CARI Captures Issue 586: Workers in Southeast Asia expected to see larger salary bumps in 2023 due to persistent inflation and labor crunch
ASEAN
Workers in Southeast Asia expected to see larger salary bumps in 2023 due to persistent inflation and labor crunch
(28 December 2022) Workers across Southeast Asia are expected to see bigger salary bumps in 2023 as companies seek to retain talent in the face of persistent inflation and labor crunch. According to a survey carried out by services companies Aon, median salary increase budgets across industries in 2023 are forecast at 6.8% for Indonesia, 5.1% for Malaysia, 6.0% for the Philippines, 4.7% for Singapore, 5.1% for Thailand and 7.9% for Viet Nam. With the exception of Malaysia, all figures are expected to exceed 2022 rates. While inflation plays a significant role in driving salary changes within ASEAN, the shifts are also due to supply and demand in the labor market, with high attrition rates in 2022 putting pressure on employers to boost compensation to ease hiring and retention. Another survey by consultancy Mercer released in November 2022 projected that markets in the Asia-Pacific region would see an average 4.8% increase in overall salaries in 2023, a slight jump from 4.6% in 2022.
MALAYSIA
Malaysian export prices fell 0.7% in November 2022 while import value barely moved
(28 December 2022) According to the most recent statistics by Malaysia’s Department of Statistics (DOSM), Malaysian export prices fell by 0.7% in November 2022, while the import value index barely moved. In their statement, the DOSM noted that the export unit value index dipped to 148.7 points from 149.7 points in October 2022, while the import unit value index eased by a marginal 0.01% to 133.2 points. The DOSM also noted that Malaysia’s terms of trade continued to decline by 0.7% month-on-month to 111.6 points in November 2022. In terms of the export volume index, it had decreased by 0.4% in the same month. Malaysia’s terms of trade maintained a positive year-on-year growth of 4.3% compared with 107.0 points in November 2021.
SINGAPORE
Singapore’s Internet tech rout intensifies with US$110 billion wipeout for both Sea Ltd and Grab combined
(28 December 2022) The tech rout currently roiling Singaporean markets has been intensified by the US$110 billion wipeout for both Sea Ltd and Grab Holdings, both the largest tech firms in Singapore by market capitalization. Sea Ltd saw its market capitalization plunge by 78% in 2022 while Grab Holdings’ has more than halved. Higher interest rates and a slowing economy has created a challenging environment for Singapore’s tech firms, as investors increasingly begin to question their ability to turn a profit. The MSCI Singapore gauge has lagged the Straits Times Index — which doesn’t count Grab and Sea as its members and is more focused on old-economy sectors like banking and property — by about 20 percentage points in 2022. The outlook for Singaporean tech firms remains dim as concerns over a potential recession have triggered layoffs, closure of business units, and other measures to rein in expenses across the tech industries.
MALAYSIA
Malaysian conglomerate Berjaya Corp mulling potential acquisition of financial services firm
(28 December 2022) Malaysian consumer-to-property conglomerate Berjaya Corp is currently evaluating the potential acquisition of a licensed financial services entity governed by the central bank. To facilitate the potential purchase of a 51% equity stake, Berjaya Corp said its founder and major shareholder Vincent Tan Chee Yioun intends to pare down his stake to not more than 19.6% by the end of January 2023. Tan currently owns an 18.84% stake in Berjaya. Under Malaysia’s financial services act, no individual should hold more than 10% of a licensed entity governed by the country’s central bank. Berjaya currently has businesses in the financial services sector via units including stockbroking firm Inter-Pacific Securities Sdn Bhd and general insurer Berjaya Sompo Insurance Bhd.
MALAYSIA
Malaysia to present its 2023 budget on 24 February, 2023, according to new government
(29 December 2022) The Malaysian government will present its budget for 2023 on 24 February, 2023, according to a schedule published on its parliament’s website. The previous administration of Prime Minister Ismail Sabri had on 07 October, 2022 unveiled a smaller budget for 2023, but it was never approved as parliament was dissolved to make way for national elections in November 2022. Newly-elected Prime Minister Anwar Ibrahim, who is also the nation’s finance minister, is expected to present an updated budget when parliament convenes in February 2023. Prime Minister Anwar Ibrahim has ordered a review of government subsidies programmes, aiming to direct money towards lower-income groups. Malaysia is estimated to spend a record US$17.4 billion on subsidies in 2022.
VIET NAM
Viet Nam’s GDP grows at 8.02% in 2022, fastest pace in 25 years
(29 December 2022) Viet Nam’s GDP grew at 8.02% in 2022, the fastest pace in 25 years, backed by strong domestic retail sales and exports. The reading is higher than the official growth target of 6.0%-6.5% and growth in 2021 of just 2.58%, when COVID-19-related lockdowns impacted factory activity. Viet Nam’s high annual growth comes despite fears of a global recession and its impact on demand for Vietnamese exports. Viet Nam is a key manufacturer of goods like textiles, footwear and electronics for big-name international brands. GDP growth in the fourth quarter of 2022 was measured at 5.92%, slowing from an expansion of 13.71% in the third quarter. Exports in 2022 were up 10.6% to US$371.85 billion, while retail sales rose 19.8%.
VIET NAM, LAO PDR
Viet Nam and Lao PDR agree to intensify cooperation in areas of agriculture, forestry, fishing and rural development
(29 December 2022) Viet Nam and Lao PDR agreed to intensify their cooperation in the areas of agriculture, forestry, fishing, and rural development. During a meeting between the Minister of Agriculture and Rural Development of Vietnam, Le Minh Hoan, and the Minister of Agriculture and Forestry of Lao, Phet Phomphhiphak, both countries examined their plan with regards to cooperation in the above mentioned areas. Both countries also reviewed their cooperation for the 2017-2021 period. In terms of intensifying cooperation, there was emphasis on the training of human resources, technical support, the exchange of experts and the promotion of aid projects from Viet Nam to Lao PDR. In order to strengthen trade and investment ties, both parties also called for promoting connectivity in agriculture between both companies, hold frequent exchanges, and establish a joint agricultural business association.
RCEP Monitor
CHINA
Hong Kong drops almost all of its remaining COVID-19 restrictions to revive its economy
(28 December 2022) Hong Kong has dropped almost all of its remaining COVID-19-related restrictions as well as compulsory testing for arrivals as the city aims to revive its economy. Hong Kong’s chief executive announced on 28 December, 2022 that travellers would no longer be required to undergo PCR testing on arrival from 29 December, 2022 onwards, and would only need to present evidence of a negative rapid antigen test. A ban on gatherings of more than 12 people will also be scrapped, although the city’s outdoor mask mandate remains. Close contacts of positive COVID-19 cases will also no longer be required to isolate at home or quarantine at government facilities. Hong Kong may experience an economic rebound after the restrictions are relaxed, predicting 3.5% to 4% GDP growth in 2023 following a projected 3.2% contraction in 2022.
SOUTH KOREA
South Korea to raises electricity prices for first quarter of 2023 by 9.5% quarter-on-quarter
(30 December 2022) South Korea will raise electricity prices for the first quarter of 2023 by 9.5% quarter-on-quarter, the largest-ever quarterly increase. The amount of increase for the second quarter of 2022 and beyond will be decided after reviewing trends in global energy prices, domestic inflation and the financial standings of public enterprises. The Korea Electric Power Corp (KEPCO) is expected to post a deficit of more than US$23.73 billion in 2022, due to a rise in global energy prices which has not been reflected in domestic prices in a timely manner. South Korea’s energy minister stated that adjustments in electricity and gas prices are inevitable to ensure the sustainability of energy supplies. In terms of gas prices, the government decided to hold prices for the first quarter of 2022, before reviewing it in the second quarter and thereafter.
SOUTH KOREA
South Korea’s chip production fell in November 2022 by the most since 2009, reflecting deepening industry downturn
(29 December 2022) South Korea’s chip production fell in November 2022 by the most since the global financial crisis in 2008, reflecting the deepening downturn in the chipmaking industry. South Korea’s chip output decreased for a fourth consecutive month in November 2022, sliding 15% year-on-year in its biggest drop since 2009. Output was down 11% month-on-month while semiconductor inventories surged more than 20% year-on-year. With the global demand for technology products hit by high inflation after a two-year boom during the COVID-19 pandemic, there has been a sharp increase in inventories caused by a supply glut of memory chips. It is believed that inventory destocking could be completed throughout 2023 and rebound in 2024.