January 24, 2025 • 10 mins
In this episode, Michelle introduces the top stories affecting the Southeast Asian markets. She begins by examining Vietnam's economic growth, identifying the key factors driving this upward trend. The discussion then moves to Indonesia's new export earnings policy, analyzing its potential impact on the country's economy. Michelle also evaluates the performance and growth of Singapore's manufacturing sector, considering its broader implications for the region. The episode wraps up with a conclusion and a call to action, encouraging listeners to stay informed and engaged with the evolving economic developments in Southeast Asia.
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Episode Transcript
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(00:00):
Welcome back to the Southeast Asia MarketsDaily Brief.
I’m your host, AI Michelle.
Here are our top stories today...
First, Vietnam is poised to become thefastest-growing economy in the Asia-Pacific
region in 2026, according to the World Bank.
Second, Indonesia's new policy mandating a onehundred percent deposit of export earnings is
(00:24):
expected to impact coal miners' cash flow.
Third, Singapore's factory output saw asignificant increase of ten point six percent
in December, surpassing expectations.
Let's dive into our first story.
Vietnam is on track to become thefastest-growing economy in the Asia-Pacific
region by 2026, as projected by the World Bankin its latest ‘Global Economic Prospects’
(00:50):
report.
The World Bank forecasts Vietnam's GrossDomestic Product growth to reach six point
three percent in 2026, placing it ahead of thePhilippines at six percent and Indonesia at
five point one percent.
This projection is a testament to Vietnam'srobust economic strategies and its ability to
(01:10):
capitalize on global economic trends.
Looking at the specifics, Vietnam's economicgrowth is driven by several key factors.
First, the country has been a significantbeneficiary of the ongoing shift in global
supply chains.
As companies seek to diversify theirmanufacturing bases away from China, Vietnam
(01:32):
has emerged as a favorable alternative due toits competitive labor costs, strategic
geographic location, and investment-friendlypolicies.
This trend is expected to continue, bolsteringVietnam's manufacturing and export sectors.
Moreover, Vietnam's commitment to free tradeagreements has further enhanced its economic
(01:55):
prospects.
Agreements like the Comprehensive andProgressive Agreement for Trans-Pacific
Partnership and the European Union-Vietnam FreeTrade Agreement have opened up new markets for
Vietnamese goods, driving export growth andattracting foreign investments.
These agreements not only provide Vietnam withpreferential access to key markets but also
(02:17):
encourage domestic industries to upgrade andinnovate, enhancing overall productivity.
In addition to trade, Vietnam's focus ondigital transformation and technology adoption
is playing a crucial role in its economicascent.
The country's rapidly growing tech sector isfostering innovation and creating new
investment opportunities, particularly in areassuch as fintech, e-commerce, and digital
(02:42):
services.
This technological advancement is expected tocontribute significantly to Vietnam's GDP
growth in the coming years.
As we look ahead, the World Bank's optimisticoutlook for Vietnam underscores the country's
potential to lead the region in economicgrowth.
However, it's essential for Vietnam to addresschallenges such as infrastructure development,
(03:05):
workforce skill enhancement, and sustainableenvironmental practices to ensure long-term,
inclusive growth.
With the right policies and strategicinvestments, Vietnam is well-positioned to
capitalize on its current momentum and achieveits ambitious growth targets.
Our second story today focuses on a new policyin Indonesia that could have significant
(03:29):
implications for the country's coal miningsector.
The Indonesian government has introduced aregulation that requires commodity exporters to
deposit one hundred percent of theirdollar-denominated export earnings into the
domestic financial system for a year.
This policy is primarily aimed at boostingIndonesia's foreign exchange reserves, which
(03:51):
could further strengthen the country's economy.
However, this change is expected to createcash-flow challenges for coal miners, who are
already grappling with prices at multi-yearlows.
Previously, exporters were only required toreserve thirty percent of their revenue in
Indonesian financial institutions for a minimumof three months.
(04:12):
The new mandate represents a substantial shiftin policy, as noted by Coordinating Minister
for the Economy Airlangga Hartarto.
In a statement, he mentioned that the processfor Dollar Earnings from Exports has been
completed, and the preparation of theGovernment Regulation is underway.
This policy update involves coordination withBank Indonesia, the Financial Services
(04:34):
Authority, and the banking sector to ensure asmooth implementation.
The impact of this policy is particularlyconcerning for coal miners, as it could lead to
increased financing costs.
Many miners are likely to face the need toborrow additional funds to manage their
operational expenses due to shrinking profitmargins.
(04:55):
This additional financial burden might evenlead to the shutdown of some mines.
However, there is a provision for leniency.
Export transactions under two hundred fiftythousand United States dollars are exempt from
this regulation, aiming to protect smallexporters and keep them competitive in the
international market.
The timing of this mandate is critical, assmall miners are already facing difficult
(05:20):
conditions.
Demand from major consumers such as China andIndia is low, and prices for Indonesian thermal
coal have plummeted to multi-year lows.
Notably, the Kalimantan four thousand twohundred kilocalories per kilogram grade coal
was priced at forty-eight point two five UnitedStates dollars per metric ton free on board as
(05:40):
of January twenty-second, the lowest sinceApril fifteenth, two thousand twenty-one.
This is a stark contrast to October twentieth,two thousand twenty-one, when prices peaked at
one hundred fifty-eight United States dollarsper metric ton due to China's unofficial ban on
Australian coal.
While the new regulations are intended toincrease foreign reserves, some market
(06:02):
observers believe that if the differencebetween loan interest and deposit interest in
government banks is minimal, the impact onexporters may not be as severe.
Large proceeds from Indonesian commodityexports are often placed overseas due to higher
interest rates and favorable tax treatment.
Meanwhile, Indonesia's official foreignreserves assets stood at one hundred fifty-five
(06:25):
point seven billion United States dollars atthe end of December two thousand twenty-four,
up from one hundred fifty point two billionUnited States dollars at the end of November
two thousand twenty-four, thanks to revenuefrom taxes, foreign loan withdrawals, and oil
and gas export receipts.
Despite the potential drawbacks, Indonesia'scoal exports have remained robust.
(06:47):
In two thousand twenty-four, the countryexported five hundred fifty-five point seven
million metric tons of coal, marking a sevenpoint six percent increase from two thousand
twenty-three.
China was the largest export destination,importing two hundred forty-five point eight
million metric tons, while India received onehundred eight point three million metric tons.
(07:10):
Our final story today highlights Singapore'simpressive factory output growth in December
2024, which surpassed expectations and markedthe sixth consecutive month of expansion.
According to data from the Economic DevelopmentBoard, Singapore's total manufacturing output
grew by ten point six percent year-on-year,significantly beating analysts' forecast of six
(07:34):
point two percent growth.
This positive performance is largely attributedto the resilient demand for electronics
exports, a sector that plays a crucial role inSingapore's manufacturing landscape.
The electronics industry, which constitutesnearly half of Singapore's manufacturing
output, saw a robust increase of fourteen pointthree percent compared to the previous year.
(07:58):
Within this sector, semiconductor productionrose by eleven point four percent.
However, not all sub-sectors performed equally.
While other electronic modules and componentssaw a decline of nine point two percent,
computer peripherals and data storage reportedan impressive expansion of twenty-seven point
one percent, and infocommunications andconsumer electronics surged by forty-one point
(08:24):
two percent.
Analysts, including DBS Bank economist Chua HanTeng, expect this positive manufacturing trend
to continue into the first half of 2025.
The sustained expansion in new export orders,as evidenced by Singapore's purchasing
managers' indices, is supported by the globaltechnology upcycle.
(08:46):
Additionally, the transport engineering sectorexperienced a significant climb of sixteen
percent year-on-year, driven by increasedactivity in the marine and offshore engineering
segment, which grew by twenty-eight point onepercent.
On the other hand, the chemicals cluster,despite being the worst performer, still
registered a growth of three point one percent.
(09:08):
Within this cluster, the other chemicalssegment rose by eighteen point six percent due
to higher fragrance production, and thepetroleum and petrochemicals segments grew by
seven point four percent and six point fourpercent, respectively.
However, the specialties segment faced adecline of nineteen point eight percent,
primarily due to lower production in mineraloil additives and biofuels.
(09:32):
The biomedical manufacturing sector alsocontributed positively, with a growth of nine
point four percent year-on-year.
This growth was driven by a thirteen pointseven percent increase in the pharmaceuticals
segment, which benefited from a different mixof active pharmaceutical ingredients.
The medical technology segment expanded by tenpoint five percent, reflecting continued export
(09:55):
demand for medical devices.
Looking ahead, the outlook for Singapore'smanufacturing sector remains cautiously
optimistic.
While the near-term prospects are bolstered byresilient demand, potential challenges loom on
the horizon.
Economists like DBS' Mr.
Chua and OCBC Bank's chief economist SelenaLing have highlighted the risks posed by
(10:19):
escalating geopolitical tensions and a moreprotectionist global trade environment.
These factors could introduce medium-termchallenges for highly trade-dependent economies
like Singapore.
With this comprehensive overview of Singapore'smanufacturing sector, we conclude today's
episode.
Alright, that's a wrap for this episode.
(10:41):
If you enjoyed this brief, and would like tostay updated on the latest episodes, don’t
forget to click 'Follow' in your podcast app.
Thanks again for listening, and hope to catchyou next time.
Welcome back to the Southeast Asia MarketsDaily Brief.
I’m your host, AI Michelle.
Here are our top stories today...
First, Vietnam is poised to become thefastest-growing economy in the Asia-Pacific
region in 2026, according to the World Bank.
Second, Indonesia's new policy mandating a onehundred percent deposit of export earnings is
(00:24):
expected to impact coal miners' cash flow.
Third, Singapore's factory output saw asignificant increase of ten point six percent
in December, surpassing expectations.
Let's dive into our first story.
Vietnam is on track to become thefastest-growing economy in the Asia-Pacific
region by 2026, as projected by the World Bankin its latest ‘Global Economic Prospects’
(00:50):
report.
The World Bank forecasts Vietnam's GrossDomestic Product growth to reach six point
three percent in 2026, placing it ahead of thePhilippines at six percent and Indonesia at
five point one percent.
This projection is a testament to Vietnam'srobust economic strategies and its ability to
(01:10):
capitalize on global economic trends.
Looking at the specifics, Vietnam's economicgrowth is driven by several key factors.
First, the country has been a significantbeneficiary of the ongoing shift in global
supply chains.
As companies seek to diversify theirmanufacturing bases away from China, Vietnam
(01:32):
has emerged as a favorable alternative due toits competitive labor costs, strategic
geographic location, and investment-friendlypolicies.
This trend is expected to continue, bolsteringVietnam's manufacturing and export sectors.
Moreover, Vietnam's commitment to free tradeagreements has further enhanced its economic
(01:55):
prospects.
Agreements like the Comprehensive andProgressive Agreement for Trans-Pacific
Partnership and the European Union-Vietnam FreeTrade Agreement have opened up new markets for
Vietnamese goods, driving export growth andattracting foreign investments.
These agreements not only provide Vietnam withpreferential access to key markets but also
(02:17):
encourage domestic industries to upgrade andinnovate, enhancing overall productivity.
In addition to trade, Vietnam's focus ondigital transformation and technology adoption
is playing a crucial role in its economicascent.
The country's rapidly growing tech sector isfostering innovation and creating new
investment opportunities, particularly in areassuch as fintech, e-commerce, and digital
(02:42):
services.
This technological advancement is expected tocontribute significantly to Vietnam's GDP
growth in the coming years.
As we look ahead, the World Bank's optimisticoutlook for Vietnam underscores the country's
potential to lead the region in economicgrowth.
However, it's essential for Vietnam to addresschallenges such as infrastructure development,
(03:05):
workforce skill enhancement, and sustainableenvironmental practices to ensure long-term,
inclusive growth.
With the right policies and strategicinvestments, Vietnam is well-positioned to
capitalize on its current momentum and achieveits ambitious growth targets.
Our second story today focuses on a new policyin Indonesia that could have significant
(03:29):
implications for the country's coal miningsector.
The Indonesian government has introduced aregulation that requires commodity exporters to
deposit one hundred percent of theirdollar-denominated export earnings into the
domestic financial system for a year.
This policy is primarily aimed at boostingIndonesia's foreign exchange reserves, which
(03:51):
could further strengthen the country's economy.
However, this change is expected to createcash-flow challenges for coal miners, who are
already grappling with prices at multi-yearlows.
Previously, exporters were only required toreserve thirty percent of their revenue in
Indonesian financial institutions for a minimumof three months.
(04:12):
The new mandate represents a substantial shiftin policy, as noted by Coordinating Minister
for the Economy Airlangga Hartarto.
In a statement, he mentioned that the processfor Dollar Earnings from Exports has been
completed, and the preparation of theGovernment Regulation is underway.
This policy update involves coordination withBank Indonesia, the Financial Services
(04:34):
Authority, and the banking sector to ensure asmooth implementation.
The impact of this policy is particularlyconcerning for coal miners, as it could lead to
increased financing costs.
Many miners are likely to face the need toborrow additional funds to manage their
operational expenses due to shrinking profitmargins.
(04:55):
This additional financial burden might evenlead to the shutdown of some mines.
However, there is a provision for leniency.
Export transactions under two hundred fiftythousand United States dollars are exempt from
this regulation, aiming to protect smallexporters and keep them competitive in the
international market.
The timing of this mandate is critical, assmall miners are already facing difficult
(05:20):
conditions.
Demand from major consumers such as China andIndia is low, and prices for Indonesian thermal
coal have plummeted to multi-year lows.
Notably, the Kalimantan four thousand twohundred kilocalories per kilogram grade coal
was priced at forty-eight point two five UnitedStates dollars per metric ton free on board as
(05:40):
of January twenty-second, the lowest sinceApril fifteenth, two thousand twenty-one.
This is a stark contrast to October twentieth,two thousand twenty-one, when prices peaked at
one hundred fifty-eight United States dollarsper metric ton due to China's unofficial ban on
Australian coal.
While the new regulations are intended toincrease foreign reserves, some market
(06:02):
observers believe that if the differencebetween loan interest and deposit interest in
government banks is minimal, the impact onexporters may not be as severe.
Large proceeds from Indonesian commodityexports are often placed overseas due to higher
interest rates and favorable tax treatment.
Meanwhile, Indonesia's official foreignreserves assets stood at one hundred fifty-five
(06:25):
point seven billion United States dollars atthe end of December two thousand twenty-four,
up from one hundred fifty point two billionUnited States dollars at the end of November
two thousand twenty-four, thanks to revenuefrom taxes, foreign loan withdrawals, and oil
and gas export receipts.
Despite the potential drawbacks, Indonesia'scoal exports have remained robust.
(06:47):
In two thousand twenty-four, the countryexported five hundred fifty-five point seven
million metric tons of coal, marking a sevenpoint six percent increase from two thousand
twenty-three.
China was the largest export destination,importing two hundred forty-five point eight
million metric tons, while India received onehundred eight point three million metric tons.
(07:10):
Our final story today highlights Singapore'simpressive factory output growth in December
2024, which surpassed expectations and markedthe sixth consecutive month of expansion.
According to data from the Economic DevelopmentBoard, Singapore's total manufacturing output
grew by ten point six percent year-on-year,significantly beating analysts' forecast of six
(07:34):
point two percent growth.
This positive performance is largely attributedto the resilient demand for electronics
exports, a sector that plays a crucial role inSingapore's manufacturing landscape.
The electronics industry, which constitutesnearly half of Singapore's manufacturing
output, saw a robust increase of fourteen pointthree percent compared to the previous year.
(07:58):
Within this sector, semiconductor productionrose by eleven point four percent.
However, not all sub-sectors performed equally.
While other electronic modules and componentssaw a decline of nine point two percent,
computer peripherals and data storage reportedan impressive expansion of twenty-seven point
one percent, and infocommunications andconsumer electronics surged by forty-one point
(08:24):
two percent.
Analysts, including DBS Bank economist Chua HanTeng, expect this positive manufacturing trend
to continue into the first half of 2025.
The sustained expansion in new export orders,as evidenced by Singapore's purchasing
managers' indices, is supported by the globaltechnology upcycle.
(08:46):
Additionally, the transport engineering sectorexperienced a significant climb of sixteen
percent year-on-year, driven by increasedactivity in the marine and offshore engineering
segment, which grew by twenty-eight point onepercent.
On the other hand, the chemicals cluster,despite being the worst performer, still
registered a growth of three point one percent.
(09:08):
Within this cluster, the other chemicalssegment rose by eighteen point six percent due
to higher fragrance production, and thepetroleum and petrochemicals segments grew by
seven point four percent and six point fourpercent, respectively.
However, the specialties segment faced adecline of nineteen point eight percent,
primarily due to lower production in mineraloil additives and biofuels.
(09:32):
The biomedical manufacturing sector alsocontributed positively, with a growth of nine
point four percent year-on-year.
This growth was driven by a thirteen pointseven percent increase in the pharmaceuticals
segment, which benefited from a different mixof active pharmaceutical ingredients.
The medical technology segment expanded by tenpoint five percent, reflecting continued export
(09:55):
demand for medical devices.
Looking ahead, the outlook for Singapore'smanufacturing sector remains cautiously
optimistic.
While the near-term prospects are bolstered byresilient demand, potential challenges loom on
the horizon.
Economists like DBS' Mr.
Chua and OCBC Bank's chief economist SelenaLing have highlighted the risks posed by
(10:19):
escalating geopolitical tensions and a moreprotectionist global trade environment.
These factors could introduce medium-termchallenges for highly trade-dependent economies
like Singapore.
With this comprehensive overview of Singapore'smanufacturing sector, we conclude today's
episode.
Alright, that's a wrap for this episode.
(10:41):
If you enjoyed this brief, and would like tostay updated on the latest episodes, don’t
forget to click 'Follow' in your podcast app.
Thanks again for listening, and hope to catchyou next time.
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