8 October 2021

Key Insights

Indonesia – New cases have fallen to less than 2,000 per day. This is the lowest rates in 12 months. Restrictions are being eased across the country for the 20 percent of the population who are fully vaccinated. A slow economic recovery is predicted for the fourth quarter. (Source: EIU, Growth outlook for Indonesia worsens among Covid-19 outbreak, accessed August 2021). Consumer spending will be sluggish.

Malaysia – Malaysia’s COVID-19 exit plan is taking shape. As vaccination rates rise, eleven more economic sectors across service and retail industries will be permitted to reopen. Operational capacity for offices in Phase Two states have been expanded depending on staff vaccination rates. Prime Minister Ismail Sabri has signaled publicly that his administration is opposed to lockdowns. 

Philippines – A pilot of localised lockdowns has commenced. This policy aims to curb COVID-19 cases while allowing businesses to reopen at limited capacity. Under the new system, Alert Level 4 areas are those with high and/or increasing COVID-19 transmission and high total-bed and ICU utilisation rates. Oxford Economics forecasts that the third quarter of 2021 is unlikely to record strong growth (Source: Philippine Star, 20 September).

Singapore – Restrictions are being tightened. The recent Delta outbreak has resulted in around 1,500 recorded cases of COVID-19 per day. This is despite 82% of the population being fully vaccinated. Working from home is now default practice. Gatherings are limited to two people per group with one gathering per day. However, hospitalization from COVID-19 is now extremely rare. According to recent data, only 1.7% of positive cases require oxygen supplementation and 0.2% require ICU care.

Thailand – Vaccination coverage is improving. The central bank has reported a further deterioration of the economy since June, owing to tighter lockdown restrictions. Private consumption is falling, and the Siam Commercial Bank’s Economic Intelligence Center has lowered projections for economic growth in 2021.

Vietnam – The current limited number of flights from Australia to Vietnam is impacting live seafood exports. Domestic logistic costs are 50–70% higher than they were in July, owing to lockdowns. This is severely impacting local supply chains. Strict social distancing measures in major cities have been imposed since June. All non-essential business activities are closed, including food service, and wholesale and wet markets. All public transport and delivery services have been suspended.

Market opportunities

Health

ASEAN – Australia’s supplements industry continues to grow amid the pandemic. It is currently worth $5.7 billion. Complementary Medicines Australia (CMA) has identified several Southeast Asian countries as markets with strong potential. Three factors contribute to the appeal of Australian brands in the region: the high reputation of Australian-made products; a growing middle class; and an ageing population.  

Infrastructure

Thailand – Multiple infrastructure projects are likely to commence in the next four years. Opportunities for Australian companies include:

  • a high-speed rail network linking Bangkok’s three airports worth $10 billion
  • the Eastern Airport City project at U-Tapao, Rayong, worth $13 billion
  • Phase 3 of the Map Ta Phut deep seaport development worth $2.5 billion. 

These projects are located in special economic zones within the Eastern Economic Corridor. These zones offer corporate income tax exemptions and reductions. Japan is the top FDI applicant in the corridor ($2.3 billion), followed by China ($920 million).

Agriculture and Food & Beverage

ASEAN – Avocado growers from Western Australia and Queensland are trialing sea transport for export. This involves refrigerated containers that use ‘controlled atmosphere’ technology. Hass avocados will be shipped to Singapore, Malaysia, Indonesia, Hong Kong and Japan. The Avocado Collective, a WA-based company says the current crop will be large. (Source: Asia Fruit website, 6 September). 

Malaysia – Two agrifoods-related trade events are imminent – the Malaysian International Halal Showcase from 9 September to 31 December and the Selangor International Business Summit on 18–21 November. These events will highlight potential opportunities for Australian agrifood exporters.

Malaysia – Australian biotech Stemcell United has partnered with Universiti Malaysia Sabah to develop and commercialise seaweed-derived products. The partnership is a response to vegetarian trends across the Southeast Asia region. There is also increased demand for plant-based protein in Malaysia.

Malaysia – The pandemic has boosted demand for baking products in the Asia Pacific region, driven by home-baking and healthier eating trends, according to local food news sites (Source: Food Navigator, Home baking, flavor innovation and healthier options: Top APAC bakery firms weigh in on trends dominating the sector, accessed August 2021). A local Malaysian bakery firm The health and wellness trend appears to have penetrated most food and beverage categories.

Singapore – Food security is a hot topic and supermarkets are eager to diversify their sources of food imports. Austrade is engaging with local suppliers to introduce them to Australian brands. 

Thailand – Retailers are importing fruit in large quantities with a longer shelf life. Consumers aim to minimise wastage. This will impact demand for Australian summer fruit. Protocols do not permit mixed shipments and full container orders are typically too large for buyers.

Vietnam - Consumption of packaged foods has increased during lockdown. Sales of fresh and perishable products decreased significantly as only mainstream supermarkets and e-commerce platforms are operating and wet markets are closed. Some importers and distributors report that sales of frozen and chilled products have decreased by 50% (retail) and 80–90% (hospitality) compared to Quarter 1 of 2021. Importers have postponed orders and sought flexibility from Australian exporters.

Vietnam – Buyers are showing interest in using Australian barley as animal feed. In Vietnam, cows and pigs can use a wide variety of feeds. Australian barley is considered a good option as it is cost effective and supports animal health.

Supply chain, travel & tourism

Thailand – Australian exporters report that decreased container availability and higher sea-freight rates are impacting their business. Booming Chinese exports to the United States and Europe have led to a lack of empty containers where they are required. The US has a surplus of empty containers, but ports in the US are congested.

Thailand – Phuket is now open to international tourism. The Phuket ‘Sandbox’ enables visitors to the island so long as they are vaccinated, test negative prior to departure and undertake four further PCR tests during their stay. They must also accept electronic monitoring. Visitors must not leave the island for 14 days.

Technology

ASEAN –The pandemic has accelerated digital adoption particularly in e-commerce, online media and food delivery. This Austrade insight identifies 5 factors for Australian exporters to consider in ASEAN e-commerce markets.

Singapore – The Singapore Government has allocated 90 out of 500 available work passes for foreigners in the tech sector since launching the Tech.Pass scheme in mid-January. The pass is a new visa that allows established international tech entrepreneurs, leaders or technical experts to go to Singapore to work on frontier and disruptive innovations. 

Finance and fintech

Philippines – COVID-19 has fast-tracked the take-up of digital payments in the Philippines, which is traditionally a cash society. GCash is the biggest mobile wallet company in the country. It is expected to triple its gross transaction value to over US$19.8 billion by the end of the year, up from just US$6.6 billion last year.

Thailand – The 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.

Vietnam – The popularity of e-wallets has expanded as a result of the pandemic. Payment intermediaries are also more common.

Ed-tech

Malaysia – The reopening of the Malaysian K–12 education sector has been delayed to October. However, the government has emphasised that COVID-19 mitigation measures and high vaccinations rates should allow for the safe delivery of teaching and learning in traditional classroom modes.

Thailand – The 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 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 design and develop prototypes using 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.

Vietnam - The Directorate of Vocational Education and Training (DVET) has announced that Vietnam will build three high-quality vocational training centres by 2025. The centres will be based within three colleges in Hanoi, Quang Ngai province and Ho Chi Minh City. Vietnam also aims to increase the number of high-quality vocational colleges from 45 to 70 by 2025 and to 90 by 2030. DVET is working with international organisations from Australia, Germany, United Kingdom, Singapore and Korea to learn their models. The new vocational training colleges should open more opportunities for international and Australian partnerships.

Manufacturing & defence

Singapore – The government has announced a ‘qualitative transformation’ of the advanced manufacturing sector. This is in response to the disruption of international supply-chains caused by COVID-19. The program aims to encourage a shift to products where competition is not based on cost but on intellectual property and the quality of products. This shift aims to grow the manufacturing sector by 50% over the next decade. It opens up opportunities for Australian companies with capabilities in biomedical electronics and precision engineering.

Vietnam – The fourth wave of COVID-19 has slowed a planned shift in manufacturing production from China to Vietnam by two US technology companies – Google and Apple (Nikkei, 18 August). The manufacturing sector has been hit hard by the fourth wave of COVID-19, with the Purchasing Managers’ Index falling below 50 for the second consecutive month.

Contact:

ASEAN: Mukund.Narayanamurti@austrade.gov.au

Manila: Christopher.Lim@austrade.gov.au