The dove, the hawk and the canary in the coal mine

This week in Asean: 

• Thailand: Industrial confidence tanks
• Indonesia: Prabowo rounds up old gang to fill Cabinet
• Vietnam: Death row tycoon slapped with life sentence
• Malaysia: 99-year-old ex-PM Mahathir hospitalised

Dear BT reader,

Wednesday (Oct 16) was a bumper day for monetary policy decisions across South-east Asian central banks. 

The most dovish of them all – Bangko Sentral ng Pilipinas (BSP) – slashed its key policy rate for the second straight meeting by a quarter point to 6 per cent, as per expectations. 

Recall that the Philippines kickstarted the region’s easing cycle earlier in August, with a pre-emptive quarter-point cut ahead of the US Federal Reserve. Inflationary pressures in the archipelago are among the highest in Asia due to the nation’s dependence on imports, especially food. 

But as inflation trends downwards, room for further easing has grown. BSP said it will maintain “a measured approach” in its shift towards a less restrictive monetary policy. You can broadly expect a third quarter-point cut at BSP’s December meeting. 

Meanwhile, Bank Indonesia (BI) held its benchmark interest rate at 6 per cent. This comes after last month’s unexpected quarter-point shave hours before the historic Fed meeting. Wednesday’s decision fell in line with most projections, as the central bank of South-east Asia’s largest economy succumbs to growing pressure on the rupiah, reports our Indonesia correspondent Elisa Valenta. A second cut can be expected in the last two months of this year.

Now we come to the most interesting decision. That afternoon, my Thai journalist friend texted me: “BOT announced they cut the interest (rate)”. Markets were shocked by the quarter-point cut – the first reduction in more than four years – but not too bewildered. 

There have been repeated high-profile calls over the past year from former prime minister Srettha Thavisin, the finance ministry and local businesses for the central bank to cut its decade-high rate. But BOT has – until now – stood pat against the appeals, sending strong signals of central bank independence. 

The bank’s governor was quick to downplay any impact from the government, stressing that the cut was not the start of an easing cycle but, rather, “just recalibrating”. Analysts say this signals how concerns over economic growth are outweighing inflation risks – hence, the canary in the coal mine. 

The kingdom’s already-muted growth that has lagged its regional peers hit a sunshower last month as the Asian Development Bank slashed its projections for Thailand’s gross domestic product growth for this and next year. 

Notice that monetary policies of South-east Asian central banks are starting to diverge as nations weigh slowing economic growth, inflationary pressures, exchange rates and other key indicators, all the while keeping an eye on interest rate differentials by dancing to the Fed’s tune. Next up is Bank Negara Malaysia in early November. Meanwhile, BI has meetings in both November and December, while BOT and BSP will convene in the last month of the year. 

I’m ending today’s newsletter with a big scoop from BT’s very own Vietnam correspondent Jamille Tran. Several sources revealed to her that Vingroup, the nation’s largest private conglomerate, is selling its stakes in two artificial intelligence firms. An American chipmaking giant – you can find out which one in Jamille’s piece here – is said to be urging related parties to finalise its acquisition of one of the companies. 

Together with BT’s visual team, Jamille also produced another banger this week that makes for a softer, more visual read on Vietnam’s death row property queen Truong My Lan. This story rounds up everything that has happened so far, and tops it off with the team’s first-ever comic piece that retells the sequence of events based off media reports and court proceedings. 

We’ve got a strong lineup of stories this week from other regional correspondents below; be sure to give them a scroll. As I approach my one-year anniversary of writing this newsletter, do let me know what you’d like to see more of in my subsequent pieces too. Have a good weekend.

Trending

What we’re watching: Malaysian Prime Minister Anwar Ibrahim is presenting Budget 2025 on Friday (Oct 18), with analysts believing he is primed to roll out an expansionary fiscal policy to boost the economy and attract more foreign direct investments, reports our Malaysia correspondent Tan Ai Leng. 

What you should know: The need to reduce its fiscal deficit is a flashpoint for the country as public spending has historically been driven by large-scale development projects and subsidy programmes, explains Ai Leng.

Asean in brief

• Medical tourism, biopharma leading the way in China’s healthcare flows to Asean Patients within the Chinese healthcare sphere are flocking to South-east Asia in search of good quality, alternative healthcare treatments, while biopharma firms are making forays into new, emerging markets. Read more
• Surging property prices put Vietnam’s major cities among the least affordable in S-E Asia Vietnam’s housing market is under immense pressure as prices continue to soar, with Ho Chi Minh City now one of the most unaffordable cities in South-east Asia for locals, surpassing the likes of Bangkok, Jakarta and Singapore. Read more
• Indonesia’s US$30 billion free lunch plan hinges on big tax revamp President-elect Prabowo Subianto’s focus on soft infrastructure is a contrast with his predecessor Joko Widodo, who prioritised roads, rail and bridges and the mineral export industry. Read more
• Bursa Malaysia’s outperformance may attract Singapore listcos seeking higher valuations In the last three months, at least two companies listed in Singapore have said that they were eyeing a secondary listing in Malaysia. Read more
• Malaysia’s Worldwide Stainless to acquire Bahru Stainless from Acerinox for US$95 million Spanish stainless steel producer Acerinox has signed an agreement to sell its subsidiary Bahru Stainless to Malaysia-based Worldwide Stainless for US$95 million. Read more
• Singapore Polytechnic, Federation of Malaysian Manufacturers ink MOU to groom more tech talent This will give a boost to the workforces in Singapore and Malaysia by enhancing skills in automation, data analysis and smart manufacturing. Read more
• Thailand eyes 10 trillion baht gas field frozen by Cambodia dispute Thailand’s new government will restart negotiations with Cambodia to explore an offshore oil and gas field with at least US$300 billion worth of reserves that the two countries have been squabbling over since the 1970s. Read more
• Asean markets are ‘gold mines’ for cross-border sellers, but challenges abound Industry insiders say going-global merchants in South-east Asia still perceive significant barriers, including intense competition with the likes of China, stricter overseas policies and regulations, rising operating costs and increasingly restrictive platform rules. Read more
• Asean needs louder voice on the global stage now more than ever: PM Wong When asked about his response to critics who say Asean is nothing more than a toothless talking shop, the Singapore leader emphasised the importance of being realistic about what Asean can or cannot do, and appreciate the wide diversity of countries. Read more