ASEAN should start reopening and allow safe travel to revive Covid-19 pandemic-hit economies in the region, says Thailand’s Prime Minister Prayuth Chan o-cha. 

Citing Thailand as an example, he said the kingdom has already opened up pilot areas under the Phuket Sandbox programme to welcome foreign tourists and will gradually open up more areas in other provinces for international tourism.

“ASEAN Travel Corridor Arrangement Framework should be utilized, with mutual recognition of vaccines and vaccine certificates to facilitate business travel, and later tourism,” he said in his intervention at the 38th and 39th ASEAN Summits and Related Summits via a videoconference on Tuesday.

Prayuth said ASEAN should  avoid unnecessary measures that might hinder the movement of goods to ensure our supply chain connectivity during the pandemic and make greater use of the intra-ASEAN market to stimulate our regional economy.

The Covid-19 crisis underlines the vulnerability of the region in coping with emerging threats that might arise beyond expectations, he said.

Prayuth added that ASEAN should further strengthen preparedness in response to emerging diseases and bolster public health security in the long run, including through promoting cooperation on research and development on vaccines to attain vaccine security and self-reliance in the region.

“Currently, Thailand is on track in the development of Covid-19 vaccines and the country is ready to cooperate with other ASEAN member states on this matter,” he said.

Prayuth reaffirmed Thailand’s commitment to jointly advancing the ASEAN Community and forging greater regional integration, so that ASEAN could continue to serve as a major driving force of the global economy and society.

Source: Bernama

ASEAN should start allowing safe travel to revive economies, says Thai PM Prayuth

The Association of Southeast Asian Nations (ASEAN) and South Korea should look at strengthening cooperation in digital transformation that would help boost ASEAN economy, said Prime Minister Datuk Seri Ismail Sabri Yaakob.

In his intervention during the 22nd ASEAN – Republic of Korea (ROK) Summit held via videoconference on Tuesday, he said South Korea is highly regarded as a world-leader in digital technologies and its application to drive productivity.

The event was held in conjunction with the 38th and 39th ASEAN Summit and Related Summits chaired by Brunei with the theme “We Care, We Prepare, We Prosper”.

“The region’s digital economy is forecast to reach US$300 billion by 2025 as millions of people take up online shopping, embrace ride-share food delivery and other online services,” he said.

Correspondingly, Ismail Sabri said there is a need to address the threat of cyber-crimes which increases in tandem with digitalisation.

“Malaysia looks forward to the support of the ROK for the proposed programme,” he said.

On COVID-19, the Prime Minister said the pandemic has made it imperative for ASEAN and South Korea to coordinate efforts in effectively managing public health emergencies and emerging diseases.

In this regard, he said Malaysia applauds the South Korea’s vaccine hub initiative that would enable the region to have fair and equitable access to affordable, safe and effective COVID-19 vaccines.

“ASEAN and the ROK could also collaborate on initiatives to strengthen the public health system,” he said.

Malaysia also appreciates the South Korea’s contribution of US$1 million to the ASEAN COVID-19 Response Fund to support ASEAN’s public health initiatives and the country’s assistance of US$5 million to enhance COVID-19 detection capacity project as well as sharing of information and best practice to mitigate the impacts of the pandemic.

Source: Bernama

ASEAN, South Korea should strengthen cooperation in digital transformation – PM Ismail Sabri

Singaporean Prime Minister Lee Hsien Loong called on relevant parties to soon ratify the Regional Comprehensive Economic Partnership (RCEP) to contribute to the region’s post-pandemic economic recovery while addressing the 38th ASEAN Summit on October 26.

Given the difficult times caused by the COVID-19 pandemic, the Singaporean PM noted the need to work even harder on economic integration, and ratify the RCEP, Vietnam news agency (VNA) reported.

According to him, the agreement will boost confidence in regional trade and investment and contribute significantly to the region’s post-pandemic economic recovery.

“I look forward to the swift ratification of the RCEP by all ASEAN Member States and partners, for the agreement to enter into force by January 2022 as planned.”

ASEAN countries must also progressively re-open its economies and resume safe travel as they bring COVID-19 under control, VNA reported Lee added. This, he said, is an important aspect of living with COVID-19.

With the COVID-19 pandemic remaining a key challenge after two years, ASEAN nations must work together to improve access to vaccines, added Lee.

“As co-chair of the Friends of the COVID19 Vaccine Global Access (COVAX) Facility, Singapore is strongly committed to vaccine multilateralism and fair and equitable access to COVID-19 vaccines for all countries,” he affirmed.

Source: Bernama

ASEAN should ratify RCEP soon to boost economic recovery: Singaporean PM

When Beijing filed its formal application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) recently, the world reverberated by the move that could reshape regional trade.

Malaysia and Singapore, as members of the Association of the Southeast Asian Nations (ASEAN), announced that they are “looking forward to welcoming” the interest.

The world has been speculating on how such an inclusion would bring mutual benefits to the regional bloc, which Nikkei Asia reported that negotiations with China could start in 2022 at the earliest.

Pundits, however, have different perspectives that, among others, envisage ASEAN to gain a lot more from the concurrent inclusion of China in CPTPP, as well as in the Regional Comprehensive Economic Partnership (RCEP).

During the 38th and 39th ASEAN Summits and Related Summits scheduled from Oct 26 to 28, 2021, the issue of China’s inclusion would give hype to the annual event.

Former Deputy Secretary-General for the ASEAN Economic Community (AEC), Dr Aladdin D. Rillo, told Bernama that the new bid is definitely positive and impacts favourably on ASEAN.

Both CPTPP and RCEP are two important trade agreements that will widen trade liberalisation through their significant provisions on market access and promotion of private investment due to regulatory reforms, he said.

“It (China’s inclusion) will improve access to markets of other members of CPTPP, particularly the Americas since Canada and Mexico are both parties of CPTPP where ASEAN does not have any existing free trade agreements (FTAs).

“For example, RCEP contains new disciplines on e-commerce, competition, intellectual property rights, and government procurement that are not in existing ASEAN+1 FTAs and will therefore improve the trade environment in ASEAN, as well as in China, since China will be forced to make commitments and concessions on some of the trade concerns by ASEAN.

“On the other hand, CPTPP establishes a high standard of non-tariff measures (including sanitary and phytosanitary measures) and dispute settlement. Thus, when China becomes a party to CPTPP, these disciplines will make China’s trading arrangement with ASEAN also robust,” said Rillo, who was with the ASEAN Secretariat office from 2018 to 2021.

China has officially launched its bid to join the CPTPP by sending a notification to New Zealand’s trade minister, the designated CPTPP member who serves as the repository for administrative matters.

The 11-member trade pact include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam

Negotiations for what was then the Trans-Pacific Partnership (TPP) went on for five years, from March 2010 until Oct 5, 2015.

The United States was party to the talks, however, the election of Donald Trump in 2016 led to the country’s withdrawal from the agreement before its ratification.

Rillo, who is currently senior economic adviser in Jakarta-based Economic Research Institute and East Asia (ERIA), highlighted that China’s inclusion into CPTPP will benefit the digital sector the most.

He believes that as digital transformation becomes a priority for ASEAN, the development of the digital economy, along with trade, is crucial.

“CPTPP’s innovation is to promote digital trade by allowing data transfers, eliminating data localisation requirements, and prohibiting forced transfer of source codes as a requirement for firms to import.

“By acceding to CPTPP, this means that China abides with all these rules, thus allowing digital trade to flourish,” he said.

Asked if it were timely for ASEAN to evaluate the inclusion, Rillo opined that ASEAN’s immediate priority should be to ratify the RCEP next year.

He said that as implementing the RCEP is crucial to consolidate economic integration in ASEAN, it is imperative to ensure that all ASEAN member countries are ready to implement the RCEP and for the markets to enjoy the benefits in their business, as well as in the trading environment of the region.

“At the same time, there are ongoing priorities to upgrade the other ASEAN+1 FTAs which have been pending for some time now. 

“All these measures are consistent to keeping markets open again for trade and investment and enhancing supply chain resilience as the region recovers from the Covid-19 crisis,” he said.

To the question of whether ASEAN could pull the US into the CPTPP and describe the move as “revolutionary”, Rillo said the chances are small due to the current political climate in the US which remains toxic as far as reviving the CPTPP is concerned.

On Oct 13, 2021, it was reported that the Malaysian government was refining the draft amendments to three Acts, as it moves towards ratifying the RCEP.

On ratifying the CPTPP, Malaysia is currently on track, pending a detailed and clear mandate from the Cabinet, Bernama quoted the Ministry of International Trade and Industry (MITI) as saying on Sept 19, 2021.

Source: Bernama

China’s inclusion in CPTPP to give ASEAN shot in the arm

Initially sparked by supply chain disruptions associated with the Covid-19 pandemic, a worldwide shortage of microchips has intensified in recent months, largely due to a new round of lockdowns in Southeast Asia. Given the impact on strategically important sectors like automotive, efforts are under way to prevent similar issues in the future.

Microchips – also known as superconductors – are the “brains” inside electronic devices. They manage a host of systems in vehicles, for example, including electric windows and driver-safety features.

Demand for microchips rose sharply during the early stages of the pandemic in response to increased sales of devices such as laptops, phones and televisions. This, combined with an abrupt drop in production due to factory closures and supply chain disruptions, led to a major shortage worldwide.

The dearth of microchips intensified in recent months as producers in Asia implemented lockdowns in response to the Delta variant. This came at a particularly ill-timed moment for the automotive industry, stymieing its ability to capitalise on a recent surge in consumer demand.

In August car sales in China fell by almost 20 per cent year-on-year due to a shortage of vehicles. Elsewhere that month, US dealerships added fewer than one million new vehicles, a drop of 72 per cent from the 3.6 million added in August 2019.

While Japanese auto giant Toyota’s supply chain and large stockpiles of equipment proved to be relatively resilient following the Fukushima disaster in 2011, the superconductor shortage has impacted its operations.

The company – currently the world’s biggest carmaker – reduced its global production by some 430,000 units in September, and plans to cut production by another 333,000 in October. It hopes to partially offset this lost volume by the March 31 end of its financial year, to finish the period 300,000 vehicles shy of its original 9.3 million target.

Production trends in South-east Asia

Part of the problem is that Toyota, like many other automotive firms, sources its microchips from Southeast Asian producers, principally in Malaysia and Vietnam.

Indeed, South-east Asia’s semiconductor firms account for around 27 per cent of global packaging and testing.

Malaysia is a major producer in the region. More than 50 semiconductor multinationals have invested in the country, making it the world’s seventh-largest exporter, with around seven per cent of all superconductors passing through Malaysia for production, packaging or testing, according to data from the US-based Semiconductor Industry Association.

Having initially escaped the worst effects of the pandemic, Malaysia was severely impacted by the Delta variant in 2021. As of early October the 32.4 million-strong nation had reported nearly 2.3 million cases and 26,759 deaths.

In June the government imposed a nationwide lockdown, although it designated electronics companies as essential and allowed them to continue operating at 60 per cent capacity. Nevertheless, this resulted in a reduction in supply and increase in demand, aggravating the already severe global shortage.

Malaysia’s microchip industry is seen by many as crucial to overcoming the ongoing bottleneck.

Mei-Hua Wang, the minister of economy for Taiwan, another major producer of microchips, told international media in October that the global shortage could only be resolved by Malaysia resuming full operations as soon as possible.

“Now the focus is on Malaysia resuming production as soon as possible,” she said. “If their capacity can slowly come back, this problem can be slowly dealt with.”

Future-proofing the industry

It is widely expected that the microchip shortage will result in greater integration between producers and automotive companies.

An early indication of this was when the Taiwan Semiconductor Manufacturing Company (TSMC) – one of the world’s biggest producers of chips, alongside South Korea’s Samsung – announced plans to build new factories in the US and Japan.

Boosting production levels is another avenue of interest to stave off future shortages.

Microchip factories around the world increased their capacity by eight per cent between early 2020 and September 2021, and aim to expand it by more than 16 per cent by the end of 2022.

The TSMC recently announced it had increased its output of a key component of automotive semiconductors by 60 per cent in 2021.

The company is also working to modernise its just-in-time supply chain management method and increase demand visibility. Similar modifications are being proposed across the segment.

At the same time, the industry is exploring a transition from single- to multi-axis operations. Prior to the pandemic, the microchip industry was highly compartmentalised – a situation that countries such as Malaysia and Taiwan were able to leverage to their advantage, but which laid the foundations for the current pandemic-related disruptions.

While China is well placed to take advantage of such a shift, with many anticipating it will move ahead with developing its own microchip industry, it may also prompt other emerging markets to expand their market share.

Vietnam, for instance, has been working to develop its local industry, which is set to grow by US$6.2 billion between 2020 and 2024, at a compound annual growth rate of almost 19 per cent, according to research firm Technavio.

In addition to developing local ecosystems, the government has courted foreign investment. In January Intel announced that it had invested an additional US$475 million in its Vietnam facility, taking the total to nearly US$1.5 billion.

Locally produced semiconductor supply in Vietnam could be a key competitiveness draw for manufacturing and industry players that rely on these parts, including traditional and electric vehicle producers, as well as an attractive alternative to China for those pursuing China+1 supply chain strategies as part of their post-pandemic recovery plans.

Source: The Borneo Post Online

How can Southeast Asia’s microchip industry prevent future shortages?

Technology research and consulting firm Gartner Inc has identified 12 top strategic technology trends that organisations need to explore in 2022.

In a statement on Oct 18, Gartner said the trends are generative artificial intelligence (AI), data fabric, distributed enterprise, cloud-native platforms (CNPs), autonomic systems, decision intelligence (DI), composable applications, hyper-automation, privacy-enhancing computation (PEC), cybersecurity mesh, AI engineering and total experience (TX).

Gartner research vice-president David Groombridge said with chief executive officers and boards striving to find growth through direct digital connections with customers, chief investment officers’ (CIOs) priorities must reflect the same business imperatives, which run through each of Gartner’s top strategic tech trends for 2022.

“CIOs must find the IT force multipliers to enable growth and innovation, and create scalable, resilient technical foundations whose scalability will free cash for digital investments.

“These imperatives form the three themes of this year’s trends — engineering trust, sculpting change and accelerating growth,” he said.

Source: The Edge Markets

Gartner identifies 12 top strategic technology trends for 2022

Asian governments are urged to fully implement an existing global trade agreement and use digital technologies to speed up the recovery and avert future shocks to global trade.

In making the call, Asian Development Bank (ADB) said the Trade Facilitation Agreement, adopted by the World Trade Organisation in 2017, intended to cut down the amount of red tape involved in moving goods across borders.

It said the agreement aims to expedite the movement, release and clearance of goods by improving transparency and governance, streamlining and modernising border procedures, and enhancing the movement of goods in transit.

“Ramping up ongoing national efforts to implement this agreement could reduce trade costs for economies in Asia Pacific substantially.

“On top of that, making full use of digital technologies could cut costs even further,” it said in its blog yesterday.

ADB said the Covid-19 pandemic has provided hard-earned lessons about global supply chains, as disruptions led to shortages of critical goods from medical supplies to food.

It attributed the failure in international supply chains for medical supplies to the geographic concentration of major manufacturers of vaccines and personal protective equipment; export bans on medical supplies and key raw materials; as well as restriction on transportation movement.

“A recent survey shows that implementation of the agreement is raising transparency, streamlining border formalities, and enhancing institutional arrangement and cooperation across the region.

“However, it also shows that implementation of cross-border paperless trade is lagging. Many bilateral paperless trade mechanisms remain in the pilot stage or in early development,” it said.

On digital technologies, ADB said while the pandemic has accelerated the transition to paperless trading, greater use of information and communication technologies is needed to streamline customs procedures and electronic exchange of information, implement national and regional “single windows” for document submissions and clearance, and introduce e-registration of travel documents.

For instance, all members of Asean have joined the Asean Single Window live operation, exchanging certificates of origin under the Asean Trade in Goods Agreement preferential tariff arrangement.

However, this needs to be expanded to areas such as exchange of e-documents related to phytosanitary, animal health, and food safety certificates, it added.

Source: Bernama

Fully implement global trade agreement, digital technologies

IBM has unveiled a groundbreaking commitment and global plan to provide 30 million people with new skills needed for the jobs of tomorrow by 2030.

In a statement today, the New York-headquartered technology corporation said to achieve this goal, IBM has created a clear roadmap with 170 new partnerships and programme expansions in more than 30 countries across the Americas, Asia Pacific, Europe, Middle East and Africa.

The effort would leverage IBM’s existing programmes and career-building platforms to expand access to education and in-demand technical roles.

It said the plan relies on its broad combinations of programmes and includes collaborations with universities and key government entities, including employment agencies.

“Partnerships extend to non-governmental organisations as well, particularly those that focus on groups such as underserved youth, women, and military veterans,” it said.

In Malaysia, the company said it recently announced a collaboration with Politeknik Balik Pulau (PBU) in Penang to establish the IBM SkillsBuild@PBU Learning Institute, which is expected to benefit nearly 800 students at the polytechnic annually.

“Under the collaboration, PBU would tap into IBM SkillsBuild platform to access free accredited learning content, badges to certify learning and career development coaching from IBM experts,” it said.

Through IBM SkillsBuild@PBU Learning Institute, the company said the polytechnic aims to produce the country’s brightest young minds and provide them with the opportunity to learn the relevant skills and thrive in the future digital economy.

Source: Bernama

IBM commits to skill 30 mln people globally by 2030

The expected implementation of the Regional Comprehensive Economic Partnership agreement next year will widen trade flows and consolidate the supply chain network in the Asia-Pacific region, economists and business leaders said.

Despite the adverse effects of the COVID-19 pandemic on the region’s economic growth, the RCEP will help China mitigate the impact caused by an aging society and pave the way for both Chinese and global companies to export more products like fruits, aquatic goods, machinery and electric passenger vehicles to various markets within the region, said Rajiv Biswas, Asia-Pacific chief economist at global research and information provider IHS Markit.

“Innovations in trade policies, products and practices will be the cornerstones of progress for China and its partners to persevere on the path of development,” said Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore’s Business School.

Specifically, China can leverage much from its leadership in global collaborations such as the Belt and Road Initiative, participation in free trade agreements like the RCEP, and sound management of the domestic economy, he said.

The RCEP is a free trade agreement concluded in November between the 10 member states of the Association of Southeast Asian Nations－Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam－and five of its FTA partners, namely Australia, China, Japan, New Zealand and the Republic of Korea.

Arthayudh Srisamoot, Thailand’s ambassador to China, said the RCEP will lay the foundation for more intraregional trade and GDP growth when it comes into force if the public looks at how the free trade agreement between ASEAN and China has boosted economic and trade ties between the two sides, or how a free trade deal between China and the Republic of Korea has contributed to bilateral trade.

“With the RCEP in force, it will attract more investments from outside the region, especially against the backdrop of the global pandemic, thus reducing the impact of the COVID-19 pandemic on the economies in the region,” he said, stressing the massive deal will not only be an economic recovery tool against the disease but also help ensure the opening of markets as well as uninterrupted supply chains.

Glenn G. Penaranda, commercial counselor of the Philippine embassy in China, said the pact will help achieve a high level of openness within the region.

“With regard to trade in goods, member countries will further open their markets to each other, as well as reinforce the collaboration of regional supply chain development to better prevent risks,” he added.

According to the common rule of origin established by the agreement, only 40 percent of regional content is required for goods to be considered of RCEP origin, much lower than the threshold of other free trade agreements.

Backed by sales and service networks and a large number of employees in Indonesia, Vietnam and Malaysia, OSell, one of China’s major cross-border e-commerce platforms, plans to build more warehouses and service centers to expand into ASEAN markets.

“The RCEP will support the growth of both regional and global trade, cross-border e-commerce and related industries, and create a more stable and open investment environment for global companies investing in the region,” said Feng Jianfeng, chairman of the Chongqing-based company.

Iris Pang, chief China economist at Dutch bank ING, said the major challenge for China’s long-term growth is (strengthening its) technological competitiveness in the international environment. This does not only mean producing top-notch technologies but also being able to export them to the rest of the world.

“The dual-circulation growth paradigm is always needed for a big economy like China. International trade offers both seller and buyer economies a better price for the same transaction than traded within their own economies,” she said, noting domestic circulation provides the backbone support for the economy when the external side is weak.

Proposed by the central leadership, the dual-circulation growth pattern has emerged as the overriding economic theme, with innovation, opening-up and the need to boost domestic demand identified as priorities during the 14th Five-Year Plan period (2021-25). It sees domestic circulation as the mainstay, with domestic and international circulation reinforcing each other.

Source: China Daily

RCEP to boost trade flows and supply chain network in Asia-Pacific

Asia-Pacific is starting a period of recovery from the wave of the COVID-19 Delta variant, allowing for a resumption of economic recovery across much of the region in the fourth quarter of this year, according to Moody’s Analytics.

Asia-Pacific (APAC) chief Steve Cochrane said the movement controls put in place in Southeast Asia during the previous quarter due to the Delta wave has brought the region’s economy nearly to a halt.

However, he said, this will not last forever, as countries are now pulling back on movement controls as pandemic caseloads fall.

“Countries such as Indonesia, Malaysia and Thailand as well as Japan are now pulling back on movement controls as pandemic caseloads fall.

“Even the Philippines is instituting more targeted movement control orders, even as its daily caseload and coronavirus-related fatalities remain very high,” he said in a statement.

Cochrane said the uncertainty of COVID-19 and its impacts on global supply chains and industrial production is the greatest risk to the APAC economy as it approaches 2022.

While the current wave of the Delta variant is ebbing, the rapid response by policymakers to ease movement restrictions could set the region up for another as-yet-unknown variant, he said.

The Philippines, Vietnam, Indonesia and Thailand are the most vulnerable given their low vaccination rates to date.

India could be at similar risk, although there is a chance that it now has a high rate of natural immunity due to the two huge waves of infection it has already suffered, he explained.

“Fiscal and monetary policy also poses risks to economic performance in 2022. So far, Malaysia, Singapore and Japan appear set to continue some form of expansionary spending plans into 2022.

“Australia has begun a process of fiscal consolidation as it has curbed its extraordinary support for the unemployed while China moved early in paring back targeted spending programmes that supported manufacturing and infrastructure but is now injecting considerable liquidity into the financial system to ensure stability in the wake of the Evergrande debt crisis,” he added.

According to him, rising debt across the APAC region and looming acceleration inflation create risks that central banks will tighten monetary policy before Moody’s Analytics’ expectation of the second half of 2022.

“Indeed, the Bank of Korea was the first to raise its policy rate as it sought to curb high household debt and soaring property prices,” he noted.

A greater near-term threat is rising inflation, Cochrane said.

“The current pattern is uneven, but rising energy prices and China’s aggressive efforts to procure sufficient coal, natural gas, and other energy commodities for the winter months bode ill for containing inflation in the near term,” he said.

He added that at this time, inflation exceeds central bank target rates in only four APAC countries — Australia, New Zealand, South Korea and the Philippines.

Source: Bernama

Moody’s: Asia-pacific Resuming Economic Recovery Amid Lower Delta Variant Infections

ASEAN countries will benefit from China joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), said Nation-Building Institute (Thailand) chairman Prof Dr Kriengsak Chareonwongsak.

The CPTPP is a free trade agreement (FTA) involving 11 countries around the Pacific Rim, namely Mexico, Canada, Peru, Chile, New Zealand, Australia, Brunei, Singapore, Malaysia, Japan and Vietnam.

On Sept 16, 2021, China formally submitted a request to accede to the CPTPP, which was very much welcomed by Malaysia.

“When China is in both the CPTPP and Regional Comprehensive Economic Partnership (RCEP), we (ASEAN) can leverage both blocks, and eventually, we can merge.

“China is a big player, the more they join in (trade pacts), it would cause the competitive advantage paradigm to shift in every block,” he said during an online panelist discussion at the 2021 ASEAN Leadership & Partnership Forum today.

The forum, themed “Rebuilding ASEAN Towards Sustainable Recovery”, was co-organised by the KSI Strategic Institute for Asia Pacific and Economic Club of Kuala Lumpur.

Chareonwongsak also said ASEAN will be able to gain strength in a comparative advantage with China in both blocks.

“However, if we can pull the United States in (CPTPP) at the same time, it will be revolutionary,” he said.

Initial trade negotiations for what was then simply the Trans-Pacific Partnership went on for five years, from March 2010 until Oct 5, 2015.

The US was party to the talks, however, the presidential election of Donald Trump in 2016 led to the country’s withdrawal from the agreement before its ratification.

The remaining 11 nations amended the text of the agreement and the renamed CPTPP was signed in March 2018.

Malaysia is currently on track in ratifying the CPTPP, pending a detailed and clear mandate from the cabinet, Bernama quoted the Ministry of International Trade and Industry (MITI) as saying recently.

Malaysia has an FTA with China via the ASEAN-China FTA.

Source: Bernama

ASEAN nations to benefit from China’s inclusion in CPTPP, says expert

Global investors are expected to move into Asia as the worldwide economic outlook is anticipated to be uncertain with fractured growth in 2022 and 2023, said economists.

Juwai IQI chief economist Shan Saeed believes that the global economy is going back to the 1970s stagflation or recession-inflation era in which the inflation rate is high, economic growth is slow, and unemployment remains steadily high.

“Because of the Covid-19 pandemic, about 100 to 300 million people had dropped into the poverty level, while 20 to 30 million people had lost their jobs globally.

“So, we are in great economic fragility in 2022 and 2023. The global economic recovery is expected to have fractured growth with financial fragilities and bazooka towards the financial market,” he told Bernama.

He highlighted that usually during the stagflation period, investors historically took a position in real estate and commodities.

“Malaysia will tend to benefit due to higher oil and commodities prices expected next year.

“Juwai IQI expects the gross domestic product to grow between 4 and 5 per cent next year,” he said.

Furthermore, he said investment opportunities also remained seen in the liquefied natural gas (LNG), e-commerce, technology and infrastructure sectors.

He also noted that infrastructure is the only winning investment strategy that can spur growth globally.

“All top players are moving into Asean and Malaysia remains a growth story due to macroeconomic stability and economic confidence at the macro level.

“The total value of the Belt and Road Initiative (BRI) infrastructure projects at the current price is tantamount to US$4.5 trillion (RM18.8 trillion) and Malaysia is an important player in BRI equation due to her strategic geographical position,” he said.

Meanwhile, Centennial Asia Advisors Pte Ltd, chief executive officer Manu Bhaskaran said Southeast Asia is in a good place right now as long-term trends remained in its favour.

He said this in a panel session at the 2021 Asia Economic and Entrepreneurship Summit today.

The summit, themed “Building Sustainable Infrastructure for Economic Growth”, was organised by KSI Strategic Institute for Asia Pacific and other partners.

“There is a reconfiguration of production supply chains which would largely benefit countries in the region. Even with Covid-19, we see foreign direct investment (FDI) inflows coming in.

“It has also been seen in the last few years that the whole supply side had reformed in many countries in Asean, which would improve the region’s effectiveness with FDI,” he said.

He noted that new changes and improvement in the ease of doing business, and cutting through a lot of red tape, would contribute to more investment and growth.

Source: Bernama

Economists expect global investors to pivot towards Asia

Source: The Star

Developing Asia’s Growth

The expansion of the digital economy in Southeast Asia (SEA), which has accelerated significantly during the Covid-19 era, will continue its momentum post-pandemic as the increasing digital consumers will spur online purchasing amid greater e-commerce development, said Facebook.

SEA and Emerging Markets vice-president Benjamin Joe said the pandemic has been an accelerator of the digital trend with many consumers and users now being accustomed to doing things on mobile applications.

He believes that with more people multi-screening than ever before, a new consumer way of life is emerging with new purchasing habits, new ways to discover and new expectations.

“I think we will continue to see this (digital) user trend, and every data and insight that I have seen so far points to the fact that it will only continue to increase, not decrease,” he told a virtual media roundtable at the 2021 Facebook Summit SEA today.

He was responding to a question of whether the growth in the digital economy would continue given the rapid vaccination rate and economic relaxation in many countries that would enable consumers to regain offline purchasing experience.

Also present was Mindvalley chief marketing officer Marisha Hassram, who represented the Kuala Lumpur-based educational technology firm.

According to Facebook’s survey, SEA’s migration from the offline to the online economy in 2020 has surpassed its initial estimates and took off at an accelerated pace.

The survey also showed that the digital economy will continue to play an outsized role in daily life, even after Covid-19.

About 70 million people in the SEA region, which is equivalent to the entire population of the United Kingdom, have become digital consumers since the pandemic began, it revealed.

According to studies, digitalisation is a key driver of business resilience in the post-Covid economy with the increase in home-centric consumption.

“Digital channels help businesses reach more audiences, facilitate emotional connections, and turn the audience into consumers,” Benjamin said.

Social media platforms, such as Facebook, have become essential for some businesses’ survival, he added.

Benjamin noted that at Facebook, businesses — be it large, small, medium enterprises and micro — are provided with tools to grow and strengthen their digital presence, connect with customers and upskill their teams, thus helping them recover and contribute to the economic growth in their respective countries.

Meanwhile, Facebook, in a bid to help businesses be future-ready, will be hosting the third installment of the annual Facebook Summit on Sept 28, 2021.

The summit will feature over 50 global and regional leaders, who are pushing the boundaries in the industry, spotlighting ideas on how companies are using platforms like Facebook, Instagram, WhatsApp, and Messenger to creatively engage and serve their communities better.          

Source: Bernama

Digital economy to continue post-pandemic, says Facebook

A global survey conducted by KPMG International has found that 59 percent of chief executive officers (CEOs) in the Asia Pacific (APAC) are now more confident about global economic recovery compared to earlier this year.

However, they are also increasingly concerned about the risk to their supply chains, according to the KPMG 2021 CEO Outlook, which surveyed over 1,300 global CEOs about their strategies and outlook over a three-year horizon.

Among almost 500 CEOs in the Asia Pacific, 66 percent of CEOs in APAC stated their supply chains have been under increasing stress over the past 18 months.

It is thus unsurprising that CEOs have ranked supply chain risk as their top threat to growth this year, the consultancy firm noted.

“Pre-pandemic, risks to the supply chain had been steadily gaining attention due to increasing volatility from trade tensions and climate-driven events but were still considered a low priority for CEOs.

“However, the pandemic brought this issue into sharper focus as organisations struggled to maintain supply chain continuity during worldwide lockdowns,” said the managing partner of KPMG in Malaysia Datuk Johan Idris in a statement.

KPMG said Asia Pacific CEOs continue to recognise the importance of building resilient, flexible supply chains, with 36 per cent having stated an intention to monitor deeper into their supply chain to better anticipate potential problems, while 34 percent would diversify sources of input by adding new locations of inputs to make their supply chain more resilient.

Meanwhile, 14 percent said they would prioritise reconfiguring their supply chain to provide greater resiliency and more consistent access to achieve their growth objectives.

Other findings in the outlook stated that 70 per cent of CEOs faced increased demands from stakeholders for more reporting and transparency on environmental, social, and governance (ESG) issues and 81 per cent believed that the government’s stimulus would be required if all businesses are to reach net zero.

It also said while 68 per cent of CEOs were placing more capital investment in buying new technology, they were also looking to build human capability with 49 percent planning to invest in digital training, development, and upskilling to ensure employees’ skills remain future-focused.

“Just 18 percent of CEOs now say they are planning to downsize, or have already downsized their organisation’s physical footprint. This is a dramatic shift from August 2020 where 75 percent stated their intention to downsize their space,” it said.

Source: Bernama

CEOs more confident about global recovery but supply chain risks weigh

The Covid-19 pandemic sped up the shift of innovation from Europe and North America towards Asia, UN world rankings showed today.

The Global Innovation Index 2021, from the United Nations’ World Intellectual Property Organisation, showed surging performances by South Korea and China.

“The pandemic has accelerated the long-term geographical shift of innovation activities toward Asia, even if Northern America and Europe continue to host some of the world’s leading innovators,” said WIPO.

While the top four in the global rankings remained the same as last year — with Switzerland leading for the 11th year running followed by Sweden, the United States and Britain—South Korea leapt five places to fifth.

The index found “substantial increases in brand values in Korea, in trademarks being filed, but also in cultural and creative services exports,” index co-editor Sacha Wunsch-Vincent told reporters, citing the K-Pop phenomenon.

The Netherlands, Finland, Singapore, Denmark and Germany round out the top 10.

Meanwhile China continued its progress towards the top 10 and is still the only middle-income economy in the top 30, up two places to number 12.

Wunsch-Vincent said the country’s innovation players were individually strong and China was now trying to connect them better “so that public research feeds into commercial innovation”.

Turkey (41), Vietnam (44), India (46) and the Philippines (51) are the only other middle-income nations that are systematically catching up.

“Beyond China, these four particularly large economies together have the potential to change the global innovation landscape for good,” WIPO said.

The index ranks 132 economies. Among low-income countries, Rwanda leads the way in 102nd place, ahead of Tajikistan (103) and Malawi (107).

WIPO’s index found that countries and businesses increased investments in innovation despite the Covid-19 crisis, in a bid to stimulate post-pandemic economic growth.

Scientific output, research and development, IP filings and venture capital deals continued to grow in 2020.

Companies whose innovations revolved around measures to contain the pandemic and its effects—particularly pharmaceuticals and information technology—redoubled their innovation investments.

However, sectors hit hard by coronavirus restrictions, such as travel, cut back.

“Many sectors have shown remarkable resilience—especially those that have embraced digitalisation, technology and innovation,” said WIPO director general Daren Tang.

“As the world looks to rebuild from the pandemic, we know that innovation is integral to overcoming the common challenges that we face.”

Wunsch-Vincent highlighted that beyond top research and development spenders such as Australia, Germany, Japan and the United States, which all increased investments, “seven out of 10 economies still devote less than one per cent of GDP to R&D”.   

Source: AFP

Covid-19 pandemic speeds innovation shift to Asia, says UN

Global semiconductor equipment investments for front end fabs in 2022 are expected to reach nearly US$100 billion, powered by digital transformation and other secular technology trends, to meet soaring demand for electronics after topping a projected US$90 billion this year, according to the US-based Semiconductor Equipment & Materials International (SEMI).

Fab spending refers to spending on semiconductor fabrication plants.

In a statement on its website yesterday, SEMI highlighted in its World Fab Forecast report that the new fab equipment spending records will mark a rare three consecutive years of growth that began in 2020, bucking the historical cyclical trend of a one- or two-year expansion followed by a year or two of tepid growth or declines.

SEMI said the semiconductor industry last saw more than two consecutive years of growth in the mid-1990s.

It said the foundry sector will account for the bulk of fab equipment investments in 2022, with more than US$44 billion in spending, followed by the memory sector at over US$38 billion.

SEMI said both DRAM and NAND also show large increases in 2022 with jumps in spending to US$17 billion and US$21 billion, respectively.

Meanwhile, micro/MPU investments will reach approximately US$9 billion, discrete/power US$3 billion, analog US$2 billion, and other devices about US$2 billion next year.

The association said that regionally in 2022, Korea will lead in fab equipment spending at US$30 billion, followed by Taiwan at US$26 billion, and China at nearly US$17 billion.

It said Japan will take the fourth spot with almost US$9 billion in fab equipment spending.

While Europe/Mideast will be in fifth place at US$8 billion, the region is expected to post standout year-over-year percentage growth of 74% in 2022.

In the Americas and Southeast Asia, spending is projected to reach more than US$6 billion and US$2 billion, respectively.  

The World Fab Forecast report lists 1,417 facilities and lines globally, including 129 facilities and lines starting volume production in 2021 and beyond.     

Source: The Edge Markets

Global fab equipment spending to hit US$100 billion in 2022, says SEMI

Asia-Pacific merger and acquisition (M&A) activity hit an all-time high in the first six months of 2021 (1H21) as markets began to revive from the Covid-19 pandemic, fuelled by technological innovation and environmental, social and governance (ESG) agendas, according to Ernst & Young PLT (EY).

Based on EY’s new analysis, M&A values targeting the region increased to US$535 billion (about RM2.22 trillion), almost doubling from US$284 billion in the same period last year.

In a statement, the firm said so far this year, there were more than 50 deals worth over US$1 billion announced that targeted Asia-Pacific, increasing by almost five times from last year.

The technology sector continued to lead deal activity in the region, accounting for almost one-third (28%) of the cumulative deal value in 1H21, as M&As targeting technology companies hit a record high in the region with deal value increasing by 88% year-on-year (y-o-y).

The consulting firm said advanced manufacturing and mobility were the subsequent most active sectors in terms of deal activity.

EY Asia-Pacific strategy and transactions leader Yew-Poh Mak said M&A activity in the tech sphere of Asia-Pacific was fuelled by the emergence of next-generation technological applications, such as the industrial Internet of things (IoT), artificial intelligence (AI), electric vehicles (EVs) and sustainable, fuel-efficient technologies.

“For advanced manufacturers who pursued M&A, the primary activity was bolt-on acquisitions in the same sector designed to increase market share or transformative deals that would enable a more sustainable business model.

“Consolidation is a means for businesses to combine and complement their strengths to differentiate themselves and, in the technology sector, to focus more on a target’s business resilience, digital technology alignment and to gain market share,” said Mak.

Outbound value in Asia-Pacific rebounded to pre-Covid-19 levels of US$85 billion.

Meanwhile, inbound value reached a historical high of US$74 billion, jumping by more than 170% compared to the pre-Covid-19 pandemic average.

Ernst & Young PLT strategy and transaction leader Preman Menon said the consulting firm expects to see M&A trends in Malaysia mirroring the trends seen globally, albeit lagging behind the recent pace seen in the larger markets.

“The Covid-19 pandemic accelerated the need for Malaysian businesses to review and realign their strategy and formulate their transformation journeys for the future.

“While plans and growth trajectories vary by sector, we observe common themes centring around transformation, agility and sustainable growth. In line with this, we believe that M&A activity will be featured as companies look to acquire technology and skill sets, favouring ‘buy’ versus ‘build’,” Menon noted.

ESG-related acquisitions drive global deal activity

In addition, M&A activity in the renewable energy (RE) sector almost tripled globally in 1H21, compared to the same period last year, as chief executive officers (CEOs) looked to meet ambitious environmental targets through transactions.

The value of these ESG-related deals jumped from US$35.7 billion in 1H20 to US$96.5 billion in 1H21.

EY global vice chair for strategy and transactions Andrea Guerzoni said: “ESG is increasingly becoming an integral part of investment decisions, with many CEOs and investors committing to adapting their current and future deal strategies with sustainability and long-term value creation at the forefront.”

Asia-Pacific M&A deal appetite at highest level since 2010

Looking forward, the appetite for deals in Asia-Pacific is at its highest level since 2010 with almost 90% of companies in the region indicating that they are on the lookout for cross-border acquisitions in the next 12 months.

EY Asia-Pacific’s Mak said: “Digitalisation remains paramount in Asia-Pacific and globally. Companies are actively putting customer expectations at the centre of their plans. One aspect that arose from the Covid-19 pandemic was the splintering of value chains, both upstream to suppliers and downstream to customers, due to repeated lockdowns. Any acquisition of emerging technology and innovative solutions will enable companies to scale up their existing technological capabilities, accelerate the digitalisation of the customer journey and transform business processes. 

“Identifying potential areas of growth to make acquisitions and making the difficult decision to divest underperforming assets are both firmly on the corporate agenda in Asia-Pacific and worldwide,” Mak added.

Source: The Edge Markets

EY: Asia-Pacific M&A activity hit all-time-high in 1H21, fuelled by technological innovation, ESG agendas

A review of the free trade agreement (FTA) and cooperation on Covid-19 were among the issues discussed in a virtual meeting between India and ASEAN economic ministers on Tuesday.

India’s Junior Minister for Commerce and Industry Anupriya Pate and Brunei Minister of Finance and Economy Datuk Dr Amin Liew Abdullah co-chaired the India-ASEAN consultations while Malaysia was represented by the Senior Minister and Minister of International Trade and Industry Datuk Seri Mohamed Azmin Ali.

Mohamed Azmin said there is vast potential for both sides to explore and expand opportunities for trade and investment.

“The private sector must therefore continue to play an active role in forging ahead to intensify and develop business synergies, activities and other strategic initiatives,” he tweeted.

Meanwhile, in a statement, India’s Ministry of Commerce said the Ministers took stock of the current pandemic situation and reaffirmed their commitment to take collective actions in mitigating the economic impact of the pandemic and ensuring resilient supply chains in the region.

It said the two sides have been discussing changes in trading arrangements in the ASEAN-India Trade in Goods Agreement (AITIGA), which was signed in August 2009 and came into force in January 2010.

The Ministry said the Ministers resolved to complete the review process “expeditiously to make the agreement trade facilitative, user-friendly with contemporary” and streamline Customs procedures.

It added that India suggested both sides should work to announce the review before the end of this year.  

Source: Bernama

ASEAN and India discusses trade pact review, Covid-19 cooperation

Even as they struggle with one of the world’s worst Covid-19 outbreaks, nations across Southeast Asia are slowly realizing that they can no longer afford the economy-crippling restrictions needed to squash it.

On the factory floors of Vietnam and Malaysia, in the barbershops of Manila or office towers of Singapore, regulators are pushing forward with plans to reopen, seeking to balance containing the virus with keeping people and money moving. That’s leading to a range of experiments including military-delivered food, sequestered workers, micro-lockdowns and vaccinated-only access to restaurants and offices.

In contrast to Europe and the US, which have already moved down the reopening path, the region’s low vaccination rates leave it among the world’s most vulnerable to the delta variant. But with state finances stretched by previous rounds of stimulus and dwindling monetary policy firepower, lockdowns are becoming less tenable by the day.  

“It’s a tricky balance between lives and livelihoods,” said Krystal Tan, Australia & New Zealand Banking Group Ltd economist, noting that even Singapore has struggled with infection spikes despite having a world-leading vaccination rate. The risks of stop-start re-openings are higher in the rest of the region, where coverage is considerably lower, Tan said.

Southeast Asia’s factory shutdowns have rippled across the world to create supply chain hiccups, with automakers including Toyota Motor Corp slashing production and clothing retailer Abercrombie & Fitch Co warning the situation is “out of control.”

The daily death rate in many Southeast Asian countries has surpassed the global average, helping push them to bottom spots of Bloomberg’s Covid Resilience Ranking. 

Yet officials are increasingly worried about what it means economically if restrictions linger too long despite slow inoculations. Malaysia cut its 2021 growth forecast in half to 3%-4% as daily cases hit records. Thailand’s hoped-for rebound on a critical tourism revival is swiftly vanishing. 

‘Pipe dream’

Even where the outlook appears impressive — Vietnam is set to grow 6% this year and Singapore officials see theirs as high as 7% — there’s increasing pressure to address global supply-chain blockages and to avoid dampening foreign investor appetite for the dynamic region.

According to Oversea-Chinese Banking Corp economist Wellian Wiranto, Southeast Asian nations are being worn down both by the economic costs from successive rounds of lockdowns and an increasing sense of exhaustion among their populations as the crisis drags on.

“Any hope of a broad border reopening that can facilitate trade and tourism flow across various Asean countries is going to remain a distant pipe dream,” Wiranto said.

When it comes to impacts on global supply chains, the stakes have been among the highest in Vietnam, where increasingly stringent lockdowns have exacted a high cost for manufacturers and exporters while failing to halt delta’s spread.

The country’s trade ministry warned this month that it risks losing overseas customers because of tough restrictions that have shuttered factories. The European Chamber of Commerce in Vietnam estimated that 18% of its members have relocated part of their production to other countries to ensure their supply chains are protected, with more expected to follow. 

Endemic shift

Patience among the public is wearing thin across the region, especially as they’ve battled the virus for longer than most of the world. In Malaysia, the social angst helped force regime change after extended lockdowns fueled job losses but failed to reduce cases.

Street protests against the Thai government that predate Covid have evolved into pandemic-related rallies. The plight of the working poor in Vietnam — away from promising middle-class jobs for multinational companies — is increasing pressure on the government to re-open.

In Singapore and the Philippines, businesses are becoming more vocal about difficulties in long-term planning due to the lack of certainty around government policies.

As a result, there is now a growing shift in Southeast Asia to treat Covid-19 as endemic, with the likes of Malaysia, Indonesia and Thailand emulating Singapore’s strategy to learn to “live with the virus.”

Indonesia, the region’s biggest economy, is focused on the long game. Ministers are attempting to cement rules like a years-long mask mandate rather than implementing on-and-off mobility curbs. They’re also rolling out “road maps” for specific areas like offices and schools in order to outline more permanent rules in the new normal.

Reporting the number of daily cases is now becoming less important than their severity. This is especially true for the two most-vaccinated in Southeast Asia — Singapore, which ranks among the world’s best above 80%, and Malaysia, with about half the population fully inoculated.

Targeted lockdowns

In place of national or regional lockdowns, the Philippines is looking to apply mobility curbs in more targeted zones — down to the street or even house. Vietnam, too, is testing this strategy, with Hanoi instituting travel checkpoints as officials vary restrictions based on virus risk in different areas of the city.

Only those with vaccine cards can enter malls and places of worship in Jakarta, or head to the cinemas in Malaysia. Restaurants in Singapore are required to check the vaccination status of diners. In Manila, officials are considering “vaccine bubbles” for workplaces and public transport.

While this strategy may reduce the damage to the broader economy, the risk is that an unequal distribution of vaccines — in Malaysia, for instance, to economically vital states rather than poorer areas — may unfairly disadvantage lower-income residents. 

Source: Bloomberg

With economies on the brink, Southeast Asia chooses to reopen

The 53rd ASEAN Economic Ministers’ (AEM) Meeting and Related Meetings concluded on a positive note for the revitalisation of regional economic growth and the importance of ASEAN centrality and commitment to work collectively and emerge from the COVID-19 crisis successfully.

To rejuvenate the region’s economy, discussions on the implementation status under the ASEAN Comprehensive Recovery Framework (ACRF) took centre stage, the Ministry of International Trade and Industry (MITI) said in a statement here today.

Among key initiatives under the ACRF that have been completed were the signing of the Regional Comprehensive Economic Partnership (RCEP) Agreement, the finalisation of the comprehensive review of the ASEAN Digital Integration Framework, and the ASEAN Digital Integration Framework Action Plan (DIFAP) 2019-2025, it said at the end of the virtual meeting held between Sept 8-9, 2021.

Senior Minister and MITI Minister Datuk Seri Mohamed Azmin Ali led the Malaysian delegation at the AEM Meeting hosted by Brunei Darussalam as the Chair of ASEAN 2021.

In the meeting, Azmin stressed the imperative of ASEAN centrality and the need to continue to work with greater resolve in order to tackle headlong the challenges of the pandemic for the region to emerge stronger and more resilient. He further underscored the importance of expediting the implementation of all the initiatives under ACRF to facilitate economic reopening and spur regional recovery.

The AEM also welcomed the finalisation of the ‘Bandar Seri Begawan Roadmap: An ASEAN Digital Transformation Agenda to Accelerate ASEAN’s Economic Recovery and Digital Economy Integration (BSBR)’, which will provide a focused plan for ASEAN to develop an enabling environment for a robust ASEAN digital economy and ensure the region emerges stronger from the pandemic.

In supporting the roadmap and calling for its swift implementation, the Senior Minister said that it is timely to tackle the immediate and short-term needs for the digital transformation of the region.

He reiterated Malaysia’s commitment to incorporate comprehensive digital economy elements in international trade arrangements and cooperation so as to create a digital trade environment with improved stability, lower risks, and reduced compliance costs.

The initiative complements Malaysia’s MyDIGITAL that outlines strategies to drive the growth of the digital economy and narrow the digital divide as well as to transform the nation into a digitally-enabled and technology-driven high-income economy.

The ministers endorsed the Framework for Circular Economy for the ASEAN Economic Community in recognising the importance of advancing sustainable economic agenda.

Azmin also emphasised that the Environment, Social and Governance (ESG) factors are central to the key elements in the ASEAN Community Vision 2025, and are crucial in driving long-term value creation, integrating Malaysia’s businesses into international networks and attracting more investors.

In this vein, the Senior Minister proposed the concept of Carbon Neutrality for ASEAN and explore discussions on investment opportunities in the green economy which was warmly received by fellow ministers and endorsed by AEM Chair Dato Amin Liew Abdullah.

Going forward, ASEAN Secretariat Chair Lim Jock Hoi also expressed interest to work with Malaysia on advancing this initiative and deepening the commitment towards sustainability and green technology.

The AEM commenced with the ASEAN Free Trade Area (AFTA) Council Meeting where the ministers were apprised of the status of the implementation of the ASEAN Trade in Goods Agreement (ATIGA) as well as its review.

Achievements in trade facilitative measures were also reported, including the endorsement of the Non-Tariff Measures (NTM) Cost-Effectiveness Toolkit, which would act as an important guideline to address NTMs that affect the smooth flow of goods in ASEAN.

This was followed by the ASEAN Investment Area (AIA) Council Meeting where the ministers adopted, in principle, the ASEAN Investment Facilitation Framework (AIFF), underscoring the importance of improving investment facilitation processes in ASEAN member states, which are crucial for promoting and retaining investments in the region and contributing to overall economic recovery.

The meeting also commended the work advanced by the ASEAN Business Advisory Council (ASEAN-BAC) in 2021 in boosting ASEAN’s efforts towards economic integration and continuously championing initiatives that are central to the betterment of the business environment and the people of ASEAN.

To this end, the ministers welcomed the recommendations of the ASEAN-BAC on human capital development, trade facilitation, and digital connectivity.

The ministers also endorsed the expanded list of essential goods in the memorandum of understanding (MoU) on the Implementation of Non-Tariff Measures on Essential Goods, signed in November 2020, to ensure the uninterrupted flow of essential goods in the region. The list now includes food and agricultural products, from the previously endorsed list of medicines and medical equipment.

They also launched the OECD Competition Assessment and Competitive Neutrality Reports on the logistics sector in ASEAN.

Funded by the ASEAN-UK Economic Reform Programme, these two studies aim at assessing regulatory constraints on competition in the logistic sectors in all ASEAN member states by identifying regulations that hinder the efficient functioning of markets and creating a non-level playing field for businesses.    

Source: Bernama

ASEAN to focus on revitalising regional growth and emerging stronger from pandemic

The economic ministers of ASEAN will reconvene through the virtual 35th ASEAN Economic Ministers (AEM) Meeting on Sept 8-15, 2021, to push for quicker implementation of the initiatives under the ASEAN Comprehensive Recovery Framework (ACRF), Ministry of International Trade and Industry (MITI) said.

The initiatives to be deliberated on include the signing and ratification of several mutual recognition arrangements (MRAs), including the signing of the ASEAN MRA on Building and Construction Materials and ratification of the ASEAN MRA on Type Approval of Automotive Products, MITI said.

“The progress of ratification of the Regional Comprehensive Economic Partnership (RCEP) agreement is also expected to be deliberated,” it said in a statement released today.

Senior Minister and MITI Minister Datuk Seri Mohamed Azmin Ali will continue to lead the Malaysian delegation at the AEM Meeting, which is being held under the chairmanship of Brunei in 2021.

“Along with these, emphasis will also be given to the progress of the memorandum of understanding (MoU) on the implementation of non-tariff measures on essential goods signed in November 2020 by the ministers,” the ministry said.

In March this year, the AEM concurred that expeditious ratification and entry-into-force of ASEAN economic agreements could fast track the economic recovery of the region.

To this end, MITI said, the ministers had tasked the senior economic officials to develop a set of guidelines in collaboration with legal experts, on appropriate and reasonable provisions that could be used to expedite the entry-into-force of future economic agreements.

“The ministers are expected to be further briefed on the progress of this task at this meeting,” it added.

Another anticipated focus area at this AEM Meeting is on the digital transformation in ASEAN where the ministers are expected to endorse the Bandar Seri Begawan Roadmap: An ASEAN Digital Transformation Agenda to Accelerate ASEAN’s Economic Recovery and Digital Economy Integration.

MITI said the ministers are also scheduled to undertake consultations with ASEAN Dialogue Partners – the United States, India, China, the European Union, Russia, South Korea, Japan, Australia, New Zealand. Switzerland, and Hong Kong/ China to continue with their collaborative work beyond the ASEAN region.

They will welcome the United Kingdom for the first consultation session, after the country’s conferment as ASEAN’s newest dialogue partner in August this year.

Source: Bernama

ASEAN ministers to hasten implementation of initiatives for regional recovery

Fintech and e-commerce companies in Southeast Asia are raising hefty amounts of capital as global investors bet on post-pandemic technology plays, bankers and investors said, a trend that is also stoking concerns about frothy valuations.

Public equity capital raising by Southeast Asian firms has surged to a four-year high of $8.4 billion this year, data from Refinitiv shows, with companies such as Indonesian e-commerce firm Bukalapak attracting strong interest in its IPO.

Private equity investments have also jumped, reaching $8.2 billion, just shy of a record of $8.9 billion in 2020 and expanding the “unicorn” club of startups valued at more than $1 billion.

Near-term fundraising activity will be led by Indonesian tech group GoTo’s expected completion of a $2 billion pre-IPO funding, while about a dozen start-ups are looking to list regionally or in the United States over the next two years, bankers and investors said.

The hectic pace of activity comes as the COVID-19 pandemic boosts consumers’ adoption of digital platforms and investors scout for internet-based companies that are able to grow their businesses faster in a region of 650 million people.

Cash-rich global funds are also sharpening their focus on these opportunities, given China’s regulatory crackdown on technology companies.

“There’s strong interest from public market investors to get exposure to the growth profile of this region,” said Jeffrey Perlman, head of Southeast Asia at buyout fund Warburg Pincus, one of the biggest investors in the region.

Startups looking to list as early as this year include Indonesian travel firm Traveloka and online classified marketplace Carousell, sources familiar with the plans said.

Other sources said Thai e-commerce enabler aCommerce and startup Pomelo Fashion are considering IPOs next year. Regional logistics group Ninja Van said an IPO was a possibility but it gave no timeline.

Traveloka and Carousell declined to comment. Pomelo Fashion and aCommerce did not immediately respond to requests for comment.

“We do see more exciting companies emerge. I would be constructive on the opportunities within Southeast Asia,” said Sukumar Rajah, director of portfolio management at Franklin Templeton Emerging Markets Equity.

‘REAL OPPORTUNITY’

Southeast Asia’s internet economy is forecast to triple to $300 billion by 2025 from end-2020, according to a report from Google, Temasek and Bain & Company.

The total value of venture capital transactions has already hit a record $10 billion in the first half of this year, surpassing 2020’s level of $8.2 billion, data from industry tracker Preqin shows.

“Indonesia, Vietnam, Thailand – all these countries have large enough domestic populations where digitisation opportunities can be unicorn size,” Jeffrey Jaensubhakij, chief investment officer at Singapore sovereign wealth fund GIC said last month.

“The difficulty lies in which are the few business models that can really do pan-regional because that’s where the real opportunity is.”

The region has also attracted interest from SPACS or special purpose acquisition companies and accounts for four of eight Asia-related SPAC targets unveiled this year, Dealogic data shows.

“Investors have also been to the movie before in China and India, so they are looking to leverage that experience in a bigger way and avoid missing out on some of those same opportunities,” said Perlman from Warburg Pincus.

Ride-hailing and food delivery firm Grab, struck a record $40 billion SPAC deal in April as part of a U.S. listing.

“It’s rare that our part of the world gets the attention. It’s not China or India or Australia or Korea but Southeast Asia,” said Hari Krishnan, CEO of regional online marketplace PropertyGuru, referring to interest from SPACs.

Singapore-based PropertyGuru agreed a $1.8 billion merger with a SPAC backed by tycoons Richard Li and Peter Thiel to list in the United States.

Singapore-based gaming to e-commerce firm Sea’s stellar U.S. share performance since its listing four years ago has also encouraged investors.

However, some concerns are emerging over whether the abundant global liquidity is inflating company valuations and if they can be sustained in secondary markets.

For example, Bukalapak, which launched Indonesia’s biggest IPO of $1.5 billion this month after scaling it up from $300 million, saw its shares jump 55% from its IPO price in the first few days before giving up most of its gains.

“To justify its high enterprise value to sales multiples, Bukalapak will need to maintain annual revenue growth at around 50% over the next five years, which seems like a rather difficult target,” said Oshadhi Kumarasiri, equity analyst at LightStream Research.

Source: Reuters

Southeast Asia tech dealmaking booms as investors place post-COVID bets

The Asia-Pacific Economic Cooperation (APEC) region posted a 6.1 per cent increase in economic growth in the first quarter (Q1) of 2021, bouncing back strongly from a two per cent decline in the first quarter of 2020.

According to the latest update from the APEC Policy Support Unit (PSU), the forum’s research and analysis arm, this number comfortably puts the region on track to achieve growth expectations for 2021, which is estimated at 6.4 per cent.

The report said the high growth in Q1 2021 was due to several factors, including the low comparison point following substantial economic contraction a year ago as well as higher government spending given the sustained impact of the pandemic on economic activities, while domestic consumption grew considerably during this period.

In the near term, the unit still expected sustained stimulus measures from governments to drive the region’s economic growth.

According to the report, private consumption will also get a boost of confidence as consumers are expected to draw on their accumulated savings, bolstered in part due to cash transfers and wide-ranging subsidies to households.

“Vaccination programmes and rollout still drive economic growth and the recovery progress in the region.

“We are still seeing a disparity in access to vaccination coverage across APEC; economies with faster rollouts and sustained fiscal support will recover faster and stronger, while economies that struggle with vaccine access and have limited fiscal space will take more time to recover due to these uncertainties,” said APEC PSU director Dr Denis Hew.

Vaccination coverage across APEC is noticeably diverse, ranging from 148 doses per 100 residents to a low of only one dose per 100 residents.

As a result, the rate of fully vaccinated people across economies varied greatly, from as low as 0.2 per cent to as high as 72 per cent of the population, as of mid-August.

“The race to vaccinate as many people as possible in the shortest amount of time is extremely crucial.

“Economies cannot afford to keep imposing restrictions, close borders and indefinitely provide wide-ranging fiscal and monetary support,” said Rhea C. Hernando, a researcher at the unit.

According to her, multilateral cooperation is key in facilitating the free flow of vaccine components and related supplies as this will significantly contribute to the accessibility and affordability of vaccines, especially for low- and middle-income economies.

“It is now clear that for economic recovery to be on firmer footing, health must be safeguarded, which in turn necessitates access to vaccines to protect as many people as possible, as soon as possible,” Hernando said.

On trade, the region performed positively in the first quarter of 2021, with the value of merchandise exports and imports growing at a higher rate of 16.8 per cent and 16.2 per cent, respectively, from a contraction of 6.1 per cent for exports and 4.1 per cent for imports during the same period last year.

This improved performance, the report said, was due mainly to pharmaceuticals and office and communications equipment, while the agrifood, apparel, metals and minerals sectors also added to the trade boost.

The unfaltering impact of COVID-19 on the transport and travel sectors continues to drag APEC’s commercial services performance.

From January to March 2021, commercial services declined further to 12 per cent for exports and 15.2 per cent for imports, compared with a decline of 9.5 per cent for exports and 9.2 per cent for imports for the same period in 2020.

The updated report also noted an increase in inflation during the first half of 2021 to 2.3 per cent, compared with 1.6 per cent in the first half of 2020, due to the gradual normalisation of prices.

“Inflation is expected to revert to its pre-pandemic levels globally once prices factor in pandemic-related supply-side disruptions,” it said.

According to the report, the whole-year forecast of inflation for the APEC region is two per cent and it could increase to 2.2 per cent in 2022.

“There is a risk that the upward trend in inflation could persist as consumption activity strengthens following successive quarters of pent-up demand,” it said.

The report advised that price pressures require continued monitoring and clear communication from monetary policy authorities to guide inflation expectations.

Source: Bernama

APEC posts strong Q1 economic growth, set to hit 6.4 pct in 2021

About 39 per cent of ASEAN enterprises have made substantial progress towards digital transformation, according to accounting firm EY.

EY, formerly known as Ernst & Young Global Ltd, reckons 65 per cent of ASEAN enterprises will start their digitalisation journey in the next three years.

EY ASEAN regional managing partner Liew Nam Soon said COVID-19 has significantly accelerated digital transformation across businesses in the region.

He said a new EY study, entitled “Building successful digital ecosystems in Southeast Asia,” has found that companies will continue to transform their business digitally to drive profitable growth.

“A partnership model can provide significant momentum for their digital transformation journeys,” he said during a virtual media briefing on Wednesday.

Liew said the growing digital ecosystem in Southeast Asia offers the potential to generate revenue opportunities of US$23 billion by 2025 from about US$6 billion in 2020.

Between 2016 and 2020, Southeast Asia witnessed technology transactions worth a total of US$408.5 billion. Mobile applications, cloud computing, artificial intelligence, big data and analytics, blockchain and Internet of Things (IoT) were the technology areas that saw the most investments.

Industry players will seek a win-win proposition through mergers and acquisitions (M&A), joint ventures and investments, Liew reckons.

EY-Parthenon partner and ASEAN specialist Joongshik Wang said surveys done among executive level managers involved in M&A or digital strategy have found that 90 per cent of respondents prioritise digital investment in their capital allocation, while 74 per cent of corporates buy or make investment approaches for digital growth.

“Meanwhile, most traditional firms have been focusing on their core business and may be hesitant to build a platform-based business due to legacy systems and corporate culture.

“Thus, traditional firms are turning to collaborating with e-commerce and last-mile platforms to offer digitalised, streamlined and omnichannel experiences to their customers,” he added.

Asked about Malaysia’s position among region peers, he noted that the country has fewer unicorns compared to other countries.

“I’m surprised to see that because more than 80 or 90 per cent of unicorns are very concentrated in Singapore and Indonesia and we seeing emerging unicorns getting more active in Vietnam.

“Malaysia has overall market maturity and high readiness for the digital economy, but interestingly we don’t see many unicorns,” he said.

Source: Bernama

ASEAN Enterprises On Track For Digital Transformation — EY