21 January 2021

Key insights

ASEAN – Six ASEAN countries have signed onto the ASEAN Customs Transit System (ACTS) to facilitate the cross-border transit movement of goods within the ASEAN region. The ACTS links Cambodia, Lao PDR, Malaysia, Singapore, Thailand and Vietnam. The ACTS represents a deeper integration of ASEAN economies and will facilitate greater intra-ASEAN trade and promote the free flow of goods.

Malaysia – Malaysia’s worsening COVID-19 infection rates have resulted in reinstatement of lockdowns in five states. A new lockdown (Movement Control Order, MCO) imposes a two-week restriction on mobility and social gatherings while only businesses in essential services are permitted to operate. Restrictions extend to the education industry with teaching online until at least March 2021. Malaysian health officials are already signaling a possible extension of the MCO into February and perhaps beyond.

Myanmar – Trade in the first two months of FY20/21 was 26% lower compared to the same period the year before, according to World Bank data. The trade deficit widened to US$400 million (compared to US$63 million surplus) in this period, as exports fell at almost twice the rate of imports. Land border trade was particularly hard hit due to the restrictions triggered by the COVID-19 pandemic, with exports decreasing by 41% and imports by 13%.

Philippines – Traditionally a cash society, COVID-19 has fast-tracked the take-up of digital payments in the Philippines. Globe, the country’s leading telco, reported a 150% year-on-year increase in registered users for its GCash mobile money service, and an eightfold jump in payments. The Philippine central bank is aiming for 50% of all payments to be digital by 2023.

Singapore – Construction contracted 28.5% and services shrank 6.8% in the fourth quarter, while the manufacturing sector grew 9.5%. The growth of the manufacturing sector was supported primarily by output expansions in the electronics, biomedical manufacturing and precision engineering clusters. Australian companies employing Singaporeans are able to tap into the Jobs Support Scheme (JSS) that was disbursed from October 2020 with support scheduled to end in March 2021.

Thailand – An ongoing shortage of shipping cargo containers continues to cause delay in the export of goods from Thailand and higher freight costs for business. A COVID-19 resurgence in December 2020 saw lockdowns and restrictions applied across much of Thailand. These include the closure of all schools and lockdown of some provinces. Community transmission has been reported in 58 of Thailand’s 77 provinces including Bangkok.

Thailand – Revenue in the tourism industry is forecast to fall by 110 billion Baht in 2021 and consumer spending by 167 billion Baht. This assumes the current outbreak is contained. Unemployment caused by the current COVID-19 outbreak is forecast to be worse than last year, which peaked at 8 million unemployed. The service sector remains the hardest hit, while the auto, food and manufacturing sectors have been somewhat affected.

Vietnam – Vietnam’s projected annual economic growth rate is set to rise from 3% in 2020 to 7.8% in 2021, according to Standard Chartered Bank. Growth will be driven by increasing consumption, improving sentiment and accelerating manufacturing. International flights have resumed to Guangzhou, Tokyo, South Korea, Taipei, Phnom Penh and Vientiane. All passengers are required to present virus-free certificates before departure.

Market opportunities

Health

ASEAN – Online healthcare services have flourished during 2020 lockdowns. This trend is creating opportunities for companies that can provide scalable digital solutions that promote telemedicine.

Indonesia – There is growing demand for Australian skincare products, especially those with natural ingredients. Digital channels have proved popular.

Myanmar – Myanmar has received several major healthcare spending injections to upgrade hospital and healthcare services. Funds include: a US$250 million Asian Development Bank (ADB) loan to help Myanmar respond to COVID-19 by mitigating the impacts on health and livelihoods; an ADB loan of US$30 million for the development of pandemic healthcare services; and an International Development Association loan of US$50 million.

Thailand – The pandemic has fast-tracked solutions that deliver health services through telemedicine. In Thailand, the Samitjev Virtual Hospital created a smartphone app which enables remote patient examinations, diagnoses and treatments through its 380 physicians around the clock. The service is expected to be rolled out to other Asia-Pacific countries.

Thailand – Demand for immunity-boosting supplements is on the rise. However, the Thai Food and Drug Administration categorises most nutraceutical and vitamin supplement products as ‘drugs’, which means they can only be distributed via registered pharmacies. This limits the capacity for Australian vitamin and supplements companies to take advantage of online channels, and also restricts the sale of such goods via traditional retail.

Infrastructure

Philippines – Roughly 56% of the Philippines’ ambitious ‘Build’ infrastructure program (US$170 billion for 100 road, port and airport projects) is now expected to be completed by 2022 owing to budget re-prioritisation. Greater emphasis is being placed on health and digital infrastructure.

Thailand – Multiple infrastructure projects are likely to commence within the next four years creating opportunities for Australian companies. These include: a high-speed rail network linking three airports, worth A$10 billion; the Eastern Airport City project at U-Tapao, Rayong, worth A$13 billion; and phase three of the Map Ta Phut deep seaport development, worth A$2.5 billion. Of specific interest to potential investors are additional incentives on offer within the special economic zones in the three provinces of the Eastern Economic Corridor (EEC). These include corporate income tax exemptions and reductions.

Thailand – Thailand’s Transport Ministry will accelerate US$7.4 billion of spending on major road and rail projects. Projects include the expansion of Bangkok’s mass transit network, and expressways linking important industrial provinces along the nation’s eastern seaboard, highways.

Thailand – A major contract associated with the Thai-Chinese high speed railway from Bangkok to northern Thailand’s Nakhon Ratchasima has been signed. The joint venture partners include the State Railway of Thailand, China Railway International Co., and China Railway Design Corporation. The contract covers the rail system, train carriage procurement, the electrical, signaling and communication systems, personnel training, and operations and maintenance works for the proposed 253km rail route.

Ag and Food & Beverage

ASEAN – The acceleration of e-commerce continues. A survey by Facebook and Bain & Company reveals that consumers in Southeast Asia bought groceries online almost three times more often this year as compared to 2019. At 40%, Myanmar has the highest percentage of respondents in Southeast Asia who say they buy groceries online, according to the survey.

Malaysia  Under current lockdown restrictions, dining-in at restaurants or eateries is not allowed in most of the country with customers only permitted to order takeaway or food delivery. This has a strong impact on food service which impacts importers of Australian products, as food service is the main channel for entry into the market.

Myanmar – Large retailers such as Metro-Wholesale, Makroclick and Citymall have created e-commerce channels. Also there is an increasing number of international food-delivery platforms such as Food Panda and Grab Food, as well as local door-to-door services such as Food2U. This means there are opportunities for basic groceries, horticulture, meat and dairy products. While e-commerce has grown significantly, transactions are still mostly in cash, with payment made upon delivery. This is due to limited digital payments infrastructure.

Singapore There are reports that sales of Australian meat products through e-commerce channels have improved during the COVID-19 period, with a shift in consumer habits towards higher and more frequent purchases online. Wine sellers report extremely robust sales through retail-only channels – even during the circuit breaker period.

Thailand – Importers and food service companies report a rise in beef consumption, in particular among younger demographics. Traditionally, beef is consumed in hospitality venues. Now, more people are buying beef at supermarkets to cook at home. Industry reports say consumers are also experimenting with different meat cuts and types of preparation.

Vietnam – In the first nine months of 2020, imports of pork topped 90,400 tons, worth A$292 million. This was largely driven by domestic supply shortages due to African Swine Fever. This represents an increase of 357% in terms of quantity and 460% in terms of value, year-on-year.

Fast moving consumer goods

Vietnam – Consumer spending on fast moving consumer goods (FMCG) has picked up. In the first half of the year, most FMCG categories – except beverages – recorded positive growth. Hygiene, health-boosting products, snacks, and convenient foods experienced robust growth during COVID-19 with hypermarket and supermarkets driving channel growth.

Resources & energy

Philippines – Energy demand is rising and the only operational gas field in the Philippines will likely be depleted by 2024. The Philippines Government and industry are pursuing options for liquefied natural gas (LNG) imports and the development of associated facilities.

Technology

ASEAN Demand for innovative ag-tech is growing across the region. Australian agtech company FluroSat recently won the Future Food Asia 2020 Award. The company is a full crop- cycle analytics provider delivering reports and alerts on all aspects of crop performance and health. There are opportunities for Australian ag-tech across the ASEAN region.

ASEAN – Internet usage across the region has grown by 40 million in 2020, according to the just-released e-Conomy SEA Report by Google, Temasek and Bain & Co. The coronavirus pandemic has accelerated digital adoption particularly in e-commerce, online media and food delivery. E-commerce has risen 63.2 percent in just one year, according to the report. There are growth opportunities in health-tech, fin-tech and ed-tech.

Malaysia – The southern state of Johor will develop a ‘digital enclave’ in Iskandar Puteri. This will include a comprehensive digital centre. Johor will bolster broadband coverage and re-evaluate its investment policy to cut bureaucratic red tape. Post will identify specific market opportunities once details emerge.

Malaysia – According to local reports, there are opportunities for Australian cyber security companies to assist in tackling newer sophisticated threats such as APTs, which have proliferated over the past few months.

Myanmar – An online export/import registration platform, Tradenet 2.0, went live in November 2020. The Government’s aim is to reduce red-tape and facilitate international trade.

Singapore – The corporate venture unit of ST Engineering continues to express keen interest in promising cybersecurity technologies that complement its existing businesses. ST Engineering Ventures will invest in US-based CloudSphere, a cloud management and governance provider.

Philippines The Philippine’s Government is seeking international partnerships to support its shift to distance learning, including in teacher training and curriculum content. The government is also prioritising digitalisation programs across the economy. This may create opportunities for Australian ed-tech companies that specialise in innovation, leadership, entrepreneurship and data management.

Thailand – The country is ramping up promotion of its bio, circular and green (BCG) economy plans, which are intended to drive growth from 2021–2026. The new five-year strategic plan identifies four target sectors: farm and food; healthcare and medical services; energy and biochemicals; and tourism and creative economy. The Board of Investment is set to adjust privileges to attract foreign investment.

Thailand – Huawei Thailand is investing A$21 million to establish a 5G ecosystem innovation centre at the headquarters of Thailand’s Digital Economy Promotion Agency (DEPA). The partnership is an important milestone for Thailand as the country positions itself as an ASEAN digital business hub. The centre will serve as a sandbox to research 5G innovations and an incubator for 100 Thai SMEs and start-ups over the next three years.

Vietnam – Over the past 12 months, Vietnam has remained a top investment destination for tech, surpassing Indonesia and Singapore. Factors encouraging continued investment include a robust economy and advantageous shifts in consumer behaviour. Also, since COVID-19, companies have fast-tracked the digitalisation of their operations.

Finance & fin-tech

Malaysia – According to local reports, there are opportunities for Australian cyber security companies to assist in tackling newer sophisticated threats such as APTs, which have proliferated over the past few months.

Myanmar – The Insurance Business Regulatory Board is further opening the reinsurance sector to overseas participation. This is the latest in a series of Government measures to promote technical know-how and financial capacity, and to improve insurance coverage in Myanmar.

Myanmar The pandemic is driving Myanmar’s cash society toward a digital payment world, allowing everyone to use fin-tech services, regardless of whether they have a bank account. Financial inclusion in the country is projected to increase from the current 45 percent to 60 percent by 2023.

Thailand – Thailand’s Commerce Ministry intends to remove three types of services from ‘List 3’ of the Foreign Business Act: telecommunications, finance and software development. This means businesses in these sectors will not be required to seek permission from the Foreign Business Commission to operate in Thailand.

Edtech

Malaysia – The Ministry of Higher Education Ministry (MOHE) in Malaysia has outlined six areas of strategic focus for 2021: Empowering the Education Digitalisation Agenda, Enhancing Strategic Collaboration Network, Strengthening Graduates Marketability, Driving Community Well-being, Promoting Institutional Excellence and Enlivening the Spirit of #KPTPrihatin. Capacity building of lecturers in teaching online and hybrid models will continue be an area of opportunity for Australian universities and trainers.

Thailand – Thailand’s Eastern Economic Corridor (EEC) Office will work with government agencies and the private sector to sharpen the skills of more than 8,500 workers in 2021. The EEC Office estimates that more than 475,000 workers will be needed in the next five years, including people with the skills required by foreign companies. The government is looking at ways to improve skills to better serve targeted industries, particularly in sectors such as next-generation cars, robotics, medical technology and aviation.

Singapore – Ngee Ann Polytechnic wants new technologies to enable students to ideate and develop prototypes via 3D printing technologies. The polytechnic seeks a partner to move their program to an online space and allow students to 3D print products virtually. This presents an opportunity for Australian edtech companies to bridge this gap in STEM education.

Manufacturing & defence

Thailand – Thailand’s Industrial Promotion Department is partnering with universities and the private sector on programs to help SMEs modernise their manufacturing operations. The aim is to help SMEs develop ‘smart factories’ in line with the country’s Thailand 4.0 policies, and to increase competitiveness.

Thailand – Thailand’s government has set a target for electric vehicles (EVs) to make up 30% (or 750,000 vehicles) of all auto production by 2030. Sales of EVs are expected to double from 2017 to 2019. Companies that invest in Thailand to support the growth and development of EVs are eligible for corporate tax exemptions of up to eight years.

Thailand – Mitsubishi Motors Thailand will invest A$575 million in a production facility that will produce 3,000 EVs and A$310 million on a car spray-painting facility. Thailand’s automotive sector is implementing new technologies, including AI: this is impacting the sector’s 2,000 auto-parts makers, which employ half a million workers.

Thailand – The country’s electronics and electricals industries boasts a supply chain of more than 2,500 companies. This makes Thailand a regional hub for inputs into sectors such as robotics, medical products and electric vehicles. Investments by domestic and foreign firms has increased since 2019.

Vietnam There appears to be a trend for global electronics manufacturers to move production to Vietnam. For example, Samsung Electronics will stop producing personal computers in China and shift production to an existing factory in Vietnam to minimise costs. The moves comes as the Japanese Government has begun helping companies to diversify their supply chains.

Vietnam – Foxconn has recently opened a factory in Quang Ninh Province to produce displays. With an investment of A$35 million, the factory will make 20,000 screens each year. Foxconn also plans to expand the project to manufacture a million display screens and televisions.

Travel & tourism

Myanmar The Directorate of Investment and Company Administration announced temporary relief for companies from resident director requirements. This positive move will assist those foreign companies whose directors have been absent from Myanmar as a result of COVID-19.

Singapore – Singapore has established Safe Travel Lanes with Australia, Brunei, Mainland China, New Zealand and Vietnam for all travelers and all purposes. Singapore also has Reciprocal Green Lanes (RGL) for business and official travel with Brunei, Mainland China (Chongqing, Guangdong, Jiangsu, Shanghai, Tianjin and Zhejiang), Indonesia, Japan, Malaysia and South Korea. A RGL with Germany is expected to be announced soon. Plans to launch a travel bubble between Singapore and Hong Kong have been postponed to 2021 following a spike in COVID-19 cases in Hong Kong.

Thailand Thailand’s Ministry of Tourism and Sports is continuing to explore travel bubble options with low-risk countries. With tourism hard hit, Thailand is looking for options to reopen the country to tourists with some operators reporting they will not survive beyond the end of this year.

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