CARI Captures 434: World Bank lowers Malaysia’s 2020 GDP forecast to 4.5% due to weaker exports and investment


 

MALAYSIA

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

THE PHILIPPINES

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

MYANMAR

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

BRUNEI

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

BRUNEI-OMAN

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

VIETNAM-US

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

INDONESIA-EU

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

INDONESIA

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

INDONESIA

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

THAILAND

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

Mekong Monitor: Vietnam remains Laos’ third-largest investor


Photo credit: Cambodia Ministry of Tourism

 

TRADE, ECONOMY, AND INVESTMENT

 

VIETNAM, LAOS

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

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

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

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

Thailand’s Big C supermarket opens first Cambodian outlet
(6 December 2019) Thailand’s Big C supermarket chain opened its first branch in Cambodia this week, with plans to expand to other parts of the country in the near future. The new outlet, which costs around US$6.8 million to build, is located in Poipet town. Poipet town is located on the Cambodia-Thailand border and is known as a key trade hub that hosts the countries’ main border crossing. Big C is expected to tap into Poipet’s population of 200,000 people to hire 1,200 people to operate the new branch.
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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: Malaysia-China trade expected to exceed US$100 billion this year


Photo Credit: New Straits Times

 

Economy, Investment and Trade

 

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


 

ASEAN

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

VIETNAM

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

MALAYSIA

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

INDONESIA

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

INDONESIA

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

MYANMAR

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

MYANMAR

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

THAILAND-EU

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

BRUNEI-JAPAN

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

INDONESIA

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

Mekong Monitor: Mekong countries agree to strengthen tourism cooperation


Photo credit: Cambodia Ministry of Tourism

 

TRADE, ECONOMY, AND INVESTMENT

 

CAMBODIA, LAOS

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

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

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

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

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


Photo Credit: The Nation

 

Economy, Investment and Trade

 

Thailand, Hong Kong sign five MoUs to boost economic cooperation
(29 November 2019) Thai Deputy Prime Minister Somkid Jatusripitak and Hong Kong chief executive Carrie Lam co-chaired the inaugural Thai-Hong Kong summit last week and witnessed the inking of five memoranda of understanding on strengthening economic relations between Thai and Hong Kong agencies. The summit also featured bilateral discussions which focused on several areas including trade whereby both countries agreed to aim for over US$20 billion in trade by next year, efforts towards a Thailand-Hong Kong free trade agreement, the updating of private sector investment protections, cooperation among private sectors to exchange technologies and facilities, capital market cooperation, and the startup ecosystem cooperation through cooperative research and knowledge sharing.
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Singapore, Guangxi organisations ink MoUs to bolster ties
(2 December 2019) Companies and organisations from Singapore and China’s Guangxi Zhuang Autonomous Region inked six memoranda of understanding during a forum held in Singapore this week. While the contents of the agreements were not disclosed, a Singaporean media outlet says that DBS Bank and government solutions provider CrimsonLogic were among the Singaporean entities which inked MoUs. In addressing the forum, Singapore Business Federation head Teo Siong Seng highlighted Singapore’s role as a launchpad for Chinese firms to do business globally as he touted the over 7,000 Chinese firms presently established in Singapore.
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Telcom operator China Unicom enters Cambodian market as part of BRI
(2 December 2019) China’s largest telecommunications operator China Unicom officially opened its Cambodian subsidiary this week as part of plans to expand along the Belt and Road. According to the company, they will invest in Cambodia’s infrastructure by first developing optical telecommunication pathways to bring higher quality cloud-based networks and telecommunications services to local and foreign enterprises. There were 12.5 million internet users and 19.16 million registered SIM cards in Cambodia in 2018.
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Chinese investment in Vietnam reaches US$2.28 billion in 11 months
(3 December 2019) Vietnam received US$2.28 billion in investment pledges from China from January to November this year — almost twice the amount it saw during the same period in 2018. With this, China accounted for 15.5% of Vietnam’s total registered FDI during the 11 months, making it the country’s second-largest investor behind only South Korea which poured in US$2.91 billion. Total registered FDI in Vietnam during the same period fell by 7% year-on-year to US$14.7 billion.
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Cambodia’s rice exports to China yet to reach 2018 quota
(27 November 2019) Cambodia has yet to meet its 2018 300,000 tonnes rice export quota to China — a hurdle that it must clear before the new 2019 quota of 400,000 tonnes can take effect. The country exported 184,844 tonnes of milled rice to China in the first ten months of this year — representing 40% of its total rice exports and a 5% increase from the same period last year. According to local industry players, they are hoping for an order from China’s largest food processor Cofco, which has yet to place an order the 2019-2020 period.
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CARI Captures 432: ASEAN and South Korea to aim for US$200 billion in trade next year


 

ASEAN-ROK

ASEAN and South Korea to aim for US$200 billion in trade next year
(26 November 2019) ASEAN countries and South Korea vowed to push for greater economic cooperation as “indispensable friends” in the face of growing protectionism around the world as they aim for US$200 billion in two-way trade in 2020 during the ASEAN-ROK Commemorative Summit held in Busan this week. According to South Korean government data, ASEAN is now the country’s second-largest trade partner as two-way trade grew by 4.4% and totalled US$160.5 billion in 2018. Similarly, South Korea is ASEAN’s fifth-largest trading partner and fifth-biggest source of foreign direct investment last year.

INDONESIA-ROK

Indonesia and South Korea conclude talks for a free trade agreement
(25 November 2019) Indonesia and South Korea announced this week that they have completed negotiations on their bilateral Comprehensive Economic Partnership Agreement (CEPA) and will sign the pact in early 2020. Under the CEPA, Indonesia will enjoy tariff-free treatment on bunker C oil, sugar and beer, while South Korea will gain access to 93% of Indonesia’s market and zero tariffs on steel, car, car parts, textiles and machine parts. Meanwhile, Hyundai Motor Group announced that they will invest US$1.5 billion to build a finished car production plant in Indonesia’s Bekasi.

THE PHILIPPINES-ROK

PH and South Korea aim to sign a bilateral FTA in 1H 2020
(27 November 2019) Filipino trade secretary Ramon M. Lopez and his South Korean counterpart Yoo Myung-hee signed an “early achievement package” this week to mark the progress that they have made so far in their FTA negotiations. Both sides now hope to conclude the deal by the first half of 2020 after missing their initial November deadline. So far, only the draft chapter on competition has been finalised. Trade between the Philippines and South Korea grew 8.83% from US$12.79 billion in 2017 to US$13.7 billion in 2018.

CAMBODIA-ROK

Cambodia and South Korea to work towards a free trade agreement
(26 November 2019) Cambodian commerce minister Pan Sorasak and South Korean trade minister Yoo Myung-hee inked an agreement to launch a feasibility study on the potential for a bilateral free trade agreement between the countries during the ASEAN-ROK summit in Busan this week. While a specific timeline was not disclosed, South Korean media speculate that the study could take a year. Trade between the countries grew by approximately 15% in 2018 from the year before, reaching US$756 million. Singapore and Vietnam are currently the only ASEAN countries with bilateral FTAs with South Korea.

CAMBODIA-EU

Cambodian Prime Minister Hun Sen downplays loss of EU trade privileges
(21 November 2019) Cambodian Prime Minister Hun Sen responded to the European Union’s (EU) preliminary evaluation report on human and labour rights by saying that they would rather lose preferential access to the bloc’s Everything But Arms scheme than “exchange our sovereignty to plead for their gifts or their sympathies.” Besides, he said, Cambodia can still export to the EU even if it means tighter profit margins due to tariffs. He added that his administration has also been preparing for this eventuality since March this year.

INDONESIA-EU

EU takes Indonesia to the WTO over nickel ore export curbs
(22 November 2019) The EU lodged a complaint at the World Trade Organisation (WTO) last week against Indonesia’s measures to lower its exports of nickel and other raw materials as the country moves towards becoming a stainless steel producer. According to them, these measures have limited EU producers’ access to such raw materials, thus putting the region’s struggling steel sector at even greater risk. The bloc is also challenging what they call an “illegal subsidy” that spares Indonesian manufacturers from tariffs on certain imports meant for work on new factories as long as local appliances make up 30% of the content.

THAILAND-EU

A Thai-EU FTA could help raise Thailand’s GDP by 1.63% per year
(22 November 2019) A Thailand-EU free trade agreement would help raise the country’s GDP by 1.63%, exports by 3.43%, imports by 3.42% and investment by 2.74% annually, according to Thai trade negotiations head Auramon Supthaweethum. The trade negotiations department has been conducting studies and public hearings ahead of the anticipated revival of the long-delayed Thai-EU FTA talks. Results from public hearings conducted these past months will soon be published online and submitted to the cabinet. The EU is Thailand’s fourth-largest investor and trade partner with trade totalling US$47.3 billion last year.

INDONESIA, MALAYSIA, THAILAND

Palm oil-producing countries join forces to fight anti-palm oil campaign
(22 November 2019) The world’s major palm oil-producers Indonesia, Malaysia, Thailand, Brazil, Honduras and Nigeria agreed to cooperate in taking countermeasures against importing countries that impose discriminatory trade barriers to curb the use of palm oil. The agreement was made during a recent meeting of the Council of Palm Oil Producing Countries (CPOPC) in Kuala Lumpur, during which Malaysian Prime Minister Mahathir Mohamad also called on the palm oil-producing countries to adopt new technologies throughout the palm oil value chain in order to reduce labour input, improve productivity and ensure sustainable development.

THAILAND

Exports continue monthly decline with 4.5% drop
(22 November 2019) Thailand’s exports continued its third consecutive month in decline with a 4.5% year-on-year drop in October to US$20.75 billion, following a 1.4% drop in September and a 4% drop in August. Imports also fell by 7.6% in October to US$20.3 billion. Thai trade policy head Pimchanok Vonkorpon attributed the fall to the “fragile global economy” and “protectionist measures” taken by most of the country’s key trading partners, as well as lower oil prices which led to exports of finished oil to plunge by 35.4% in October.

ASEAN

ASEAN was the fifth largest economy in the world in 2018
(27 November 2019) The Southeast Asian economic bloc recorded around US$3 trillion in gross domestic product last year, making it the fifth-largest economy in the world, according to the 2019 ASEAN Integration Report launched by the ASEAN Secretariat this week. The bloc’s total trade grew 23.9% from US$2.3 trillion in 2015 to US$2.8 trillion in 2018, while FDI inflows grew 30.4% from US$118.7 billion in 2015 to US$154.7 billion last year. Furthermore, intra-ASEAN activity accounted for the largest share of the region’s trade and FDI at 23.0% and 15.9% respectively.

Mekong Monitor: South Korea, Mekong nations to prioritise seven cooperation sectors


Photo credit: Yonhap

 

TRADE, ECONOMY, AND INVESTMENT

 

CAMBODIA, LAOS

South Korea, Mekong nations to prioritise seven cooperation sectors
(27 November 2019) The inaugural Mekong-Republic of Korea Summit held in Seoul concluded with the leaders of South Korea and the five Mekong countries agreeing to push for greater cooperation in seven key sectors as outlined in the new Mekong-Han River Declaration. This would include the creation of new biodiversity conservation and water resources research hubs, as well as the joint development of e-government and smart city projects. According to South Korean President Moon Jae-in, the country’s trade with Mekong nations grew 2.4 times in the past eight years, totalling US$84.5 billion in 2018.
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MEKONG

Mekong countries approve new 5-year plan to manage drought
(27 November 2019) The Mekong River Commission (MRC) Council approved a five-year strategy to tackle the upcoming dry season as water levels in the subregion drop to their lowest points in the last 60 years. According to MRC data, Cambodia and Thailand will likely be the hardest hit among countries in the lower Mekong basin, which also include Laos and Vietnam. The new five-year strategy aims to tackle priority areas that require “immediate action” such as improving the governments’ capacity to monitor, forecast, mitigate, provide early warning and share information.
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VIETNAM, THAILAND

Thailand’s EGAT begins work on coal-fired power plant in Vietnam
(24 November 2019) The Electricity Generating Authority of Thailand (EGAT) broke ground on a 1,320 MW coal-fired thermal power plant in the central Vietnamese province of Quang Tri last week. The project, which the EGAT is developing under a build-operate-transfer contract, will have two 66 MW turbines that is expected to ultimately generate 7,200 kWh of electricity and over US$538 million in revenue annually. The Quang Tri Economic Zone Management also inaugurated a new US$30.2 million, 23.5-kilometre road connecting Quang Tri Southeastern Industrial Park with Cua Viet Port during the power plant’s ground-breaking ceremony.
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CAMBODIA, VIETNAM

Cambodia continues to attract Vietnamese investment
(21 November 2019) Cambodia remains one of Vietnam’s top investment destinations with Vietnamese firms having invested around US$50 million in the country in the first nine months of 2019. According to the Vietnamese investment ministry, this makes Cambodia the country’s fourth-largest destination of Vietnamese outbound investment during the period. Furthermore, there are over 200 Vietnamese companies operating in Cambodia, making Vietnam the country’s fifth-largest foreign investor. Bilateral trade totalled US$2.7 billion in the first half of 2019 and is expected to reach US$5 billion by year-end.
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CAMBODIA

Cambodia approves US$8.2 billion national budget for 2020
(27 November 2019) Cambodia’s legislative arm passed the country’s draft Budget Law for 2020 which provides a 22% increase year-on-year in expenditure for next year totalling US$8.2 billion. More specifically, the US$4.8 billion will go to current expenditures and US$3.3 billion will be allocated for capital expenditures. To this end, the government expects to generate US$6.5 billion in revenue to cover its expenses and borrow the rest from development partners, though finance minister Aun Pornmoniroth stressed that the government will not borrow more than US$1.9 billion next year.
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About Greater Mekong Subregion (GMS)

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

China-ASEAN Monitor: Malaysia’s Khazanah divests stake in Alibaba for US$526.3 million


Photo Credit: Bloomberg

 

Economy, Investment and Trade

 

Malaysia’s Khazanah divests stake in Alibaba for US$526.3 million
(25 November 2019) Malaysian sovereign wealth fund Khazanah Nasional has divested a portion of its stake in Chinese technology giant Alibaba Group for US$526.3 million as the fund looks to lower its involvement in non-strategic and foreign assets to produce more cash for the government. The fund has reaped over US$1 billion from its Alibaba investment thus far, having invested US$400 million for a 0.6% stake in the group before it went public in 2014. Nevertheless, Khazanah still retains an undisclosed stake in Alibaba.
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Chinese firm to build one million affordable homes in Malaysia
(23 November 2019) China’s Jiangsu Provincial Construction (JPC) will cooperate with Malaysia’s Kava Resources and local co-operative Koperasi Alumni MKM Kuala Lumpur (Kopama) to develop one million affordable homes in the country. The units will be priced between US$9,568 (RM40,000) to US$71,763 (RM300,000). According to Kopama, they hope to increase their membership from the current 4,000 to one million by being the project’s end-financier. Kopama members who purchase a property under their scheme need only pay US$200 (RM833) per month for 30 years with no compounded interest on loans.
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Chinese operators to help expand Indonesia’s Kuala Tanjung port
(22 November 2019) Indonesian state-owned port operator PT Pelabuhan Indonesia I inked an agreement with China’s Zhejiang provincial seaport company and the Netherlands’ Rotterdam port authority to elevate North Sumatra’s Kuala Tanjung Port into a maritime hub comparable to ports along the Malacca Strait. Under the agreement, the parties will expand the port’s multipurpose terminal and turn it into Indonesia’s second-largest port. The first phase of the partnership has been completed, and subsequent phases will see the construction of a 3,400-hectare industrial estate, hub port and further urban development.
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Cambodia and Chinese industry players sign 18 MoUs
(22 November 2019) The Cambodia Chamber of Commerce (CCC) inked 18 memoranda of understanding (MoU) with members of a visiting Chinese business delegation representing 24 firms. While the contents of the MoUs were not disclosed, the delegation was said to represent diverse sectors such as construction, real estate, energy and technology. According to the CCC, trade between Cambodia and China grew 22% year-on-year from 2017 to reach US$7.4 billion in 2018. Furthermore, Chinese tourists represented 38.7% or 1.86 million of all foreign visitors that Cambodia received in the first three quarters of 2019.
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Chinese firms sign US$184 million in deals including purchase of agricultural goods from Laos
(23 November 2019) Chinese enterprises inked US$184 million in agreements with their Lao counterparts at the recent Sino-Laos Investment Fair held in Kunming, the capital of southwest China’s Yunnan Province. According to Xinhua, the agreements were mainly for the procurement of agricultural goods. Separately, several cooperation agreements were inked between five business organisations and 16 enterprises from Myanmar and China during a border trade fair held for Myanmar’s Lashio town and China’s Lincang county in Yunnan province last week.
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Mekong Monitor


Photo Credit: Khmer Times

 

Economy, Investment and Trade

 

Cambodia, Vietnam aim for US$5 billion 2020 trade target
(22 July 2019) Cambodian foreign affairs minister Prak Sokhonn and Vietnamese foreign affairs vice minister Nguyen Quoc Dung expressed their confidence that both governments will be able to reach — and maybe even surpass — their pledged US$5 billion bilateral trade target by 2020 during a meeting held in Phnom Penh recently. According to the Cambodian Ministry of Foreign Affairs, the ministers’ statements were made based on the fact that Cambodia-Vietnam trade reached US$4.7 billion in 2018 and the upward trend can only continue with the Bilateral Trade Enhancement agreement in place for the 2019-2020 period (signed in February 2019). Both sides also agreed to accelerate negotiations on their Border Trade Agreement and to expand bilateral trade and investment as soon as possible.
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Lao markets may increase agricultural imports from neighbours to meet growing demand
(19 July 2019) Vientiane’s markets selling fresh produce, such as the Aussie Lao market in the Sikhottabong district, currently import around 15% of their produce from Thailand and another 15% from Vietnam. However, local vendors may have to rely even more on imported produce in the near future as domestic growers continue to struggle to compete with imported produce, especially in terms of pricing. As such, domestic growers struggle to expand their operations and cope with rough weather. As such, many growers have opted for a change in trade or profession. Nevertheless, the Lao Ministry of Agriculture and Forestry says that local agricultural production is still growing, with local produce such as vegetables recording a 19% year-on-year increase in yield to 1.19 million tonnes, in the first half of 2019.
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Myanmar to require more information from prospective investors
(22 July 2019) Myanmar’s Ministry of Investment and Foreign Economic Relations announced on July 22 a slew of changes to the government’s proposal and endorsement application forms for prospective investors. These changes, which will take effect on August 1, aim to furnish the relevant authorities with more information on applicants to allow them to better scrutinise their proposals. Among the information which will be required include a summary of the parent company’s services, how much it can invest in the company, their technological experiences, and so on. The move follows a local media’s recent expose which found several loopholes and shortcomings in the existing system. Nevertheless, experts urge the government to publish the revised proposal forms for public comment and ensure that these forms will be made available in a digital format so that they can be properly screened and searched.
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Vietnam sees a US$1.6 billion trade surplus in H1 2019
(21 July 2019) Vietnam’s exports in the first half of 2019 saw a 7.2% year-on-year increase reaching US$122.53 billion, giving it a US$1.59 billion surplus during the period. According to data from the Vietnamese customs department, the surge in export value can be attributed to growth in the processing and manufacturing sectors, which saw a 9.1% increase in exports on the year reaching US$102.2 billion. Despite the positive growth, the Vietnamese Ministry of Industry and Trade noted that they had failed to deliver the targeted US$123.5 billion in total export value for the first six months, mainly due to the less than favourable global economy.
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New industry minister plans northeastern special economic zones
(20 July 2019) Thailand’s newly-minted industry minister Suriya Jungrungreangkit shared his plans to establish a version of the Eastern Economic Corridor (EEC) in the country’s northeast to develop the region’s economy when he spoke to local media during his first day on the job. According to Suriya, he and Deputy Prime Minister Somkid Jatusripitak are currently discussing the matter, which will be presented to parliament on July 25 as part of the new administration’s economic policy platform. Additionally, he also intends to announce the Industry Ministry’s new strategy and plans within 100 days, which he says will include new measures for small and medium enterprises and human capital development.
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