ASEAN Market Watch: Malaysian FTAs, Auto Production in Brunei, and Thai Flights to Laos

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Malaysia: FTAs to be Signed in Bid to Boost Economy

Malaysia is expected to sign three more Free Trade Agreements (FTAs) this year according to International Trade and Industry Second Minister Ong Ka. The three FTAs will be with the European Union, Hong Kong and the Regional Comprehensive Economic Partnership (RCEP).

The FTAs are expected to further increase volumes in trade and investment as well as bolstering revenue. The minister further stated that the FTAs will facilitate two-way trade, with zero tax rates and no import duties on almost 90 percent of products. In addition, more FTAs are planned to further help the economy and boost two-way trade. According to data, 65 percent of trade in 2015 was due to FTAs –which removed tax and non-tax barriers. Ong further stated that his could increase to 70 percent this year.

 

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Brunei: Automobile Sales in Low Gear in January

Automobile sales in January fell by 30.8 percent according to the Brunei Automobile Traders Association (BATA). The country’s auto industry shrunk by 20.40 percent in 2015. Average monthly sales are around 1,300 automobiles. Industry analysts say that automobile sales are expected to be slow in the coming year as the country reduces spending on projects due to low energy prices.

In addition to falling commodity pricing, the automobile industry has also suffered due to tighter lending regulations issued by the central bank and aimed at reducing debt among individuals. The newly implemented loan cap, also known as the Total Debt Service Ratio (TDSR), has severely restricted car purchases. The limit is currently set at 60 percent for those earning a minimum net salary of US $1,750. While the central bank implemented these limits to curb debt and encourage savings, it has constrained the availability of credit and thus discouraged consumers from buying vehicles. Experts believe that car sales are expected to further drop even during the upcoming festive season.

 

Related-Reading-Icon-Asean Link RELATED: ASEAN Open Skies Policy to be implemented in 2015

 

Laos: Thai AirAsia Flies into Luang Prabang

Thailand’s low-cost carrier (LCC) Thai AirAsia (TAA) became the first LCC to operate flights to Luang Prabang after an eight year wait. While ASEAN’s open sky policy theoretically obligates member states to allow airlines of member countries to operate flights to their countries without barriers, Laos has been reluctant to do so. Government officials have stated that the delay in granting permission to TAA was to understand the LCC model rather than protect state-owned Lao Airlines. The first flight will commence on March 24 and TAA plans to expand to the capital Vientiane in the future.

Luang Prabang remains significant as it is one of the fastest growing tourist destinations in Southeast Asia. More than 4 million tourists visit Laos each year, with half of them coming from Thailand. Tourism accounts for 3-4 percent of the country’s GDP. In addition, Malaysia AirAsia, HK Express and Silkair are also planning to launch flights to Luang Prabang to capitalize on the tourist traffic. While slow, the development underlines the authorities’ stance to open up the aviation sector to cater to the booming tourism industry.

 

 


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