Asean’s green future and debt trouble

This week in Asean:

• Vietnam: US$15.5 billion financing framework for energy transition unveiled
• Malaysia: Increase in housing prices and rental rates expected
• Thailand: Tourism target back on track with surge in Malaysian visitors
• Indonesia: Presidential candidates competing to court the youth vote
• Myanmar: Central bank ceases setting exchange rates for foreign currencies

Dear BT reader, 

The big news of the week is the 28th meeting of the Conference of the Parties (COP 28) at the 2023 UN Climate Change Conference in Dubai, which started on Nov 30 and will wrap up on Dec 12. 

Asean members, including Singapore, Vietnam, Indonesia and Malaysia, have announced a series of initiatives and financial instruments aimed at accelerating the transition to a green economy. However, questions persist regarding whether these measures are sufficient to attract private capital and close the international financing gaps for these countries. Our ESG correspondent, Janice Lim, spoke to experts during her trip to Dubai to gain insights into how the region can finance a greener future.

At the same time, the region is facing risks from elevated debt levels. A financial stability report released on Tuesday revealed that non-financial debt - comprising corporate, household and government debt - in the Asean+3 region (Asean plus China, Japan and South Korea) reached 300 per cent of the region’s GDP by the end of last year. This revelation underscores the vulnerability of the region to potential inflation resurgences, prompting calls for diverse measures to reduce debt across the three different sectors.

Following last week’s news of Thailand resurrecting a proposal for a 100km land bridge, which would effectively allow ships to bypass Singapore and Malaysia, our journalist Goh Ruoxue got in touch with a number of experts to understand the impact of the project. The consensus seems to be that the potential alternative trade route poses little threat to the international seaports of Singapore and Malaysia, the two key ports in the region.

Over to Malaysia, a recent survey unveiled a positive outlook among most of the country’s property agents regarding the real estate sector in 2024. Many expect a rise in residential prices and rentals within the next 12 months. Over half of the surveyed agents also anticipate stronger economic growth during the same period. Moreover, Malaysia is actively working to enhance its tourism sector by implementing measures such as visa-free travel, with the goal of attracting five million Chinese tourists annually to fuel the ongoing growth.

Do check out more stories in the links below. Thank you for supporting The Business Times and we will see you again next Friday!

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Japanese leaders will host a three-day special summit with Asean leaders in Tokyo from Dec 16. During this summit, both sides aim to deepen their cooperation across three pillars: people exchanges, the co-creation of the economy and society, as well as peace and stability. Priority areas will include supply chains and digitalisation.

Asean in Brief

• Consumer-focused startups in South-east Asia need laser-sharp focus to attract funding Startups selling consumer goods in South-east Asia must be laser-focused in their strategy and marketing if they are to attract funding in this tough market, investors and consultancies told The Business Times. Read more
• Singapore food manufacturers in spotlight as Asean consumption recovers Singapore-listed food and beverage (F&B) manufacturers should get a lift from a post-Covid consumption recovery across South-east Asia next year. Read more
• Vietnam launches financing framework for its energy transition At the sidelines of COP28, Vietnam on Friday (Dec 1) launched an investment framework to finance its transition to a low-carbon economy, known as the Resource Mobilisation Plan (RMP). Read more
• Malaysia property agents expect housing prices, rental rates to increase in 2024: survey The majority of property agents in Malaysia say they are upbeat about the real estate sector’s outlook for 2024, with many anticipating that residential prices and rentals will increase in the next 12 months. Read more
• Malaysians top list of tourists flocking to Thailand as Chinese miss target Thailand is on course to meet its target for 28 million foreign tourist arrivals this year as a surge in visitors from neighbouring Malaysia helps counter a slow recovery in the Chinese market, the biggest source of inbound travellers pre-Covid. Read more
• Thailand’s proposed 100 km land bridge poses little threat to Singapore, Malaysia ports: analysts Thailand has again resurrected a proposal to build a 100 km land bridge that will effectively allow ships to bypass Singapore and Malaysia. But should the project come to fruition, experts believe that it will pose little threat to the region’s two major international seaports. Read more
• Philippines inflation to return to target by December, barring shocks: central bank Inflation in the Philippines could return to the central bank’s 2 per cent-to-4 per cent target range by December barring supply shocks, Bangko Sentral ng Pilipinas governor Eli Remolona said on Wednesday (Dec 6). Read more
• With campaigning in full swing, Indonesia’s presidential hopefuls out to court the youth vote While every vote is important, political analysts have identified the younger group – there are 106.4 million eligible voters aged between 17 and 40 years old, who account for a little over half (52 per cent) of the electorate – for focus. Read more
• ByteDance strikes deal with GoTo to save Indonesian TikTok shop ByteDance’s TikTok has struck an agreement to invest in a unit of Indonesia’s GoTo Group and cooperate on an online shopping service, pioneering a template for e-commerce beyond South-east Asia’s biggest economy. Read more
• Myanmar central bank to stop setting forex rates Myanmar’s central bank will no longer set exchange rates for foreign currencies and will allow banks and dealers to decide rates themselves, state media reported on Wednesday (Dec 6), in a rare easing of some of its tight forex controls. Read more