CARI Captures 437: Healthtech investments in Southeast Asia reach US$266m in 2019



 

ASEAN

Healthtech investments in Southeast Asia reach US$266m in 2019
(11 January 2020) Southeast Asia recorded a total of US$266 million in healthtech investments in 2019, with Singapore and Indonesia capturing around 93% of the total funding value, according to a report by a Singapore-based advisory firm. The amount is 2.25 times higher than the total of US$118 million in investments received in 2018. In terms of deal volume share, Singapore kept its lead with a 54% share, followed by Indonesia which tripled its deal volume share to 15%. The healthtech categories that received the most funding by value in Southeast Asia were health management solutions, patient solutions, medical diagnostics, medical education, and population health management.

VIETNAM

Vietnam proposes 14 initiatives for ASEAN 2020
(15 January 2020) Vietnam, as ASEAN Chair for 2020, proposed 14 initiatives, priorities and specific cooperation plans that were discussed with ASEAN member states at the first meeting of the ASEAN senior economic officials for the 51st ASEAN Economic Ministers’ Meeting held in Hanoi from 12-14 January. The initiatives were built around ASEAN’s 2020 theme, “Cohesive and Responsive,” which prioritises three areas under the ASEAN economic pillar: promoting intra-ASEAN economic integration and connectivity, intensifying partnerships for peace and sustainable development, and enhancing ASEAN’s adaptive capacity and operational efficiency. Vietnam has collected the suggestions on the proposals from participants of the meeting and will submit them to the ministers for approval.

THE PHILIPPINES

The Philippines’ economy expected to accelerate to 6.6% in 2020
(14 January 2020) The Philippines’ economy is expected to improve in 2020, rising from 6.2% growth in 2019 to 6.6% in 2020. This projected increase in growth is attributed to stronger consumer spending, growing tourism, and easing monetary conditions. The government is committed to spend aggressively on infrastructure until the end of 2020, which is expected to boost consumer spending. The country’s central bank, Bangko Sentral ng Pilipinas, is also expected to cut reserve requirement by 1-2% and potentially reduce the policy rate by 50 basis points from current levels, according to a local investment bank spokesperson. The reserve requirement currently stands at 14%.

MALAYSIA, SINGAPORE

Malaysia, Singapore committed to concluding RTS Link agreement by April 2020
(10 January 2020) Malaysia and Singapore are committed to concluding the agreement on the Johor Bahru-Singapore Rapid Transit System (RTS) Link project by April 2020, according to Malaysia’s Transport Minister Anthony Loke. The status of the RTS Link project looked uncertain after the 2018 Malaysian general elections as the then new government embarked on a review of agreements signed by the previous administration and in November 2019, Malaysia suspended the RTS Link project for the third time. Upon completion, RTS Link will connect Bukit Chagar in Johor Bahru to Woodlands in Singapore, ferrying 10,000 passengers per hour each way and is expected to ease traffic congestion on the Causeway. The project, which was meant to be completed in 2024 is now behind schedule.

MALAYSIA

Malaysia considering breaking up state-controlled firms to foster more competition
(15 January 2020) The Malaysian government has stated that it is considering divesting its “golden shares” in state-owned firms in order to foster more transparency and competition in the economy, as well as allow more participation by private investment. A golden share allows the government to outvote all other shareholders on certain matters, such as the appointment of chief executive officers. The Malaysian government said it will look at each company on a case-by-case basis but analysts warned that efforts to overhaul state-owned firms may also trigger upheaval in the market if not done through proper consultation with stakeholders and given enough time. The government’s move of slashing broadband prices after the May 2018 election has caused state-owned telecom operator Telekom Malaysia Berhad to lose almost US$1 billion in market value since May 2018.

THAILAND

Thailand avoids US ‘currency manipulator’ tag
(14 January 2020) Thailand has avoided being included in the latest watch list of “currency manipulators” issued by the US Treasury. In the 12 months through November 2019, Thailand’s goods trade surplus with the US passed the US$20 billion mark while its current surplus account exceeded 2% of its GDP, according to US government data. However, the Thai baht’s almost 9% rise against the US dollar last year means “no one should consider Thailand as one that has tried to manipulate” its exchange rate to gain an export advantage, said the country’s central bank governor in an interview on 8 January. Ten countries that are possibly using their exchange rates to gain an export advantage over the US were listed in the semi-annual report released on 13 January. Three ASEAN countries, Singapore, Malaysia, and Vietnam, remained on the list from May 2019.

MYANMAR

Myanmar economic growth expected to reach to 6.4% in fiscal year 2019/2020
(15 January 2020) The World Bank expects economic growth in Myanmar’s fiscal year 2019/2020 to rise to 6.4%, up from 6.3% in 2018/2019 and 6.2% in 2017/2018. The projected growth was attributed to increasing government investment in transportation and communication. A larger inflow of FDI into construction is also expected to boost growth. Other expected growth sectors include tourism, the services sector, and agriculture. However, pressure on core inflation is expected to intensify this year due to higher electricity tariffs and an ongoing power shortage.

INDONESIA

Indonesia’s stock market to overtake Thailand’s as the largest in Southeast Asia
(16 January 2020) Indonesia’s stock market is poised to overtake Thailand as Southeast Asia’s largest equity market by market valuation. Indonesia’s stock market gained 5.5% in US dollar terms in the last three months to reach US$529 billion, nearly matching the market value of Thailand’s which took the top spot from Singapore in May 2019. Before 2019, Singapore’s equity market had been the region’s leader for the vast majority of the time since 2003. The growth of the Indonesian bourse was attributed to President Joko Widodo’s infrastructure projects, political landscape, and reforms.

INDONESIA

Abu Dhabi Crown Prince and former British PM to chair panel on construction of new capital
(14 January 2020) Indonesia nominated Abu Dhabi’s Crown Prince Mohammed Bin Zayed Al Nahyan, former British Prime Minister Tony Blair, and SoftBank Chief Executive Officer Masayoshi Son for a panel to advise the government on the building of a new capital city in east Kalimantan province on the island of Borneo. The panel is also intended to provide confidence to prospective investors. The new capital is expected to cost around US$34 billion, and 80% of the cost will be covered by private investors and state-owned corporations. Civil servants will start moving into the city in phases starting in 2024, and the eventual population of the city is expected be about 6-7 million.

SINGAPORE

Hong Kong asset managers keen to open offices in Singapore
(14 January 2020) The protests in Hong Kong have increased the number of queries from the city’s fund managers about possibly opening offices in Singapore. According to a corporate finance consulting firm, there has been an increase in the number of applications from Hong Kong asset managers to open offices in Singapore and apply for licenses to do regulated business. The total number of fund management companies, licensed and registered by the Monetary Authority of Singapore grew 9% to 892 as of 8 January 2020 from 820 as of 31 May 2019. The corporate finance consulting firm added that while the protests accelerated the decision by Hong Kong fund managers to open offices in Singapore, it is not the main driver of the firms applying to do regulated business in the city-state.

Mekong Monitor: Challenging year expected for Vietnam’s steel industry


Photo credit: SGGP

 

TRADE, ECONOMY, AND INVESTMENT

 

VIETNAM

Challenging year expected for Vietnam’s steel industry
(15 January 2020) The steel industry in Vietnam is expected to face difficulties in 2020 due to an increase in production capacity, lower demand and protectionist measures by countries reducing imports. In 2019, exports to the US and the EU markets, the second and third largest markets for Vietnamese steel, fell by a combined 44% in terms of volume. While opportunities in 2020 such as the EU-Vietnam Free Trade Agreement is expected to boost steel production and exports, a slowdown in the Chinese economy may negatively impact steel demand, indirectly affecting steel prices in Việtnam. According to the Vietnam Steel Association, China’s steel demand is forecasted to rise by only 1% in 2020, much lower than the estimated 2019 growth rate of 7.8%.
Read more>>

THAILAND, MYANMAR

Thailand’s Kasikorn Bank to acquire a 35% stake in Myanmar’s Ayeyarwaddy Farmers Development Bank
(13 January 2020) Thailand’s Kasikorn Bank has sought approval from the Central Bank of Myanmar to acquire a 35% stake in Myanmar’s Ayeyarwaddy Farmers Development Bank. The move follows the Central Bank of Myanmar’s decision in January 2019 to allow foreign banks to hold shares in local banks. Kasikorn Bank mainly provides services in small and medium-size enterprise lending, and retail and digital banking. The acquisition will allow it to expand its reach in Myanmar by leveraging Ayeyarwaddy Farmers Development Bank’s network. Ayeyarwaddy Farmers Development Bank has registered capital worth US$27 million and assets worth US$213 million.
Read more>>

THAILAND, MYANMAR

Thailand, Myanmar to collaborate on cross border transfers
(9 January 2020) Thailand’s Siam Commercial Bank (SCB) and Myanmar’s Ayeyarwady Bank (AYA Bank) signed a memorandum of understanding (MoU) to work together on the development of cross border payments and fund transfer services between the two countries. The move cements an October 2019 agreement between the two countries’ central banks to promote the official use of the Thai baht and Myanmar kyat for cross-border trading. Trading at the Thai-Myanmar border is already conducted in baht and kyat but for payments that are processed through banks, the transactions are conducted in US dollars which results in leakages through foreign exchange losses.
Read more>>

CAMBODIA, THAILAND

Cambodia seeks further inroads into Thailand’s retail market
(14 January 2020) Cambodia is looking into ways to increase the display of its products in supermarkets across Thailand. Ouk Sorphorn, the Cambodian Ambassador to Thailand has asked Thailand’s Siam Piwat Company Limited to distribute Cambodian goods in its retail outlets. According to him, Cambodia currently has a trade deficit with Thailand and stocking its products in Thai supermarkets can help reduce the deficit. The products to be displayed include the Kampot Pepper and Kampong Speu Sugar. A report by the Thai Embassy in Phnom Penh revealed that the trade volume between the two countries reached US$4.2 billion in the first half of 2019, marking a 7% increase over the same period in 2018.
Read more>>

VIETNAM

MoU signed for the development of sustainable clam supply chain in the Mekong Delta
(10 January 2020) Vietnam’s Ben Tre, Tien Giang and Tra Vinh provinces signed an agreement with the Netherland’s Lenger Seafoods Vietnam to establish closed clam supply chains encompassing all stages from breeding and harvesting to transporting and processing. The memorandum of understanding (MoU) was signed under the EU-funded “Inclusive and sustainable clam and bamboo value chains development in Vietnam” project carried out by Oxfam, ICAFIS and the Vietnam Chamber of Commerce and Industry in 2018-2022. The project aims to achieve sustainable clam production in the country and prevent overexploitation.
Read more>>

 


mekong-monitor-map

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: China boosts trade with ASEAN to offset declining trade with the US


Photo Credit: Nikkei Asian Review

 

Economy, Investment and Trade

 

China boosts trade with ASEAN to offset declining trade with the US
(15 January 2020) According to recent data released by China’s General Administration of Customs, China had boosted trade with ASEAN to offset declining trade with the US. It was reported that exports to Vietnam rose by 16.7% y-o-y, the Philippines by 16.3%, Malaysia by 14.9%, and Singapore by 11.6%. This comes amidst a historic low in trade with the US, with Chinese exports to the US dropping by 12.5% for 2019, while imports plunged by 20.9%. Overall, ASEAN overtook the US to become China’s second-largest trading partner in 2019.
Read more>>

Ceasefire in US-China trade war may help boost Southeast Asian property market
(14 January 2020) The stabilisation in the trade war between the US and China may help bolster the Southeast Asian property market in 2020, according to industry players at a recent real estate summit in Beijing. The uncertainty caused by the two-year trade spat between both economies pushed many Asian currencies down, deterring many property investors worried about their investment being devalued. The potential phase-one deal between the US and China announced in December 2019 puts Southeast Asia in a good spot as the currencies have begun to stabilise, according to an Indonesian property developer.
Read more>>

Chinese President Xi Jinping to visit Myanmar to boost trade and investment ties
(13 January 2020) Chinese President Xi Jinping is set to visit Myanmar on 17 January as part of commemorations of 70 years of diplomatic ties and to boost bilateral trade and investment. It is believed that both countries will seek to deepen economic relations through China’s Belt and Road Initiative, while also discussing stalled Chinese projects such as the Myitsone hydropower dam project in Kachin state and its deep-sea port and special economic zone in Rakhine state. One academic stated that the fact that Myanmar was chosen as Xi’s first state visit of 2020 highlights the strategic importance of Myanmar to Beijing.
Read more>>

Thai brands hope to tap Chinese market through Chinese tourists
(13 January 2020) Several Thai brands hope to gain popularity among Chinese tourists visiting the country, looking to use them as a gateway to the Chinese market. It is believed that around 10.5 million people from mainland China visited Thailand in 2018, taking home local products including dried durian and mango, beauty creams, coconut waters, and latex pillows. While some brands prefer to sell their goods on Chinese e-commerce platforms such as Tmall.com or JD.com, others have also set up shop in China itself. However, one academic warned that only businesses with ‘financial clout and business acumen’ have made it in China, due to the high operating costs there.
Read more>>

China and Laos sign agreement to initiate direct currency exchange

(13 January 2020) The central banks of China and Laos signed the Agreement on Bilateral Local Currency Cooperation on 6 January 2020 in Beijing. Through the agreement, both countries agreed to facilitate the direct exchange of the Lao kip and the Chinese yuan instead of having to make conversions to other currencies. Under the currency cooperation agreement, both central banks agreed to enhance cooperation and advance settlements and payments for trade and investment between the residents of both countries. It is hoped that through the agreement monetary and financial cooperation would be boosted, while also facilitating trade and investment.
Read more>>

Press Release: Vietnam should galvanise ASEAN to support the call for world economic peace during ASEAN 2020 Chairmanship


Vietnam should galvanise ASEAN to support the call for world economic peace during ASEAN 2020 Chairmanship


(From left): Tan Sri Dr. Munir Majid, Chairman of CARI and ASEAN-BAC Malaysia; and H.E. Dr. Le Quy Quynh, Ambassador of Vietnam to Malaysia

 

Kuala Lumpur, 14 January 2020 – Vietnam, as the ASEAN Chair for 2020, will focus on enhancing ASEAN solidarity, economic integration and identity while being more responsive by promoting ASEAN pro-activeness, under the ASEAN 2020 theme, “Cohesive and Responsive”.

The key agenda for Vietnam this year includes boosting intra-ASEAN trade and investment through regional dialogues and discussions; the development of the circular economy through a best practices sharing platform; and the development of a Digital Integration Index to monitor and improve the key areas under the ASEAN Digital Integration Framework.

H.E. Dr. Le Quy Quynh, Ambassador of Vietnam to Malaysia presented at the exclusive event titled “CARI Briefings: ASEAN 2020 Outlook and Vietnam’s ASEAN Chairmanship 2020.”

“ASEAN as a whole must stand together and speak out for a rules-based international order to meet the challenges of an increasingly unstable international security and trade environment. In this time of global uncertainty, which was recently heightened by the ongoing US-Iran standoff, unity and solidarity among ASEAN Member States remain crucial as is ASEAN centrality in the international arena,” said Dr. Quynh.

Dr. Quynh explained that for ASEAN to be a more responsive force on the global stage, Vietnam intends to improve institutional capacity through institutional reforms and improvements in the rules of procedures and processes within ASEAN-led mechanisms. The adoption of ASEAN Outlook on the Indo-Pacific (AOIP) in 2019 under Thailand’s chairmanship demonstrates ASEAN’s unity in its desire to maintain a central role in regional integration efforts. Designed as a guide to cooperation in the region, particularly the Asia-Pacific and Indian Ocean regions, the AOIP could also serve as a guide on how ASEAN can address other future issues threatening peace and prosperity in the region.

Tan Sri Dr. Munir Majid, Chairman of CIMB ASEAN Research Institute (CARI), who delivered the keynote presentation at the briefing expects Vietnam’s chairmanship of ASEAN to demonstrate a more robust leadership that would go beyond its theme of “cohesive and responsive” to being action-oriented and proactive.

“Vietnam should next take the lead in galvanising ASEAN towards challenging anti-international trade and the rules-based world economy, by speaking with one voice with a well-prepared stance, at APEC, at the G-20 (both coming up in November). ASEAN must be the region that leads the call for world economic peace,” said Tan Sri Munir.

The percentage for intra-ASEAN trade has dropped to 23.0% in 2018 even though the value of intra-ASEAN trade in goods increased from US$591 billion in 2017 to US$647.5 billion in 2018.

“Trade is the lifeblood of the US$3 trillion ASEAN economy, constituting 90% of its GDP. Improving intra-ASEAN trade (and investment) is essential at a time particularly of headwinds against international trade. ASEAN must be the region that leads the call for world economic peace,” said Tan Sri Munir.

He added that another area of concern hindering ASEAN trade is non-tariff barriers.

“Vietnam should focus on reducing the non-tariff barriers which make a nonsense of the ASEAN Economic Community (AEC). They have been rising instead of falling since the AEC was pronounced in Kuala Lumpur in 2015. Intra-ASEAN trade has stubbornly stuck at less than 25%. Even intra-RCEP trade is higher at 32%,” Tan Sri Munir pointed out.

ASEAN performed well in 2018, having risen to the fifth-largest economy in the world with a nominal GDP totalling US$3.0 trillion and capturing its highest ever total FDI inflows of US$154.7 billion. However, after achieving a growth rate of 5.2% in 2018, forecasts predict a year-on-year slowdown in 2019 before the growth rate is expected to pick up in 2020, explained Tan Sri Munir.

CARI Captures 436: Indian restrictions on refined palm oil may cause price war between Malaysia and Indonesia


 

MALAYSIA, INDONESIA

Indian restrictions on refined palm oil may result in price war between Malaysia and Indonesia
(9 January 2020) The Palm Oil Refiners Association of Malaysia claimed that India’s move on 8 January to amend the import of refined palm oil to ‘restricted’ will lead to a price war between Indonesia and Malaysia on crude palm oil sales to India. This is because Malaysia would now have to compete on crude palm oil sales to India, where Indonesia has traditionally been more cost-competitive. The recent restrictions could amount to quotas or more regulations. It is widely suspected that India’s move was due to diplomatic rifts with Malaysia over the fugitive preacher Zakir Naik and comments made by Malaysian Prime Minister Mahathir over Kashmir. A recent report by a prominent Indian news outlet suggested that India may consider imposing formal checks on Malaysia’s exports of palm oil and electronic goods.

MALAYSIA

Malaysia’s shadow economy takes up 20% of GDP, claims finance minister
(8 January 2020) Malaysia’s Finance Minister Lim Guan Eng stated that Malaysia’s so-called shadow economy comprises 20% of its GDP, referring to it as ‘uncommonly high for a developing country’ (which is normally around 12%). He described the shadow economy as consisting of corruption, smuggling, and unreported income, and that the 1MDB financial scandal alone was worth RM52 billion (US$13 billion). He also stated that the government’s tax revenue target for 2020 is RM155 billion (US$38 billion), as compared to RM145 billion (US$35 billion) in 2019.

TINDONESIA

Indonesia’s 2019 budget deficit rises to 2.2%
(7 January 2020) Indonesia’s 2019 state budget deficit reached 2.2% of its GDP, higher than the 1.8% government target due to a revenue shortfall of around US$15 billion. According to Finance Minister Sri Mulyani Indrawati, the government collected US$142 billion in state revenue in 2019, which was below the targeted amount of US$157 billion. The shortfall in tax revenue totalled US$18 billion, the lowest in at least five years. The lower tax revenue was the result of contractions in the manufacturing sector and mining industry.

THE PHILIPPINES

Instability in the Middle East expected to impact the economy
(8 January 2020) Instability in the Middle East could potentially affect the Philippine economy due to possible reduction in remittances if the situation escalates. Almost 2.3 Filipinos work abroad, with an estimated 1.25 million working in the Middle East. Remittance payments to families of overseas workers contribute significantly to the Philippine economy as the average Filipino overseas worker sends back US$1,630 back annually. Foreign remittance payments account for the second-largest source of foreign capital and contribute more than 10% to the country’s GDP. If the situation in the Middle East escalates and Filipino overseas workers are forced to return from Iraq and Iran, the families of the overseas workers stand to lose around US$12 million annually.

THE PHILIPPINES

The Philippines’ 2019 inflation reaches 2.5%, staying within government target
(7 January 2020) The inflation rate in the Philippines reached 2.5% in December 2019, bringing the entire year’s inflation rate to 2.5%. This was within the government’s 2019 target range of 2.0%-4.0%, according to the Philippines Socioeconomic Planning Secretary Ernesto Pernia. The inflation in December was primarily driven by the increase in the prices of both food and non-food items as a result of typhoons and rising oil prices. According to Pernia, even though the inflation rate was within the targeted range, the government must remain vigilant and proactive in managing the effects of potential price pressures caused by events such as typhoons, African swine fever and the heightened conflict in the Middle East.

SINGAPORE

Singapore exchange to remove quarterly reporting requirements starting in February
(9 January 2020) The regulatory arm of Singapore’s bourse plans to end requirements for listed companies with market capitalisation of above US$56 million to report their quarterly earnings. The rule change will take effect on February 7, and will only apply to companies not deemed as risky. Other changes to take effect include the tightening of other disclosure rules and the introduction of a new whistleblowing policy to protect investors. The Singapore Exchange Regulation stated that these changes were to encourage companies to focus ‘on the long term’. The quarterly reporting requirements will still apply to 100 companies when the rules change in February.

THAILAND

Thailand now at risk of being deemed currency manipulator by US Treasury
(8 January 2020) Thailand is now at risk of being placed on the US Treasury’s currency manipulators watchlist after its 12-month trade surplus with the US exceeded US$20 billion. The surplus had reached US$20.05 billion in the 12 months through November according to recent US data. This comes amidst the Thai government’s efforts in stemming the rise of the baht as one of Asia’s fastest appreciating currency, with a 6% gain against the dollar over the past year. Bank of Thailand Governor Veerathai Santiprabhob recently stated that Thailand is engaged in close dialogue with US officials concerning the matter.

THAILAND

Thailand Central Bank to further ease restrictions on capital outflows to ease gains in the baht
(8 January 2020) The Bank of Thailand Governor Veerathai Santiprabhob has stated plans to ease restrictions on capital outflows in the coming months to curb gains made by the baht. Thailand’s central bank has been struggling to rein in the baht after it gained almost 6% against the dollar over the past year, hurting tourism and exports. Among the plans the bank have considered include increasing the amount of proceeds exporters can hold overseas, the liberalisation of foreign-currency deposit accounts, and allowing insurance companies to invest more abroad. Previous measures taken by the central bank to curb the baht’s gains have included cutting interest rates to a record low last year.

MYANMAR

ASEAN countries contributed over 46% of Myanmar’s total FDI during the period 1988-2019
(8 January 2020) According to Myanmar’s Ministry of Investment and Foreign Economic Relations, Myanmar has potential investments from ASEAN countries such as Singapore and Thailand for the fiscal year 2019/2020. It was further revealed that between 1988 to November 2019, all nine ASEAN countries invested a total amount of US$38 billion into Myanmar, which was equivalent to over 46% of total foreign investment into the country.

ASEAN

Consumer sector in ASEAN set for a soft start in 2020
(6 January 2020) The beginning of 2020 for ASEAN’s consumer sector is set for a soft start due to macro headwinds and soft consumer sentiments, according to a research report. Singapore, Malaysia and Thailand are expected to see an uptick in GDP but the increase will still be below the countries’ historical trends. On the other hand, the Philippines’ consumer market is projected to recover after it was hit during the period 2018-2019.

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


Photo credit: Viet Nam News

 

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.
Read more>>

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.
Read more>>

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.
Read more>>

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.
Read more>>

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.
Read more>>

 


mekong-monitor-map

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.
Read more>>

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.
Read more>>

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.
Read more>>

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.
Read more>>

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.
Read more>>

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%.
Read more>>

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.
Read more>>

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.”
Read more>>

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.
Read more>>

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.
Read more>>

 


mekong-monitor-map

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


Photo Credit: Shutterstock

 

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.
Read more>>

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.
Read more>>

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.
Read more>>

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.
Read more>>

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.
Read more>>