been asked by Washington to establish a large-scale investment fund to assist in US manufacturing reconstruction, and areas of potential cooperation include semiconductors and shipbuilding. South Korea remains cautious about joining the proposed USD 44 billion Alaska LNG pipeline project, citing feasibility concerns.

AUSTRALIA
Australia announces full lifting of restrictions on US beef imports
(24 July 2025) Australia has announced the full lifting of restrictions on US beef imports following a review by its agriculture department, which concluded that recent improvements in US cattle tracing protocols sufficiently mitigate biosecurity risks. While Australia technically ended the ban in 2019, continued restrictions on Canadian and Mexican cattle had effectively kept US beef out due to integrated supply chains. The decision follows US pressure, including the imposition of at least 10% tariffs on Australian exports in April, which the White House linked to the beef restrictions. US Agriculture Secretary Brooke Rollins labelled the restrictions “absurd”, and called the decision a “major trade breakthrough”. Australia’s Agriculture Minister stated the decision was based strictly on science, not trade pressure, while an opposition leader raised concerns that the change may have been politically motivated to appease the Trump administration. Industry body Cattle Australia expressed support for the decision. The US is Australia’s largest beef export destination, valued at AUD 14 billion in 2024. Despite US tariffs, a Meat and Livestock Australia report released in June indicated that beef trade between the two countries had increased by approximately one-third year-to-date.

ASEAN, CHINA
Chinese consumer brands increasing their presence in Southeast Asia
(16 July 2025) Chinese consumer brands are increasing their presence in Southeast Asia through acquisitions, product innovation, and use of online sales platforms, with these brands gaining shares in home appliance and cosmetics markets previously dominated by Japanese, South Korean and European firms. Euromonitor data show China’s share in Southeast Asia’s consumer appliances market rose from 3.6% in 2015 to 8.6% in 2024, with sharper gains in specific categories such as vacuum cleaners (22.9%), washing machines (20.4%) and microwave ovens (18.2%). Haier has expanded via local production, acquisitions and AI-enabled products, projecting Thai sales of THB 14 billion in 2025, up 28% year-on-year. Deerma, after acquiring Philips’ water purification business and listing in 2023, now leads Southeast Asia’s vacuum cleaner market with competitively priced products sold via e-commerce. Chinese brands’ share of Southeast Asia’s air conditioning market rose from 9% in 2015 to 25% in 2024, while Japanese brands lost 7 points. Growth has been supported by platforms like TikTok Shop, offering incentives to Southeast Asia-focused merchants, and Shopee, which manages Chinese merchants’ operations. In cosmetics, Chinese mass skin care brands posted 115% average annual growth from 2019–2024, increasing colour cosmetics market share in Indonesia from 2% to 15%. However, Chinese brands remain weak in food categories due to persistent safety concerns and localisation challenges. China’s exports to ASEAN reached USD 322.5 billion in H1 2025, up 13% year-on-year and exceeding exports to the EU and U.S., while imports grew just 1% to USD 188.4 billion, raising competitiveness concerns for Southeast Asia’s local industries.

SINGAPORE
Singapore’s economic growth expected to slow in second half of 2025
(16 July 2025) The Monetary Authority of Singapore (MAS) stated that Singapore’s economic growth is expected to slow in the second half of 2025 despite second-quarter GDP growing 4.3% year-on-year, supported by front-loaded exports ahead of US tariffs. The Ministry of Trade and Industry’s GDP forecast for 2025 was downgraded in April to 0–2% from 1–3%, reflecting weaker global demand and policy uncertainty. The MAS highlighted risks surrounding US tariff measures, noting that Singapore has not yet received formal notification of additional tariffs beyond the 10% baseline announced in April. He projected softer consumption and investment in the coming months. MAS reported a net profit of SGD 19.7 billion for FY2024/25 and assets under management rising 12.2% year-on-year to over SGD 6 trillion. The MAS emphasised Singapore’s position as a regulated and trusted wealth management hub.

SINGAPORE
Luxury condos market faces uphill struggle in attracting wealthy homebuyers
(17 July 2025) The W Residences Marina View in Singapore’s central business district recorded only two units booked out of 683 during its pre-sale weekend, despite preview prices starting at SGD 3,200 per square foot and one-bedroom units priced from SGD 1.8 million, with five-bedroom units at SGD 11.6 million and above. The 99-year leasehold project, developed by Malaysia’s IOI Properties Group for SGD 1.5 billion and managed by Marriott International, comes amid weak demand in the prime city centre, partly due to higher taxes on foreigners and a shift in local preference toward suburban homes. In contrast, LyndenWoods, a mass-market project located 9km away, sold over 94% of its 343 units at an average SGD 2,450 per square foot in one day. Apartment prices in the core central region have increased about 19% over five years, compared to a 40% rise across the broader private home market. Skywaters Residences nearby, backed by Alibaba Group and Perennial Holdings, has sold only two of 190 units since launch, priced at SGD 47.3 million and SGD 30.9 million respectively. City Developments Ltd has yet to announce a launch date for its Newport Residences project in the same area. IOI Properties claimed strong interest during private previews and described buyer caution as expected given the surge in new launches. Analysts suggested developers may slow land acquisitions and avoid price wars, though they continue to target wealthy residents eligible for lower levies rather than offering deep discounts.

INDONESIA, UNITED STATES
US announces trade agreement with Indonesia reducing US tariff rate to 19%
(15 July 2025) U.S. President Donald Trump announced a trade agreement with Indonesian President Prabowo Subianto reducing the threatened U.S. tariff rate on Indonesian goods from 32% to 19% in exchange for Indonesia committing to purchase USD 15 billion in U.S. energy, USD 4.5 billion in agricultural products, and 50 Boeing aircraft, mainly 777s, for Garuda Indonesia. Trump claimed the deal ensures U.S. exports face no Indonesian tariffs or nontariff barriers and grants full access to Indonesia’s market of 280 million people. The U.S. goods trade deficit with Indonesia was USD 17.9 billion in 2024, with bilateral trade totalling USD 38.3 billion. Trump also highlighted Indonesia’s copper reserves as a point of U.S. interest. Indonesian officials expressed confidence that tariff-free U.S. imports were manageable, though analysts in Jakarta noted risks to sectors such as poultry and corn. The Indonesian Employers Association advised caution, noting ongoing regional negotiations could shift competitiveness. The Indonesian Palm Oil Association welcomed the deal, citing potential to raise U.S. palm oil imports to 3 million metric tonnes in coming years. The agreement follows similar U.S. deals with Viet Nam, the U.K., and China, and analysts suggested the inclusion of critical minerals like copper could set a precedent for future trade agreements.

INDONESIA
Indonesia targeting up to USD 2 billion from US dollar-denominated sukuk issuance
(16 July 2025) Indonesia is targeting up to USD 2 billion from a US dollar-denominated sukuk issuance launched on Wednesday, comprising a five-year sukuk with initial price guidance of 4.85% and a 10-year green sukuk at 5.5%. The issuance, through Perusahaan Penerbit SBSN Indonesia III with the government as obligor, will be listed on the Singapore Exchange and Nasdaq Dubai and is rated Baa2 (Moody’s), BBB (S&P) and BBB (Fitch). Proceeds will fund general financing needs and eligible green expenditures. The sukuk follows a U.S.-Indonesia trade deal announced Tuesday reducing proposed U.S. tariffs on Indonesian goods from 32% to 19%, which Indonesian officials described as the result of difficult negotiations. Indonesian equities reached a one-month high after the deal and ahead of the sukuk, outperforming regional peers amid weaker global sentiment. Bank Indonesia cut rates for the fourth time since September, citing the revised U.S. tariffs as supportive amid slowing trade and domestic demand, with the rupiah remaining stable.

VIET NAM, UK
UK announces agreement with Viet Nam to remove pharmaceutical trade barriers
(14 July 2025) Britain announced an agreement with Viet Nam to ease the sale of UK-manufactured medicines and vaccines in the Vietnamese market, as part of its new trade strategy focused on sector-specific deals. Viet Nam will expedite the registration process for new pharmaceuticals and accept approvals from additional regulators, including the UK’s Medicines and Healthcare products Regulatory Agency. The agreement, expected to be confirmed on Monday, is projected to generate GBP 250 million (USD 337 million) for the UK pharmaceutical industry over five years. The UK-Vietnamese Joint Economic and Trade Committee will also meet in London to discuss financial services and renewable energy. While prioritising life sciences under its new industrial strategy, Britain is simultaneously imposing a new quota regime to restrict steel imports from Viet Nam. The industrial strategy has faced delays due to ongoing disputes over drug pricing between the government and the pharmaceutical industry regarding fair valuation of medicines and payments to the health service. Trade Minister Douglas Alexander described the Viet Nam agreement as evidence of early progress under the revised strategies.

MALAYSIA
BMI projects Malaysia will miss its 2024 fiscal deficit target of 3.8%
(17 July 2025) BMI, a Fitch Solutions company, projects Malaysia will miss its 2024 fiscal deficit target of 3.8% of GDP, with the deficit narrowing only to 4%, delaying the government’s aim of reducing it to 3% by 2028. BMI attributes this to higher-than-planned spending and weaker revenue, forecasting 2025 revenue at 16.4% of GDP, down from 16.8% in 2024, due to subdued economic activity limiting tax collection. Petroleum-related revenue is expected to fall short of budget expectations, while economic growth is forecast at 4.2% for 2024, below the official 4.5–5.5% target currently under review. BMI anticipates continued pressure on public finances from the 01 July electricity tariff hike of 14%, which could drive additional utility subsidies, and notes the government has yet to provide clarity on planned RON95 fuel subsidy cuts. It also expects policymakers to exceed planned expenditure in 2025, as seen in previous years. S&P Global Ratings has separately warned of rising risks to Asia-Pacific sovereign ratings from tariffs and trade tensions, underscoring the fiscal challenges for Malaysia despite its relatively strong credit standing in the region.

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AUSTRALIA
Unemployment rate rises to 4.3% in June, highest since 2021
(17 July 2025) Australia’s unemployment rate rose to 4.3% in June, the highest since 2021, as net employment grew by only 2,000 against forecasts of 20,000, while the number of unemployed increased by 33,600 and youth unemployment climbed to 10.4% from 9.5%. The weaker-than-expected labour data has raised questions about the Reserve Bank of Australia’s recent decision to hold rates steady at 3.85% despite market expectations of a further cut, with the Australian dollar falling by half a cent after the release on expectations of a rate cut in August. Oxford Economics attributed weak hiring partly to firms’ caution amid global trade uncertainties and noted the slowdown was particularly evident among youth, often the most marginal workers. Langcake and Westpac both cautioned that while headline employment growth has remained solid over the past year, largely due to state-funded hiring in sectors like health and education, recent trends may indicate the start of a broader weakening in labour demand as private sector restraint emerges. Prime Minister Anthony Albanese’s government, elected in May on cost-of-living pledges, plans to convene a productivity-focused roundtable next month to address economic challenges amid easing inflation and slowing jobs growth.

NEW ZEALAND, MALAYSIA
Malaysia aims to serve as halal hub in ASEAN for New Zealand products
(16 July 2025) Malaysian Deputy Prime Minister Zahid Hamidi announced that Malaysia will serve as a halal hub in ASEAN for New Zealand products, following recognition of two New Zealand organisations by the Malaysian Islamic Development Department (Jakim). Speaking at the Malaysia-New Zealand Halal Forum on 16 July, Zahid invited New Zealand halal industry players to participate in the Malaysia International Halal Showcase 2025, where plans for an ASEAN Halal Council comprising ASEAN and ASEAN Plus Plus nations will be announced. The council aims to standardise halal certification across the region, with the agenda to be raised at the ASEAN Summit in October. Zahid also noted discussions within the Gulf Cooperation Council to reactivate the World Halal Council to include Muslim and non-Muslim halal-exporting countries, in view of the global halal market’s projected growth from USD 1.3 trillion annually to USD 5 trillion by 2050, with Malaysia targeting a 5% share. New Zealand Biosecurity and Food Safety Minister Andrew Hoggard highlighted Malaysia as a key market for premium halal meat, with exports exceeding NZD 60 million, and ongoing facilitation of approvals for new halal-certified premises.

CHINA
Authorities call for stricter price oversights amidst deflation pressures
(17 July 2025) Chinese Premier Li Qiang, at a high-level meeting on Wednesday, called for stricter price regulation in the electric vehicle sector to address destructive price competition and deflationary pressures, urging automakers to improve cost oversight, make timely supplier payments, and enhance competitiveness through innovation and quality. Li also called for boosting domestic consumption by removing spending restrictions and optimising trade-in policies for consumer goods. Concerns over oversupply and price wars in sectors such as EVs, solar panels, and steel have intensified, with China’s industrial profits down 9.1% in May and producer prices falling 2.8% year-on-year in the first half. Chinese automakers’ profits fell 11.9% in May despite an 11.7% increase in sales, over half of which were new energy vehicles, prompting the industry association to urge a halt to “vicious competition.” The National Statistics Bureau noted some easing of price cuts in key industries without intervention. Economists, however, cautioned that addressing overcapacity through production cuts risks economic growth and employment, with Evercore ISI’s Neo Wang describing current measures as likely short-lived rather than substantive reform. China’s second-quarter GDP grew 5.2%, keeping it on track for the 5% full-year target, and analysts such as Tianchen Xu warned that firms may still undercut competitors despite calls for price discipline.

ASEAN
Trump announces new series of tariffs on ASEAN countries, effective 01 August
(09 July 2025) U.S. President Donald Trump announced new punitive tariffs effective 01 August on eight ASEAN economies, with rates of 36% on Thailand and Cambodia, 32% on Indonesia, 25% on Malaysia, 20% on the Philippines, 25% on Brunei Darussalam, and 40% on Lao PDR and Myanmar. Meanwhile, Viet Nam secured a reduced rate of 20% though transshipped goods through Viet Nam faces rates of 40%. ASEAN governments have so far achieved limited progress in negotiations despite offering to increase imports of U.S. goods, and Malaysia, Cambodia and Indonesia confirmed ongoing talks, emphasising a preference for diplomatic resolution. Cambodia noted its rate was already reduced from 49% in April, while Indonesia projected potential output losses of up to IDR 164 trillion (USD 10.1 billion, about 12% of 2024 GDP) if tariffs proceed, particularly impacting labour-intensive sectors. Analysts warned of increased regional uncertainty, adverse effects on industrial output due to dependence on Chinese inputs, and disincentives to investment in affected sectors. Firms are expected to re‑evaluate U.S. market reliance, while Viet Nam may gain short‑term advantage despite ongoing uncertainties in its agreement. Trump’s focus on transshipments aims to counter Chinese exporters’ use of ASEAN to bypass U.S. tariffs, prompting regional caution given China’s threat of retaliatory measures. Market observers noted the possibility of brinkmanship, with three weeks remaining for further negotiations before implementation.

ASEAN
Inflation across ASEAN continues to fall due to weaker demand
(09 July 2025) Inflation in several Southeast Asian economies continued to fall amid concerns over weakening consumer demand, political instability, and increased imports of low-cost Chinese goods. Thailand’s consumer price index declined 0.25% year-on-year in June, following a 0.57% fall in May, driven by lower food and energy prices due to favourable weather and higher agricultural supply, according to the Commerce Ministry. While Thai officials denied deflation risks, Moody’s Analytics identified Thailand as particularly vulnerable, citing a weak tourism recovery and political turmoil, including the 01 July suspension of Prime Minister Paetongtarn Shinawatra, which Maybank warned would dampen consumption and investor confidence into 2026. Singapore’s headline inflation fell to 0.8% in June, its lowest since early 2021, while Malaysia’s eased to 1.2% in May, a four-year low, with Maybank noting broad-based declines in categories like communication and clothing. Economists attributed regional disinflation partly to weaker demand amid economic uncertainty from U.S. tariffs, warning of risks if low inflation entrenches pessimistic expectations. China’s deflationary pressures and increased exports to ASEAN have intensified price competition, particularly in consumer goods and electronics.

MALAYSIA
Bank Negara Malaysia makes first rate cut in five years, marking first policy change in 25 months
(09 July 2025) Bank Negara Malaysia reduced its overnight policy rate by 25 basis points to 2.75% from 3% on Wednesday, marking its first rate cut in five years and its first policy change in 25 months, citing external uncertainties, notably U.S. President Trump’s upcoming 25% tariffs on Malaysian goods effective 01 August, as risks to growth. The rate had previously been raised by a cumulative 125 basis points between May 2022 and May 2023 before being held steady since July 2023. The central bank characterised the move as pre-emptive to support growth amid moderate inflation and geopolitical risks. Malaysia’s GDP growth slowed to 4.4% in Q1 while headline inflation fell to a 51‑month low of 1.2% in May, with core inflation at 1.8% and specific categories such as personal care, education and transport rising 3.7%, 2.2% and 2.1% respectively. A Reuters poll earlier this week showed a slim majority of economists had anticipated a 25‑basis‑point cut. Capital Economics forecast the policy rate to fall further to 2.50% by year‑end. Fitch BMI identified Malaysia, Thailand and Cambodia as among the most exposed to U.S. tariff increases, with Malaysian exports facing the full 25% levy. Despite these pressures, the ringgit has strengthened 5–6% year‑to‑date against the dollar, continuing its 2024 rally driven by favourable trade balances and weaker dollar conditions, with MIDF Research projecting an average exchange rate of 4.10 and a potential recovery to 3.90 by year‑end.

INDONESIA, CHINA
Chinese conglomerates investing billions into Indonesia’s aluminium sector
(10 July 2025) Chinese conglomerates, including Tsingshan Holding, China Hongqiao Group and Shandong Nanshan Aluminium, are investing billions of dollars into Indonesia’s aluminium sector, with Goldman Sachs projecting a fivefold increase in national production by 2030. The expansion follows Indonesia’s 2023 bauxite export ban and continuation of downstreaming policies under President Prabowo Subianto, aimed at fostering manufacturing growth and funding socio-economic programmes. CRU Group expects three new alumina refineries to commence operations in 2025 and at least three more by 2027, while Goldman Sachs projects four additional smelters by decade-end, adding to the two already running. Each refinery costs approximately USD 1 billion, with Chinese investors offering capital and equipment to Indonesian partners. Indonesia’s limited bauxite reserves compared to nickel may constrain growth, while reliance on coal-fired power raises concerns over electricity security and cost. Analysts have questioned whether planned projects will materialise given aluminium prices near USD 2,500/tonne and infrastructure risks, though others note China’s proven ability to scale industries. Indonesia’s bauxite ban has also pushed China to reduce reliance on Guinea, reinforcing its motivation to diversify supply chains through Southeast Asia.

INDONESIA
Increasing number of educated Indonesians migrating abroad for work
(08 July 2025) An increasing number of educated Indonesians are leaving to work abroad due to low domestic salaries, limited career prospects, and cuts to education budgets under President Prabowo Subianto’s administration. 2024 saw an 83% rise in migrant workers with diplomas (to 4,505) and a 2.3-fold rise among those with bachelor’s degrees (to 3,421), together making up 2.7% of emigrants, up from 1.4% in 2019. Tertiary enrolment has grown to 45%, yet unemployment among graduates remains higher (5.25%) than among junior high school leavers (4.11%), and 59% of workers are now in the informal sector. Social media campaigns such as “Just escape for now” and protests over tuition hikes highlight youth frustration. Indonesian firms such as GoTo, Mind ID, and BCA are investing in training and career development to retain talent, but private R&D spending remains low at 0.65% of GDP. Business leaders warn the talent drain threatens long-term competitiveness, while government officials urge returning migrants to contribute to national development.

VIET NAM
Viet Nam preparing stricter sanctions and inspection procedures to combat transshipments
(10 July 2025) Viet Nam is preparing a new government decree introducing stricter sanctions and inspection procedures to combat trade fraud and illegal transshipment, particularly of Chinese goods, in line with commitments under a preliminary tariff agreement reached with U.S. President Trump on 03 July. The agreement reduced proposed U.S. tariffs on Vietnamese imports to 20% from 46%, while maintaining a 40% levy on goods deemed illegally transshipped through Viet Nam. The draft decree mandates intensified inspections of exports to the U.S., with a focus on high‑risk categories such as wooden furniture, plywood, steel machine parts, bicycles, batteries, wireless headphones, and other electronics. It cites fraudulent practices such as forged origin certificates, fake documentation, and import of counterfeit goods, which have reportedly increased in recent years. The decree plans stricter oversight of self‑certified origin claims, enhanced on‑site inspections, and closer control over certificates of origin, though specific penalties are still under revision. The U.S. is also pressing Viet Nam to reduce dependence on Chinese components, particularly for electronics. Details on how Washington will define illegal transshipment, required domestic value‑added thresholds, and finalisation of the deal remain unclear. Bilateral trade data show Vietnam’s exports to the U.S. and its imports from China each totalled around USD 140 billion in 2024, reflecting the relocation of manufacturing since 2018 but also rising Chinese input reliance.

SINGAPORE
Singapore unveils grant to help SMEs brace for US tariff fallout
(10 July 2025) The Singapore Economic Resilience Taskforce (SERT) announced a Business Adaptation Grant to be launched by October 2025, capped at SGD 100,000 (MYR 331,000) per company, with more generous allocations for SMEs, which employ about two-thirds of the workforce. The grant will support companies exporting to or operating in overseas markets affected by tariffs, covering advisory services on free trade agreements, trade compliance, legal and contractual issues, supply chain optimisation, market diversification, and reconfiguration costs such as logistics and inventory. Manpower Minister Tan See Leng indicated further details will follow. Deputy Prime Minister and Trade and Industry Minister Gan Kim Yong said US tariffs will prolong uncertainty and reiterated Singapore’s exposure to a 10% baseline tariff. He urged continued negotiations to lower tariffs and announced plans to visit the US this month to discuss concessions on pharmaceutical tariffs and broader economic cooperation, noting semiconductor discussions will follow pharmaceutical talks. Gan added the economy should remain stable in the first half of the year but warned of slower growth in the next 6–12 months due to higher tariffs and reduced front-loading effects.

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AUSTRALIA
Australia announces AUD 1.28 billion development programme for ASEAN
(10 July 2025) Australian Foreign Minister Penny Wong announced an AUD 1.28 billion development programme for ASEAN to address needs arising from significant USAID funding cuts, including over AUD 1 billion dedicated to fostering economic prosperity, climate resilience, and regional stability. Speaking at an event organised by ISIS Malaysia and the Australian High Commission alongside the 58th ASEAN Foreign Ministers’ Meeting, Wong outlined allocations for humanitarian initiatives such as vaccination and HIV/AIDS programmes in the Philippines, and free meal schemes for children and pregnant women in Indonesia. Australia will also provide an additional AUD 16 million in humanitarian aid to Myanmar and Rohingya refugees, including in Bangladesh. The USAID cuts, announced in March and estimated by The Lancet to potentially result in 14 million avoidable deaths by 2030, prompted Australia to reaffirm its strategic partnership with ASEAN and the Indo‑Pacific, highlighting collective resilience, sovereignty, and integration over militarisation. Wong also underscored the value of middle‑power collaboration, referencing Malaysia as Australia’s largest source of international students and its fourth‑largest technology investment destination.

NEW ZEALAND
RBNZ maintains benchmark interest rate at 3.25%, signals further easing if inflation moderates
(09 July 2025) The Reserve Bank of New Zealand (RBNZ) kept its benchmark interest rate at 3.25% on Wednesday, pausing after 225 basis points of cuts since August 2024, and signalled it may ease policy further if inflation moderates as projected. Meeting minutes confirmed the decision aligned with the May projections, with the next cut likely in August given near-term inflation risks and trade tensions. Inflation stands at 2.5% and is expected to reach the top of the 1–3% target band in Q2 and Q3 2025. The RBNZ noted heightened global policy uncertainty, tariffs, and subdued global growth as headwinds to New Zealand’s recovery, which remains fragile despite lower rates and elevated export prices. The New Zealand dollar fell 0.3% to USD 0.5977, and markets pushed back expectations of further easing until August. Capital Economics projected the terminal rate at 2.5%, below the RBNZ’s implied 2.75%. The RBNZ had previously raised rates by 525 basis points from 2021–2023 to combat inflation, tipping the economy into recession, with growth still constrained by weak demand and tight fiscal policy. In contrast, the Reserve Bank of Australia left its rate at 3.85% this week, diverging from New Zealand’s sharper monetary easing path.

SOUTH KOREA
South Korea announces plans to intensify trade negotiations with the US
(08 July 2025) South Korea announced plans to intensify trade negotiations with the United States after receiving a letter from President Donald Trump on 07 July stating his intent to impose a 25% tariff on South Korean goods from 01 August, while framing the letter as an effective grace period to reach agreement. The Industry Ministry confirmed it would use the remaining time to pursue a mutually beneficial outcome, improve domestic systems addressing the US trade deficit, and advance industries through a manufacturing partnership. South Korea recorded a record USD 55.6 billion trade surplus with the US in 2024, up 25% year-on-year, mainly from car exports, while the US ran an USD 66 billion deficit with South Korea, its eighth largest. High-level talks have already taken place, with National Security Adviser Wi Sung-lac meeting US Secretary of State Marco Rubio in Washington, where both sides agreed a summit between President Lee Jae Myung and Mr Trump could advance cooperation. Mr Trump signalled openness to negotiation, saying the deadline was “firm, but not 100% firm”. South Korea, under a new administration since 04 June, acknowledged insufficient time to resolve all issues before high-level negotiations began. The US remains South Korea’s second-largest export market, worth USD 127.8 billion in 2024, accounting for 18.7% of exports, which in total represent over 40% of GDP, with semiconductors, smartphones, cars, and batteries central to global supply chains.