Vietnam’s high-speed rail in the making; Asean, Japan mark 50 years of ties

This week in Asean:

• Vietnam: Announced progress in its high-speed railway project
• Thailand: Plans global tender for its 1 trillion baht Landbridge
• Indonesia: Bank Indonesia kept interest rate flat at 6 per cent
• Malaysia: Experienced its ninth consecutive month of declining exports

Dear BT reader,

Are you feeling ready for 2024? Laos probably wishes it had a bit more time as it gears up to assume the chairmanship of Asean on Jan 1. 

The country faces several challenges, including having the region’s most devalued currency, the highest inflation rate and the lowest budget expenditure on essential services such as education and health. Its mounting public debt is especially a cause for concern: The International Monetary Fund estimates that Laos’ public and publicly guaranteed debt stands at 122 per cent of gross domestic product in 2023. However, there is a silver lining — the economy is experiencing continuous growth led by services and exports. Read this story by our correspondent Peter Janssen to learn more about how Laos is addressing these challenges at home in preparation for its big role. 

From Dec 16 to Dec 18, a commemorative summit took place in Tokyo, celebrating 50 years of Asean-Japan relations. 

Prime Minister Lee Hsien Loong met Japan’s Prime Minister Fumio Kishida during the summit. Singapore has deepened cooperation with Tokyo to promote peace and stability, including welcoming the Japan Self-Defence Forces’ aircraft and vessels to stop over and make port calls in Singapore. PM Lee also expressed his support for the Japan-led Asia Zero Emission Community to help Asia become greener.

On the sidelines of the summit, progress was made regarding the funding of Vietnam’s US$70 billion North-South high-speed railway project. Vietnamese Prime Minister Pham Minh Chinh has proposed to PM Kishida that Japan provide Vietnam with additional official development assistance (ODA) loans for several key infrastructure projects, including the North-South railway. Japan is currently the largest ODA lender to Vietnam, with a total value of ODA loans set to exceed 100 billion yen (S$925 million) this year.

Meanwhile, Malaysia’s Prime Minister Anwar Ibrahim went on a trade mission that ran concurrently with the commemorative summit. The country said it is attracting RM6.6 billion (S$1.9 billion) in potential investments from Japan. PM Anwar and PM Kishida also signed a 400 million yen maritime security assistance deal as Asian countries seek cooperation to counter the growing tensions in the South China Sea.

Over to Thailand, the country is making strides in its 100 km land bridge ambition, which would effectively allow ships to bypass Singapore and Malaysia. It is planning a global tender for the one trillion baht (S$38 billion) project, and the winning consortium will be granted a 50-year concession. The project will be divided into four phases between 2025 and 2040 and may break even in 24 years.

There are more interesting reads in the links below. Thank you for supporting The Business Times as always. We wish you a lovely holiday season and see you next Friday! 

Trending

Shipping analysts said that the international seaports of Singapore and Malaysia may face massive pressure due to the redirection of shipping routes from the Red Sea, amid concerns about attacks by Iran-backed Yemeni militants. As the transhipment ports of Asia, the Port of Singapore, along with Malaysia’s Port of Tanjung Pelepas and Port Klang, are expected to face significant bottlenecks.

Asean in Brief

• High chilli prices feed inflation in Indonesia ahead of central bank’s rate decision The tiny but mighty chilli padi – or bird’s eye chilli – is having an outsized impact on inflation in Indonesia, exposing gaps in the country’s food production and distribution system that the government still struggles to overcome. Read more
• Indonesia central bank extends interest rate pause, sees possible easing in second half of 2024 Indonesia’s central bank kept its interest rates on hold, as widely expected, at the end of its final meeting for 2023 on Thursday (Dec 21), while also signalling that there could be some leeway for monetary easing in the second half of next year. Read more
• After repeated delays, Vietnam’s US$70 billion high-speed railway to finally see light of day For the better part of the last two decades, Vietnam has tried to modernise its rail transport network with high-speed bullet trains connecting the country – only to be held back by a lack of government consensus and access to funding. That all looks set to change, with the US$70 billion North-South high-speed railway project. Read more
• Laos battles mounting debt, inflation as it prepares for Asean chairmanship As Laos gears up to assume the chairmanship of the Association of Southeast Asian Nations (Asean) on Jan 1 next year, the government is busy dealing with some serious economic challenges at home. Read more
• Malaysia’s exports fall for ninth consecutive month in November Malaysia’s exports declined for the ninth straight month in November, sliding 5.9 per cent year on year to RM122.1 billion (S$34.7 billion), according to Department of Statistics Malaysia data on Tuesday (Dec 19). Read more
• Chinese firms look to Malaysia for assembly of high-end chips: sources A growing number of Chinese semiconductor design companies are tapping Malaysian firms to assemble a portion of their high-end chips, keen to hedge risks in case the US expands sanctions on China’s chip industry, sources said. Read more
• Singapore, Malaysia ports could come under ‘massive pressures’ from Red Sea diversions A veteran shipping analyst has warned that ports in Singapore and Malaysia could come under “massive pressures” amid diversions of shipping routes from the Red Sea. Companies hoping to ship goods from Asia to Europe in 2024 could also face a shortage of vessels. Read more
• Philippines keeps inflation target at 2-4% to 2026 The Philippines central bank said on Thursday (Dec 21) it has decided to retain its inflation target range of 2 to 4 per cent to 2026, reiterating its readiness to tweak monetary policy to achieve targets. Read more
• Global competitiveness of Asean firms increasingly rides on ESG readiness In the year ahead, businesses in Singapore and South-east Asia would be wise to tighten their climate, human rights, biodiversity and nature-resource management as policies increasingly seek to eliminate corporate externalities. Read more