Never trust, always verify: Why zero trust is essential for Singapore's cybersecurity
Recent announcements from Coordinating Minister for National Security K Shanmugam underscore the serious threats from cyberespionage groups like UNC3886 attacking critical information infrastructure. These are not your average opportunistic hackers. We are talking about sophisticated, well-resourced advanced persistent threat (APT) actors that gain unauthorised access to a computer network and target essential services.
The intent is clear: espionage, disruption and undermining national security. So, how can nations defend against such formidable and constantly evolving adversaries in today's complex digital landscape?
The answer lies in a fundamental shift in our cybersecurity philosophy: zero trust.
Beyond the perimeter: why the old ways don't cut it anymore
A decade or so ago, securing technology felt simpler. We relied on physical security, strong network perimeters, firewalls and basic identity management. Our applications were often monolithic, tucked safely behind these defences. But those days are long gone.
Today, software development is all about distributed, cloud-native, microservices-based applications. We are 'gluing together' countless pieces of existing code, each with its own complex dependencies – forming the software supply chain, which typically encompasses all tools, libraries and processes used to develop and publish software.
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This interconnected nature vastly increases the potential attack surface of our critical systems. Every new component, configuration and connection becomes a potential doorway for attackers.
It is no surprise then that we have seen a dramatic hike in common vulnerabilities and exposures (CVEs) – publicly disclosed cybersecurity vulnerabilities found in software or hardware that act as a standardised way to identify and catalogue security flaws. In the first seven months of 2025, almost 27,000 CVEs were reported – an average of 127 CVEs per day.
While investments in cybersecurity spending are essential, vulnerability scanners only work against known threats. This leaves us acutely exposed to zero-day attacks like the infamous Log4Shell, which exploit previously unknown weaknesses and leave defenders no time to prepare a response. Even internal bad actors can pose a zero-day threat; true zero trust means verifying even code from 'the inside'.
This increasing complexity, coupled with the sheer volume of new vulnerabilities, means configuration errors or omissions in our distributed cloud-native applications can easily introduce exploitable paths.
In fact, SUSE's Securing the Cloud Apac 2024 report revealed that IT decision-makers in the Asia-Pacific region experienced an average of 2.6 cloud-related security incidents in the past year, and 64 per cent confirm an incident in the last 12 months. This includes threats ranging from artificial intelligence-powered cyberattacks to edge security breaches, all aiming to disrupt and exploit our cloud environments.
This reality underscores the urgent need for a transformative approach. Zero trust, with its 'never trust, always verify' principle, is that transformation.
Hidden weapons in our defence arsenal
More than a buzzword, zero trust is a strategic approach amplified by modern cybersecurity features.
Zero-day exploits: proactive runtime protection
As we have seen, UNC3886 and similar APTs frequently leverage zero-day vulnerabilities. While we cannot always predict where the next zero-day attack will strike, zero trust's granular access controls and microsegmentation significantly limit an attacker's lateral movement after a breach.
Cloud-native security solutions that protect applications from zero-day attacks at runtime are crucial. These solutions continuously monitor application behaviour, detecting anomalies and blocking malicious code even if it is present. They also halt unauthorised attempts at access and data exfiltration. This means threat actors are stopped dead in their tracks, even against unknown exploits like Log4Shell.
Software bill of materials: knowing what exactly is in your software 'ingredients list'
In today's interconnected software landscape, understanding what is inside our applications is paramount. A software bill of materials (SBOM) provides a detailed, itemised list of all components, libraries and dependencies used in a piece of software, much like ingredients on a food label.
For zero trust, SBOMs are essential. They enable organisations to know precisely what they are deploying, allowing for continuous monitoring of known vulnerabilities within those components. This visibility is critical for identifying potential weak points in the software supply chain that attackers might exploit.
By understanding the provenance – the origins and history – and composition of every software element, zero-trust principles can be applied more effectively, verifying the integrity of each component before it is granted access or permission to execute.
SBOMs, therefore, become a foundational element for building trust in the software we consume and deploy, aligning perfectly with the never trust, always verify ethos by exposing hidden risks.
Open source: transparency, agility and collaborative defence
In the face of sophisticated nation-state adversaries, proprietary, black-box security solutions can be a disadvantage. This is where open source shines.
Open-source software, by its very nature, is transparent. Its code is openly available for review by a global community of experts. This transparency leads to faster discovery of vulnerabilities, and patching. Open-source solutions are also adaptable to specific national security needs, allowing for rapid deployment of new defences against evolving threats, increasing overall security resilience.
At the same time, it is crucial to acknowledge that while open source offers many benefits, it can also be a source of risk if not managed properly. Regular scanning for known vulnerabilities, diligent patching, and the careful selection of well-maintained and trusted open-source projects can help organisations guard against ever-evolving threats.
Building a resilient digital Singapore
Cyberattacks by groups like UNC3886 are a stark reminder that our digital defences must be as agile and sophisticated as the threats we face. Implementing a zero-trust architecture – bolstered by features like proactive runtime protection, verified SBOMs and the collaborative power of open source – is a pre-emptive advantage.
It ensures that even if an adversary gains a foothold, their mission becomes infinitely harder – safeguarding vital infrastructure and preserving trust so that nations like Singapore can protect and advance their missions as secure digital hubs.
The writer is SUSE's chief technology officer for Asia-Pacific, Japan and Greater China
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Business Times
a day ago
- Business Times
Most Asean nations get softer US tariffs, mitigating growth risks ahead of Aug 7 hikes
MOST Asean countries have secured reductions of the US reciprocal tariffs ahead of the prior Aug 1 deadline for the higher tariffs to kick in, following months of intense deal making and significant market access, trade and investment concessions. According to US President Donald Trump's executive order unveiled on Thursday (Jul 31), Singapore remains subject to a baseline rate of 10 per cent; the majority of South-east Asian economies face duties of between 19 and 20 per cent, which will now start on Aug 7. Rahul Bajoria, Asean and India economist at BofA Securities, told The Business Times: 'This is a better outcome than what was anticipated, but the rate of tariff is still much higher than what the status quo was. 'The Asean region saw a lot of front-loading of exports, so some payback is unavoidable, but with a better growth outcome, we see a respectable scope for GDP growth in the region.' Laos and Myanmar bear the heaviest burden in the region. Despite reduced tariffs of 40 per cent each, they still face one of the highest rates the US has imposed on its global trading partners. Dozens of other countries have been hit with tariffs ranging from 10 to 41 per cent, and goods from nations not specifically listed will be levied a universal US import tax of 10 per cent. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The 40 per cent tariff on transshipped goods now applies not only to Vietnam, but also to other countries – a move analysts largely see as aimed at China. However, uncertainties remain surrounding the rules of origin used to identify targeted shipments, as well as upcoming sector-specific tariffs. Maybank senior economist Chua Hak Bin said: ''China + 1' is not dead, as all Asean countries will face lower effective tariff rates than China. China's multinational corporations (MNCs) will likely consider having an alternative base, given China's high effective tariff rates of over 35 per cent.' The Trump administration also signalled that 'meaningful' agreements with certain nations are forthcoming, potentially leading to revised duties, as the US seeks to bring more trading partners in line with its economic and national security priorities. 'Don't assume this is the end of the story. Trump regards this as an ongoing reality show,' noted Stephen Olson, former US trade negotiator and visiting senior fellow at ISEAS-Yusof Ishak Institute. 'Developing countries, especially those in South-east Asia hoping to pursue export-led development models, will be especially hard hit,' he added. Radhika Rao, senior economist at DBS, echoed this viewpoint, emphasising that despite better clarity on the country-specific tariffs, the new rates are two to six times higher than the average implied most-favoured-nation rates in 2024, suggesting significant economic impact for both the region and the US. However, China's stronger-than-expected economic performance and its potential rapprochement with the US could mitigate the risk of a negative growth shock for the Asean region, added Bajoria of BofA Securities. The Business Times has compiled key developments from the following Asean nations to examine the implications of the latest tariff landscape: Singapore: 'Sweet spot' with lowest rate Singapore will continue to be subject to a 10 per cent baseline tariff on exports to the US, the Ministry of Trade and Industry (MTI) said on Friday (Aug 1). 'MTI has confirmed this understanding with the Office of the US Trade Representative,' a ministry spokesperson said, referringn to the US' Executive Order released on Jul 31 (eastern time). 'We are closely monitoring developments and will seek clarification from our US counterparts as necessary,' the spokesperson added. The relatively low baseline tariff rate of 10 per cent should bring some relief to exporters in Singapore, economists said. 'Singapore is in a sweet spot and 'can live with it', as her reciprocal tariff is the lowest in Asia,' said Dr Chua, echoing similar remarks by the Republic's Prime Minister Lawrence Wong earlier this week. But companies looking to launch investments are likely still 'in a holding pattern' as they assess the frequent changes in tariff policies, said Denise Cheok, head of South-east Asia economics at Moody's Analytics. Trump's tariff letters state that the levies may change 'depending on our relationship with your country', noted Bernard Aw, the Asia-Pacific chief economist at credit insurer Coface. 'The certainty is that uncertainty will remain,' he said. With the fluid situation, he said companies likely have two plans ongoing – a short-term one to mitigate uncertainties, and a long-term plan to adjust to the new economic realities. The long-term one would entail reorganising logistics and shifting production, among other things. Even so, MNCs already in the city-state would likely maintain their presence, said Dr Chua. MNCs caught in a higher-tariff country may consider Singapore as a part of their supply chain. Still, Cheok estimates the baseline tariff could shave about 0.5 percentage points off Singapore's gross domestic product. 'With close trade partners attracting much higher tariffs, the hit to GDP from direct tariff-related disruptions would come in closer to about 1 percentage point,' she said. She added that beyond the headline 10 per cent, a key concern for Singapore is sectoral tariffs, especially on pharmaceuticals, which dominate Singapore's exports to the US. Since the Singapore economy is highly dependent on trade, the indirect effects of tariffs on global export demand remain a key factor to the outlook, said Cheok. Dr Chua said he expects Singapore's export and GDP growth to slow in H2, but not contract, given the reciprocal tariff deals, the low baseline tariff and a likely extension of the US-China trade truce. Reported by Sharon See from Singapore Vietnam: First, but not best While Vietnam was the first Asean country to strike a trade deal with the US by granting 'total access' to its market, its tariff outcome is no more favourable than that of most regional peers. Washington set a 20 per cent levy on goods imported from the South-east Asian country, with which the US ran a trade deficit of US$123.5 billion last year – the highest in Asean and third-highest globally. While this was a significant reduction from the previously announced 46 per cent, it remains slightly higher than the 19 per cent imposed on Malaysia, Indonesia, Thailand, Cambodia and the Philippines. According to S&P Global's latest purchasing managers' survey released on Aug 1, new export orders for Vietnam's manufactured goods contracted for the ninth consecutive month in July. While manufacturers remained optimistic about output growth over the coming year, sentiment fell to a three-month low – well below the series average – because of concerns over how the US tariffs weighed on the outlook. Still, the manufacturing sector returned to expansion in July after three months of decline, with firms securing enough domestic business to lift total new orders back into growth. Maybank analysts wrote in a recent note that Vietnam's steady rollout of private-sector reforms would cushion the impact of of the tariffs on external trade by promoting domestic investment and boosting the country's competitiveness as a destination for foreign direct investment. An improved business environment – characterised by reduced red tape, a more predictable legal framework, better education system and stronger local firms – is expected to broaden Vietnam's value proposition beyond being merely a low-cost destination, they added. Reported by Jamille Tran from Ho Chi Minh City Malaysia: Levelled playing field Just before the Aug 1 deadline kicked in, the US reduced the reciprocal tariff imposed on Malaysian imports to 19 per cent, down from the earlier 25 per cent rate, bringing the South-east Asian country in line with its regional peers. It also removes a key overhang for exporters, particularly in the electrical and electronics, as well as glove sectors. Hong Leong Investment Bank wrote in a note that from a trade standpoint, the harmonised US tariff rates across Asean ensure that Malaysia is not at a relative disadvantage. Ken Low, head of dealing at Moomoo Malaysia, noted that the tariff reduction offers short-term optimism. While the new rate is less damaging than the previous one, it remains on par with that of its regional peers, and continues to pose a hurdle to the competitiveness of Malaysian exports. In a statement on Friday, Malaysia's Ministry of Investment, Trade and Industry (Miti) stressed that the US-Malaysia tariff agreement was reached without compromising on key 'red-line' issues such as excise duty and Bumiputera equity quotas, thus protecting the country's sovereign economic policies. At a media briefing on Friday evening, Miti Minister Tengku Aziz said Malaysian semiconductor and pharmaceutical exports would remain exempt from US tariffs. Under the deal, the Malaysian government confirmed that 61 per cent or 6,911 items of its new trade arrangement's tariff lines with the United States would have zero tariffs. Malaysia and the US are expected to issue a joint statement on the tariff agreement over the weekend. Tengku Zafrul clarified there is no agreement or request from the US for exclusive access to Malaysia's rare earths, despite such minerals being central to US trade talks globally. To address the trade deficit with the US, Malaysia will make major procurements, including the purchase of another 30 Boeing aircraft valued at US$9.5 billion, he said. Miti said the government worked with Bank Negara Malaysia to model tariff scenarios and would implement targeted measures to support affected exporters and small and medium-sized enterprises. Reported by Tan Ai Leng from Kuala Lumpur Indonesia: Room to breathe Indonesia, which is grappling with domestic economic pressures , has secured a final US tariff rate of 19 per cent on its exports, easing fears of the fallout from President Trump's Apr 2 rate of 32 per cent. While still nearly double the 10 per cent baseline applied during the reprieve, the revised rate offers some relief as the country grapples with domestic economic pressures. Indonesia's tariff rate remains lower than Vietnam's, a key regional rival in labour-intensive sectors like textiles and footwear. As the US ranks as Indonesia's second-largest export market, analysts believe the reduced tariffs could boost trade and protect labour-intensive industries from economic challenges. The deal was reached following an agreement between President Prabowo Subianto and Trump to open Indonesia's vast market of 280 million consumers to US goods. Indonesia, which runs a US$17 billion trade surplus with the US, will eliminate tariff barriers on more than 99 per cent of goods coming in from the US, and commit to purchasing US$2.5 billion in agricultural products and US$15 billion in energy supplies. Citi's research team sees the agreement as having a net dovish impact on the Indonesian economy. While the shift in import sources may slightly weigh on the trade balance, the broader macroeconomic effects are expected to be manageable. Risks to the rupiah remain, but are likely to stay contained as long as Indonesia's commodity export prices remain stable. Reported by Elisa Valenta from Jakarta Cambodia: Double cuts to match peers Cambodia cheered the 'great news' of a 19-per-cent tariff on its US exports – a cut from the earlier 36 per cent and a significant drop from the original 49 per cent, which would have devastated its manufacturing sector and jarred its economy. The kingdom's Prime Minister Hun Manet took to Facebook on Friday morning to praise the 'excellent outcome', but analysts BT spoke with cautioned that Cambodia is not yet out of the woods. Adam Ahmad Samdin, an economist at research firm Oxford Economics, said that transshipments, the definition of which is left to the discretion of the US authorities, remain a bugbear for Cambodia, because its production is heavily reliant on Chinese inputs. The nation's post-pandemic economic expansion has been picking up speed, and annual growth has surpassed 5 per cent, but the double whammy of US tariffs and recent border disputes with neighbouring Thailand has clouded its outlook. Adam acknowledged that the reduced levy mitigates a substantial amount of downside risk to Cambodia's growth, noting that there remains scope for more immediate near-term support, as the kingdom improves its public debt ratio and rebuilds its fiscal space. Maybank economist Brian Lee added that border tensions will weigh on tourism, particularly in border areas, such as Poipet. Thailand is Cambodia's top source of international tourists. Nevertheless, the revised tariff brings Cambodia in line with its Asean neighbours and is lower than the rate imposed on its regional competitors (such as India) in the garment space, said Lee. He added that the risk of a sharp pullback in foreign direct investment is now reduced. The house expects Cambodia's growth to slow from 6 per cent in 2024 to 5 per cent this year and 4.6 per cent next year. Reported by Goh Ruoxue from Singapore
Business Times
a day ago
- Business Times
Most Asean nations get softer US tariffs to cushion growth risks ahead of Aug 7 hikes
MOST Asean countries have secured reductions of the US reciprocal tariffs ahead of the Aug 1 deadline for negotiations, following months of intense negotiations and significant market access, trade and investment concessions. According to US President Donald Trump's executive order unveiled on Thursday (Jul 31), Singapore remains subject to a baseline rate of 10 per cent; the majority of South-east Asian economies face duties of between 19 and 20 per cent, starting on Aug 7. Rahul Bajoria, Asean and India economist at BofA Securities, told The Business Times: 'This is a better outcome than what was anticipated, but the rate of tariff is still much higher than what the status quo was. 'The Asean region saw a lot of front-loading of exports, so some payback is unavoidable, but with a better growth outcome, we see a respectable scope for GDP growth in the region.' Laos and Myanmar bear the heaviest burden in the region. Despite reduced tariffs of 40 per cent each, they still face one of the highest rates the US has imposed on its global trading partners. Dozens of other countries have been hit with tariffs ranging from 10 to 41 per cent, and goods from nations not specifically listed will be levied a universal US import tax of 10 per cent. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The 40 per cent tariff on transshipped goods now applies not only to Vietnam, but also to other countries – a move analysts largely see as aimed at China. However, uncertainties remain surrounding the rules of origin used to identify targeted shipments, as well as upcoming sector-specific tariffs. Maybank senior economist Chua Hak Bin said: ''China + 1' is not dead, as all Asean countries will face lower effective tariff rates than China. China's multinational corporations (MNCs) will likely consider having an alternative base, given China's high effective tariff rates of over 35 per cent.' The Trump administration also signalled that 'meaningful' agreements with certain nations are forthcoming, potentially leading to revised duties, as the US seeks to bring more trading partners in line with its economic and national security priorities. 'Don't assume this is the end of the story. Trump regards this as an ongoing reality show,' noted Stephen Olson, former US trade negotiator and visiting senior fellow at ISEAS-Yusof Ishak Institute. 'Developing countries, especially those in South-east Asia hoping to pursue export-led development models, will be especially hard hit,' he added. Radhika Rao, senior economist at DBS, echoed this viewpoint, emphasising that despite better clarity on the country-specific tariffs, the new rates are two to six times higher than the average implied most-favoured-nation rates in 2024, suggesting significant economic impact for both the region and the US. However, China's stronger-than-expected economic performance and its potential rapprochement with the US could mitigate the risk of a negative growth shock for the Asean region, added Bajoria of BofA Securities. The Business Times has compiled key developments from the following Asean nations to examine the implications of the latest tariff landscape: Singapore: 'Sweet spot' with lowest rate Singapore will continue to be subject to a 10 per cent baseline tariff on exports to the US, the Ministry of Trade and Industry (MTI) said on Friday (Aug 1). 'MTI has confirmed this understanding with the Office of the US Trade Representative,' a ministry spokesperson said, referringn to the US' Executive Order released on Jul 31 (eastern time). 'We are closely monitoring developments and will seek clarification from our US counterparts as necessary,' the spokesperson added. The relatively low baseline tariff rate of 10 per cent should bring some relief to exporters in Singapore, economists said. 'Singapore is in a sweet spot and 'can live with it', as her reciprocal tariff is the lowest in Asia,' said Dr Chua, echoing similar remarks by the Republic's Prime Minister Lawrence Wong earlier this week. But companies looking to launch investments are likely still 'in a holding pattern' as they assess the frequent changes in tariff policies, said Denise Cheok, head of South-east Asia economics at Moody's Analytics. Trump's tariff letters state that the levies may change 'depending on our relationship with your country', noted Bernard Aw, the Asia-Pacific chief economist at credit insurer Coface. 'The certainty is that uncertainty will remain,' he said. With the fluid situation, he said companies likely have two plans ongoing – a short-term one to mitigate uncertainties, and a long-term plan to adjust to the new economic realities. The long-term one would entail reorganising logistics and shifting production, among other things. Even so, MNCs already in the city-state would likely maintain their presence, said Dr Chua. MNCs caught in a higher-tariff country may consider Singapore as a part of their supply chain. Still, Cheok estimates the baseline tariff could shave about 0.5 percentage points off Singapore's gross domestic product. 'With close trade partners attracting much higher tariffs, the hit to GDP from direct tariff-related disruptions would come in closer to about 1 percentage point,' she said. She added that beyond the headline 10 per cent, a key concern for Singapore is sectoral tariffs, especially on pharmaceuticals, which dominate Singapore's exports to the US. Since the Singapore economy is highly dependent on trade, the indirect effects of tariffs on global export demand remain a key factor to the outlook, said Cheok. Dr Chua said he expects Singapore's export and GDP growth to slow in H2, but not contract, given the reciprocal tariff deals, the low baseline tariff and a likely extension of the US-China trade truce. Reported by Sharon See from Singapore Vietnam: First, but not best While Vietnam was the first Asean country to strike a trade deal with the US by granting 'total access' to its market, its tariff outcome is no more favourable than that of most regional peers. Washington set a 20 per cent levy on goods imported from the South-east Asian country, with which the US ran a trade deficit of US$123.5 billion last year – the highest in Asean and third-highest globally. While this was a significant reduction from the previously announced 46 per cent, it remains slightly higher than the 19 per cent imposed on Malaysia, Indonesia, Thailand, Cambodia and the Philippines. According to S&P Global's latest purchasing managers' survey released on Aug 1, new export orders for Vietnam's manufactured goods contracted for the ninth consecutive month in July. While manufacturers remained optimistic about output growth over the coming year, sentiment fell to a three-month low – well below the series average – because of concerns over how the US tariffs weighed on the outlook. Still, the manufacturing sector returned to expansion in July after three months of decline, with firms securing enough domestic business to lift total new orders back into growth. Maybank analysts wrote in a recent note that Vietnam's steady rollout of private-sector reforms would cushion the impact of of the tariffs on external trade by promoting domestic investment and boosting the country's competitiveness as a destination for foreign direct investment. An improved business environment – characterised by reduced red tape, a more predictable legal framework, better education system and stronger local firms – is expected to broaden Vietnam's value proposition beyond being merely a low-cost destination, they added. Reported by Jamille Tran from Ho Chi Minh City Malaysia: Levelled playing field Just before the Aug 1 deadline kicked in, the US reduced the reciprocal tariff imposed on Malaysian imports to 19 per cent, down from the earlier 25 per cent rate, bringing the South-east Asian country in line with its regional peers. It also removes a key overhang for exporters, particularly in the electrical and electronics, as well as glove sectors. Hong Leong Investment Bank wrote in a note that from a trade standpoint, the harmonised US tariff rates across Asean ensure that Malaysia is not at a relative disadvantage. Ken Low, head of dealing at Moomoo Malaysia, noted that the tariff reduction offers short-term optimism. While the new rate is less damaging than the previous one, it remains on par with that of its regional peers, and continues to pose a hurdle to the competitiveness of Malaysian exports. In a statement on Friday, Malaysia's Ministry of Investment, Trade and Industry (Miti) stressed that the US-Malaysia tariff agreement was reached without compromising on the key 'red-line' issues protecting the country's sovereign economic policies. While negotiation details remain undisclosed – rare earths and halal standards were reportedly discussed – no specific concessions have been confirmed by the government. Miti said the government worked with Bank Negara Malaysia to model tariff scenarios and would implement targeted measures to support affected exporters and small and medium-sized enterprises. The tariff breakthrough coincides with the launch of a RM611 billion five-year development plan, which targets economic growth of 4.5 to 5.5 per cent, RM1.82 trillion in national revenue, and a fiscal deficit below 3 per cent by 2030. CIMB Treasury and Market Research said the combination of the lower tariff and strong fiscal planning should support investor sentiment and export resilience amid global trade uncertainties. Reported by Tan Ai Leng from Kuala Lumpur Indonesia: Room to breathe Indonesia, which is grappling with domestic economic pressures , has secured a final US tariff rate of 19 per cent on its exports, easing fears of the fallout from President Trump's Apr 2 rate of 32 per cent. While still nearly double the 10 per cent baseline applied during the reprieve, the revised rate offers some relief as the country grapples with domestic economic pressures. Indonesia's tariff rate remains lower than Vietnam's, a key regional rival in labour-intensive sectors like textiles and footwear. As the US ranks as Indonesia's second-largest export market, analysts believe the reduced tariffs could boost trade and protect labour-intensive industries from economic challenges. The deal was reached following an agreement between President Prabowo Subianto and Trump to open Indonesia's vast market of 280 million consumers to US goods. Indonesia, which runs a US$17 billion trade surplus with the US, will eliminate tariff barriers on more than 99 per cent of goods coming in from the US, and commit to purchasing US$2.5 billion in agricultural products and US$15 billion in energy supplies. Citi's research team sees the agreement as having a net dovish impact on the Indonesian economy. While the shift in import sources may slightly weigh on the trade balance, the broader macroeconomic effects are expected to be manageable. Risks to the rupiah remain, but are likely to stay contained as long as Indonesia's commodity export prices remain stable. Reported by Elisa Valenta from Jakarta Cambodia: Double cuts to match peers Cambodia cheered the 'great news' of a 19-per-cent tariff on its US exports – a cut from the earlier 36 per cent and a significant drop from the original 49 per cent, which would have devastated its manufacturing sector and jarred its economy. The kingdom's Prime Minister Hun Manet took to Facebook on Friday morning to praise the 'excellent outcome', but analysts BT spoke with cautioned that Cambodia is not yet out of the woods. Adam Ahmad Samdin, an economist at research firm Oxford Economics, said that transshipments, the definition of which is left to the discretion of the US authorities, remain a bugbear for Cambodia, because its production is heavily reliant on Chinese inputs. The nation's post-pandemic economic expansion has been picking up speed, and annual growth has surpassed 5 per cent, but the double whammy of US tariffs and recent border disputes with neighbouring Thailand has clouded its outlook. Adam acknowledged that the reduced levy mitigates a substantial amount of downside risk to Cambodia's growth, noting that there remains scope for more immediate near-term support, as the kingdom improves its public debt ratio and rebuilds its fiscal space. Maybank economist Brian Lee added that border tensions will weigh on tourism, particularly in border areas, such as Poipet. Thailand is Cambodia's top source of international tourists. Nevertheless, the revised tariff brings Cambodia in line with its Asean neighbours and is lower than the rate imposed on its regional competitors (such as India) in the garment space, said Lee. He added that the risk of a sharp pullback in foreign direct investment is now reduced. The house expects Cambodia's growth to slow from 6 per cent in 2024 to 5 per cent this year and 4.6 per cent next year. Reported by Goh Ruoxue from Singapore
Business Times
2 days ago
- Business Times
Cambodia deputy PM says 19% US tariff rate averts collapse of its garments manufacturing sector
A TARIFF rate of 19 per cent on Cambodia's exports to the United States has helped it avert the collapse of its vital garment and footwear sector, allowing the country to remain competitive with its peers, its deputy prime minister told Reuters on Friday. Sun Chanthol, Cambodia's top trade negotiator, thanked US President Donald Trump for his understanding in Cambodia's negotiations to reduce a tariff rate that had initially been set at 49 per cent then later 36 per cent - among the world's highest levies - and for his intervention in a deadly conflict between Thailand and Cambodia. 'First off the bat I have to thank President Trump for providing a rate that's competitive vis-a-vis our neighbouring countries and express gratitude to President Trump for his noble intervention for a ceasefire and peace,' Chanthol said in a phone interview. 'If the US maintained 49 per cent or 36 per cent, that industry would collapse in my opinion,' he said of the garment and footwear manufacturing sector, the biggest economic driver in the country of 17.6 million people. 'People would go to Indonesia, Vietnam... a 16 per cent difference would have been huge. We can live with 5 per cent, anything around that. We are very grateful, for protecting our industry and its employees.' 'We have close to 1 million workers, mainly women, each one of those workers supporting 4-5 members of their family. It would have been a huge impact if this would have been bad,' he added. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Cambodia has a big trade surplus with the United States, with its exports to the US market accounting for 37.9 per cent of its total shipments in 2024, valued at close to US$10 billion, according to official data. Much of that was textiles and shoes, a sector crucial to an economy projected by the International Monetary Fund to reach US$49.8 billion this year, driven by manufacturing of goods for brands that include Adidas, H&M, Ralph Lauren and Lacoste. The deputy premier said what had been agreed with Washington was a framework, with a deal to be finalised later. Chanthol also said Cambodia had agreed as part of the deal to buy 10 Boeing 737 MAX 8 aircraft for its national carrier Air Cambodia, with the option to purchase another 10. 'We don't have a lot of purchasing power compared to other countries,' he said. 'Our approach was we put everything on table, negotiate in good faith, ensure both countries will benefit from this trade deal.' REUTERS
