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Factories in SE Asia are firing up as China reopens

Asia’s manufacturers are improving at the start of the year as the region becomes more optimistic about the boost from China’s reopening, while activity in the euro area shows the downturn is softening as cost pressures ease. 

Factories in South-East Asia (SE Asia) ramped up production and purchasing in January as new orders piled in, data from S&P Global manufacturing Purchasing Managers’ Indexes (PMI) showed on Jan 1. Signs that prices are softening and supply chain disruptions are easing also lifted business confidence for factory output over the next 12 months. 

The gauge for the eurozone improved for the third consecutive month, rising to 48.8 from 47.8 in December. Numbers were on an upward trend across the region. 

The reading for French factories went above 50 for the first time since August, while Italy reversed six months of negative readings. The manufacturing slump in Germany continued for a seventh month, however, although the reading of 47.3 was an unexpected improvement from 47.1 in December. 

The energy market in Europe has stabilised, thanks in part to mild weather and state subsidies, and supply-chain constraints have eased significantly, according to S&P Global Market Intelligence chief business economist Chris Williamson. Business optimism about the year ahead has also surged higher. 

“Although euro-area manufacturers continued to report falling output and deteriorating orderbooks in January, sustaining the sector’s downturn for an eighth successive month, the picture is considerably brighter than the lows seen back in last October,” he said. 

Thailand led SE Asia with a January PMI reading of 54.5 — a jump from 52.5 the prior month. The Philippines and Indonesia also posted readings above 50, the threshold separating expansion from contraction. 

Other countries in the region remained in negative territory last month, but most saw manufacturing conditions improve. Malaysia was the only country in the region where conditions worsened as PMI fell to a 17-month low of 46.5. 

“With supply-side pressures easing, and inflation rates below their post-pandemic averages, this could support further improvements in business conditions in the months ahead,” S&P Global Market Intelligence economist Maryam Baluch said of SE Asia’s performance. “It’s vital that demand conditions continue to recover and are able to support growth momentum into the rest of 2023.” 

Activity in North Asia, however, was more mixed. South Korea’s manufacturing PMI improved slightly to 48.5 from December’s 48.2, although still below 50. Japan was steady at 48.9, the same as the previous month. 

Surveys for both countries, though, suggested that factories were increasing employment in anticipation of improving global economic conditions that would spur new business. That was better than the outlook in Taiwan, where the PMI slump deepened to 44.3 from 44.6. Manufacturers there held a sombre outlook, trimming their buying activity and inventory. 

The data provide a sharper view of how the global demand outlook is impacting some of the world’s most critical trade engines. 

The International Monetary Fund reiterated last week that tight monetary policy among central banks and Russia’s invasion of Ukraine will continue to weigh on economic activity through the year. 

The Washington-based institution still upgraded its global growth forecast slightly, though, in part on optimism that China’s reopening will buttress demand. The emergence of the world’s second-largest economy from its strict Covid Zero strategy last year has also raised hopes in Asia that the region’s biggest trading partner will soon generate more demand for goods. 

“If the message from Jan 31’s strong official PMIs was that China has started a brisk recovery, the message from Feb 1’s Caixin report is that a significant swath of the economy continues to struggle,” said Bloomberg Economics Chang Shu. “To be sure, the rise in the Caixin manufacturing gauge in January reinforces our view that conditions are on the mend. But a reading still below 50 in contractionary territory suggests exporters and small companies are lagging in the recovery.” 

Data in China showed some signs of a pickup last month, though the week-long Chinese New Year holiday likely weighed on factory activity since many workers went home to celebrate the period with their families. Covid’s spread through the country also sickened some workers. 

A private survey of factory activity on Feb 1 showed the sector had yet to recover, though the fall in output and new orders moderated. The Caixin Manufacturing Index — which covers mainly smaller and export-oriented businesses — inched up to 49.2 in January from 49 the month before. The official PMI, which covers larger and state-owned firms, showed a slight expansion earlier last week.

Source: Bloomberg

Factories in SE Asia are firing up as China reopens


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Strengthening the connectivity between the European Union (EU) and the Association of South-East Asian Nations (Asean) and deepening the bilateral economic ties will be one of the priorities of the 27-member union this year, according to EU Ambassador to Asean Igor Driesmans.

The diplomat said that the signing of the EU-Asean comprehensive air transport agreement, the first ever region-to-region aviation agreement in 2022, will boost to air connectivity between the 37 countries involved.

The EU wants to invest more in the region, Vietnam news agency (VNA) reported him said, adding that leaders of the union have announced 10 billion EUR (US$10.88 billion) in investment in Southeast Asia in the next couple of years through the “Global Gateway” sustainable investments in the region that aimed to address some of Asean’s big connectivity needs and build on some of the successes in that respect of our previous cooperation.

He noted that the EU has already signed free trade agreements (FTA) with Singapore and Vietnam. The union will open negotiations for FTAs with other Asean countries, while resuming FTA negotiations with Indonesia, Malaysia, Philippines and Thailand.

Driesmans said that the EU’s second priority is to develop a joint green and sustainable agenda with the region, which is a top priority for the EU and for its partnership with Asean.

He said that the union is rolling out the EU Green Deal to make the EU circular, carbon neutral economy by 2050. Therefore, it need to partner with Asean to make that a reality because due to rapid growth, Asean as the entire region is increasingly a CO2 emitter.

“The EU has been developing quite a few cooperation projects and programmes with Asean, for example, to support Smart Green cities to improve biodiversity to manage peatlands more sustainably.

“So we will want to scale up that ambition, do much more in terms of cooperation, and add a political dimension to our work. And we look forward to work with Indonesia to hold the first ever EU-ASEAN environmental ministerial meeting,” he noted.

He said a EU-Asean dialogue on energy will also be held this year.

The diplomat said that the third priority is security partnership as there’s a number of security issues in both of our regions, especially Myanmar in Southeast Asia, and Ukraine in Europe.

VNA reported that the EU also hopes to work with Asean to ensure free and open maritime supply routes in the East Sea in full compliance with international law, in particular the 1982 UN Convention on the Law of the Sea (UNCLOS), he said, pledging that the union will also support the negotiations for a Code of Conduct on the East Sea (COC).

The ambassador also underlined other priorities of the EU in promoting Indo-Pacific partnership, and ensuring a safe, prosperous Asean.

“The EU hopes for stronger and even stronger partnership building on the momentum of the EU-Asean Summit in Dec,” he added.

Source: Bernama

EU to focus on deepening economic ties with Asean, says its ambassador in Hanoi


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Taiwan-China cross-strait tensions and governments’ focus on greater control of advanced chips will reshape global semiconductor supply chains in the long term, according to Moody’s Investors Service in a new report.

In a statement on Wednesday (Jan 18), the global credit rating firm said geographic diversification of semiconductor production and investment would be credit negative for the Taiwanese government and chipmakers.

It said rising geopolitical pressure would have a limited immediate effect on semiconductor supply chains but would lead to geographic diversification of the production capacity and investments of Taiwanese semiconductor companies.

“Given the substantial investments required and the potential economic concerns for Taiwan, if it were to move a large portion of high-end manufacturing capacity offshore, we do not expect this process to happen swiftly.

“Still, any disruption to the supply of semiconductors from Taiwan will have effects beyond Asia-Pacific,” managing director Michael Taylor said in a statement on Wednesday (Jan 18).

He said China’s reliance on semiconductor imports is unlikely to diminish over the medium term, given the constraints on its advanced chip production.

However, Taylor said the semiconductor supply chain in China has become increasingly vulnerable to geopolitical disruptions.

“More restrictions on access to manufacturing equipment for advanced chips will slow the progress of China’s plans for semiconductor self-sufficiency; as a result, the country will remain reliant on semiconductor imports.

“We expect cross-strait tensions to remain heightened, with an increased risk of disruption to the supply of semiconductors manufactured in Taiwan,” he added.

Source: Bernama

Moody’s: China-Taiwan cross-straits tension will gradually reshape semiconductor supply chain


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The economic growth outlook for Asia Pacific (APAC) in 2023 is expected to be robust despite global risks, said Moody’s Investors Service.

The rating agency said APAC economies would be confronting a dynamic set of hurdles and support drivers.

“Growth will be lower than in 2022, but close to potential in most cases, underpinning broad credit stability.

“While growth in the region will slow after rebounding from the pandemic, it will remain strong compared with other regions,” it said in a note today.

Easing the last remaining pandemic-related border restrictions on leisure travellers and ongoing domestic reopening will sustain services-sector recoveries and catch-up consumption across the region, supporting key sources of employment, said Moody’s.

“Inflation will remain above recent averages as commodity prices stay elevated and output gaps close, but the most acute pressures will subside in many economies,” it said.

Moody’s said weaker export demand from the United States and European Union would drag on growth momentum for export-oriented economies such as China, Japan (A1 stable), South Korea (Aa2 stable), Malaysia (A3 Stable), Taiwan, China (Aa3 stable), Thailand and Vietnam (Ba2 stable).

It added that the Group of 20 (G20) leading advanced and emerging economies are expected to expand at 1.3 per cent in aggregate in 2023, down from its August 2022 forecast of 2.1 per cent, driven by high inflation.

In addition, China’s outlook would shape regional momentum given uncertainty about the economic impact of its relaxed COVID-19 policies and the potential for more protracted stress in the property sector.

Meanwhile, tighter financial conditions would hurt debt affordability for some, even as easing inflation slows the pace of rate rises, said Moody’s.

It said most central banks in APAC have not tightened policy as quickly as the US Federal Reserve and European Central Bank because of weaker demand-side inflation, and more significant fiscal steps to curb inflation such as fuel subsidies, consumption tax cuts and suspension of electricity tariffs.

“Negative credit effects will also be less pronounced for frontier and emerging markets with a significant degree of concessional financing, including Bangladesh (Ba3 review for downgrade) and Fiji.

“This includes those with deep domestic funding such as India, Malaysia and Thailand, where large institutional investor bases and banking systems have helped to anchor debt affordability,” it said.

Moody’s said debt burdens would continue to rise or stabilise at higher levels in countries such as India and Malaysia.

On currency, it said all emerging markets have foreign-exchange reserves that could cover more than three months of imports, although Bangladesh, Cambodia (B2 negative), Malaysia and Vietnam are positioned closer to that threshold.

It said China’s renminbi depreciation could competitively disadvantage other exporters such as South Korea, Malaysia, Thailand and Vietnam.

Source: Bernama

Asia Pacific region’s economic growth to stay robust despite global risks – Moody’s


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The Asia-Pacific region is set to remain the world’s fastest-growing region despite ongoing stressors exacerbated by the Russia-Ukraine conflict and global financial volatility, according to Knight Frank’s latest report, Asia-Pacific Outlook Report 2023: Pivoting Towards Opportunities.

The report said even as growth momentum continues to normalise across much of the region, domestic-oriented economies such as emerging Southeast Asia and India are forecast to remain supportive of overall regional growth in the upcoming year.

Asia Pacific head of research Christine Li said with much of the known risks largely priced in and likely to have overshot on current negativity, there remains scope for fundamentals to surprise on the upside, underpinned by the marginal easing of zero-COVID strategy and the lower-than-expected terminal interest rates.

Chinese authorities have currently lowered the duration of quarantine for inbound travellers, a step in the right direction that could set the tone for more calibration and an eventual exit in 2023/2024.

“We can afford to be sanguine given that nascent signs of inflation peaking have crept into the Federal Reserve’s data watch. While it remains to be seen if these can be sustained, the prevailing macroeconomic and policy uncertainties, once rolled back, will narrow bid-ask gaps and pave the way for higher investment activity,” she said.

At a sector level, the report predicts that the market conditions in 2023 will continue to favour tenants as high-amenities office buildings with sustainable credits are being completed and ready for occupancy.

Rents in the logistics sector are forecast to increase by 5.5 per cent, while office rents will rise by 2 per cent across the region.

Overall, real estate offers good diversification benefits with a relatively low correlation to equities and bonds.

Therefore, risk-adjusted returns for direct real estate are unlikely to re-price to the same extent as indirect, it said.

Meanwhile, Knight Frank Malaysia group managing director Sarkunan Subramaniam said the global macroeconomic headwinds will impact upon Malaysian markets.

“However, we are still hopeful that the newly-elected unity government will be able to outline clear and consistent policies in driving economic investments into our country, and encourage all direct measures to revitalise and sustain the growth of the property sector.

“Malaysia needs to bring back investors’ trust and faith in our economic growth, in order to see recovery across all sectors,” he said.

The independent global property consultancy firm also hoped the government will introduce green incentives to property buyers, landlords and developers who are aligned with the nation’s target of becoming a net zero nation by 2050.

It added that it encourages an extension of existing incentives to incorporate tax reliefs or grants to industry players who include green features into their developments, especially renewable energy like solar panels and water harvesting as well as sustainably-built properties from timber and low-carbon cement in place of high-emission materials.

Source: Bernama

Knight Frank report: Asia-Pacific to remain world’s fastest growing despite ongoing challenges


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The worldwide semiconductor industry is projected to invest more than US$500bil in 84 volume chipmaking facilities starting construction from 2021 to 2023, SEMI announced in its latest quarterly World Fab Forecast report.

The projected growth in global factory count includes a record high 33 new semiconductor manufacturing facilities starting construction this year and 28 more in 2023.

“The latest SEMI World Fab Forecast update reflects the increasing strategic importance of semiconductors to countries and a wide array of industries worldwide,” SEMI president and CEO Ajit Manocha said in a statement.

“The report underscores the significant impact of government incentives in expanding production capacity and strengthening supply chains. With the bullish long-term outlook for the industry, rising investments in semiconductor manufacturing are critical to laying the groundwork for secular growth driven by a diverse range of emerging applications.”

In the Americas, the U.S. Chips and Science Act has vaulted the region into the lead worldwide in new capital spending as the government investment spawns new chipmaking facilities and supporting supplier ecosystems.

From 2021 through next year, the Americas is forecast to start construction on 18 new facilities.

SEMI said China is expected to outnumber all other regions in new chip manufacturing facilities, with 20 supporting mature technologies planned.

“Propelled by the European Chips Act, Europe/Mideast investment in new semiconductor facilities is expected to reach a historic high for the region, with 17 new fabs starting construction between 2021 and 2023,” it said.

Meanwhile, Taiwan is expected to start construction on 14 new facilities, while Japan and Southeast Asia are each projected to begin building six new facilities over the forecast period. South Korea is forecast to start construction on three large facilities.

Source: The Star

Global chip industry projected to invest more than US$500bil in new factories by 2024


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The recovery in Asean compares favourably to the 30% average growth in developing economies, UNCTAD reports

INFLOWS of foreign direct investment (FDI) in Asean increased by 42% in 2021 to US$174 billion (RM765.6 billion), returning to pre-pandemic record levels, according to the latest Asean Investment Report 2022.

The report published by The Asean Secretariat and the United Nations Conference on Trade and Development (UNCTAD) said the rebound underscores the resilience of the region, which has been battered by successive waves of the pandemic. 

“The recovery in Asean compares favourably with the 30% average growth in developing economies. 

“Six member states recorded a rise in inflows and in two, inflows remained flat. 

“This contrasted with the situation in 2020 when only two member states recorded a rise,” it added. 

The report also highlighted that Asean remained a top recipient of FDI in developing regions, second after China in 2021, and continued to be an engine of growth. 

It said the region’s share of global FDI inflows rose from a pre-pandemic annual average of 7% in 2011-2017, to 11% in 2018-2019, and to 12% in 2020-2021. Strong inflows pushed up FDI stock in the region to US$3.1 trillion, an increase of 72% from 2015 (US$1.8 trillion). 

Robust Upturn 

According to the report, several factors led to the robust upturn namely, rising investment across different modalities; a strong rebound in manufacturing; corporate investment strategies focusing on capacity expansion to bolster supply chains and for the post-pandemic recovery; significant investment from key source countries and; investment in infrastructure-related activities, including in the digital economy. 

“Announced greenfield investment project numbers rose by 12%, with most investment in manufacturing and infrastructure-related activities. 

“Three industries (electronics and electrical equipment, energy and gas supply and information and communication) accounted for 68% of announced greenfield investment values in 2021. 

“Cross-border mergers and acquisitions declined in number but rose significantly in value, from -US$4.7 billion in 2020 to almost US$50 billion because of a few megadeals, including the US$34 billion special purpose acquisition company established by Grab (Singapore) and Altimeter Growth (the US). 

“Announced international project finance values increased from US$66 billion to US$114 billion, with the largest increase in renewable energy, followed by industrial estates. 

“These two industries accounted for 75% of international project finance activities in 

2021. The number of international project finance deals rose by 18% to 134,” it noted. 

Apart from that, the report also said a broad-based rise in FDI in manufacturing played a key role in 2021. It pointed out that strong investment in manufacturing, finance and some services industries associated with the rapidly growing digital economy and Industry 4.0 activities were the main industry drivers. 

Investment in manufacturing recorded the strongest growth (134%), to US$45 billion, in industries such as electric vehicles (EVs), electronics, biomedical and pharmaceuticals. 

Finance and banking remained the largest FDI recipient industry with 22% growth, to US$57 billion, underpinned by Asean and foreign banks picking up investment and multinational enterprises in banking resuming their regional expansion plans. 

The active fintech industry in the region was another contributory factor. The strong digital economy helped attract rising investment in data centres and in information and communication activities. 

Semiconductors 

Meanwhile, robust investment in semiconductors, electronics and EVs were significant drivers of the rise in manufacturing FDI, the report noted. 

It said the announced greenfield investment in electronics and electrical equipment quadrupled to US$33 billion in 2021, increasing the share of these two industries in the total value to 52%, from 12.4% in 2020. 

On top of that, the report also said investment in all FDI components — equity, intracompany loans and reinvested earnings — rose. 

“New equity investment was prominent, suggesting new investment interest or further injection of capital into expanding existing operations,” it added. 

On future prospects, the report noted that it is expected that Asean will continue to receive a high level of FDI flows following the significant rebound. 

However, it said potential new waves of the pandemic, inflationary pressures and a weakening global economy will put downward pressure on both global and regional FDI. 

It added that other developments on the global stage in 2022, such as the Ukraine war, food-fuel-finance crises, recession fears could also dampen the growth momentum. 

Nevertheless, the report said despite the worsening outlook for global FDI, several factors will support continued growth in Asean, including vibrant industrial development, regional integration momentum, growing numbers of middle-income consumers and a consistent policy push. 

“The interaction of internal (such as regional integration, market attraction) and external factors (such as adjustment or strengthening supply chain capacity and regional corporate expansion strategies) favourable to the region will help sustain a high level of inflows. 

“FDI in manufacturing is expected to remain strong particularly in the EV value chain, electronics and semiconductors and in activities related to the digital economy,” it noted.

Source: The Malaysian Reserve

Asean FDI surges 42%, back to pre-pandemic level


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The 4th Asean-Japan Smart Cities Network High Level Meeting kickstarted here on Sunday (Dec 4), with Asean highlighting three key efforts in promoting smart and sustainable city development in the region.

Asean Secretary General Datuk Lim Jock Hoi, in delivering his opening remarks at the event, highlighted that firstly, investment in digital infrastructure is critical for smart city development, whereby data can help officials make informed decisions to service their citizens more effectively.

“Robust and integrated central digital infrastructure is necessary to realise excellence in public service delivery, “ he said in his speech, which was pre-recorded, at the event.

In this regard, he said Japan has been supporting Asean through Smart Japan-Asean Mutual Partnership, which conducts feasibility studies to help cities determine the appropriate digital infrastructure for smart city development.

Lim also said Asean emphasised on enhancing human capital, which is essential to seize smart city opportunities, especially when considering various capacities of Asean cities in managing smart city projects.

He said many Asean cities, especially small- and middle-sized ones, require the support of the institutions that could help local government design and implement smart city initiatives.

“As such, Asean and Japan can collaborate to provide strategic and technical support that helps localities in executing smart city plans,” he added.

Thirdly, Lim said that inclusive community participation is crucial to implement Smart City initiatives, with reaching out to people in the problem-solving process, which will subsequently help the local government select appropriate solutions to various community issues in the respective areas.

Thus, he said this will help improve the quality of life of those who work and live in the cities.

Lim said pursuing smart and sustainable city development is high on Asean’s agenda, as the regional grouping strive to tackle urban challenges and empower vulnerable communities in those cities.

“In this regard, I would like to commend the government of Japan for their unwavering support towards realising smart city initiatives in Asean,” he added.

Lim said the Covid-19 pandemic impacted every aspect of urban life, and in response, Asean member states and cities have continued to transform digitally and sustainably to tackle urban challenges, as well as advance their recovering efforts.  

“Thus, I believe today’s meeting will bring enormous opportunity for members of the Asean Smart Cities Network to exchange ideas and experiences with Japan in making our cities more liveable,” he said.  

The two day 4th Asean-Japan Smart Cities Network High Level Meeting, which ends on Monday, is hosted by Japan’s Ministry of Land, Infrastructure, Transport and Tourism, in partnership with Asean member states and related government agencies and municipalities.

This annual international meeting has contributed to building collaborative relationships in the smart city field between Asean and Japan, since its inaugural meeting in 2019.

The high-level meeting held at the University of Aizu in Aizuwakamatsu in Fukushima, is being attended by delegates from Asean states, besides three media personal from the Philippines, Cambodia and Malaysia.

Source: Bernama

Asean highlights three key efforts to promote sustainable city development


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WITH electric vehicles (EVs) set to proliferate and become more accessible to drivers around the world, several emerging markets are looking to expand their EV manufacturing.

Once a luxury segment of the automotive industry, EVs have become popular among consumers and companies alike in recent years, with solid growth trends attracting public and private investment.

EV uptake is essential to the global energy transition, as transport remains the sector with the highest reliance on fossil fuels, producing an estimated 37% of CO2 emissions from end-use sectors in 2021.

The number of passenger EVs on the road is expected to triple globally in the next decade to over 77 million, according to BloombergNEF.

Debuting brands in MENA

Although China currently dominates EV manufacturing, accounting for 57 per cent of global output in 2021, several emerging markets – especially in MENA – have announced plans to jump-start domestic production.

In March 2022 El Nasr Automotive Manufacturing Company (NASCO) signed a shareholders’ agreement with the National Automotive Company to establish the country’s first EV distributor, with the first EVs produced by NASCO hitting the market in 2023.

That same month NASCO also signed a memorandum of understanding with Valeo Egypt, a subsidiary of the French automotive supplier of the same name, to design, develop and produce EV components. As of December 2021 the project was seeking some US$127 million in investment and targeting annual production of 20,000 units over a three-year period.

Private players are also seeking to support the EV goals of North Africa’s most populous country. Shifting his investments from social media to green projects, Egyptian billionaire Mohamed Mansour announced plans in November 2022 to produce 15,000 EVs in Egypt over the next three to five years via his company Al Mansour Automotive. The company also plans to import and market five models of Cadillac EVs by 2025.

Meanwhile, Brightskies, an Egyptian company specialising in EVs and power systems, signed an agreement with NASCO and the Engineering Automotive Manufacturing Company in February 2021 to produce the country’s first electric buses, localising and manufacturing the technological components in Egypt.

Elsewhere in MENA, in November 2022 Saudi Arabia’s Public Investment Fund, the country’s sovereign wealth fund, announced a partnership with Taiwan-based tech company Foxconn to manufacture the Kingdom’s first EVs by 2025. The brand, known as Ceer, is expected to draw more than US$150 million in foreign direct investment and contribute $8bn to the Kingdom’s GDP by 2034.

In May 2022 Saudi Arabia’s Ministry of Industry and Mineral Resources said the construction of a US$2 billion EV battery metals plant was already under way, an integral component in the Kingdom’s EV manufacturing plans and in line with its aim of attracting US$32 billion in investment in its mining sector as part of ongoing economic diversification efforts.

Turkey has also joined the regional push into EV manufacturing, with the first SUV models of its domestically produced Togg EVs set to reach the local market at the end of the third quarter of 2023. The country’s Automobile Joint Venture Group, the consortium behind the project, is planning to export the vehicles within 15 to 18 months of their first domestic sales.

Attracting investment in South-east Asia

In addition to the proliferation of domestic brands, some countries – most notably in South-east Asia – are working to attract investment for EV manufacturing and technology uptake from more mature markets.

Already the region’s top auto-manufacturing centre, Thailand has implemented policies to bring in EV manufacturers and boost output, including a cash subsidy for passenger EVs and a planned subsidy for batteries.

The country aims for EV production to account for 30 per cent of total automobile output by 2030.

As OBG reported in April 2022, Indonesia is also set to become a major EV player, as the world’s two-largest EV battery producers are preparing to invest in projects in the country.

The country released its EV Roadmap in September 2020, which includes plans to produce 600,000 four-wheeled EVs and 2.45m two-wheeled EVs annually by 2030, along with complementary metals-refining and battery-production targets.

China’s Contemporary Amperex Technology – the world’s biggest EV battery maker – and a South Korean consortium headed by LG Energy Solution have also signed respective agreements with Indonesian partners on mines-to-manufacturing EV projects worth US$6 billion and US$9 billion.

Upgrading infrastructure

The expansion of ride-sharing services and micromobility options such as electric scooters could help drive EV uptake in emerging markets, especially in urban environments as an alternative to car ownership. For example, 46 per cent of three-wheelers sold from the start of 2022 in India as of April were electric, pushing the share of EVs in overall automobile sales to 2.6 per cent.

Launched by Drive Electric, a global philanthropic campaign supporting transport solutions powered by clean energy, the Leapfrogging to E-mobility Acceleration Partnership has committed US$1 million in grants to 10 projects to boost EV adoption in emerging markets, with the target to eventually raise US$1 billion for the cause.

Subsidies or tax exemptions have proven to be useful tools for encouraging the adoption of EVs. In some states of Mexico, EV drivers are exempt from an annual tax based on car value. In Vietnam, the government has exempted EVs from registration fees for three years, in addition to reducing the excise tax on smaller EVs to three per cent.

The global charging industry is set to grow at a compound annual growth rate of 34.5 per cent from 2022 to 2030, as governments encourage the construction of EV infrastructure and award large-scale contracts.

The UAE, which boasts one of the biggest charging station-to-vehicle ratios in the world, plans to increase the number of EVs on the street to 42,000 by 2030.

Under way since 2015, Dubai’s EV Green Charger initiative aims to boost the number of charging stations in the UAE to meet expected demand, with the number of chargers in the country at 325 as of August 2022.

In March 2022 the first EV and battery logistics hub in MENA opened in Dubai’s Jebel Ali Free Zone. It is designed to bolster the regional circular economy for EVs by providing an area where batteries can be stored, repaired, recycled or processed.

Egypt, meanwhile, is offering private sector players a 40 per cent share in a new company established to oversee pay-to-use charging stations, with a total of 3,000 charging stations in the works, the first of which are set to be launched in Alexandria and Cairo.

This column was produced by the Oxford Business Group.

Source: The Borneo Post

EMs are targeting a share of the global EV market


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Global semiconductor equipment billings rose 7% year-over-year to US$28.75 billion in the third quarter of 2022, according to the US-based Semiconductor Equipment & Materials International (SEMI).

In its Worldwide Semiconductor Equipment Market Statistics (WWSEMS) Report released on Wednesday (Nov 30), SEMI said the figure was 9% higher quarter-on-quarter.

SEMI president and chief executive officer Ajit Manocha said semiconductor equipment revenue growth in the third quarter remained in line with positive forecasts for 2022.

“The 9% quarter-over-quarter increase in equipment spending for 3Q reflects the semiconductor industry’s determination to bolster fab capacity to support long-term growth and technology innovation,” he said.

The data is compiled from information submitted by members of SEMI and the Semiconductor Equipment Association of Japan (SEAJ).

The WWSEMS Report is a summary of the monthly billings figures for the global semiconductor equipment industry.

Source: The Edge Markets

Global semicon equipment billings up 7% y-o-y to US$29 bil in 3Q, says SEMI


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The 5G network would become the leading technology in South-east Asia (SEA) by 2028 with a penetration rate of 48 per cent, according to Ericsson Mobility Report.

The 5G subscriptions in the region is projected to reach almost 30 million in 2022 and around 620 million by end-2028.

Head of Ericsson Malaysia, Sri Lanka and Bangladesh David Hagerbro said the rapid rollout of the 5G network by Digital Nasional Bhd in Malaysia would accelerate the country’s journey towards becoming digital economy and a 5G leader in the region.

The report said most major service providers are expected to launch commercial 5G services by the end of 2028 in SEA and Oceania.

“5G adoption and growing consumer usage of new immersive services are key factors for growing mobile data usage in the region.

“Mobile traffic per smartphone is expected to grow from 12.5 gigabyte (GB) per month in 2022 to 54 GB per month in 2028, a compound annual growth rate (CAGR) of almost 30 per cent,” it said.

On wider perspectives, the report said global 5G subscriptions remained on track to top one billion by the end of this year and five billion by the end of 2028 despite current and developing economic challenges in many parts of the world.

According to the report, about 110 million subscriptions were added globally between July 2022 to September 2022, bringing the total to about 870 million.

“5G is still expected to reach one billion subscriptions by the end of this year, two years faster than 4G did, following its launch.

“The statistic reinforces 5G as the fastest-scaling mobile connectivity generation. Key drivers include the timely availability of devices from multiple vendors with prices falling faster than for 4G and China’s large early 5G deployments,” it said.

Globally, it said almost 230 communications service providers (CSPs) have launched 5G services to date with more than 700 5G smartphone models announced or launched commercially.

It said global 5G subscriptions are forecast to account for 55 per cent of all subscriptions by the end of 2028.

The report said in that same timeframe, 5G population coverage is projected to reach 85 per cent while 5G networks are expected to carry around 70 per cent of mobile traffic and account for all contemporary traffic growth.

Additionally, it said global fixed wireless access (FWA) connections are forecast to grow at 19 per cent year-on-year through 2022-2028 and top 300 million connections by the end of 2028 driven by accelerated FWA plans in India and expected growth in other emerging markets.

It said more than three-quarters of CSPs surveyed in more than 100 countries currently offer FWA services, which saw almost one-third of CSPs offering FWA over 5G compared to one-fifth a year ago.

It added that almost 40 per cent of the new 5G FWA launches in the past 12 months have been in emerging markets

FWA is a wireless alternative to wireline broadband connectivity for homes and businesses and it is one of the major early 5G use cases, particularly in regions with unserved or underserved broadband markets. 

Source: Bernama

Ericsson Mobility Report: 5G to become leading technology in SE Asia by 2028


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Talks on the upgrade of Asean’s free trade area with China have been launched while negotiations on upgrading the one with Australia and New Zealand wrapped up recently. Leaders of Asean and China have announced and welcomed the official launch of negotiations for the upgrade of the Asean-China Free Trade Area (ACFTA), reported Vietnam News Agency.

Speaking at the recent 25th Asean-China Summit in Cambodia’s Phnom Penh, they affirmed that the upgrade is meant to ensure that the ACFTA helps further deepen and broaden Asean-China economic relations and contribute to the region’s post-pandemic economic recovery.

ACFTA is Asean’s oldest free trade agreement among its dialogue partners. Upgrading ACFTA sends a signal to the private sector and all stakeholders that both Asean and China are committed to making the ACFTA more relevant to businesses that are responsive to global challenges.

The upgraded ACFTA will cover areas of mutual interest, including the digital and green economies, supply chain connectivity, competition, consumer protection, and micro, small, and medium enterprises. China is Asean’s largest trade partner and the second largest source of foreign direct investment (FDI).

In 2021, total merchandise trade between the two sides reached US$669 billion (RM3.06 trillion), registering a year-on-year increase of 29% despite the Covid-19 pandemic’s lingering impacts.

During the same period, FDI flows from China to Asean amounted to US$13.6 billion, almost double the US$7 billion in 2020, and equivalent to 7.8% of total FDI into the bloc.

Moving forward, the upgraded ACFTA will further support these trends and momentum, according to the Asean Secretariat.

Meanwhile, leaders of Cambodia – the 2022 Chair of Asean, Brunei – the country coordinator for Asean-Australia-New Zealand Free Trade Area (AANZFTA), Australia, and New Zealand have announced the substantial conclusion of the negotiations for the AANZFTA upgrade.

The upgrade was said to be a key priority economic deliverable of Cambodia’s chairmanship of Asean, according to the announcement made at the 40th and 41st Asean Summit in Phnom Penh. Trade between Asean, Australia and New Zealand remained robust despite the global effects of the Covid-19 pandemic and geopolitical tensions.

In 2021, total merchandise trade between Asean and Australia reached US$81.6 billion, up 49% year-on-year and higher than pre-Covid-19 rates.

Meanwhile, trade between Asean and New Zealand last year reached US$11 billion, growing by 22.5%. In 2021, FDI from Australia and New Zealand to Asean amounted to US$589 million.

The agreement establishing AANZFTA, signed in Thailand on Feb 27, 2009, is being upgraded to ensure that it is fit-for-purpose and is future-proofed against emerging challenges.

The upgrade also aims to maintain its high standard, remain relevant for businesses, enable it to effectively contribute to post-pandemic economic recovery efforts, and efficiently respond to global and regional challenges.

Asean secretary-general Datuk Lim Jock Hoi, one of the chief architects of AANZFTA, welcomed the substantial conclusion of the talks on the upgrade.

He further highlighted AANZFTA’s instrumental role in strengthening not only the Asean-Australia comprehensive strategic partnership and Asean-New Zealand strategic partnership, but also regional economic integration.

Source: Bernama

Asean free trade areas to be upgraded


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The trend of electrification of the mobility sector is driven by global commitments by countries and corporations to act on reducing harmful carbon emissions.

The maturity of electric vehicle (EV) technology and its acceptance by consumers have contributed to the significance of this trend.

Many countries have either mandated or announced timelines to phase out the sales of pure internal combustion engine (ICE) vehicles.

Norway leads the trend with a target of achieving zero ICE vehicle sales by 2025. China, the world’s largest automotive market, will sell only xEV (different forms of hybrids and zero-emission vehicles) by 2035.

Among Southeast Asia nations, Singapore aims to have all vehicles run on clean energy by 2040.

Other countries such as Indonesia, Malaysia and the Philippines have also announced commitments to accelerate conversion to xEV by 2030.

Thailand is particularly resolute in accelerating zero-emission vehicle transformation, with the goal to produce 50 per cent of electric vehicles locally by 2030, and 100 per cent by 2035.

International management consultancy Roland Berger projects that the share of global ICE sales will reduce to 40 per cent by 2030.

Need for a new approach

EV development has created a new industry value chain and opportunities.

“Taking Thai EV development goals as an example, we estimate a revenue pool of more than US$100 billion, however, there are many challenges associated with the new market that remain to be resolved,” says Roland Berger principal and automotive practice lead (Southeast Asia) Timothy Wong.

Roland Berger’s Automotive Disruptive Radar (ADR), a biannual tracker of disruptive trends in the automotive sector, indicates desirability among consumers to switch to EVs.

Accessibility, convenience and price, however, remain key concerns. The existence of charging infrastructure, access to maintenance and repair, and price gaps between ICE and EV are hurdles to be resolved.

On the supply side, industry players are grappling with the challenges of the nascent market with an underdeveloped EV ecosystem.

The struggles include needing to build stronger EV-related know-how and attracting investments to scale up.

“Should we wait for the EV to be more ready before we invest, or should we act now? How soon can we reap the rewards?” said Wong in reflecting sentiment on the ground towards EV potential and risks.

He added that to address the conundrum of the nascent EV market in Southeast Asia, both the public and private sector have roles to play with different strategic imperatives and considerations.

Overall, the development of EV will create unprecedented opportunities for various stakeholders in the public and private sectors.

Roland Berger believes that a “playbook” approach could provide high level guidance for policymakers and business decision-makers to better define their objectives, strategy and approach to capture the EV growth potential.


PLAYBOOK FOR PUBLIC STAKEHOLDERS AND POLICYMAKERS

1) Enable and stimulate EV deployment

Governments play a key role to enable and stimulate electric vehicle (EV) growth. Three broad policy categories essential to stimulate EV growth in Southeast Asia are:

• Enabling infrastructure development policies: Availability and accessibility to charging infrastructure is a major concern. Funding to develop charging infrastructure with partnership of private sector stakeholders is critical to enable EV growth.

• Demand side policies: Incentives to close or narrow the price gaps between ICE and EV are necessary. Singapore’s rebates under the Electric Vehicle Early Adoption Incentives give buyers of EV batteries a rebate of up to 45 per cent on their additional registration fees, capped at S$20,000 to narrow the ICE vs EV price gap. In Thailand, subsidies in the range of 70,000 baht to 150,000 baht are provided for completely knocked down (CKD) and completely built-up (CBU) units of battery capacity of 10-30kWh and more than 30kWh, respectively.

“The recent slew of policies on EV will help to encourage the growth of EV in Thailand,” said Roland Berger Thailand country head and partner Udomkiat Bunworasate.

• Supply side policies: Objectives differ by each country’s auto industry capacity.

“For automotive producing nations such as Malaysia, Thailand, Indonesia and Vietnam, incentive packages to encourage and accelerate the industry transformation from ICE to EV would be key,” said Udomkiat.

For automotive consumption nations, lowering of import duties and taxes to reduce upfront cost of ownership is more effective.

2) Leverage EV to drive economic transformation agendas

EV development not only creates environmental and socio-economic benefits, but also new EV value chains, ecosystems and investment needs. EV presents unprecedented opportunities for SEA governments to attract new investments to transform its economies.

In Southeast Asia, resource-rich countries such as Indonesia and the Philippines have the world’s largest and sixth nickel reserves, respectively, a critical raw material for lithium ion batteries.

Both countries are well positioned to attract global investments and partnerships along the EV battery value chain, build capabilities and upgrade the local economy.

Indonesia for example, has set up Indonesia Battery Corporation to spearhead this development. A partnership with LG/ Hyundai for co-investing in a battery plant in Indonesia was also announced.

PLAYBOOK FOR PRIVATE SECTOR STAKEHOLDERS

1) Define strategic roles of EV

A diverse group of private sector stakeholders is in play in the EV ecosystem, such as EV producing OEMs, parts and component suppliers, fleet operators, large corporations or new players venturing into EV, investors and more.

All players have different agendas and objectives, hence a “one-size fits-all” approach will not work.

Three strategic roles that EV could play for the private sector are:

• An enabler to achieve environmental, social and governance goals: In Southeast Asia, large corporations such as Ayala Corporation in the Philippines have announced net zero greenhouse gas emissions by 2050. EV will be a key lever to achieve climate action targets.

• EV as opportunistic investment: Tens of billions of funds went or is going into EV sectors. EV players and OEMs such as Tesla and Nio have attracted capital market attention and enjoy higher valuation than traditional companies.

Investment along the EV value chain presents opportunities for investors to diversify investment portfolios and optimise returns/ risks.

• EV as a new growth engine: An example is PTT in Thailand, which has invested aggressively and formed partnerships with global and local players in battery, EV car production and mobility services.

2) Adopt “ecosystem” mindset and approach

Three building blocks are essential for EV to work in the nascent market environment. These are: demand creator, supply securer and enabling infrastructure.

• Demand creator: Sources of generating necessary uptake volume and demand to justify business feasibility. These could be in the form of internal captive demands (e.g. government eBus programme, own corporate fleet), domestic and regional Southeast Asia demands and potential exports.

• Supply securer: Sufficient demands created to attract and secure supply or investment in production, sales & distribution, and aftersales services. This supply could be in the form of parts and components (e.g. battery), EVs and other service providers.

• Enabling infrastructure: Charging facilities and other financing means essential to alleviate EV adoption concerns.

3) Leverage collaboration and partnership to boost EV market

Partnership or strategic alliance has become a common and important go-to-market approach to grow the market for mutual benefits.

In the battery sector, LG chemical formed a strategic partnership with Hyundai to build an EV battery cell plant in Indonesia with an annual capacity of 10GWh, to meet the demands of 150,000 electric vehicles.

In the EV production segment, Toyota partnered with Chinese EV OEM, BYD, to develop and produce an all-electric small and affordable sedan in China.

New players such as Foxconn are establishing a JV with PTT to produce EVs in Thailand, leveraging its MIH platform. Such partnerships could shorten the product development lead time, as well as lower product development cost.

This partnership approach will help accelerate the forming of EV ecosystems in the nascent Southeast Asia market.

Source: NST

Scaling EV for future mobility in SEA


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The Asia-Pacific Economic Cooperation (Apec) member economies are ramping up efforts to revitalise cross-border travel by tackling the lingering uncertainties faced by travellers as the Covid-19 pandemic enters its third year.

Through a report, “Covid-19 and Cross-Border Mobility in the Apec Region: Addressing Uncertainties at the Border”, Apec’s Safe Passage Taskforce put forward recommendations to drive the forum’s work on passenger movements in the region, looking into issues at and behind the border that can be addressed to facilitate travel and tourism in the region.

The report, developed by the Apec Policy Support Unit, said the Covid-19 pandemic has had a tremendous impact on cross-border mobility throughout the world.

“Apec region implemented some of the most stringent cross-border travel restrictions in the world, and the impact of these measures have been massive and protracted. Apec Policy Support Unit study estimates the economic costs of the resulting loss in cross-border mobility at US$1.2 trillion in 2020.

“While international travel has started to recover since 2020, as of April 2022 international visitor arrivals in Apec was only one-third of the levels seen in January 2020. Border restrictions have had a devastating impact on travel and tourism throughout the world, with the Apec region particularly affected.

“International tourist arrivals to Apec economies fell by 79.1 per cent in 2020 relative to 2019, which is higher than the 69.8 per cent contraction registered in the rest of the world. While the rest of the world saw an increase of 18.4 per cent in tourist arrivals between 2020 and 2021, arrivals in the Apec region continued to decline by 28.3 per cent during the same period,” it said.

Despite the upturn in international tourist arrivals in 2021 for the rest of the world, the report said the number of arrivals was still 64.3 per cent lower than in 2019, while the number of arrivals in the Apec region was 85.0 per cent lower in 2021 compared to 2019.

The report also emphasises the importance of providing travellers clear information about entry requirements relating to Covid-19. The information needs to be up-to-date and access should be easy. Thailand recently launched a one-stop information hub that highlights the summary of health and Covid-related border measures across Apec.

“Regional mobility issues are cross-cutting and involve several ministries, the report highlights. It recommends member economies to continue coordination and cooperation and develop a mechanism that are flexible, ready and quick in order to immediately respond to future risks to cross-border mobility,” it said.

Meanwhile, Thailand’s Apec Senior Official and the chair of Apec’s Safe Passage Taskforce, Cherdchai Chaivaivid, said safe passage coordination between member economies needs to continue even when the pandemic becomes endemic.

“Beyond Covid-19, we need to come together and build that resilience in the face of future pandemics or crises that may affect cross-border travel.

“Travel and tourism are key to the economic growth of our region, so facilitating the safe resumption of cross-border movements will continue to feature post-pandemic,” he said.

Since its inception earlier this year, the taskforce has been exchanging best practices on the safe resumption of cross-border travel at the domestic, sub-regional and regional levels.

It has worked towards greater alignment of approaches across Apec, for example, through policy discussions on facilitating travel for air and maritime crew as well as improved interoperability of vaccine certificates issued by Apec economies.

Source: Bernama

Apec ramping up efforts to tackle travel uncertainties


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China’s Belt and Road Initiative (BRI) projects have played an important role in helping Asean countries broaden their development road and grow their economy, according to Asean officials and experts.

Kao Kim Hourn, a minister attached to the prime minister of Cambodia, said BRI is one of the important frameworks helping Cambodia attract investment for infrastructure development.

“As a country that had suffered heavily from war and conflict, our infrastructure was not there, so we need investment to develop roads, bridges, and ports among others,” he told Xinhua in a recent interview. “BRI has been one of the key priorities for Cambodia to develop our infrastructure.”

Kim Hourn, who will take over the post of Asean secretary-general in January 2023, said BRI has provided tremendous benefits not only to Cambodia, but also to all participating countries.

“Cambodia, as a country that produces a lot of rice and contributes to ensuring food security, also needs investment in the irrigation system, and this kind of infrastructure projects require a lot of capital, so BRI is a framework that can help us attract investors,” he said.

BRI, a reference to the Silk Road Economic Belt and the 21st Century Maritime Silk Road, was initiated by China in 2013 to build trade and infrastructure networks connecting Asia with Europe and Africa on and beyond the ancient Silk Road trade routes.

Vasim Sorya, undersecretary of state and spokesman for Cambodia’s Ministry of Public Works and Transport, said the BRI mega-projects in Cambodia, including the Sihanoukville Special Economic Zone, hydropower plants, Phnom Penh-Sihanoukville Expressway, the new Siem Reap International Airport, Morodok Techo National Stadium, roads and bridges are very beneficial to Cambodia’s socio-economic development.

“These projects have provided and will continue to provide a lot of tangible benefits to the economy and people of Cambodia,” he told Xinhua. “The BRI projects here are sincere with no strings attached, and their aim is to help boost our socio-economic development and improve our people’s livelihoods.”

Joseph Matthews, a senior professor at the BELTEI International University in Phnom Penh, said BRI has played a very important role in helping countries cushion the economic fallout of the Covid-19 pandemic.

“BRI remains a driving force to continue expanding cooperation among countries in the region and the world at large for the cause of peace, security, prosperity and sustainable development,” he told Xinhua. “It is becoming the new engine of global economic growth.”

Other Southeast Asian nations such as Laos, Thailand, Indonesia, and Malaysia, have also greatly benefited from BRI, Matthews said.

The China-Laos Railway, a landmark project of high-quality Belt and Road cooperation, runs 1,035 km, including 422 km in Laos, from the city of Kunming, southwest China’s Yunnan Province, to Lao capital Vientiane. It started operation in December 2021.

“I traveled to Oudomxay province by the train. It took only over two hours and it was convenient.” Bounleuth Luangpaseuth, vice president of the Lao National Chamber of Commerce and Industry, told Xinhua.

As a docking project between the Belt and Road Initiative and Laos’ strategy to convert itself from a landlocked country to a land-linked hub, the railway will slash the travel time between Vientiane and Kunming to about 10 hours.

“The Laos-China Railway transformed Laos from a land-locked country into a land-linked hub in the region. The railway will be an important piece of infrastructure that increases the nation’s transportation connectivity with other parts of the region. The railway would definitely play an important and positive role in promoting trade and investment in Laos, and it will create thousands of local jobs,” Luangpaseuth said.

In an interview with Xinhua, General Chairman of the Indonesian Chinese Entrepreneur Association Abdul Alek Soelystio said the China-Asean comprehensive strategic partnership represents closer, higher-level and wider scope cooperation between the two sides.

“The cooperation between China and Asean will not be limited to the field of goods trade, and will be expanded to closer and more professional cooperation on service trade in the future,” the entrepreneur said.

In his perspective, China has effectively promoted Asean’s economic development through the Belt and Road Initiative, global cooperation on the industrial chain and supply chain, as well as various favorable policies provided by the China-Asean Free Trade Area.

For example, the Jakarta-Bandung High-Speed Railway, which links China’s Belt and Road Initiative and Indonesia’s Global Maritime Fulcrum strategy, is expected to start operation in June 2023.

With a design speed of 350 km per hour, the railway built with Chinese technology will cut the journey between Jakarta and Bandung, capital of West Java province, from more than three hours to around 40 minutes.

Another example of the BRI project synergizing with the development scheme of an Asean country could be found in Vietnam’s capital Hanoi, a city crowded with millions of motorbikes and cars, where commuters are longing for alternative ways of traffic.

Built by the China Railway Sixth Group and as an important project of the synergy of BRI and Vietnam’s “Two Corridors and One Economic Circle” plan, the Cat Linh-Ha Dong line, more than 13 km with 12 stations covering three districts in Hanoi, has transported around 7.2 million people since last November.

With a designed speed of 80 km per hour, each train has four carriages capable of carrying up to 1,000 people. Local newspaper Vietnam News reported that on average 32,000 passengers take the line every day, and 70 percent of them use monthly tickets.

Like many other capitals, Hanoi sees a large number of passengers, mostly workers and students, at rush hour, and serious traffic congestion and environmental pollution, which made developing the railway system necessary, said Vu Hong Truong, CEO of Hanoi Metro, a state-owned enterprise for railway operation and maintenance.

The Cat Linh-Ha Dong line has gradually reduced traffic congestion in Hanoi, he said. – Xinhua

Source: The Star/Xinhua

Asean’s economic development benefits from BRI projects, say officials, experts


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Plans for a web of sub-sea cables that would create a continental power grid spanning Japan to India are rapidly becoming cheaper and more feasible, according to a study commissioned by advocates of the technology.

The evolution in high-voltage, direct current technology and ability to lay cables at depths of up to 3,000 metres — opening up previously inaccessible terrain — has strengthened the prospects for a network that could help shift renewable energy generated in one corner of the region to consumers thousands of miles away.

It’s now becoming more possible “to connect energy grids over much longer distances in an economical manner,” the Asia Green Grid Network said Wednesday in a report. “Making it a reality will require overcoming a series of challenges, many of which will require breakthroughs in innovation.”

The group, which includes Sun Cable — developer of a US$19bil (RM90bil) Australia-to-Singapore solar project — calculates that the main transmission lines for a pan-Asia grid could cost between US$77bil to US$116bil (RM364bil to RM550bil0, far lower than similar estimates in the past. However, additional investment would be needed in other major pieces of infrastructure, such as renewable energy, batteries and voltage converters, according to the network.

The idea of connecting power plants and customers across Asia has been pursued for decades, but stymied by issues including lack of government coordination and infrastructure funding. State Grid Corp. of China said in 2016 that such a grid would cost about US$50 trillion (RM236 trillion) by 2050.

Backers see the chance to turbocharge the green transition — connecting renewable energy produced in regions with abundant sun, wind or hydropower resources with heavy power consumers in cities and industrial hubs.

While still in its infancy compared to the interconnections in Europe, Asia is taking small steps toward integrating grids. Singapore began receiving hydropower from Laos wired through Thailand and Malaysia earlier this year.

China is also deploying similar ideas on a national scale with the installation of thousands of kilometers of ultra-high voltage lines to link power plants in western deserts to urban centers in the east.

The Asia Green Grid Network was launched by Sun Cable in association with a number of universities in Australia and Singapore to study how to create an integrated regional power network.

Source: Bloomberg

A clean energy super grid across Asia is closer to reality


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With sustainability integral to business decisions today, more organizations are taking the initiative to ensure their investments and business plans embrace it. Gone are the days whereby a simple CSR program would be sufficient for an organization’s contribution to society.

Today, environmental, social and governance (ESG) awareness among businesses requires proper planning and implementation. However, despite the greater focus on sustainability, businesses are still lacking a holistic strategy and are grappling wit how to integrate their data to science-based targets.

According to Kyndryl’s ASEAN Digital Transformation Study 2022, in collaboration with technology research and advisory firm Ecosystm, while organizations in ASEAN are aware about their responsibility to balance sustainability and profitability, there are still challenges that hinder them to set and achieve their sustainability goals.

The study aims to outline the key business priorities and technology trends in ASEAN enterprises, including their sustainability goals. Five hundred C-suite leaders participated in the study across ASEAN, and the findings revealed that ESG awareness is growing exponentially in the region with some industries leading the way.

With 77% of organizations in ASEAN focusing on becoming sustainable organizations, the study showed that they are being driven to develop and demonstrate an ESG consciousness in their actions and investment, by their customers, investors and by governments’ sustainability mandates. However, many organizations pursue sustainability goals without a strategy backing them up with only 23% of organizations in ASEAN have a corporate sustainability strategy.

At the same time, while the majority of organizations are focusing on budget allocation for sustainability initiatives, they have not gone beyond that to identify the right skills and data required to support the initiatives. Only 4% of organizations across ASEAN have a holistic strategy and are focusing on external and last-mile challenges such as negotiating ambiguous reporting frameworks.

Interestingly, the study also highlighted that customers and investors are also driving sustainability efforts. Responding to customer expectations has become a norm for every successful business today – and this extends to environmental and social consciousness. In the Philippines, Indonesia and Thailand, customers are driving environmental and social responsibility in organizations; in most cases more than regulations are.

Barriers in achieving sustainability

When it comes to barriers in sustainability projects in the region, 60% has to do with operational costs, with 55% stating data availability and 50% stating a lack of dedicated resources. This confirms that organizations’ sustainability initiatives are still at a preliminary stage. In today’s data-driven world, it is very likely that organizations have access to the data needed for their sustainability efforts. But it is often not integrated within their overall data strategy that helps identify the right data sets, collect the necessary data across all operations, and has embedded analytics for the right insights.

Meanwhile, while sustainability initiatives are yet to mature, some industries are leading the way in their strategies, and especially in their initiatives. The  Media & Telecom and Energy & Utilities for example, are among the most mature industries given the incentives to adopt sustainable practices are cost-related and for future survival. Other industries that have initiated smaller eco-friendly measures have also found some early success and this includes the Retail industry where there has been focus on reducing the use of plastic in packaging and procuring locally to reduce carbon footprints.

“In today’s evolved economies, an organization’s relevance and success will be measured both in terms of financial and climate aspects. This has spurred organisations to appoint Chief Sustainability Officers and highlighted the growing importance of sustainability skillsets for tomorrow’s workforce. This research highlights how the lack of data consistently hinders an organization’s sustainability planning,” said Ullrich Loeffler, CEO, Ecosystm.

“While sustainability is an integral part of many businesses in ASEAN, there is a lot more that needs to be done to build sustainability competencies and fully understand what data organizations have access to and identify the data gaps to support corporate sustainability goals,” added Loeffler.

For Joey Mak, Managing Director, Kyndryl Malaysia, as ASEAN is predicted to become the fourth largest economy in the world by 2030, there is  now a huge responsibility for businesses in Malaysia to balance the long-term imperative of a net-zero future with the short-term need to safeguard the bottom line.

“I strongly believe that the success of sustainability lies in how well an organization can integrate its people, processes and technology to achieve a common goal. To achieve this goal, we need to put people at the centre and embed sustainability principles at all levels of the organization culture,” commented Mark.

As such, for companies like Kyndryl, ESG strategy is at the heart of the organization’s mission to become a purpose-driven company. Kyndryl’s strategic focus is to continue to grow its Cloud business, to enable an estimated 22-39% increase in energy efficiency. The company will also continue the expansion of renewable energy across its portfolio, growing it to 75% within the next few years for all of its data centres.

Source: Techwire Asia

More ASEAN businesses are prioritising sustainability in their digital transformation


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Some 63% of CEOs in the Asia-Pacific region anticipate a recession over the next 12 months, but more than half (55%) expect it to be mild and short, according to KPMG International Ltd.

In its 8th edition of CEO Outlook, KPMG said about 58% of them have already taken precautionary measures to weather the upcoming turbulence.

The survey, conducted among 1,325 CEOs between July 12 and Aug 21, 2022, provides a unique insight into their mindsets, strategies and planning tactics.

The survey also revealed that 73% of the CEOs were confident in their companies’ resilience in weathering through the next six months, with a similar level of confidence (71%) in their country’s resilience.

“In response to the anticipated recession over the next six months, the CEOs plan to implement a hiring freeze (44%), manage cost by increasing price (43%) and reduce profit margins (40%).

“More worryingly, 29% of CEOs in the Asia-Pacific have reportedly paused or reconsidered their existing environmental, social and governance (ESG) efforts while 47% plan to do so over the coming months,” it said.

“There is also the likelihood that CEOs may need to look for alternate sources of capital to improve their chances of refinancing.

“Not surprisingly, 70% of them see the availability of capital for new investments (and lack thereof) will impact their organisation.

“Despite that, 61% cited that they are placing more capital investment in buying new technology, while 65% consider new partnerships will be critical to continuing their pace of digital transformation,” added KPMG, a global organisation of independent professional services firms providing audit, tax and advisory services.

KPMG Malaysia managing director Datuk Johan Idris said as governments in Malaysia and around the world are battling higher inflation with large interest rate increases, there is an increasing concern of a global liquidity crisis.

“This will mean companies will find it increasingly difficult to refinance or rollover debt as banks, in anticipation of a recession, become more cautious in their lending.

“Moreover, as liquidity gets tighter and a recession becomes more certain, those industries that are already out of favour with banks due to their ESG priorities may find any form of new financing difficult, thereby triggering capital issues that will require careful planning,” he said in a statement on Oct 17.

Source: Bernama

CEOs in Asia-Pacific confident of weathering looming recession


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The global economy is projected to expand by 2.9 per cent in 2023, due to slower-than-expected growth in both advanced economies and emerging market and developing economies (EMDEs), said the Ministry of Finance (MoF).

In its Economic Outlook 2023 report released today, the MoF said advanced economies’ growth is expected to moderate further to 1.4 per cent.

It also forecast that the United States’ gross domestic product (GDP) is projected to register at one per cent due to weak private consumption with inflation expected to remain above the Federal Reserve’s target of two per cent.

“Likewise, growth in the euro area is expected to moderate to 1.2 per cent as limited energy supply will continue to adversely affect economic activities,” the report said.

The report outlined EMDEs’ growth forecast to be marginally higher by 3.9 per cent in 2023, buoyed by elevated private consumption and exports.

China’s economy is projected to grow by 4.6 per cent, the expansion is attributed to strong domestic demand amid fiscal stimulus.

Meanwhile, the ASEAN-5’s (Indonesia, Malaysia, the Philippines, Singapore, and Thailand) growth is forecast to increase by 5.1 per cent, sustained by further improvements in domestic consumption and private investment.

In 2022, global growth is expected to expand by 3.2 per cent, supported largely by Asia Pacific’s GDP growth despite rising energy prices, supply chain disruptions and challenging financial conditions.

The ministry said global trade is anticipated to record 3.2 per cent in 2023 amid weaker demand, while trade is expected to record a growth of 3.2 per cent in advanced economies and 3.3 per cent in EMDEs.

In advanced economies, both exports and imports are expected to grow by 4.7 per cent and 4.5 per cent, respectively, owing to prolonged supply chain disruptions.

“Likewise, both exports and imports of EMDEs are anticipated to grow to 3.6 per cent and 4.8 per cent, respectively,” MoF said.

It said world trade for this year is expected to grow moderately to 4.1 per cent in 2022, following the prolonged geopolitical conflict in Eastern Europe as well as stringent lockdown measures in China to contain the spread of COVID-19.

In 2022, advanced economies are expected to record growth of 5.0 per cent and 6.1 per cent in exports and imports, respectively.

Trade in EMDEs is expected to moderate with exports and imports projected to grow at a slower rate of 4.1 per cent and 3.9 per cent, respectively

Global inflation is forecast at 5.7 per cent in 2023, backed by an anticipated fall in prices of commodities, including crude oil, while the inflation rate in advanced economies is projected to record 3.3 per cent and EMDEs at 7.3 per cent.

“Global inflation is anticipated to register at 8.3 per cent this year, in line with higher food and energy prices.

“The inflation rate is projected at 6.6 per cent in advanced economies and 9.5 per cent in EMDEs,” MoF added.

Source: Bernama

Global economy to grow by 2.9 pct in 2023 — MoF


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Record FDI flows to EMs Asean in 2021 reached a new high year-to-date in 2022, led by manufacturing investments such as EV, battery, semiconductor and electronics

ASEAN is projected to keep attracting foreign direct investment (FDI) in the next five to 10 years, driven by the region’s supportive policies, cost competitiveness, industrial development, linkages to existing manufacturing hubs and rising middle-income consumers.

In a note today, JP Morgan said record FDI flows to emerging markets (EMs) Asean in 2021 reached a new high year-to-date in 2022, led by manufacturing investments such as electric vehicle (EV), battery, semiconductor and electronics.

The EMs Asean includes Malaysia, Indonesia, Philippines, Thailand and Vietnam.

According to JP Morgan, Asean’s share of global FDI rose from 5.8% in 2015 to 13.7% in 2020.

As such, it noted that the US government’s plans for friend-shoring should encourage further supply chain relocations into Asean.

“Over the past 12 months, we have witnessed the relocation of large-scale FDI projects involving key supply chains — namely EV batteries, parts and components to Indonesia, Malaysia and Thailand; semiconductors to Malaysia and Vietnam; Apple’s products to Vietnam and nickel mining and smelting to Indonesia.

“In our view, stronger FDIs will raise capital accumulation, bring along technological know-how, and develop labour and managerial skills.

“This would further boost the economic growth of the region,” JP Morgan said.

The investment banking company reiterated four long-term plays — namely banks with high exposure to corporates/trade, hardware/industrial goods producers that link to regional supply chains, industrial real estate and logistic services providers benefitting from increased trade flows, and consumer names exposed to rising income and discretionary spending.

Meanwhile, JP Morgan also highlighted that policy reforms and increased trade cooperation will add to the existing advantages of Asean.

JP Morgan said it has seen several key improvements this year, including tax incentives for EV production, a consistent policy push, continued commitment to improve the ease of doing business and regional trade agreements such as the Regional Comprehensive Economic Partnership and Indo-Pacific Economic Framework.

“Note, Asean also has one of the highest numbers of international investment agreements (IIAs).

“These large numbers of IIAs underscore the member states’ commitment to attracting FDI and strengthening investment relationships with partner economies,” it noted.

Commenting further, JP Morgan said Toyota Motor Corp, BYD Auto Co Ltd, Foxconn, CATL and LG Energy Solution Ltd have announced significant investments in EV assembly and battery production in Thailand and Indonesia — countries with existing auto parts supply chains, skilled labour, mineral resources and government incentives for EVs.

It added that semiconductor firms have been moving to Malaysia, with significant announced expansion plans by Intel Corp (US$7 billion), Infineon Technologies AG (US$2 billion) and AT&S (US$2 billion).

“Vietnam also saw semiconductor investments from Samsung and Amkor Technology.

“In Apple Inc’s supply chain, Vietnam is rising as a location to produce 15% of global output of iPads and MacBooks,” it said.

Malaysia had attracted a total of RM123.3 billion worth of approved investments in the manufacturing, services and primary sectors involving 1,714 projects in the first half of the year (1H22), according to Malaysian Investment Development Authority (Mida).

FDI accounted for 70.9% or RM87.4 billion of the total investments, while investments from domestic sources contributed 29.1%, or RM35.9 billion.

International Trade and Industry (MITI) Minister Datuk Seri Mohamed Azmin Ali said Malaysia is on the right trajectory to secure more high-quality, high-impact and capital-intensive projects, with the services sector being the key growth driver for the economy and the largest contributor to approved investments in 1H22.

He added that in maintaining the momentum, MITI will continue to strengthen the country’s competitiveness by developing economic complexity, nurturing a strong industrial ecosystem with innovation intensity, enhancing inclusivity by creating high-income jobs and promoting opportunities to participate in the regional and global supply chains.

“Driven by the National Investment Aspirations, we will intensify our focus towards sectors such as digital economy, electrical and electronics, pharmaceutical, chemical and aerospace with significant economic potential and sustainable long-term growth,” the minister said.

Source: The Malaysian Reserve

JP Morgan: Asean to continue attracting FDI in next 5 to 10 years


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Southeast Asian countries can meet their growing energy demand with renewables, and cut 75% of their energy-related CO2 emissions by 2050, half of the emissions compared to today.

The International Renewable Energy Agency (Irena) in its “Renewable Energy Outlook for Asean: Towards a regional energy transition” report released recently said that almost doubling renewable power by 2030 creates significant regional business and investment opportunities.

Irena director-general Francesco La Camera said with its massive renewable potential, Southeast Asia stands at a historic crossroad between moving away from fossil fuels and towards a renewable energy transition that meets the region’s economic growth and rising energy demand.

He said coal retirement, coupled with renewables and regional grid interconnection, is an indispensable step to aligning with net-zero targets.

“Half of Asean members have signed up to international efforts to end coal in the power sector.

“Climate commitments require concerted and accelerated action that must begin now to have a hope of success,” he said.

Meanwhile, Asean Centre for Energy executive director Dr Nuki Agya Utama said accelerating the energy transition is crucial in order to meet climate goals and support the region’s economic growth.

“Guided by Phase II of the Asean Plan of Action for Energy Cooperation, Asean is committed to achieving 23% renewables share in total primary energy supply by 2025.

“Moreover, the regional blueprint includes the optimisation of clean coal technology as one of its programme areas,” he said.

Irena said that as renewables have become the cheapest power option in much of Southeast Asia, renewable capacity additions can cost-effectively increase up to 40% of total power capacity by 2030 compared to one-quarter today.

It said this means around 300 gigawatts of new renewable capacity installations, most of it solar and wind.

The agency said significant investment is needed to boost renewables in national energy mixes, but overall costs are balanced by substantial savings on supply and fuel costs.

It said Asean’s investment in renewables must almost triple the current levels.

Investment opportunities include renewable power, transmission, biofuels, energy efficiency, hydrogen and electromobility, and can amount to over US$6 trillion (RM27.4 trillion) cumulatively by 2050.

Irena said countries can reduce their energy costs by as much as US$160 billion to 2050.

Overall, the avoidance of costs related to health and environmental damage caused by fossil fuels can bring savings of up to US$1.5 trillion cumulatively to 2050.

Source: The Edge Markets

Asean can cover two-thirds of energy demand with renewables, says Irena


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South-East Asian nations need to more than double their annual investment on renewables to accelerate energy transition and to meet climate goals, a report released this week by the International Renewable Energy Agency (IRENA) showed.

IRENA said, in the long term, average annual investment of US$210 billion was needed on renewable energy, energy efficiency and to support technologies and infrastructure in the period to 2050 to limit a global temperature rise to 1.5 degrees Celsius.

The investment is more than two and a half times the amount currently planned by Southeast Asian governments to reach their goals, IRENA said.

“Coal retirement, coupled with renewables and regional grid interconnection, is an indispensable step to aligning with net-zero targets,” IRENA’s Director-General Francesco La Camera said.

Southeast Asia is home to 25% of the world’s geothermal generation capacity, but the region also has major coal reserves. The region’s biggest economy Indonesia is the world’s top exporter of thermal coal.

While half of the members of the Association of South-East Asian Nations (Asean) have pledged to stop using coal in the power sector, La Camera said climate commitments required concerted and accelerated action “that must begin now to have a hope of success.”

The region aims to have 23% of its primary energy supplied by renewables by 2025, however, investments in recent years show mixed progress, IRENA said.

“Accelerating energy transition is crucial in order to meet climate goals and support the region’s economic growth,” said Nuki Agya Utama, executive director of the ASEAN Centre for Energy, adding the bloc remained committed to its 2025 goals.

IRENA said countries could by investing more in renewables reduce their energy costs and avoid as much as $1.5 trillion of costs related to health and environmental damage from fossil fuels up to 2050.

Source: Reuters

South-East Asia needs US$210bil annual investment on renewables, says IRENA


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The buoyant market for the global halal economy is expected to reach US$4.96 trillion (RM22.34 trillion) by 2030, from US$2.3 trillion in 2020, according to research and consulting firm Frost & Sullivan.

In a report on Tuesday (Sept 6), the firm said that the halal economy is experiencing an upward trend, as demand for halal products from Muslims and non-Muslim nations increases.

It said the main factors driving the halal industry are favourable population demographics, government policies, and private-sector initiatives.

It said growing non-Muslim demand for halal food will be driven by its association with safe and healthy eating, while halal fashion and tourism should also find increasing acceptance among more conservative non-Muslim consumers.

Frost & Sullivan senior economist Neha Anna Thomas said with higher levels of halal trade and Islamic finance potentially accelerating infrastructure development, the halal economy is poised to become more integrated with global trade and supply chains.

“Further, governments are strengthening regulatory and policy support through national master plans and certification scope expansion, which will boost the halal industry’s growth,” she said.

Thomas added that transparency and traceability along the halal product value chain are crucial.

“Due to this, governments should encourage the adoption of advanced technologies, such as the blockchain and the Internet of Things, when developing halal economy master plans, while businesses can partner with tech start-ups,” she said.

Frost & Sullivan said that to tap into growth opportunities of the halal market:

  • Global governments must seek to unify halal standards and accreditation processes to help reduce the number of certification requirements and promote halal commerce.
  • Food manufacturers should collaborate with technology companies to improve traceability and transparency while increasing consumer trust.
  • Global drug manufacturers and raw material suppliers should incorporate halal-certified products into their offerings, potentially through joint ventures, to tap into growing halal pharmaceutical demand from Islamic countries.

Source: The Edge Markets

Global halal economy to hit US$4.96 trillion by 2030, says Frost & Sullivan


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Global semiconductor equipment billings rose 6% year-on-year (y-o-y) to US$26.43 billion (RM118.93 billion) in the second quarter of 2022 (2Q22), according to US-based Semiconductor Equipment and Materials International (SEMI).

In its Worldwide Semiconductor Equipment Market Statistics (WWSEMS) report released on Wednesday (Sept 7), SEMI said the figure was up 7% quarter-on-quarter (q-o-q).

Compiled from data submitted by members of SEMI and the Semiconductor Equipment Association of Japan, the WWSEMS report is a summary of the monthly billings figures for the global semiconductor equipment industry.

Following are quarterly billings data in billions of US dollars with q-o-q and y-o-y changes by region:

Source: The Edge Markets

Global semiconductor equipment billings up 6% y-o-y to US26.4b in 2Q22, says SEMI


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Global semiconductor industry sales rose 7.3% year-on-year (y-o-y) to US$49 billion in July 2022, from US$45.7 billion, according to the US-based Semiconductor Industry Association (SIA).

In a statement on its website on Tuesday (Sept 6), the SIA however said the figure was 2.3% lower from the June 2022 total of US$50.2 billion.

Monthly sales are compiled by the World Semiconductor Trade Statistics (WSTS) organisation and represent a three-month moving average.

SIA president and CEO John Neuffer said global semiconductor sales remained strong in July, easily topping the total from last July, but market growth has slowed substantially in recent months, with year-to-year sales increases dropping into the single digits for the first time since December 2020.

“Sales into the Americas market increased 20.9% y-o-y to lead all regions,” he said.

The SIA said that in addition to the Americas, year-to-year sales were up in the Europe (15.2%) and Japan (13.1%), and Asia-Pacific/all others (4.1%), but down in China (-1.8%).

Month-to-month sales increased in Europe (2.7%) and Japan (0.6%), but decreased in the Americas (-2.3%), China (-3.5%), and Asia-Pacific/all others (-3.5%).

Source: The Edge Markets

Global semiconductor sales up 7.3% y-o-y in July, but growth slowed, says SIA


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