Photo credit: The Malaysian Reserve
Economy, Investment and Trade
China’s growing appetite for biodiesel increases demand for Southeast Asian palm oil
(1 April 2019) Southeast Asia saw an increase in exports of a class of palm oil biodiesel known as palm methyl ester (PME) in the first quarter of 2019 — providing a much needed respite for palm oil producers in Indonesia and Malaysia. According to Singaporean consultancy PRIMA, the increase is fueled by a surge in demand for PME from Chinese and European importers due to its low prices — which were, ironically, brought down by the European Union’s (EU) proposal to restrict the use of palm-based biofuel in its member countries. Figures from Chinese customs show that the country’s PME imports rose by almost 50 times to 751,056 tonnes in 2018. Furthermore, PRIMA provides that up to 50,000 tonnes of PME are expected to be shipped to China from March to May alone as the country looks to increase its use of alternative energy. According to palm oil brokerage firm Sprint Exim, Chinese importers are facing difficulties procuring more biodiesel for delivery in May and June as Indonesia’s plants have already reached full capacity.
The Philippines is still far from closing trade gap with China
(29 March 2019) The trade imbalance between the Philippines and China remains wide in favour of the latter, said the Philippines’ trade secretary Ramon Lopez during an interview on the sidelines of the recent China-Philippines Summit. According to data from the Philippine Statistics Authority (PSA), Chinese exports to the Philippines saw a 24.5% year-on-year increase reaching US$2.01 billion in January 2019, accounting for 22.2% of the Philippines’ total imports in that month. In comparison, the Philippines recorded a mere 2.3% year-on-year increase in exports to China during the same month, reaching only US$640.79 million or 12.1% of the country’s total exports. According to Lopez, the problem mainly lies on the supply side as Filipino manufacturers have been unable to meet the growing demand from China.
Thailand eyes 12% increase in bilateral trade with China in 2019
(1 April 2019) The Thai Commerce Ministry hopes to increase bilateral trade with China by 12% this year by boosting its exports of agricultural produce and processed products from small and medium enterprises, according to Department of Trade Negotiations (DTN) head Auramon Supthaweethum. To this end, the DTN is looking to increase the level of awareness and usage of privileges provided under the Thai-China free trade agreement as it aims to reach bilateral trade worth US$140 billion by 2021. China is Thailand’s biggest trading partner. Bilateral trade between both countries in 2018 stood at US$80.136 billion, an increase of 8.7% year-on-year. Nonetheless, Auramon said that the 12% target may have to be revised if the US-China trade war is prolonged to a point where it impacts Thai exports.
Chinese mega investments in the spotlight as Indonesia heads into election
(31 March 2019) Indonesian President Joko Widodo’s election contender Prabowo Subianto has made the legitimacy of Chinese investments in the country a key rallying point ahead of the country’s national elections on April 17. Among the Chinese investments that Prabowo has pledged to review is the US$6 billion Jakarta-Bandung high speed rail project, which Indonesian investment chief Tom Lembong previously claimed was “deeply troubled” and lacked transparency. However, Joko has insisted that the country had to embrace China in order to fund its growing infrastructure needs. Indonesia has recorded a US$18.4 billion trade deficit last year, representing a 40% increase ever since Joko took office in 2014. Nevertheless, Bloomberg quoted Lembong in saying that he expects China to announce a “more green, more transparent and more professional” Belt and Road Initiative (BRI) during the BRI summit to be held in Beijing later this month.
Sony moves smartphone production base from Beijing to Thailand
(28 March 2019) Japanese electronics giant Sony Corp announced on March 28 that it was shutting down its smartphone production facility in Beijing by the end of the month and moving its smartphone production base to Thailand. The move comes with Sony’s announcement that its handset business recorded a US$863 million loss in the financial year ending March 2019. A company spokesman said that the decision was not related to the US-China trade war, but rather, an effort by the company to turn around the ailing business. As such, Sony will only produce smartphones at a Thailand plant and through other outsourced manufacturers moving forward.