Economics

ss
DBS Focus
ASEAN-6: Tailwinds from supply chain reconfiguration
Economics/Growth

DBS Group Research October 10, 2023

30Chua Han Teng, CFA

Economist
• In the first of a two-part series, we explore
the FDI dynamics in ASEAN-6*, on the
back of China+1 shifts.

• FDI inflows into ASEAN-6, as proportion of

world inflows, have exceeded China in the
past two years.
Radhika Rao
Senior Economist
• Western and advanced Northeast Asian
countries have a strong FDI footprint in
the region, besides China.

• Singapore has been the key beneficiary in

terms of quantum of flows, followed by
Vietnam and Indonesia.
Please direct distribution queries to
Violet Lee +65 68785281 violetleeyh@dbs.com
• EV components, electronics supply chain,
and green technologies are few of the key
emerging opportunities.

• Geopolitical risks, including further

sanctions on China, weaponization of the
USD, and industrial policy in the West
need to be monitored.

• We estimate that FDI inflows into the

region can potentially grow by a 6-8%
CAGR till 2030.

*ASEAN-6: Indonesia, Malaysia, Philippines,

Singapore, Thailand, Vietnam

Refer to important disclosures at the end of this report.

ASEAN-6: Tailwinds from supply chain reconfiguration October 10, 2023

Beneficiary of Asia’s supply chain shifts
Supply chain shifts through the adoption of
‘China+1’ strategy have benefited the ASEAN
region. While the regional economies have long
attracted foreign inflows, two push factors have
accelerated that move since 2017 - de-risking
since the onset of US-China tensions, and next,
supply chain reconfigurations brought about by
the pandemic. While the region might be
unable to absorb or replace all the displaced
production capacity from China, ASEAN-6
countries offer unique advantages (see table).
In this report, we explore a) the extent to which
ASEAN-6 has benefited from the China+1 shifts;
b) main investors; c) key sectors; and d) major
reforms that would sustain the foreign
investment momentum; e) risks on the horizon.
products was relocated, spurring other
countries to explore regional and multilateral
trade agreements.
For goods trade, the uncertain global
environment arising from the US-China
tensions hurt the overall trade environment.
Yet, ASEAN-6 captured a part of the loss in
China’s export share to the US. Exporters
diverted from China and shipped their products
from ASEAN to the US to circumvent the tariffs.
Vietnam has been the biggest winner in this
regard. ASEAN’s export share to the US could
rise further, amid the reshuffling of regional
production.

Countries Advantages & Pull factors

Rich in natural resources, spanning agriculture,
crude oil, & metals/minerals; Favourable
Indonesia
demographics with large domestic market; Strong
investment push
Expertise in electronics assembly & backtesting;
Malaysia Reasonably educated workforce; Wealth of
resources in palm oil, rubber, oil & gas
Low labour costs given young labour force;
Philippines Expertise in the services sector, notably business
process outsourcing
Political stability & good rule of law;
Regional business hub in finance, shipping,
Singapore
aviation; Highly skilled talent; Very open with high
number of free trade agreements
Regional autos production hub; Strong The ASEAN-6 region has made notable strides
Thailand
infrastructure and logistics network on foreign direct investments (FDI). Total FDI
Labour cost is amongst the lowest in ASEAN;
Supportive foreign investment policies; Proximity inflows into ASEAN-6 as % of world inflows have
Vietnam
to China; Very open with high number of free exceeded China in 2021 and 2022, particularly
trade agreements
Source: DBS
since 2018. This also marked a shift from low-
end supply chains in footwear, garments, and
Shifting tide from the onset of US-China rivalry textiles, which were previously drawn to the
region due to its cost competitiveness amid
The US-China tensions that started from 2017- China’s rising labour costs. Current ‘China+1’
18 marked the turning point for China’s and efforts have accelerated the structural
ASEAN-6’s trade and foreign direct investments diversification towards ASEAN, beyond low-end
(FDI). The resultant tariffs curbed trade manufacturing. We believe this trend will
between US and China, but trade in the affected persist over the coming years.

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ASEAN-6: Tailwinds from supply chain reconfiguration
ASEAN’s trade integration via its already wide
free trade agreement (FTA) network is likely to
viewed favourably by investors. We expect
medium-term progress in trade integration,
improving competitiveness further, as barriers
are reduced.
Indeed, ASEAN has been a strong supporter of
deeper economic integration. The bloc is a part
of the Regional Comprehensive Economic
Partnership (RCEP), which covers 30% of global
GDP (see ‘Vietnam: Assessing RCEP benefits and
linkages’), as well as the Comprehensive and
October 10, 2023
Progressive Agreement for Trans-Pacific
Partnership (CPTPP), which counts Malaysia,
Singapore, and Vietnam as members.
Strength in numbers
Tapping the net balance of payments data for
the individual countries, our analysis shows
that about two-third of the flows into ASEAN-6
head to Singapore, totalling about $141bn last
year, with the quantum up a sharp 50% from
average 2017-18 flows.
The net FDI data above highlights that a
significant part is being channelled to
Singapore’s real economy such as the
manufacturing sector, even though the country
attracts sizeable in-transit inflows (gross flows),
acting as a conduit for investing in the region.
Panning over to the other ASEAN-6 countries,
the scale of FDI inflows has largely improved
since the US-China trade skirmishes began in
2017-2018.
Vietnam and Indonesia attracted the most,
while Philippines is playing catch up with rest of
the region. Vietnam benefited from the
geographical proximity to China, and its existing
and expanding manufacturing ecosystem.
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ASEAN-6: Tailwinds from supply chain reconfiguration
Foreign manufacturing firms had already
maintained presence in the country, with any
incremental shift in capacity thereafter likely to
have been due to the trade war developments.
Despite politics plaguing Malaysia from 2020 to
late-2022, the economy has attracted sizeable
inflows (see next few sections for details). A
strong commodity cycle and supportive
government policies in the EV sector have
helped jumpstart interests into Indonesia.
October 10, 2023
Mapping the estimated production costs in the
region as a function of Japan (=100), show that
most of the ASEAN-6 countries are competitive.
Singapore stands out as high-cost base but with
highly skilled talent, while Vietnam is on the
lower end of the scale, according to the latest
survey from the Japan External Trade
Organisation (JETRO).
Key investors
The AmCham China 2023 China Business
Climate Survey shows that most companies
seeking to relocate production capacity from
China, are opting for Developing Asia, which
includes ASEAN. This is accompanied by an
increase in preference for potential ‘reshoring’
to the US, likely drawn by the recent industrial
policy push.
In this mix, we make few observations. While
investments from China to the ASEAN-6 region
have broadly picked up, the share of Western
and advanced NEA countries (Japan, South
Korea and Taiwan) is the largest, with the
proportion differing between countries,
according to our analysis of ASEAN’s investment
data (see table below; individual charts in
Appendix 1).
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ASEAN-6: Tailwinds from supply chain reconfiguration October 10, 2023

In the past year, for instance, the advanced

NEA economies were the dominant FDI
investors in four of the six ASEAN-6 countries
(Indonesia, Philippines, Thailand, and Vietnam),
accounting for ~13% to 40% of total
realized/approved FDI. Malaysia and Singapore
attracted more inflows from the G2 countries
(US and Europe). Notably, the US accounted for
the bulk of Singapore’s fixed asset investment
(FAI) commitments at 50.6%. China’s
investments on average were lower at ~10%. By
including Hong Kong SAR, average investments
rose to 15%, but still smaller than G2’s inflows
into most of the ASEAN countries. Intra-regional
investments from Singapore also stand out
The investment momentum picked up this year,
across ASEAN-5, at an average of 23.5% share of
partly due to China’s post-pandemic reopening.
the total. This comes amid efforts by Singapore
Chinese FDI approvals in Malaysia surged in
firms to venture abroad and tap ASEAN’s
1H23, vs the drop between 2017 to 2022, with
growing opportunities (see ‘Singapore: Wage
Malaysian Prime Minister Anwar courting China
pressures and productivity efforts’).
for fresh investments. Chinese FDI share also
That said, China’s share of ASEAN-6’s FDI has rose in Thailand and Vietnam in 1H23 vs 2022.
picked up since the US-China trade war.
We will explore China’s FDI into ASEAN-6 in
Comparing 2022 to 2017, investments from
detail in a separate focus report.
China were up in Indonesia, Thailand, and
Vietnam. The scale of increase ranged from four
to eight percentage points (pp). The share of
Chinese FDI into Philippines, however, trended
lower. China’s fixed asset investment
commitments into Singapore picked up in 2022
vs 2021 but were steady vs 2017’s levels.

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ASEAN-6: Tailwinds from supply chain reconfiguration
Booming sectors
At an aggregate level, four segments –
manufacturing, financial & insurance, trade,
and logistics (transport and storage) made up
nearly 80% of the total inflows into the region
in the past three years. By country, the
weightage varies, with the manufacturing
sector attracting nearly 60% of the total flows
into Vietnam, whilst base metal processing
dominates the sectoral mix in Indonesia.
Apart from the traditional sectors that have
attracted flows to this part of the region, few
sectors have witnessed much stronger interest.
These include the electric vehicles (EV) segment
(battery, ancillary, and automobile production),
the electronics and semiconductors industries,
and green technologies. While our focus in this
report is on FDI inflows into the goods/real
sector, the ASEAN region has also attracted
strong interest in the digital sectors (e-
commerce and fintech, for e.g.), information
and communication, and data centres.
Source: ASEAN Stats, DBS
October 10, 2023
Given Singapore’s open economy and status as
a leading manufacturing hub, the sector has
dominated the foreign investment
commitments entering the city state. The
manufacturing share was close to 77% of total
FAI commitments in 2022, within which
electronics led the way, while chemicals also did
well historically. Singapore accounts for 11% of
the global semiconductor market share, and
hosts several prominent global chip makers.
The island-state’s world-class manufacturing
ecosystem, coupled with political stability,
highly skilled talent, and excellent connectivity,
has allowed it to remain competitive and
continue attracting investments. For e.g.,
GlobalFoundries, the third largest contract
chipmaker globally, is one of the largest wafer
foundries in Singapore, and just opened its
$4bn expansion facility in Sep23. Other major
electronics investments announced in 2022
included those by Applied Materials (US), Soitec
(France), and UMC (Taiwan). Other advanced
manufacturing investments included Dyson
(UK), which is setting up a next-generation
battery plant, as part of plans to double its
advanced manufacturing footprint in 2023.
Siemens also announced a new high-tech
factory in Singapore in Jun 2023, aimed at
serving Southeast Asia.
Singapore has also drawn in green-related
investments, as it strives to be a leading
regional centre for developing new
sustainability solutions, as well as being a global
hub for green finance. An example is Schneider
Electric, which launched a new carbon-neutral
logistics hub in Tuas in late-2022, and also
announced around mid-2023 that it is
establishing a Sustainability Competency
Centre for Asia in Singapore, acting as its global
hub for sustainability leadership and
innovation.
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ASEAN-6: Tailwinds from supply chain reconfiguration
Also, as a regional business hub, nearly a
quarter of incoming investments into Singapore
are in services, such as ‘infocommunications &
media’ and ‘research & development’. For e.g.,
Ant Group (China) unveiled a new Singapore
office in Sep 2023, pledging to increase
investments on cutting-edge technologies for
digital commerce.
Vietnam was likely the biggest beneficiary of
the supply chain shifts in the past few years,
preceding the pandemic. Following the onset of
the US-China tensions starting from 2017-18,
Vietnam’s newly registered manufacturing FDI
picked up to a multi-year high of $12bn (~72%
of the total) in 2019, from $6.9bn in 2017 (~32%
of the total).
While the pandemic years were a challenging
period for new manufacturing FDI inflows,
ongoing supply chain diversification carried
benefits. For instance, the number of Apple
suppliers rose from 14 in FY2018 to 25 in
FY2022, with a majority also having presence in
China. In the post-pandemic era, we expect
interest in Vietnam to pick up further, with
new manufacturing inflows in the first nine
months of 2023 already exceeding 2022. For
October 10, 2023
e.g. in Feb23, China’s AirPods maker GoerTek
Inc. said it is investing in a new Vietnam plant,
while in Jan23, it was reported that Chinese
display maker BOE Technology Group Co Ltd, a
supplier of Apple and Samsung, plans to invest
in two Vietnamese factories. In late-Dec 2022,
longstanding South Korean investors such as
Samsung and LG have also said that they will be
adding investments.
Vietnam has also attracted green-related
investments, with Denmark’s Lego building its
first-ever carbon neutral factory in Vietnam,
worth $1bn, starting from 2H22, and expected
production commencing in 2024. Additionally,
Vietnam’s EV maker VinFast is looking to
expand in Asia, aiming to set up EV factories, for
instance in Indonesia and India.
While US FDI into Vietnam has been small,
accounting for just 4.3% of total newly
registered FDI in 2022, we see room for a pick-
up over the coming years. Vietnam’s
government raised US to the highest diplomatic
status in Sep23, taking them on par with other
key partners, China, and Russia. This was
accompanied by top US firms, including Google,
Boeing, Intel, and GlobalFoundries also seeking
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ASEAN-6: Tailwinds from supply chain reconfiguration October 10, 2023

fresh investment avenues on the country, with making hub, as Geely owns 49.9% in Malaysian
the latest elevation likely to include sectors like automaker Proton.
semiconductors, strengthening the supply
chain of critical minerals, and funding
workforce training.

Malaysia has seen the share of its FDI into the

manufacturing sector jump notably, especially
in the past two years, with total FDI approvals
rising to record levels. Sectors that have
benefited from this push include electronics
(packaging, assembly, testing), auto and
components, and chemicals, amongst others.
Western multinational companies (MNCs),
especially from Europe, have been amongst the
most active investors in the past two years, and
continue to show interest in Malaysia. For e.g.,
German chipmaker Infineon plans to build the Indonesia attracted record high FDI inflows last
world’s largest production site for silicon year, and continues to fare strongly into 2023.
carbide chips (used in EVs, wind turbines, Incremental increase in foreign inflows has
consumer electronics etc.) in the country, been witnessed in all three industry buckets –
adding to its existing presence. primary, secondary, and tertiary. A large
quantum of increase has been in the primary
US MNCs have long established electronics
and secondary sectors, into mining, basic metal
facilities in Malaysia. While FDI approvals from
industry and metal goods, chemicals, besides
the US were relatively muted in recent years, US
tertiary (real estate and business activities).
interest is starting to pick up in 2023. The US
giant Intel Corp’s plans to open a new advanced Two industry segments underscore the broader
chip packaging and testing factory in Penang, manufacturing push: a) downstreaming of
which falls under plans to invest $7bn over the commodities; b) EV battery manufacturing
next decade, part of which is also increasing the facilities. A concerted shift towards
capacity of its existing operation in Penang and downstream value-added activities in
Kedah. Others global players have also dipped commodities, construction of smelters, and
in, for instance US’ Tesla, Amazon Web services, related activities besides ample domestic
AMD Global Services, BASF, ASE Tech Holdings reserves of copper, nickel (largest in the world),
(world’s largest semiconductor packaging and bauxite, cobalt, etc, have attracted significant
testing services), Mercedes Benz, South Korea’s interest from China, South Korea, etc.
Lotte Financial Chemicals, etc. particularly in aluminium, steel, and EV battery
production sectors. A combination of a
Beyond Western MNCs, Chinese companies are
deliberate policy push (by ban of ore exports)
also looking towards Malaysia. For e.g., China’s
and rising interest amongst large auto
automaker Geely plans to invest in Tanjung
manufacturers to move closer to the raw
Malim in Perak state to turn it into a major car

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ASEAN-6: Tailwinds from supply chain reconfiguration
material source, while forging partnerships with
local players, has resulted in a strong upmove in
FDI flows. Collaborations with the Indonesia
Battery Corp (IBC) i.e., a holding company
consisting of four state-owned enterprises and
FDI investors have announced more than $1bn
worth investments. China has assumed a
leading role in the sector, moving closer to the
source after being one the key nickel importers
from the country earlier. Automakers like
Hyundai Motor company and LG Energy
Solution Ltd. are amongst the new investors in
this sector.
Thailand’s approved investment pledges
jumped by more than 70% YoY in 1H23, with
strong interests in electronics and autos
sectors. The country, which is already a key auto
manufacturing hub in the region, is seeking to
grab a bigger market share in EV manufacturing.
The government had set ’30 at 30’ target earlier
to mean that by 2030 EVs should comprise at
least 30% of total car production in the country.
Japan dominates auto sales in the country, with
a third by Toyota, 25% by Isuzu, and 10%
Honda1. Amongst EVs, China’s Great Wall had
1 Press
October 10, 2023
the highest share at 45%, followed by MG at
24% as of 3Q22. China’s BYD bought land in east
Thailand to start production of EVs, keen to tap
the already entrenched supply chain.
Separately, Taiwan’s Foxconn had also
announced plans to produce EVs in 2024. From
the traditional investors like Japan, Honda
Motor plans to start mass-producing all-electric
SUVs in Thailand, to complement its already
production and R&D lines in Thailand.
Philippines has been a market leader in
business process outsourcing activities, spurred
further by the pandemic, marked by the
presence of several MNCs, including global
banks, insurance, and technology companies.
Investors have maintained a strong presence in
the industrial and electronics value chain,
notwithstanding moderation in the quantum of
inflows in 2022 vs 2021, which slowed further
into Jan-Jun23. Japan, Germany, US, and
Singapore, were the top four investors this year,
with the manufacturing sector accounting for
54% of the total flows, followed by real estate,
finance, and insurance sectors.2 While FDI into
Philippines has been more modest than its
2 BSP
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ASEAN-6: Tailwinds from supply chain reconfiguration
ASEAN neighbours, recent reforms, including
the removal of restrictions of selected sectors,
have been timely, with the renewable industry
in particular a key focus area. Earlier in the year,
German-owned offshore wind farm projects
worth PHP392.4bn were approved in Cavite,
Negros Occidental, and Guimaras.
Concerted efforts to attract investments
Supply chain reconfigurations in the region
have provided the push factor for the ASEAN-6
countries to expedite efforts to improve the
‘ease of doing business’, which are a mix of
measures to facilitate as well as promote
investments. In recent years, steps to facilitate
investments have taken precedence, including
actions to provide a predictable regulatory
environment, investor services including
centralising in the application process,
environmental clearances, etc, and reforms
involving the main agents of production.
Appendix 2 summarises recent key reform
initiatives by ASEAN-6.
We expect total FDI inflows into ASEAN-6 to
grow at a robust pace over the coming years,
amid tailwinds from the ongoing supply chain
reconfiguration. Total net FDI inflows into
ASEAN-6 rose by ~10% on a compound annual
growth rate (CAGR) basis over 2018 to 2022,
which was higher than ~6% CAGR over a longer
time frame of 2013 to 2022, reflecting the
stronger foreign investor interest since the US-
China tensions began in 2017-18. Taking a
conservative CAGR estimate of 6-8% between
2022 and 2030, we estimate that cumulative
net FDI inflows into ASEAN-6 could reach
almost $400bn from 2022’s tally.
3 South-east Asia Green Economy 2023 report
October 10, 2023
Amongst the various sectors, there is room for
the electric vehicle component supply chain
and green technologies to expand
exponentially in the coming years. Mobility
transition and EV adoption is still small in this
part of the region and large-scale adoption is
still critical to meet the ambitious net zero
emission targets.
Thailand and Indonesia stand to benefit from
this transition, tapping on their strengths of an
existing large auto industry base and as well
availability of natural commodities, while
Vietnam is home to a fast-growing EV player.
Other countries in the electronics supply chain
might also have room to participate by a higher
proportion of components channelled to the EV
ecosystem, from existing focus on
communication and consumer electronics.
Incremental domestic EV adoption will also
draw in foreign investors to fulfil local needs.
ASEAN continues to rely heavily on foreign
green investments, according to the South-east
Asia Green Economy 2023 report3 by Bain and
Company, Temasek, GenZero, and Amazon
Web Services. More than 55% of 2022 private
green investments came from foreign investors,
both within and outside the region. Up to $2trn
in new cumulative investment is needed up to
2030 to transition ASEAN economies and meet
their NDC unconditional targets across all
sectors, suggesting significant potential for
foreign green investments over the coming
years.
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ASEAN-6: Tailwinds from supply chain reconfiguration
Risks
Geopolitics is one of the key risk factors for the
region, during the ongoing supply chain
reconfigurations, and a concurrent rise in a
protectionist stance towards natural resources
and strategic sectors. As the US-China tensions
simmer, ASEAN is often seen as stuck in the
middle. A survey conducted by the ISEAS
institute on how the ASEAN region might
respond, shows that a majority prefer not to
take sides, instead focussing on their own
resilience and unity as a defence mechanism. A
small minority see the need to take sides, which
is unlikely to be an easy choice, considering
deep trade, investment, and diplomatic
partnerships between ASEAN-6 and China, as
well as the US.
Instances of defacto weaponization of the US
dollar have also left the region in a cautious
mode. The punitive sanctions (including cutting
access to the SWIFT network) brought about by
the US on Russia in wake of the war with
Ukraine have made the ASEAN members wary
of the dominant role of the US dollar in the mix.
The region is likely to seek solutions to mitigate
October 10, 2023
risks by diversifying their reserve currencies as
well as push the use of the local currencies for
trade settlement purposes, as a start. Towards
this, the members signed an agreement earlier
this year to promote regional payment
connectivity through QR codes in their
respective currencies as well as explore the use
of local currency in bilateral cross-border
transactions.
Lastly, a strong push towards reshoring i.e.,
industry policies of the Western countries also
warrants attention. In this regard, countries
will watch developments around the US’
Inflation Reduction Act with much interest,
where tax credits have been offered to firms
seeking to invest in the US, focused on clean
tech manufacturing as well as serving the
country’s industrial and climate agenda. An
analysis by the Financial Times reported that in
the past one year, about $84bn large scale
projects have been announced, led by
commitments from the US, South Korea, Japan,
and Canada.
Of interest to the region are the underlying
sourcing requirements which requires a) 40% of
the minerals, electronic components, etc to be
purchased either from the US or existing FTA
partners. This ratio will rise to 80% in 2025; b)
firms are not allowed to purchase components
from ‘foreign entities of interest’ (countries
including China) from 2024 and minerals/raw
materials from 2025. Countries, like Indonesia,
we reckon will seek to establish special
arrangements with the US to supply processed
metals/ minerals, etc., provided a) and b) pre-
requisites are met.
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ASEAN-6: Tailwinds from supply chain reconfiguration October 10, 2023

Appendix 1: Key investors in ASEAN-6

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ASEAN-6: Tailwinds from supply chain reconfiguration October 10, 2023

Appendix 2: Recent key reform initiatives

Economy Reforms
Omnibus Laws, including for the Job Creation Law, to improve the ease of doing business. Tax incentives,
including lowering the corporate income tax.
From the over 500 restrictions earlier, all business sectors are now open for 100% foreign ownership,
except for a few in the restricted category.
Indonesia
Improve risk-based licensing procedures (NSPK) and harmonization with other PPs.

Implementation of the OSS RBA system, meant to smoothen business licensing services.

Extended tax incentives to manufacturing companies that transfer their

operations to Malaysia, as well as a 15% tax rate for C-suite executives until 2024 in Budget 2023.

Launch of ‘Madani Economic Narrative’ (MEN) in July 2023, aimed at building a better Malaysia. This
includes establishing Malaysia as a globally competitive investment destination.

Launch of the New Industrial Master Plan 2030 (NIMP 2030), key part of MEN, on 1 September 2023. It is
Malaysia
designed to drive Malaysia's trajectory as a global leader in industrial development, extend the domestic
linkages to create wealth across the nation as well as strengthen its position in the global value chain.

Intensify the promotion of foreign investments through 'Strike force' sessions - targeted one-to-one
meetings with potential investors, where the topics discussed are technical and specific in nature.

Plans to extend the length of multiple entry visas to better facilitate investors' entry into Malaysia.

Public Services Act was reformed in 2022, which opened the door for 100% FDI ownership for
infrastruture (ports, roads, expressways, etc.) and telecom sectors.

Offshore investors will also be allowed to fully own renewable energy projects (including solar, wind,
Philippines
hydro, etc.). The Renewable Energy Laws might be reviewed to ensure energy supply and attract FDI.

International companies are allowed to open small businesses, with a relaxation on the minimum capital
threshold.
More PPP collaboration is being purused for key projects.
Topped up SGD4bn into the National Productivity Fund as part of Budget 2023, with investment
promotion included as a supportable activity.
Introduced the Complementarity Assessment Framework (Compass) from Sep 2023 for Employment Pass
(EP) applications, making the criteria for granting approvals for hiring foreign professionals more
transparent.
Introduced the Overseas Networks and Expertise Pass (ONEPass) from Jan 2023 to attract top talent
Singapore
across all sectors.
Enhancing transport infrastructure through developing Changi Airport Terminal 5 and Tuas Port.

Introduced the Enterprise Innovation Scheme as part of Budget 2023 that will raise tax deductions for
businesses working on key activities that boost innovation.

Adopted a five-year investment promotion strategy in Oct 2022, which aims to attract investments in
innovative, high-tech, and green industries over the period of 2023 to 2027.
Thailand
Promote Thailand as a regional electric vehicle (EV) production hub through various policies. These
include corporate tax exemptions for EV investments, import tariff waivers for production parts, and
subsidies for local EV battery production.
Introduced preferential tax rates and fees for eligible new and expanding R&D and large investment
projects, starting from late-2021.
Vietnam
Approved a 10-year national strategy on foreign investments, covering 2021 to 2030, in 2022.
Source: News sources, DBS

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ASEAN-6: Tailwinds from supply chain reconfiguration October 10, 2023

Group Research
Economics & Strategy

Taimur BAIG, Ph.D.

Chief Economist
Global
taimurbaig@dbs.com

Wei Liang CHANG Chris LEUNG Daisy SHARMA

FX & Credit Strategist Chief Economist Analyst
Global China, Hong Kong SAR Data Analytics
weiliangchang@dbs.com chrisleung@dbs.com daisy@dbs.com

Nathan CHOW Teng Chong LIM Joel SIEW

Senior Economist Credit Analyst Credit Analyst
China, Hong Kong SAR SGD Credit SGD Credit
nathanchow@dbs.com tengchonglim@dbs.com joelsiew@dbs.com

Han Teng CHUA, CFA Tieying MA, CFA Duncan TAN

Economist Senior Economist Rates Strategist
Asean Japan, South Korea, Taiwan Asia
hantengchua@dbs.com matieying@dbs.com duncantan@dbs.com

Violet LEE Radhika RAO Mervyn TEO

Associate Senior Economist Credit Strategist
Publications Eurozone, India, Indonesia USD Credit
violetleeyh@dbs.com radhikarao@dbs.com mervynteo@dbs.com

Eugene LEOW Amanda SEAH Samuel TSE

Senior Rates Strategist Credit Analyst Economist
G3 & Asia SGD Credit China, Hong Kong SAR
eugeneleow@dbs.com amandaseah@dbs.com samueltse@dbs.com

Philip WEE
Senior FX Strategist
Global
philipwee@dbs.com

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ASEAN-6: Tailwinds from supply chain reconfiguration October 10, 2023

Sources: Data for all charts and tables are from CEIC, Bloomberg and DBS Group Research (forecasts and
transformations)
GENERAL DISCLOSURE/ DISCLAIMER (For Macroeconomics, Currencies, Interest Rates)

The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively,
the “Company”). This report is intended for “Accredited Investors” and “Institutional Investors” (defined under the
Financial Advisers Act and Securities and Futures Act of Singapore, and their subsidiary legislation), as well as
“Professional Investors” (defined under the Securities and Futures Ordinance of Hong Kong) only. It is based on
information obtained from sources believed to be reliable, but the Company does not make any representation or
warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose.
Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any
recommendation contained herein does not have regard to the specific investment objectives, financial situation
and the particular needs of any specific addressee. The information herein is published for the information of
addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should
obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected
with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other
loss or damages of any kind arising from any use of the information herein (including any error, omission or
misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other
person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a
solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any
investment advice or services. The Company and its associates, their directors, officers and/or employees may have
positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or
seek to perform broking, investment banking and other banking or financial services for these companies. The
information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen
or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or
residents of the United States of America) where such distribution, publication, availability or use would be contrary
to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any
jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be
contrary to law or regulation.

This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial
Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank
Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses
pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Singapore recipients should
contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.

DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888.
Company Registration No. 196800306E.

DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center,
99 Queen’s Road Central, Central, Hong Kong SAR.

DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 13th Floor One Island
East, 18 Westlands Road, Quarry Bay, Hong Kong SAR

Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial
product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor
protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is
high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own
independent advice.

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