19 April 2021

Key insights

ASEAN – Six ASEAN countries have signed onto the ASEAN Customs Transit System (ACTS) to facilitate the cross-border transit of goods within the region. Linking Cambodia, Laos, Malaysia, Singapore, Thailand and Vietnam, the ACTS will facilitate greater intra-regional trade, promote the free flow of goods and further integrate the ASEAN economies.

Indonesia – A boom in electric vehicles is predicted. The government is prioritising investment in the automotive industry – particularly in electric vehicles – and is introducing incentives and tax concessions to boost the sector. This may trigger opportunities for Australian businesses with supporting technologies to partner with local players.

Malaysia – The government is encouraging farmers to adopt digital solutions to improve efficiencies and increase supply chain resilience. Australian companies with agriculture technology capabilities can benefit from potential opportunities in Malaysia.

Singapore – Singapore will accept the IATA digital travel pass stored on mobile phones as proof of travelers' COVID-19 status and vaccinations, starting in May. Qantas, Qatar Airways, Korean Air and other airlines are testing the travel pass.

Philippines – The Philippines has over 178,000 active COVID-19 cases, the highest in ASEAN. Despite two weeks of strict lockdown in the Greater Manila area, new COVID-19 cases still average at around 10,000 a day. The lockdown will likely cut GDP growth this year by 0.8 percent. The World Health Organisation (WHO) has warned the country’s health system is nearing the point where demand will exceed capacity.

Thailand – A third wave of the UK variant has hit Thailand days before the Songkran holiday period (April 13-15). Linked cases have spread to 20 provinces, stemming from a cluster at an entertainment district in Bangkok.

Vietnam – Output, new orders and exports expanded rapidly March, as the country’s Purchasing Managers’ Index increased to 53.6 in March from 51.6 in February. Business confidence rose to a 20-month high. On the downside, supply chain disruptions continue to affect manufacturing, while input costs and output prices grew at the fastest rate in recent years. Registered foreign direct investment (FDI) increased by 18.5 percent year-on-year in the first quarter of this year, reaching US$10.13 billion. The IMF projects Vietnam’s GDP will grow by 6.5 percent in 2021.

Singapore – The World Economic Forum conference has been postponed to 17–20 August owing to international travel restrictions. The conference was due to be held in Singapore in May. Separately, Singapore suspended its green lane arrangements with Germany, Malaysia and Korea for three months from 1 February because of spikes in COVID-19 cases in these countries.

Philippines – President Duterte has lifted a nine-year ban on new mining agreements in order to increase government revenue, create jobs and spur development.  Around 15 mining projects are awaiting permits. However, this new directive does not apply to open pit mines or existing mines which were closed.

Market opportunities

Health

ASEAN – Online healthcare services have flourished because of rolling lockdowns. This trend presents opportunities for companies that can provide scalable digital solutions for telemedicine.

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

Thailand – The pandemic has fast-tracked solutions that deliver health services through telemedicine. 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

Malaysia – Construction of the major infrastructure project East Coast Rail Line is on track to resume, albeit with a 14 percent rise in building costs to $15 billion. The railway is a signature project of China’s Belt and Road Initiative in Malaysia and is intended to connect the less developed east coast with the western region to stimulate economic development.

Philippines – The Government will resume its flagship ‘Build Build Build’ Infrastructure Program, which includes three big-ticket projects and 42 road projects. The 2021 budget approved a 9.9 percent increase in spending. Real estate is expected to recover with the help of the Business Process Outsourcing industry, a continuous supply of flexible workspace, increased interest from Chinese investors, and expected high remittances from overseas workers.

Thailand – Multiple infrastructure projects are likely to commence in the next four years, creating opportunities for Australian companies. These 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 the special economic zones within the Eastern Economic Corridor, which offer corporate income tax exemptions and reductions. Japan is the top FDI applicant in the corridor (A$2.3 billion), followed by China (A$920 million).

Thailand – The Government’s new ‘Made-in-Thailand' campaign requires the proportion of local products used for state projects to be no less than 60 percent or 90 percent of steel and iron. This could negatively affect imports of Australian building materials.

Thailand – The 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. A major contract associated with the Thai–Chinese high speed railway from Bangkok to northern Thailand’s Nakhon Ratchasima has been signed.

Singapore – The CBRE 2021 Asia Pacific Investor Intentions Survey indicates broad-based improvement in market sentiment. This is attributed to the progress of Singapore’s vaccination programs. Sixty per cent of investors are intending to buy more real estate, the highest since 2016. In the survey, Singapore is the second most preferred city in the Asia-Pacific after Tokyo for cross-border real estate investments in 2021. Logistics, driven by e-commerce, was the most popular sector for investors while interest in the office sector has weakened.

Agriculture 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.

ASEAN/Malaysia – Hong Kong retailer Dairy Farm Group (part of Jardine Matheson) has experienced 20 percent growth in its e-commerce sales within the region, including Malaysia. The group has had to increase its e-commerce capabilities to meet surging demand.

Indonesia – The Ramadan period has begun. Most retailers and distributors are busy with promotions that focus on food for the breaking of fasts. An uptick in demand for premium food produce (particularly beef and other protein products) is expected, despite high prices. Some services or businesses are observing shorter business hours, and public holidays in mid-May will affect business responsiveness.

Indonesia – There is increased interest from Indonesian importers in new food products from Australia. This includes beef products, and mid-range and premium-range packaged food and beverage products. Interest may be due to optimism around the rollout of the Sinovac vaccine in Indonesia, or simply reflective of the New Year period. However, retailer Hypermart is reluctant to promote Australian agri-food products on a large scale for fear of unreliable freight services.

Indonesia – Indonesian supermarkets have observed consumers’ increasing awareness of the risks of high cholesterol and diabetes, and a concurrent rise in interest in healthier foodstuffs. The latter group includes dairy, ‘healthy’ packaged food, and fresh fruit and vegetables.

Indonesia – Retailers say there has been an uptick in interest in baking at home as most people continue to work at home. This has resulted in significantly higher sales in western baking products, but it is unclear if this trend will continue post-pandemic. 

Indonesia – Australian exporters to Indonesia have noted that an increasing shares of product sold in Indonesia is being distributed via local e-commerce channels (such as Tokopedia, Blibli, and Shoppee) over the last six months.

Malaysia – Local retailer NSK is looking to develop an upscale supermarket, NSK Grocer. The retailers is looking at a phased approach for imports of fruits and vegetables, meat and wine – including premium produce. Austrade will closely monitor this opportunity.

Malaysia – The government has instituted new rules requiring import permits and phytosanitary certificates for all grain imports, regardless of their end use. Australian grains will be affected. Previously only grain for feed required such documentation. DAWE is engaging with the government on behalf of Australian commercial interests.

Malaysia – The government is considering reforms to the certification of halal products, such as through QR code digital verification. The government has also recognised more overseas halal certification bodies, including an additional Australian organisation – the Australian National Imams Council.

Philippines – The government has cut MFN tariff rates for pork imports from 30 to 5 percent for the next three months in a bid to address pork shortages and to control the escalating inflation. African swine flu has led to the killing of nearly a quarter of the country’s hog population.

Philippines – The proportion of all retail transactions paid for digitally as increased to 20 percent during the pandemic. While low compared to other countries, this represents a large rise from 1 percent in 2013. Separately, price aggregator iPrice reported the country posted a 21 percent rise in online shopping traffic last year, the second highest growth in ASEAN. The Philippines’ average spend of $15 remains lower than the regional average ($42). 

Philippines – Australian agri-food products face increased competition from other foreign producers who are also looking for new markets. Specific opportunities include healthier food options, such as fresh fruits and vegetables, and plant-based products. Opportunities also include premium and imported food items like meat, wine, dairy and baking ingredients.

Singapore – There are reports that sales of Australian meat products through e-commerce channels have improved during the COVID-19 period. This is thought to be due to 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 – Austrade has partnered with The Mall Group to showcase Australian meat, dairy, seafood, horticulture and packaged foods as part of the Taste of Australia campaign. The Mall has recently renovated its high-end retail spaces.

Thailand – Importers reported a rise in Australian beef consumption during 2020, 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.

Thailand – As the COVID-19 resurgence gathers pace retailers are leaning towards importing fruit in large quantities with a longer shelf life. Consumers aim to minimize 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. Cold treatment requirements in non-‘fruit fly free’ areas tend to restrict airfreight to small batches, making it more costly and unpredictable.

Vietnam – In the first 11 months of 2020, pork imports topped 127,730 tons, worth $395 million, a jump of over 416 percent in quantity and 546.5 percent in value year-on-year. This was largely driven by a domestic supply shortage caused by the prevalence of African swine fever.

Supply chain, travel & tourism

Singapore – Sea Swift, a private Australian shipping company, has launched a new Dampier–Singapore shipping service. It will provide an average of two sailings per month. This route cuts down the Fremantle Singapore transit time by up to two days.

Singapore – The city state 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 and Japan.

Thailand – A quarantine-free ‘bubble’ for international visitors to Phuket will commence from 1 July, contingent on at least 70% of residents being vaccinated. Reciprocal arrangements with target countries are being pursued, but the new outbreak in Bangkok could undermine this plan. Even before the outbreak, Kasikorn Bank’s CEO has said Thailand’s tourism revenue would not return to pre-COVID levels until 2024.

Thailand – Tourist arrivals fell from 40 million in 2019 to 6.7 million in 2020. Arrivals from China fell from nearly 11 million tourists in 2019 to just 1.2 million last year. There are reports that thousands of travel-related businesses have closed. Demand for imports into the food service sector remains relatively low. Hopes for ‘travel bubbles’ were dashed by a resurgence of COVID-19 in December 2020.

Fast moving consumer goods

Vietnam – Market research group, Kantar expects sales of fast-moving consumer goods (FMCGs) to expand by 6.4 percent this year in the major cities and 8.7 percent in rural areas. This slightly undershoots the 10 percent growth achieved in both areas last year. In the cities, growth in packaged food will stabilise at around 10 percent. Personal care products will grow by at least 10 percent.

Technology

ASEAN – Demand for innovative ag-tech is growing across the region with ensuing opportunities for Australian companies. FluroSat, an Australian ag-tech company, recently won the Future Food Asia 2020 Award. The full crop-cycle analytics provider delivers reports and alerts on all aspects of crop performance and health to their clients.

ASEAN – New internet users across the region grew by 40 million in 2020, according to the just-released e-Conomy SEA Report by Google, Temasek and Bain & Co. The 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. The report signals growth opportunities in healthtech, fintech and edtech.

Malaysia – The southern state of Johor will develop a ‘digital enclave’ in Iskandar Puteri with comprehensive digital facilities, wider broadband coverage and freer investment conditions. Austrade 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 advanced persistent threats (APTs), which have proliferated over the past few months.

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 government is seeking international partnerships to support its shift to distance learning. Areas of proposed partnership include teacher training and curriculum content. The government is also prioritising digitalisation programs. This will create opportunities for Australian edtech 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 $21 million to establish a 5G ecosystem innovation centre at the headquarters of the country’s Digital Economy Promotion Agency (DEPA). The partnership is an important milestone for Thailand as it positions itself as an ASEAN digital business hub. The centre will serve as a sandbox for research into 5G innovations and an incubator for 100 Thai SMEs and start-ups over the next three years.

Finance & fin-tech

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 percent 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 half of all payments to be digital by 2023.

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 – Prime Minister Nguyen Xuan Phuc has approved a two-year pilot mobile money program. This will allow mobile phone payments for small-value goods and services. Network operators VNPT, MobiFone and Viettel are ready to trial the service.

Ed-tech

Malaysia – The government is encouraging institutions to adjust their existing learning modules and assessment methods to suit the digital environment and increase the capacity of teaching staff. Australian distance learning expertise is well-positioned to help train and support Malaysian teaching staff members who are given education-digitalisation objectives.

Malaysia – The Ministry of Higher Education has outlined several areas of strategic focus for 2021, including Empowering the Education Digitalisation Agenda, Enhancing Strategic Collaboration Network, Strengthening Graduates Marketability, and Driving Community Well-being, Promoting Institutional Excellence. Capacity building of lecturers in teaching online and hybrid models will continue to offer opportunities for Australian universities and trainers.

Vietnam – The Ministry of Education and Training has issued new guidance for the delivery of joint qualifications on online platforms. This is a positive outcome of the project ‘Building Vietnam’s Quality Assurance Capabilities of Blended and Online Higher Education Courses and Qualifications’, funded and executed by DESE. The Ministry’s new guidance offers opportunities for Australian education providers to develop new TNE models with local academic institutions and promote the online education capabilities of Australia’s education sector.

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 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 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.

Manufacturing & defence

Singapore – The biennial naval and maritime industry show IMDEX 21 will only offer a maritime conference and business fora on 27–29 July.  Exhibitions have been cancelled, affecting Team Defence Australia’s plans to set up a stand for Australian defence companies, including Austal.

Thailand – The Industrial Promotion Department is partnering with universities and the private sector to help SMEs modernise their manufacturing operations. It aims to help SMEs develop ‘smart factories’ to increase competitiveness, in line with the Thailand 4.0 policy.

Thailand – The government has set a target for electric vehicles (EVs) to make up 30 percent (750,000 vehicles) of all auto production by 2030. The government wants to establish Thailand as a regional EV manufacturing base, although widespread use of EV is not anticipated for at least 10 years. Companies that invest in EVs are eligible for corporate tax exemptions of up to eight years. A new excise tax structure for EV will be finalised this year.  

Thailand – Mitsubishi Motors Thailand will invest $575 million in a facility to produce 3,000 EVs and $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. Meanwhile, Suzuki Motor Thailand reported that its domestic car sales rose by 7 percent year on year in 2020, to 25,528 units. This is in a stark contrast to overall domestic car sales which decreased by 21 percent year on year to 792,146 units.

Thailand – The country’s electronics and electrical-goods 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. Apple is partly moving its production of iPads from China to Vietnam. In Vietnam, Apple is also seeking to increase production capacity for the HomePod mini, a voice-activated smart speaker. The moves comes as the Japanese Government has begun helping companies to diversify their supply chains.

Singapore – The Government has announced a ‘qualitative transformation’ of the advanced manufacturing sector 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 is intended to grow the manufacturing sector by 50 percent over next decade. It opens up opportunities for Australian companies with capabilities in biomedical electronics and precision engineering.