Mekong Monitor: Vietnamese Prime Minister launches Vietnam’s 2020 ASEAN Chairmanship

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Mekong Monitor: Vietnamese Prime Minister launches Vietnam’s 2020 ASEAN Chairmanship

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TRADE, ECONOMY, AND INVESTMENT

VIETNAM

Vietnamese Prime Minister launches Vietnam’s 2020 ASEAN Chairmanship
(7 January 2020) Vietnamese Prime Minister Nguyễn Xuân Phúc chaired a ceremony in Hanoi on 6 January launching Vietnam’s 2020 ASEAN Chairmanship. The Prime Minister stated that Vietnam intends to build upon the achievements and efforts of previous ASEAN chairs and work to identify the future direction of the ASEAN Community until 2025 and beyond. The ASEAN 2020 theme of ‘Cohesive and Responsive’ will be centered on five priorities: strengthening ASEAN unity and regional centrality, intensifying economic integration, promoting the ASEAN identity, enhancing ASEAN’s global partnership for peace and stability, and developing the bloc’s institutional capacity and effectiveness.
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VIETNAM

Vietnam’s total export of seafood in 2019 misses goal for second year in a row
(8 January 2020) Vietnam exported a total of US$8.6 billion worth of seafood in 2019, a 2.2% y-o-y drop and lower than the year’s goal of US$10.5 billion. This is the second year in a row in which Vietnam missed its seafood export goal, exporting a total of US$8.8 billion in 2018 (well below then target of US$10 billion). The sale of shrimp, the largest contributor to Vietnam’s total seafood export value, was US$3.38 billion in 2019, a 5% reduction y-o-y. Vietnam has once again set a target of US$10 billion for its seafood exports in 2020, an expected increase of 16.3% increase from 2019.
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CAMBODIA

Cambodia benefitted from US-China trade war, claims National Bank of Cambodia
(7 January 2020) The National Bank of Cambodia has claimed in its latest report that Cambodia benefited from the trade war through the relocation of production from China to the country to avoid US tariffs. A think tank quoted stated that while Cambodia may benefit from Chinese investors seeking to relocate their production base, in the long term the country will experience negative impact due to China possibly reducing investment if a global economic crisis occurs. However, neighbouring countries such as Vietnam and Thailand have absorbed more investments from relocating companies due to superior capacity and infrastructure.
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LAOS-CAMBODIA

195 MW of electricity from Laos dam linked to Cambodia’s national grid
(8 January 2020) Nearly 200 MW of electricity from the Dan Sahong Dam in Laos was linked to Cambodia’s national grid on 7 January after tests on the dam’s four electricity generators were completed. The power linkage between interim transmitters in Laos and transmitters in Cambodia’s Stung Treng province was carried out in preparation for the official importing of power from Laos to Cambodia in the first quarter of 2020. The US$500 million dam has an installed capacity of 260 MW. Cambodia and Laos had also reached an agreement for a 2,400MW power purchase scheduled to start in 2024.
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MYANMAR

Myanmar economy expected to remain flat at 6.5% growth in fiscal year 2019/2020
(8 January 2020) A British research firm projected in a recent report that Myanmar’s economy will remain flat at 6.5% growth in the fiscal year 2019/2020. The growth forecast was reportedly the lowest yet among other projections: the ASEAN+3 Macroeconomic Research Office forecasted 7.1% while the World Bank projected a 6.6% growth. Among the reasons attributed to the flat growth was poor access to credit for the country’s SMEs (which account for a third of the contribution to Myanmar’s GDP), and the poor business environment that deters foreign direct investment. High projected inflation of 6.5% in the fiscal year and uncertainty caused by an upcoming general election will also curtail growth. Nevertheless, sectors which are expected to grow include manufacturing, trade, transportation, and tourism.
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About Greater Mekong Subregion (GMS)

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

China-ASEAN Monitor: Ant Financial applies for Singapore digital banking licence

Photo Credit: The Straits Times

Economy, Investment and Trade

Ant Financial applies for Singapore digital banking licence
(7 January 2020) China’s online financial platform Ant Financial and a consortium that includes smartphone maker Xiaomi are among those who have submitted digital bank licences to the Monetary Authority of Singapore (MAS). Ant Financial applied for a wholesale banking licence which if approved, would allow it to serve corporate clients. MAS is offering five digital banking permits to non-banks to liberalise its financial industry. Two of the licences are for full digital banks while the remaining three licences are for wholesale banks, which is the category that Ant Financial applied for. The digital lending market in Southeast Asia is projected to more than quadruple to US$110 billion by 2025.
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Malaysia to collaborate with China to establish next-gen vehicle hub in SE Asia
(7 January 2020) Malaysian automakers will collaborate with China in developing the first next-generation vehicle hub in the region. A memorandum of understanding (MoU) was signed between the Malaysian Automotive, Robotics and IoT Institute (MARii) and China Automotive Technology and Research Center Co Ltd (CATARC) for knowledge transfer, standardisation of technical standards and the construction of facilities for the establishment of a full-fledged next-generation vehicle test centre in Malaysia. Another agreement was signed between Malaysian automaker Proton Holdings Bhd and CATARC which would enable Proton to access CATARC’s vast testing facilities in China. According to MARii, the facilities are expected to be completed by 2023.
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Laos-China railway investment reaches US$980 million in 2019
(7 January 2020) Investment in the Laos-China railway totalled US$980 million in 2019 and accounted for 49.8% of total investment in the mega infrastructure projects. Over 170km of tunnels, accounting for 86.5% of those planned, have been completed. Around 52 out of the total 75 tunnels along the rail route, including the 9,384 metre Phangam Mountain tunnel, were completed ahead of schedule. More than 36km of bridges have been constructed while 97.3% of landfill work and 78.7% of the station groundwork were completed. The railway project is a cooperative initiative between the governments of Laos and China and is part of Laos’ efforts to become a land-linked country which is a part of China’s Belt and Road Initiative.
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Myanmar to export semi-processed mangoes to China
(7 January 2020) Myanmar will export 8,000 to 10,000 metric tonnes of semi-processed mangoes to China between 2020 and May 2023, according to its Ministry of Commerce. Mango processors in Myanmar have increasingly been exporting value-added mango products such as mango paste, frozen mango, preserved mango slices and dried mango, to countries that have signed agreements with the country, such as China, Singapore and Russia. Mango plantations in Myanmar cover 250,000 acres of land across the country and the fruits are exported mainly to China, India, Bangladesh, Thailand, South Korea, Singapore and Japan. In its 2017/2018 fiscal year, Myanmar exported 50,000 tonnes of Seintalone (Diamond Solitaire) mangoes and aims to increase the export volume of Seintalone mangoes to 100,000 tonnes in 2020.
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China, Laos look to a shared future
(7 January 2020) Chinese president Xi Jinping reiterated China’s firm support for Laos in safeguarding its national sovereignty and territorial integrity and called for further development of the China-Laos comprehensive strategic cooperative partnership during Lao prime minister Thongloun Sisoulith’s visit to Beijing. In a separate meeting on the same day between Chinese premier Li Keqiang and Laotian officials, China conveyed its readiness to promote the construction of major infrastructure projects and strengthen cooperation in finance and agriculture and welcomes the entry of high-quality agricultural products from Laos into the Chinese market.
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CARI Captures 435: The Philippines sees 6.5% to 7.5% growth between 2020 and 2022

THE PHILIPPINES

The Philippines sees 6.5% to 7.5% growth between 2020 and 2022
(18 December 2019) The Philippines’ economy is projected to grow by 6.5% to 7.5% in the next three years following the country’s “stable economic performance” this year, said socioeconomic planning secretary Ernesto Pernia. He added that the country’s GDP growth is expected to come in between 6.0% to 6.5% in 2019 fuelled by lower inflation, higher domestic consumption and robust public spending. Nevertheless, Pernia noted that the Philippines must be prepared to meet the looming challenges in 2020 such as slowing global trade and weaker global growth.

THE PHILIPPINES

The Philippines to focus on trade deal negotiations in 2020
(16 December 2019) Negotiations for free trade agreements (FTA) with countries such as the United Arab Emirates (UAE), South Korea and the US will be high on the Philippines government’s agenda in 2020, said trade secretary Ramon M. Lopez. According to him, the government plan to seal a deal with the UAE before 2021 that aims to secure cheaper oil imports for the Philippines and increase industrial and agricultural product exports to the UAE. Trade between the countries rose 42.7% from US$1.5 billion in 2017 to US$2.1 billion in 2018.

THE PHILIPPINES

The Philippines to provide US$592 million to support manufacturers
(14 December 2019) The Philippines’ trade secretary Ramon M. Lopez announced the launch of a US$592 million fund known as the Securing Manufacturing Revitalization & Transformation (SMART) Program that aims to support high-potential local manufacturing projects. More specifically, the SMART programme will be open to manufacturing projects that promote (i) global value chain upgrading, (ii) social benefits such as electric vehicles, (iii) economic growth through Industry 4.0, (iv) commercialisation of innovative research, (v) closing gaps in supply chains, and (vi) industrial development in rural areas.

INDONESIA

Indonesia records trade deficit in November as imports increased m-o-m
(16 December 2019) Indonesia’s trade balance took a turn from October’s US$161.3 million surplus to a US$1.33 billion deficit in November — the country’s biggest deficit yet since the US$2.29 billion deficit it saw in April. Exports fell by 5.67% on the year to US$14.01 billion, while imports fell by 9.24% on the year to US$15.34 billion. According to Indonesian statistics agency head Suhariyanto, the decline was due to slowing international trade caused by trade tensions between the US and China which led to lower export demand.

SINGAPORE

Singapore’s exports continue downtrend with 5.9% fall in November
(17 December 2019) Singapore’s non-oil domestic exports continued to fall for a ninth consecutive month in November with a 5.9% year-on-year decline despite growing by 5.8% on a month-on-month basis. According to Enterprise Singapore, the fall was largely due to the 23.3% year-on-year plunge in exports of electronics, led by a decline in exports of integrated circuits (-36.5%), personal computers (-25.1%) and disk drives (-35.7%). Meanwhile, other non-oil exports rose by 1.3% in November, led by an increase in exports of non-monetary gold (249.3%), specialised machinery (15.5%), and non-electric engines and motors (40.1%).

MALAYSIA

Malaysia approves US$1.3 billion in manufacturing investments
(16 December 2019) Malaysia’s National Committee on Investment (NCI) announced that they have approved four manufacturing investments in four states worth US$1.3 billion on December 12, including a US$483.4 million glass manufacturing project in an industrial park in Sabah state’s Kota Kinabalu Industrial Park. According to the NCI, the project in Sabah is expected to create over 1,000 jobs, 80% of which will go to Malaysians. According to trade minister Darell Leiking, the country’s services, manufacturing and primary sectors received US$36.0 billion in investments from January to September 2019.

MALAYSIA

Liberalised permit for transshipment to be gazetted in 2020
(17 December 2019) The Malaysian government is expected to gazette new, liberalised regulations in the first quarter of 2020 aimed at easing the transshipment process for goods transiting through the country’s ports. According to transport minister Anthony Loke, the new regulations will see a significant reduction in the classes of goods that require an approved permit to transit through Malaysian ports from 74 classes to 20 classes. The move comes as part of plans to boost the competitiveness of Malaysian ports by reducing red tape and expediting turnaround times for shipping liners.

THAILAND, INDONESIA

Bangkok Bank takes over PT Bank Permata for US$2.7 billion
(12 December 2019) Thailand’s Bangkok Bank announced that it plans to acquire an 89.1% stake in Indonesia’s Bank Permata for around US$2.7 billion. Bangkok Bank is presently Thailand’s second-largest bank by assets, while Bank Permata is owned by Standard Chartered and PT Astra International, with each holding a 44.6% stake. The move comes as Bangkok Bank looks to expand its presence in ASEAN markets to become a regional player, while Standard Chartered looks to reduce costs in countries such as Indonesia which it no longer considers a core market.

INDONESIA-EU

Indonesia takes EU to WTO over palm oil dispute
(16 December 2019) Indonesia submitted an official request to the World Trade Organization (WTO) on December 9 to initiate a lawsuit against the European Union for its decision to phase out the use of palm oil in biofuel blends in EU member states by 2030. According to trade minister Agus Suparmanto, Indonesia hopes that the lawsuit signals the government’s seriousness in combating discrimination against palm oil, and that they hope the EU will respond by withdrawing its RED II policy and the high-risk Indirect Land Use Change status that was imposed on palm oil.

VIETNAM-US

The US slaps duties of up to 456% on Vietnamese steel products
(17 December 2019) The US Department of Commerce announced that it will impose tariffs of up to 456% on corrosion-resistant steel (CORE) products and cold-rolled steel (CRS) products imported from Vietnam. The ruling was made when the agency found that much of these exports were actually produced in South Korea and Taiwan, then shipped to Vietnam for minor processing before being exported to the US to circumvent the US’s anti-dumping and anti-subsidy duties. Shipments of CORE and CRS products from Vietnam to the US have surged by 4,353% and 922% respectively in recent years.

Mekong Monitor: Cambodia-Vietnam trade likely to have exceeded US$5 billion mark

Photo credit: SPM

TRADE, ECONOMY, AND INVESTMENT

CAMBODIA, VIETNAM

Cambodia-Vietnam trade likely to have exceeded US$5 billion mark
(15 December 2019) Trade between Cambodia and Vietnam may have already exceeded US$5 billion, said Cambodian Prime Minister Hun Sen. He believes the trade volume, targeted for 2020, may have already been reached due to trade figures not reflected in official data. According to him, exports of goods such as rice and farm produce along the border are not registered on the trade list. On another note, Vietnam invested in 206 projects in Cambodia last year worth a total of US$3.02 billion. Vietnam’s investment in Cambodia is largely concentrated in agriculture and forestry, accounting for nearly 70.0% of total registered capital while investment in finance, banking and insurance accounted for 9.4%.
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VIETNAM

Trade pacts cost Vietnam US$558 million in import duties in the first 11 months of 2019
(15 December 2019) Vietnam’s 12 existing trade pacts have so far cost the country US$1.25 billion in forgone import duties and US$558 million in the first 11 months of 2019 alone. According to its Ministry of Finance, import duties accounted for 21.85% of the country’s customs revenue in 2017, but only 17.40% in 2018 and 16.70% from January to November this year. Nevertheless, Vietnam’s customs revenue has seen steady growth as it collected US$13.74 billion in the 11 months of this year, up from 2018’s US$13.53 billion and 2017’s US$12.76 billion.
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CAMBODIA-EU

Cambodia responds to the EU over human rights concern
(12 December 2019) The Cambodian government said last week that it has responded to the European Union’s (EU) threat to suspend its Everything But Arms (EBA) trade privileges with a “comprehensive report on the actions and measures undertaken by the Royal Government to respond to all the areas of concerns” and that they expect the EU to take into consideration the potential impact that the EBA withdrawal would have “on nearly one million female workers” and their families, as well as the “principles of sovereignty and non-interference into Cambodia’s internal affairs.”
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LAOS-US

Laos to work with US on improving its business environment
(16 December 2019) Laos’ Ministry of Industry and Commerce announced that they will cooperate with the US Agency for International Development (USAID) to implement a five-year “New Lao Business Environment Project” that aims to improve the country’s business environment through capacity building and advisory services. This would include improving the country’s trade-related laws, policies and regulations, in addition to boosting the competitiveness of Laos’ small and medium enterprises. According to US ambassador to Laos Rena Bitter, the US has invested US$22 million in recent years to help boost the Lao economy.
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MEKONG

Taco Bell keen to expand in the Mekong region
(12 December 2019) Siam Taco, the Thai franchisee of American fast-food chain Taco Bell, is in talks with the US franchiser to acquire the rights to expand the chain to Cambodia, Laos, Myanmar and Vietnam. The company, which received the right to launch the first Taco Bell restaurant in Thailand in 2018, opened its first branch in Thailand in January 2019 and currently has four branches in Bangkok and one in Nonthaburi. Taco Bell currently has stores in 11 countries in the Asia Pacific region, including Thailand and the Philippines. New restaurants are scheduled to open in Indonesia and Malaysia in 2020.
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About Greater Mekong Subregion (GMS)

China-ASEAN Monitor: Vietnamese fruit exports to China plunge 13.7% y-o-y

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Economy, Investment and Trade

Vietnamese fruit exports to China plunge 13.7% y-o-y
(11 December 2019) The value of fruit exports from Vietnam to China recorded a 13.7% year-on-year fall to US$2.08 billion from January to November following tighter import restrictions enforced by China which took effect on May 1 this year. Vietnam’s coconut exports fell the most at 34.9%, followed by watermelon exports which fell by 24.6%. Nevertheless, the fall in exports to China was offset by exports of the same to the US, South Korea and Japan — leading to a mere 0.6% year-on-year fall in total exports to US$3.5 billion during the period.
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Vietnam’s cashew nut exports to China rise by 58.0% y-o-y from January-October
(16 December 2019) Exports of Vietnamese cashew nuts to China recorded a 58.0% year-on-year rise in volume totalling over 58,100 tonnes and a 36.3% year-on-year rise in value totalling US$447.2 million from January to October 2019, despite the fall in exports of other agricultural products due to stricter controls on the Chinese side. This sets Vietnam on track to meet its 2019 cashew nut export target of 450,000 tonnes in volume and US$3.5 billion in value. The country’s exports of farm, forestry and aquatic products grew 3.6% to US$37.3 billion during the period.
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Myanmar pineapple growers call for official export channels to China
(16 December 2019) Pineapple growers in Myanmar are calling for the government to establish official export channels to sell their produce to China following the Chinese government’s ban on imports of pineapple and avocados from Myanmar this year. According to an industry association, the ban led to local growers losing US$458 million as they were unable to sell around 24,800 tonnes of their produce from the previous harvest season. As such, they hope for a remedy soon before the next pineapple season comes around in six months.
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High-end apartments in Singapore attract Chinese buyers
(17 December 2019) Sales of high-end apartment units in Singapore priced at above US$3.69 million (S$5 million) to Chinese buyers almost doubled in the third quarter of 2019 to 40 units, up from 21 units in the same quarter of 2018. However, sales of mid-tier units priced between US$2.21 million (S$3 million) to US$3.69 million (S$5 million) fell by 63%. According to analysts, the fall could be due to the availability of cheaper alternatives in Southeast Asia, such as in Malaysia or Thailand, which are also popular destinations for Chinese tourists.
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Startup raises Series A to bring Chinese brands to Southeast Asia
(16 December 2019) Intrepid Group, an e-commerce consultancy that focuses on helping Chinese brands penetrate the Southeast Asian e-commerce market, has raised an undisclosed sum for its Series A. The Singapore-based startup is noteworthy because the company is founded and headed by Charles Debonneuil, who previously co-founded Lazada Group. The company is expected to use the funding to expand its fleet of Chinese-speaking local teams in Southeast Asian markets such as Indonesia, the Philippines, Singapore, Vietnam, Thailand and Malaysia.
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CARI Captures 434: World Bank lowers Malaysia’s 2020 GDP forecast to 4.5% due to weaker exports and investment

MALAYSIA

World Bank lowers Malaysia’s 2020 GDP forecast to 4.5% due to weaker exports and investment
(10 December 2019) The World Bank Group lowered Malaysia’s GDP growth forecast from 4.6% to 4.5% and investment growth forecast from 1.7% to 1.4% due to slower-than-expected investment activity in the third quarter of 2019, weaker export growth, and greater uncertainty surrounding business confidence and investment intentions. Furthermore, the country’s export growth forecast is expected to remain at 0.5% in 2020 against a backdrop of prolonged uncertainty in the global economy. Meanwhile, private consumption is expected to continue expanding at 6.5%, serving as the country’s primary growth driver.

THE PHILIPPINES

The Philippines’ total trade in goods declines by 6.7% year-on-year in October
(10 December 2019) The Philippines’ trade in goods recorded a 6.7% year-on-year decline in October this year totalling only US$15.89 billion, down from the US$17.03 billion recorded in October 2018. Exports accounted for 39.8% or US$6.32 billion of the sum, while imports accounted for the remaining 60.2% or US$9.57 billion. Nevertheless, its trade in goods deficit came in at US$3.25 billion — 26.4% lower than last October’s US$4.42 billion deficit. Filipino socio-economic planning secretary Ernesto Pernia therefore urged businesses to improve their market strategies to capitalise on key products and economies of scale.

MYANMAR

Myanmar sees US$1.3 billion in investments approved in October and November
(10 December 2019) The Myanmar Investment Commission approved investment inflows worth US$1.3 billion in 41 projects during the first two months of its 2019-2020 fiscal year beginning October 2019 — representing a three-times increase from the US$465 million it saw during the same period in 2018. Most of the US$1.2 billion went to real estate and infrastructure developments, such as the Adani Group’s US$290 million port project and Goldman Fortune International’s US$350 million mixed commercial development (both located in the Yangon region).

BRUNEI

Brunei’s foreign tourist arrivals up 14.8% in Q1 2019
(10 December 2019) The number of foreign tourists visiting Brunei grew by 14.8% in the first quarter of the year to reach 81,174 arrivals, according to the Ministry of Primary Resources and Tourism (MPRT), putting the country on track to meet its 8% growth target of 300,273 air arrivals for 2019. According to tourism development head Salinah Hj Salleh, the growth is partly due to Royal Brunei Airlines’ diversification to 26 destinations this year, which includes a route to Beijing’s new Daxing International Airport.

BRUNEI-OMAN

Brunei-Oman joint venture increases capital for investments into agriculture and education
(11 December 2019) Brunei and Oman’s joint investment venture, the Oman Brunei Investment Company (OBIC), have inked an agreement to increase their capital investment in the OBIC from US$100 million to US$200 million. According to the Oman embassy in Brunei, both sides have also agreed to invest part of the additional capital in Brunei’s agriculture, food and services, and education sectors. The OBIC has thus far invested in nine projects in Oman since its establishment in 2009, and one project in Brunei — a 50% stake in aquaculture company Golden Corporation — in November this year.

VIETNAM-US

Vietnam to cut import tariffs on US agricultural products
(9 December 2019) The US has asked Vietnam to reduce import tariffs on a range of US agricultural products — a request that the Vietnamese Ministry of Finance says it will consider. According to local media, the US’s proposed tariff cuts include reductions on chicken and processed chicken meat (from 20.0% to 14.5% in 2020 and 0% in 2028), fresh apples and grapes (to 0% in 2020), wheat and processed potatoes (to 6.0% in 2020 and 0% in 2021), as well as pork (from 25.0% to 18.9% in 2020 and 0% in 2027).

INDONESIA-EU

Indonesia prepares lawsuit against EU for biodiesel import duties
(10 December 2019) Indonesia is working on filing a lawsuit against the European Union (EU) for its December 9 decision to impose tariffs of between 8.0% to 18.0% on biodiesel imports from Indonesia, said trade ministry secretary-general Oke Nurwan. However, he added that he could not reveal the government’s strategy and that they would have to “draft it first”. The EU’s most recent announcement, which follows its imposition of provisional tariffs on Indonesian biodiesel in August of this year, includes claims that Indonesia has been selling biodiesel at unfairly low prices.

INDONESIA

Indonesia introduces new e-commerce regulations
(11 December 2019) The Indonesian government announced new e-commerce regulations this week that aims to protect local consumers and businesses as the country’s digital economy looks set to triple to US$133 billion by 2025. Under the new regulations, all online vendors are required to apply for a permit in order to sell their goods, while all online marketplaces are required to utilise local data centres and domain names. Industry players did not respond favourably to the new regulations, saying that the new procedures will increase costs and stifle industry growth (especially for small and medium enterprises).

INDONESIA

US$137 billion worth of infrastructure investments in the pipeline
(10 December 2019) Indonesia has US$137 billion worth of investments in infrastructure projects in the works, 46% of which is expected to go to oil and petrochemical refinery projects, 34% to mineral processing facility developments, and the rest to transportation, tourism and other projects. According to investment minister Luhut Pandjaitan, he is also in talks with global investors to “bring in several billion US dollars” to establish the country’s sovereign wealth fund, in addition to luring big-name electronic manufacturers to build a lithium-ion car battery factory in the country.

THAILAND

Thai minimum wage could increase in 2020
(6 December 2019) Thailand’s national wage committee announced last week that it will submit a proposal to the cabinet this week to raise the national daily minimum wage from US$10.21-US$10.93 (308-330 baht) per day to US$10.37-US$11.13 (313-336 baht) per day beginning 1 January 2020. According to permanent secretary for labour Suthi Sukosol, the proposal will see workers in Bangkok, Chon Buri, Phuket, Prachin Buri, Samut Prakan and Samut Sakhon enjoy a US$0.20 (6 baht) increase, while workers in other provinces will see a US$0.17 (5 baht) increase.

Mekong Monitor: Vietnam remains Laos’ third-largest investor

Photo credit: Cambodia Ministry of Tourism

TRADE, ECONOMY, AND INVESTMENT

VIETNAM, LAOS

Vietnam remains Laos’ third-largest investor
(9 December 2019) Vietnam remains Laos’ third biggest investor with investments totalling US$4.22 billion in 413 projects to date, said Vietnamese Prime Minister Nguyen Xuan Phuc. Furthermore, Vietnam will purchase 5,000 MW of electricity from Laos from now till 2030, in addition to providing US$30.4 million in 2019 and US$139.76 million in non-refundable aid for the 2016-2020 period for infrastructure and human capital development. Trade between Vietnam and Laos reached US$940 million from January to October 2019 and is expected to reach US$1.2 billion by year-end (an increase of 12.6% y-o-y).
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VIETNAM, LAOS

Vietnam to import additional 200 MW of electricity from Laos in 2020
(9 December 2019) Vietnam will procure another 200 MW of electricity from Laos in 2020 on top of the planned procurement of 1,000 MW as the government looks to foreign sources to meet its surging energy needs. According to the Vietnamese government, the country will be short of 3.7 billion kWh of electricity in 2021 and 15 billion kWh in 2023. As such, the country is looking to meet this shortage in the near term by importing more electricity from Laos and expediting work on major local power projects.
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CAMBODIA, VIETNAM

Cambodia-Vietnam forum discusses plans for a cross-border SEZ
(8 December 2019) The governments of Vietnam and Cambodia have approved plans to develop a special economic zone (SEZ) along the countries’ shared border, said Cambodia Chamber of Commerce vice head Lim Heng. According to him, the plan is for the SEZ to be located partly in Cambodia’s Kratie province and partly in Vietnam’s Binh Phuoc province. However, if the countries find it too difficult to reconcile their respective investment laws for the project, they may instead set up twin SEZs on each side of the border. It has been noted that Cambodia may benefit from access to Vietnam’s existing free trade agreement with the US.
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THAILAND, VIETNAM

Thai investors foresee delays in Vietnamese petrochemical project
(5 December 2019) Two Thai investors, Vina SCG Chemicals Company Limited (VSCG) and Thai Plastic & Chemicals Public Company Limited (TPC), have submitted a request to the Vietnamese government to push back the commercial launch date of the Long Son Petrochemical Project by three years to December 2022 due to land acquisition delays. According to local media, the investors also hope to increase the project capital by 27% to US$5.15 billion to increase the project’s “competitiveness” and “economic efficiency” with new technologies. The project is expected to ultimately generate US$115 million in annual revenue for the government for 30 years.
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THAILAND, CAMBODIA

Thailand’s Big C supermarket opens first Cambodian outlet
(6 December 2019) Thailand’s Big C supermarket chain opened its first branch in Cambodia this week, with plans to expand to other parts of the country in the near future. The new outlet, which costs around US$6.8 million to build, is located in Poipet town. Poipet town is located on the Cambodia-Thailand border and is known as a key trade hub that hosts the countries’ main border crossing. Big C is expected to tap into Poipet’s population of 200,000 people to hire 1,200 people to operate the new branch.
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About Greater Mekong Subregion (GMS)

China-ASEAN Monitor: Malaysia-China trade expected to exceed US$100 billion this year

Photo Credit: New Straits Times

Economy, Investment and Trade

Malaysia-China trade expected to exceed US$100 billion this year
(9 December 2019) Malaysia is optimistic about achieving US$100 billion again in bilateral trade with China in 2019 after posting US$108.60 billion last year. According to a senior government official, this optimism is based on the fact that trade between the countries has already reached US$889.75 billion from January to September this year. Furthermore, Malaysia expects to welcome more high-spending Chinese tourists during Visit Malaysia Year 2020. The country welcomed 2.94 million Chinese tourists in 2018, up 29% from 2.28 million in 2017.
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Trade value at China-Vietnam border port grew 19.71%
(4 December 2019) Trade at China’s Tianpeng port on the Vietnam-Yunnan province border grew by 19.71% year-on-year in the first three quarters of 2019 reaching US$46.77 million — which also translates to a 22.86% rise in trade volume at 63,095 tonnes. According to the port authority, inbound and outbound visits through their gate also grew by 4.67% reaching 120,302 visits. Bilateral trade between China and Vietnam totalled almost US$150 billion in 2019. Chinese tourists of roughly 5 million also accounted for the largest number of Vietnam’s foreign visitors during the year.
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China greenlights 18 more Cambodian rice exporters
(9 December 2019) The Chinese government has awarded rice export licences to 18 more Cambodian rice millers, bringing the total to 44, to help the country meet its 400,000-tonne rice export quota to China in 2020. Cambodia’s rice exports to foreign markets grew by 3.4% from 497,240 in the first 11 months of 2018 to 514,149 tonnes during the same period this year. Exports to China led the way at 195,242 tonnes, followed by the EU at 174,397 tonnes, and other ASEAN countries at 69,239 tonnes.
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Chinese firm wins US$210 contract to build two MRT stations in Singapore
(10 December 2019) Singapore’s Land Transport Authority announced this week that it has awarded China Railway 11 Bureau Group with a US$210 million contract to construct two stations on the new Jurong Regional Line (JRL). The Chinese firm is expected to begin constructing the Jurong West and Bahar Junction stations in 2020 and complete them in 2026. According to a local news outlet, the 24-station JRL will be Singapore’s seventh MRT line that comes as part of the government’s plans to improve connectivity in the Jurong area and turn the Jurong area into the country’s second central business district.
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Malaysia expects more interest from Chinese property buyers in 2020
(9 December 2019) Malaysia will likely see greater interest from Chinese property shoppers next year following the government’s recent move to lower the minimum price requirement for foreign buyers on high-rise property, according to a survey conducted by Chinese property portal Juwai.com. A total of 386 Malaysian real estate agents participated in the survey, which was conducted between 6 and 21 November 2019. Based on the government’s Budget 2020, foreign property buyers will be allowed to purchase urban high-rise property that cost between US$144,120 (RM600,000) to US$240,200 (RM1,000,000) from January 1 till December 31, 2020.
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CARI Captures 433: ASEAN PMI signals sixth month of weak manufacturing activity

ASEAN

ASEAN PMI signals sixth month of weak manufacturing activity
(4 December 2019) Manufacturing firms in the Southeast Asian economic bloc saw manufacturing conditions recording a sixth consecutive month in decline in November as the bloc’s headline PMI rose to 49.2 from 48.5 the previous month, based on the latest IHS Markit Purchasing Managers’ Index (PMI) which takes into account output, new business and employment data. Myanmar, the Philippines and Vietnam were the month’s strongest performers of the seven ASEAN countries on the index, with Myanmar leading the way with its 13th consecutive month in improved operating conditions and growth.

VIETNAM

Vietnam sees US$9.1 billion trade surplus during Jan-Nov 2019 period
(29 November 2019) Vietnam recorded a 7.8% year-on-year increase in export turnover from January to November this year totalling US$241.42 billion, while its import revenue increased by 7.4% on the year reaching US$232.31 billion — resulting in a US$9.1 billion trade surplus during the 11 months. According to government data, 91.6% of its export revenue came from 30 types of goods such as phones and components which generated US$48.7 billion, and electronic products, computers and components which generated US$32.4 billion. Vietnam’s exports to the US also increased US$27.9% on the year during the period totalling US$55.6 billion.

MALAYSIA

Malaysia records approved investments of US$35.8 billion in first nine months of 2019
(2 December 2019) Malaysia approved US$35.8 billion in investments in the first three quarters of 2019, with domestic investment accounting for 55.5% or US$19.8 billion of the sum and foreign direct investment (FDI) accounting for the remaining 44.5% or US$15.9 billion. According to the Malaysian Investment Development Authority, most of these investments went to the country’s three key sectors, i.e. the services, manufacturing, and primary sectors. Total approved FDI to these sectors rose by 6.5% from US$14.9 billion during the first nine months of 2018 to US$15.9 billion this year.

INDONESIA

Indonesia to streamline laws to lure foreign investment
(2 December 2019) President Joko Widodo announced that the Indonesian government plans to merge parts of 74 existing laws into one job creation omnibus bill that they will seek to pass in January 2020. According to deputy economic affairs minister Iskandar Simorangkir, the bill will cover 11 key areas such as business permits, labour, special economic zones and SMEs. Separately, Indonesia is reportedly looking to establish a US$10 billion sovereign wealth fund similar to Singapore’s Temasek and Malaysia’s Khazanah that aims to boost the economy and invest in local startups.

INDONESIA

Indonesia plans income tax reforms and new digital tax
(29 November 2019) Indonesian finance minister Sri Mulyani Indrawati revealed that the government is working on a slew of tax reforms, which could include (i) taxing citizens and foreigners only on income that they earn in Indonesia, (ii) removing the overseas dividend tax on companies which hold under 25% in shares, (iii) lower the penalty interest rate from the current 2% per month to the market interest rate, (iv) gradually lower the corporate income tax from 25% to 22% in 2021 and 20% in 2023, (v) a five-year 3% tax break for companies that go public, and (vi) the introduction of a new digital economy tax.

MYANMAR

Myanmar awards insurance licenses to 11 firms
(28 November 2019) Myanmar has granted life insurance licences to the fully-owned subsidiaries of Britain’s Prudential, Japan’s Dai-ichi Life, Hong Kong’s AIA, US’s Chubb and Canada’s Manulife half a year after they were awarded provisional licenses — marking the first time the country has awarded licences to fully foreign-owned entities. Additionally, the government also awarded three life and three non-life insurance licences to six joint ventures between local and foreign firms. According to a report published in July, less than 4% of Myanmar’s population is covered by any form of insurance.

MYANMAR

Commerce ministry’s draft trade bill alarms private sector
(3 December 2019) A local media outlet published a report highlighting private sector concerns with regards to the government’s draft trade bill. According to the report, the bill would (i) authorise the commerce ministry to enforce price control measures on products, (ii) allow a new trade development body to issue a list of trade-related restricted items and other non-tariff regulations, (iii) regulate the e-commerce industry, (iv) require companies to apply for a trade registration certificate to carry out trading activities, and (v) apply additional regulations for the trade registration of individual traders, among other things.

THAILAND-EU

EU to continue imposing tariffs on Thai sweet corn
(2 December 2019) The European Commission announced the renewal of tariffs on sweet corn imports from Thailand for another five years effective 3 December, saying that Thai sweet corn exporters continue to unfairly undercut the bloc’s “still vulnerable and fragile” local industry through dumped prices. With this, tariffs of up to 14.3% will continue to be imposed on prepared or preserved sweet corn kernels from Thailand. Thailand’s sweet corn exports accounted for 3.9% of the EU market in the 12 months through June 2018.

BRUNEI-JAPAN

Brunei’s makes first shipment of hydrogen to Japan
(2 December 2019) Brunei flagged off its first shipment of hydrogen to Japan this week to the Toa Oil Company in Kawasaki as part of what it calls “the world’s first global hydrogen supply demo project”. The supply of hydrogen was produced in Brunei’s Sg Liang Industrial Park, where an association representing a consortium of Japanese companies have built a hydrogenation plant. A total of 210 tonnes of hydrogen will be shipped to Japan over 12 months. According to officials, Brunei was selected due to its geographic proximity to Japan and experience in liquefied natural gas production.

INDONESIA

B30 implementation gets green light after road tests
(29 November 2019) The Indonesian Energy and Mineral Resources Ministry announced last week that the country’s B30 biodiesel policy is ready to be implemented beginning 1 January 2020 as planned following a series of successful road tests over five months. According to the ministry, the tests—which involved driving 11 B30-powered vehicles for a distance of 50,000 kilometres—found that these vehicles consumed more fuel but yielded higher power and had generally lower emission levels than B20-powered vehicles. However, the ministry also noted that vehicle engine filters will need to be changed more frequently when using B30.

Mekong Monitor: Mekong countries agree to strengthen tourism cooperation

Photo credit: Cambodia Ministry of Tourism

TRADE, ECONOMY, AND INVESTMENT

CAMBODIA, LAOS

Mekong countries agree to strengthen tourism cooperation
(2 December 2019) Countries in the Greater Mekong Subregion (GMS) inked an agreement during a recent working group meeting to realise their 2020-2025 joint action plan. Under the plan, the countries will cooperate to boost tourism in their subregions, such as through joint promotional activities as well as infrastructure and human capital development. The GMS received over 67.5 million foreign visitors in 2018. Separately, the Cambodian government established a National Tourism Development Committee chaired by a deputy prime minister to help drive growth in the sector.
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CAMBODIA, VIETNAM

Cambodia and Vietnam to launch new border trade market
(1 December 2019) Cambodia and Vietnam will be launching a new border market known as Da Market in Cambodia’s Tbong Khmum province along the countries’ shared border in conjunction with the Cambodia-Vietnam Trade Fair to be held later this month. The market, which began construction in February 2018, spans 19,500 square meters in the province’s Thary Tbong Khmum Special Economic Zone. According to province officials, cross-border trade through their province reached US$970 million in 2017 and US$1.2 billion in 2018. Overall Cambodia-Vietnam trade is expected to reach US$5 billion this year.
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MYANMAR, THAILAND

Myanmar bans imports of Thai rubber trees due to fungal outbreak
(2 December 2019) Myanmar’s agriculture department has halted imports of rubber trees, seeds, seedlings and saplings from Thailand following the outbreak of a pestalotiopsis fungal infection in Thai rubber trees. The fungus is known to cause rubber trees to lose its leaves and lower the quality of latex that a rubber tree produces. According to a government official, the nationwide ban will remain in effect indefinitely though the ban is expected to have limited impact on the local rubber market since raw rubber and rubber latex can still be imported.
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THAILAND

Thailand’s cross-border trade registers 1.94% dip
(29 November 2019) Thailand’s border trade value recorded a 1.94% year-on-year dip from January to October this year totalling US$37 billion. The Commerce Ministry has largely attributed the drop to the lacklustre global economy, prolonged trade war, volatile foreign exchange and strong baht. Exports accounted for US$20.7 billion of the sum, while imports accounted for US$16.5 billion. Malaysia remained Thailand’s top border trade partner with trade reaching US$14.5 billion, while trade with Laos fetched US$5.5 billion, Myanmar US$5.4 billion, and Cambodia US$4.4 billion.
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MYANMAR

Myanmar trade unions to push for higher minimum wage
(29 November 2019) The Confederation of Trade Unions in Myanmar (CTUM) announced last week that they will submit a proposal to the national minimum wage committee proposing an increase in the wage floor from US$3.20 (4,800 kyats) to US$4.80 (7,200 kyats) per day, or US$0.60 per hour for an eight-hour work day. The new rate was determined based on survey results from eight key states and regions. Nevertheless, CTUM member U Win Zaw expects negotiations to be challenging since the proposed rate is a significant jump from the current rate.
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About Greater Mekong Subregion (GMS)