Asia Roundup
China’s New Five-Year Plan Maps Overhaul of Property Sector
China has outlined a sweeping overhaul of its real estate sector in its new five-year plan, prioritizing risk reduction and reforms such as changes to housing finance and sales systems over growth-driven property expansion, Caixin reported.
The blueprint for national economic and social development from 2026 to 2030 dedicates an entire chapter to the property sector, including building a new development model. It highlights the heavy burden of preventing and defusing structural risks in real estate, local government debt, and small and midsized financial institutions.
Singapore Warns of Illicit Funds in Popular Low-Tax Investment Vehicles
Singapore’s markets regulator has warned fund managers that popular investment structures introduced by the city-state six years ago to lure investors from offshore tax havens could be used for money laundering, Financial Times reported.
In a private briefing to industry participants in late January, the Monetary Authority of Singapore said the so-called variable capital company structure had proved very popular with hedge funds, private equity managers and family offices but cautioned over their use to transfer illicit funds, according to people with knowledge of the briefing.
VinFast to Resume US EV Plant Construction as Loss Widens
Vietnamese electric vehicle maker VinFast Auto said it will resume construction on its North Carolina factory this year while reporting a wider loss in the fourth quarter as costs tied to its global expansion continued to rise, Bloomberg reported.
VinFast is not expected to reach the break-even point on earnings before interest, taxes, depreciation and amortization (Ebitda) this year, VinFast Chairwoman Le Thi Thu Thuy said.
VinFast’s high cash burn raises concerns about its ability to fund capital expenditures, said Third Bridge analyst Ollie Coughlin. However, if the company hits its delivery target of 300,000 EVs globally in 2026, which he believes it can, it should no have trouble raising capital, Coughlin said.
Indonesia Roundup
Prabowo Open to Breach Indonesia Deficit Cap Only During Crisis
President Prabowo Subianto said he would only consider temporarily exceeding Indonesia’s statutory budget deficit cap for emergency situations, adding that he remains committed to fiscal discipline and the nation must “live within our means,” Bloomberg reported.
Prabowo said his government would only approve a short-term increase in the deficit beyond 3% of gross domestic product if oil prices stay elevated for a sustained period due to the US-Israel war in Iran. He likened the situation to the Covid-19 pandemic, when Indonesia’s fiscal deficit breached the legal limit for two years to allow for emergency spending.
Indonesian Stocks, Bonds Drop on Deficit Cap Concern
Indonesia’s stocks and government bonds fell on concern Prabowo Subianto’s administration is moving closer to removing the long-held deficit ceiling for the state budget, Bloomberg reported.
The Jakarta Composite Index of shares slid as much as 3.1% to an eight-month low after ministers said in a cabinet meeting on the weekend that the budget deficit limit of 3% of gross domestic product is difficult to maintain as the Iran war pushes up oil prices.
Indonesia Eyes Budget Cuts Amid High Oil Prices, Keeps Free Meal Program Fund Intact
Indonesia is preparing additional budget cuts if oil prices remain high, but the government will keep funding for the free meal program – which accounts for more than 10% of this year’s total budget – unchanged, The Business Times reported.
Finance Minister Purbaya Yudhi Sadewa said that the government will re-evaluate its budget as oil prices remain elevated. This is amid escalating tensions in the Persian Gulf – developments that could push up the Southeast Asian country’s energy subsidy bill.
He added that the government will soon ask all ministries and agencies to reassess their budgets to identify spending that could be cut. He also urged them to postpone non-urgent new programs.