ASEAN
PETRONAS Retains Title As Most Valuable ASEAN Brand In 2022
(28 Jan 2022) Petronas has maintained its position as the most valuable ASEAN brand in the Brand Finance Global 500 2022 report with a brand value of US$13.6 billion, which is 13% higher than the previous year. Energy demand is rising as the economy recovers from the impact of the pandemic, which has allowed Petronas to bounce back this year from the challenges that the oil and gas industry had to face in 2020.

ASEAN
Nikkei: ASEAN Start up Fundrasing more than doubled in 2021
(31 Jan 2022) Southeast Asian startups raised a record US$25.7 billion in funding last year, more than double the previous year as cash-rich global investors seek to tap the region’s potential amid digitalization driven by the COVID-19 pandemic. With private equity and venture capital firms looking for investment opportunities to deploy capital they raised over the past year, experts say the Southeast Asian “gold rush” will continue in 2022, stoking momentum in the region’s startup ecosystem. But a recent tech sell-off in public markets globally highlights a changing environment, potentially affecting the valuation of growth-driven startups.

LAOS PDR
Laos undergoes leadership reshuffle
(4 Feb 2022) Laos has announced a high-level reshuffle of its leadership, less than one year after the new government assumed office last March. This is the first reshuffle of leadership since the National Assembly approved the new cabinet members last year. The change took place after the government announced the need to implement two national agendas to address economic and financial difficulties and drug trafficking. The reshuffle is aimed at strengthening administrative and government agencies in response to the changing needs of the nation to overcome challenges triggered by the COVID-19 pandemic.

MALAYSIA  
Foreign buying picks up on Bursa Malaysia
(31 Jan 2022) The pace of foreign buying on Bursa Malaysia accelerated with RM116.45mil net of equities purchased over the past trading week. According to a MIDF Research data, this was an improvement over RM11.35mil net bought over the week before. Foreign investors recorded growing interest in Malaysian equities with the largest net buying recorded on Tuesday to the tune of RM89.04mil.

SINGAPORE  
Singapore retail sales up 11.1% in 2021 after year-end rise in December.
(4 Feb 2022) Singapore retail sales surged by 11.1% year on year in 2021, reversing the previous year’s 15.3% decline and snapping a 3-year losing streak. Excluding motor vehicles, retail sales were up by 10.5% for the year. The rebound was helped by a year-end shopping spree, as retail sales expanded by 6.7% year on year in December, picking up from the 2.2% rise in the month before.

THAILAND
Thailand follows ASEAN peers in applying cryptocurrency controls 
(3 Feb 2022) Thailand’s central bank is falling in with its regional peers after announcing tougher regulation of cryptocurrencies and limiting their use for payments to ensure they can only be traded as assets on licensed platforms. The Bank of Thailand (BoT) said on Jan. 25 that it was drafting regulations to prevent Bitcoin and other cryptocurrencies from being used to make payments because the volatility of digital tokens would create risks and losses for both buyers and sellers. Other members of the Association of Southeast Asian Nations (ASEAN), including Brunei, Indonesia and Malaysia, have announced similar rules in recent years. Even in some countries where Bitcoin is popular, such as Singapore and Vietnam, the central banks do not allow crypto payments.

VIETNAM
Vietnam’s leather and footwear industry set export target of US$25 billion for 2022
(4 Feb 2022) Vietnam’s export of leather, footwear and bags this year will likely increase 10-15% year-on-year to about US$23-25 billion, the Vietnam Leather, Footwear and Handbag Association (Lefaso) has forecast. The prediction was delivered by Lefaso based on the world economic outlook and developments, control of the COVID-19 pandemic as well as several orders businesses inked for 2022. Last year, the export turnover of leather, footwear and handbags saw a modest yearly increase of 4.6% to reach US$20.78 billion. In which, footwear exports hit US$17.77 billion, up 6.1% while export of suitcase and bag products topped nearly US$3.01 billion, down 3.2%.

RCEP Monitor

INDONESIA, SINGAPORE
Singapore, Indonesia sign extradition, airspace and defence agreements
(25 January 2022) Indonesia and Singapore signed three agreements resolving longstanding bilateral issues on the occasion of the 5th Singapore-Indonesia Leaders’ Retreat held in Bintan. Under the first agreement, both countries agreed to realign their respective flight information region boundaries and continue delegating the management of parts of Indonesia’s airspace to Singapore’s air traffic controllers, though these arrangements will need to be approved by the International Civil Aviation Organisation. The second agreement provides further guidelines and safeguards for the extradition of fugitives, while the third agreement promotes closer interaction between Singapore and Indonesia’s armed forces.

INDONESIA, SINGAPORE
Indonesia opens quarantine-free travel corridor to Singapore
(24 January 2022) Travellers from Singapore can visit Nongsa in Batam and Lagoi in Bintan beginning 24 January 2022 without undergoing quarantine, though they will need to limit their activities within these locations and are not permitted to go beyond Nongsa and Lagoi. Travellers must have received two rounds of vaccinations and have a negative PCR test taken three days before travelling. They will also be tested again upon arrival, after which they will head directly to their hotel to await the test results which should be out within an hour. Travellers will also need to use the Indonesian COVID-19 tracing applications and have travel insurance.

INDONESIA, TAIWAN
Indonesia partners with Foxconn to develop electric vehicles
(24 January 2022) The Indonesian government and Taiwanese chipmaker Foxconn signed a memorandum of understanding to develop a “new energy ecosystem” and build up Indonesia’s electric vehicle industry. The Indonesia Battery Corporation, energy company PT Indika Energy, and Taiwanese electric scooter company Gogoro were also involved in the agreement. According to Foxconn, the partnership includes the development of supporting industries such as energy storage systems, battery exchange stations, battery recycling capabilities, as well as an open platform that provides electric vehicle hardware and software services. The move comes as Foxconn aims to serve 10% of the world’s electric vehicle component and services market by 2025 to 2027.

MYANMAR  
TotalEnergies and Chevron exit Myanmar gas project
(21 January 2022) Oil giants TotalEnergies and Chevron Corp announced that they have decided to withdraw from the Yadana gas project, a joint venture that the companies were involved in alongside Thailand’s PTT Exploration and Production (PTTETP) and Myanmar’s state-owned oil and gas company MOGE, citing deteriorating human rights conditions in Myanmar following last year’s military coup. The Yadana fields produce gas for power plants in Thailand and Myanmar, with 70% of it going to Thailand where it is sold to PTT. TotalEnergies’ spokesperson says that PTTEP would be the “natural” choice for its assets while PTTEP, which holds a 25.5% stake in the joint venture, says that it is “carefully considering” its next steps.

MYANMAR  
Junta backs Telenor unit sale after M1 pairs with local firm
(21 January 2022) Myanmar’s military government has reportedly approved the takeover of Norwegian telco Telenor’s local business by a joint venture between Myanmar’s Shwe Byain Phyu Group and Lebanon’s M1 Group, with the former holding the majority stake. The government previously rejected Telenor’s sale of its Myanmar business to Beirut-based M1 Group as it allegedly favoured a local buyer. Shwe Byain Phyu is a group with interests in gem mining and petrol stations, though its chairman is also a director of a consortium that holds a stake in military-owned telco Mytel. All parties either declined to comment on or were not reachable by Reuters.

CAMBODIA, VIETNAM
Cambodia-Vietnam trade reached nearly US$10 billion in 2021 
(24 January 2022) Bilateral trade between Vietnam and Cambodia rose by 75% year-on-year to reach US$9.3 billion in 2021 despite the pandemic and both sides have agreed to aim to cross the US$10 billion mark in 2022. Vietnamese businesses also invested in four new projects in Cambodia worth around US$88.9 million, bringing its total investment in the country to around US$2.84 billion and making Vietnam one of Cambodia’s top five foreign investors. These figures were revealed during a meeting between Prime Minister Hun and Vietnam’s foreign minister, where both sides also discussed plans to develop a rail connection between the two countries.

ASEAN
ASEAN looks to market Southeast Asia as a single tourism destination
(25 January 2022) The bloc’s new tourism campaign to market Southeast Asia as a single destination under the tagline “A Destination For Every Dream” was launched at this week’s ASEAN Tourism Forum held in Sihanoukville, Cambodia. The forum also saw the approval of new hygiene and safety guidelines for professionals in the region’s tourism industry, as well as the launch of the ASEAN Safe Travel Stamp which can be used by tourism industry players to assure travellers of their hygiene and safety standards. Preliminary data shared during the forum found tourism receipts in the region to have dropped by around 94% and international tourism arrivals by around 90%, while the average hotel occupancy rate across nine member states came in at around 27.5%.

RCEP Monitor

ASEAN, TAIWAN
Taiwan seeking to deepen economic ties with Southeast Asia as part of “New Southbound Policy”
(18 January 2022) Taiwanese President Tsai Ing-wen is seeking to expand economic ties with Southeast Asia as part of the “New Southbound Policy” (NSP), which seeks to reduce Taiwan’s trade dependence on China by focusing on Southeast Asia, South Asia, and Australasia. The NSP was launched in 2016, and is composed of four elements, including economic and trade cooperation, talent exchanges, resource sharing and regional connectivity. In the first 11 months of 2021, 37% of Taiwan’s total foreign direct investment went to Southeast Asia, compared with around 33% for China. In recent years, partnerships between Taiwan and Southeast Asian countries have developed in fields including agriculture, health care, tourism, education and other fields. Mutual understanding has also been fostered through the presence of Southeast Asian workers in Taiwan – there were an estimated 675,672 foreign workers in Taiwan as of the end of November 2021, mostly found in industries such as manufacturing and social care. Most foreign workers come from Indonesia, Vietnam, the Philippines and Thailand.

MALAYSIA
Malaysian civil aviation regulator approves two new airlines in 2021
(17 January 2022) Malaysia’s civil aviation industry regulator Mavcom granted approval for an air service licence (ASL) for two new airlines in 2021. These two airlines include ultra-low cost carrier MYAirline Sdn Bhd and SKS Airways Sdn Bhd. MYAirline was granted conditional approval for an ASL by the commission on 22 December, 2021. The license is valid for 12 months from 01 January to 31 December, 2022. SKS Airways was also granted an ASL on 22 December, which lasts for three years from 01 January, 2022 to 31 December, 2024. MYAirline plans to build an airline business in Malaysia and compete with Air Asia for dominance. It is reportedly a good time to build a new airline business as leasing rates for aircraft are super cheap right now, while retrenched pilots and air crews can also be hired at reasonable rates. Meanwhile, SKS Airways will focus on domestic short-range flights to island-based and coastal resorts from major cities within Peninsular Malaysia.

MALAYSIA
Palm oil prices climb to record high due to contracting supply in Malaysia
(21 January 2022) Palm oil prices in Malaysia climbed to a record high and headed for its longest streak of weekly gains since July 2021 due to contracting supply in Malaysia. Futures for palm oil for April 2022 jumped by as much as 1.3% to MYR 5,256 (US$1,256) a ton, an intraday all-time high, before trading at MYR 5,244 ringgit by 2:42 PM in Kuala Lumpur. Prices have advanced 5.8% this week, a fifth straight weekly gain for the most-active contract. Palm oil supply is expected to remain tight in the first quarter of 2022, as the country faces ongoing labor shortages. Output is expected to drop by 18% in the first 20 days of January from a month earlier. Palm oil prices are also benefiting from an overall rally in vegetable oils prices. Crude palm oil production fell by 11.3% month-on-month to 1.45 million tons in December 2021, the smallest since March and the biggest drop in 11 months due to labor-related issues and floods in some key-growing areas. Production is expected to recover in the longer term.

INDONESIA  
Indonesia announces new capital to be built in Borneo to be called Nusantara
(19 January 2022) Indonesia has announced that its new capital, to be built on the island of Borneo, will be called “Nusantara”, which means Archipelago in Bahasa Indonesia. This announcement came as its parliament approved a bill to relocate the capital from Jakarta, which is both overcrowded and sinking rapidly. The capital will be built in the province of East Kalimantan, which is mineral rich and home to a population of only 3.7 million people. The move of the capital will cost the country an estimated US$32.4 billion, and will be one of the biggest infrastructure projects ever undertaken by its government. Critics have argued that the move of the capital may have negative environmental impacts on the jungle-rich island of Borneo. Indigenous groups have also voiced their concerns.

INDONESIA  
Indonesian e-commerce firm PT Bukalapak.com loses more than half its value since IPO in August 2021
(19 January 2022) Indonesian e-commerce firm PT Bukalapak.com has lost more than half its value since raising US$1.5 billion in Indonesia’s biggest public offering. Shares closed at a record low IDR 352 on 18 January, 2022, pushing its market value below US$2.6 billion. That’s a decrease of 66% from the US$7.6 billion market capitalization recorded on its first trading day in August 2021. Concerns have been raised that Bukalapak’s IPO flop bodes poorly for upcoming tech listings that are expected to propel the Indonesian stock market to another year of record deals. This includes the planned listings of tech start-up GoTo Group and e-commerce platform Blibli, which both plan to go public in 2022. According to one observer, investors plan to focus on tech companies that will be able to report positive earnings within three to six months after their IPO. As well, the flop of Bukalapak.com’s IPO may be due to specific challenges facing the company, including its chief executive officer recently leaving to join the public sector.

SINGAPORE
Cryptocurrency ATMs halted in Singapore after authorities clamp down on marketing  
(19 January 2022) Cryptocurrency ATMs have halted operations in Singapore after being requested by the Monetary Authority of Singapore (MAS), which seeks to limit consumer marketing of cryptocurrencies. Singapore’s biggest operator of the ATMs, Daenerys & Co., ceased its services to comply with an MAS request. The five machines, mostly located in malls around Singapore, offered people a convenient way to buy tokens like Bitcoin and Ether using fiat currency. The MAS claimed that such services could encourage consumers to trade ‘on impulse’, which they believe could be dangerous given the volatile nature of cryptocurrencies. Bitcoin has recently dropped by some 40% from a peak in November 2021. Regulators in other countries such as the UK and Spain have also sought to clamp down on the consumer marketing of cryptocurrencies.

THAILAND
Thailand to resume quarantine-free travel for vaccinated arrivals from 01 February onwards
(20 January 2022) Thailand will resume its quarantine-free travel programme for vaccinated individuals from 01 February onwards, with the scheme having been suspended only a month ago after only seven weeks due to fears of the Omnicron variant. Under the “Test & Go” quarantine waiver, visitors are required to to test on arrival and again five days later, while agreeing to have their whereabouts tracked. Authorities also extended the hours restaurants are allowed to serve alcohol to 11 PM from 9 PM. Thailand’s government has also agreed to expand its other quarantine-waiver programme, the “Sandbox”, to include popular eastern beach destinations Pattaya and Koh Chang. The programme, which requires vaccinated tourists to stay in one location for a week, is currently operating in Phuket and Koh Samui.

RCEP Monitor

ASEAN, JAPAN
Japan to push for a new chapter of Japan-ASEAN economic relations
(12 January 2022) Japan is looking to bring its economic relationship with ASEAN to the next level to tap into the region’s growing middle class and digital economy, said Japanese trade minister Koichi Hagiuda during his visit to the region. According to him, Japan-ASEAN economic relations has historically centred on manufacturing and this new chapter will be built on three principles: (i) localised solutions for each ASEAN country, (ii) private sector innovation for a sustainable society, as well as (iii) collaboration between local businesses and the Asia-Japan Investing in the Future Initiative. Over 14,000 Japanese companies currently operate in ASEAN. Japan exports to ASEAN grew by 24.9% on the year in the first 11 months of 2021 to reach US$103.7 billion, while imports rose 13.2% to US$102.9 billion.

ASEAN, JAPAN
Japan to help Indonesia, Singapore and Thailand cut carbon emissions
(10 January 2022) Japanese trade minister Koichi Hagiuda signed a slew of agreements during his tour of the region, most notably agreements to help ASEAN countries lower their carbon emissions and develop their green sectors per Tokyo’s Asia Energy Transition Initiative which it launched last year. Thailand and Japan launched a framework for policy dialogues and projects to promote decarbonisation as both countries aim for net-zero greenhouse gas emissions by 2050, Singapore and Japan will cooperate on carbon capture technology and on transitioning to low-emission energy, while Indonesia will adopt Japanese power generation, carbon recycling and carbon dioxide storage technologies.

CAMBODIA, JAPAN
Cambodia to be an international logistics hub for Japan’s Aeon
(10 January 2022) Japanese supermarket operator Aeon announced plans to build a 30,000 square mater logistics hub in Sihanoukville Special Economic Zone with the Japanese government’s backing. The new logistics hub will be operational by 2023, serving Aeon’s chain of shopping malls, providing cross-border online retail services, and connecting Japanese consumer product makers to the Cambodian market. The hub will also be the country’s first bonded warehouse where Aeon can import, store and withdraw goods for low-to-no tariffs. The move comes as Aeon aims to reach US$860 million in operating profit in Asia outside Japan through 2025.

ASEAN  
Cambodia postpones ASEAN foreign ministers’ meeting
(12 January 2022) Cambodia, which holds the ASEAN Chairmanship in 2022, announced this week that the ASEAN Foreign Ministers’ Meeting (AMM) Retreat which was initially scheduled to be held in Siem Reap on 19 January 2022 has been postponed due to scheduling conflicts. A new date was not mentioned. While Malaysia’s foreign minister confirms that he would not have been able to attend the meeting, diplomatic observers say that some countries could be avoiding the meeting as a way to protest Cambodia’s decision to invite Myanmar’s junta foreign minister. Indonesian premier Joko Widodo also reiterated the country’s stance on Myanmar’s exclusion until there is significant progress on the five-point consensus peace plan.

INDONESIA  
Indonesia relaxes export ban to allow 37 coal vessels to depart
(13 January 2022) Indonesia lifted its ban on coal exports which was first put in place at the start of the year due to concerns of critically low coal supplies at domestic power plants which could lead to widespread power outages. The ban was lifted following the national electricity company’s announcement that it has procured sufficient coal to last 15 days. The shortage was caused by coal miners neglecting the Domestic Market Obligation (DMO) which requires them to sell 25% of their output domestically with a price cap of US$70 per tonne for power plants. A recent study estimated that 490 of Indonesia’s 631 coal miners, who represent around 35-40% of total production, have yet to meet the DMO requirement.

VIETNAM
Vietnam approves US$15.4 billion economic stimulus package  
(11 January 2022) Vietnamese lawmakers passed a US$15.4 billion stimulus package for the 2022-2023 period aimed at supporting those impacted by the COVID-19 pandemic. The package includes allocations for healthcare, rent subsidies and infrastructure, as well as measures to reduce value-added tax by 2.0 percentage points and loan interest rates by 0.5-1.0 percentage points. Vietnam expects GDP to grow by 6-6.5% in 2022, up from 2021’s 2.58%. The government also expects exports to grow by 6-8% this year and is targeting industrial output growth of 7-8%, up from last year’s 4.8%.

THAILAND
Thailand’s stock exchange unveils 2022-2024 strategy
(12 January 2022) The Stock Exchange of Thailand (SET) announced its 2022-2024 plan this week under the theme “Connecting Opportunities x Transforming Possibilities” that aims to create a modern capital market for businesses and investors across all segments. This will include the launch of a funding platform for startups and small businesses in the first quarter of the year, as well as the launch of the Thai Digital Assets Exchange (TDX) in the third quarter of the year to cater to the growing interest in digital assets. The SET also plans to create more avenues for local investors to invest in foreign stocks and develop a funding platform for social enterprises.

RCEP Monitor

ASEAN
RCEP mega-free trade agreement comes into effect on 1 January 2022
(01 January 2022) On 01 January 2022, the Regional Comprehensive Economic Partnership (RCEP) entered into force. The RCEP agreement represents 30% of the world’s GDP and population, and initially takes effect among the 10 members that completed ratification earlier: including China, Japan, Australia, New Zealand, Brunei Darussalam, Cambodia, Lao PDR, Singapore, Thailand and Viet Nam. South Korea will follow on 01 February 2022. The remaining four countries which have yet to ratify the agreement include Indonesia, Malaysia, Myanmar and the Philippines. According to a recent report by UNCTAD published in mid-December 2021, within ASEAN Malaysia is expected to be the largest beneficiary of the RCEP agreement in terms of gains in exports, with a projected US$0.2 billion increase. On the other hand, Vietnam and Indonesia are likely to see adverse effects — a net loss of US$1.5 billion and US$0.3 billion, respectively — due to trade diversion within the region.

SINGAPORE
Singapore economy rebounds to 7.2% in 2021, due to export demand and vaccine rollout
(03 January 2022) The Singaporean economy expanded by 7.2% in 2021, on the back of export demand and a fast rollout of vaccines. By end-2021, some 87% of the population had been fully vaccinated. 2021’s growth rate is the fastest since 2010, when the economy expanded by 14.5% following the global financial crisis. Singapore’s manufacturing sector expanded by 12.8% in 2021 due to global demand for electronics components, while the services and construction sectors rebounded by 5.2% and 18.7% respectively. For the October to December quarter, GDP expanded by 5.9% year on year, slower than the 7.1% growth recorded in the July to September period. The government has projected a GDP growth in the range of 3% to 5% for 2022, with a key measure to supporting growth including rolling out booster shots. However, some warn that the omicron variant could force authorities to reimpose restrictions, which would delay the recovery in private consumption and investments.

MALAYSIA
Malaysia’s manufacturing PMI expanded 5.9% year on year in December 2021
(05 January 2022) Malaysia’s manufacturing Purchasing Managers’ Index (PMI) expanded slightly to 52.8 in December 2021 compared to 52.3 in November, its highest level since April 2021. This signalled a continued recovery in manufacturing conditions in line with a relaxation of COVID-19 restrictions and rapid vaccine rollout. New orders in December 2021 rose to an eight-month high, underpinned by stronger consumer confidence in both domestic and international markets. Optimism is driven by hopes that the COVID-19 pandemic is receding and a broad recovery in supply chains and the overall economy is in effect. However, backlogs of work expanded, reflecting ongoing raw material and labor shortages. Kenanga Investment Bank Bhd forecast GDP growth of between 3.5% to 4.0% in 2021, and 5.5% to 6.0% in 2022. However, their forecasts are subject to downside risks including the omnicon COVID-19 variant, as well as raw material and labor shortages.

INDONESIA  
Indonesia to subsidize 1.2 billion litres of cooking oil in bid to rein in inflation
(05 January 2022) The Indonesian government will subsidize 1.2 billion litres of cooking oil, in a bid to rein in inflation. The government is planning on spending some US$250.78 million on the subsidy, which will be funded through a levy on palm oil exports. Under the plan, the government will sell cooking oil at US$0.97 a litre. Cooking oil prices have jumped significantly, due to an uptrend in palm oil prices. High cooking oil prices, alongside rising egg and chilly prices, have been the main drivers of inflation. December’s 1.87% inflation rate was the highest recorded in 18 months. The government is concerned that high inflation could disrupt Indonesia’s economic recovery from COVID-19. Authorities stated that 70 cooking oil producers will be involved in the cooking oil subsidy programme.

VIET NAM  
Vietnamese prime minister warns that Viet Nam’s economy to continue facing pandemic-related risks
(06 January 2022) Viet Nam’s prime minister Pham Minh Chinh warned that Viet Nam’s economy will continue to face pandemic-related risks in 2022, including a widening state budget deficit to rising bad bank debts. Among the difficulties facing the economy include struggling businesses, disbursement of public investments at a multi-year low, the state budget’s increasing non-recurring revenue, and the pandemic’s effects on efforts to restructure the economy. Viet Nam’s Finance Ministry estimated that the 2021 state budget deficit was below 4% of GDP. State budget revenues for 2021 was estimated to be at 1,563 trillion dong, or 16% higher than planned, while state spending was estimated at 1,879 trillion dong, an 11% increase from the government’s plan.

THAILAND
Thailand imposes three-month export ban of live pigs to cool rally in prices
(06 January 2022) Thailand has imposed a three-month export ban of live pigs to cool a rally in prices amidst a meat shortage. Overseas shipments will be prohibited until 05 April 2022, and the Commerce Ministry will monitor the situation to assess whether the ban needs to be extended any further. It is believed that domestic pork prices may double from an average of THB 150 (US$7.5) a few months ago to around THB 300 (US$8.94) baht per kilogram ahead of Lunar New Year celebrations, when traditionally demand for pork rises. Thailand exports about 5% of its live pigs annually to neighboring countries including Cambodia, Viet Nam, Lao PDR and Myanmar. The spike in pork prices is due to limited supply and high feed costs. While the export ban is expected to balance supply with demand, in the longer term the government will promote raising more pigs and producing more feed locally.

THE PHILIPPINES
Inflation rate reaches three-year high of 4.5% in 2021, tempering consumer spending
(05 January 2022) In 2021 the Philippines reached a three-year high inflation rate of 4.5%, creating faster-than-manageable price hikes which tempered consumer spending at a time when it was needed to promote an economic recovery. This was the highest average rate of increase in the prices of basic commodities since 2018, when the inflation rate reached 5.2%. Headline inflation eased to 3.6% in December 2021 — the year’s lowest monthly rate — but the full-year average remained above the central bank’s 2% to 4% target band of price increases deemed conducive to economic growth. Official data showed that areas outside Metro Manila posted a 3.9% year-on-year inflation rate in December, down from 4.5% in November but a faster pace than the 2.8% in NCR. The spike in the inflation rate in 2021 was due to both food inflation as well as higher oil prices.

RCEP Monitor

CAMBODIA
Cambodia places high hopes on the RCEP and CCFTA
(26 December 2021) Cambodia is looking forward to the Regional Comprehensive Economic Partnership (RCEP) and the Cambodia-China Free Trade Agreement (CCFTA) coming into force in 2022. The government expects the RCEP to boost the country’s GDP by 2%, increase exports by 7.3%, and increase investment inflows by 23.4% as the agreement will give Cambodian businesses preferential access to all 15 RCEP markets. Nevertheless, companies are also urged to adapt to capitalize on the RCEP’s benefits, especially since said benefits would also be available to neighboring Vietnam and Thailand who are also major agricultural exporters.

THE PHILIPPINES
RCEP expected to provide farmers access to more markets
(25 December 2021) The Philippines’ assistant trade secretary responded to concerns raised by farmer associations regarding the RCEP saying that the agreement would provide the agricultural sector with greater market access and preferential trade arrangements while still protecting certain groups of agricultural products such as swine meat, poultry meat, potatoes, onions, garlic, cabbages, sugar, carrots and rice. He added that membership in the RCEP also indicates to investors that the country is able to offer a stable and predictable business environment, with terms that remain certain regardless of political changes.

THAILAND
Thailand targets 3-4% growth for 2022
(28 December 2021) Thailand’s commerce ministry expects the country’s economy to grow by only 3-4% in 2022, up from 2021’s estimated US$268.3 billion, as it expects another wave of pandemic restrictions if the Omicron variant takes a more severe turn. These numbers are also based on the RCEP’s expected entry into force, a favorable THB/USD exchange rate, rising Dubai crude oil and agricultural goods prices, increased container production, and the economic recovery of Thailand’s top trading partners. The ministry also expects cross-border trade to grow by 5-7% in 2022, with exports worth around US$32 billion.

VIETNAM  
Vietnam confirms flight resumption on five International routes
(28 December 2021) Vietnam will resume regular international flights to Japan, Taiwan, Singapore, Cambodia and the United States starting 1 January 2022 after grounding most international flights since March 2020. National carrier Vietnam Airlines has been cleared to cover all five routes while Vietjet Air, All Nippon Airways and Bamboo Airways have been granted permission to cover specific routes. This first reopening phase is slated to last two weeks, during which there will be four flights per week on each route in each direction. The government is also in talks to resume flights with Thailand, Laos, South Korea and China.

MALAYSIA  
Malaysia lifts travel ban on eight African countries
(28 December 2021) Malaysia has removed its travel ban on South Africa, Zimbabwe, Mozambique, Malawi, Botswana, Eswatini, Lesotho and Namibia given the rapid spread of the Omicron variant, though these countries are still among the 18 countries on Malaysia’s list of high-risk countries. Travelers from these countries must undergo a polymerase chain reaction (PCR) test two days before departure and another upon arrival, after which fully vaccinated travelers will be quarantined for seven days while unvaccinated travelers will be quarantined for 10 days. Travelers can choose to be quarantined at home or at designated facilities.

CAMBODIA, EU
EU rice tariffs to expire on 18 January 2022
(27 December 2021) The European Commission’s three-year safeguard measures on Indica rice exports from Cambodia and Myanmar which started on 18 January 2019 will expire on 18 January 2022, after which Cambodian rice exporters will be able to enjoy zero tariffs under the European Union’s Everything But Arms (EBA) trade preference scheme. Under the safeguard clause, Cambodia was required to pay US$200 per tonne in 2019, US$170 per tonne in 2020, and US$140 per tonne in 2021 when exporting to the EU. Nevertheless, supply chain issues such as a shortage of empty shipping containers threaten to dampen export growth.

SINGAPORE, CHINA
14 deals signed at annual Singapore-China bilateral meeting
(29 December 2021) Singapore and China signed 14 memoranda of understanding and agreements at their annual high-level forum co-chaired by the countries’ vice premiers. Notable deals include an agreement between custom authorities from both sides that will see the establishment of a blockchain-based platform for the exchange of customs and trade information, an agreement between the Singapore Exchange and Shenzhen Stock Exchange to develop a cross-border exchange-traded funds (ETF) product link, as well as agreements to deepen cooperation on the CCI-New International Land-Sea Trade Corridor and the Sino-Singapore Tianjin Eco City.

RCEP Monitor

ASEAN, US
US plans ASEAN summit, weighs new sanctions against Myanmar
(15 December 2021) US Secretary of State Antony Blinken said that ASEAN was “essential to the architecture of the Indo-Pacific region” and reiterated President Joe Biden’s plans to host a special summit with the bloc in 2022 which would cover topics such as investment, infrastructure, climate change, and the pandemic. When asked about the country’s stance on Myanmar during his stop in Malaysia, Blinken said that the US was looking at additional steps that could be taken against Myanmar’s military regime including possible sanctions on oil and gas revenues. He also repeated calls for the release of those who have been “unjustly detained” and for Myanmar to be restored “to its democratic path”.
 

INDONESIA, US
US, Indonesia sign MOUs on maritime and social development cooperation
(14 December 2021) US Secretary of State Antony Blinken started the first leg of his three-country visit to Southeast Asia in Jakarta where he signed three agreements — one on maritime cooperation, the second for social and economic development assistance, and the third to expand youth leadership exchange programmes. The US has so far donated over 25 million vaccine doses and US$77 million in pandemic relief assistance to Indonesia. However, Blinken’s four-day tour of the region was cut short when a journalist in his travelling party was tested positive for COVID-19. Bangkok was meant to be his third and final stop after Jakarta and Kuala Lumpur.

MALAYSIA, US
Malaysia exploring solar energy tie-ups with the US
(16 December 2021) Malaysian energy and natural resources minister said during the US-Malaysia Renewable Energy Roundtable with US Secretary of State Antony Blinken that the country was exploring potential areas of cooperation with the US, particularly in renewable energy, given solar energy's increasingly significant role in the country’s electricity supply. According to him, the government has been rolling out initiatives to meet the country’s climate targets, including plans to introduce a utility-scale battery energy storage system with 500MW capacity in Peninsular Malaysia from 2030 to 2034 to ensure supply reliability.
 

SINGAPORE, SOUTH KOREA  
Singapore and South Korea conclude digital trade deal negotiations
(15 December 2021) Singapore and South Korea announced the conclusion of talks on the Korea-Singapore Digital Partnership Agreement (KSDPA), a deal that sets rules and norms for bilateral cross-border data flows and deepens cooperation in the digital economy between the countries. Among other measures, the KSDPA allows businesses to decide where to process and store data involved in their daily operations and prohibits governments from requiring such activities to be conducted solely within their borders. The agreement will also promote the development of interoperable systems and standards in digital payments and data protection, as well as identify areas of collaboration in artificial intelligence innovation.
 

CAMBODIA  
Cambodia unveils goals for its term as ASEAN Chair
(15 December 2021) Cambodian Prime Minister Hun Sen shared his administration’s two top priorities as ASEAN Chair in 2022. The first is for the Code of Conduct (COC) in the South China Sea to be fully adopted by all parties involved at next year’s ASEAN Summit. The second is for the situation in Myanmar to improve, beginning with the appointment of Cambodian deputy prime minister and foreign minister Prak Sokhonn as the new ASEAN Envoy for Myanmar. Hun Sen also stressed that ASEAN can only act as a mediator in this crisis and that real solutions would have to come from within Myanmar.
 

THE PHILIPPINES
Senate approves bill allowing 100% foreign ownership of public services
(15 December 2021) Philippine senators passed a bill that would allow full foreign ownership and control of companies in key industries should it come into law, up from the present 40% foreign ownership limit. The country’s Constitution currently requires 60% Filipino ownership in “public utility” companies and the bill hopes to circumvent this requirement by limiting the definition of “public utility” to electricity, water, sewerage, airports, seaports, and public utility vehicles. This would exempt other industries such as telecommunications, airlines, shipping, railways, and subways from the foreign ownership cap, thus allowing more foreign investment and greater competition.
 

VIETNAM
Lego to build first carbon neutral factory in Vietnam
(14 December 2021) Denmark’s Lego Group announced plans to build a US$1 billion factory in Vietnam, its second factory in Asia after China, on the strength of double-digit growth in the region for three consecutive years. The factory will be located in Binh Duong province with production set to start in 2024. Lego plans to make the factory carbon neutral by powering the facility with solar energy, planting 50,000 trees, and meeting the LEED Gold standard. The factory will be developed in collaboration with Singaporean developer Sembcorp and Vietnamese state-owned developer Becamex IDC.
 

RCEP Monitor

ASEAN
Southeast Asian companies collectively raise more than US$10 billion through IPOs in 2021
(06 December 2021) Southeast Asian companies have collectively raised more than US$10 billion through initial public offerings (IPOs) in 2021, the first time since 2017. According to data collected by Deloitte up to 15 November 2021, 121 Southeast Asian companies raised a total of US$9.77 billion on local bourses, with more companies issuing IPOs during the remainder of the year. The COVID-19 pandemic prompted companies to raise funding to invest into diversifying revenue sources and adjusting to the digitalization of the economy. Thailand led the region in terms of total funds raised in 2021, with 35 companies and real estate investment trusts raising $4.2 billion as of 15 November 2021. Thailand represented 43% of total funds raised in the region as of mid-November. Southeast Asian companies have found receptive investors, in part due to low interest rates ensuring low returns for alternative investment options such as bonds and deposits.

INDONESIA, MALAYSIA, SINGAPORE
Indonesia seeks to challenge Singapore’s Changi Airport and Kuala Lumpur International Airport as regional hubs
(04 December 2021) Indonesia seeks to challenge Singapore’s Changi Airport and Kuala Lumpur International Airport as regional hubs through Kualanamu International Airport in North Sumatra Province. GMR Airports Consortium – jointly owned by India’s GMR Group and France’s Aeroports de Paris Group – will form a joint venture with Indonesian state-owned Angkasa Pura II to operate Kualanamu International Airport. The joint venture will operate Kualanamu airport under a 25-year “strategic partnership” worth US$6 billion, with plans to expand Kualanamu airport and boost annual passenger traffic from 10 million visitors pre-pandemic to 54 million. Indonesia hopes the GMR-tie up will eventually draw a significant number of passengers away from Malaysia and Singapore who are travelling between South Asia, North Asia and Australia.

MALAYSIA
Malaysia’s unemployment rate stood at 4.3% in October 2021, at lowest rate since April 2020.
(08 December 2021) According to data collected by the Department of Statistics Malaysia, Malaysia’s unemployment rate stood at 4.3% in October 2021; its lowest rate since April 2020. Malaysia’s unemployment rate eased by 3.4% in October compared to the 729,600 unemployed people recorded in September 2021. Out of the total unemployed people in October, 83.6% were the ‘actively unemployed’, or those actively looking for work. As well, 55.5% had been unemployed for less than three months, while 7.8% had been unemployed for more than a year. The share of those aged between 15 to 24 stood at 13.9% for the third month, whereas the unemployment rate for those aged between 15 to 30 recorded a fall of 0.4% points month-to-month to 8.1% in October. The continuous resumption of more economic and social activities has ensured that the labour market has remained stable in October.

THE PHILIPPINES  
The Philippines government seeks nearly US$6 billion loan from central bank in 2022
(08 December 2021) The Philippines bank is seeking a nearly US$6 billion loan from its central bank in 2022. This will be lower than the government’s borrowing in 2021, as officials anticipate the economy to recover next year. The government has informed the Bangko Sentral ng Pilipinas that it will fully repay its outstanding US$10.7 billion provisional advances on 10 December 2021, ahead of the 12 January 2022 maturity. The new loan will carry no interest, and will be due in three months, and can be extended by another three months. The Philippines’ finance chief had stated during a forum on 08 December that government borrowings will start to decline in 2022 as revenue is expected to return to 2019 levels.

THAILAND, MALAYSIA  
Thailand to consider reopening borders with Malaysia to revive local tourism and boost economic growth
(06 December 2021) Thai authorities are considering reopening the border with Malaysia in order to revive local tourism and boost economic growth in Thailand’s southern provinces. Thailand’s Centre for Covid-19 Situation Administration (CCSA)’s forward command dealing with COVID-19 in the southern region is expected to make a decision this week, after which they will present the matter to the CCSA for consideration on 13 December. The CCSA had reportedly initially planned to reopen the Thai-Malaysia border on 16 December, but the recent emergence of the Omicron COVID-19 variant in Malaysia has forced Thai authorities to reassess the situation. Border checkpoints that were initially planned for reopening include Sa Dao border checkpoint in Songkhla province, Sungai Kolok checkpoint in Narathiwat province, Betong checkpoint in Yala province, and Wang Prachan checkpoint in Satun province.

SINGAPORE, UNITED KINGDOM
Singapore and UK agree to Digital Economy Agreement, to allow UK businesses to target Singapore market
(09 December 2021) The UK and Singapore agreed in principle to a Digital Economy Agreement (DEA) that will cut costs, slash red tape and pave the way for a new era of trade. An agreement was reached between the UK’s International Trade Secretary Anne-Marie Trevelyan and Singapore Minister-in-charge of Trade Relations S. Iswaran after just six months of negotiations. Referred to as the ‘first digitally-focused trade agreement ever signed by a European nation’, it is expected to further facilitate the UK-Singapore trading relationship – worth £16 billion in 2020 – by overhauling outdated trade rules that affect both goods and services exporters, making it easier for UK business to target new opportunities in both the Singapore and wider Asian markets. The UK government also announced that the DEA will help support the UK’s bid to join the Comprehensive Progressive Trans-Pacific Partnership (CPTPP) free trade agreement, of which Singapore is a signatory.

VIET NAM
Ministry of Transport submits proposal for resumption of international flights to Asia and the US
(08 December 2021) Viet Nam’s Ministry of Transport has submitted a proposal for a two-phased resumption of international flights across Asia and the United States from 15 December onwards. It is proposed that the first phase would include four flights weekly to and from either Los Angeles or San Francisco in the US, plus Singapore, Bangkok, Phnom Penh, Laos, Beijing, Tokyo, Seoul and Taipei. Under phase two, from 1 January 2022 onwards additional routes to Kuala Lumpur, Hong Kong, Paris, Frankfurt, Moscow and Sydney would be added. The first phase would see flights running to and from just two of Viet Nam’s airports in Ho Chi Minh City and Hanoi, to be expanded to include Da Nang City, Cam Ranh, Phu Quoc and Van Don under phase two.

RCEP Monitor

ASEAN
Grab lists on Nasdaq after SPAC merger at a US$40 billion valuation
(2 December 2021) Southeast Asia’s largest ride-hailing and delivery “super app” began trading on Nasdaq on 2 December 2021 under the ticker symbol “GRAB” after completing a US$40 billion merger with a special purpose acquisition company (SPAC). The merger with Altimeter Growth Corp, said to be one of the biggest SPAC transactions to date, was first announced in April 2021 and approved by Altimeter’s investors on 30 November 2021. The company will receive a cash injection of US$4.5 billion as part of the deal. Grab debuted with an opening price of US$13.06 and rose as much as 21% in opening trades before retreating to close at US$8.51 on its first day of trading.

ASEAN
Governments respond to new COVID-19 variant
(1 December 2021) ASEAN governments have heightened precautions in response to the new Omicron variant which is said to potentially be more transmissible. Singapore is pausing vaccinated travel lane launches and will now require travellers arriving at or leaving from Changi Airport to undergo a PCR test. Indonesia has increased its quarantine period to 10 days and placed temporary bans on foreign nationals who visited high-risk countries in the past two weeks. Malaysia will temporarily ban the entry of travellers from countries who have reported Omicron cases or are considered high risk. The Philippines has banned travellers from 14 countries in Africa and Europe, while Vietnam has halted flights to and from seven African countries.

SINGAPORE, MALAYSIA
Singapore, Malaysia launch land vaccinated travel lane
(29 November 2021) Malaysia and Singapore launched their land and air vaccinated travel lanes (VTLs) on 29 November 2021 for citizens, permanent residents, and long-term pass holders of either country. The land VTL could also open to general travellers in mid-December as both sides plan to gradually expand access. In light of the Omicron variant, Malaysia now requires travellers from Singapore to self-test on the third and seventh day after entering the country and report their results via the government’s COVID-19 tracing app. This comes in addition to the VTL’s standard pre-departure and arrival tests, though travellers need not undergo quarantine.

CAMBODIA, THAILAND  
Bangkok Airways resumes flights to Phnom Penh
(2 December 2021) Cambodia welcomed its first flight from Thailand this week as both countries look to ease border controls, resume air travel and revive tourism. Thailand opened its borders to fully vaccinated Cambodians on 31 October 2021. Cambodia also hopes to resume flights between Siem Reap and Bangkok in the near future as it pushes ahead with plans to reopen its borders to fully-vaccinated foreign visitors despite concerns over the Omicron variant, safe for temporary bans on a few African countries. Bangkok Airways has also suspended food and beverage services on its flights and made mask-wearing mandatory.

MALAYSIA, SINGAPORE  
Malaysia, Singapore sign RTS Link Grantor Agreement
(29 November 2021) The Johor Bahru-Singapore Rapid Transit System (RTS) is now one step closer to reality following the signing of the Link Grantor Agreement by the countries’ respective transport ministries. The RTS is a cross-border rail link that will travel between a station at Woodlands North in Singapore and a station at Bukit Chagar in Johor Bahru. Each one-way journey is expected to take approximately five minutes, with passenger service starting by the end of 2026. The RTS link will have a capacity of up to 10,000 passengers per hour per direction.

INDONESIA
Constitutional Court orders amendments to omnibus job creation law
(29 November 2021) Indonesia’s apex court last week ruled the government’s 2020 Job Creation Law “conditionally unconstitutional” due to procedural flaws—particularly relating to public participation—and ordered the legislature to “redo the legislative process” following prevailing laws and regulation within two years. This means that the law will remain in force and will only be deemed unconstitutional if legislators fail to make amendments by 25 November 2023. President Joko Widodo responded to the ruling by reassuring investors that their investments remain secure, that business will go on as usual, and that the revision of the law will be a priority.

VIETNAM, RUSSIA
Vietnam to expand local production of Sputnik V vaccine
(1 December 2021) Vietnam’s state-owned pharmaceutical company VABIOTECH and investment company Sovico Group signed an agreement with Russia’s sovereign wealth fund, the Russian Direct Investment Fund (RDIF), to increase local production of the Sputnik V vaccine and start manufacturing the one-shot Sputnik Light vaccine in Vietnam. The RDIF also facilitated an agreement between Vietnam’s largest industrial company T&T Group and Russia’s Binnopharm Group for a US$60-70 million Sputnik V production facility in the first Vietnamese-Russian industrial park located in Quang Ninh province. The facility is expected to be fully operational in early 2023 after which it will produce 40 million doses of the vaccine per year.

RCEP Monitor

ASEAN, CHINA
China pledges to upgrade relations with ASEAN from strategic partnership to comprehensive strategic partnership
(22 November 2021) During the recent China-ASEAN Special Summit to Commemorate the 30th Anniversary of ASEAN-China Dialogue Relations held on 22 November 2021, Chinese President Xi Jinping announced that ties between China and ASEAN would be raised from strategic partnership to comprehensive strategic partnership, with more focus to be made on security cooperation and development funding. Among the commitments made during the summit included a pledge by China to provide US$1.5 billion in development assistance to help ASEAN nations with pandemic control and economic recovery for the next three years, as well as a pledge to deliver 150 million COVID-19 vaccine doses to the region as well as give US$5 million to an ASEAN pandemic fund. The free trade zone between China and ASEAN would also be upgraded, and more advanced technologies transferred to ASEAN from China.

SINGAPORE
Singaporean government projects growth of 3% to 5% for 2022 as borders reopen and restrictions are loosened
(24 November 2021) On 24 November 2021, Singapore’s Ministry of Trade and Industry projected in its quarterly economic update that the Singaporean economy would grow by 3% to 5% in 2022, as borders reopen and domestic restrictions are loosened. It also predicts that the economy will expand by around 7% in 2021. The ministry stated that the recovery of the various sectors in 2022 is expected to be uneven, with the aviation and tourism sectors expected to recover gradually. The economy also expanded by 7.1% year-on-year in the three months to September 2021, supported by manufacturing and a rebound in the services sector. Authorities warned however of downside risks, such as the uncertain COVID-19 situation, China’s economic slowdown and protracted global supply chain disruptions.

INDONESIA
Indonesia to consider banning tin exports in 2024 to attract investments into domestic resource processing industries
(24 November 2021) The Indonesian government is considering banning tin exports in 2024 in order to attract investments into the domestic resource processing industry, and to improve the country’s external balance. The government is also considering banning the export of bauxite in 2022 and copper ore in 2023. The Indonesian President, Joko Widodo, had made previous public remarks stating that the country is too dependent on the export of raw commodities, depriving it of revenue and jobs in the manufacturing industry. He stated that stopping the export of raw commodities and attracting investment in downstream industries will improve Indonesia’s trade and current account balances. Indonesia has already banned the export of nickel in order to attract investments in the manufacture of electric car batteries.

MALAYSIA  
Malaysian state of Sarawak to hold state election on 18 December 2021
(24 November 2021) Malaysia’s largest state of Sarawak will hold state elections on 18 December 2021, with votes to be cast for 82 state assembly seats. Nomination day will be held on 6 December, while early voting will start on 14 December. The Sarawak poll result could influence the timing and outcome of Malaysia’s next general election that’s due before July 2023. This comes as the ruling coalition won 21 out of 28 seats in the recent state elections in Malacca. While there are concerns that the local elections may put Malaysia at risk of a renewed surge in COVID-19, Malaysia’s rapid vaccination progress may prevent a repeat of a nationwide lockdown. As of 24 November 2021, some 77% of the population have been fully vaccinated.

MALAYSIA, SINGAPORE  
Malaysia and Singapore to reopen causeway linking both countries starting on 29 November 2021
(24 November 2021) Malaysia and Singapore have agreed to reopen the causeway linking both countries starting on 29 November 2021, allowing cross-border land travel for the first time since March 2020. Vaccinated passengers will be allowed on designated buses between Singapore and Malaysia’s southernmost city of Johor Bahru. As many as 2,880 people a day will be allowed to travel between the countries in the initial phase of the causeway reopening, with the quota to be reviewed weekly. Initial priority will go to people who have been working in either country to visit their families, while eligibility to be expanded over time to general travellers. Singapore was Malaysia’s largest source of tourists in 2019 at 10 million arrivals, while some 1.2 million Malaysian tourists visited Singapore in the same year.

THE PHILIPPINES
IKEA opens largest branch in the world in Manila, hopes to pull in 7 million shoppers in first year of operation
(25 November 2021) Swedish home furnishings multinational IKEA opened its first outlet in the Philippines, and its largest branch in the world, in Manila on 25 December 2021. IKEA plans to pull in 7 million shoppers in its first full year of operation, and plans to open other branches in the country. The new outlet can accommodate up to 8,000 people, but for now capacity will be held to half that to maintain physical distancing. Sales of home furnishings in the Philippines are expected to reach US$4.6 billion by 2023, up from US$3.5 billion in 2020, a year that saw sales decline by 16.4% due to COVID-19-related restrictions. IKEA stated they intend to keep prices low despite ongoing global supply chain challenges and high electricity costs in the Philippines.

THAILAND
Government to hand out US$4.7 billion in handouts to Thai farmers impacted by COVID-19 and floods
(24 November 2021) Thailand’s government plans to hand out US$4.7 billion in cash handouts to Thai farmers impacted by COVID-19, floods, droughts, and poor crop prices. The Thai Cabinet will consider a program to allocate US$4.7 billion to growers of rice, rubber, palm oil and other crops at a meeting on 30 November 2021. The money will be transferred to the accounts of eligible farmers through the Bank for Agriculture and Agricultural Cooperatives. The payments will be used as price-support measures for rice, rubber and palm oil as well as to prevent distress sales of agricultural produce. Flooding in October and November 2021 caused extensive damage to the Thai rice industry, and it is believed the money for farmers will help Thailand’s nascent economic recovery.

RCEP Monitor