Since the newsletter launch in August this year, almost 100 of you have joined my Southeast Asia journey. For that, I would like to thank you for your support sincerely.

I truly believe we have seen the tip of the iceberg as the region has not shown its full potential in the current low-growth environment. When the dust settles in the next 2-3 years, it would be interesting where and how the growth comes.

🎅🎄🎉 To thank you for your support, I prepared early Christmas presents for you! 🎅🎄🎉

Claim LIMITED complimentary offers valid until 31 January 2024 by scrolling to the bottom for links

• ^{1 x FREE Sponsorship post (first five)}

• ^{1 x FREE Content Piece Writeup on Industry of your Interest (first two)}

This will also be the last newsletter for 2023. I look forward to seeing you back in the new year, in a new location with an eagerness to learn and explore.

Here is a festive season message from me and our in-house correspondent, Alex Bancroft. Merry Christmas and a Happy New Year!

This week, we look at the Australia-Indonesia AgriFood Export Landscape (Special Corners), Chinese President Xi’s visit to Vietnam (Politics), China’s ambitious e-CNY program in Singapore (Economy), why the railway is an effective answer to decarbonisation (Infrastructure).

I also put together ‘🇻🇳 Vietnam Corner 🇻🇳’ to reflect the recent media coverage of the country’s changing economic and social landscape.

Appetisers

• 🇻🇳 🇨🇳 Vietnam is the only country in the world that both Xi Jinping and Joe Biden visited this year

• 🇲🇾 ☕ Malaysia’s 4th largest bank advises investors to divest from Starbucks due to the US HQ’s response to its pro-Palestine workers’ union

• 🇮🇩 💦 $4.8 billion project to switch water supply from ground to pipe as Jakarta sunk 4.8m (16ft) over the last 25 years

• 🌏🥛 Vitasoy saw a 44% increase in profit in China (soy milk, tea), as well as strong performance in Singapore (tofu) and the Philippines (soy milk, oat milk)

⬆️UP ⬆️

• 17% | 5 years Indonesia’s import growth of Infant formula, of the US$93 million imports. 24% come from Australia

• 15% | 5 years Indonesia’s import growth of Non-alcoholic beverages but with most significant share held by Malaysia (56%) and Thailand (21%).

• 18% | 5-year global import growth of Dog or cat food, put up for retail sale with 5% Australian market share an area of potential growth for Australian products.

• US$1.2 billion | Indonesia’s imports of Soups and Condiments, Australia has only a 1.6% market share.

⬇️DOWN⬇️

• Decreases in global imports of Wine and Whisky, though Australia retains a good market share in wine at 25%.

• Overall declines in global imports of wheat starch, ethyl alcohol, redcurrants, avocadoes, apricots, lemons and plums.

• 🇻🇳 🇨🇳 Chinese President Xi and Vietnam’s Prime Minister Trọng signed 36 agreements, albeit light in specifics: four had to do with politics and foreign affairs; four covered security and defence, crime prevention, maritime cooperation and judiciary; 24 documents involved cooperation at the government and ministry levels; and a final four had to do with city-city or province-province cooperation.

• 🇻🇳 💾 Despite NVIDIA’s $250 million investment, Vietnam won’t be a semiconductor hub overnight as more domestic players must develop their high-tech capabilities. 99% of the hardware parts in the IT industry are currently imported.

• 🇲🇲 ⚔️ Could Myanmar’s 3-year junta government come to an end soon as the rebels gain ground? Nearly 20,000 people have been imprisoned by the junta since the February 2021 coup, and nearly one million people are internally displaced.

• 🇸🇬 🇨🇳 Singapore and China have launched a pilot cross-border digital yuna (e-CNY) program for tourist spending. This includes a mutual 30-day visa-free travel arrangement. Total e-CNY transactions grew to 950 million yuan (US$133 million) in June 2023 which was only 0.16% of China’s cash circulation.

• 🇲🇾🏥Malaysia, particularly Penang, is emerging as a key destination for medical tourism which saw US$279 million (MYR 1.3 billion) in 2022. In the first nine months of 2023, Penang welcomed 287,379 foreign patients, with Indonesians comprising 84.1% of these visitors, followed by Chinese at 1.9% and Indians at 1.7%.

• 🇸🇬 🐔 Singapore has temporarily halted the import of raw poultry from various regions in Japan, the United States, Canada, France, Belgium, and Germany due to H5N1 avian influenza outbreaks.

  • Is this an opportunity for Australian poultry businesses to gain market share?

🇻🇳 Vietnam Corner 🇻🇳

• 💲Vietnam's number of high-net-worth individuals increased by 70% over the last five years, from 40,971 people in 2017 to 70,000 in 2022 (min. $1m net asset). This growth in wealth aligns with trends seen in other Asian countries like Singapore, Malaysia, and Indonesia.

• ✂️ 󠀥󠀥Vietnam has extended the current VAT cut (10% > 8%) to 30 June 2024 to stimulate the economy which has lagged in growth (5%) compared to the government’s target (6.5%).

  • Mini-insight: This is an opportunity for foreign exporters to save cash on large-volume exports.

• 🧧 Vietnam to implement a 15% global minimum tax on large foreign companies in 2023, affecting 122 businesses and generating $603.31 million in revenue.

  • Mini-insight: This may offset any existing tax benefits that the companies currently receive. Instituted by G7 nations in 2021, is this the right move for foreign investors in Vietnam? The UK, Japan, South Korea, and the EU plan to impose the tax next year.

• 👦 Vietnam faces a significant gender imbalance issue, with a high rate of sex-selective abortions favouring male children. The sex ratio at birth in 2022 was 112.1 boys per 100 girls, up 3% from 2006. At this rate, Vietnam will have 1.5 million more males than females by 2034, and 4.3 million extra by 2050.

• 🇱🇦 🇨🇳 Are Southeast Asian railways an answer to decarbonisation and growth? Although the China-Laos railway has reduced transport costs by 30-40% compared to truck transport, challenges such as harmonized standards, substantial investment, and overcoming geopolitical tensions exist.

  • Mini-insight: Rail transport causes only 1% of transport emissions, compared to 2.5% in aviation and 20% in shipping.

• 🇻🇳🚄 Vietnam's Ministry of Construction agreed to invest in a new North-South railway which is estimated to cost about $68.98 billion, aiming to transport around 133.5 million passengers and 20 million tons of goods per year. International standardisation and coordination with 20 provinces would pose significant challenges.

• 🌏✈️ Southeast Asia is experiencing a surge in airport expansions and new airline ventures, anticipating a boom in air travel, especially from Chinese and Indian tourists. The region represents 10% of global air traffic, with an expected annual growth rate of 9.5% in the next two decades according to Boeing, well above the global average of 6.1%.

  • Mini-insight: Over-reliance on Chinese tourism has left some airports abandoned as travel is still below pre-pandemic levels.

• 🇮🇩🚄 The success of Indonesia’s recent high-speed rail remains to be seen as Southeast Asia’s infrastructure spending must prove itself effective. Despite 13,000 daily passengers, the $7.3 billion project was financed by a loan from the China Development Bank and the Indonesia-China state enterprises consortium (KCIC), costing $52 million per kilometre, surpassing global averages.